L Boyd

Betting Against the U.S. Dollar

My problem with UDN is that, as far as I can tell, it doesn't short against the dollar by going long the Chinese Yuan - which, IMO, is the most important one. It does, however, go long the Euro and the British Pound which is very troubling indeed as both of these currencies are probably worse off than the dollar.

Does anyone know of any other similar short USD investment vehicles that include the Yuan?

What Does It Mean That Stocks Are Undervalued?

I will not dispute the fact of whether or not stocks are "cheap". It should be noted that, while using the prior ten years' earnings do erase the effects of the business cycle, the past ten years have been somewhat of anomaly. Corporate earnings were fueled by consumer (and therefore business) spending based on ever increasing leverage. We got to the point that we were spending more than we were making, as a NATION! People were using low interest rates, via credit cards and home "equity" credit lines, to buy, buy, buy. This obviously couldn't go on forever (though it is very surprising, to me at least, how long the party did last) and we're now faced with a crash back to reality. It is highly doubtful that people will spend like they did over the past decade. In the near term we will probably see an "over correction" in consumer spending, but probably a much needed one. Are stocks historically "cheap"? Possibly; but I would take a look at the past ten years' earnings with a grain of salt.

Using the Ka-Poom Theory to Invest After Black Swan Events

Indeed an interesting article - thanks for sharing.

@Larry - I agree with what you say. So if I were to agree with the Ka-poom theory AND Larry's analysis (which I do) I'm going short the U.S. dollar, big time. If you are pumping massive amounts of cash into the economy but it is not being invested in appreciative assets or spent by consumers (thereby leading to capex) you have a huge supply of dollars that aren't doing anything to grow the U.S. economy. Sets the stage for massive currency devaluation.

Where's the SPAC Attack?

Having worked extensively on a SPAC deal as an M&A I-banker, my advice to anyone considering a SPAC is to - RUN, don't walk. In theory, SPACs seem like a great opportunity. In practice, there are just too many moving parts, too many cooks in the kitchen - which is evident by the amount that have been successful in getting acquisitions approved by shareholders.

Marc Faber, Jim Rogers and Boone Pickens - Bullish on Oil

@riskreturnoptimizer - re: 'this concept of roll'. ETFs and ETN's that track commodities such as oil (or copper, orange juice, etc) usually do so by continually buying front month futures contracts. Before the front month contract gets to its settlement date, the fund will close out its position and buy the next front month contract. In periods of extreme contango (now) this is a very unprofitable strategy. The fund is essentially buying at a high price, and as the contract nears its settlement date the contract has (probably) traded much lower, at which point the fund sells for a lower price than it paid. In an effort to provide continual exposure to the price of oil, the fund is buying high and selling low on a monthly basis.

This is why you see many (smart) companies (hedge funds, commodity-related companies, etc.) buying large amounts of oil on the spot market and storing it. They are essentially doing the exact opposite of the aforementioned oil ETFs. They are buying low (on the spot market) and then will SELL a futures contract at a higher price - using their oil "stash" to cover the contract. As the settlement date nears, they will usually close the contract out by buying it back at a lower price - therefore never having to move their actual inventory of oil. As long as the profit they've made on the contract buy/sell is more than what they're paying for storage of the oil, they've done well. They can (and will) continue to do this on a monthly basis. Unfortunately, this isn't an accessible strategy for your everyday investor (idea for a new fund?). Not to mention, we're running out of storage space!

'Wars and Rumors of Wars' - Time to Look at Defense Stocks

A bright spot for many of defense stocks is the amount of repair that is going to be necessary on the equipment once it is returned home en masse. Maintenance and repair performed while in theater is obviously at a minimum as this is just not a priority while in combat. Tanks, planes, trucks, etc. will be returned in tatters and there will be considerable expense at bringing this equipment back to "playing shape". This is not cheap by any means.

Chart of the Week: Volatility Drifts Lower

I will apologize in advance for the quality of this post but...

Bill, you look like Brett Favre. Have you heard this before?

How Are Banks Spending Bailout Money? Anyone's Guess

BB&T - great bank, run the way banks should have been run to avoid the mess we're in. Very attractive at today's prices (8% div yield).

Disclosure: I am SUPER* long BB&T!

*Unnecessary 'super'

The Dollar/Oil Surprise: What Does 2009 Hold?

Article has a lot of common sense and I very much agree.

@Patio, I'm on the same page friend. Inflation will not hit us anytime soon, but when it does it will skyrocket. We've still got a TON of de-leveraging to do so I don't think that we're in any near term inflationary pressure. That being said, there are so many USDs being pumped into the market, that when this turns around, the USD will go into a downward spiral. Not a bad time to go short the dollar in the next couple of months, I would wager; no question that if the Euro fails, the dollar would skyrocket, but again, I believe that'll be a relatively short-term spike. In the long-run, the yuan will be a very attractive alternative to the USD. Once again, if you can keep a long-term investment view while taking advantage of near-term opportunities, you stand to do very well. I feel that EVERYBODY knows what's going to happen; the trick is timing all of it right.

Corporate America's Unhealthy Love for Buybacks and Dividends

I'm not sure I follow the logic here? How is taking (what will prove to be) precious cash to buy back stock at inflated values, only to have have to sell shares at whatever they can get (significantly lower prices), in many cases simply for working capital needs, a good strategy? While it may have been better than funneling that cash into capex for no apparent reason, I suspect most did it because they saw no other alternative and wanted to give positive signals to the market; after all everybody else was doing it. The short term, quarter to quarter, time horizon of the Street is very much to blame.

On Dec 29 07:51 AM CLH wrote:

> Growth certainly makes no sense during a time of contraction. Seems
> to me companies were right.

The Case for Higher Interest Rates and Lower Home Prices

Exactly; simply put, we had an era of easy money which naturally led to inflated prices - across all asset classes - though real estate was the go to. Asset prices have to come down, there is simply no way around it. I don't care if the government gives money away (they seem to have no problem with that), it won't solve the problem. The only cure is a general lowering of prices - many people will lose money, yes, but this is the reality of it. Better to accept it now, and move on.

Plummeting Oil Prices Increases Hedging for 2009 Contracts

I wonder at what point most ETFs/ETNs start to get out of front month contracts? If one could get a sense of the timing of this, there may be a way to profit off of these by going short a few days before and then obviously selling before the delivery date.

Crack Spread 'Yes' Futures 'No'

Brad,

Great article; a strategy that I was not aware of and makes perfect sense for the current state of things (refiners massively cutting back production; unrefined oil sitting in tankers idly at sea). I was wondering the same thing as wosg though; can you specifically tell us the contracts that you're quoting above?

GE Finally Enters the Zone of the Unknown

I certainly agree with MarkGill. While it is easy, using hindsight, to say the time to short was $40, I think the point (at least that I'd make) is that there are a lot of more attractive short candidates than GE right now. This is still a relatively solid, well-diversified company. While it is quite possible that the share price could dip to the ~$10 range, I'd say its much more likely to hover in the mid-teens for the next year or so.

Think the Commodities/Mining Boom Is Over? Insiders Don't

If you're long commodities, I would think you'd want producers to think the boom was over - or at least to cut back on capex therefore limiting future supply (which many are doing, though it is more a function of the credit crisis).

I am long commodities and I see this "blip" as a great time to get in. The housing bubble was fueled by excessive speculation and easy money. The commodities bull run is a simple function of demand significantly outpacing supply. (It takes a long time to drill an oil well or dig a copper mine); in the meantime, demand can tick up at the drop of a hat.