Monday, October 13, 2008
Up, Up, and Away?
It's a good day. The Dow and Nasdaq indices are currently up over 6%, but so far, most of my long-term trades are still in the red. I did very well on a Morgan Stanley (MS) trade, but I only had 100 shares. When the dust settles on Friday, I will feel more comfortable about celebrating.
Saturday, October 11, 2008
G-7 to the Rescue? Don't Bet on It
The news that the G-7 is meeting is not great news. The G-7 is Canada, France, Germany, Italy, Japan, United Kingdom, and United States of America. With the exception of Canada, Japan, and possibly Germany, none of the other countries' consumers can pull us out of this morass. For example, the average British consumer is more in debt than the American consumer, and even the German consumer is barely keeping his head above water (or did you forget all those formerly East Germans needing jobs?).
We need normally isolationist China and Russia to step in, and it's insulting to them that the G-7 is not already the G-9. WWII is long over, but the financial and political paradigms are all based on a post-WWII world. It's time to grow up and get the players with the most cash reserves and natural resources into the game. This crisis won't be over till China and Russia get officially invited to the club. Personally, I would invite Singapore and make it the G-10. With those three new players, the G-7 can exchange political capital for hard cash. Then, we can show them the advantages of being part of the club. Perhaps then, Russia might feel less inclined to continue to occupy Georgian soil and will avoid establishing a consortium of natural gas producers, which would include Iran.
We need normally isolationist China and Russia to step in, and it's insulting to them that the G-7 is not already the G-9. WWII is long over, but the financial and political paradigms are all based on a post-WWII world. It's time to grow up and get the players with the most cash reserves and natural resources into the game. This crisis won't be over till China and Russia get officially invited to the club. Personally, I would invite Singapore and make it the G-10. With those three new players, the G-7 can exchange political capital for hard cash. Then, we can show them the advantages of being part of the club. Perhaps then, Russia might feel less inclined to continue to occupy Georgian soil and will avoid establishing a consortium of natural gas producers, which would include Iran.
Bridgewater Report from 2003
Words of doom: "At this point [2003], the U.S. makes up only 30% of the world economy but sucks up 80% of the world's savings."
Here is the link to the whole report (PDF file):
http://www.rapp.org/wp-content/112203-bridgewater.pdf
(copyright belongs to Bridgewater)
HTML version here:
Bridgewater 2003 Report
(copyright belongs to Bridgewater)
Here is the link to the whole report (PDF file):
http://www.rapp.org/wp-content/112203-bridgewater.pdf
(copyright belongs to Bridgewater)
HTML version here:
Bridgewater 2003 Report
(copyright belongs to Bridgewater)
Friday, October 10, 2008
Nassim Nicholas Taleb
From Conde Nast's Portfolio.com comes a fantastic interview with Nassim Nicholas Taleb :
http://www.portfolio.com/views/columns/the-world-according-to/2008/08/14/Interview-With-Nassim-Nicholas-Taleb
Here is one excerpt:
The structure of uncertainty in the world is vastly greater than we think. So let's stop playing the narrative fallacy. Take economics, for example. How many economists figured out that when people go to the store to buy products from China, they're raising the price of oil at the pump? How many people thought of that? They raise the price at the pump just by going there.
Interesting fellow, this Mr. Taleb. His book, The Black Swan, received rave reviews, and I liked it but wouldn't necessarily recommend it over Wheelan's Naked Economics, Malkiel's A Random Walk Down Wall Street, or Greider's Secrets of the Temple.
http://www.portfolio.com/views/columns/the-world-according-to/2008/08/14/Interview-With-Nassim-Nicholas-Taleb
Here is one excerpt:
The structure of uncertainty in the world is vastly greater than we think. So let's stop playing the narrative fallacy. Take economics, for example. How many economists figured out that when people go to the store to buy products from China, they're raising the price of oil at the pump? How many people thought of that? They raise the price at the pump just by going there.
Interesting fellow, this Mr. Taleb. His book, The Black Swan, received rave reviews, and I liked it but wouldn't necessarily recommend it over Wheelan's Naked Economics, Malkiel's A Random Walk Down Wall Street, or Greider's Secrets of the Temple.
Random Thoughts
With GE reporting decent earnings and no corresponding effect on the overall market, I have only three thoughts in my head:
1. The beatings will continue until morale improves.
2. The market can stay irrational longer than you can stay solvent.
3. Omnia munda mundis. (All things are pure to the pure in heart.)
I'm not sure why the last one popped in my head, but perhaps it's my subconscious asking for divine intervention. After today's buying, my retirement accounts are now fully invested. From December 7, 2007 until today, my retirement accounts have decreased 22.6%. The S&P 500 has fallen 42.8% during the same time period. My retirement accounts need to increase 29% to get back to December 2007 levels (a decline of 1% in your portfolio requires more than 1% to get it back to the pre-existing level--it's counter-intuitive, but true). I would say today is the bottom, but I've been wrong before.
1. The beatings will continue until morale improves.
2. The market can stay irrational longer than you can stay solvent.
3. Omnia munda mundis. (All things are pure to the pure in heart.)
I'm not sure why the last one popped in my head, but perhaps it's my subconscious asking for divine intervention. After today's buying, my retirement accounts are now fully invested. From December 7, 2007 until today, my retirement accounts have decreased 22.6%. The S&P 500 has fallen 42.8% during the same time period. My retirement accounts need to increase 29% to get back to December 2007 levels (a decline of 1% in your portfolio requires more than 1% to get it back to the pre-existing level--it's counter-intuitive, but true). I would say today is the bottom, but I've been wrong before.
Thursday, October 9, 2008
Debt Clock
The national debt has become so large, the debt clock can't keep up:
http://www.mlive.com/flintjournal/voices/index.ssf/2008/10/and_the_debt_clock_says_time_t.html
You have to love the title: What time is it? "Time to kiss your future goodbye."
http://www.mlive.com/flintjournal/voices/index.ssf/2008/10/and_the_debt_clock_says_time_t.html
You have to love the title: What time is it? "Time to kiss your future goodbye."
I Was Wrong
My September 18, 2008 call of capitulation was wrong. See call after the jump:
http://willworkforjustice.blogspot.com/2008/09/capitulation-is-hereagain-good-times-to.html
But today, on October 9, 2008, I feel like I called the bottom only a few weeks too early--which isn't a capital crime. Here is my take on the current situation, which I posted on Barry Ritholz's website:
It all depends on GE and Google. That's it--the double G's will determine whether we make or lose money. No other real catalyst on the horizon--interest rates have been cut, and money pumped in, so both the money supply and interest rates have been manipulated. After HP's positive earnings, I am feeling sanguine, despite the blood on the streets.
I bought a commodity fund for my 401k today, T Rowe Price's New Era fund. Being relatively young, I am a buyer at these levels. I just wish I had more gunpowder. My Roth IRA is already fully invested.
http://willworkforjustice.blogspot.com/2008/09/capitulation-is-hereagain-good-times-to.html
But today, on October 9, 2008, I feel like I called the bottom only a few weeks too early--which isn't a capital crime. Here is my take on the current situation, which I posted on Barry Ritholz's website:
It all depends on GE and Google. That's it--the double G's will determine whether we make or lose money. No other real catalyst on the horizon--interest rates have been cut, and money pumped in, so both the money supply and interest rates have been manipulated. After HP's positive earnings, I am feeling sanguine, despite the blood on the streets.
I bought a commodity fund for my 401k today, T Rowe Price's New Era fund. Being relatively young, I am a buyer at these levels. I just wish I had more gunpowder. My Roth IRA is already fully invested.
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