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Eric50

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    MSFT

    in General Discussion

    Posted

    Re GOOG, I'd worry about the spending. It does not seem to be under control: SG&A rose 39% in Q4 QoQ while revenue grew 15%. They increased salaries by 10% across the board earlier this year. I'd be careful with that one.

    Jim Grant on gold

    in General Discussion

    Posted

    Here is a quick interview of Jim Grant. He has an interesting way of seeing gold:

     

    "To me the gold price takes the form of a very uncomplicated formula, and all you have to do is divide one by ‘n.’  And ‘n’, I’m glad you ask, ‘n’ is the world’s trust in the institution of paper money and in the capacity of people like Ben Bernanke to manage it.  So the smaller ‘n’, the bigger the price.  One divided by a receding number is the definition of a bull market.

     

    You’ll notice that this had nothing to do with security analysis.  This is conceptualizing, brainstorming, nothing to do with price/earnings ratios, other valuation methods like cash flows.  It is a proposition or a hypothesis on what is driving the gold market.  So the gold market is necessarily a speculative piece of business.  It’s not to be confused with the kind of investment that Ben Graham wrote about.  Anyway, I happen to be bullish on it, but not for reasons that I can readily defend before a member of the fraternity of chartered financial analysts.”

     

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/4/14_Jim_Grant_-_US_Will_Resolve_Debt_by_Returning_to_Gold_Standard.html

    Dr. Michael Burry Will Give a Lecture...

    in General Discussion

    Posted

    The most interesting part of his interview was captured by zero hedge:

     

    Michael Burry's ironic plight against pervasive lemming groupthink (such as the one gripping the nation currently) has been well documented in Michael Lewis' "The Big Short." It is thus not surprising that the topic of his speech to the Vanderbilt University (of which he is an alum) Chancellor's Lecture series is the current flawed conventional thought paradigm: that of central planning, of quantitative easing and of dollar debasement by the Fed, which are far more dangerous than anything experienced during the credit bubble as when the current regime finally fails, and it will fail, there will be nobody to bail out the US. From Burry's speech: "I am worried about a future of a nation that refuses to acknowledge the true causes for the crisis. A historic opportunity was lost. America has instead chosen its poison as its cure... Today I expect the US government to attempt to continue easy money policies into the next presidential term, past the foreclosure crisis, and past the corporate and public refinancing humps that are forthcoming. Junk bonds incredibly are again at all time highs. Quantitative Easing seems to be working for now. Buit this is an invalid validation of what America is doing. This is in fact a Pyrrhic gamble. As we continue to debase our currency, Bernanke says he is not printing money, again I disagree. As it stands I get an email from the Fed saying we bought another X billion in Treasurys. I don't know - that's pretty clear to me. In fact this program QE2 its scope and breadth raises the severe question of the Treasury's needs. The government's borrowing of money for the purposes of injecting cash into society, bailing out banks, brokers and consumers, is a short-sighted easy decoision for a population that has not yet learned that short-sighted, easy strategies are the route to long-term ruin. We never quite achieved the catharsis necessary to stoke the reevaluation of our wants, need, and feers. Importantly, the toxic twins: fiat currency and an activist Fed remain firmly entrenched, even more so with the financial reforms last year."

     

    Burry's practical advice: open a bank account in Canada.

     

    http://www.zerohedge.com/article/michael-burry-toxic-twins-fiat-currency-and-activist-fed-set-route-long-term-ruin

    Good article on NFLX

    in General Discussion

    Posted

    In a non money printing environment and with a ST catalyst I could be very aggressive and go up to 5% of total portfolio. But this is unlikely to happen soon as the Fed is printing like crazy and is unlikely to end soon (Bernanke hinted in December in 60' that he'd be ready to start QE3...). I don't see a short term catalyst with NFLX itself yet but I believe we might have one in the summer as they have to renegotiate their streaming catalog.

     

    Eric

    Good article on NFLX

    in General Discussion

    Posted

    Personally I own long term put options on NFL. It is one of the most overvalued stock that I have ever seen. I started to buy them when the stock first reached $200. I might buy more soon.

     

    In terms of risk control, it's about 1% of my total portfolio. I might go higher in percentage of total portfolio if I see an end to QE2 (it's very dangerous to short in a money printing environment) or if I see a short term catalyst.

     

    This is clearly an overvalued stock and we all know that it's going to tank somehow in the future. The question is when. Without a catalyst and with an insane policy at the Fed, it's a very dangerous environment for the shorts. But time will come and then I think we'll have some amazing short opportunities.

     

    Eric

    Series 65

    in General Discussion

    Posted

    I've used the "Pass the 65" by Robert Walker and studied on my own for a few days before the exam. I thought the book was a good way to prepare and the author has a great sense of humor.

     

    Eric

    Do You Really Need This?

    in General Discussion

    Posted

    Probably not, but I sure see alot of kids around that are suffering because their parents choose to exercise that right.  In that regard, should we remove the role of Social Services to monitor the welfare of children?

     

    I'm not one for the government intervening in every facet of our lives, but unfortunately maybe there are certain circumstances where intervention is warranted...the mortgage industry from 2004-2007 comes to mind.  Cheers!

     

    I have four children from 2 to 11. I think it's my responsibility to feed them and to make sure that they are in good health. I would not want the government to intervene with my (and my wife's) choices. If governments start to tell me what my kids should eat and drink, where does it end?

     

    I see lots of kids who watch way too much TV. Should the government pass a law that limits how much TV children can watch? Would you agree with that?

     

    Re the mortgage industry, I think the crisis was primarily triggered by the Fed keeping interest rates too low for way too long. It fed the speculation as it did in 1996-1999 with the internet bubble and as it is doing now... There were also several federal watchdogs that did not do their jobs. So, I think we would have been better off without any government intervention and let the markets correct themselves. People won't learn to be responsible if they don't pay for their mistakes.

     

    Eric

     

    John Embry Suggests Munger is Not Rational

    in General Discussion

    Posted

    Classic market tells us that there are three phases in a bull market:

     

    1. The stealth phase. This is when prices are extremely cheap and everyone hates or has forgotten about the investment/asset;

    2. The second stage is the wall of worry phase. People know about the investment as it’s increasing in value and seems likely to go higher. But they deny it and think that every correction along the way up means it has peaked;

    3. The third and final phase is the mania. That’s the explosive phase, when there is no more rationality.

     

    I think gold is close to the end of the second phase, in the middle of a correction. As the sovereign debt crisis develops in the next few months/years, it will likely enter the third phase and become a real mania.

     

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