Morning Call [7:28am ET] As traders focus on sovereign risk, they need perspective. Often one’s perception differs from reality. To bring clarity to this issue, earlier this month economists at Royal Bank of Canada published the results of their model. Interestingly, Ireland, not Greece, is the worst sovereign risk of the 21 Developed Countries in the study.
http://s.wsj.net/public/resources/documents/st_heatmap022010_20100223.html
Economic giant developing BRIC countries (Brazil, Russia, India, and China) were excluded from the study. So too were other developing countries, most of which would have very high sovereign risk ratings.
But today in Brussels, the soon to explode Greek debt bubble is the main subject for discussion by leaders of the 27 nations of the European Union (EU). Are they going to develop a solution to today’s Greek crisis, and tomorrow’s financial crisis in other EU nations – Portugal, for instance today had its debt rating downgraded – or are the Europeans going to look to the International Monetary Fund (IMF) for the ultimate in crisis management solutions.
At stake in the ultimate decision is the future of the EU and the euro and beyond that the way of life in Europe, i.e., the traditional state sponsorship for heavily unionized large corporations versus the approach of other countries where entrepreneurship and productivity have more focus.
In any case, the countries with the lowest sovereign risk according to RBC are, in order, Norway, Switzerland, Sweden, Australia, New Zealand, Finland, Denmark, Canada and Germany. The worst are, in order, Ireland, Greece, Portugal, United Kingdom, Italy, France, Spain, Japan and United States. Yes, all is not well in most of the Eurozone, but the UK, Japan and US are also problematic in terms of sovereign risk.
Sovereign risk in the aggregate is the key driver of precious metals prices. As you can see from the RBC study there are four main factors: (i) Fiscal Balance (ie, deficit spending) as % of GDP, (ii) Public Debt (ie, owed by government) as % of GDP, (iii) Real GDP Growth % (ie, growth of a nation’s total goods and services output, eliminating price inflation, and (iv) Inflation % (ie, growth of the prices – but not volume -- of goods and services in a nation’s economy.
Looking only at Real GDP and Inflation, Ireland is the worst of the 21 Developed Nations. But there is an ebb and flow to every economy, and Ireland happens to be out of luck for now, but will likely improve on a relative basis in the future because that’s how these things go.
The more serious factors are deficits and debt. In terms of deficit spending, the worst of the 21 nations is the US and UK is next worst. Blame a lot of that on military expenditures and reluctance to tax. This is another factor that ebbs and flows. In the case of the US, there is a massive taxing power that can, with political resolve and under the right economic circumstances, be applied.
The debt problem, however, is the most serious as there is a time, based on agreements, that debts must be repaid. As the RBC study shows, Japan is the worst offender, followed by Italy and then Greece.
So, while, on an overall score basis using criteria applied by RBC, it is Ireland, Greece, Portugal and UK that are the highest sovereign risks, leading international investors to require higher interest rates to compensate for that higher risk, the matter is not a simple financial one. Always in macro events like this there are political and social issues involved.
At the end of the day, debts must be repaid or written off. If there are write-offs or prospects of that, then interest rates and prices of assets will soar. Presently, there are solutions being worked out to ensure that sovereign debts will be paid. The matter is not yet settled, so with Greece and later Portugal under the microscope, the Euro is under pressure. Once a solution to this crisis is found, the Euro will strengthen. After that, the relevant issue is the basis for settlement. To the extent that non-Europeans, like the nations that back the IMF for example, are involved in bailouts of European countries, the Euro will strengthen further, and the other currencies will falter.
But the Greek debt crisis is one marker on an endless highway. Upcoming are the problems of Japan, the UK and the US, not counting those of the developing countries, which in the past have been the biggest failures.
You see, there is no end of the day. Life goes on. It’s all a matter of how we choose to live it. Today in Brussels, the German leaders are telling the world, in effect, they want to go down a path much different than most other EU member nations.
As the European leaders are meeting today, the Euro is gaining a little strength – it kind of looks like white smoke coming from the chimney – and along with it the prices of gold and silver, crude oil and US equity futures are rising. European equities are also strengthening. Earlier in the day, equity prices in Shanghai China and Hong Kong were quite weak, while most of the other markets in the region were quiet, awaiting smoke signals from Europe.
Have a good day.
CTA Trading Desk Post-Close Report
In a normal market the reversal Thursday would be a warning shot fired across the bow -- a huge intraday sell-off from resistance, an extended market overdue for a correction, finally showing the first signs of exhaustion. For a tradeable decline to materialize, however, the Bears need to take advantage of the vulnerability of the equity market, driving prices quickly below the S&P 1150 support zone and generate some downside momentum.
A quick glance at the Cara 100 RSI tool shows no buy set-ups, and over 20 stocks in the distribution zone or with completed sell signals. These are high quality stocks that have simply gotten ahead of themselves as the uptrend has gotten very long in the tooth. Once the shorter term daily RSI-7 closes under 70, traders can conclude the buying power has been met with equal or greater supply of stock and a change in trend is likely imminent.
As we have repeatedly cautioned, a legitimate downswing needs a series of two lower highs and lower lows at a minimum to suggest an interim price peak may have been reached. This can take place in hours or days or weeks, but usually in weeks. Definitive confirmation requires chart support to be violated, Fibonacci levels to fail, and swing lows undercut.
Once 1150 falls, the market has spoken (with price action) that the uptrend is in jeopardy; there then needs to be a lower high carved out three to six weeks from the initial high, with the intervening low between the two highs meaningfully violated.
The US bond market (TLT -0.65%) cratered after a poor 7-year auction and is teetering at support. TLT has minor support here, and about one point lower around 87.5; so, violating the lower area will usher in another four point decline, meaning interest rates will skyrocket. Higher interest rates would strain the finances of the largest debtor nation in the history of the world (yes, the US) and ultimately negatively impact the equity markets, as funds will flow out of riskier investments, locking in higher guaranteed rates of returns in the form of coupon payments.
The table has been set once again for the Bears -- can they actually take advantage of the favorable situation? Time will tell, but prepared risk is very, very high right now.
Have a great evening.
Comments
Cara 100 Ratings Changes
Good morning.
FSLR - Kaufman Bros. Resumes Coverage with a Buy. PT = $143
SBUX - Downgraded to Neutral @ Robert W. Baird. PT Raised from $26 to $27
US agency weighs limits on futures amid gold rally
http://www.bostonherald.com/business/general/view/...
Is this something to be concerned about?
Looks like government will fight this "bubble."
The gold futures do not seem to as they are creeping up.
FD: cash but thinking about scaling in gold and silver.
Cara 100 Update
NKE - Upgraded to Overweight @ HSBC. PT = $85
RIMM - Rodman & Renshaw Initiates Coverage with a Market Perform.
This just sent market up screaming
March 25, 2010 9:01:21 AM
Qualcomm Inc *RAISES Q2 GUIDANCE $0.56-0.58 v $0.53e, R$2.55-2.65B v $2.57Be ($0.49-0.53, R$2.4-2.6B prior)
- CEO: "We are very pleased with our stronger than expected performance this quarter with both the licensing and chipset businesses projecting higher revenues versus our prior guidance, We now project earnings per share to be well above the high end of our prior guidance driven by strength in licensing revenues and favorable volume and product mix in our chipset business."
- Guides CDMA based Mobile Station Modem (MSM) shipments: estimated to be approximately 92 to 93 million units compared to our prior guidance range of 88 to 92 million units
Cara 100 Update
AAPL - estimates, target boosted at BMO. Shares of AAPL now seen reaching $265. Estimates also raised, because of higher Mac and iPad sales. Outperform rating.
JCP - target boosted at Citigroup to $47. See higher near-term same-store sales for the company. Buy rating.
Live Coverage
For those interested, the link below will provide live coverage of today's Public Meeting to Examine Futures and Options Trading in the Metals Markets. As Bill C. linked yesterday, Bill Murphy of GATA fame, has supposedly brought in a "star" witness to help publicize the suppression of precious metals on the NYCOMEX.
Should be fun - Fireworks
http://tinyurl.com/ya5yotl
RBC sovereign debt study ingores the OBVIOUS
GDP doesn't matter. You could base it on (GDP - Consumer spend) vs Debt or Deficit , or Tax Revenues vs Debt or Deficit, and you'd have honest ratios, but to compare it against GDP is either idiotic, or dishonest, IMO.
Not that my opinion counts very much with RBC, LOL.
ADES
had much better than expected revenues and smaller loss. Looks like the company is starting to build momentum on its clean coal business.
FD:
Long from yesterday at $7.90 average.
Japanese yen
JPY clearly broke MA200 yesterday and showed us a nice gap at the same time.
It is on its way to the January low (around 107) which also coincides with the trend line which started in 2008. If that is taken out the JPY is going down big time.
Sayonara to deflation?
GCI
Looks like its starting to get momentum. I still think this is one of the most undervalued large cap companies in the market primarily because of negative sentiment surrounding newspaper advertising. Their business generates almost $1 Billion in free cash flow at current levels (compared to net worth of $4 Billion). They paid down $700 Million in debt last year and are on pace for a larger paydown this year.
FD:
I hold a small position at around $16.20 from a few days ago.
GATA's golden deep-throat
im awaiting news of the alleged explosive testimony from GATA's unveiling of their shadowy deepthroat.
i believe this is a critical juncture for GATA, if they fail to produce the identity of the person and simply relay his claims, it will severely damage their credibility, if they can actually provide the name and testimony of a verifiable big wig in the trading community it may just catapult them to gold-stardom.
call me pessimistic but i dont believe their testimony will say anything new they havent said before, nor will it give any significant identities out of inside people w/ special information.
i hope GATA proves me wrong. but at this point its: show me the money.
Cara 100 Update (Final)
RCL - PT Raised from $32 to $40 @ Stifel Nicolaus. Buy
WFMI - PT Raised from $32 to $39 @ BMO. Outperform
Re: Live Coverage GATA
It's worth reading Bill Murphy's 3 page position paper for the presentation today. points finger at jpm and hsbc as holding almost all of large short positions.
I am more than likely Way off base,
but Mos is being worked like someone knows something.... I guess its business as usual, but the past 2 weeks have seen unusual extremes in the amount of lots used to work it to the $ 57.00 area,and then yesterdays reversal on almost double the buys vs. sales... It just did not look or ' feel ' like a squeeze... Although this is just my Very humble a** opinion, I can't get Vale out of sight... I am willing to take the ride, for now...
Re: Live Coverage GATA
here: Bill Murphy's statement
http://www.capitolconnection.net/capcon/cftc/03251...
Sorry, it wouldn't "Tiny"
Re: Live Coverage GATA
again, the salient issue is:
1. we have been led to believe via BNN's broadcast yesterday that they will produce the identity of an "insider" of some importance to finally verify their claims of manipulation.
2. if Mr. Murphy fails to provide the clear name and position of the person in question, or if this person is simply a trader in a middle management position that claims there is manipulation, it will lack the veracity that his build-up led us to believe.
to date.... no money....
Re: This just sent market up screaming
Yeah, it's the bear version of My Lai.
Chinese markets breaking down?
I'm no China expert, but I do look at the SSEC overnight on Yahoo, and then FXI and CAF during the US markets, which however probably give more a view of what US traders think that Chinese stocks should be doing than anything else.
All of these seem to me to have a negative bias and to be breaking down below their recent trading ranges of the last few weeks.
CFTC live webcast
Link:
http://www.capitolconnection.net/capcon/cftc/03251...
Re: RBC sovereign debt study ingores the OBVIOUS
GDP can be irrelevant indeed, China's case is quite notorious. In terms of debt as percentage of tax revenue, the worst is Japan, at 601.1%, followed by Mexico at 339.2%. The U.S. is up there in 6th at 144.7%.
Full table: http://shockedinvestor.blogspot.com/2010/03/how-go...
Excellent performers are Chile, Brazil, China, Australia, South Korea.
More Info on ADES if anyone is Interested
http://www.adaes.com/PDFs/presentations/Exhibit%20...
Market support?
In the last hour on Fox Business Charles Payne and a trader were discussing the unusual action that occurs overnight in E minis for the S&P inferring that the Fed or some entity is propping up the market. Most of it happened in December and January. They indicated the support would have to consist of trillions of dollars to justify the move the market makes at certain times. They indicated no one knows the support of the market or where it is coming from... The trader basically said the government will not let this market go down.
C'mon people, borrow, invest, spend!
BOC guv, GS alum tells biz community to get the lead out. Who knows best? To be continued
http://www.theglobeandmail.com/report-on-business/...
Drive toward 11K is on
70 points left, which is nothing for this market. Barring sudden news development, if not today, then tomorrow...
Re: Drive toward 11K is on
3rd and goal.
global bout of deleveraging trigged by PIGS default?
How possible is it? I'm eying the dollar and is has not been so strong since the second part of 2008. Another crash coming?
Re: Market support?
Are you surprised? It has been happening for a while now.
Re: Live Coverage GATA
and here we go,
no names, no significant or new information,
same allegations,
same claims to inside figures,
but still no one.
unless i have missed something where and who is the deep throat Mr. Murphy claimed would be identified as per yesterday's interview with BNN?
i hope something comes out shortly as im very disappointed thus far at what is building up to be one giant disinformation campaign.
the clock is ticking mr. murphy....
Re: global bout of deleveraging trigged by PIGS default?
Still have Italy, Spain and Ireland to send things to the depths. They are much larger than Greece or Portugal.
I think it ends as a big group hug and money printing bonanza.
Photo Op!
Re: global bout of deleveraging trigged by PIGS default?
What if the recovering economy causes things to get better in those countries?
Re: global bout of deleveraging trigged by PIGS default?
Gee, if you print ENOUGH, everything will go higher...
That's the Keynesian way, isn't it?
Forgive me, but it occurs to me that we are printing a LOT more to create precious little, it seems, in the way of "growth". Seems to me its a great example of malinvestment.
Capitulation
I don't think we need to see 11000/1200. On the other hand, next week is EOQ.
Probably prudent to stay in cash.
Re: Drive toward 11K is on
outta' curiosity, at what point did it get inside the 10 :)
Re: global bout of deleveraging trigged by PIGS default?
"What if the recovering economy causes things to get better in those countries?"
What recovering economy? The only evidence of recovery is in govt. manipulated statistics. Things here are deteriorating at an accelerating pace.
I chatted with a RE closing agent from Houston last week in a waiting room.
She says all the current commercial construction activity was approved before the 08 debacle, and that there has been no follow-on. Once the pipe is exhausted, there is nothing.
If you look at the retail numbers, it's Abercrombie and the group that has as their customers those most ignornant of the state of the economy.
No surprise Bennie would conspire to launch the market with intervention just as QE is ending. Yes it can go higher, but anyone who has seen this game before knows what happens to a parabolic push. And one that looks like an EW wave 5 that is likely to truncate, combined with a seasonal cycle for a decline. I'll be watching 1220 and 11,200 and the pattern to redeploy full shorts.
There will be no true recovery until all of the excess credit generated over the last 30 years has been extinguished, and there is some resolution to the US Govt debt crisis other than a collapse of the Dollar.
Re: ADES
Team, Kudo's. Call of the week. Give me that clean coal!
Bob
Gold - SP500 relationship
Even if Bill warned about gold potentially going down, I'm surprised about the recent size of the move against the SP500 index. The attached graph shows 3 years of weekly relationship between GLD and SPY (the two ETFs about gold and the index SP500). It broke a trend line, and the weekly RSI7 is really low.
I'm surprised about the power of the bulls, without the need for lower USD, or "inflation" fears to push the gold, too.
this is my dillema
The gold miner sentiments are record low and getting lower. The US equities are record high and getting higher. The dollar sentiment is record high and getting stronger. The gold/miners chart setup is bullish (mimics mid august 09 setup), but stock crash or stronger dollar can destroy the miners.
So many mixed signals!
But, I decided to slowly enter the miners/silver/gold hoping the TA will prevail. Hopefully stops will save me.
Re: ADES
Bob - Thanks. This thing looks like it has a lot of room to go up. Valuation is at about $65 Million for this company and they look like they could be doing $200 to $300 Million in revenues in a year or two.
By the way, the news out yesterday about Arch Coal could be a big deal. I listened to their conference call this morning and they said the Arch Coal Deal was not for cyclean (one of their existing technologies) but for a new technology which the two have been working on for quite some time and led to a breakthrough recently for which Arch wanted an exclusive license(royalty/commercialization deal in coming weeks). This could be a big one for the company.
They have their hands in so many things right now that the valuation looks so out of whack I can hardly believe it. I need to temper my enthusiasm for this company.
Re: Gold - SP500 relationship
I'm not sure about the trend line, but the ratio went down to the August 2009 levels. We all know what happened to gold after that.
Narrow vein mining
Anyone know what constitutes a practical width for modern (as opposed to artisan) mining. I'm keeping an eye on Rainy River after Bill's head up, and they seem to have high grade ore, but over narrow widths. I would expect that mining with machines rather than pick and shovel requires some minimum size of hole, which would mean diluting the ore grade.
(GR) Franco-German
(GR) Franco-German "last-minute agreement" on aid package to Greece is for €22B - Le Figaro
- Paris and Berlin have agreed on the terms of a bailout for Greece. The agreement provided a budget of 22 billion euros "as a last resort." The assistance will be released in case of inability to Athens normally finance markets.
- The European framework consists of coordinated bilateral loans which Member States would have to contribute, with the IMF granting financing through additional loans.
- The text must still be submitted to EU President Van Rompuy.
Re: Narrow vein mining
ChrisM,
You raise an excellent point re Rainy River (RR.TO). In fact in my morning conference call with my traders I raised this very point in explaining my reasons why RR.TO is not in my top nine selections for accumulation. The jury is still out, although Ray Threlkeld obviously believes that the company's $20 mil drill program for 2010 will answer this issue with positive results.
To answer somebody else's query here in the past day or so as to my post-PDAC assessment, I can only say that I will do it when my associates are able to review the data. We obtained an awful lot of data, and leads, so this is going to take quite a bit of time for even an initial assessment by professionals.
Btw, my list of nine includes US Gold, New Gold, Silver Wheaton, Silvercorp Metals, and Alamos Gold, all of which I have discussed in these pages. DYODD.
Re: global bout of deleveraging trigged by PIGS default?
What will the US market do without a steady injection of $25 billion in freshly printed cash every week? What about home mortgage rates? How about bonds?
Dividing 1.3 trillion by 12 months, we find that the Fed has injected 108 billion per month since March of 2009. The entire money flow for the US market in March 2010 was $34 billion. And the lower the volume, the MORE the Fed's printing matters. What do we think this 12-month rally is based on again? Perhaps - its just about the money flow.
Only four more trading days until the end of QE (at least for now). Based on this week's trading activity, bonds are not looking forward to this event.
Oops, there goes the euro again. Gold is not pleased.
Outperformers today: financials, discretionary, retail, and homebuilders
Underperformers: oil & gas, gold miners, utilities, and healthcare.
Re: this is my dillema
Normally diverse investments are trading "all in one market".
IMHO, when the next big dive comes, it will again be equities, gold, oil, commodities, all down (with the miners being decimated). US Dollar up, as a flight to safety (least worst fiat). Bonds ought to rally through the decline, but there is an ominous H&S pattern in LT bonds that threatens to take them wayyy down. Maybe a declining bond market can finally decouple Gold from the one-market, liquidity-driven bubble. TOG. But not until Gold is sub-1040 or into the 900's. I think short equities will be a better trade than long Gold for quite some time. My research biases me to think that once this trend breaks, it will be down into about late 2012.
Bill Murphy names Andrew Maguire
dr. cosa, I sit on both sides of this argument. I do believe that Bill Murphy is riding the right horse, and we should be appreciative and understanding of the challenges in the fight GATA's taken on.
But in today's CFTC hearing, he raised the name of Andrew Maguire as being his evidence of wrongdoing by HB&B. Interesting that CFTC knows all about Maguire's complaints, which have been voiced publicly for some time.
More interesting is that Maguire, in a complaint letter to CFTC a couple years ago, quotes Murphy's findings as evidence of wrongdoing in precious metals markets.
http://forum.prisonplanet.com/index.php?topic=1465...
Today's hearing -- of what I saw -- seemed to me to be a push for Big Government to get more involved in the regulation of our markets. The simple fact with new position limits is that the big players will take their business elsewhere, and unless the US market regulators and legislators are prepared -- and they are not -- to prevent global financial service companies from dealing in other markets ("my way or the highway"), the CFTC is barking up the wrong tree. Best they work with every major regulatory regime in the world to try to harmonize policy legislation.
What bothered me about today's hearing is very important, which is that nobody wants to address the issue of conflict of interest. It seems that nobody -- other than maybe Murphy -- is prepared to stand up and say a lending bank should not be a dealing bank, prop trader, advisor, broker, insurer, and all else that they want under their "self-regulated" umbrella. So, for all the intelligent and fact-based discussion I listened to, it wasn't worth a hill of beans.
Re: global bout of deleveraging trigged by PIGS default?
Come on man...Do you really think the 76% rise from last March is just a dead cat bounce? Don't you think there has been some improvement in fundamentals? I'm not saying its all peaches and cream but you have to admit things have gotten at least slightly better. Even if its the medium term top right here and now, this 76% rise has thrown a lot of money back into consumers' hands and has helped "right" a lot of the financial institutions' balance sheets. You can't deny that, valuations aside.
Flatness of the market surprises.
I can't believe the bulls could not move this market up during trading hours. Lots of positive news no significant spike. Maybe it will happen in the last hour, but my gut is saying we roll over and close below the open.
Bob
Is the SP 500 Following the Nikkei?
I'm not talking about the longer term (I'm sure I'll hear a lot of people say we're Japan 20 years ago)...I'm talking the last 3 years. Back in 2007, the Nikkei topped out in July or about 3 or 4 months before we did. Then in August/Sept 09 it topped out (again about 3 or 4 months before we did in January) before dropping 13%. It then turned around and did a straight move up of about 20% and topped out in January.
If the pattern holds then we could probably see a topping out in another month or so at around 1,200 before another pull back.
Demographics and sentiment aside, the Nikkei looks like a buy with a series of higher highs and higher lows.
Recovery?
L at best, not V...
http://tinyurl.com/ycgjmnu
Quite a recovery in the VIX. Added to FAZ, SRS, SCC.
Early, but do not expect trend to last another week.
PPT juicing the banksters again.
Re: Recovery?
So this 76% has been caused by short covering or the infamous PPT pumping it up, right?
In that link that you posted, did you notice how every time it dropped it eventually went back up? Why would it be different this time around?
Again, I'm not saying that things are undervalued right now but how can you just ignore everything that has happened and say there has been no improvement? I don't understand the excessive negativity.
Re: Recovery?
TOF: I have not been able to understand your optimism of late either.
We are both right, just not at the same time. I anticipate a robust man
coming to my end of the see-saw.
"how can you just ignore everything that has happened and say there has been no improvement?" - I just saw the Govt pee away another $1T this week. A trillion here, and there, and soon we are talking some big money. The USG is so far beyond the point of no return, they must know in the end, the dollar will be replaced, or that is the plan.
http://tinyurl.com/ydqcyas
Newbie; hope I have added something other than noise.
Re: Bill Murphy names Andrew Maguire
thx for the breakdown Bill,
the crux of my argument is that the interview on BNN yesterday amounts to nothing more than bluster on the part of Bill Murphy for directly or even indirectly leading us to believe they would in some way identify a "deep throat" type character.
not only did no deep throat get identified, no new material information was presented.
i dont like BNN staff going soft on anyone, and I would certainly hope that during his next appearance they would play back that portion of his interview, then play back the portion of his testimony and ask point blank why he simply testified the same info as before and named not a deep throat but a previously referenced insider that the CFTC already knew about?
that is not even in the realm of a deep throat, and sadly it puts the first of the final few nails in the coffin for Mr. Murphy in my mind. GATA itself and what they claim in general are credible from a macro perspective, and even Mr. Murphy himself has my respect in terms of fighting the good fight, but this is a clear loss of credibility, when he goes before the media to make false claims.
im sorry to those who follow his work but this whole fiasco takes the cake, he should have simply given his testimony without any fanfare as that sort of bluster really pisses me off.
Re: Recovery?
teamonfuego,
Re: "I don't understand the excessive negativity"
Maybe it is just a matter of concern over a possible replay of the 1930's?
http://caracommunity.com/content/caras-commentary-...
Re: Recovery?
I hear you. Everyone has their own opinions. We could both be right but just have the wrong timing. And I'm not terribly bullish, just open minded enough to see positive things are indeed happening around us. I agree that we have some big problems but I just don't think they're as imminent as people make them out to be. Human beings by nature accept and learn to adjust to things and I think we will be able to do the same with regards to our debt problems going forward. For the most part, I think people that are constantly saying only negative things are either short or looking to get in at better prices.
BUSINESSLESS RECOVERY
ALOHA!!
What good is a BIG BANK RECOVERY without a SMALL BUSINESS RECOVERY? Can you ever paper over bank losses with bailouts and accounting magic and then predict future economic growth and monetary stability with no jobs?
For a long time I have reported how the US Treasury has been PRICE FIXING the US economy, even during the Bush years, so this whole "Stimulus Corruptus" has gone nowhere in terms of solving the real cause of the crisis, which is in essence the monetary system. However, rather than bore people with that dynamic I will look at the huge malinvestment that the monetary system has created, from which the US economy suffers now and will continue to suffer until government and all its machinations and illusions get the hell out of Dodge and allows the private sector to "readjust" the malinvestment that plagues our globalized failures(see RBC list).
For starters this malinvetment created by government has diverted capital into unproductive enterprises that only benefit few paper shufflers who are the parasitic middlemen of global power. Capital is and continues to be misallocated.
Lets look at jobs and why there is such rampant unemployment whether you measure employment at 10% or 20%. Instead of looking at job losses and how to stem them it is more important to look at business starts and failures and fix that first.
One article that comes to me via NFIB explains the failure of job creation through government stimuli quite well and here it is ...
LINK: http://tinyurl.com/ybrktx3
Then let us look back via 2009 data, until new data comes forth, at "business starts" and failures and the bankruptcies ...
Small Business Impact on the Economy
The estimated 29.6 million small businesses in the United States:
* Employ just over half of the country’s private sector workforce
* Hire 40 percent of high tech workers, such as scientists, engineers and computer workers
* Include 52 percent home-based businesses and two percent franchises
* Represent 97.3 percent of all the exporters of goods
* Represent 99.7 percent of all employer firms
* Generate a majority of the innovations that come from United States companies
Source: U.S. Small Business Administration Office of Advocacy, September 2009
Small Business Survival Rates
Small Business Openings & Closings in 2008
* There were 627,200 new businesses, 595,600 business closures and 43,546 bankruptcies.
* Seven out of 10 new employer firms survive at least two years, and about half survive five years.
* Findings do not differ greatly across industry sectors.
Sources: U.S. Small Business Administration Office of Advocacy, September 2009
Survival and Longevity in the Business Employment Dynamics Database, Monthly Labor Review, May 2005. Redefining Business Success: Distinguishing Between Closure and Failure, Small Business Economics, August 2003. END
Do the math for 2008 equals net negative business starts ... The last Obama Jobs Summit excluded any representation from the NFIB or small business, however key attendees were Fortune 500 execs and union bosses. In other words the largest contributors to re-election campaigns were at the top of the list.
So it seems the latest data shows America and its elected officials are trying to restart the economy based on negative business starts. The mistakes in allocating capital are costing America and its citizens dearly, not just the current generation of the unemployed but the future generations with regards to debt burden due to debt service. As I have explained many times there are significantly lower "net" tax revenues flowing into the US Treasury currently while there are significantly higher levels of debt issues. None of that makes for a bright future or an economic recovery, much less sound fiscal policy. This is the basis of the US Constitution, since it is a well known and proven historical fact that governments, especially empirical ones, always fail, so it seemed logical to our Founding Fathers to limit the size of government, thereby guaranteeing that when our government did fail the failure would create minimal and short-lived market disruptions, malinvestment and social calamity. With the clever advent of the money monopoly in 1913 the political monopoly was born and here we sit on the RBC list of impending insolvency, whereby many of our States and cities, like California and Detroit, make Greece look like a Scotsman's purse!
To eliminate the overwhelming burden of government we need to address regulatory reform and elimination of taxation where America can perhaps have a boom for business ... a SBA SUBPRIME based on jobs not a SUBPRIME based on debt. The banking cartel in America frowns on such endeavors as it is very hard to create mega profits on business starts and jobs as opposed to shuffling paper instruments of debt. Had our elected leaders allowed these over bloated banks of malinvestment to fail it would have cleared out the dead weight and more efficient and risk adverse banks would have replaced those that failed. The error was to reward the failures. The error was intervention by government. These same banks were getting bailouts and special favors throughout America's history. By reviving them once again we guarantee future failures as we are now starring down the 12 gage barrel of TOO BIG TO GOVERN. The global "debt derivatives" we now call "free floating currency" is under the gun and rightly so.
Re: Bill Murphy names Andrew Maguire
dr.cosa,
I have an ax to grind with Canadian media too. In today's Toronto Star, a Canadian Press article headlined McKenna warns of 'dutch disease' or something. The opening paragraph says, Frank McKenna, former New Brunswick premier, told a Kitchener audience that (basically) the country needs to protect its manufacturing sector. Nowhere in the article does it state what McKenna is up to these days, or has been for the 13 years he's not been the NB premier. In other words, give the man a free ride as to his credentials and hide his vested interests. Anyway, they did the same thing when he was promoting real estate in Turks & Caicos years ago, and I wrote to the Star to explain the situation then too. Although I do like many of the people at BNN, I suggest that, in too many cases, the media in Canada are dead from the ankles up. They never did get it with Stelco, which amazes me to this day.
Re Murphy/GATA, I hear you doctor. If a person is going to point fingers, he or she had better back it up or their credibility becomes the issue. I think Murphy can, but shooting out words today like they were coming from a shotgun didn't hit the target as I see it too. He has the stage now, so hopefully his papers are more succinct.
Btw, CFTC introduced Murphy in their hearing today as a former pro football player and that his GATA made a presentation or something in South Africa. Whaa? How about introducing him as a professional commodities and futures trader since that was relevant to the commodities and futures commission.
Re: Recovery?
I hear you Bill. There is definitely some concern over that. It's a very difficult period to invest in. I hear so many negative stories and talk to friends that are business brokers and staffing recruiters and I hear nothing but bad things. Then I see business in my own retail company and in other friend's companies picking up and it gets me confused.
I'd rather just focus on individual companies for now and go with the assumption that we will probably trade sideways for a few years, giving us opportunities to buy at lower prices. Shorting has been so difficult for so many of us that I think its better to wait for prices to come back to you or to focus on undervalued investments based on cash flow.
gravestone dojis abound
Check out all your favorite financials: BAC, WFC, GS, JPM - gravestone dojis today. That's not generally one of those bullish candles.
Metals or miners - who's right?
Miners getting clobbered while GLD and SLV still green.
Re: Bill Murphy names Andrew Maguire
yes,
this does not surprise me in the least.
the media in canada despite our self-proclaimed independence is under more singular control than the american and european counter parts in far too many ways.
does anyone really think that the financial reports on the Toronto Starr staff who are paid a pithy sum really can provide us anything as good as what we pool together on this site or others?
and if BNN can actually hire some journalists who ask tough questions, not just slow-pitches in the strike zone like they did for Mr. Murphy and others, we might get somewhere.
journalists today are faced with dwindling sources of revenue, i dont blame them for being more willing to toe the party line. my other life is in health and nutritional science and trust me it is much much worse. the "health" pages of most newspapers are cleverly disguised ads written by journalists who know little to nothing of science beyond what observational studies tell them. its sad.
Faceplant
A faceplant today worthy of a youtube post, IF we could speed up the video.
http://finviz.com./
Before I sign off, I want to second the recent post of links to King World News interviews. I thoroughly enjoy these. Spend some time in the archive.
http://www.kingworldnews.com/kingworldnews/King_Wo...
Re: Bill Murphy names Andrew Maguire
part 2:
regarding the return of our manufacturing base,
i always found it paradoxical that our manufacturing base has been in fairly steady decline the past decade or so, and the provincial govt seems to never stop pouring millions upon million into the sector trying to save it, while claiming we need to create "green jobs" and "skilled jobs".
they essentially pour millions in to secure thousands of blue collar jobs that evey few years require another cash infusion. if there is such a demand for these allged skilled jobs, just spend the last $200,000,000 training these people for these jobs.
the reality is i suspect that the govt knows that blue collar manufacturing jobs are a much greater cash cow because there simply isnt much of a demand for these so called jobs of the future as our system is clogged with computer science dudes making $45,000 a year.
manufacturing might make a return in ontario just not in the south, it may move to the far north where land is cheap, municipalies will roll out the red carpet and an eager jobless population would gladly take $15 an hour instead of demanding $25 to assemble a car. and that $15 an hour would go that much farther up there. it would be win win.
Re: Bill Murphy names Andrew Maguire
part 2:
regarding the return of our manufacturing base,
i always found it paradoxical that our manufacturing base has been in fairly steady decline the past decade or so, and the provincial govt seems to never stop pouring millions upon million into the sector trying to save it, while claiming we need to create "green jobs" and "skilled jobs".
they essentially pour millions in to secure thousands of blue collar jobs that evey few years require another cash infusion. if there is such a demand for these allged skilled jobs, just spend the last $200,000,000 training these people for these jobs.
the reality is i suspect that the govt knows that blue collar manufacturing jobs are a much greater cash cow because there simply isnt much of a demand for these so called jobs of the future as our system is clogged with computer science dudes making $45,000 a year.
manufacturing might make a return in ontario just not in the south, it may move to the far north where land is cheap, municipalies will roll out the red carpet and an eager jobless population would gladly take $15 an hour instead of demanding $25 to assemble a car. and that $15 an hour would go that much farther up there. it would be win win.
bullish chart of the day - for 10 year treasury yields
Weekly chart tells me we might see a break above 4% for 10 year treasuries. Last two days the move has been big, and it looks for all the world like a cup & handle. And as the market tanked at end of day, what did bonds do? Nothing.
Got TBT?
http://stockcharts.com/h-sc/ui?s=$TNX&p=W&b=5&g=0&id=p18351091312
Re: Drive toward 11K is on
You missed the 95-yard drive over the last year? ;) Sometimes it feels like I watched every minute of every play.
ACMR
I posted about this one a few days ago. Its a very interesting company in my opinion. I don't have a position in the company but I think they have a lot of potential to turn things around. Balance sheet looks solid enough to get them through another couple of years and they almost turned a profit (actually after adjusting for one time items I think they did earn a profit) last quarter. Anyone know anything about their stores?
A couple of articles over at Spiegel
One an update on shipping - which doesn't look positive for German companies. 1000 undelivered ships still not yet received... ay ay ay.
http://www.spiegel.de/international/business/0,151...
2nd, a moving and important read for anyone with family or friends serving in Iraq. Fixing up broken minds with an enviable success rate through a new therapy program.
http://www.spiegel.de/international/world/0,1518,6...
and one from WSJ:
Gap Widens Between Tech Richest and the Rest (cut n paste title into browser)
"A handful of cash-rich companies are consolidating power in the technology industry, using their wealth to expand into new businesses and making it harder for small and midsize competitors to break through.
Why the industry is evolving this way is rooted in balance sheets. Over the past two years, Apple Inc., Oracle Corp., Google Inc., Microsoft Corp. and six other large tech companies have generated $68.5 billion in new cash, compared with just $13.5 billion for the other 65 tech companies in the S&P 500 Index combined, according to a Wall Street Journal analysis of data provided by Capital IQ."
and this: Caterpillar Takes Hit on Health Care (cut n paste)
"Caterpillar Inc. said Wednesday it will take a $100 million charge to earnings this quarter to reflect additional taxes stemming from newly enacted U.S. health-care legislation.
The world's largest construction equipment manufacturer by sales, warned last week that provisions in the legislation would subject the company to federal income taxes on the subsidies it receives for providing prescription drug benefits for its retirees and their spouses."
hmmm. Govt will save money on new health plan (yeh right) but business will take multi-million dollar charges to earnings. So let me guess where it's going to hurt taxpayers in future...
Re: Metals or miners - who's right?
Lots of headwind from the dollar. I guess miners are heavier and drop faster. While I scaled some into SLV at the close, I'm not sure about miners yet.
Re: Bill Murphy names Andrew Maguire
posted by GATA:
CFTC faces naysayers on metals trade limits
Submitted by cpowell on 01:40PM ET Thursday, March 25, 2010. Section: Daily Dispatches
By Frank Tang and Tom Doggett
Reuters
Thursday, March 25, 2010
http://www.reuters.com/article/idUSN2521251820100325
WASHINGTON -- The top U.S. futures regulator heard objections on Thursday from exchanges and traders who said limiting metals speculation could irreparably harm markets, while some questioned whether the agency has the authority to impose such restrictions.
The day-long hearing came as Washington moves to crack down on Wall Street excesses blamed for the 2008 run-up in commodity prices and the recent financial crisis. The Commodity Futures Trading Commission has been criticized for not doing enough to prevent excessive speculation. Soaring energy bills prompted political pressure for tougher energy speculative limits. But calls for curbs on gold and silver speculation have been limited, making it less certain the commission will propose a cap on holdings.
Re: gravestone dojis abound
RSI(7) on daily SPY doesn't look healthy either. Closer to top or maybe topped already? The only big question is how big the dip?
Re: Faceplant
bolus,
I can't say about King World News, but McClatchy Newspapers, the 3rd largest chain in the US, seems to be doing an outstanding job at investigative journalism, or do I have it wrong?
UXG - My PM stock of the year-Update
Go to their website for a release of the Form 8-K describing the latest drilling results. Tonite, afterhours, the stock has dropped 5% down to $2.54 where I initiated rebuying the company. Additional bids are in at lower price points. As I mentioned yesterday, this seems like a nice price point to start but I hope to average down which is a possibility as the price of precious metals tank An average price below $2,50 is fine although I wouldn't mind it dropping to $2.25-$2.30. A replay of the last drop took it down to the $2.00 area. If PMs get shredded, maybe it happens. I have taken profits 3 times this year in UXG. It is a nice play but you need patience.
Re: gravestone dojis abound
I agree...the SPY 14 going back under 70 looks negative. Tomorrow looks like it is setting up for a gap down day...
Re: Flatness of the market surprises.
Nice call on the roll over. You are very insightful. :)
Bob
Re: global bout of deleveraging trigged by PIGS default?
bolus,
"There will be no true recovery until all of the excess credit generated over the last 30 years has been extinguished, and there is some resolution to the US Govt debt crisis other than a collapse of the Dollar."
Hear! Hear! and Amen!
Re: Flatness of the market surprises.
Nice call on the roll over. You are very insightful. :)
Bob
You left out good-looking, sensitive, and a good dancer. ;)
Seriously, Bob- nice call.
Re: global bout of deleveraging trigged by PIGS default?
TOF,
Where do you see improvement in fundamentals?
Money has been stuck in the biggest banks. They can't lend and businesses don't need to borrow since consumers are scare to death and not buying any big ticket items. At least that is the picture around here in the Midwest.
Re: global bout of deleveraging trigged by PIGS default?
Most of the industrial production numbers, earnings, and retail sales.
Re: Flatness of the market surprises.
Thanks Second. All true. Wondering what your sentiment indicator is telling you? Dow 12000? Lets put it this way will we see 12000 before we see 10,000?
Bob
Re: Flatness of the market surprises.
Bob- I took the sentiment indicator in to the local shrink for an overhaul, as it seemed to be pedal to the metal and I couldn't get the brakes to work. She told me she could find nothing wrong. So I guess it's 12000 before 10000, unless it veers out of control and crashes to 6000 before I can bring it to a dead stop.
Maguire = Markopolos
It appears the CFTC is closely following the highly suspect path of the SEC into the history books...
"On March 23, 2010, GATA Director Adrian Douglas was contacted by a whistleblower by the name of Andrew Maguire. Maguire is a metals trader in London. He has been told first-hand by traders working for JPMorganChase that JPMorganChase manipulates the precious metals markets, and they have bragged to how they make money doing so.
In November 2009 Maguire contacted the CFTC enforcement division to report this criminal activity. He described in detail the way JPMorgan Chase signals to the market its intention to take down the precious metals. Traders recognize these signals and make money shorting the metals alongside JPM. Maguire explained how there are routine market manipulations at the time of option expiry, non-farm payroll data releases, and COMEX contract rollover, as well as ad-hoc events.
On February 3 Maguire gave two days' warning by e-mail to Eliud Ramirez, a senior investigator for the CFTC's Enforcement Division, that the precious metals would be attacked upon the release of the non-farm payroll data on February 5. On February 5, as market events played out exactly as predicted, further e-mails were sent to Ramirez while the manipulation was in progress."
http://tinyurl.com/ye6v8uy
China vs. US
Of all of the things we have to worry about as investors, I think the China-US battles going on in corporate world may be the most worrisome. If you think about where the majority of the growth has come from over the past decade, it's clear that it came from China. China's manufacturing growth fueled the world's consumption of lower cost goods which in turn gave rise to the world's real estate bubble.
Well, the news of late in the corporate world is a little unsettling at best. First, Google pulled out of China because of their issues with censorship. Next, GoDaddy refused to register domain names in China because China is requiring applicants to provide extensive personal data including photos of themselves. Then Network Solutions followed suit. Now, it looks like it's Visa and MasterCard's turn:
http://www.bloomberg.com/apps/news?pid=20601087&si...
It wouldn't be such an issue if China didn't account for such a large portion of the world's growth over the past decade and if they weren't in the WTO (which requires them to abide by the laws of the WTO that the rest of the world abides by).
Interesting times huh. Sovreign debt, thats so far away from me
But if equities can reach an attractive price level, the race will be on. I would say the weekly chart should determine the trend and entries by the daily. Use your Cara 100 choices as they are a pretty good list even with my limited knowledge of it. RSI 7 is a good theory too. I like it. This is a good site. But all is predicated on less risky prices. I look for the market to demand them given all the untold risk at large. Good trading!
I would love to see a daily chart that reflects the Cara 100 by GICS Sector. It looks like it would have 8 lines. So, at a glance you could tell which sector was outperforming. That might be of interest.
StockCharts has a Perf chart.
Re: Bill Murphy names Andrew Maguire
Bill -
Looks as if Bill Murphy's "Deep Throat" has some hard evidence including emails and taped phone calls according to his "additional statement" after the hearing today. Is this evidence new? I don't know but at least it puts focus on the agency and could trigger MSM interest. If GATA's Deep Throat has taped phone calls implicating JPM's London trade desk, good enough. Nixon left office on lesser evidence. Surely CFTC deserves a special subcommittee investigation but if the whole Washington establishment weren't in on managing the almighty buck.
http://jessescrossroadscafe.blogspot.com/2010/03/b...
Sign of the Times
Severity of the economic recession can be seen in different ways.
If prisons are overcrowded, they release some prisoners; if the morgue gets overcrowded, they ??????
More bodies unclaimed as times get tougher
http://tinyurl.com/ygcvrdn
PM miners capitulation very near
Less than 0.12% of rydex assets are in PM miners. This is among the lowest readings since 2004.
It is also low in the absolute terms, only November 2008 was lower. Since 2004, there only 7 instances of such low allocation. Six times it was a beginning of a major upleg in miners. The only time it failed was August 2008. If we assume we are not going to have a major crash now (I hope), the light is green for miners (plus minus a few days).
While the charts are very bullish on dollar index (mainly dollar vs euro), dollar is not necessarily that strong vs real assets or Asian currencies, so it should not be as detrimental to the trade as I was worried about till now.
I'm looking to employ money in GDX and GDXJ in the next couple of days.
BTW, dollar is easing some overnight, there might be a jump up in PM tomorrow.
Re: global bout of deleveraging trigged by PIGS default?
And how do you extinguish excess credit? You force the exchange of debt for equity. Unfortunately it will never happen. We had a once in a 3 generation shot to right the ship and they caved in to the money powers. The 'can' has been kicked to the next generation or even further. If you want to see what the U.S. will look like in 5 to 10 years, look at the British between 1962 to 1978. I just hope we can manage hyper stagflation and not become Weimar. Our financial system is being run by sinister gangsters using clueless acadamitions as stooges. Burn the ivory tower and 'retire' the banksters. woulda coulda shoulda..........
They should have nationalized the insolvent banks, wiped out the equity and given debt holders a haircut equal to the bad loans. Then you recapitalize the banks with taxpayer money and sell them squeeky clean back into the market. So simple a cave man could do it! He might yet!
Re: global bout of deleveraging trigged by PIGS default?
Japan had been doing the can kicking for 20 years now (on and off). Record debt? Yes! Inflation? No!
And most interestingly, low bond yields.
I'm still waiting for hyperinflation gurus to explain the japan phenomenon.
which sectors put in key reversal (outside down) days yesterday?
Of those I watch I see:
IYM, XLB, XLE, IYT.
That's the lead sled dog the Russel small cap index, plus basic materials, energy & transports.
What looks most overextended with possibly, though not quite yet, failed gaps up yesterday?
XLF & XLY
That's everyone's favorite long term buy & holds - the financials & retail.
(just joking . . . .)
(no position in any of these currently)
German Economists threaten Germany with Lawsuit
FT has piece written by 4 economists who took Germany to court to block Euro creation. Constitutional court decision of original case lends strength to Economists' intent to lodge new lawsuit against Germany if bail out occurs in order to force Germany to quit the union.
"A euro exit is the only way out for Greece"
http://www.ft.com/cms/s/0/6a618b7a-3847-11df-8420-... (registration required)
Interesting remark from the following commentary:
"The professors in the FT piece suggest that Greece should exit the EURO and relist the DRACHMA, but we think this is a flawed solution. It would be better for Germany to leave the EURO and allow the rest of the European problems devalue against a revived DMARK. We know this will not sit well with many but when you think about it, this is far easier than awaiting the exit of the next PIIGS and watching another crisis infect the world’s financial structure."
http://yrah53.wordpress.com/
Note the blogger's suggestion that heavy selling of long bonds is affecting the sell off in the market yesterday. That sovereign risk in Bill's comments yesterday starting to make itself felt?
Re: global bout of deleveraging trigged by PIGS default?
ALOHA!!
"I'm still waiting for hyperinflation gurus to explain the japan phenomenon.'
While I am not a hyperinflation guru per say, I am critical of the way various governments around the world calculate CPI as there have been numerous versions that rotate at any given period, like jobs and unemployment data. I rather subscribe to the "boiling frog" scenario, in that we have been slowly boiling in a cesspool of debt and currency destruction to the point where we actually believe that average prices like a $220,000 home and a $20,000 new car is cheap! Ask anyone who was alive in 1970 or 1980 if that would have been considered cheap or even "average" then. As one who was alive then I can say, "NO, a thousand times NO!" We actually sit around and consider that government spending at a rate of nearly $1TRIL per month is "doable" and has no consequences as if Japan's "era of deflation and debt" is something to strive for.
Mercers 2009 Top Five Highest Cost Of Living Cities in the World lists Tokyo at #1 and Osaka at #2. The CIA rates Tokyo at #4. It also rates average wages paid in Tokyo higher than NYC. Explain how deflation and bond yields and 1% CPI produce cities that have the highest wages and prices in the World. Is that no less a phenomenon?
Who cares what bond yields are if you cannot afford to live there? Nobody measures cost of living using bond yields.
It matters not which route you chose on the road to total and complete currency destruction, inflation or deflation, as the masses end up not being able to afford either one. The guys over at the US FED must be laughing in their caviar as they watch the minions argue and debate incessantly over the last 4% of the USD purchasing power ...
nemo/Vad- This Note's For You: Appendix B to the Tao te Ching
James Kostohryz expresses his views so well, I thought you'd enjoy reading this:
http://tinyurl.com/yg566g9
And the background music: http://www.youtube.com/watch?v=KSSvzCNBvlQ Click to bypass the opening ad.
Caveat- I realize neither of you are market timers- agnostics, perhaps- relying instead on daily set-ups. The author acknowledges (in a separate article) that "I don’t really have time to be an effective trader. Thus, there's not a fit between the trading strategy that the current situation seems to call for and my ability to properly execute such a strategy." Hence Appendix B.
Excerpts:
"Statistical tests, and plain common sense, show that excess index returns are generated in fairly short periods that represent less than 15% of all trading days. The key to successful market timing is to correctly foresee and be on the right side of the market during some of these periods.
Unless you’re supernatural, you won’t be able to foresee all of these periods in which there are major directional moves. The human creative process is such that you won’t always have value-added ideas -- ideas that aren’t already fully discounted in market prices. Most of the time, your ideas will already be accounted for in market prices. And many times you won’t be able to correctly anticipate issues or trends that can generate excess returns.
To summarize: First, the market provides opportunities less than 15% of the time. Second, even if you’re an unusually gifted investor, you’ll only occasionally be capable of identifying such rare opportunities.
The key insight is this: If you want to be a successful market timer, you’ll need to have the wisdom and discipline to be completely out of the market (long or short), more than 90% of the time.
By definition, few investors are extraordinarily talented or skilled. Thus, excess returns can’t be expected from them, except by pure chance.
Ironically, the untalented and unskilled will be joined in very good company in their random walk toward mediocre results by a majority of the select few individuals who do possess extraordinary talent and skills, for among this subset of talented and skilled individuals there will tend to exist a marked propensity for them to “take the walk down Wall Street” far too consistently and too often. There’s a tendency for investors -- particularly professionals -- to want to stay busy (after all, investing is their job isn’t it?). Furthermore, pride and ambition cause far too many “opportunities” that are simply not there. This will tend to lead these presumed experts toward making too many investments, which will tend to produce random, and most often subpar, returns over time.
Acquiring the wisdom and discipline to stay still -- to do nothing -- is, in my opinion, perhaps the single most important prerequisite for becoming a successful investor."
BONOFIED
ALOHA!!
Apparently Bono has not done well investing. Maybe that is why U2 is still touring!
Bono named worst investor in America
San Francisco Business Times - by Patrick Hoge
U2 singer Bono's investments into Elevation Partners, which has offices in New York and Menlo Park, have helped make him the "worst investor in America," according to the online publication 24/7 Wall Street.
With large investments in Palm, Forbes, and Move.com -- "an unprecedented string of disastrous investments which even bad luck could not explain" -- Elevation Partners has earned the distinction of being "arguably the worst run institutional fund of any size in the United States," 24/7 Wall Street asserts.
Bono is listed on Elevation's website as one of the five leaders, along with Fred Anderson, former CFO at Apple Computer, Marc Bodnick, founding principal of Silver Lake Partners, Roger McNamee, co-founder of Silver Lake and Integral Capital Partners and Bret Pearlman, former senior managing director of The Blackstone Group.END
Re: BONOFIED
Hilarious.
Re: BONOFIED
ALOHA !!
What happened to poor Fred Anderson former CFO at Apple? Didn't he leave Apple with any company stock? It proves being a high paid CFO or #1 rock star is no guarantee of "easy street"!!! Perhaps Bono needs a self directed IRA or maybe he should buy Bill and Vad books! I wonder how his "gal pal" Oprah did?
Actually it seems the music industry is rife with big name rock stars losing their life savings to lousy managers or the IRS or divorce court!
Re: nemo/Vad- This Note's For You: Appendix B to the Tao te ...
"Acquiring the wisdom and discipline to stay still -- to do nothing -- is, in my opinion, perhaps the single most important prerequisite for becoming a successful investor."
Chuangtse had a beautiful essay on the activities of the busy man, but one of his most poignant quotes from his essay, "The Doctrine of Inaction" speaks to your point:
Therefore if the gentleman can refrain from disturbing the internal economy of man and glorifying the powers of sight and hearing, he can sit still like a corpse or spring into action like a dragon, be silent as the deep or talk with the voice of thunder, the movement of his spirit calling forth the natural mechanism of Heaven. He can remain calm and leisurely while all things are brought to maturity and thrive....
Re: nemo/Vad- This Note's For You: Appendix B to the Tao te ...
This is one of those academic things that is hard to comment on, because it's a such strange mix of correct and wrong observations and conclusions, combined in such manner that you can't really separate them without ruining whole construct; meanwhile construct dos have ideas that have merits...
Last sentence for instance is undoubtedly a gem (not that it's a big news for anyone who traded more than 10 times). But let's have a look at this: "First, the market provides opportunities less than 15% of the time. Second, even if you’re an unusually gifted investor, you’ll only occasionally be capable of identifying such rare opportunities." This makes little practical sense without identifying time frame. For a day trader for instance, opportunities exist every day. They may be limited to 15% of the time WITHIN that day but that, in turn, has no relation to his next conclusion about necessity to identify and utilize unusually high percentage of those in order to outperform the market.
here is the thing his theory misses: market spends a lot of time threading water. If you made anything during that period, you have already outperformed it. Market that went from 10,800 to 10.900 and back did nothing over that period of time performance wise; it did a lot however creating opportunities wise. If a trader managed to get 10 points on the way up and 10 points on the way down, he is already ahead. When the market establishes trend, a trader stays ahead by either utilizing movement in the direction of the trend and skipping counter-trend ones, or by playing both. I.E, if market went from 10,000 to 11,000, it did so with let's say 10 upward thrusts 200 points each, and 10 downward ones 100 points each. Get 120 points out of 200 on each leg up and skip legs down - and you will have already outperformed the market. Alternatively, get just 80 out of 200 on the way up and 40 out of 100 on the down - and you again will have outperformed the market - EVEN THOUGH YOU UNDER-PERFORM IT IN EACH DIRECTION! Such is a power of flexibility.
But one must be a trader, not pure academic, in order to get these practical things.