radicall

On Paul Krugman's Deficit Rationalization

Wow Petrovka38 !! What a great prediction ..

I am in no way bullish on the market - but come on! Dow will NEVER go over 11000?

How long have you been short the market? I feel bad for you - if you have been on the wrong side of the trade more than a few months. With interest rate at 0% - people don't have a choice but to speculate in the stock market and junk bonds. By the way I like junk bonds.. at 12% yield (JNK) I think there is still too much risk premium there.

Among the bullet points The Onion cites as key issues in Ken Lewis' resignation from Bank of America (BAC): "Problems involving banks, America"

Since when did the onion become news? It is funny though...

Chinese threats to stop exporting rare earth minerals - with applications in electronic devices as well as wind turbines, hybrid cars and missiles - have touched off a boom around the world to develop alternative mines. One exec says three months ago "You couldn’t borrow 10 cents from anybody in the financial community [to develop a mine] ... We get inundated with calls offering financing these days."

I think the executive who says "You can't borrow 10 cents from anyone in the financing community" must be so wrong! ave you seen the number of IPOs, secondaries, debt issues coming on to the market? The market has been just eating it all up and can't seem to get enough.

Risk appetite is back. Now it is a matter of someone raising some capital to explore and find other places where such rare earths CAN be found. Africa is very mineral rich...US .. I guess we have to first find some place before they can get mining permits.

We want our weapons of war - and if these elements are necessary to build them - then the government will give out the permits.

Playing the VIX in a Bullish Market

So i guess it has the equivalent of contango - like USO, which I think is a great long term short (and keep writing out of the money puts on it).

USO was at 42 when oil prices first hit but even when they went to 75, it only reached 38.50.

Thanks a ton for explaining this. Is there a real way of figuring out what the NAV of the VXX ETN is at any given time, rather than just relying on bid/ask prices?

Playing the VIX in a Bullish Market

Since I can't trade VIX - I have been using VXX as a proxy for VIX. Unfortunately it seems that VXX loses value over time. When VIX was 23 last time - VXX was at about 56-57, now it is at about 52 with VIX at the same level.

Can anyone explain to me how/why? Is VXX a better a short than a long over time?

U.S. banks need more capital, former Fed chief Alan Greenspan tells a Mumbai conference this morning. "I think even in non-euphoria, non-crisis times, we need to have a larger buffer than we currently have."

On the lighter side of things, the onion is the only paper reporting the real news anymore...

www.theonion.com/conte...

Verizon Downgraded on Continuing Unemployment Concerns

www.theonion.com/conte...

No Surprises: Unemployment Still Rising

www.theonion.com/conte...

So you've decided to avoid double-dip losses and head for the "safe haven" of bonds for a while. If the low, low yields on long-term Treasurys and high-grade corporates revert to form, Brett Arends writes, you run real risks of losing on the prices - even before accounting for inflation.

There is nothing wrong with investing in treasuries/corporate bonds. Everyone has a different risk profile and advice should be subjective -

Let's say I am 55 and want to retire in 15 years. - should I put all my money into stock? No! Balance between Treasuries / Corporate bonds / high yeild bonds and stocks. Worried about inflation - buy some TIPS. Not everyone can handle a 30% market correction impacting their portfolio. Besides, people have at least an year or two to sell off treasuries before .

I am 33 and this is what my 401k portfolio looks like:

I was short the dow in my 401(k) Jan-March 9 (long consumer staples and utilities)
Added Energy, Commodities, Financials and utilities and S&P 500 funds in March. Sold off at S&P 950.

Currently
Short S&P at 1030.
Long Utilities, Medical sector, consumer staples, some basic materials and government bond fund

Stocks with 10x Gain Since March: Room to Run?

I think during the march lows - stocks were mispriced. Instead of March 2009, lets use March 2008 as a starting point. Economy had already slowed down, housing was already going down. The only thing added to the equation was the credit crisis. The credit crisis is mostly over, risk appetite is back, high yield market is working, bond spreads are down, industrial demand is picking up.

Earnings are a backward looking indicator - so look at 2010 and 2011 earnings instead. Coffee companies may be overvalued, but look at companies like TCK that is up 1000% since march lows but still down 50% from it's 2008 high.GNW down 66% from it's 2008 high but up 1200% since its low.

Nobody complained when stocks dropped 30% in a month, but have a problem with them going up 40% in a month. I think a lot of it has to do with individual companies, their real balance sheets and future earnings prospects (as opposed to "Sell All" mentality during a period of fear).

At the same time I agree that the housing crisis is far from over, there will be a "new normal" at least for 2-3 years and a lot of stocks are overpriced. At the same time - there are still a lot of undiscovered gems out there.

Take my current favorite CEL (Israel Cellcom) for example. it yields 11%, has had 15% growth yoy, is a market leader in wireless in Israel and trades at a forward PE of 2.5x.

As far as things like Citi, FRE, FNM, AIG are concerned - yes - pure speculation, but who knows - they might be worth 10x as much in 5 years. People are looking for that big jump. There is no point keeping just stable companies like utilities in your portfolio - or you will always lag the market.

August auto sales aren't due for another week, but early hints support those who think "cash-for-clunkers" cannibalized future sales - Edmunds is estimating an 11% decrease in "purchase intent" from June. Prices are going up across the board. And 17% of clunker buyers surveyed say they have some or serious doubts they should have bought, vs. the more typical remorse number of 6-8%.

Recessions are caused by fear and people's unwillingness to spend. I think it will spur on the Joneses into buying too.

That money is now in circulation instead of sitting in a bank. I say that is a good thing. The idea is to increase the velocity of money.

Enough! writes John Crudele: It's time to boycott stocks until a full investigation of Goldman Sachs (GS) can confirm or deny our faith in the fundamental fairness of the market.

Everyone hates a winner. Let's reward AIG and investigate GS

According to bank analyst Dick Bove, many bank stocks sell at higher multiples today than during the high-growth 2002-06 period. What's more, "those companies with the least chance of recapturing their 2007 earnings peak" performed best in the recent rally. Bove suggests investors buy 'high quality' banks (including HCBK and JPM), "not the ones perceived to be offering the biggest 'bang for the buck.'"

Tony I completely agree. I've tried being short this market and long quality short froth does not work.

I guess it's better to be lucky than right ;)

According to bank analyst Dick Bove, many bank stocks sell at higher multiples today than during the high-growth 2002-06 period. What's more, "those companies with the least chance of recapturing their 2007 earnings peak" performed best in the recent rally. Bove suggests investors buy 'high quality' banks (including HCBK and JPM), "not the ones perceived to be offering the biggest 'bang for the buck.'"

People piling into FNM and FRE and C. Nobody really cares about fundamentals right now I guess and I am going with the flow and buying 3x leveraged ETFs depending on direction. Great trading market.

Cellcom’s Q2 Beats Expectations Thanks to Content, Value-Added Services Expansion

Great year for the company - giving out a dividend of roughly $1 to holders on record - August 30th I think.