ubuy2wron
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Posts posted by ubuy2wron
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If you do not eat a smoked meat sandwich at Swartzs you better be a vegetarian or you will be eternally regretful. There are a boatload of good food in Old Montreal and missing the 3 or 4 blocks that make for the night life district of Montreal is missing the best non stop party available in Canada.
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I do not want to get dragged into arguements about money but if V is dropping like a stone then printing dollar bills is NOT inflationary. Learn about V and how it impacts M and then you can make comments about someone not knowing what they are talking about.
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I think we are not close to a Euro deal I am not sure a deal is possible with out leadership and that seems to be sorely lacking at this stage. In the US a bunch of guys sat around a boardroom table and congress passed Tarp and the bailouts shortly there after. In Europe this kind of cohesive dramatic action seems required but impossible to pull off. They still have not decided conclusively what they are going to do with Greece which is now is looking more and more like Europes Lehman moment.Who knows what political clout the holders of the CDS on soveirgn debt but they will be pushing for the just say no to Greece.
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Parsad, I have been taking stabs at shorting gold( I covered my last short with a decent profit) because I am of the opinion that it is starting to look a little bubblicious. I think the root of a lot of the imbalances that we are witnessing are because of countires not allowing their currencies to float freely. As an example you could make the arguement that the Chinese buying US treasuries allowed the sub prime mortgage mess and the US real estate bubble. I am of the conviction that a new currency accord will be one of the outcomes of fixing the mess in Europe. It is entirely possible that gold may take a more central role in central banks holdings because of these new currency accords. It is also quite possible that one of the outcomes of the current mess is that gold held in weak countries balance sheets is liquidated. Gold is not cheap when compared to any asset other than fiat currencies and it is starting to even look expensive against those. For the gold bulls congrats you got it right most value guys did not. Even if you are a gold bull you should at least consider that a lot of the storm clouds that are gathering can produce results that destroy money. A blow up of the Euro can force bullion that has been off the mkt for decades or even centuries to come onto the mkt it can also result in bank failures and loss of depositers money, the destruction of money can quickly turn what may appear to be a can not lose proposition to just the opposite Mr Bernanke could decide to reverse QE2. The US could raise taxes AND cut spending these seem like impossible futures to the gold bulls right now. I am alos still of the opinion that the new bull mkt in equities will start around the time that this bull mkt in precious is over.
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Ericopoly it is posts like this that make me think your success in the mkt has more to do with smarts than luck. By the way if we reverted to the gold standard the REAL gold bugs would not be any happier and they still would not sell their gold because they would not trust the govt would go of it at some point in the future.My thinking for myself on gold goes like this...
1) There isn't much of it in absolute total value if you take the total known supply and price it in dollars at the current market price. Thus, if we go back to a gold standard it will need to go sky-high in price (so that the total value of it will begin to make sense). This will be a big win for gold owners, but to everyone else it really won't matter. Prices of bread in dollars will be the same, it's just that those dollars will be backed by gold all of a sudden. Life would go on.
My reasoning to support this ho-hum scenario is that the world was already flooded in dollars over the past 40 years since taken off the gold standard. And so pricing already reflects the flood of printed money. The thing that would need to catch up is gold prices.
Meanwhile there are other ways of finding value instead of betting on a rebasing in gold of the USD. So I'm playing that game instead.
And I agree with Watsa on the idea that goods are priced by the amount of dollars chasing them. A car for example is going to be priced (all other things being equal) on the wages of the person interested in buying one. If a person doesn't get a raise, he can't bid up the price of that car. So just because the Fed inflates reserves, it doesn't actually push up prices in the real world unless that money gets into the wages of ordinary people who buy things. And why would it get into their hands if they are not in demand (wages stagnant)?
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I was going to reply to this post right away but then thought I would get to it a little later ::)
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Harry there is an old joke about 2 people walking down a forest trail and coming upon a grizzly bear who makes every indication that it is about to make lunch out of both of them. One guy starts backing away and nervously looks over at his friend who is calmly taking his sneakers out of his back pack and exchanging them for his hiking boots. What are you doing you fool he exclaims dont you know you cant out run a grizzly? I dont have to out run the bear he replies I just have to out run you. I decided long ago that I was not the smartest investor plying the markets there are many who are better equiped in many respects I do not need to finish first to achieve mkt beating returns which is all I strive for.
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Harry I guess in a sense you are right Big Blue was able to to soundly beat the best human chess player out there. I believe that investing is even more complex than chess and the pay offs are a heck of a lot larger than being a grand master at chess hence the incentive to build a better algo to steal a mere value investors lunch money is pretty great. I suspect however that the arms race in machine driven algo trading will rapidly evolve into the machines attempting to devour each other. In the final analysis however I do not have as pessimistic outlook as you. There are still plenty of mispriced securities out there and perhaps the misvaluation may even be
agravated by the activities of emotionless profit seeking robots. I am no way convinced that you have to join them to beat them. I think it is usfull to think about and discuss however from a regulatory standpoint the desireability of allowing the robots at the table. What would be the point of having a chess tournament where humans were pitted against machines would it not be like watching a quarter mile race between a human and a dragster the outcome is pre determined who would want to enter or watch the race. If emotionless machines are so superior then within a generation they or their owners will have most of the capital .
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I just had a quick peek and it is damn cheap this thing has cash pouring in as fast as it was hemmoraging it a few years back. Solve the underfunded pension issue and it becomes a very interesting company. They should just let Warren or Prem manage the pension assets.. Managing pension assets should be easier than managing the float for an insurance company no pesky disasters that require you to write big checks. With pension funds disasters cause you to write smaller checks( deceased pensioners do not require monthly cheques)anyone else looking at GM?
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I just read the entire case against BAC and other Banks. I Am obviously biased being a BAC long, but doesn't it strike you all as a lot less severe given the total claims against BAC are for $30B? The stock has lost way more than that in market value.
I do not think the bears believe their arguements I think they only want to scare you the BAC shareholder into believeing they might be correct. It is called short and distort .They get some one like my favorite analyst Henry Bludgeon sic to get out the story
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What we saw in August was the first wave. Large depositors in European banks started to pull out some dough, the European banks when they lose deposits have to either sell assets read (Euro sovereign debt) or raise capital. Everyone hitting the bid on the Spanish and Italian bonds forced the mkt to dry up pretty darn fast and both Spain and Italy cancelled auctions. The ECB had to step in and start buying bonds to stop the run. The money was transfered to Swiss and American banks and what did the American banks do with the dough they bought American govt. debt ,yields dropped prices rose the poor Suisse could not handle the avalanche of money and the Suisse Franc started to look like gold. It is certainly interesting and I do not think we are done. I got short again at the close today
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The last 5 purchases I made before the bottom appreciated by an average of 500 percent over the ensuing 18 months.
You must have been in some pretty beaten up stuff. Care to share the names after the fact?
BAC was one name I sold it and I have recently purchased leaps another I was able to buy was was my old nemisis JDSU I bought that at 2 and change it was selling below cash at that point, I could not even get myself to buy the net nets and they were numerous when the mkt was at its darkest.
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Hester, I experienced first hand the hard way the inability to get justice with Chinese mgmt , the company was Noble China the mgmt stole the co. blind and while judgements were granted against the officers they were able to escape justice simply by remaining in China. I expect the size of this fraud however may result in changes in Chinese policy. We very recently sent back a Chinese national to China to face trial for economic crimes in China. I suspect these parties may able to be forced to face justice. I am no legal expert how ever so I certainly would defer to almost anyones learned opinion on this matter. It is interesting however perhaps the value investors interest is not entirely misplaced. I made the point that not all Chinese RTO's are frauds tho I suspect that at this point most are suspected to be and priced accordingly perhaps it is about time to do proper due dilligence to see if there is not some babies getting thrown out with the bath water?
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I actualy couseled a client yesterday that you have to start buying before fear gets to extreme levels because when the public fear gets to extreme levels you are likely to be infected by it as well. I can remember all too well the day the mkt bottomed in March 2009. I had 200,000 in cash undeployed in my RRSP I had spent the previous 6 months buying stuff on sale at progressively lower prices. Mr Greenspan had on the weekend written a piece that suggested that the nationalzation of the banks may be one way out of the crises which would have of course wiped out a good 20% of my capital at that stage. My rational thought at that stage was well if we really headed for a 29 scenario then 200000 could last a long time hence I could not bring myself to pull the trigger. The last 5 purchases I made before the bottom appreciated by an average of 500 percent over the ensuing 18 months.
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I can understand why someone would be tempted to either go long or short TRE. The reward was potentialy great with either trade. On one side you had a brash newcomer Mr Block who had made some pretty outlandish claims some of which appeared to be incorrect I am referring to his claims of the impossibility of the harvest when the company was not harvesting trees but supposedly just selling forests. However if his claims of a basic fraud were true then a zero was pretty much a certainty. On the other side you had a company which had had operated for at least a decade and had produced audited financial statements and had some sophisticated investors willing to buy into this is not a complete fraud thesis. In this instance its likely however the only people who could invest with any margin of saftey or knowing what the true odds were were the company insiders. All companies that are claimed to be frauds are not all Chinese RTO`s that are claimed to be frauds are not"[tho a shockingly high percentage seem to be} I stated earlier that if someone was lying I would prefer it was the company as there was a chance for some justice if it was Mr Block who was grossly misprepresenling the facts the chances of Mr. Block or any other guilty participant being forced to compensate the victims would be almost zero. Short and distort and pump and dump are two trading strategies that have been around for a long time less than scrupulous "investors" have been involved for as long as there have been mkts. I must admit I am almost always surprised however when long term large scale fraud is discovered in public companies. I would have thought that companies external auditors would make large scale long term fraud very difficult to pull off. I am guessing the compnaies auditors at his stage are feeling a little of what the shareholders have already felt and I guess rightly so.
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I think you do not need a credible short thesis to have a winning trade you just need to convince the mkt you have one. Financial institutions especialy highly levered ones are always vulnerable to a run. It can quite quickly snowball into a crises if investor depositors/ confidence is shaken. I believe the put back liability is a non issue BAC has many ways of dealing with this if it gets out of hand a litigated resolution would take MANY years to be resolved. BAC could alternatively just mail in the keys to Country wide to the FED, a strategic default. A run on BAC would be very difficult to engineer because of its extremely large retail deposit base. It would be fun for a co. like BAC to attack the shorts by rapidly shrinking their balance sheet and buying back debt in the mkt. place. The opacity of BAC balance sheet is of course true for almost any large bank to say that one can presume because Mr. mkt is correct is of course relieving ones selve of doing security analysis. One does not need perfect information to make a wise investment or wager I believe right now the majority of the short side focus on BAC is very short term perhaps as little as a intra day.
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I got short gold again three days ago I am enjoying this!
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None of the above Einhorn and Biglari lack his ethics and Lampert lacks his humility ( no humble person would try to turn around Sears for crying out loud ) I think the person who best channels the young Buffet is our gentle host Parsad I just do not know much about his ukelele proweress however to be certain LOL ;DEach of these companies have one ultimate goal...The wise distribution and reinvestment of free cash flows with the aim of constant compounding of book value.
I just want to get your idea of who most reminds you of a young Mr. Buffett of the following three men:
1. Einhorn
2. Lampert
3. Biglari
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I wonder how many prisoners are in jail for dealing drugs or stealing to support a drug habit. Either make the drugs legal or kill addicts cuz jailing them is a stupid expensive solution$1B a year in salaries to medical staff in prisons!
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Every price movement in every security is affecting the price of every other security almost instantly because of algo and HFT trading the closer the securities in the relationship the larger greater the impact. The seller of the CDS has to hedge the exposure some of the trades in the CDS are hedged with the stock. No-one has been charged with insider trading through CDS transactions ,you should be a conspiracy thorist ,I am certain that lots of illegal or at least questionable activity is conducted through the CDS mkt.Here's something I've been wondering since the financial crisis.
Does activity in the CDS market affect the way that the underlying credit's common stock trades because the CDS market is used as an input in the algorithms used by HFT firms? Bond traders seem to believe that the CDS market is smarter than the stock market. If that is the case, it seems probable that any movement in the CDS market would be incorporated into the algorithmic trading of equities.
The follow up question is how liquid is the CDS market, and is it possible to cause wild swings for a particular credit using a small amount of money in favor of a much larger long or short equity position by exploiting any linkages between the CDS market and the stock market?
Does anyone have any insight on this? This is a legit question, btw -- I'm not a conspiracy theorist by any stretch of the imagination.
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I purchased TOL leaps two weeks ago at pretty attractive prices/ They will be one of the last guys standing they still have lots of land on books acquired pre 2000 and they have been acquring distressed property and mortgages. The home builders have typicaly bottomed at PB ratios around current levels. I believe SFR is the least risky investment available today. I am in the Buffet camp in thst the over supply is no where near as large as many imagine.what a difference a month makes, several home builders are now trading below bv and at low single digit p/e (based on pre bubble normalized earnings power)
phm p/bv 0.75 p/e 3
len p/bv 0.74 p/e 4
ryl p/bv 0.8 p/e 2
mdc p/bv 0.8 p/e 4
tol p/bv 0.96 p/e 10
dhi p/bv 1.1 p/e 6
buffett talks about excess housing inventory of only 1 million and a recovery by mid 2013
http://www.charlierose.com/view/interview/11845
based on current economic conditions and outlook, it might be wise to pick "the last one standing" any suggestions?
regards
rijk
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Sharper you are clearly one of the smartest big picture guys here. The transference of risk from private to public hands however does not make the risk go away what it allows is more time for crises to be resolved and perhaps better realizations on distressed assets. With govt intervention thru bailouts etc we are seeing for instance much lower unemployment than one would have experienced through a pure private sector solution. I am completely convinced that without govt involvement we would have experienced a 1929 to 1932 scenario, the great recession would have been the great depressionII. The ultimate price we pay however with higher lows in asset prices and economic activity is lower highs in the same, no free lunches. This line of thought leads me to conclude that Blue chip types of investments and single family homes in the US with a tennant will be the best performing asset classes for the next decade just not so sure about the next few months. LOLYou might also want to consider that many of the worlds premium companies have implied sovereign guarantees on them - especially those that employ a lot of people.
- GECapital - assistance rolling their commercial paper during the credit freeze
- GM/Chrysler - auto industry bail-out
- Japanese electronic manufacturers, BP/Exxon/Elf, etc?
In todays world of every-day state intervention, there may well be a lot less risk than everybody seems to think.
SD
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Moore, " The ONLY downside is they can be very illiquid at times" Look if your original thesis is correct and gold is just getting started then you and your clients are going to get VERY rich however if your thesis is incorrect the results may be markedly different. I suggested that the US treasury could simply devide currency in circulation by the amt of gold in Fort Knox and return to a gold standard overnight. The premise for the lovers of Gold is that we have to return to a gold standard and we have to use a ratio of currency to gold that existed at some previous time in history. Most of the gold is owned by central banks. I can assure you that central bankers could use a standard that would cause horrible pain to the gold lovers and they would consider it expropriation but as you have so rightly said the amount of gold in private hands is so insignificant that the central bankers and elected leaders will not care nor will the general public (Ron Paul will be right pissed tho> LOL). You reject that scenario out of hand I am not sure why this is not possible nor desireable for the stable currency crowd. You mention that GLD is insignificant yet I suspect it is rapidly growing to become one of the largest piles of the metal that has every existed in the whole of human history how can this be considered immaterial? A strongly held investment conviction and thesis which is correct by the way is the surest path to fame and fortune. There is something in my personality that makes it impossible for me to hang buy AAPL @ 8.00 and hang on until its trading for 400 I suspect that this flaw exists in many who are attracted to the value discipline.
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You are commenting about the lack of retail participation as an indication of not a bubble. I believe most retail participation is expressed through GLD and like vehicles. I believe at this stage GLD is one of the largest stores of Gold bullion on the planet and in fact is gretaer than most central bank holdings so I am not sure of the adequacy of your lack of stupid money buying{ I have always had a problem by the way with equating retail investers with dumb money.) I am pretty convinced that dumb investors are pretty evenly distributed amongst both the professional and amatuer investor classes.I think the problem is that a lot of value investors just read a copy of Security Analysis and/or Intelligent Investor and base every single investment decision through that prism.
I have yet to hear one solid argument as to why gold is in a bubble other than rhetoric relating to booms and busts or historical quotations. The last response defended the original assertion of the author and then said "even if gold goes to 3-5k" so assuming that logic is correct and gold runs to 3-5k per USD and then settles at say 2,500 or 1,900, that means all this bubble talk today was pointless.
There are absolutely no analogies to the real estate bubble. The commercials you all see on TV are for the RETAIL INVESTORS TO SELL THEIR GOLD, not to buy homes and second homes with borrowed money. The gold gets sold to cash for gold stores that in turn sell the gold (all on an unlevered basis) to smelters that smelt it down to .999 fine and sell it on to mints where it is molded into Good Delivery bars and becomes part of the supply.
On the Demand side, the retail investor is the smallest segment of the gold market, representing less than 100 tonnes per annum.
Instead of just throwing around rhetoric that gold is in a bubble month in month out, true value investors should be seeking opportunitites. There are so many right now! Seth Klarman has ramped up his gold equity research team and they are deploying some serious capital there (over $1b). His favorite way is to gain leverage to the gold price by buying it in the ground. He has so far taken stakes in Gabriel Resources (GBU) which is developing the Rosia Montana development in Romania and other positions which I know but cannot disclose.
The gold developers represent asymmetric exposure to the price of gold as you can buy through them, the gold in the ground at a fraction of its spot price. In some cases I am buying Canadian juniors hand over fist at $10-30 per ounce in the ground.
Gold Price is Now Higher Than Inflation Adjusted 1980 Price
in General Discussion
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