ProHFAnalyst

Hedge Fund Redemptions May Crash Q1 Markets

Again, as I often lament, Blogs give a veneer of credibility to people just because it is often nicely formatted and online. Clearly this poster doesn't understand the first thing about hedge funds. Hedge funds often lock in their investors for extended periods of time. Even when redemptions are allowed, they must be notified in advance, and typically are limited as a proportion of your total investment (Citadel = 1/16 of your investment per quarter can be redeemed) or as a proportion of the fund's total AUM (the famous gates).

The Real Unemployment Numbers

Everyone knows the limitations of the 6.5% rate and the way it is computed. Even those who compute it put out a big disclaimer with it.

Some comments.

1. The usefulness of the unemployment number is to enable comparisons across countries. If you want to compare what the US puts out with the rest of the world, the number should be adjusted to include people who are taken out of the workforce number when they haven't been actively looking for a job for more than 4 weeks. That puts us at about 7.3%, and that number can then be compared to what the EU and Japan put out.
2. Including part-time worked is probably not accurate in terms of trying to measure unemployment. Firstly, there are a lot of people who hold two jobs. Myself for instance, I work full time in the day and teach one high school class twice a week as well. So I show up in the part-time statistics. Many professionals I know, lawyers, doctors, engineers, etc have some side jobs now and then, and all those show up as part-time. So to assume that all part-timers are struggling people that would jump on a full time job if so offered is incorrect. Furthermore, there is a secular trend at work here. A lot of senior citizens hold part-time jobs because they report being bored sitting at home all day (I can understand that). As the US population ages, that number should trend up fairly linearly. There is no clean way to separate out all these subgroups within the part-time work number.
3. Even the long-term unemployed number ("discouraged worker") is troublesome. Popular imagination has it that that is the car factory worker who has been fired and is desperately seeking a job but just can't find one. While that is a romantic and true vision for some fraction of the long-term number, it is not the whole picture. Take for instance all the mortgage brokers that have been fired in the last 1-2 years. They were one of the biggest additions to the workforce in the US over the last few years before the housing market fell apart. These people were bringing in large six figure salaries. Many are still unemployed. Are they really "discouraged" workers? Sure they are looking for the next job where they won't have to work so hard and make a mint at it. But they aren't even considering going to Wal-Mart to get a job or even at the local bank to be a bank teller. Again, it is impossible to strip out the voluntarily "discouraged" workers from the involuntary discouraged workers.

The upshot of this? It is just as incorrect and misleading to include every single potentially "truly" unemployed person (as does the blue line in the graph above) as it is to exclude every single potenitally "not truly" unemployed person, as do the government statistics (red line).

11 Stocks Selling Below Cash

Well I took a look at GNW because I was in disbelief about your numbers. Turns out I was right. They have $5.861B of cash on the balance sheet. However they also have $8.1B of debt, so net they have debt of $2.3B.

Then I realized that you were probably talking about cash as opposed to net cash. No one cares about cash. Net cash is what matters. The reasoning is that if the company were to stop operating tomorrow and liquidate, your equity value would be protected if the shares trade below net cash*. That is not the case in the stocks you mention.

What To Look For Next in This Market

Take a look at some of the past bigger recessions in the 70s and 80s. There were tons of stocks trading at 3-4x free cash flow for quite a while. No reason for that not to reproduce now, especially when leverage magnification will no longer dope results in several sectors.

ProShares UltraShort and UltraLong ETFs

UYG what am I not getting here? It says it tracks the DJUSFN index, with 2x the return. DJUSFN is up 6.07% today. So UYG should be up 12.14%. However as we speak UYG is up a measly 2.2%.

Can Gold Be Suppressed Indefinitely?

Why is gold being "suppressed"? The title of your article already reveals your bias. Gold has had a bubble-like run - it was up approximately 140% between its peak in March 2008 and March 2005. That is a roughly 40% annualized return. There is no fundamental reason for it to have had such a return. If it were a true hedge to inflation, then it should be yielding a return somehwere near to the inflation rate. I see no reason why it couldn't fall to the $600 level in short order.

Mechel: The Strength of Russian Steel

In the chart above you circle the purple area with the words Stainless Flat. According to the legend, that purple should be Rebar, while Stainless Flat in gray is 4%. What's going on?

How the Fannie / Freddie Announcement Impacts Forex, M&A

This is the problem with Blogs. Anyone and everyone can write something, and it has a veneer of credibility becuase of the nice layout, etc.

Seven Reasons Inflation Won't Vanish

I agree with many of your stats, however, the Fed's statement that inflation will moderate is predicated on one simple and unavoidable fact: when there is a recession, demand plummets, and hence there is an oversupply of all goods for a little while until production also adjusts downwards. So in the end, the argument boils down to this: if there is a big recession, then inlfation will moderate, if not, then inflation will keep chugging along.

Bill Gross: Brilliant, As Usual

saf

The Long Case for Office Depot

Haha. As if your one store sample is statistically significant. And since when are any minimum wage employees NOT disgruntled?

Investing in Venezuelan Mining: Risk or Reward?

Spot on analysis. Kudos for seeing through the hype.