Blair

Nouriel Roubini, One on One: More Doom and Gloom

The basic question is: where did we come from and how does the history prejudice oneself.

I have gold investments. Why do I have gold investments? Answer is quite simple. I don't know what the future brings -- deflation or inflation? Anyone who says that they know is deluding both themselves and anyone who listens to them.

I do know that I don't have any faith in the central banks and/or legislative bodies to do rational actions to control the turmoil. I do have faith in gold simply because it has limited supply. I don't know where it will go in the short term, but in the long term I am convinced that its price will be significantly higher. There will be a time to reduce gold holdings, however, it is not now.


Now, let us talk about the price of oil. Dr. Roubini says that $30 is a good price. I disagree. There is no doubt that overall consumption can be controlled by different methods. But, one thing that is not stated is whether the so called baseline has oil *underpriced* over the longterm. I am of the opinion that energy resources have been underpriced for all too long. Similar situation to have clean water. We can have clean water, at the expense of cleaning up 'dirty' water. Just think about the cost of drilling for oil 10,000 feet below the ocean surface.

Thus for the energy issue, I see energy as a long term buy and hold investment. You don't trade the stuff. The value of the energy resources will mitigate the impact of any kind of financial instabilities. In a modern society, you will always need source of high density energy. A bunch of wind mills and/or bio fuels will never provide it in sufficient amounts. As far as I can see, nuclear power is the only long term energy resource that will meet the requirements.

The Secret Paulson-Goldman Meeting

The proposal that there be government supported campaigning is great!.

I can hardly wait until Sarah Palin gets her campaign financing!

Three Asset Classes that Can Actually Outpace Coming Inflationary Price Increases

One poster repeats a statistic that I have seen elsewhere, viz, personal income is up. Where is the money going to?

With a 10% unemployment rate, what that statistic implies is that all of the gainfully employed got a 10% pay raise. Now, if you want to include all of the government handouts, then I can partially understand the statistic, but not to the extent that personal incoming being up.

Don't believe everything the government tells (or doesn't) tell you.

Bond Market Expects Inflation to Be Only 1.75%

I think, as stated elsewhere, the big clue is precious metals, plus other commodities.

From my perspective, I am investing in PM because what is going on from a monetary consideration doesn't make any rational sense.

Avoiding the Cloud Computing Commoditization Death Spiral

I thought that I was reasonable well informed as to what is going on technically, but

What is Cloud computing?

Thanks

17 Reasons for Crude to Fall Near Term

What a waffle!

"Technically crude looks like it is topping out. It appears that it is more likely to move downward from here in the near term. Of course, it could also break through overhead resistance."

So, if crude goes up , say $50, then White can say, 'I told you there is a possibility that crude 'could go up.'

Will Consumers Ever Revert to Pre-Recession Spending Levels?

The savings rate will go back up to the nominal 10% number, based on the 50s - 60s rate.

Yes, it will go back up again, but not to the level see in the past few years. It will happen when the second generation comes with the mindset that their parents, grandparents, etc don't realize there are new times, and the cycle starts over again.

Timing a Strategy Using Mean-Reversion: A Critique

Regarding both strategies, the problem is -- how do you know what the market will close at, and secondary can you get an execution based on the strategy?

Perhaps what one should do is to use the opening price for the next morning as the input value, and close the position at the close for the day -- then see what kind of performance one gets

Naked Short Selling Is a Phoney Problem

My opinion regarding naked shorting is that it is equivalent to horse thieving.

In other words, selling something that you don't own. In the old days, they would hang the thief from the nearest tree. Perhaps they should go back to the old days. If nothing else, make it a felony with a one year minimum sentence.

There is nothing wrong with legitimate short selling, where the short seller borrows stock to short. Indeed, it helps market liquidity.

Further, as a statement to Northstar 10000, the last thing that I am is an Obama supporter.

To close, there is one thing that brings joy to my heart is when I read another hedge fund goes under. In German they call it schadenfreude.

One Trillion Dollar Commercial Real Estate Time Bomb Now Ticking

I heard in passing that the commercial bank loan amounts had changed in recent years. Prior, the loan amounts were based on actual income. Recently, the loan amounts are now? based on income projections.

My emotional reaction to this whole business is that the matter is so unbelievable it has to be believable.

I know that many have congratulated you on your excellent articles. But, let my add my name to the list.

Is This (Finally) the Bottom? Part II

I wonder how many of the posters have examined the point & figure charts for the dow industrials?

The 2007 downside count still stands at 4,000. This recent rally satisfied the upside rally count to Thursday's close. In addition, the steep down trend still has not been broken.

So, if you are a technician, rather than a fly-by-seat investor, the analysis shows that this market still has a way to go on the downside.

Why I Believe Paul Krugman Is Wrong

Regarding CaptainJJack's posting, it would be quite surprising for the banks **not** to make money in the first two months. After all, they have borrowed money at no cost. Therefore, if they didn't make money then they would indeed be in bad shape.

Portfolio Turnover and Transaction Costs Negatively Affecting Your 401(k)

If you will notice that the date of this study is 12/2006.

For those that did not follow the study date regarding the dropping of the up tick rule, that study date is roughly the same.

The point to be made is that these analyses were made during a relatively calm time in the market.

The big question is how well the investments would have done in the 2008-09 50% drop? I think not too well. Buy and hold is well and fine during certain market times, but not all of the time -- as all too many investors have found out, to their dismay.

The Final Market Bubble

On Feb 10 11:03 PM derryl wrote:

> Hyperinflation can be stunted by a value added tax (seekingalpha.com/symbo...)
> on everything. A 100% VAT would instantly double the price of everything
> so 1/2 of any money that is spent (rampant spending contributes to
> or causes price inflation, as our recent bubbles experience shows)
> would flow to Treasury, and Treasury could remove that money from
> the economy by using it to buy back its bonds from the Fed. Or Treasury
> could just lock it in a vault.
>
> There is no limit how high the VAT could be set. If it was 500%
> then a $1000 item would cost $6000 and pretty soon even a hyperinflationary
> spending mood would be cooled down because the government would suck
> so much money out of the economy every time anybody spent some money.
>
>
> In hyperinflation the velocity of money reaches warp speed as everyone
> tries to trade their cash for something they think will hold its
> value. So we bid up the prices of everything to get rid of all our
> money before it is worth less.
>
> But if Treasury takes a large slice of that money out of every transaction
> then after purchase #1 for $1000 (with a 100% VAT) the seller only
> has $500 to get rid of, and after purchase #2 for $500 the seller
> only has $250, etc. Pretty soon there is no longer 'too much money'
> in the system. It's a fast way to suck money out of a system where
> too much money is chasing too few goods.
>
> There ARE solutions to these monetary problems. We don't have to
> just sit back and allow arithmetic problems involving money to cause
> the world to end. The solutions would be politically difficult (a
> 500% VAT!!! Raise the guillotines!). Maybe Paul Volcker will be
> the guy who kills hyperinflation.

There is only one problem with this concept: There are such things as black markets. With such a large spread introduced by the VAT, there will be enough 'fat' to enable profitable VAT avoidance transactions. Mankind has always been inventive to avoid taxes and there is no reason to think this situation will be an exception.

What Will This Year's 'January Effect' Be?

The essential problem with this tax related January thesis of buying/selling is whether or not the recent financial turmoil will invalidate the argument.

Time will tell whether my assessment that this year it will not work. Too many normal investors are in bad financial shape and they are afraid of their own shadows. There are a number of clues that support my argument -- gas consumption has not picked up even though the price has dropped over 50%. Further, look at the upper scale retail sales -- they are pathetic. There aren't any ordinary investors in the market to support any kind of significant bull move.

My put is to short the market when Obama takes office -- then look to see the market to go down roughly 50% from that level, specifically to the (S&P 500) 400 area. I think the pain will be short and intense.