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  • Lashed To The Zero Bound - The Fed's Ship Of Fools [View article]
    Reader............."The alternative was a disaster of epic proportions."

    That's a counterfactual statement for which there is no proof. Many of us involved in the markets in those days objected to government selecting winners and losers. When it came to MBS there was lots of culpability to go around.

    All said I believe Sheila Bair was the 'smartest one in the room' and likely is the one deserving praise for avoiding your "disaster of epic proportions" when she pushed to have government backing for demand deposits, savings, and money market funds after the collapse of the Reserve Primary Fund and the seizure of IndyMac. That's when we had the greatest risk of 1930's type bank runs.

    The concern many of us have is allowing the Fed to exceed its charter, and by proxy one unelected person, the Chairman, to make broad sweeping decisions on what they think will revive the economy. When hatched this plan was called "a Bridge". Well the "Bridge" now has a beard! Long ago we heard the refrain "when you're in a hole, stop digging".
    Oct 6, 2015. 10:50 AM | 3 Likes Like |Link to Comment
  • The 'Something For Nothing' Society [View article]
    31456..........."Corre... doesn't necessarily prove Causation"

    Oh I thing given Mr. Jensen's point, correlation very definitely proves causation!

    I don't think any type of statistical analysis is even relevant here which I state as one who loves technical analysis. Rather Mr. Jensen's point is I believe "common sense".
    Oct 5, 2015. 10:04 AM | 1 Like Like |Link to Comment
  • The 'Something For Nothing' Society [View article]
    Hello David,

    Well said as usual. I was rather hoping you would read this article.

    Oct 5, 2015. 09:43 AM | Likes Like |Link to Comment
  • The 'Something For Nothing' Society [View article]
    We experienced a 'quality' movement in the 1980's and 1990's where we learned businesses and individuals spent too much time focusing and fixing "effect" versus understanding "cause". This article is a perfect example of focusing on "effect".

    But then 'Quality tools' are soooo yesterday to think-tank writers like Ms Coppola.
    Oct 4, 2015. 12:44 PM | 1 Like Like |Link to Comment
  • 3 Things I Think I Think - Angry Old Guys And Low Risk Young People Edition [View article]
    I don't think many are worried or care about angry old Bill Gates, or his investment returns. From this old guy, you are absolutely right about a diversified and/or laddered bond portfolio, funds or individual bonds. What I am concerned about is the very many folks, especially on fixed income, who can't afford a financial consultant and are being told to stay away from bonds completely. So these people are in CD's, the stock market, or maybe just cash.

    As for young folks, in my conversations with them they are scared to death that the older folks running the economy don't know what they are doing. Government economist tell them not to worry, we can spend our way to prosperity. But, well Cullen the 'dogs aren't eating the dog food'.
    Sep 25, 2015. 11:23 AM | 1 Like Like |Link to Comment
  • Yellen Says There Is No Economic Problem While Describing A Serious Economic Problem [View article]

    I loved your comment! Like you I come at this from an experienced based perspective. And I'm an old guy too, may have you by a few years. I'm staring at 70.

    You are absolutely right, we fail to learn from history. When I was young I often heard from elders; "experience is a great teacher but rarely gives its pupil a holiday". I would opine that today what is different is the scale of the travesty. There will be no painless way out of this, the FRB is really in a box that they have created regardless of how well intended.

    As for the business environment, and to your point, I've never seen anything like the challenges of running a business today and I started my professional career in the 1960's. For decades I though the 1970's were bad, hah! A manager of a small to mid-size business can deal with a lot of government mandates, but the ever shifting uncertainty of bureaucrats creating and changing interpretation of laws is very expensive and a legal compliance nightmare. I don't know of a business, regardless of sector, that isn't dealing with shifting ground under their feet.
    Sep 21, 2015. 10:59 AM | Likes Like |Link to Comment
  • A V Or W-Shaped Bottom [View article]

    I think your article is well reasoned and I hope you're analysis is correct concluding a W bottom! Thus far the S&P 500 successfully tested the October 2014 lows but the Dow and Transports failed that test which is concerning especially if you're a Dow Theorist. I agree technically the damage will take time to repair off a W bottom given overhead resistance.

    Interestingly one of the CNBC talking-heads this morning believe we will see a deflationary rally. Although on Bloomberg a Lombard Street Research analyst (more credible I believe) said we are at a critical juncture here, we could rally, or we could see a worsening financial crisis unfold. We shall see.
    Sep 16, 2015. 10:13 AM | Likes Like |Link to Comment
  • Are We On The Precipice Of Another 2008? [View article]

    Others are making your 1998 comparison, Barron's had an article this week on the subject. And while I don't disagree with similarities given the serious EM problems, nothing else is remotely comparable. I was also in the investment business through both panics. The tech/telecom boom was well underway in 1998, Greenspan had already made his "irrational exuberance" remark. Tech/telecom was the worst misallocation of capital in the history of free markets up to that time. An argument could be made that subprime mortgages may have eclipsed even that nutty time. Regardless, nothing today on corporate balance sheets compares given the cost of capital is almost zero Capital today is being used to buy back shares, pay dividends, or used for M&A which has been mostly accretive given near zero borrowing costs.

    Those in the market have greatly benefited from the most hated bull market in history. Sentiment is awful! If you're a contrarian you have to love what we have experienced this decade so far. That is the polar opposite of what we had in 1998 where if you didn't have clients heavily invested in tech/telecom they were very unhappy. And everyone was an investment expert.
    Sep 12, 2015. 11:30 AM | 3 Likes Like |Link to Comment
  • 5 Observations On The July 2015 Jobs Report [View article]

    Yes, we have a plutocracy. And if the politicians who go to Washington are not yet rich they will be enabled to engorge themselves by the time they finish their "careers". The polar opposite of say a Harry Truman. This is not at all what the founders envisioned when serving in Washington was a Sacrifice!

    The elites throw enough bread-crumbs to the unwashed to keep us quiet. Any change requires a catalyst. I don't see it. Maybe their profligate ways creating an unsustainable debt level versus GDP that causes a financial death spiral. The latest CBO outlook I've seen says without a change we hit critical-mass by 2035. But that assumes we get back to historical GDP growth. With debt, the current tax structure, and an aggressive regulatory environment impact on small business, and all a drag on economic growth I think normalization is not a given. Guys like Larry Summers and Joe Stiglits, who advise this administration, say the "new normal" is 2% growth or less.

    All said, I think self-interest and ideology are the rule of the day. And the outcome of another financial crisis likely leads us into greater socialism, more of the same. Most people haven't a clue, and worse many don't care.
    Sep 9, 2015. 10:03 AM | Likes Like |Link to Comment
  • This Is Not A Retest - It's A Live Bear [View article]
    David's article gets around to discussing the all important "E". He doesn't support the outlook and on the surface there is little argument. But, 25bps will not in my opinion slow down the financial engineering of buybacks and M&A where even marginal acquisitions are accretive to earnings because of near zero cost of capital.

    So it is possible to hit the numbers, and the game goes on. You really think we have to produce and grow? Hah! That's so 1990's.
    Sep 5, 2015. 02:45 PM | 1 Like Like |Link to Comment
  • Rigor Mortis Of The Robo-Machines [View article]

    Apologies for my reaction. And I completely agree with your paragraph regarding information about ETF's. Many of these new arcane ETF's are not helpful, they are sales gimmicks. Institutional investors avoid them hence they're thinly traded which should be a red flag for retail investors which I'm sure you're well aware.

    Sep 4, 2015. 06:33 PM | Likes Like |Link to Comment
  • Rigor Mortis Of The Robo-Machines [View article]

    I have not attacked you personally, I wonder why you find it necessary to do so.

    So I've made a lot of money for a lot of people for a lot of years in this business and I've used, and currently use, various equity ETF's as core holdings. I can say with great conviction that a discount to net value, or underlying value is a good thing for investors not a bad thing. If some firm or someone has figured out how to take advantage of and arbitrage the discount fine by me. Any result in price change would be at the far margins and then short term.

    In David's article he ends focusing on the IBB high valuation which is true. Just before that he mentions Icahn's warning. I didn't hear the interview but if he was talking valuation with this and maybe other funds that's certainly a valid concern. Also there is a potential issue we saw come up last week with bond ETF's and lack of liquidity in a selloff. That's because we lack the market makers we had with banks prior to regulatory changes. That likely is what Icahn was discussing, its a real and big concern.

    So if you want to argue the point like gentleman or ladies if that's the case, fine with me but lets stop the name calling. It does not further one's position.
    Sep 3, 2015. 10:40 AM | 2 Likes Like |Link to Comment
  • Rigor Mortis Of The Robo-Machines [View article]
    aguy6307 makes several good points, I would add the tax advantage of ETF's for most retail investors. As to the criticisms of arbitrage and fees; of course there will be discounts to underlying assets that I suppose could be arbed. I could list CEF's with mind-numbing discounts to underlying, often high quality, assets and they have been around since the 1920's where of course there were no program arbs. And while Vanguard offers ETF-like fees to many mutual funds most of their funds are Index funds so they are very much like ETF's. All said I don't think these criticisms are significant for buy-and-hold investors.

    As to David's article, and Icahn's criticism of ETF's, I don't think that applies to most ETF's which are market Index based including most sector Index ETF's. I would argue that includes IBB which during this correction has barely broken its 200 day MA. Where I believe ETF's are potentially off the rails and Icahn's warning is relevant is the many new specialized, and actively managed ETF's. They are thinly traded and potentially are WMD. I think average investors do themselves a disservice mixing these up with straight forward market indexed funds of which Jack Bogle has always been a fan.
    Sep 2, 2015. 10:49 AM | Likes Like |Link to Comment
  • Why The Fed Needs QE Infinity [View article]

    My reference was Old Sir John's four stages of a market cycle.

    Aug 29, 2015. 10:24 AM | 1 Like Like |Link to Comment
  • Why The Fed Needs QE Infinity [View article]
    Hello David,

    Good to hear from you again. And as usual your posts are well thought out, a pleasure to read. I trust you're surviving the market volatility well. We have been way overdue for a correction. Always opportunities until we see signs of euphoria, the Templeton test. Then I start to worry.

    To your point, I agree, its a tough balancing act. Both contain their own versions of a death spiral.

    All the best,
    Aug 28, 2015. 09:48 AM | Likes Like |Link to Comment