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I engage mostly in long term dividend investing, with a touch of options to keep things interesting. I like the ability to hedge my positions and participate in stocks that would normally be beyond my price tolerance. Hence the name, Vertical Spread. APPL and GOOG are examples of this. I can... More
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  • Strawberry Pimco

    This month's Investment Objective is a must read. For anyone Generation X or older. Right out of the gate, we get some psychedelic Beatles music and surreal artwork graphics. References are made to all sorts of popular entertainment culture which excite me, but probably wouldn't rope the "Gangnam Style" generation. I keep thinking about the cattle punching device in "No Country for Old Men".

    Some soothing political observations are made. I love the reminder of "you didn't build that" on one side, and on the other, the plan-less campaign to magically make the numbers work.

    Mr Gross resumes and renews the case for "New Normal", giving us bullet points about the usual suspects. Listed are Globalization, Demographics, Technology, and Debt. It would appear to me, that the first three of those are a bit outdated and obvious. Re-hashing the old Keynesian "robots replacing people" problem seems unproductive. We should be on top of that by now. People should be able to read and write, so they can get re-hired after being dismissed from their riveting jobs. But, it's not hard to accept the thesis of slow growth, new normal growth, general economic malaise. No need to quibble over the exact reasons when we all know the 800 pound gorilla is debt.

    We are left with some investment ideas. I was surprised to see Oil and Gold in there. I personally have not inched forward with Gold at all this year. And I am getting clobbered by holding Exxon options. I was surprised to see high yield bonds dismissed, as Pimco sells tons of funds that focus on exactly that.

    I really wish we could all agree; Housing is the issue, always has been the issue, and will remain the issue. The FED has done an excellent job of forcing money back out of savings accounts and into the equity markets. It is up to the rest of the Federal Government to route the rest of the money into housing. What happened to the first time home-buyer credits? Where they too expensive to implement? Until you get the middle class back out from underwater mortgages, all you will see for prosperity are Bill's "Strawberry Fields Forever". Lifting mortgages requires extreme pressure on the price of the existing stock of homes. I would even advocate a ban on new residential single family "McMansion" construction. Sure, office buildings may be needed in some markets. Apartments companies can roll the dice and test the market, and eat their own dog food. But every new single family home built, sinks another further underwater.

    Disclosure: I am long IAU, XOM, PMX, PHK, AAPL, EIM, EVN, PHF, PHT, BOND.

    Tags: XOM, IAU, Bill Gross, PIMCO
    Dec 11 3:59 PM | Link | Comment!
  • Bill Gross On Being "Gross"

    At the risk of being single-minded, I can't help be voice my pleasure with another month of Bill Gross's commentary. This month he entertained us with some self-deprecation regarding his name and his passion for naming his children with traditional middle class American names. Names that sound, ateast to Bill, as being more satisfying, more masculine for males, more normal suburbia for females. Atleast that's the way I interpreted his writing on the matter. I don't have a complaint about 'Bill', and growing up in suburban America, I can provide good and bad examples of the usage of all of those names he likes. There were 'Jennifer's in my school and on the silver screen that you would long for, and others you would run from. I will say, my father was a 'Nick', and it worked for him.

    As always, the metaphor he provides us gets put to good use :

    Is a clean dirty shirt a dirty shirt by another name?

    While bemoaning the debt burden being incurred by our country, as he has done for almost every monthly article this year, he does point out that America may be the cleanest dirty shirt. He reminds us also that getting out of a debt crisis requires either defaulting (just refuse to pay back any loans), or printing money out of it. Defaulting as a solution has certainly worked for many of my peers on a consumer level. Walk away from a house, marry somebody with a house, become a personal trainer, teach pilates, etc.. I have long agreed with the printing solution, if every country were to do that in unison. After all, it's only currency and numbers. However, the consequence of that seems to be, the little countries that can't print get squashed, and the earth itself just gets raped more and more. Print more money, so young personal trainers can buy more and more condos and Ferrari's, and more Starbucks shops can dominate the landscape pouring 500 calorie coffee-less frozen drinks into our housewives. Well, enough of that. Printing money would solve the debt problem, but it won't stop the consumerism, obesity, the health-care balloon, etc..

    I do find Bill extra-leery of the 7% return in this month's 'Outlook'. After all, his own Pimco High Income Fund (NYSE:PHK) pays 11%. Why all the belly-aching about hard-to-find returns. The subtitle reads 7% returns out of reach.

    So, best I can tell; the US is the cleanest shirt, but it better not over-borrow, and it must reign in some wasteful government activities to stay there. Should I buy some PHK or PML?

    Tags: PML, PHK
    Jul 03 11:14 AM | Link | Comment!
  • Bill Gross on Six Packs
        This month's insight was particularly satisfying for me. I really appreciated what sounded like some sincere mention of employment in fixing our economy. Consecutive months of mentioning employment and globalization can only be interpreted by me as not sarcasm. 
       Unfortunately I got a bit lost in the humor around the getting old and losing six pack abs to see the metaphor there, unless it was just as simple as America needs to get back to work. I have been saying for a couple years now, that working has been out of style in America since 2004. That was the year that I was willing to move away from my home to work with some elite technical folks on Microsoft-related technologies. This was met with nothing but the sound of crickets chirping in my social and private life. Five years earlier I would have been not only applauded but chased by hoards of hungry followers into a job path that came with a signing bonus.  I would go farther to say, I might have been trambled and left for dead in the wake of such a work opportunity. Instead, everybody wanted to know what time would I schedule my personal training appointment for surely I needed to support that industry. I asked for a realtor and was told, my blood was not rich enough to get a referral to a coworkers realtor. It was as if working was suddenly a role for the underclass. Or the off-shored more realistically. 
     Because Corporate America, (i.e. Accenture) hires so many fresh middle managers straight out of business school, and offshore so many technical staff to India, if you are American and want to work in a technical role, you will be clubbed about the head in a back alley on the way to the office. Until this is changed by government, jobs will continue to flow offshore, and only the hyper-educated slave owning plantation drivers here will thrive.

    Oct 05 11:21 AM | Link | Comment!
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