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Jonny Tellyarn

Jonny Tellyarn
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  • Turning Neutral From Bullish On Bonds [View instapost]
    If yields on the 10 year start to rise, it will be most interesting to see what explanation we hear attached to it. I'll bet the story we hear will be that the bond market is anticipating more growth and inflation. And I bet that will be wrong.
    May 31 02:58 PM | Likes Like |Link to Comment
  • Torstar's Ongoing Value Trap [View article]
    Watsa's entire stock portfolio is hedged against the Russell 2000, so the only issue to consider is how this investment behaves in relation to that index.
    Mar 31 05:07 PM | Likes Like |Link to Comment
  • Oxfam Report Suggests The NWO Is Almost Upon Us [View article]
    Gee, sorry. You asked why people weren't commenting and I took that as a request for a reply. Since I have been a faithful reader of all of your articles before those two and have always looked forward to the next one, it seemed appropriate to me to tell you why you lost one of your readers. Maybe my reason is a rotten one, I'll admit that, but it IS my reason, and you asked me for it, so I gave it to you. I wasn't trying to make any kind of case against the article, just telling you why you lost my attention.
    Jan 30 10:40 PM | Likes Like |Link to Comment
  • Oxfam Report Suggests The NWO Is Almost Upon Us [View article]
    "...85 extremely wealthy individuals have about as much wealth as the poorest 3,500,000,000 do. This shocking statistic..."

    No, that is not a shocking statistic. Most people do not own assets. The only thing that should surprise here is that the net worth of the poorest half is not a negative number.

    As for the two articles you wrote, I stopped reading when it appeared that you were suggesting that Congress simply create the money it wants to spend. I have no interest in living in such a country.
    Jan 30 12:31 PM | Likes Like |Link to Comment
  • Why We Are Not OK And Not On A Sustainable Trajectory [View article]
    In a serious deflation, wealthy people would discover themselves not to be nearly as wealthy as they had previously thought. Much outstanding debt would default, especially low quality debt, and stocks would collapse. Yes, the very few who stayed out of the fray with cash would be able to scoop up assets. But precious few people actually do this. The vast majority feel compelled to participate in the "prosperity". The middle class, too, would be hurt through their pensions.

    But as to your question, preferable over what? Look at Greece and Spain right at this moment and you will see what a refusal to accept deflation can do for the common man. Unemployment around 50%. Europe, especially its banks, is swimming in debts that look to be bad. To accept any default of such debts would be deflationary, but the cost of keeping up the facade is the turmoil you see in the streets. Coming to Italy soon too, perhaps France as well.

    Nobody will enjoy a deflation, but those with nothing to lose will lose less. I think the young would actually benefit. Our current anti-deflationary policy of supporting asset prices is a direct obstacle to them. How does it benefit the young to support house prices? How does it benefit them to give them loans for education that burden them with debt and inflate the cost of that education? How does it benefit them to give them an over-priced stock market to invest in for their future. As assets collapse in price, the loss of the current owner becomes the gain of the future owner. Thus the loss of the currently wealthy creates opportunity for the young.
    Jan 16 10:03 PM | Likes Like |Link to Comment
  • Why We Are Not OK And Not On A Sustainable Trajectory [View article]
    I agree with your thesis, Joseph, that the taxpayer is held responsible for a deficit in order that the corporate sector be assigned a surplus. It seems very unfair. I wonder what comes next. The ruling class will stop at nothing to fight deflation. I am afraid we might be heading toward compulsory GDP production like China has. Maybe we are already there?
    I am sorry that you have to put up with some of the rude people who visit Seeking Alpha. Thanks for your persistence and your insights.
    Jan 16 05:23 PM | Likes Like |Link to Comment
  • Why We Are Not OK And Not On A Sustainable Trajectory [View article]
    JS, if the point you want to make is that corporate taxes are only a tiny fraction of personal taxes, it would suffice to state those two numbers 1.4 trillion and 0.08 trillion. I find that comparison amazing. I had no idea corporate taxes were so much smaller. I don't think any graph at all is required to show that amazing comparison. If you put that graph on a semi-log scale, you would be able to see how corporate taxes have changed over time. On the arithmetic scale, that lower curve is so close to the x-axis that one cannot learn anything from it. Putting the graphs on semi-log would not fool a reader into thinking that corporate taxes were 50% of individual taxes, provided the reader looks at the scale on the y-axis. If you were worried that a reader might be fooled nonetheless, you could state in the text what the value of that ratio now is.
    Jan 16 12:05 PM | Likes Like |Link to Comment
  • Why We Are Not OK And Not On A Sustainable Trajectory [View article]
    I'm so sorry you don't really like me, YG. It makes me sad to hear that news. I saw that "like" and my heart lit up. It really made my day. But it is best for both of us that the truth be out. Thanks for your honesty. I hope that both of us can recover from this misunderstanding.

    I think you are wrong when you say the Fed does not care about the value of its assets. How could they not? They are a bank. A contraction in the value of their assets would undermine the currency that is backed by those assets. The bank would lose credibility, which is its most important asset. I am sure if you look at the minutes of their meetings you will see that that is one of their concerns.

    What you will find harder to accept, I am sure, is my belief that you are also wrong in your belief that the Fed can drive long term rates lower by buying long bonds. Surely they can do that over short periods of time, but over longer intervals I see no reason the practice should work. It is very anti-intuitive, but Fed bond purchases, by creating the appearance of being inflationary, also have the tendency to lower the value of the bonds they are buying. If you or I had a hundred billion dollars and used it to buy long term treasuries, we would surely drive their price up. But for the Fed, it is different, just an asset swap with one form of money being replaced with another, like swapping a checking account for a savings account.
    Jan 15 04:01 PM | 1 Like Like |Link to Comment
  • Why We Are Not OK And Not On A Sustainable Trajectory [View article]
    One more remark about graphing earnings yield. A log scale is only useful when you want equal percentage changes to appear equal on the graph. For example, on the graph of a stock price, you want the change from 1¢ to 2¢ to appear the same as the change from $8 to $16 because they really are the same. The difference is only one of scale. However, a change in earnings yield from 0.1% to 0.2% is not at all the same as a change from 8% to 16%. The second one is far more spectacular.
    Jan 15 01:42 PM | 1 Like Like |Link to Comment
  • Why We Are Not OK And Not On A Sustainable Trajectory [View article]
    Because of the discussion here about log graphs, in particular the comments of YG, I have a few comments. I will point out one graph where a log scale would have made things worse, and one where a log scale would have made things much clearer. For most of the other graphs, it would not make much difference to JS's arguments.

    In reference to JS's plot#4, earnings yield on the S&P from 1880-present, plotting earnings yield on a semi-log graph would be a bad idea. Especially as earnings shrink towards zero, this would give a meaningless unstable chart. If earnings went negative, you would be impossibly trying to take the log of a negative number. What JS's plot shows is the ratio E/P of E=(earnings per share) to P=(price per share). E/P does not do anything weird as E approaches zero or E becomes negative (unless P also approaches zero, which is a catastrophe!).
    Plot#4 is fine the way it is, but if you want to use logs to graph E/P, you nonetheless CAN do so provided you do it right. Since E/P = (E+P)/P - 1, the graph of E/P is identical to the graph of (E+P)/P, but shifted in the y-direction by 1. The quantity (E+P)/P is a more stable and more meaningful assessment of earnings than E/P because the earnings' true significance is the percentage by which the earnings change the value of the company. If you want, you can now take the log((E+P)/P) and you will get an even better graph than Plot#4. But don't get too excited about it, because for small values of x, the natural log of 1+x is approximately equal to x. Thus your eye will not be able to distinguish the graph of the log((E+P)/P) from the graph of E/P !

    A graph that really needs to be put on a semi-log scale is the one comparing personal to corporate tax receipts from 1920-present. It really is impossible for the eye to discern from this graph whether or not the ratio of those two quantities has changed over the years by a lot, a little, or not at all. Semi-log would have made it possible to tell. The graph, as is, gives no useful information.
    Jan 15 01:10 PM | Likes Like |Link to Comment
  • Why We Are Not OK And Not On A Sustainable Trajectory [View article]
    No, but I can imitate the big banks plus Fed by positioning myself in a similar way - holding cash and safe government securities. The Fed doesn't want the value of its assets to fall. Neither do the banks. If the banks would rather collect 0.25% than lend to business, that tells me that I shouldn't lend to business (or invest in them) either. How could I expect to do better than them? By positioning myself like them, I have them on my side. That should be the true meaning of "don't fight the Fed".
    Jan 13 09:46 AM | 2 Likes Like |Link to Comment
  • Why We Are Not OK And Not On A Sustainable Trajectory [View article]
    If the Fed is manipulating markets to accumulate wealth for its banker-owners, then instead of following the maxim "Don't Fight the Fed", it makes more sense to follow the alternate: "Do Like the Fed". If the banks are accumulating cash, then I should accumulate cash. If the Fed is buying long term bonds, then I should buy long term bonds. If these guys are so smart and powerful, then I should do what they do.
    Jan 12 10:54 PM | Likes Like |Link to Comment
  • The Fed's Betrayal Of The Middle Class [View instapost]
    Wouldn't it be nice to have a banking system that was simple enough to be understood by the common man? I've never been a fan of gold, but at least people understand it, or at least think they do. When people are easily confused, they tolerate all sorts of mischief because they don't even know what questions to ask.
    Jan 3 11:10 AM | Likes Like |Link to Comment
  • The Fed's Betrayal Of The Middle Class [View instapost]
    Provocative as always, Joseph.

    It confuses me when I hear people say that the Federal Reserve Bank misbehaves by serving the interests of its banker-owners rather than the interests of the people.

    The way I understand it, the Fed is supposed to be independent. I interpret that to mean that it is supposed to act like a bank. Banks must make a profit. They work for their own interests, not someone else's.

    For the Fed, what this means is that it can print as much money as it wants so long as the new money is backed by unquestionably good collateral. If the Fed takes lousy collateral, like bags of sand, then it is not behaving like a real bank. We need Fed independence because we all know that the "people" will always be clamoring for money in exchange for bags of sand. But it is really in the peoples' best interest that the Fed NOT do that, because we all know what happens to our society if it did. It is necessary tough love -- the Fed must say no. We are best served if the Fed puts its banker-owners first, are we not?
    Jan 2 08:01 PM | Likes Like |Link to Comment
  • Several Reasons To Turn Bullish On Treasuries: Are They Good Enough To Make Them A Buy? [View article]
    At the time when treasuries yielded 10% plus, inflation was something that nobody wanted, not something desired as it is now. By the time we kicked inflation clear out of the stadium, it was something people had grown to love, even a source of profit.

    Now as we are moving into deflation, it is something that nobody wants. My own belief is that we will fight it for a long time. Then, when we have grown to love it and see it as a source of profit, it will turn on us, but not till then.
    Dec 12 03:34 PM | 1 Like Like |Link to Comment