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  • Review Of 'Zero Marginal Cost Society' [View article]
    Glad to see a review of this book. I don't quite agree with 'marginal' cost - would think more in terms of LRAC- but this book and other related works critical to understand future- similar to Alvin Toffler and others writing about globalization in 70's.
    Aug 28 11:10 AM | Likes Like |Link to Comment
  • Securities Lending: Hardest To Borrow [View article]
    I'm glad you mentioned the zero-sum fallacy. I think most probably would reference balance by debits and credits-(zero-sum is a different animal). The inference is that the actions of the winners and losers must equate to zero. Timeframes certainly impact the reference point-but so does the unique situation of every player.
    People also neglect a central tenant of bargaining in an open society. A basic premise is the 'quid pro quo'-the bargained for consideration. If I own a 100 shares of ABC and wish to sell a call option, I have received the benefit I requested. The buyer of a call has received exactly what he bargained for. The fact that B used the call as a hedge against 100 short shares of ABC is, of course, merely the rationale for entering the transaction. If the short shares increased in value (at time period T1), the buyer of the call has profited by virtue of the insurance. Were it not for the long call, that risk may not have been taken. The seller of the call has derived income that he would not have had, but for selling the option. In this case, both parties have derived a benefit. That the option may have expired worthless at time period t2 is not relevant. Yet, a bean counter could declare that dr=cr-although, neither party to our example could care less.
    In studying game theory, one finds that zero-sum situations are generally theoretical.
    Aug 26 05:14 PM | Likes Like |Link to Comment
  • Is The Middle Class On A Sinking Ship? No Economic Good Times For Them Or Their Retirement [View article]
    George, the very people that need to contemplate market strategies want nothing to do with the 'stock market.' They can't pay their bills-they truly live paycheck to paycheck. When they have time off, studies indicate they just sit around and watch the 'idiot box.' The lack of basic financial acumen is beyond credulity.
    Since 'retirement' I've worked with some school teachers to help them with financial planning. These people are among the more educated in our society. Yet, the crap they've been told by stock brokers and insurance peddlers will make you cry out in rage. The 'information' that the vast majority of people are exposed to is poisonous. The real problem is that the education level in general has declined-and continues to decline. You folks that are encapsulated in offices in lower Manhattan, Naples and San Francisco need to venture out to a WMT, or visit a public school. We don't have kids, and I spent most of my working life in high- rises, and entertaining clients at exclusive country clubs. You really can't grasp the destruction of small business, erosion of educational standards and the real unemployment rate until you get out and about. Merely reading about it just won't cut it.
    Aug 26 11:23 AM | 14 Likes Like |Link to Comment
  • John Hussman: Broken Links: Fed Policy And The Growing Gap Between Wall Street And Main Street [View article]
    It would take approximately 14 hours to really respond-but I'll just note that 'cause-effect' is, in reality, an indeterminate challenge.
    But, just one small item to think about-lower oil and commodity prices will 'somewhat' bail out the losses in median income. As millions drop out of the middle income ranks, extraordinary 'adjustments' will be made to 'smooth' the transition. Fragmentation of data and an attempt to collect and understand same will lead to splintered analysis and obscure the slow shift to a new equilibrium.
    To some extent, this is always the case-but the deviation from post-WWll income, combined with the psychological impact arising therefrom, will continue to play out over many years.
    I'm of the opinion, for example, that the Great Recession (and the causes typically attributed thereto), is decidedly not some 'defining moment.' Rather, it's better understood as one of many linked observation posts, and simply confirms the confluence of numerous changes.
    Well, already out of time. Enjoy conversing with you guys, but the ROI is somewhat lacking.
    Aug 26 10:37 AM | Likes Like |Link to Comment
  • Why "S&P 2000″ Is A Fed Manufactured Mirage: The "Buy The Dips" Chart That Says It All [View article]
    The stock market is nothing more than a manifestation of man's desire to have his hour upon the stage. It is a modern contrivance, a phenomenon whose gestation harkens back to the emergence of the industrial age. It has, of course, embraced technology and embellished/embraced the modern global economies. In many respects, its genesis was random-although it's formulation and subsequent function sing from the book of Adam Smith, and all subsequent tunes relative to the financing of war and peace.
    The jury is still out on the sum total of human efficacy. The majority of people pay no never mind to it's voice-for their concern and contentment rests not with stocks and bonds and such things-but more with the daily burden of buying a gallon of gas, a diaper or a loaf of bread.
    Casino? Not so much as it is constructed-yet one definitely employs the sharp-edged odds of the casino to grab a dollar. A non-stop perpetual show, complete with manipulation, dull sages and holy scribes entreating all those that would lend an ear. The carnival barker finds a more refined home here, and the hurly-gurly man calls at a distance. Brother Love seeks to embrace all, and save all, for salvation surely rests with those that tithe on a regular basis. It's the greatest show on Earth, and life under the big-top has proven sublimely seductive for both the gambler and true-believer.
    So, take it for what it is. After all, it's just another experiment-another random interlude. An advocate would note the benefits accruing to a society at large-and humanity cheers for the brave soul given a chance to better the lives of the planet's inhabitants. A more jaded perspective questions the cost side of the ledger.
    Today though, we just want to lay down one more bet. After all, I got it figured out now-don't confuse me with those Federal Reserve people. They're not playing with a marked deck-are they?
    Aug 25 02:12 PM | 11 Likes Like |Link to Comment
  • The iShares U.S. Home Construction ETF Now Lags Encouraging Housing Data [View article]
    Imagine, if you will, a strange dimension where there were no suppressed interest rates, no government subsidy for first time home buyers, no FHA, no FNMA-in short, nothing but the 'free market' left entirely to its own devices.
    (Time to think, ponder, contemplate).
    OK-So, do we need MORE subsidy? The 2006 run rate in contradistinction to the last 8 years, and counting-and so we note the gap. And, why is there a gap?
    Solution: Low income tax credits. Or, suppose the government contracts directly with builders to build starter homes, and incentives are provided to 'buyers.'
    What-we've tried that already?
    But, housing data is 'encouraging'? Is median income data likewise 'encouraging'? Yes and no?
    I was happy to get a 10% fixed rate in 1984. Folks were buying houses, in droves, and excited just to get a low double-digit mortgage rate. Can we surmise that interest rates are not a key variable?
    Unless and until the average person can get a 'decent' job, and have some confidence in his future, the housing market will be a symptom of a decaying economy.
    Aug 22 10:15 PM | Likes Like |Link to Comment
  • Stocks Are Moving Higher But Beware [View article]
    I don't like the word "beware"- If one has to 'beware' then they haven't prepared. Market drops? I can short multi-millions in the blink of am eye (or as Springsteen says-the blink of a young girls' eye). Market rebound? No problem-I can pivot and fire.
    But, I am eternally grateful to those that climb a wall of worry, and just keep on worrying. And, to those of you that panic at the first sight of the big, bad wolf (or grizzly bear), it's been a real pleasure all these years.
    One of these days, rationality will prevail-I predict no later than the year 3535-if man's still alive.
    Aug 22 10:55 AM | Likes Like |Link to Comment
  • Housing Relates To Income More Than Credit Now [View article]
    Once again, it's always about median income and job opportunities. It's really not complicated.
    Median income and job opportunities have dipped post 2007. In fact, many 'new' jobs are 'permanent part-time' jobs, which were crafted to deal with the new health care rules.
    But, even before 2007, companies were engaged in a generation of 'corporate re-engineering'. (That was code for trimming the fat and cutting out the middle guy, etc).
    But, the larger picture relates to a fundamental societal shift-a Darwinian renaisance-somewhat like the oil and sugar trusts-but now supported by central governments.
    The age of mergers, strategic ventures, corporate buybacks, globalization is, in reality, a classic transformation. Main Street is dead, save for a few trinket shops. The soul and vibrancy are now gone. We've made a pact with Big Business and Big Government. Housing? Well, we are in the midst of redefining what it means to have a home-to be part of a vibrant community. Say goodbye to Mayberry. Say goodbye to the way we were.
    But, by all means, you folks keep looking at all the housing data. And, you'll keep coming up with the same superficial conclusions.
    Aug 20 04:21 PM | 1 Like Like |Link to Comment
  • Margin Debt Peaks May Indicate End Of Cyclical Bull Market [View article]
    Notwithstanding margin levels, somebody has to run for the exits and create a stampede. NOW, how that margin is allocated can make a big difference. In 2007, hedge funds were grossly overweight in seed, cattle, coffee-in short, anything that would grow out of the ground or on a tree. There's always something a bit different, and a different cast of characters around to stir the pot. Of course, we now have the additional variable of a 'flash crash'.
    But, if you have the skill, you're already prepared. And, frankly, whether the market goes up or down is just another blip on the eternal screen. There is absolutely no question but that I will make money if the market drops. And, later, it will go up again-and then after more debate and circumstance, it will go down again. So what?
    Aug 19 06:47 PM | 3 Likes Like |Link to Comment
  • A Weird All-Long Strategy [View article]
    Yes-I've seen it before but watched again. Thanks.
    I started wondering about how decisions are made in my early 30's. I'm convinced, as are numerous neuro scientists, that music (and art) play a significant role in brain development.
    I think too that whatever it is that fosters and nourishes imagination is also inextricably linked to decision making. I have no doubt that, as a species, we are in a very elementary place-merely surviving by the intricate firing of neurons-the basic composition of which remains elusive.
    Aug 19 05:37 PM | Likes Like |Link to Comment
  • Momentum Continues For Home Builder Confidence Even As Affordability Continues Its Decline [View article]
    I think we'll have a better perspective by Dec. 31, 2024-but not before the end of that day.
    In the meantime, I'll amuse myself by shorting the homebuilders at peaks-just like I've done since the late 70's.
    I'm not opposed to housing-I reside in one. But I think we've gotten to the point where the Federal Government should get involved. Just imagine how much better the numbers would look-if only we had some incentives and subsidies.
    Aug 19 12:37 PM | Likes Like |Link to Comment
  • How Do I Stick To The Slow, But Sure Process Of Dividend Growth Investing? [View article]
    The trick is to take a trip on a time machine-like Rod Taylor did in 1960. An additional bonus is that you might encounter Yvette Mimieux-don't know that I would go much beyond the year 9595, though.
    Aug 19 12:19 PM | 3 Likes Like |Link to Comment
  • The Greek Handicaps The Week Ahead [View article]
    Over any relevant time, liquidity dwarfs any other variable(s). Other factors are mere trifles (save an alien invasion, nuclear war or deadly virus epidemic). So, I'm long liquidity-but hedged for the possibility of a Mars invasion. Remember that even a fake Mars invasion frightened the public just a few decades ago. Of course, there is a 'play within a play' for the true believers that worship 'financials.' After all, the casino wants all kinds of players-the earnings pundits, the chart technicians, the astrologers and the small investment clubs.
    "Step right up ladies and gentleman, buy your tickets here! Son it's never too early to get in the game-why you'll be rich at 30!Hey Gramps-take a flyer before you get any older-got some safe GM bonds right here-perfect for you older folks needing safety."
    Aug 18 12:38 PM | 2 Likes Like |Link to Comment
  • A Weird All-Long Strategy [View article]
    Thanks-enjoy chess but tend to get a bit impatient. I also came across two elderly guys playing checkers recently at an old service station. I forgot how nuanced that simple game can be. Amazing how these old, traditional games teach us to think through our moves-to anticipate and be prepared.
    Aug 18 10:33 AM | Likes Like |Link to Comment
  • The Stock Market Is Starting To Price In The Next Housing Downturn [View article]
    Some of you new to this game need to know that the housing stocks have historically been 'gamed' by the pros. Go back and look at history-particulalry post WWll. After a recession or downturn, housing stocks get a lot of cheerleading. BUT, this is a very extraordinary sector in that private builders have accounted for over 90% of all activity. This is not the case with aircraft/weapons, soft drinks, etc. So, ABC builder can never hope to grow out of this constraint. Nor can they readily adopt to changing economic, local or demographic trends. If you want to be in something housing related, buy a mini-storage facility.
    To look for tell-tale signs of housing viability via housing stocks is far less reliable than consulting the nearest palm reader.
    Aug 18 10:24 AM | 1 Like Like |Link to Comment