U.S. stocks are overbought, says reknown perma-bear Marc Faber, and any more near-term gains are going to be big trouble for the market. As we continue to move higher, the probability of a crash becomes higher as well. The next crash, he says, could be worse than the one that crushed world markets in 2008. "The next crisis could lead to a deflationary bust. And a bust in governments. In other words, we may have a total collapse in confidence in the system." [View news story]
Sooner or much later Faber may be right. Unfortunately, following his sage advice would have been a disaster to one's financial position and outlook.
While many believe the global economy is stable and recovering, "permabear" economist David Rosenberg sees "a car being driven by a drunk, lurching from side to side on the road, narrowly avoiding the ditches each time." While the car is in the middle of the road right now, "is that because the driver has sobered up, or is it because the car is just passing through the middle on its way to the ditch on the other side?" [View news story]
If you care about the long term performance of your portfolio, do not spend more than a moment listening to any economist.
"There are less ways to cheat on a balance sheet than an income statement," says Bruce Berkowitz, explaining why he focuses on the one rather than the other (and why he'll probably never be a buyer of auto stocks). In this great 35-minute chat from late last year, he again makes his case for AIG and BAC - "it's the 90s all over again" - and SHLD - selling for the liquidation value of its merchandise; the brands and the real estate are free. [View news story]
Hard to find comfort in Bruce's insights. He is the fund manager that took and continues to take concentrated bets in financial service investments, real estate (JOE) among others and then defends his high beta selections with the research conducted by relatives with whom he no longer has relations.
Bruce is another example of an overcompensated fund manager who is paid regardless of his risk adjusted returns.
Rethinking Gold Asset Allocations For 2013 [View article]
If you replace the word "gold" with "real estate", you will notice the exact same argument was used to justify over allocating to real estate in the 2004 to 2007 period. Following the dot-com blow-up, investors were urged to buy real estate because it was so much safer and a better inflation hedge.
When the going gets tough, the tough cut the retirement age. New French President Hollande announces he's rescinding Sarkozy's 2010 bump from age 60 to 62. While the reforms could cost the strapped government billions, a cabinet minister says it will be paid for through higher worker and employee contributions. [View news story]
I will be even more surprised when France rescinds winter.
Chesapeake Energy (CHK -13.9%) may have to delay some of the $14B in asset sales planned for this year because low natural gas prices may hurt its ability to comply with credit covenants, the company says in an SEC filing today. (more) [View news story]
I learned that garbage at a discount is still garbage.
We can all measure the cost of ineffective CHK corporate governance that permits self dealing and enrichment.
"They say unemployment rate, but they really mean" the S&P 500 (SPY), says David Rosenberg, referring of course, to the esteemed members of the FOMC. "After all, to get the wealth effect to work on spending, you have to generate the wealth," he continues. As for the sustainability of the rally in both equities and fixed income, Rosenberg is having déjà vu: "Distortions caused by negative real interest rates, the mis-pricing of risk and promotion of leverage sounds a lot like the previous cycle … enjoy it while you can." (Also: NYSE margin debt signals return of leverage) [View news story]
Another economist forecasting a downturn for over 3 years now. I am sure Mr. Rosenberg will be correct one day but the opportunity cost of following his suggestions are material.
3 Moves To Make On The Verge Of Market Panic [View article]
Your statement that we will see mass selling is incorrect. Baby Boomers are not likely to stop working and liquidate savings at 65. Today's 65 year old is similar in many ways to previous generation 50 year olds. Actuarially, they should expect many more years and will supplement savings with continued work to support themselves.
The Biggest Housing Bubble Of Them All [View article]
Hard to argue with the price/value equation. Again consumers make decisions about housing based on the need for shelter and the rent versus buy decision strongly favors purchase. If you are willing to accepts the challenges associated with investing in residential real estate including property management, cheap capital combined with strong rental demands make it compelling.
I sit on a community bank board and the only pressure to move assets is seen from the regulatory arena. Another factor that should be included in any analysis is the character of bank REO property. Typically, we are seeing lower quality real estate located in the weakest sub-markets that will be the last to participate in any recovery. How much demand is there for a unfinished water park in Illinois?
Facebook's (FB) poor IPO showing and the resulting fallout "will hurt the funding market for earlier stage startups," warns Paul Graham, co-founder of major startup incubator Y-Combinator. Graham expects many hot startups will have to accept funding rounds with lower valuations than the ones granted in prior rounds. He's far from alone in expressing such concerns. [View news story]
Hard to understand why this will serve as an barrier for future funding. My guess is founders will still enjoy lofty valuations even if not at nosebleed levels.
Chesapeake Energy (CHK -13.9%) may have to delay some of the $14B in asset sales planned for this year because low natural gas prices may hurt its ability to comply with credit covenants, the company says in an SEC filing today. (more) [View news story]
Sold out over the past 2 days-way too much noise to evaluate the risks. There are better natural gas risk-reward options.
Cloud software companies are being acquired left and right (I, II, III, IV), but most of these deals will be failures for the acquirers, says industry exec Flip Filipowski. The acquired companies sport agile, dynamic cultures whose best talent won't stick around post-merger, rather than deal with the bureaucracy of a larger firm. As a result, the acquiring companies will often end up fielding "immature half-baked offerings" that are surpassed by new upstarts. [View news story]
Hard to view Flip's opinion as anything short of self serving. Flip, and how much money did you burn and how many companies destroyed via Divine?
U.S. stocks are overbought, says reknown perma-bear Marc Faber, and any more near-term gains are going to be big trouble for the market. As we continue to move higher, the probability of a crash becomes higher as well. The next crash, he says, could be worse than the one that crushed world markets in 2008. "The next crisis could lead to a deflationary bust. And a bust in governments. In other words, we may have a total collapse in confidence in the system." [View news story]
While many believe the global economy is stable and recovering, "permabear" economist David Rosenberg sees "a car being driven by a drunk, lurching from side to side on the road, narrowly avoiding the ditches each time." While the car is in the middle of the road right now, "is that because the driver has sobered up, or is it because the car is just passing through the middle on its way to the ditch on the other side?" [View news story]
"There are less ways to cheat on a balance sheet than an income statement," says Bruce Berkowitz, explaining why he focuses on the one rather than the other (and why he'll probably never be a buyer of auto stocks). In this great 35-minute chat from late last year, he again makes his case for AIG and BAC - "it's the 90s all over again" - and SHLD - selling for the liquidation value of its merchandise; the brands and the real estate are free. [View news story]
Bruce is another example of an overcompensated fund manager who is paid regardless of his risk adjusted returns.
Rethinking Gold Asset Allocations For 2013 [View article]
When the going gets tough, the tough cut the retirement age. New French President Hollande announces he's rescinding Sarkozy's 2010 bump from age 60 to 62. While the reforms could cost the strapped government billions, a cabinet minister says it will be paid for through higher worker and employee contributions. [View news story]
Chesapeake Energy (CHK -13.9%) may have to delay some of the $14B in asset sales planned for this year because low natural gas prices may hurt its ability to comply with credit covenants, the company says in an SEC filing today. (more) [View news story]
We can all measure the cost of ineffective CHK corporate governance that permits self dealing and enrichment.
"They say unemployment rate, but they really mean" the S&P 500 (SPY), says David Rosenberg, referring of course, to the esteemed members of the FOMC. "After all, to get the wealth effect to work on spending, you have to generate the wealth," he continues. As for the sustainability of the rally in both equities and fixed income, Rosenberg is having déjà vu: "Distortions caused by negative real interest rates, the mis-pricing of risk and promotion of leverage sounds a lot like the previous cycle … enjoy it while you can." (Also: NYSE margin debt signals return of leverage) [View news story]
3 Moves To Make On The Verge Of Market Panic [View article]
Just One Stock: A Balanced Conglomerate With Sturdy Growth and Dividends [View article]
The Biggest Housing Bubble Of Them All [View article]
If you are willing to accepts the challenges associated with investing in residential real estate including property management, cheap capital combined with strong rental demands make it compelling.
Roger Nusbaum Positions For 2013: Think Long Term, Invest Globally [View article]
Another Real Estate Bubble? [View article]
Facebook's (FB) poor IPO showing and the resulting fallout "will hurt the funding market for earlier stage startups," warns Paul Graham, co-founder of major startup incubator Y-Combinator. Graham expects many hot startups will have to accept funding rounds with lower valuations than the ones granted in prior rounds. He's far from alone in expressing such concerns. [View news story]
Chesapeake Energy (CHK -13.9%) may have to delay some of the $14B in asset sales planned for this year because low natural gas prices may hurt its ability to comply with credit covenants, the company says in an SEC filing today. (more) [View news story]
Cloud software companies are being acquired left and right (I, II, III, IV), but most of these deals will be failures for the acquirers, says industry exec Flip Filipowski. The acquired companies sport agile, dynamic cultures whose best talent won't stick around post-merger, rather than deal with the bureaucracy of a larger firm. As a result, the acquiring companies will often end up fielding "immature half-baked offerings" that are surpassed by new upstarts. [View news story]