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Dialectical Materialist

Dialectical Materialist
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  • Meanwhile, on This Week, Larry Summers predicted a return to job growth by this coming spring. Ahead of Obama's meeting tomorrow with bankers, Summers said "it doesn't cost anything to encourage banks, as the president will be doing, to meet their responsibilities and expand the flow of credit to small business," which he believes will spur job creation.  [View news story]
    There are two sides to most successful investors. The first sizes up the overall situation and makes some guesses about the future. Notice how I don't say "prediction" because this is not a science and anyone who says it is a charlatan. The second side sizes up the markets on a more pragmatic level and sees where the money is going. Sometimes, as in the run-up of the tech bubble a few years ago, there are folks who are making money while they eye the exits and talk of overvaluations. These people are not simply "not putting their money where their mouth is" rather they are making money in the only possible way (by obeying the markets) while PROTECTING their gains by not getting stupid with greedy optimism.

    I submit there is no contradiction between making money in this market (which many folks have done this year obviously) and talking about how and why (and even when) there might be a pullback (possibly a large one) in equities. Unsophisticated investors think of investing as a gas pedal you either press or let up on, and ultimately these are the folks who can't beat the S&P. The average retail investor trails the S&P, and I would submit it is because they can't see the distinction between making money and making a plan based on market conditions.

    But surely with a name like Machiavelli, you already know all this.

    On Dec 13 10:26 PM Machiavelli999 wrote:

    > How much more losses will the bears here at SA have to take before
    > they finally just give up??
    Dec 13, 2009. 10:50 PM | 2 Likes Like |Link to Comment
  • Meanwhile, on This Week, Larry Summers predicted a return to job growth by this coming spring. Ahead of Obama's meeting tomorrow with bankers, Summers said "it doesn't cost anything to encourage banks, as the president will be doing, to meet their responsibilities and expand the flow of credit to small business," which he believes will spur job creation.  [View news story]
    Heck for the right "stimulus" I'll claim I'm hiring again! Oh wait, that probably only works for the big companies. Still, I'm eager to serve if called upon.

    On Dec 13 08:03 PM fed_alchemy wrote:

    > I'm afraid your correct ,MSM ,hedge funds ,large financial houses
    > ,Government , and squid types will be selling a phony economy really
    > hard. Like in your face hard because they know the real truth and
    > it aint pretty. So load up on the little blue pills and stay hydrated
    > up to the next election will be orgasmic.
    Dec 13, 2009. 08:22 PM | 2 Likes Like |Link to Comment
  • 'Dr. Doom' Bearish on Gold [View article]
    That's because, as an economist, he doesn't think it "should" do well in deflationary environments. As a store of value, deflation is bad for gold. But as a hedge to all the financial anxiety of a deflationary world, gold can sometimes go up.

    On Dec 13 12:22 PM ebworthen wrote:

    > Roubini forgets that gold does well in deflation as well as inflation.
    Dec 13, 2009. 05:25 PM | Likes Like |Link to Comment
  • Big banks and other lenders are facing opposition on the rates they charge from a newly unifying front: various faith-based organizations, coming together under the idea "10% is enough" to call for the return of anti-usury laws, saying that the system is off-kilter if banks profit by destroying borrowers.  [View news story]
    That's just the point though, this attempt at "maximizing" their revenues will surely only push more toward default, leaving them with less than if they charged something more reasonable. And if more defaults do occur, what's the strategy then? Even higher interest rates and more fees?
    As Davidbdc points out, these are not just increases for "distressed borrowers" I am one among many people who have seen cards increased to 20-24%. But I am lucky enough that I simply will not use these cards. If I was going through a challenging time (like I don't know an illness, as I am one of many small business owners without health insurance) than I would have more trouble.

    Ultimately its not about the rate, it's about the idiocy of biting the hands that feed them (and oh yeah that bail them out when they are in trouble)...

    This will not end well for the credit card companies and I know of no one who will care.

    On Dec 11 10:32 PM DrBenway wrote:

    > As a taxpayer, I hope the banks try to maximize their revenues while
    > they can. The wave of commercial loan defaults is coming up and they
    > will need all money they can get now to get through it.
    Dec 13, 2009. 03:56 AM | Likes Like |Link to Comment
  • The Google Phone, Unlocked (Confirmed and More Details) [View article]
    Super high resolution OLED? Are you sure this is not just a rumor? I thought that these screens were not yet in huge supply and were rather expensive. Either Google isn't planning on selling a lot of these or the cost is going to be very high (or maybe both). I could be wrong, but I'll put it in the "believe it when I see it" category.
    Dec 13, 2009. 12:17 AM | 2 Likes Like |Link to Comment
  • Baltimore City property taxes [View instapost]
    It shouldn't surprise me to hear this but it does. Who are these people who think that the answer to everything is to raise taxes? In the video game "Roller Coaster Tycoon" you can set the price of your rides and snacks. This is a great game for children and young adults to learn that when you aren't selling enough tickets to cover the operating cost of the ride, you need to LOWER the cost of the tickets. You can try to meet expenses by raising the cost, but of course you sell even fewer tickets and so run a larger deficit. Have people in city government never killed an hour or two with a game like this? You'd think they'd at least have played Sim City once or twice.

    What gets me is that there are many real problems with complex possible solutions and multiple angles of attack, each with their own unintended consequences. But this is not one of them. Raising taxes in a blighted area will not magically improve revenue. If we can't get the simple stuff down, we have no chance with the hard stuff.
    Dec 12, 2009. 03:03 PM | Likes Like |Link to Comment
  • Debunking a federal pension myth: it's not a self sustaining program funded only by members [View instapost]
    What do you suppose will happen if the day comes when these pensions can not be funded? I'm sorry not "funded" but rather paid for by the current tax revenues which are funneled into them. If there comes a time when deficit spending is curtailed -- for whatever reason like impending collapse of the dollar -- it seems that these pensions may get cut, just like they have been at many private companies who find they don't have the money they thought they did. Millions of retired postal workers and HHS and IRS and Homeland Security workers will not have the retirement they were promised -- that they "entitled" to or at the very least were expecting. One could argue it is naive to believe something will be there just because the government says it will, but still, I think this group of career bureaucrats will have something to say if this happens. Ever piss off a postal worker? Now try pissing off a few hundred thousand at one time and see what happens. It could get interesting.
    Dec 12, 2009. 02:49 PM | 4 Likes Like |Link to Comment
  • Alternative Analysts on the Apple Tablet [View article]
    Selling 4 million with a 30% margin on a $1000 device, that's $1.2 billion net rev in the first year. A 20% margin on an $800 device would yield $640 million. So while not a huge portion of the pie, if this product is a hit as many think it will be, it could easily justify a $20-30 boost in share price (from revenue not hype). Now if it does not turn into an instant hit or if there is a problem with the device, the downside could easily be greater than that. I'm still excited to see what the heck this thing will be though (and what it will be called).
    Dec 12, 2009. 02:56 AM | 4 Likes Like |Link to Comment
  • How Buying a Home Is Gambling [View article]
    Felix, you switch from the phrase "non-trivial probability [of foreclosure]" to the phrase "good chance you'll end up financially devastated." These are not the same thing. The first phrase is defensible, but the second phrase is hyperbolic.

    There is a non-trivial chance that ANY investment can crash. But that doesn't mean there is a good chance that it will go to zero.

    You also say there is no way to exit if your investment goes south...
    Buying a home with a down payment DOES give you an option if the market sours. You can sell while the sale price still covers what you owe. Heck for that matter you may have the option of continuing mortgage payments even on an upside down loan (and in some cases that would be the smart thing to do).

    Buying a home is not something that should be entered into lightly, of course. And 100% financing is silly and very risky. But if you find a home with manageable mortgage payments that you can put something down on, that is not likely to be as risky (historically speaking) as, say starting a business. (The upside isn't as good either though.)
    Dec 12, 2009. 01:46 AM | 4 Likes Like |Link to Comment
  • Swine Flu News Concentrator (December 4 - December 11) [View instapost]
    Taking your comment at face value I would just suggest that the problem lies in the way this peer review feedback is set up and not in the activity of these "buddies." The voting is a response to arbitrary negative input from multiple, likely bogus sources. To what end is unclear, but I think the idea that top commenters are getting benefits now and they have a naturally better platform to promote their points of view or their businesses or ventures has some credence. Then there is the idea that some people just like a confined arena where they can come out "on top" even if that means cheating a little along the way.

    Perhaps you could think of a more effective peer review process that would be less subject to gaming? I can't. And it doesn't matter a great deal to me. If thumbs up are meaningless, then arbitrarily promoting other members of the group is harmless. On the other hand, if thumbs up have some importance, then protecting one another from arbitrary retribution is perfectly legit.

    On Dec 11 07:59 AM Bill Engle wrote:

    > I read your comment, and didn't like it, or the fact that your buddies
    > are voting themselves up multiple times on these chat strings. So
    > you have a new voter. Previously I have never voted a thumbs down
    > on your comments, so take note.
    Dec 11, 2009. 11:48 AM | 10 Likes Like |Link to Comment
  • Swine Flu News Concentrator (December 4 - December 11) [View instapost]
    You all realize what is happening here, right? We have thumbs inflation. A thumb (up or down) used to count for something. Now it takes 5 or ten to get anywhere. Pretty soon a wheelbarrow full of thumbs is going to be required just to buy one stock tip. Either we need a new currency (maybe a foot) or maybe we can establish some sort of credit system whereby we can borrow thumbs against our future thumb earnings. Just a thought. What could go wrong?

    On Dec 10 03:00 PM User 283977 wrote:

    > I see the same pattern robert. Maya went down 228 votes last night.
    > During that same time period another person went up by 304 - in one
    > night with no new comments during that time period, a person with
    > less than 35 followers.
    > Sounds like the same force at work there. I belive the reason the
    > top 10 are now getting the most action is because they are ahead
    > of this person. Back a few days ago, the people in the top 20 were
    > getting the most action.
    > I think the person has multiple accounts, and some of those multiple
    > accounts are following the "targets".
    Dec 11, 2009. 11:41 AM | 10 Likes Like |Link to Comment
  • Swine Flu News Concentrator (December 4 - December 11) [View instapost]
    It can't be cookies or clearing your cookies would allow you to vote again, right? (It doesn't , I tested). So it is on the server. And you're right, it would be easy to profile.

    On Dec 10 03:19 PM H. T. Love wrote:

    > SA can identify the troll if it wants too. Mechanism? Well, if your
    > (normally) try to vote a second time, it "knows" you already voted.
    > How? Only two ways. Either they track it on a server or they track
    > it with cookies.
    > On the server they can run various sorts and accumulations and identify
    > potential culprits for a closer look.
    > If it's cookies, the web interface (probably java or php code) can
    > pull down the cookies and then analyze as above.
    > But they need to be aware and actually have an interest.
    > E-mails to SA time? Why should a few selfish individuals/companies
    > be allowed to spoil the "peer review" process that SA has tried to
    > provide? The fact that it is flawed in implementation, in my opinion
    > (allows you to vote for yourself), is irrelevant. What we all use
    > and try to use effectively should not be corrupted by what has been
    > described.
    > HardToLove
    Dec 11, 2009. 11:32 AM | 7 Likes Like |Link to Comment
  • Housing Can Indeed Be a Good Investment [View article]
    That's a good point. There may be "mobility" in not being tied to a house, but you gain a lot of control over your situation when you buy. And speaking from personal experience, some of the things that would be "intolerable" while renting (e.g. leaky faucet) become not necessarily as urgent when you are the one on the hook for the repairs. But if the problem is something you want corrected, you can do it. And if there is something you want changed, you can do that too. Control over our living space is a big influence on happiness (it's one reason prisons are not so fun), so there are definitely emotional reasons that figure into the calculus of rent vs. own.

    On Dec 10 03:12 PM Alaska wrote:

    > The best reason to buy a house is because landlord aggravation is
    > so frustration
    Dec 11, 2009. 02:24 AM | 4 Likes Like |Link to Comment
  • Housing Can Indeed Be a Good Investment [View article]
    Author "...and Felix is doing a good deed to disabuse people of the notion that housing is a riskless investment goldmine, and that any price rise is a sign of their investing skills."

    I used to enjoy those house flipping shows a couple years ago where these newbies would buy an overpriced house, do everything wrong, and then sell the house for a 20% profit. They always ended the show with an enthusiastic assessment of all they had "learned" about flipping and how they were proud of their success. I wonder why I can't find those shows on TV anymore?
    Dec 11, 2009. 02:18 AM | 2 Likes Like |Link to Comment
  • Gold Bugs Are Warned, Again [View article]
    I'm with those who wonder why this is an embarrassment. They are two different types of investments. Just like oil vs, an oil company. Sure there is a general correlation between the commodity and the producer of that commodity, but they don't need to move in lock step. And many MANY gold bugs are buying physical metal for the long haul. PM traders can mess with ETF's and options and mining stocks, but a real gold bug wants to have the metal close by, even under their pillow maybe -- and no that's not a dig. If you want gold because it is stable money, why would you trade paper or options on paper?

    Dec 11, 2009. 01:59 AM | 5 Likes Like |Link to Comment