North American Rail Freight Carloads - October 30th

[Parsad]

Numbers continue to improve!  

 

North America - formidable! (French for "terrific")

 

http://www.bloomberg.com/news/2010-11-04/north-american-rail-freight-carloads-for-oct-30-table-.html?cmpid=yhoo

 

Canada - pretty good

 

http://www.bloomberg.com/news/2010-11-04/canada-rail-freight-carloads-for-week-ended-oct-30-table-.html?cmpid=yhoo

 

Mexico - some slowing in certain sectors, but ok

 

http://www.bloomberg.com/news/2010-11-04/mexico-rail-freight-carloads-for-week-ended-oct-30-table-.html?cmpid=yhoo

 

Recovery is for real in the U.S.  Weaker dollar will help.  But me thinks there are problems down the road...stagflation!  Cheers!

[Myth465]

Parsad, are you raising cash or do you feel the recover is real and cash is trash right now?

[Parsad]

We buy during recessions and we sell during recoveries!  ;D  No, on some things the margin has reduced, so we've raised some cash to add to our existing stockpile, but we still have a fair amount in the markets.  Alot of things have moved up quickly, as if this whole process is done.  We think the deleveraging will occur for some time for governments. 

 

Corporations are in great shape, so you are seeing cash move to higher yielding assets...we said that this was a certainty a couple of months ago, but people disagreed.  You have investors seeking better returns, and in particular financial institutions, that need higher yields to justify their underwriting experience...be it through loans or insurance.  They had to move from bonds to other assets, and that is what we are seeing now.  Endowments, hedge funds, private equity, you name it...they need higher returns to justify their cost structure.

 

We are slowly taking a more defensive stance.  Any movements in interest rates and you will get some reaction.  Any significant movement in interest rates, and there is the possibility of the recovery stopping in its tracks altogether.  The system is still quite fragile, so any increase in interest rates, commodity prices, asset inflation, etc will reduce the progress of the recovery.  I think we are sort of stuck in that middle ground where you can't move too far forward, because the brakes have to be applied.  And the intervention on various levels, along with improved balance sheets, means that going backwards is also less probable.  As the deleveraging continues, things overall will slowly get better.  The wildcard is some six sigma event...loss of confidence in some important country, terrorist attack, war (trade or otherwise), etc. 

 

We are all investors, so our focus should be solely on buying investments with a large margin of safety.  And then selling as that margin shrinks.  Everything else is outside of our control.  Cheers! 

[Myth465]

We are all investors, so our focus should be solely on buying investments with a large margin of safety.  And then selling as that margin shrinks.  Everything else is outside of our control.  Cheers! 

 

Thanks again, one day I will remember this.