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  • 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
  • Why The Fed Needs QE Infinity  [View article]
    I think where your argument falls apart is we don't use less commodities to build a house, we use different commodities. Name any industry, auto manufacturers don't use much chrome anymore. Ford now builds an all aluminum F150. That's not a bad thing, economies adapt.

    I well remember the Southeast U.S. was devastated by the demise of the U.S. apparel industry. Many experts agreed that exporting that entire industry would create permanent economic depression for that segment of the country. Once the issue was out of the Northeast newspaper headlines they were left alone to figure it out. The rest is history with their manufacturing, technology, and financial markets renaissance. Success beyond anyone's expectations.

    I believe more central planning is not the solution, its the problem.
    Aug 27, 2015. 10:38 AM | 2 Likes Like |Link to Comment
  • Why The Fed Needs QE Infinity  [View article]

    Well stated!!
    Aug 27, 2015. 10:14 AM | 2 Likes Like |Link to Comment
  • Why The Fed Needs QE Infinity  [View article]
    Your well stated focus is on the money supply. At some point along this continuum we need to consider the other side of the equation which is debt. While painful to achieve normalized rates have had a self governing benefit of damping financial engineering which is rampant today. I fear your solution would bring us more of the same.
    Aug 27, 2015. 10:09 AM | 1 Like Like |Link to Comment
  • Why The Fed Needs QE Infinity  [View article]

    Good point. That's because wages, Social Security, and other forms of income lag inflation.

    I find it ironic having lived/worked through the 1970's that some now pine for inflation. Its very difficult and painful to get that genie back in the bottle. So folks should be careful what they ask for.
    Aug 27, 2015. 09:41 AM | 2 Likes Like |Link to Comment
  • Having To Do 'It' Again Is All You Need To Know  [View article]

    I completely agree!
    Aug 26, 2015. 02:22 PM | 1 Like Like |Link to Comment
  • The Obamacare Economic Disaster?  [View article]
    True statistically, but alternative job opportunities existed in most of the country then for skilled workers given economic growth in the 80's, and 90's as there was less slack in the labor force. Plus the benefits package made up a greater percentage of total compensation even within smaller companies. So we experienced the evolution of people not married to jobs as they were in previous generations. If you were an employer in those years, which I was, you knew you needed to take care of good employees or they would be lured away very quickly.

    Surely you are not trying to argue that those years led into the demise of the middle class we see today given our anemic growth economic reality!

    As for the bailout, I assume you mean the banks, you state that without it the economy would have completely crashed. That's a counterfactual argument you can't prove any more than your challenge of EarMoney above. Although I'm not arguing that point because as an investor I have done very well given the years of free money with its resultant financial engineering plus the series of QE's. I would rather the government hadn't picked winners and losers but so be it.
    Aug 25, 2015. 10:57 AM | Likes Like |Link to Comment
  • The Obamacare Economic Disaster?  [View article]
    Oh I think EarMoney can "generalize" the pain pretty safely. The fact is since 2008 the wealthy got a bail-out, the poor got a hand-out, and the middle class got sold-out.

    When the politicians say they are all for the middle-class and that's where you are, you better grab your wallet and hold on dearly.
    Aug 24, 2015. 08:41 PM | Likes Like |Link to Comment