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TranceAddict Investors Club @ Marketocracy (pg. 147)
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| Krypton |
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| Krypton |
| quote: | Originally posted by Capitalizt
The correction is still happening, but the intervention is prolonging it and bankrupting us in the process.
+$9 trillion in projected deficits over the next decade according to the CBO + the $4 trillion on the fed's books which isn't counted in these figures + TRILLIONS in additional bailout liabilities + the baby boomers retiring en masse over the next decade sucking the entitlement system dry.. Man oh man, there's gonna be hell to pay for our big government ways. |
Of course it's happening. That's exactly what I said.
| quote: | | Lack of regulation was a factor but not the cause of the bubble. I think you know that. |
Regulations are what prevent these calamities. If I can't leverage 50:1, then I won't.
| quote: | | Illusory wealth built on credit expansion and overleveraging. It should never have existed so it shouldn't be replaced..just like the trillions lost in the dot com boom. Pets.com shouldn't have been worth as much as Target..so when it lost 99% at the end of the bubble.."billions...zomg!", it was not a calamity. |
It's not being replaced. If you do the math from my blog posting, $17 trillion of capital has been lost while the Fed has only put in $4 billion. That can hardly be called replacing.
| quote: | | When did the discussion become about regulation? |
The implication of your statement, "he "boom" period with large amounts of malinvestment was the mistake my man. It is that we should be trying to avoid in the future..," is that banks are going to 'avoid in the future' mal-investment by themselves. Clearly that is nonsense.
| quote: | | I never said the market wasn't correcting. Clearly it is TRYING to correct, and clearly the government is standing in the way..bailing out out fatcats, raping taxpayers, and guaranteeing the destruction of the dollar in the future. |
The government has been working to prevent a systemic collapse. A part of that is some undeserving companies get bailed out because their insolvency posing a systemic risk. That's tough. It's better than letting the financial system completely collapse and live through a 10-20 years of depression. And have you noticed the dollar's appreciation through all this? What would be the destruction of the dollar is if the government has let the economy collapse, which is what you'r advocating.
| quote: | | "Infusing"..lolol. As if $4 trillion in real wealth can be created at the stroke of a pen.. As if $4 trillion in digits can somehow equal $4 trillion in real goods and services created by the productive sector of the economy. I think you know this is the same nonsense that got us into this mess in the first place krypt. |
I never said real wealth was created. Money is inherently worthless. One of its functions is to value real goods and services. Money is not in and of itself valuable. So, it's not a surprise real wealth can't be created at the stroke of a pen. Nobody's saying that. But there is something called liquidity and if the financial system doesn't have it, everything stops.
| quote: | | I'm trying to prevent the hitting the turbine on a Boeing 747..which looks inevitable at this point. Interventionist policies are just making the fan go faster and faster |
has already hit the fan. Interventionist policies are mitigating the consequences of the disintegrating fan. |
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| Shakka |
| quote: | Originally posted by Krypton
Regulations are what prevent these calamities. If I can't leverage 50:1, then I won't. |
That is not completely true. Improper/inadequate/incompetent regulation is certainly one possible ingredient in the recipe for bubbles. Easy money is the biggest contributor, however. How do you explain the great Tulip Bubble? I don't think it was regulations that caused it. Human nature and greed are probably the biggest contributors, imho. There will always be bubbles. My problem is when we have a Fed that wants us to believe they are helpless to intervene on the front end because they claim you can't see a bubble until it's in the rear-view, which I think is preposterous. The problem is that once you know a bubble has been created, nobody has a vested interest in popping it because the consequences and ripple effects are always extremely negative.
| quote: | | It's not being replaced. If you do the math from my blog posting, $17 trillion of capital has been lost while the Fed has only put in $4 billion. That can hardly be called replacing. |
This money is also being leveraged.
| quote: | | The government has been working to prevent a systemic collapse. A part of that is some undeserving companies get bailed out because their insolvency posing a systemic risk. That's tough. It's better than letting the financial system completely collapse and live through a 10-20 years of depression. And have you noticed the dollar's appreciation through all this? What would be the destruction of the dollar is if the government has let the economy collapse, which is what you're advocating. |
10-20 years of depression? You're ing off your rocker if you actually believe that. I'm negative as hell and even I think that is a ludicrous notion. Might want to check your definition of a depression and re-assess. Aren't you the same guy that called "the bottom" about a year ago?
The dollar's performance, while also a bit nonsensical in all of this, is also rational considering that inflation is still likely held at bay for the intermediate term given the huge amount of slack in the system and the fact that the dollar still maintains its status as the world's reserve currency and is still safer than most other currencies on a relative basis. Given that the current economic malaise is pretty global, it's not really that surprising to see the dollar performing well. Perversely, it is also a headwind for multinational U.S. corporations.
| quote: | | has already hit the fan. Interventionist policies are mitigating the consequences of the disintegrating fan. |
Maybe, though there are other schools of thought that suggest that all of this stimulus, while helpful for markets and companies in the near-term, will likely have much more negative long-term effects (crowding out of investment, eventual inflation, weaker currency, higher interest rates to name a few). Then again one must have a short-term in order to have a long-term, but I don't think you should be so sanguine that the policy steps being taken are necessarily the best or only options available. There's plenty of being stuffed into your stocking as well. |
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| Shakka |
Latest from Bill Gross:
| quote: |
A photograph of Bernard Baruch looms ominously on the far corner of my PIMCO office wall. Vested, with pocket watch and protruding chin thrust prominently toward the observer, this well-known financier of the early 20th century at times appears almost alive. It was Baruch who almost schizophrenically cautioned investors during the stock market’s speculative blow-off in the late 20s that “two plus two equals four and no one has ever invented a way of getting something for nothing.” Three years later during the depths of economic and financial gloom he opined just the opposite: “Two plus two still equals four,” he said, “and you can’t keep mankind down for long.” Homo sapiens, as it turns out, stayed on the deck for much longer than Baruch envisioned – some historians having suggested that it was only war and not the rejuvenating economic spirits of a capitalistic peace that eventually turned the tide – but his words, first of caution and then of optimism, typify the way that fortunes were, and still are, made in the financial markets: Get your facts straight, apply them to the current valuation of the market, take decisive action, and then hold on for dear life as the mob hopefully comes to the same conclusion a little way down the road.
I stare into Baruch’s eyes almost every day – not that we are simpatico or kindred spirits of any sort – but when I do, it’s as if I can hear him almost whispering to me over the portals of time: “Two plus two,” he commands, “two plus two, two plus two.” The message – fortunately, I suppose – ends there. If you thought I was receiving market calls from the ghost of Bernard Baruch I suspect PIMCO would have far fewer clients than we do today. But his lesson nonetheless remains clear: separate reality from exuberance either on the up or the downside and you have the ingredients for a successful market strategy.
Through my years here at PIMCO there have been numerous demarcation points where Baruch’s whispers almost turned into screams. Two plus two screamed four in September of 1981 with long-term Treasury yields approaching 15%, and two plus two boomed four in 2000 when the Dot Coms rose to prices that discounted the hereafter instead of the next 30 years. Similarly, 2007 was a screaming mimi with the subprimes – if only because the liar loans and no-money-down financing were reminiscent of a shell game, Ponzi scheme, or some other type of wizardry that was bound to lead to tears.
2009 is a similar demarcation point because it represents the beginning of government policy counterpunching, a period when the public with government as its proxy decided that private market, laissez-faire, free market capitalism was history and that a “private/public” partnership yet to gestate and evolve would be the model for years to come. If one had any doubts, a quick, even cursory summary of President Obama’s comments announcing Chrysler’s bankruptcy filing would suffice. “I stand with Chrysler’s employees and their families and communities. I stand with millions of Americans who want to buy Chrysler cars (sic). I do not stand…with a group of investment firms and hedge funds who decided to hold out for the prospect of an unjustified taxpayer-funded bailout.” If the cannons fired at Ft. Sumter marked the beginning of the war against the Union, then clearly these words marked the beginning of a war against publically perceived financial terror.
Make no mistake, PIMCO had no dog in this fight, and has infinitesimally small holdings of GM bonds as well. In turn, the rebalancing of wealth from the rich to the “not so rich” is a long overdue reversal, one that I have encouraged in these Outlooks for at least the past several years. But promoting and siding with the majority of the American public in their quest for change does not mean that as investors, we at PIMCO stand star-struck like a deer in front of the onrushing headlights, doing nothing to protect clients. Our task is to identify secular transitions and to preserve and protect capital if indeed it is threatened. Now appears to be one of those moments.
The threat, of course, falls under the broad umbrella of “burden sharing” and is a difficult one to interpret and anticipate, if only because the concept is evolving in the minds of policymakers as well. But clearly, as this financial crisis has morphed from Bear Stearns to FNMA, Lehman Brothers, AIG and now Chrysler, the claims of stockholders and in some cases senior debt holders have suffered. Please hear me on this. That is the way it should be. Capitalism is about risk taking and if you’re not a risk taker, you should have your money in the bank, Treasury bills, or a savings bond, not the levered investment of a bank or an aging automobile company. Let there be no company too big, too important, or too well-connected to fail as long as the systemic health of the economy is not threatened.
Having acknowledged that, however, let me be clear that these risks, long swept under the rug of prior Administrations, are now rising to a boil. The pressure to “survive well” or simply survive period is now clearly shifting to Wall Street as opposed to Main Street. The worm has turned, and our President, whom I voted for and still strongly support, has shed his predecessor’s regal robes for a populist’s cloak.
How does one invest during such a transition? Investors should recognize that this grassroots trend signals – most importantly – an increasing uncertainty of cash flows from financial assets. Not only will redistribution and reregulation lead to slower economic growth, but the financial flows from it will be haircutted and “burden shared” by stakeholders. In turn, the present value of those flows should reflect an increasing risk premium and a diminishing multiple of annual receipts. PIMCO’s Paul McCulley, famous for a catchy phrase or a light-bulb-generating truism, asked a group of clients the other day to compare FedEx and UPS to the U.S. Post Office, if it were a public corporation. “Which one would you pay more for?” he asked. If FedEx deserves a P/E of 12, wouldn’t the value of the Post Office be substantially less? His point, and mine as well, is that as wealth is redistributed, and the invisible private hand of Adam Smith begins to resemble more and more the public fist of government, then asset values should be negatively affected. First comes the haircutting and burden sharing, most recently evidenced by Chrysler and soon to be played out via the stress testing and equity dilution of government ownership of ailing banks. In those footsteps, however, will follow a slower rate of economic growth, not just in the U.S., but worldwide as heretofore libertarian capitalism is bridled, saddled and taught to trot instead of gallop over the investment plains.
This Outlook is not to bemoan this transition, but to recognize it. Slower growth can be a public good if it avoids the cataclysmic effects of double-digit unemployment, escalating foreclosures, and fear of financial insecurity. But the Obama cannon shot will have financial consequences. Do not be deceived by the euphoric sightings of “green shoots” and the claims for new bull markets in a multitude of asset classes. Stable and secure income is still the order of the day. Shaking hands with the new government is still the prescribed strategy, although it should be done at a senior level of the balance sheet. If the government indeed becomes your investment partner, you should keep the big Uncle in clear sight and without back turned. Risk will not likely be rewarded until the global economy stabilizes and the Obama rules of order are more clearly defined.
The ghost of Bernard Baruch still counsels that 2 + 2 = 4, but the repercussions of getting something for nothing should dominate the hopes that mankind will get off the deck and revert to a mean or median standard representative of outdated political and economic philosophies. Mohamed El-Erian’s and PIMCO’s “new normal” should trump green shoot exuberance for years to come.
William H. Gross
Managing Director |
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| Capitalizt |
| quote: | | Maybe, though there are other schools of thought that suggest that all of this stimulus, while helpful for markets and companies in the near-term, will likely have much more negative long-term effects (crowding out of investment, eventual inflation, weaker currency, higher interest rates to name a few). Then again one must have a short-term in order to have a long-term, but I don't think you should be so sanguine that the policy steps being taken are necessarily the best or only options available. There's plenty of being stuffed into your stocking as well. |
"The art of economics consists in not merely looking at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups." - Henry Hazlitt
Virtually all of the problems we have today come because our most influential "economists" have chosen to ignore this lesson. They focus on the short term and the "seen", while ignoring the long term implications and unseen victims of their policies.
I highly recommend this book to everyone:
http://www.hacer.org/pdf/Hazlitt00.pdf |
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| Nrg2Nfinit |
anyone tracking canadian stocks. I am looking into this company WTN (western canadian coal) listed on the tsx.
It looks undervalued right now relative to other companies in its industry giving the incentive of potential growth. shares are dropping down to around 1.27 canadian and it seems that theres close to 2,000,000 shares traded per day and it can be fairly liquid.
They are comming out with their 4th quarter apparently mid june and it will definatley be better then their last 4th. Coal prices have been climbing up until the past few days so i see this as a good investment.
Sunsail ran the stock through a screener and it gave me results lol. Just wanted to get more insight. Heres a link
http://www.google.com/finance?q=TSE:WTN
this 4th quarter will be compared to 3-31-2008. |
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| Krypton |
Sunsnail asked me to analyze it and the results are...
BUY
80% B
PE, PB, and PS indicate the company is undervalued relative to its sector average.
A negative is it does not pay a dividend. Return on equity is below the sector average but not bad at all when everything else is taken into consideration. Is it the best company out there? No. If you want in on commodities, X is top dog. X is a 100%, A+, STRONG BUY, pays dividend, and is hugely overvalued.
In fact I wrote a stock report on X which can be downloaded here...
http://finance.com/stock_picks__reports |
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| Nrg2Nfinit |
its funny because WTN produces coal for steel companies. I wonder though if their exports may be taxed extra to the US due to some sort of protectionism going on in the states. That would hinder upcomming revenues.
i bought today at 1.25 its already up to 1.34. A bit volatile today though.
I'll hold up close until their Q4 release then ill decide whetehr to sell before or after. |
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| Krypton |
I started a fund 2 months ago which invested in undervalued high quality stocks, with very high earnings yields. This fund has made 50% in 2 months, and I thought I'd share it with you guys.
http://www.marketocracy.com/cgi-bin...jLoJlIfMaKiAbDd
The current allocation is as follows...
X 15%
MRK 13%
TRMD 11%
CVX 9%
NE 7%
GRMN 7%
GE 7%
DSX 7%
ESEA 7%
MT 6%
CRH 6% |
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| Moongoose |
If only you had started it a week earlier, you could have ridden the rally up all the way until last week :)
Also it seems like i managed to score a blue star (#75) for the first fund i ever started at marketocracy ( MET0 ). Didnt even notice that until now.
Also^2, VIX under 30 for the first time since september... |
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| Krypton |
Good job. Next step is a green star...Like my first fund has repeatedly gotten...:D
http://www.marketocracy.com/cgi-bin...gMiPlKnMaKiAbDd
I have finished an analysis of my watch list of several dozen stocks. I will be publishing it soon. You might find it very useful. |
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| Capitalizt |
first Chrysler gets their 30-40 billion-ish bailout debt forgiven..now GM gets $16 billion in debt forgiven, untold billions in new loans for continuing operations, and the company is likely going to be bought outright by the taxpayers..
http://www.reuters.com/article/merg...943363120090519
| quote: | NEW YORK, May 19 (Reuters) - General Motors Corp's (GM.N) plan for a bankruptcy filing involves a quick sale of the company's healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.
The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source.
The remaining assets of GM would stay in bankruptcy protection to satisfy other outstanding claims.
GM has about $6 billion in secured debt, including a secured revolving credit and bank debt.
The government's plans include giving stakes in the new company to GM's union and bondholders, although the ownership structure of the company is still being negotiated, said the source who is familiar with the company's plans.
In addition, the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM, the source said.
The government has given GM until June 1 to restructure its operations to lower its debt burden and employee costs.
If those talks failed, the company has said it would follow rival Chrysler LLC into bankruptcy.
The board of the new company would be established with the tacit approval of the government. Fritz Henderson, who took the helm of GM earlier this year after the government pushed out Rick Wagoner, would likely head the new company, the source said.
GM could not be immediately reached for comment.
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Oh, lets not forget the underfunded pensions themselves could cost taxpayers an estimated $23 billion through the PBGC and the retiree medical care liability is underfunded to the tune of $34 billion. So that's another $57 billion in liabilities virtually guaranteed to rape taxpayers down the line.
These gubmint "investments" sure are paying off aren't they? :rolleyes: |
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