Dialectical Materialist

Fitch Downgrades Greece to BBB+ as Violence Erupts

Regarding all this use of "Black Swan" rhetoric...
Real Black Swans are things you don't see coming. To the extent that these admittedly dismal developments have been anticipated, they can not be Black Swans. I could try listing possible Black Swans, but the more realistic sounding ones can be more or less anticipated, and as such are not the kind of highly improbable blindside event that qualifies. And anything I can think of that would qualify makes me sound like a kook, so I will simply leave it there.

Wall Street Breakfast: Must-Know News

Maybe they should all just have to compete on a reality television show... something like "So you think you can justify your $100 million bonus." Maybe pushing them off the building could be what happens when they get voted off...


On Dec 07 10:24 AM ebworthen wrote:

> AIG Executives - give them their bonuses in large denomination bills
> in briefcases, then push them off the roof. The average taxpayer
> can scramble for the bills and sell the bloody one's on Ebay as souvenirs.

Quick Chat #23- 12/2/09 After Market Close

HTL,

I appreciate the advice, and reading on this site (and following some of you folks) is part of my research and education. My comment about being too poor not to grow my money was not intended as an indictment of the risk taking part of the strategy, more the buy and hold... There is a lot of conventional wisdom about the power of compounding and dividend investing, etc. But if you crunch the numbers for someone who is genuinely not well off (say a $10k savings) the power of compounding is not compelling. You can double that THREE TIMES and still have only $80k... so the idea of taking 25 years to double three times is not real exciting. I am not arguing that saving money is a bad thing or even the thing for others to do. All I am saying is that I started 6 years ago with a very aggressive posture. I knew I might lose my shirt (but it was a very tiny shirt!) So far I have averaged 30% annually since 2003. Some of this was smarts and some of it dumb luck, so I am not bragging. I just think that the idea that one should protect the bulk of their savings in low interest but stable vehicles makes more sense when the investor has enough money to worry about. The fewer poker chips you have at the table, the more aggressive you need to be to build a large stack.

But again, I say thanks for the comments and I will keep watching what you guys do and say as part of how I protect what gains I have made.


On Dec 06 07:52 AM H. T. Love wrote:
"Homework and decision-making done perhaps monthly might suit your situation. Or longer or shorter.

This becomes more attractive, I believe, as the debt-fueled growth we've seen in the past could be coming to an end. An economy dependent on high rates of unsustainable debt-fueled growth will not continue forever. Buy-and-hold may be a thing of the past. More modest growth may return as our fiscal and economic foundations achieve a sustainable base. But I think it may be a long slog to get there."

Quick Chat #23- 12/2/09 After Market Close

I have been reading Nassim Taleb's The Black Swan lately and despite the fact that I think his concept has some problems and is inherently contradictory, there is so much conjecture and snark in it that it makes for a decent read...

He recommends an investment strategy that is similar to what you are describing. He says the bulk of your funds should be safe (though his "safe" is US Treasuries) and you should place small bets on outliers -- the black swan possibilities. If you get a hit, you benefit greatly, if not, you don't lose too much. If the world collapses, you preserve your money (but there again I would take issue with what he calls safe).

I'm not saying I endorse this strategy (for two reasons, I'm not near retirement and I'm too poor to nest egg my money vs. try to grow it). But it is interesting I think.


On Dec 05 07:57 AM H. T. Love wrote:
"As you already know, capital preservation is often the wise move. As another oldster, I would think about short-term plays with a very small percentage just in case the uptrend runs a few more months. The way I look at it, if I can make a small amount each week/month/... it's better than a swift kick, as long as I risk only short-term and very small amounts. When the break down happens, I lose only a small amount and have garnered my gains in the meantime."

Apple to Buy Lala?

That would be exciting... but I'll believe it when I see it.


On Dec 05 08:44 AM pk de cville wrote:

> This might be a continuation of the Adobe-Apple Flash war. Apple
> may be buying Lala so they can replace Adobe's proprietary Flash
> with stds based HTML5.

Our Current Economic Illusions

It may (or may not) be true that more people participate in the underground economy during recessions. But what is likely true is that artisans and craftspeople make more money selling to folks like well off yuppies when the economy is good. Similarly, tips at restaurants and bars are better when people are actually going to restaurants and bars (i.e. when the economy is better). Yes there is certainly a population that takes on odd jobs and uses what skills they possess in order to make ends meet during down times and when they are out of work, but don't assume that "under the table" income is better during a recession. My guess would be that it tracks pretty well with the rest of the economy and is best when the economy is booming.


On Dec 05 12:32 PM Tamarack Jack wrote:

> Most people also ignore the underground economy. Millions of people
> who are technically unemployed receive income for regular home repair
> and service jobs which they do not report or pay taxes on. During
> recessions more people participate in the underground ecnomy. Even
> store owners offer cash discounts for purchases -- meaning they won't
> record the sale on their books. More and more people these days make
> a business from crafts and the arts which they sell at craft shows
> and flea markets -- none of which ever gets recorded. Then there
> is income from tips for people in the restaurant & hotel industry,
> etc. only a tiny percentage of which is reported. As government resorts
> to increasing fees and taxes, the public works harder to keep ecnomic
> activity off the books. That doesn't mean it doesn't exist.

Is Netflix's CEO Wooing Comcast?

Author: We believe there is no overlap between Netflix subscribers (trendy, early adopters of technology), and the non-broadband US internet households (late adopters)

Sorry, but there certainly is overlap, and Hastings knows this. I got broadband two years after having Netflix. My mother (who like many mothers is not an early adopter) had Netflix before broadband. The analysts here are overstating the case of Netflix as somehow being scary new technology. It's built around the US mail, for goodness sake. It is far from "scary tech" and the Netflix queue is quite usable from a dial up connection. It is also very popular in rural areas, again where people get the mail but may not yet have broadband. So I don't know if 10-20 million Netflix subscribers are enough to drive broadband adoption, but it is a mistake to assume that everyone who uses Netflix must already have broadband.

Arizona Maxes Out Line of Credit in Two Weeks Flat

You need the criminalogists and budget analysts and economists and city planners to help runs things! Cops, prison guards and firefighters? Not so much.


On Dec 04 11:10 AM yellowhoard wrote:

> Triple,
>
> Just wait. Our choice will be to either let all of the murderers
> and rapists out of prison, or raise taxes.
>
> Or, fire the policemen and fire fighters.
>
> They would never consider getting rid of tenured positions at state
> universities. Or any number of other less dramatic cuts.

Arizona Maxes Out Line of Credit in Two Weeks Flat

I agree. I think this is an understated part of the unemployment problem.... That even as some of these folks get jobs and so are no longer "unemployed" they are certainly not contributing to the state coffers what they used to with their new lower paying positions. The popular idea that if and when the unemployment rate declines we will be out of the woods is not quite right.

On Dec 04 09:59 AM John Galt wrote:

>
> A lost job is a lost job, but some jobs pay a heck of a lot more
> than others. A lot of high revenue jobs ( say Wall Street for example)
> were lost. People are earning LESS income, and that means LESS tax
> revenue.
>
> It will be interesting to see what happens. Will states trim their
> budgets, or will Obama try and pass a 3rd stimulus?

Arizona Maxes Out Line of Credit in Two Weeks Flat

If you put Dean Martin in charge of your finances, you get what you deserve. Oh, this is another Dean Martin?.... nevermind.

Apple to Buy Lala?

Beyond that, how does this licensing work? @ 10 cents a song, there is no money for labels or artists to get paid. 10 cents a stream, maybe, but not 10 cents a song. Is there some other revenue source (embedded advertising or some such)? Maybe a membership fee?


On Dec 04 04:43 PM RLLH wrote:

> Why would Apple want you to be able to pay $.10 per song rather than
> $.99 per song? Doesn't sound like the Apple we know and love.

Douche Bag Of The Year Award

Well I guess it was 2008 (time flies) but he resurfaced in 2009. Once a douchebag always a douchebag. But I guess you're right he's not a good candidate for DB o' the year.

They say he's still considering a Senate run. I say, why not. He'll fit right in.

On Dec 04 06:01 PM Silentz wrote:

> Oh my...that was this year??? After everything else that has gone
> on politically, it seems like this happened YEARS ago.

Douche Bag Of The Year Award

Are nominations still open? I know he's a dark horse candidate, but I'd like to nominate Elliot Spitzer. He spent years as a prosecutor "upholding the law" by, among other things, prosecuting prostitutes. Then as his fortunes grew, so did his sanctimoniousness. And of all the hypocrites we know who make their living off the public teat, rarely do we get such poetic proof of the underlying hypocrisy as when he got busted for regular hookups with a prostitute. Now, don't get me wrong. While I am not a fan of prostitution, the libertarian in me says its really none of my business. It's not that he saw a prostitute... it's that he spent so many years putting them in jail first.

Finally, An Encouraging Jobs Report

Allowing people who fall out of the labor force in frustration to decrease your unemployment stats is a little like beating a basketball team by allowing the lights on their side of the scoreboard to burn out. So they may actually have 80 points, but as long as that one light won't light, it looks like 60 points, so we'll call it a win.

I find all of these measurements dizzying in their variety and instability. The huge revisions for the previous two months concerns me -- even though they were "good revisions." If these figures can be 40-50 thousand off on the first try, how are we to put any faith in the initial numbers as they come out? If my scale can be off by ten pounds in either direction at any given time, I'd be a fool to brag about how much weight I lost this week.


On Dec 04 10:54 AM John Galt wrote:

> We lost 11K jobs yet unemployment went down .2%???? Please explain
> that one? We lost jobs but the market got .2% better?
>
>
> 291K dropped out of the labor force. That means these people quit
> looking for jobs, so they don't count. In all reality these people
> didn't "retire" or anything like that, they just quit. Because they
> most of them probably concluded they were wasting their time.
>
> One of the things that's going to happen is that when the job market
> gets better ( it will eventually), then all of those discouraged
> workers that quit looking for jobs will start again, and the unemployment
> rate will have a big headwind there... just like they are getting
> a tailwind now from people who quit looking for jobs.
>
> Unemployment will be elevated for YEARS, and I highly doubt that
> we will get to 5% unemployment within the next 10 years. Yes, 10
> years. In fact, it would be an economic miracle if we got back to
> "full employment" within 10 years. Either miracle economic job creation
> or an economic catastrophy like World War would get us back to full
> employment within the next 10 years.

Netflix Looks Expensive, Yet Still Impressive

Netflix has been surprising people for a long time. Even though I have been enthusiastic about Netflix in the past, I sold in the mid 50's assuming there would be a better place to buy back in. So far the joke has been on me, as this stock seems durable through good times and bad. I just added back a tiny position because I hate watching stocks get away from me like a child watching a lost helium balloon. But I am eagerly awaiting a more tempting price to take a larger position. I think this is a good long term stock and the company has a clear handle on its business model well into the future (of course in tech "well into the future" means 3-5 years).