Josh Stern's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/45760/comments http://seekingalpha.com/article/162702-hedge-fund-strategies-global-macro-vs-market-neutral?source=feed#comment-690185 690185 Thu, 24 Sep 2009 20:51:24 -0400 http://seekingalpha.com/article/134750-week-in-review-part-i-global-economics-international-and-u-s-equity-markets-overview?source=feed#comment-486790 486790 ]]> Sat, 02 May 2009 16:01:03 -0400 ]]> http://seekingalpha.com/article/131851-bond-expert-monday-wrap-the-market-has-an-epiphany?source=feed#comment-470485 470485 ]]> Mon, 20 Apr 2009 20:33:21 -0400 ]]> http://seekingalpha.com/news/market_currents/post/21573?source=feed#comment-459088 459088
Most sensible people should understand that economic systems need to find a balance between fairness and efficiency, that govt. spending should try to be restricted to the areas where the govt. will be more efficient than the private sector, and to restrict government regulation to areas that are either too dangerous to leave unregulated or where communities of self-interested actors are likely to damage the systemic good with their selfish actions - e.g. "Tragedy of the commons" applies to lots of things ranging from environmental pollution to financial fraud. Vigorous public debate should focus on delineating the boundaries of where govt. is needed, while avoiding semi-religious positions like "all socialism is bad" and "govt. spending is always less efficient".






On Apr 10 12:40 PM Fueled By Randomness wrote:

> As Vitaly Katsenelson said, "Communism failed for a reason: Government
> is a horrible capital allocator." When politicians make decisions
> on capital allocation, they will do so based on political reasons,
> not economic ones. This guarantees that capital will be allocated
> inefficiently. The more the political system is involved in the
> economy, the more inefficient it becomes. Whatever system Hobsbawm
> thinks will come next, you can pretty much predict how well it will
> work using this simple rule.]]> Fri, 10 Apr 2009 13:19:40 -0400
Most sensible people should understand that economic systems need to find a balance between fairness and efficiency, that govt. spending should try to be restricted to the areas where the govt. will be more efficient than the private sector, and to restrict government regulation to areas that are either too dangerous to leave unregulated or where communities of self-interested actors are likely to damage the systemic good with their selfish actions - e.g. "Tragedy of the commons" applies to lots of things ranging from environmental pollution to financial fraud. Vigorous public debate should focus on delineating the boundaries of where govt. is needed, while avoiding semi-religious positions like "all socialism is bad" and "govt. spending is always less efficient".






On Apr 10 12:40 PM Fueled By Randomness wrote:

> As Vitaly Katsenelson said, "Communism failed for a reason: Government
> is a horrible capital allocator." When politicians make decisions
> on capital allocation, they will do so based on political reasons,
> not economic ones. This guarantees that capital will be allocated
> inefficiently. The more the political system is involved in the
> economy, the more inefficient it becomes. Whatever system Hobsbawm
> thinks will come next, you can pretty much predict how well it will
> work using this simple rule.]]> http://seekingalpha.com/news/market_currents/post/19828?source=feed#comment-426644 426644 ]]> Sun, 15 Mar 2009 13:48:54 -0400 ]]> http://seekingalpha.com/article/125914-mark-to-market-the-bogeyman-of-the-1930s-is-back?source=feed#comment-425643 425643
Of course the banks were stupid and their problems were not caused by MTM. But the question is about whether MTM is wise for banks given the possibility that it is causing the banking industry to take down the entire economy with it. Even if the crisis ends, it may be that MTM is not compatible with traditional bank leverage levels of 10-12X and if we want MTM we can only have banks with leverage of 2X, and therefore much higher borrowing costs. That's probably not the right decision for the economy of the future.

]]> Sat, 14 Mar 2009 11:59:16 -0400
Of course the banks were stupid and their problems were not caused by MTM. But the question is about whether MTM is wise for banks given the possibility that it is causing the banking industry to take down the entire economy with it. Even if the crisis ends, it may be that MTM is not compatible with traditional bank leverage levels of 10-12X and if we want MTM we can only have banks with leverage of 2X, and therefore much higher borrowing costs. That's probably not the right decision for the economy of the future.

]]> http://seekingalpha.com/article/120728-is-barron-s-right-have-we-entered-a-golden-age-of-activist-investing?source=feed#comment-390533 390533
]]> Mon, 16 Feb 2009 11:57:33 -0500
]]> http://seekingalpha.com/article/120716-will-lack-of-accord-on-stimulus-obscure-economic-lessons?source=feed#comment-390522 390522
The two party system is the structural result of winner-take-all elections without provision for representation proportional to votes (as in the parliamentary system). So long as we keep that system in the U.S., our governance will be handicapped by limiting debate and political action to a choice between two opposed parties that strive primarily to best the other rather than to create the best policies.
]]> Mon, 16 Feb 2009 11:52:25 -0500
The two party system is the structural result of winner-take-all elections without provision for representation proportional to votes (as in the parliamentary system). So long as we keep that system in the U.S., our governance will be handicapped by limiting debate and political action to a choice between two opposed parties that strive primarily to best the other rather than to create the best policies.
]]> http://seekingalpha.com/article/120016-in-praise-of-suze-orman?source=feed#comment-384498 384498
Follow up point: anyone who is a sophisticate in these topics understands how much more financially effective it is for having a lifetime effect to teach financial competetence to 15-20 year olds rather than 40-60 year olds.
]]> Wed, 11 Feb 2009 15:54:11 -0500
Follow up point: anyone who is a sophisticate in these topics understands how much more financially effective it is for having a lifetime effect to teach financial competetence to 15-20 year olds rather than 40-60 year olds.
]]> http://seekingalpha.com/article/120016-in-praise-of-suze-orman?source=feed#comment-384493 384493 Wed, 11 Feb 2009 15:52:30 -0500 http://seekingalpha.com/article/114915-11-reasons-why-it-s-time-to-invest-in-china-and-5-ways-to-play-it?source=feed#comment-356727 356727 Thu, 15 Jan 2009 12:45:41 -0500 http://seekingalpha.com/article/110846-the-madoff-affair-greed-s-victory-over-common-sense?source=feed#comment-332348 332348
In the case of every fraud there are all sorts of things to be said with 20-20 hindsight, but I guarantee that no simple prescription for fraud avoidance is going to get the job done, and most will just hurt overall returns of a well diversified portfolio.



On Dec 16 07:04 PM trumanburbank wrote:

> Due diligence, and not even very concerted due diligence, apparenly
> kept many investors away from this toxic fund manager's clutches,
> so explain to us again why due diligence isn't the answer. The Mass
> Mutual-related hedge fund that was simply a feeder fund for Madoff
> just forwarded their entire $3.5 bil under managment to Madoff, charging
> their unsuspecting investors a 1% annual fee. I think that for $35
> mil in annual fee income they could've scraped off a few dollars
> to look over Madoff's audits, which were apparently done by an unheard-of
> firm with one CPA and a calculator. Those who took the time to examine
> the Madoff trading strategy found that it's virtually impossible
> for it to have generated the reported consistent returns. To perform
> this due diligence one only needed access to google -- you could
> do it on your cell phone in a half hour. Yes, fraud will always be
> an element of the business world, but there is an entire mini-industry
> within the world of finance that is designed to evauate risk, "internal
> controls" and operational integrity (and even a freshly-minted junior
> auditor would immediatly have recognized the near-total absence of
> proper internal controls at Madoff). The private side of this mini
> risk-management industry works (or should work) hand-in-glove with
> their public sector counterparts in the SEC and related agencies.
> These mechanisms will never prevent fraud, but if properly funded
> and used as designed they will catch fraud quickly and consistently,
> with an almost mathematical certainty. Just ask your CPA.
>
> (Disclosure: I'm not in the risk-management business, nor am I a
> CPA, but I do understand the fundamentals of internal controls, fraud
> prevention and forensic accounting.)
>
> It ain't rocket science, but fiduciaries, managers of OPM (Other
> People's Money) and those who handle the public purse are responsible
> for understanding these tools well enough to know how and when to
> employ them.)]]> Wed, 17 Dec 2008 14:58:27 -0500
In the case of every fraud there are all sorts of things to be said with 20-20 hindsight, but I guarantee that no simple prescription for fraud avoidance is going to get the job done, and most will just hurt overall returns of a well diversified portfolio.



On Dec 16 07:04 PM trumanburbank wrote:

> Due diligence, and not even very concerted due diligence, apparenly
> kept many investors away from this toxic fund manager's clutches,
> so explain to us again why due diligence isn't the answer. The Mass
> Mutual-related hedge fund that was simply a feeder fund for Madoff
> just forwarded their entire $3.5 bil under managment to Madoff, charging
> their unsuspecting investors a 1% annual fee. I think that for $35
> mil in annual fee income they could've scraped off a few dollars
> to look over Madoff's audits, which were apparently done by an unheard-of
> firm with one CPA and a calculator. Those who took the time to examine
> the Madoff trading strategy found that it's virtually impossible
> for it to have generated the reported consistent returns. To perform
> this due diligence one only needed access to google -- you could
> do it on your cell phone in a half hour. Yes, fraud will always be
> an element of the business world, but there is an entire mini-industry
> within the world of finance that is designed to evauate risk, "internal
> controls" and operational integrity (and even a freshly-minted junior
> auditor would immediatly have recognized the near-total absence of
> proper internal controls at Madoff). The private side of this mini
> risk-management industry works (or should work) hand-in-glove with
> their public sector counterparts in the SEC and related agencies.
> These mechanisms will never prevent fraud, but if properly funded
> and used as designed they will catch fraud quickly and consistently,
> with an almost mathematical certainty. Just ask your CPA.
>
> (Disclosure: I'm not in the risk-management business, nor am I a
> CPA, but I do understand the fundamentals of internal controls, fraud
> prevention and forensic accounting.)
>
> It ain't rocket science, but fiduciaries, managers of OPM (Other
> People's Money) and those who handle the public purse are responsible
> for understanding these tools well enough to know how and when to
> employ them.)]]> http://seekingalpha.com/article/110846-the-madoff-affair-greed-s-victory-over-common-sense?source=feed#comment-331217 331217 ]]> Tue, 16 Dec 2008 13:55:20 -0500 ]]> http://seekingalpha.com/news/market_currents/post/13233?source=feed#comment-329340 329340 ]]> Sun, 14 Dec 2008 17:14:24 -0500 ]]> http://seekingalpha.com/article/107291-an-unexpected-bright-spot-for-tv-advertisers-in-china?source=feed#comment-311925 311925
]]> Fri, 21 Nov 2008 13:56:33 -0500
]]> http://seekingalpha.com/article/107309-when-stocks-go-to-zero?source=feed#comment-311822 311822 EV) to free cash flow, typically finding companies with EV that is much lower than their market cap due to lots of cash on the balance sheet and little or no debt. And I can tell you from experience that holding such stocks has been an exercise in pure pain over the past few months. From a rational POV, all the stuff mentioned in this article is important and may matter in the future, but so far it hasn't mattered one iota in the Panic/Crash of 2008. There are lots of small companies selling for less than cash, and they just keep going down too.
]]> Fri, 21 Nov 2008 12:09:06 -0500 EV) to free cash flow, typically finding companies with EV that is much lower than their market cap due to lots of cash on the balance sheet and little or no debt. And I can tell you from experience that holding such stocks has been an exercise in pure pain over the past few months. From a rational POV, all the stuff mentioned in this article is important and may matter in the future, but so far it hasn't mattered one iota in the Panic/Crash of 2008. There are lots of small companies selling for less than cash, and they just keep going down too.
]]> http://seekingalpha.com/article/106335-why-i-m-worried-about-china?source=feed#comment-307801 307801
In earnings reported over the last two months, results from domestic focused Chinese companies are holding up a lot better than the overall market while the stocks are doing a lot worse than the overall market - a good percentage are posting huge year on year gains while the stocks are down 50-90% and trading at outrageouly low valuation levels relative to trailing earnings/sales/cash flow/liquid assets. At the same time, many domestic facing Chinese companies reported blowout earnings, though many also cautioned about a sudden demand drop in October that clouded near term forecasts. From everything I've read, the lack of bank lines of credit for importers continues to be a huge problem for international trade and hurts Chinese exporters and manufacturers. At the same time, this factor is presumably temporary and causes indices like the Baltic Dry to severely underestimate even current low cyclical end demand for dry bulk shipping.

Taking all of the above together, I see the category of being a domestic facing Chinese company as currently a big investment plus when looked at purely from a macro POV. Bears counter that they think fraud is much more widespread. I don't see fraud as being plausibly common enough to come anywhere close to making up the huge discount in valuations these companies are getting now. I'd suggest instead that they deserve some discount because the immature investment culture tends to result in mgmt. that sees investors as more of a source of potential/past funding and less like actual owners of the company. As a result, I don't see valuations getting to par until dividend paying, share buybacks, and corporate buyouts become much more common than they are at present. But valuations are so compressed that Chinese companies still represent excellent opportunity for investors with longer time horizons.

]]> Mon, 17 Nov 2008 09:36:22 -0500
In earnings reported over the last two months, results from domestic focused Chinese companies are holding up a lot better than the overall market while the stocks are doing a lot worse than the overall market - a good percentage are posting huge year on year gains while the stocks are down 50-90% and trading at outrageouly low valuation levels relative to trailing earnings/sales/cash flow/liquid assets. At the same time, many domestic facing Chinese companies reported blowout earnings, though many also cautioned about a sudden demand drop in October that clouded near term forecasts. From everything I've read, the lack of bank lines of credit for importers continues to be a huge problem for international trade and hurts Chinese exporters and manufacturers. At the same time, this factor is presumably temporary and causes indices like the Baltic Dry to severely underestimate even current low cyclical end demand for dry bulk shipping.

Taking all of the above together, I see the category of being a domestic facing Chinese company as currently a big investment plus when looked at purely from a macro POV. Bears counter that they think fraud is much more widespread. I don't see fraud as being plausibly common enough to come anywhere close to making up the huge discount in valuations these companies are getting now. I'd suggest instead that they deserve some discount because the immature investment culture tends to result in mgmt. that sees investors as more of a source of potential/past funding and less like actual owners of the company. As a result, I don't see valuations getting to par until dividend paying, share buybacks, and corporate buyouts become much more common than they are at present. But valuations are so compressed that Chinese companies still represent excellent opportunity for investors with longer time horizons.

]]> http://seekingalpha.com/article/105386-comparing-valuations-in-china-and-the-u-s?source=feed#comment-303337 303337
]]> Tue, 11 Nov 2008 16:38:39 -0500
]]> http://seekingalpha.com/article/101185-why-stock-market-volatility-is-perfectly-natural?source=feed#comment-288362 288362
]]> Thu, 23 Oct 2008 00:21:15 -0400
]]> http://seekingalpha.com/article/96491-oppose-the-treasury-s-bailout-plan?source=feed#comment-260796 260796 ]]> Sun, 21 Sep 2008 14:48:06 -0400 ]]> http://seekingalpha.com/article/92326-fund-manager-peter-siris-spots-gold-in-china?source=feed#comment-251380 251380
"As to the peculiarity of the Chinese pharmaceutical environment, defaults in payments to pharmaceutical companies by state owned hospitals are a normal phenomenon. Over 90% of our drugs are sold to state owned hospitals, the greater our business with the hospital, the more payments are defaulted, although in actual fact, all the defaulted payments are eventually paid, it is only a matter of time."

]]> Thu, 11 Sep 2008 08:53:28 -0400
"As to the peculiarity of the Chinese pharmaceutical environment, defaults in payments to pharmaceutical companies by state owned hospitals are a normal phenomenon. Over 90% of our drugs are sold to state owned hospitals, the greater our business with the hospital, the more payments are defaulted, although in actual fact, all the defaulted payments are eventually paid, it is only a matter of time."

]]> http://seekingalpha.com/article/94307-a-closer-look-at-the-treasury-s-gse-preferred-stock-purchase-plan?source=feed#comment-247777 247777
What you point to I believe is a risk of doing this, that T-bond yields will rise and the U.S. currency will decline

]]> Sun, 07 Sep 2008 18:46:01 -0400
What you point to I believe is a risk of doing this, that T-bond yields will rise and the U.S. currency will decline

]]> http://seekingalpha.com/article/94307-a-closer-look-at-the-treasury-s-gse-preferred-stock-purchase-plan?source=feed#comment-247715 247715

]]> Sun, 07 Sep 2008 16:38:00 -0400

]]> http://seekingalpha.com/article/94307-a-closer-look-at-the-treasury-s-gse-preferred-stock-purchase-plan?source=feed#comment-247704 247704
I'm a little surprised by Patsy's suggestion above that U.S. banks hold a lot of preferred stock relative to the size of their GSE debt holdings, and I'd like some pointers to research on this topic.

Beyond that, I'll offer that it always seemed obvious to me that the govt's implicit guarantee for the GSE's would apply to the debt and the shares. I'd have a hard time imaging it otherwise no matter who were the holders of each type. But if it was actually true that banks currently hold a lot of preferred relative to their debt offerings that would be worrisome.


]]> Sun, 07 Sep 2008 16:16:04 -0400
I'm a little surprised by Patsy's suggestion above that U.S. banks hold a lot of preferred stock relative to the size of their GSE debt holdings, and I'd like some pointers to research on this topic.

Beyond that, I'll offer that it always seemed obvious to me that the govt's implicit guarantee for the GSE's would apply to the debt and the shares. I'd have a hard time imaging it otherwise no matter who were the holders of each type. But if it was actually true that banks currently hold a lot of preferred relative to their debt offerings that would be worrisome.


]]> http://seekingalpha.com/article/92371-obama-is-bad-for-the-economy-barron-s?source=feed#comment-238099 238099 s.wsj.net/public/resou...

]]> Sun, 24 Aug 2008 23:40:06 -0400 s.wsj.net/public/resou...

]]> http://seekingalpha.com/article/89989-why-every-investor-needs-to-have-a-china-investment-strategy?source=feed#comment-226951 226951
CAGC CHCG CNOA CPHI CYXI FUQI GFRE LTUS QXM SORL SUTR XIN XING

In the case of these companies, the question of when China will slow and by how much is somewhat moot since they are already selling at distressed prices.

]]> Sat, 09 Aug 2008 23:32:18 -0400
CAGC CHCG CNOA CPHI CYXI FUQI GFRE LTUS QXM SORL SUTR XIN XING

In the case of these companies, the question of when China will slow and by how much is somewhat moot since they are already selling at distressed prices.

]]> http://seekingalpha.com/article/84924-bond-expert-monday-wrap?source=feed#comment-205643 205643 ]]> Mon, 14 Jul 2008 23:08:46 -0400 ]]> http://seekingalpha.com/article/82788-is-the-equities-party-over?source=feed#comment-193247 193247 Congratulations. It really takes some big balls to make a predictions based on a trendline where you show the data that was used to fit the trend and the reader can clearly see from your graph that the fitted slope is much lower than it would be without data from 1800-1850.

]]> Thu, 26 Jun 2008 10:18:44 -0400 Congratulations. It really takes some big balls to make a predictions based on a trendline where you show the data that was used to fit the trend and the reader can clearly see from your graph that the fitted slope is much lower than it would be without data from 1800-1850.

]]> http://seekingalpha.com/article/74098-why-the-e-trade-shorts-have-it-wrong?source=feed#comment-157216 157216 ]]> Sat, 26 Apr 2008 16:22:18 -0400 ]]> http://seekingalpha.com/article/71794-morgan-stanley-what-s-behind-mexico-s-extraordinary-resilience?source=feed#comment-155995 155995 ]]> Thu, 24 Apr 2008 13:11:11 -0400 ]]>