moore_capital54
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Posts posted by moore_capital54
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I have seen that chart.
But as you say in your last post you have to look at it on a case by case basis. For the most part, the ones that are buying back shares and that I am following are doing so at what I deem to be attractive valuations.
We are in the eye of the storm, I have no doubt about that.
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I am sorry did we read different posts?
"Corporate America is not exactly a capital allocation stalwart when it comes to valuing its own stock. If they were operating under shareholder-friendly principles, they would be distributing record cash levels in the form of special dividends at these levels and buying back stock at lower levels. Or better yet, stockpile (no pun intended) cash at high stock prices and buyback at low prices (the more tax-efficient practice)."
The way I read he is essentially saying that he is smart enough to know that at this point in the cycle, corporate america shouldn't be buying back stocks yet (wait for them to reach lower levels) and instead pay a special dividend.
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Tue Nov 22, 2011 4:14pm EST
Nov 22 (Reuters) - Bank of America Corp has reached a settlement with former Countrywide Financial Corp institutional investors who decided not to join a $624 million class-action case that won court approval in February.
The terms of the accord were not disclosed in a filing in U.S. District Court for the Central District of California that was dated Monday. Countrywide's former auditor KPMG was not part of the pact, according to the filing.
Blackrock Inc , the California Employees' Retirement System (CalPERS) and other investors in July filed a lawsuit that alleged Countrywide and its top leaders perpetrated fraud "in a quest to triple Countrywide's market share and enrich themselves at the expense" of investors. Bank of America acquired the former sub-prime lender on July 1, 2008.
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Bmichaud how can you say they are not buying at low prices? CSCO is buying back its shares at ridiculously low prices, averaged under $16 last quarter...
How do you know stocks are going to decline to "lower levels"?
Seems to me buying back stock here is a much more efficient way of allocating capital then distributing a dividend...
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An interesting article:
http://blogs.wsj.com/marketbeat/2011/11/22/fed-unveils-new-stress-test-plan/?mod=yahoo_hs
This paragraph caught my eye:
The central bank said it “will approve dividend increases or other capital distributions only for companies whose capital plans are approved by supervisors and are able to demonstrate sufficient financial strength” to withstand a time of market stress.
When the stress tests are complete, the Fed said it will publicly disclose its estimates of bank revenue and losses and estimates of bank capital ratios for the 19 largest firms.
Correct me if I am wrong but is this not the first time we have heard this tone from the fed? That they are willing to consider dividends or buybacks?
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I believe there are a lot of us on the board that are long BAC, as such I am looking forward to the results of this poll.
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These developments are very good for us value investors. They remind the market participants that in the end Mr. Market always wins and that the value of a business today is the sum of all future cash flows discounted appropriately. There are other companies like NFLX that have attracted tens of billions in equity capital that would have otherwise been routed to other segments.
My list of such companies includes: OPEN, P, Z, GRPN, YOKU, RENN, BIDU, TODU etc.
Once investors get burnt they will look for stable cash flow from real businesses that may not be growing as quickly but are being offered by Mr. Market at such high discounts a buyer today will see wonderful returns as long as they just keep earning at the same pace.
Companies that come to mind include BAC, CSCO, DELL, BP...
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moore_capital54, what are you looking at to suggest a significant relationship between money supply and productivity? Eyeballing a chart of YOY % changes in M1 and of productivity growth doesn't suggest an obvious link.
(I tried to post the charts but they don't appear)
http://www.bls.gov/lpc/prodybar.htm
We do some very cool research and it has been an eye opener.
For example, Look at the top 100 largest companies in terms of Market Cap, Profitability, and Sales.
Then, take the same list except repeat the exercise with 2009-1990 (Bloomberg users can do this)
You will see the amount of US companies continues to decrease year over year, quite drastically.
The same goes for the Forbes Billionaire List, notice the amount of US Billionaires has remained the same for nearly a decade, while globally the amount has quadrupled.
Private Debt to GDP is another tool, and its very frightening given we are less competitive and have had to incur more debt to be less competitive (IE: Laziness)
Obesity Rates as well, the less hard we work and the more we outsource the fatter we all get.
It is important to really look at the posters here. I am a 54 nearing 55 year old Money Manager who has seen this cycle come about in a very aggressive way. I run a household and have seen the cost of living rise way in excess of CORE Inflation numbers.
And I can connect the dots, I don't know why it sounds so sensational to Ben Michaud. All I am saying is that printing money is bad, and debt is bad because it leads to us printing money,and a fiat system is bad because it allows us to print money whenever we have too much debt, and you guys keep wasting time arguing about metaphors or the technicals of how it all works when in the end your idol the tax cheat Mosler and the Blogger Cullen Roche both agree that deficits are bad because we don't really know when watering them down causes Hyperinflation.
Actually, I am quite proud of Germany for not buying into this type of academic BS. But they have had the nasty experience of the Weimar to keep them disciplined.
Those stats don't necessarily make the case for a money supply and productivity relationship. Foreign billionaires might represent the misallocation of resources from privatization schemes or flexible economic regimes. Ironically, the rise of foreign companies might show malinvestment as they overpay for expansion. Similarly, high profits might reflect government intervention and/or regional specialization (natural resource boom). Looking at measures like profit margins and sales growth can be misleading indicators of productivity without some way to eliminate other explanations. Labor productivity growth has actually been pretty decent over the last two decades, somewhat mysteriously as factors like IT improvements don't fully explain differentials globally. Going back to the M1 proxy for money supply and non-farm business productivity, there doesn't seem to be a strong statistical relationship.
Not trying to be an ahole but my post provided solid facts and research confirming a trend I have witnessed over the last decade.
You spent some time here responding with a bunch of conjecture (might, ifs and maybe's) Why don't you take the time to actually analyse what your saying and see if you have found data to refute the data I presented.
Follow the path of least resistance...
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Not sure if I like the fact that after so many years, Buffett is really going out of his way to change some of his core tenets.
Don't get me wrong, Buffet is and will always be my number one, but he appears to be losing some of that discipline that helped turn Berkshire Hathaway into what it is today.
It's almost as though he does not want to let Mr. Market do his thing, maybe because he wants to see BRK trading at near it's intrinsic value before he passes away?
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But how could this be? MMT please explain ;)
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moore_capital54, what are you looking at to suggest a significant relationship between money supply and productivity? Eyeballing a chart of YOY % changes in M1 and of productivity growth doesn't suggest an obvious link.
(I tried to post the charts but they don't appear)
http://www.bls.gov/lpc/prodybar.htm
We do some very cool research and it has been an eye opener.
For example, Look at the top 100 largest companies in terms of Market Cap, Profitability, and Sales.
Then, take the same list except repeat the exercise with 2009-1990 (Bloomberg users can do this)
You will see the amount of US companies continues to decrease year over year, quite drastically.
The same goes for the Forbes Billionaire List, notice the amount of US Billionaires has remained the same for nearly a decade, while globally the amount has quadrupled.
Private Debt to GDP is another tool, and its very frightening given we are less competitive and have had to incur more debt to be less competitive (IE: Laziness)
Obesity Rates as well, the less hard we work and the more we outsource the fatter we all get.
It is important to really look at the posters here. I am a 54 nearing 55 year old Money Manager who has seen this cycle come about in a very aggressive way. I run a household and have seen the cost of living rise way in excess of CORE Inflation numbers.
And I can connect the dots, I don't know why it sounds so sensational to Ben Michaud. All I am saying is that printing money is bad, and debt is bad because it leads to us printing money,and a fiat system is bad because it allows us to print money whenever we have too much debt, and you guys keep wasting time arguing about metaphors or the technicals of how it all works when in the end your idol the tax cheat Mosler and the Blogger Cullen Roche both agree that deficits are bad because we don't really know when watering them down causes Hyperinflation.
Actually, I am quite proud of Germany for not buying into this type of academic BS. But they have had the nasty experience of the Weimar to keep them disciplined.
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Again we are saying the same thing here too:
i.e. global trade is a zero sum game, unlike your recent comment that global GDP is a zero sum game, which literally makes no sense.
That is what I meant as well, the quest for global gdp is a zero sum game IE: not everyone can grow at the same rate it is a competitive process with the victor getting the spoils.
Jeez...
So now that we agree that global trade is a zero sum game. Under MMT you guys assume no liability for any shift in competitiveness, when it is obvious that an increasing amount of debt can cripple marginal productivity. It is obvious that the debt was incurred because of a redistribution of wealth, either in the public sector by running deficits to satisfy the lower classes with pork spending, or in the private sector where the reduction in interest rates punishes the savers and rewards the debtors.
What in g-ds heck does MMT do? What purpose does it serve?
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When do you know deficits are high enough? The Austrian approach is to be prudent and avoid deficits in the first place...
Do I understand correctly that your MMT view is that we just keep walking on thin ice until it cracks? When do we know deficits are high enough under MMT? When hyperinflation comes? Then what do we do? raise interest rates?
All you guys do is explain to me that the sky is blue and grass is green.
Also about abuse from myself, I think you are blowing that out of proportion.
Did you even listen to this Mosler interview ? LOL
http://fetch.noxsolutions.com/schiff/audio/WarrenMosler_111711.mp3
Please do me the favour of listening to your idol, the first 10 minutes are spent by Mosler telling Schiff how he doesnt pay US TAX in his thick american accent via an unethical loophole in St. Croix.
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Sorry but you got me started. WTF are Mr. Roche and Mossler trying to achieve.. This is hilarious!
1. In a non-convertible fiat currency system with FX rates, the currency issuer is not constrained in its ability to create money. As Warren said, the government is merely the scorekeeper and the scorekeeper can’t “run out” of points.
2. Government money doesn’t “come from” anywhere. Just like the scorekeeper doesn’t “get” points from anywhere.
3. Taxes serve to regulate aggregate demand. So, it’s best to think of the level of taxation like a themostat. If taxes are too high the economy will run cold. If taxes are too low the economy will run hot. We need to find that optimal level. We are currently overtaxed.
4. The bogey is not the debt and whether we are going to “run out” of money. Ie, the government isn’t like a household in that it can go bankrupt. The bogey is always inflation. So we must agree on a size of government that is in-line with our goals as a society.
5. So, deficits most certainly DO matter! They just matter in a way that the mainstream doesn’t propagate.
Does anyone else agree that there is absolutely no point to this theory? What does it do explain the mechanics of how the government can print more money and why the government can tax x or y amount of aggregate demand?
In the end it confirms everything we say... Where do deficits come from? When governments spend more than they take in, or when private sector consumes more than it produces.. OK WE AGREE THERE.
So what happens next..
Well under a normal system there would be checks and balances to correct the flaws on both fronts (government and private) but by employing the water down strategy we simply subsidize government excess with newly created money to purchase government bonds and we lower interest rates to encourage capital owners to let go of their hard earned money for no return so the debtors can have a chance at recovering (wealth redistribution) and sometimes we even print money to purchase assets from the private sectors like mortgage bonds or in Japan ETF's.
And when we do this what happens?
Instead of rolling up our sleeves and correcting the flaws, we get lazier and lazier while our cost of living keeps rising because with each cycle ending there is more money chasing fewer goods (Cullens own words).
So where is the argument here Ben?
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I would encourage all who are interested in understanding how the modern monetary system actually functions from a mechanical perspective to A) put aside all prior thinking on the economy with regards to China "funding" our deficit, the potential for hyperinflation due to money "printing", and the USA eventually running into Greek-style funding issues, B) ignore anything Moore has said on the topic, and C) take a month to read anything on pragcap.com regarding how Cullen Roche, Warren Mosler, and other MMT proponents believe the monetary system actually works.
After those three steps, come back and reevaluate your prior beliefs and understanding, and revisit Moore's posts.
I'm not trying to stir anything up or be combative. This is a healthy debate and it would be much more instructive if most if not all members at least read through the MMT view point, as oppose to Moore dominating the conversation without actually refuting MMT on a point-by-point basis. It's very easy to adhere to the notion of "money printing", hyperinflation and the USA spending its way to a greek-style crisis without actually thinking through mechanically how our monetary system works.
Again just reviewed your post and its just plain rude. Did I mention anything about the US entering into a greek style crisis or having funding issues? Did I mention anything about China funding our deficits? NO, I presented 3 solid cases for why printing money is to subsidize deficits is no good longterm. I then proceeded to actually read that BS bloggers 10 page explanation of why 1+1 = 2, and in the end supported my previous post with an almost identical explanation by Mr. Roche.
What say you?
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Bmichaud I just read Mr. Roches MMT page (cringe), and I honestly feel it was a complete waste of time. Mr. Roche spends pages massaging his ego when in fact all hes doing is telling me that the sky is blue and the grass is green. Lets fast forward to the end of his "theory" where he starts to make some sense:
What’s The Catch? This Sounds Like A Free Lunch
So what’s the bogey here? What’s the catch? Because surely you must be asking yourself why this sounds like a free lunch. We can just spend to our hearts content, right? Absolutely not. The bogey here is inflation which is constantly moving up and down with the amount of money in the system based on my tax rate, spending, borrowing, etc.Thus, government cannot just spend and spend and spend or the extra dollars in the system will chase too few goods and drive up prices. It’s important to understand that government cannot just spend recklessly. This is important so I’ll say it again. This does not give the government the ability to spend and spend and spend. If they spend too much and tax too little they can create mal-investment and inflation. Likewise, if the government taxes too much and spends too little they create a government surplus and private sector deficit (by accounting identity). This can result in deflation and/or excess private sector debt levels as the private sector literally suffers a dollar shortage.
So after all these paragraphs and mazes and bs talk what does Mr. Roche end his "theory" with? A simple confirmation of everything I just said.
That this system encourages too much spending which can ultimately lead to too much inflation and the self propagating circle continues...
But here is where Mr. Roche falls short....
Why doesn't Mr. Roche mention the cultural and productivity declines that come about from each one of these cycles? How many industries are outsourced every time marginal cost producers are eeked out do the lack of fiscal discipline?
Also, You keep mentioning that I believe China is financing our deficit, but that is not the point I am trying to make. I understand just as you do that if China wouldn't buy our debt, the central bank could purchase it with newly printed money. The point that you appear to be having such a tough time getting your mind around is that the system as a whole breeds the type of fallacies we see that contribute towards foreigners to own 1/3 of every USD in existence. It's not just China and it snot just treasuries. When foriegners purchase US real estate or other hard assets they are making it that much harder for the citizenry to re-acquire such assets in the future.
Remember, in order to stay competitive the US private sector has had to amass the highest private debt per capita in the world.
All these things werent mentioned.
I honestly don't understand your hostility, and arrogance when we are basically arguing about the same thing.
My tone of discussion whenever we bring this topic up derives from the fact that intellectuals such as yourself and Roche attempt to rationalize whats going on in some complex way while attacking old school Austrians like myself. But in the end what do you accomplish? You just explained to me how all the little chips and lights work on my circuit board? Great, but the problem is still there, and the solution is still the same.
Surely if Mr. Roche can understand the problem you can as well?
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In his ridiculous analysis he forgets to mention one thing, and that is Free Trade.
I am going to simplify this for everyone to understand.
Deficits, come about when we spend more than we take in, both on a governmental level (budget deficits) and on a private level (trade deficits). When we print money to subsidize these structural flaws, there are three ways we get screwed down the line.
1) Our productivity goes down as our debt load rises.
2) Inflation increases causing prices to rise across the board, and compounding the problem as structural inefficiencies are
3) Foreigners who gain our dollars through trade, come back and own a larger part of our economy.
When we adjust for the amount of private sector debt incurred due to inflation, the decline in productivity due to the fact that every economic headwind in the last 30 years has been watered down with newly printed money, and the increased ownership of US assets by foreigners (both treasuries and real assets), you can see why printing money never works.
How do you all feel about $100 oil? Does it even compute? Wait till it hits 200...
Nearly 4 trillion of new base money has been created since 2008.
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I fully agree! I have always noticed that the biggest douche bags drive Lamborghinis.
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Ive talked about this several times on this board. This is the ultimate goal of the chinese government. They have seen what the US has accomplished with such a fantastic source of funding.
This ties in to my views about why they are hoarding so much gold as well, my theory is that they are going to make a serious run for the title of having the largest gold hoard. They will need to buy another 1,000 tonnes or so.
Global GDP is a zero sum game.
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Eric, I am 100% with you on BAC, it is an 8% position in our fund. One thing that worried me last week, was when they reversed the debit card fee. I hope this was not due to a silent bank run that was gaining traction. Even if it was the case, I trust moynihan has already gotten it contained, but it just struck me as a little unmoynihan like to change course on something.
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Its been a little over 60 days and I have been proven dead right.
Not only did we get QE3 but we got it exactly the way I predicted. First the FED has been buying the longest dated treasuries which even the members of this thread agreed was as close to printing money as possible, but now today we see my other prediction is coming to fruition which is the creation of digital currency out of thin air to buy mortgages. My last prediction which was that they just buy ETF's was actually executed by the central bank of Japan which bought ETF's on the Nikkei to stem the Yens appreciation.
I am very happy with all these developments because they result in more money chasing the quality assets and businsses which I own.
But I hope you all now realize how crappy this system is long-term for the little guy who is trying to build wealth in years or decades and not days and weeks.
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Have accounts at both, and they serve their purpose just fine.
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I would love to see everyone answer this question again after adjusting for portfolio size. Some of the returns posted here are no doubt of very small portfolios.
BAC Investor Poll
in General Discussion
Posted
I agree Eric, I am of the same opinion.
Great methapor.