drbob66

10 Reasons to Believe That We're in a Depression

"For now, besides military weaponry, our number one export is entertainment (DIS)."

Actually, according to the U.S. Trade Commission's "U.S. International Trade in Goods and Services Release (FT900)," the most recent YTD statistics (as of Sept 2009) show that "Capital Goods, except Automotive" tops the list of exported goods at $287.3B...the largest of which is "Semiconductors" ($26.7B), followed closely by "Civilian aircraft" ($26B), "Industrial Machines, other" ($21.7B) and "Telecommunication equipment" ($21.4B). "Medical Equipment" comes in forth place at $20.1B.

"Automotive vehicles, parts and engines" has its own category and - somewhat surprisingly - totals a whopping $55.8B so far this year.

The second largest exported goods category is "Industrial supplies and Materials," the YTD total of which is $213B...and the biggest in this category is "Plastic Materials" ($18.2B...remember "The Graduate"?), followed closely by "Chemicals-Organic" ($17.6B) and "Fuel Oil" ($17.5B)

The third largest category is ,"Consumer Goods," with exports totaling $110B ytd...the largest (by far) of which is "Pharmaceutical preparations" ($34.4B), with "other Household Goods" a distant second at just under $13B.

Finally, the fourth largest "Capital Goods" category is "Foods, Feed and Beverages" at $68.4B ytd as of Sept 2009. The top spot here is taken by "Soybeans" ($11B), followed by "Meat, Poultry, etc." ($9.1B) and (you guessed it ) "Corn" ($7.8B).

[as a sidenote..."Hair and waste materials" exports totaled $350M ytd and are listed under "Industrial supplies and Materials." Not sure what this is all about...but it's probably good that we're exporting them]

Anyways, these are the major categories of "Goods" exports for Jan-Sept 2009, and can easily be found by searching the internet for "U.S. Exports 2009"...or just go to www.census.gov/foreign.../
Of course, there is the other major category of exports...that is, "Services." I don't have the data for 2009 offhand, but I did very easily find (search "U S Export Factsheet 2008") that LAST YEAR the total U.S. exports of good and services amounted to $1.84T...of which $551.6B (30%) was "Services" [the largest categories of which were "business, professional and technical services,insurance services, and financial services" ($241B), "travel" ($111.5B), "royalties and license fees" ($91.1B) and "other transportation" ($60.2B).

I assume that we'll probably export roughly the same % amount of "Services" this year as last (although possibly much less "financial services," if the rest of the world learned anything in the past year or so). Obviously, "Services" comprise a significant portion of our total international exports yoy, and I expect it will continue to do so for the foreseeable future.

Still, it should be clear from the data that the U.S. exports much more than "military weaponry...and entertainment," as the author suggests. I don't have the actual figures for "military weaponry" or "entertainment" for 2009 (or even 2008)...but I highly doubt that they would come in at No. 1 and No. 2 on the list. If anyone has data to the contrary, I would be interested in examining the numbers.

Be Wary of Risk Assets and Citi's 'Profit'

This is one financial stock that I'll just stay away from. Too complicated...

Why BAC Will Beat: Understanding a New Bull Market Is Not Underway

I don't get it...have the analysts been duped into thinking that the banks are in poor shape (hence their low earnings estimates)? Or, as you claim, are they part of a "con game, " purposely keeping estimates low...even though they secretly believe the banks are stronger than their estimates suggest. I look at BAC, for example, on yahoo finance...and the high and low estimates for this quarter are $0.20 and ($0.22), respectively...with an average of $0.04. Sounds like there's downright disagreement (or even confusion) in analysts' estimates to me. Which ones are right...and which ones are part of the "conspiracy"? Hard to tell from the logic of your argument. But seeing as BAC reported a profit of $0.23 in Q12008, it looks like none of them expect BAC's yoy results to be better...again, have they been "fooled," or is it a "con game"? OR could it simply be that there's genuine disagreement (perhaps because bank earnings are so difficult to predict in this environment )?

To your other points:
"(1) Financial stocks have led this recent rally, but there is nothing fundamentally strong about any of the financial companies whose share prices have led the broad markets higher recently."

The financial stocks are not at all-time highs...in fact, the XLF is down 71% from its all-time high. It could be easily argued that the "fundamental weakness" of financial companies is still priced in at this point.

"(2) If we look at the charts of individual financial stocks, volume has been weak on these rallies. Many financial stocks have probably rallied more on short-covering than anything else, and thus the rallies will not be sustainable;"

Well, the volume of BAC on April 9 (when it first broke towards $10) was over a billion shares..the highest ever. Was it due to short-covering? No doubt SOME of it was. The question is...does it matter? The price was going UP...and it's continued to go up. And only price pays...not anger, resentment or conspiracy theories. Regardless, even the volume on Friday was 487 million shares...and up until Jan, the average volume was around 100 million. Is 487 million shares "weak volume"? I guess it depends on your definition of "weak."

Similarly, WFC traded over 376 million shares when it gave its earnings "preview"...its highest ever. Is that "weak" volume?
Up until March, JPM stock was trading around 50-70 million shares/day...since March (its low point), the average had been well over 100 million. Is that DECLINING volume? I don't think so. Did you even look at the charts before you wrote this article? Or did you read somewhere on the internet that "volume was weak"?

"(3) If we look at a chart of a broader U.S. market index above, such as the S&P 500, you will notice that the rally has occurred on decreasing volume and that a doji-star candle formation, often a sign of an imminent reversal, just formed Friday. Though the MACD is still clearly positive, the MACD is a lagging indicator;"

The volume on the S&P 500 just this past week was 29 billion...in April 2003 (when the S&P500 was at the same price level...and in the early stages of what turned out to be an impressive bull run), the average volume was less than 10 billion. Which is higher? 29 billion or 10 billion?
In addition, a "doji star" is a sign of indecision...a sign of POTENTIAL reversal...just as a resistance level (for example, 840 on the S&P500) is a sign of potential resistance...until it becomes support (as it is now). If, as you say, it's "often a sign of reversal," I would ask, "How often?" More often than not? Do you have any statistics to suggest that it would indicate that a reversal is imminent?
MACD is a lagging indicator? Well, I'm not sure of that..but, in any event, it's "clearly positive," as you point out, so what does this mean? Nothing, really...it's just a term you threw in to attempt to bolster your argument, without any real significance.

"(4) Markets in the short-term often behave irrationally but long-term fundamentals drive markets in the long-term."

The market was going up all through 2006 (and halfway through 2007)...were the long-term fundamentals good then? Obviously not...but prices went up anyway, and anyone still in the market was making money. Similarly, the fundamental macroeconomic picture was awful in early March 2009...yet the market has recovered substantially. Perhaps you were out of the market then...if so, you missed a chance to make money.

Finally, your article hardly mentions price...even though price is ALL THAT MATTERS. To suggest that one should "sell in May and go away" while prices are still going up (making higher highs and higher lows) makes little sense. I would suggest that it would be better to wait for price action to confirm a reversal...because if it doesn't, you'll miss out on further profits. With reasonable stop losses in place, one can easily protect any profits made thus far...or prevent further losses. Shorting this market makes no sense at all in view of the price action...although I'm sure there are some stocks that are "overvalued" at this point, but until they make "lower highs and lower lows" (or simply break an uptrend line), shorting them seems a high risk proposition.

In the end, the ultimate conclusion that the author makes is that the "better and less risky way" to "create wealth" is to SUBSCRIBE TO HIS NEWSLETTER. Well, my only question is...were you recommending to buy BAC when it was at $3 (now $10.60)...and after the Fed, Treasury and the current administration made it clear that BAC wouldn't be "nationalized"? Did you recommend BAC stock in Jan and Feb...when insiders were purchasing hand over fist (at prices ranging from $3.50 to $7)? Or how about WFC? I bought on Mar 5 at $8.53 (now trading at $20.26)...the same day that the CEO bought 100,000 shares (at $8.05). Were you recommending WFC in early March? Or were you convinced that Dick Kovacevich was trying to "trick" people into buying his stock by investing $800,000 of his own money? Is that the kind of "advice" that you provide (for a fee) in your "Crisis investment opportunities" newsletter?

Or were you simply telling people to "buy gold"? Frankly, I've owned some gold for a while now...and my WFC shares made me more in a month than my gold has in almost a year. In fact, the GLD chart looks like it's about to roll over. Regardless, the arguments made in this article are weak, and the real result of this all-too-common attitude that "this rally isn't real" is simply missed opportunities (or, perhaps I should say, missed "crisis investment opportunities").

Oh well, at least you can maybe make some money from the advertising on your website.

Bond Expert: Setup for a Featureless Friday

I agree...useful article. Even though the bond market may be boring today, it's more important than a lot of people realize. And it's certainly had its share of exciting days in the past year or so.


On Apr 17 11:07 AM Larry House wrote:

> Thanks for your insights, John. Always helpful. I don't think the
> credit side of investing gets enough attention.

5 Perverse Bailout Consequences

This sounds like a nonsensical rant to me.

U.S. Big Banks: Survival of the Simplest

"Citi is a kon-tiki raft of band-aids and failed greed sailing ahead of secret winds"

Ha! Good one...

Still, I wish I had bought some at $1...I was staring at it that day, but just couldn't pull the trigger. Bought some BAC instead (and a mega-million lottery ticket at the grocery store).


On Apr 14 10:29 AM bob zimway wrote:

> Citi soars, Goldman sours, a stark kabuki today. Nothing is what
> it seems. The Goldman stock buy adds 9% to the float. The Horror.
> It pledges to repay the TARP. Party pooper. It's their "duty." Uncool.
> Meanwhile Citi is a kon-tiki raft of band-aids and failed greed sailing
> ahead of secret winds.

Annals of No-Comment, Meredith Whitney Edition

"Whitney has the rare ability, among sell-side analysts, to speak in clear and unhedged declarative statements, which has served her very well."

You nailed it, here. It's been all-too-common for these "professional" analysts to hedge their opinions ("we reiterate our buy recommendation, but lower our target price") to such an extent that their opinion is essentially meaningless...and any investor who's followed their advice for the last two years will be likely be waiting a long time to recoup their losses. Conversely, anyone who's paid attention to Ms. Whitney has saved themselves a lot of anguish (and money).

Letting the Zombie Banks Fail: A Viable Plan

"Most of the zombie banks are conglomerations that satisfy megalomania more than business sense. C, BAC, GS, JPM and WFC come to mind..."

All of these stocks are up 10-25% today.

Nice call, dude.

Don't quit your day job.

Mike Mayo's Seven Deadly Sins of Banking

WFC is up >30% this AM in pre-market (on announcement of record earnings this quarter).

Nice call, Mike. Now I see why you were pushed out of your old job. Maybe you should take some time off to "spend more time with your family."

Geithner Creates Buying Opportunity in Financial ETFs

UYG would seem to be a good bet...after all, with a hundred shares purchased for an IRA at today's price of about $2.40, the downside is limited (to $2.40...but then, does anyone think that ALL of the financial companies in this ETF will be allowed to go bankrupt, or be "nationalized"? Not likely); the upside is UNLIMITED. As long as one could handle the risk of sitting on a few hundred dollars of "paper losses," what are the chances that these 100 shares won't be worth considerably more in, say, 5-10 years?

Heck, you might even get paid something close to the current stated 15% distribution yield while you wait...

Is It Finally the End of the Bear Market?

Sorry... this is a reply to the comment from "Painfully Aware" above...not to the article by Emerginvest.


On Mar 17 08:04 PM drbob66 wrote:

> The linked articles does not refer to any "fundamentals"...in fact,
> it specifically states "do NOT pay attention to the fundamentals,
> they are IRRELEVANT AT MARKET JUNCTURES."
>
> Did you even READ the article?
>
>
>

Is It Finally the End of the Bear Market?

The linked articles does not refer to any "fundamentals"...in fact, it specifically states "do NOT pay attention to the fundamentals, they are IRRELEVANT AT MARKET JUNCTURES."

Did you even READ the article?

Is It Finally the End of the Bear Market?

The market could very well go up more than most people think.

www.marketoracle.co.uk...

When Preferreds Aren't Preferred

Thanks, David. I've decided not to add to my position at the moment (since PGF is currently still in free-fall). Maybe if it gets to 5, I'll nibble a bit more...but the negative momentum seems pretty strong now.


On Mar 05 02:56 PM David Clayton wrote:

> howisbiz - I don't know the mechanism, I suspect that you'll be getting
> something from your broker, as you would for other shareholder questions.
> As for the price, I think they probably selected a premium to market
> to dampen any potential shareholder unhappiness, and that the 20-day
> average is just a coincidence. My opinion.
>
> I believe your cost basis will carry through to your converted shares,
> so you'll end up with $7307 common shares with a basis of $3.42 and
> fractions. Again, what you get from your broker should explain it.
>
>
> MarkTwain - I have no problem with the pricing - I have a problem
> with the dual treatment and the uncertainty it introduces. We don't
> need more uncertainty.
>
> drbob - While I think the government's action is a bit damaging to
> the capital raising prospects of the banks - such as they are - I
> don't think it's a big negative for PGF; the market's clearly already
> discounting the chances of future dividends significantly. Current
> price: $5.93 for a nominal yield of more than 24.5%. I think PGF
> is as good a way to stay in financials as anything, but I've thought
> that since it was in double digits. Make sure you're diversified
> - beware the black swan.
>
> By the way, I'm intrigued by the effects of the C action on BAC preferreds.
> Clearly, BAC is the next most likely to receive this conversion treatment,
> which would put a (wobbly) floor under it. And yet its preferreds
> are falling like nothing's changed. The best IMO is BML-Q, a PGF
> component, which is now yielding 37.9%. I think the government action
> makes this a much safer investment, and yet it's lost 25% this week,
> falling in tandem with BAC. A short BAC hedge could make a long
> BML-Q position profitable in almost any scenario.
>
> Thanks for the conversation.

When Preferreds Aren't Preferred

David-

I see you are long PGF. I bought a little at $8 and $6.25 last week...yet it keeps dropping. I'm still uncertain as to whether this basket of financial preferred shares is a "bargain," considering the changes you outlined. I'm interested in your opinion...should I be adding to my PGF at these slightly lower levels? Thanks