DesertRat87

Get Your Just Desserts by Selling Cheesecake Factory Puts

Don't you mean 2011 and 2012 instead of the 2010 and 2011 years specified? The prices match the 2011/12 years.

Distinction Between Positive and Normative Economics Misses the Point

Interesting question, having received a degree in Mathematical Economics 30+ years ago and then spent my career building computer systems the way I think of both is that one builds models in an attempt to understand/replicate/c... some version of reality.

The mental three-legged stool for doing this is Requirements, Analysis, and Synthesis. Requirements define what needs to be there including constraints and value judgements. Analysis pulls apart, understands, and describes what is. Synthesis builds the solution.

Normative Economics and a base body of Economic Principles from Positive Economics reflect Requirements. The understanding part of Positive Economics goes with Analysis. The constructive/ design portion that you are looking to label is aligned as Synthesis which I offer for consideration.

Sobering Stat: ARMS Index Indicates Market Is at Peak, Not Bottom

I just completed my weekly portfolio review looking to sell based on my rules and running my screens for replacements. Both buy and sell criteria are a mix of fundamentals with a relative strength overlay. Only one sale was for a fundamental factor failure. All the many others were for relative strength failures.

When I ran the screens to drive buys I was unable to replace the sells or fill existing open slots in three of five sub-portfolios which means they stay as cash. The other two were able to stay fully invested, but there was very little (3) on the buy lists that I didn't buy -- very thin pickings.

Since the 8AUG2009 review the portfolio has moved from 6% cash, where 8% is normal, to 21% cash on Monday. In the past this type of move has correlated with either a market decline or chopping sideways (base building) for a while until new leadership with reasonable fundamental characteristics appears on the screens. It has not resolved in a healthy bull.

I'm agreeing with the author -- not a market bottom.

A Granular Look at the Stratified U.S. Consumer

The data presented is ranked by income. When you look at the corresponding net worth figures you see exactly what you have dismissed as being flawed data. Large numbers of people with zero plus/minus net worth, another group that basicly owns a modest house that is paid for, and a group that has significant assets with limited income. People I know who fit in the later group includes retirees living on Social Security and drawing down their assets and farmers with land and limited net income.

On Aug 16 04:07 PM Dialectical Materialist wrote:

> I have a hard time beleiveing a lot of the data presented by the
> BAC chart about wealth. I think the net worth of the lowest 20% of
> the population is drastically overstated. It is half of what those
> in the 40-60% bracket have. This means for the many folks I have
> known in my life who fall in that lowest bracket (and who have almost
> exactly zero net worth -- in dollar terms, not as human beings) that
> there needs to be an equal number of people who have relatively substantial
> net worth just to bring up the average. How does a class of people
> in the lowest income bracket who are almost by definition renters
> who make at or near minumum wage in their not quite full time jobs
> (or who are unemployed all together and getting by on government
> assistance) end up with net worth that is not effectively zero? A
> lifetime of wise accumulation of non-depreciating assets? I think
> not. I suspect a faulty model containing some bad assumptions produced
> this breakdown of wealth and income. It is no surprise to me it would
> overstate the wealth of the poorest among us, as the real picture
> might be too ugly to accept.

International Speedway: Poised to Win

Thanks for the detailed write-up. I initiated a small position of Friday.

Europe Is Recovering More Quickly than U.S. - Why?

Since when does Europe equal Germany and France? This is like stating that the United States is California and Texas. Generalizations are being made which are not true when one looks at all the states within Europe and not just two.

13 Dividend Stocks to Enter on Dips

The author requires a yield of 3% to purchase a stock. The price stated is the one at which the yield is 3% or (Indicated Divident/.03).


On Aug 13 11:11 AM Walt17 wrote:

> I like your criteria for dividend stocks. But some of your "accumulate
> below" prices seem strange. e.g. WMT hasn't traded below $40 in a
> very long time. XOM hasn't been below $56 sincd 2005. CL would have
> to retrench to the March price range. Were those typos?

12 Potential Dividend Growth Plays

Assuming you are using tax software and are filing federal and one state, about 15 minutes per. If you are filing in multiple states and any of the MLPs are based in one other than your home state you need to split them out to that state which can get messy.

It can get tedious keeping track of all the materials sent and they do not arrive early in the tax season. If you like to file early then stay away.


On Aug 04 10:16 AM StockData.org wrote:

> Slightly OT, saw the article list some MLP's. For MLP owners here...
> how time consuming is completing your tax return?

Cash for Clunkers May Cost Up to $45,354 Per Vehicle

I took advantage of the CARS program and bought my first new car since 1986 -- a car that we drove until we junked it. We normally buy used, sometimes fairly new, sometimes fairly old depending on needs.

We were not in the market, but starting to think about what happens next year when my son commutes to university at 250 miles per week instead of 50 miles per week at the community college. Yes, the 1999 Ford van he drives would go from 15mpg he gets now to the17mpg I was getting when I was using it to commute via highway. The fact that it already had 142k on it was also a concern. The tentative plan was to switch cars and have him drive my 22mpg Buick which would save about a third in gas cost.

So why did we jump? KBB put a value of $650 on the van so it was clearly worth more dead than alive. It looked like it was going to need both AC and brake work in the next several weeks, say $300-600+. We would move to a car with 28 city/35 highway rating -- say 32/33mpg effective as a highway commuter. Also, with our newest car being a 2001 we have a more dated set than normal from the reliability perspective. But I'm going to miss it as it was our high wheel clearance car that we took camping and Boy Scout activities.

Why break down and buy new? The resale market for smaller cars is such that you do not get rewarded for buying late-model used. The economics say get the best deal that you can on new and go with that.

In the end this incentive program pulled us in from doing some car switch within the family mid next year to buying a new car now. The program achieved its intended effect with me. It also returns a couple of months of my taxes to me in a form I can directly benefit from. And for those ranting on about debt -- I paid cash!

'Failure of a Fail-Safe Strategy': Tom Lauricella Weighs in on Asset Allocation

You ask multiple questions and/or make some assumptions which I will try to isolate and address.

1) Inverse does not mean leveraged inverse which is where the complicated approaches and larger trading costs/expenses/ slippage come in.

2) You are correct that holding an EFT and an inverse to that ETF would basicly generate expenses with no return. Therefore as you suggest one would not do that and move to a lower allocation and cash instead.

3) What one would think of doing is being long one ETF and short/inverse another ETF where the two base indexes are strongly correlated in an attempt to capture the difference between the two. For example, the S&P 500 and MSCI EAFE indexes have recently been in the .8+ range. What you would have to decide is which one is going to outperform the other and go long that one and short/inverse the other.

Let's work an example here where one is long the S&P and short/inverse the EAFE and the period returns are 10% and 7% respectively. Equal dollar amounts are used -- X.

Using an inverse ETF the profit is (1.10X -1.07X) = .03X which is (0.03X) and converted to a percent is 1.5% on invested capital.

Shorting instead of using an inverse would change the calculation to be 0.03X/(X - X) or an infinite profit based on invested capital in this simplistic case. (Losses would also be infinite in percentage terms.)

Please note that you are left with the "simply" tasks of identifying relative future performance and the appropriate allocations to extract alpha once beta has been removed.


On Jul 14 01:34 PM JeffDB wrote:

> On Jul 14 10:21 AM Old Trader wrote:

Handicapping Potential iShares Buyers

Berkshire Hathaway anyone? It seems to meet several of the criteria I've seen mentioned for aquisitions including low on-going capital needs, size, and a steady income stream. Think of it as a financial utility.

Will Mileage Standards Get People to Drive Less?

Increasing the gas tax by some regular and preditable amount each month or quarter over several years is the way to introduce a behavior change. The amount should be about 3 cents per month for ten years (which is roughly the replacement cycle length).

We could use a portion of the tax receipts as a subsidy for low-incomed wage earners by rebating a portion of the social security tax on the first $20,000 of income. This cushions some of the regressive aspects of the tax and provides an incremental incentive for employment.

Ever More Unemployment

Because it is a figure net of people becoming employeed again. The layoffs is strickly a negative value with no off-setting hiring.

Go back to school...


On May 08 12:29 PM Jeff Nielson wrote:

> Anyone who takes the BOGUS, monthly U.S. jobs reports seriously needs
> to re-enroll in school to learn simple arithmetic.
>
> How can the MONTHLY job-losses be much less than ONE WEEK of officially
> announced lay-offs (in the WEEKLY jobs report)?
>
> When the weekly lay-offs were only 300,000/week (last year), the
> U.S. economy was still suffering NET job losses over the course of
> a month. With weekly lay-offs more than DOUBLING, the monthly job-loss
> "statistic" from the BLS is not even remotely plausible.
>
> Ignore the propaganda and start to pay attention to the REAL data!!

Separating Underwater Homeowners from Really Underwater Homeowners

You are confusing a balloon payment where the borrower must pay off the note in full with an Adjustable Rate Mortgage. With the ARM you take the loan balance, interest rate, and remaining term to calculate the new principal and interest (PI) payment. You pay this amount allong with taxes and insurance (TI) until the next reset.

There is no refinance required here as the original note profided the money for the entire term. However, many people writing about ARMs assume that refinacing will occur when the reset occurs because the interest rate and payment will balloon. Depending on the actual facts this may / may not be a good assumption.


On May 06 07:32 PM Radardoc wrote:

> Perhaps I don't understand the process very well, so someone please
> help me out here...
>
> I have a friend that bought a home near the peak of the market for
> roughly 500K. They put in 100K as a down payment and hold a 400K
> note. The note was an ARM. The note recasts in late 2010. Recent
> sales in the area of similar units have gone for 325K.
>
> Here comes the part where I may not understand: When they recast
> the interest on the note, is it not like you are refinancing the
> remaining balance of the loan? Would the bank not look at this as
> they would writing a 400K loan against 325K in collateral? If they
> can’t come up with 75K, would that not place them in default?
>
> Maybe there are ARMs out there that they just give you a new interest
> rate, regardless of the value of the property, I don’t know. With
> the huge loss of equity many markets have suffered, there has to
> be a large number of people with negative equity expecting to refinance
> these loans. How can that not be a huge problem for the market?<br/>

MarketRiders: Portfolio-Building and Asset Allocation Via ETFs

An offering since December 2007 for this type of ETF portfolio asset allocation is from FOLIOfn found at https://folioinvesting.com/ as their Target Date Folios offering. The methodology is explained in several working papers written by Geoff Considine, a Seeking Alpha contributer, and the contracted provider of the portfolio allocations. A good read if you haven't already done so.

The service offering does include optional automatic rebalancing.