bz1516

If you want to explore the limits of Reg T margin, why not just open up a portfolio margin account?

While i don't see this situation devolving into a crisis, since this is an investment forum, what do people think the market reaction will be on Monday? Just an excuse to consolidate, or a genuine increase in fear and uncertainty, or just to ignore the whole thing?

There are basically two kinds of stocks in China, the SOEs and the so called smallcaps which are now really microcaps. Those great metrics, 2x eps etc are available in the small caps, but not the SOE's. There is a good reason why they are so cheap. Nobody outside of China can possibly tell whether the numbers are real on any given stock. But that's just outright fraud. The SOEs have all kinds of problems that investors aren't used to in OECD based investments.

Yes you can avoid China by not investing in the mining and basic materials space. However in Canada that's harder to do outside of Ontario.

China not looking good right now, but its a so called hard landing, not a collapse as Chanos and others have predicted. When I like China i go long dry bulkers. When I don't like it I short the same group. The Chinese outlook can change quickly with government intervention, but that's becoming more problematic for them.

I like frac sand as a way to capture the greatest leverage to growth in both oil and gas. Because the latest technology utilizes much more sand per well it is the fastest growing part of the oil and gas industry. Of the three frac sand plays I like EMES the best.

The square footage of the home office as a percentage of the total square footage of the house is what determines the percentage of the home expense that can be deducted. The smaller the house, the greater the % that can be deducted. Its a portion of the utilities and alarm company, landscaping fees, insurance, trash pick up, telephone, etc.

Along those lines I'd rather participate with fraccing plays, particularly the frac sand plays, my favorite being EMES. Fraccing companies may be a way to participate as well. i like TCW and CFW.

huh? I understood either of the two sentences you said. What is tax optimization? Meant to say building up a huge potential tax liability with unrealized GAINS over several years. IB has several different options for calculating capital gains (losses). The tax optimization option automatically matches trades which reduce the tax liability to the maximum extent possible each year. From my experience with it, worst case is you will postpone tax liability for a year or two. Best case would be a lot longer depending on other factors. Have no idea about Canadiian taxes or if this is even available through IB Canada.

I use the tax optimization option at IB. it works so well you have to watch that you don't rack up too many realized losses while building up a huge potential tax liability in unrealized losses over several years.

There are lots of different things you can do to detect fraud, or more accurately suspect fraud with a high enough probability to either avoid the stock or short it if it meets your shorting criteria. Looking at accountants is a good way to develop suspicion. Just in the last two weeks i saw this little nanocap with a story and numbers that made it look like a 10 bagger. i soon found out it was a reverse merger, nothing to do with the Chinese, but a yellow caution flag nonetheless. In further reading that daY I saw that the CEO was fired for a run in with the SEC for something that took place "years ago". So now being undecided about what to do I decided to look into the accountant, because the company's numbers were so compelling and I really wanted to take a position. If the accountant were acceptable I would invest. if not then no. So I went on the internet and was able to identify the two name partners, and not any other accountants, though I couldn't say they didn't exist. A phone call to the company produced a nothing more than a voicemail menu and I left a message. So it was not looking good, but if I were going to give up this 10 bagger, I wanted a smoking gun. So i searched EDGAR by the accountant's name and hit pay dirt. A dozen companies showed up that they audited. All were penny stock pump and dumps. Guilt by association worked for me. The company was OPRX. I would still be making money had I bought IT. My subjective evaluation is there is at least a 40% chance of fraud. Not all companies that use such accountants are frauds. NOG comes to mind as one that is likely not a fraud, though they fired the suspect accounting firm.

I think there is a lot more art, or maybe a better word is feel, than science to weightings. Certainly taking implied volatility into account is one way to risk adjust weightings to make limits more representative of actual risk. However though I might be very comfortable with a 10% weighting in SHLD I would not be at all comfortable with a 26% weighting in BAC. While implied volatility is one measure of risk it is not a measure of all risk, especially longer term tail risk. Implied volatility is a function of day to day market movements not what may happen 4 months from now.

I look for shady companies to short, not necessarily whole industries. My best short right now is STSI. Probably on its way to zero. RVLT is another good one. LOCK has been a problem for me so far, but it fits right in there. I also look for catalysts that revolve around quarterly reports, rather than story stocks which can go on forever.

I also weight my holdings by conviction. Over time as I gather more information and increase conviction I can increase the weighting, but never buy more than 10% of nav.

I use Econoday to vet the indices I follow for the US. Its on Bloomberg and others. No one index over any others. For materials and commodities related I follow the Chinese economy and use the monthly economic releases from the National Bureau of Statistics, monthly export and import data, iron ore and steel spot and futures prices as well as spot copper and nickel prices.

I would call that list of stocks at least moderate maintenance. Buying SPY and taking out what is now 4% annually for 15 years would seem to be most appropriate to me. You could take 20% away from the SPY and buy some Asian ETF to get a little more growth, but that would be a close to zero maintenance situation, taking out less than the long term growth rate of the averages thaty would likely cover almost all worst case scenarios over 15 years.

When I looked at LNG two years ago it looked like the issues were with regasification rather than liquefaction. GLNG is the first name that comes to mind when thinking about LNG and the stock has done nothing for more than two years. Europe has its issues with LNG competing against Russian ng and the difficulty of getting new terminals and pipelines built. And Japan is a question mark if nuclear starts up again. It just seems like there are a lot of moving parts to making a successful investment in this space.

If you have a cash a/c you first have to purchase the foreign currency in this case CAD's, with say USD's if that is your base currency. However if you have a margin account you buy the Canadian stock in CADs and IB automatically creats an offsetting debit balance in CAD's. You then have to decide if you want to have the full currency risk, in which case you will have to purchase CADs, or stay in the mostly hedged position. A problem for me is I more often than not want the currency risk, but when I sell I forget to reduce the CADs that are now sitting in cash in CADs. that has been costly the last several weeks.

I agree with a lot of the advice already given. What I tell my own kids is to remember a career is a marathon, not a sprint. You want to avoid making any mistakes that can hurt you early in your career. In some cases you may not be able to get back on track. Never make a career move of any kind out of emotion. Not every potential boss that might hire you is going to be under 40. Some older people might not like someone who hops around. Remember if leave at 1.5 years and your next job for any reason doesn't last very long it will count against you when you look for your third job. That's why I would wait until at least 2 years to leave.

I'm looking at these checklists to see if there is anything that makes sense to add to my own protocols. I'm certainly not going to take someone elses list and adopt it wholesale. My checklist is really a semi formal decision tree. No need to go through every item for every investment. I'm also looking at these checklists to see what they reveal about value investing styles as I really would like to double the amount of high conviction ideas I have at any one time. I also scale into stocks over time as I develop more information about them. I don't want to take the risk of having a stock get away from me while I'm developing confidence in a conviction. Sometimes it can take a week or more just to get to the CFO. i limit a position to 3% until I get enough comfort to go to the next level, and only go through the equivalent of the entire "checklist" for 10% positions.

I'm getting concerned again about China's economy and its effect on basic materials producers and shipping. Their efforts to reign in shadow banking and reduce the growth of pollution set up a tension between those goals and growth for the world's number one commodity user and importer. When i was in China in October the pollution was so much worse than I had ever experienced before. Both my wife and I by the end of the trip had soreness in our throats and minor bronchial problems. when pollution levels reach over 100, with over 10 being dangerous to health, even the Chinese have to take that into account when planning additional growth. Shadow banking is related to growth in UFAI, so reducing it reduces the preferred method they have used to stimulate their economy. Seems like they have to choose between growth on the one hand and financial stability and health on the other. either way commodities are threatened, either incrementally now, or possibly in a black swan event sometime down the road. I'm now completely out of anything commodity related to be safe. George Soros has recently sensitized the market to these risks. Even though a hard landing may be somewhat unlikely and a black swan event even less likely, commodities would seem to suffer either way.

Soros of course has more credibility than either Chanos or Pettis. However this story is commentary, not news. The conclusion of this editorial is that Xi Jinping has plenty of time to make the needed changes, but asks if he will in fact do so? I think that it is likely that he will, though the risk is far from de minimis that he won't. That risk has become much more apparent in the last couple weeks. So much so that I closed out my dry bulk positions over the last two days, in all likelihood reacting to the same news that William Pesek, the author of the piece is. I have a much quicker trigger finger than most. many would probably not act so quickly. I do think its fair to say that the risks in China are greater right now than at any time since the talk of a possible hard landing a little over a year ago. I'm guessing this time they will skate through once again, but the risks are large enough to the materials sector to defend against imo.

I hate to say it but the ASX website is the one I keep using. In general it is not user friendly and Aussie accounting presentations are hard to get used to, but its all there in conjunction with the company websites. I also find it hard to get used to the half year reporting. I guess I'm just much more reluctant to leave the comfort of North America than many here.

Munger on oil "it's the height of stupidity to drill our own oil. We should use everyone else's first, then start drilling." Munger on oil prices "If you think oil prices are high, you ain't seen nothing yet" Not sure why its a negative to define the southern bound of the Bakken? Every oil field has to end somewhere! Because its very difficult to know the precise age and decline rates of all the new wells and the precise decline rates of all the wells its very difficult to make statements about the overall decline rate of the Bakken. Once a well gets to about 2 years old its getting close to the long term average it can produce at for many years so the decline rate is minimal from there on. What I am suggesting is the "decline rate" we see is a function of new and old wells, not the decline rate of the mature wells. An average decline rate for the play has no meaning analytically in the context of rapid initial declines. The test of the ultimate size of the play is how many more drilling locations there are left. I think there are a lot. Neither of those articles go into enough depth to make a statement.

I think the easy money was made in Dry Bulk. Buying it months ago when they traded at fractions of book value and low single digit earnings multiples made sense. Buying them now at high single/low double digit multiples and right around book makes less. At this point, rates HAVE to rise for you to earn a return in the near term and you're risking money up front if that isn't the case. I got into SB at 5.50 and filed down at $3.20. I've sold most of the position now that it's above 10. I could go higher but it seems possible that ot could also go a lot lower in the short term. My pick is Altius. Have been particularity impressed with this board idea and was able to build a full position just under 10% before it started moving. Hoping for big news in '14. You make some good points that are hard to disagree with. I believe that BDI spot and time charter and BVs rates are driven by Chinese demand and the 2+ year building cycle. so it essentially comes down to a matter of opinion on the Chinese economy and how you understand the iron ore market and whether you believe that 2+ solid years are enough to move the stock a lot higher. I do, but recognize that it is a very subjective judgment. But I'm happy to have my side of the trade right now.