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giofranchi

By giofranchi
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Do you guys have any quotes from Grant's Interest Rate Observer for the current time?

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giofranchi Newbie

giofranchi

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If the US ever succeed in getting its health-care costs under control, which means just in line with the rest of the world… no dramatic virtuousness required here!, they would really become once again an unstoppable force! ;)

 

giofranchi

hospital-costs.jpg.3f9eba6630b278462d1fb79b8b4e82b0.jpg

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I think most of our health issues would be resolved if we just eliminated processed foods. :P

Guest hellsten

Guest hellsten

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I think most of our health issues would be resolved if we just eliminated processed foods. :P

 

Yes, maybe Hippocrates can be Obama's health care adviser. Oh no, I guess not, he lived between 460 BC - 377 BC:

http://www.quotationspage.com/quotes/Hippocrates/

 

Everyone has a doctor in him or her; we just have to help it in its work. The natural healing force within each one of us is the greatest force in getting well. Our food should be our medicine. Our medicine should be our food. But to eat when you are sick, is to feed your sickness.

Hippocrates

 

Walking is man's best medicine.

Hippocrates

twacowfca Rookie

twacowfca

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If the US ever succeed in getting its health-care costs under control, which means just in line with the rest of the world… no dramatic virtuousness required here!, they would really become once again an unstoppable force! ;)

 

giofranchi

 

 

The US system incentivizes using the most expensive treatment options available, even when cheaper options are clearly better as established by controlled studies.  This is a continuing theme in the books we publish.

giofranchi Newbie

giofranchi

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I don't think anybody can time the market on a consistent basis, but if you listen to the message of the stock market you sure as heck can decide when you should be 'playing hard' and when you should not be playing as hard, and so I'm not playing that hard right here.

--Jeff Saut

 

http://streettalklive.com/daily-x-change/1771-is-this-a-2007-redux.html

 

Everyone kept saying ‘a top is not in place yet.’ They persistently pointed to the ‘normally reached’ levels of this or that statistic that were not yet there to reinforce their desire to remain bullish. . . . Apart from statistical measures of increasing blindness, this unwillingness to acknowledge what they themselves were already feeling revealed a comfortableness, a confidence, a conviction that whatever was happening – short-term survivable dips – would continue . . . until ‘the top,’ like a strip tease artiste of our youth would with decorum appear on stage, bow, and then, accompanied by applause from all the bulls eager to cash in on their excitement, would begin to twirl its statistical tassels in front of everyone.

 

“I’ve gotten so old I can’t remember the names of those ladies at the Old Howard, but I can remember that all you got was a flash of this or that, before they waltzed off. Stock market tops are like that. You know it’s there somewhere if you squint hard enough, but you never quite see it, so you keep waiting for more. And then, in the end, as the curtain comes down on the bull market you realize that the one rule about tops is not that they provide this or that signal, but that they come before anyone is ready.

--Justin Mamis

 

http://www.raymondjames.com/inv_strat.htm

 

 

giofranchi

txitxo Newbie

txitxo

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  The colourful Justin Mamis quote illustrates nicely how it feels now in the US stockmarket. Lots of danger indicators are flashing, but people say Bernanke this, liquidity tsunami that. And hey, US stocks keep going up. The farmer dutifully feeds the turkey every day.

 

  I got out of US stocks around last November, and since them I'm up by 20% with my EU stocks. Bestinver International is also up by 20%, and the only laggard is FFH, which has gone up "only" by 10% since then. Perhaps I could have done much better in the US market. Or not.

 

  Predicting the behaviour of the stock market is as impossible as predicting the weather. But you can get a reasonable estimate of the odds for different outcomes. The US market has a Shiller PE ~24, whereas EU stocks hover around 13 and for instance, a country like Brazil, with lots of growth ahead, has reached a Shiller PE of 10. Place your bets, ladies and gentlemen...

 

 

Guest hellsten

Guest hellsten

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Pzena second quarter commentary:

http://www.pzena.com/uploads/documents/Commentary%202Q13.pdf

 

Despite a strong run, deep value stocks are still behind the market this cycle.

 

An abundance of deeply undervalued companies gives us optimism that we are still in the early phases of recovery.

 

Likes financials (BAC):

 

Financial sector remains deeply depressed, in the 93rd percentile of historical valuations.

 

…and technology (MSFT):

 

Twelve-month relative trailing price-to-earnings ratios are at the lowest point in 35 years.

…

providing the disciplined investor an extraordinary opportunity to buy world-class franchises at considerable discounts.

 

and explains what could happen with BAC if interest rates were to rise:

 

A rise in interest rates could be a huge boon to the company's earnings, as interest rates on loans tend to adjust upward faster than interest credited to their depositors.

…

a return to the long-term average (NIM) would have the effect of increasing the bank's earnings by about $7 billion.

giofranchi Newbie

giofranchi

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Pzena second quarter commentary:

http://www.pzena.com/uploads/documents/Commentary%202Q13.pdf

 

Despite a strong run, deep value stocks are still behind the market this cycle.

 

An abundance of deeply undervalued companies gives us optimism that we are still in the early phases of recovery.

 

Likes financials (BAC):

 

Financial sector remains deeply depressed, in the 93rd percentile of historical valuations.

 

…and technology (MSFT):

 

Twelve-month relative trailing price-to-earnings ratios are at the lowest point in 35 years.

…

providing the disciplined investor an extraordinary opportunity to buy world-class franchises at considerable discounts.

 

and explains what could happen with BAC if interest rates were to rise:

 

A rise in interest rates could be a huge boon to the company's earnings, as interest rates on loans tend to adjust upward faster than interest credited to their depositors.

…

a return to the long-term average (NIM) would have the effect of increasing the bank's earnings by about $7 billion.

 

Hi hellsten,

please take a look at the Pzena commentary in attachment: it is from Q2 2008.

 

We believe that world-class franchises like Citigroup, Royal Bank of Scotland, HSBC, and others are being offered at fire-sale prices relative to their long-term normal earnings power.

 

Citigroup stock price closed Q2 2008 at $167.6, it bottomed in March 2009 at $10.5, and closed yesterday at $52.25. If you had heeded Mr. Pzena’s advice, 5 years later you would still have less than 1/3 of your initial capital…

 

This means at least two things to me:

 

1) Expressions like “world-class franchises” are almost meaningless… either you know exactly what you own, or you don’t. And imo to know mega-banks very well is extremely difficult.

 

2) You might certainly think the market will keep on advancing for a while, and you might certainly choose to play that advance. But, “to party like it is 1999” is dangerous here… There is a time for aggressiveness and a time for caution… Imo now is the time for caution. This doesn’t mean I am not invested in businesses that I think I know very well, that I like very much, and that I think are undervalued… In fact, I am always invested! It simply means that I am playing it safe.

 

giofranchi

Commentary_2Q08.pdf

dcollon Enthusiast

dcollon

Posted
Posted

Just one person’s view, but here you go…

 

From Mark Grant at Southwest Securities

 

When the bank depositors money was confiscated in the Cyprus bailout we all wondered, and rightfully so, if this was to be the template for bail-ins in the European Union. Cyprus marked a decided shift in policy for Europe. The days of using taxpayer money had come to an end and a new era had begun. The game had changed.

 

In considering the bankruptcy for Detroit I wonder if we have not reached a shift in policy in the United States and what it might mean for the Municipal bond market. A Federal Judge has now ruled that the filing is valid and that the Chapter 9 proceeding is legitimate and will be decided on in Federal court. So here is the first piece of the template; municipal bankruptcies will be a matter of Federal law and not state law.

 

The current plan, not accepted by anyone yet, means a 90% loss for Detroit municipal retirees, an 81% loss for unsecured creditors, and a 75% loss for secured creditors. No joy in Mudville for any camp here. There will be the normal bickering, shouting and hand waving as everyone fights over what little money is left.

 

What also is becoming clear, and long a speculation about Municipal bond bankruptcies, is that neither the County or the State or the Federal government has any intention of helping Detroit through this process. It is becoming quite clear that the city is being left on a stand-alone basis.

 

Sen. Lindsey Graham, R-S.C., has introduced an amendment to ban the Federal government from bailing out Detroit or any other municipalities. "There is no doubt Detroit has huge problems, but they are facing problems of their own making," Graham says in e-mailed statement. Graham's amendment to the Treasury Budget Bill would ban using Federal funds to buy or guarantee any asset from any municipal, local or county governments facing default. The measure also would prohibit the Federal government from issuing lines of credit or giving any financial help to avert bankruptcy. In other words no money or any sort of guarantee for "debtor in possession" financing.

 

This then raises several delicate questions about how Detroit, or any other municipality, is going to exit from bankruptcy if no bond seniority is available or can be granted. What I think can be said here is that the risk of owning Municipal bonds has just risen by a significant measure and that a new appreciation for the risks associated with Munis must be considered and accounted for in the spreads of Munis to other types of bonds.

 

If a city is going to be disassociated from a State and if a State is not going to be supported by the Federal government then the old suppositions that have long been a part of the Municipal bond market must be re-examined. The bond issues are just the normal fighting about money ones. The pension issues though may raise problems of a more difficult sort.

 

If the municipal works are going to lose a large part of their pensions then you may expect a significant hue and cry in both the State and Federal legislatures. It may be that eventually each State oversees the municipal pensions in their State in a manner which has not been found before. This would result in all kinds of new regulations and oversight that are not in place currently. Also if the Federal government would decide to guarantee in some form municipal pensions then large liabilities would be added to the Federal deficit.

 

However this plays out I think it is a reasonable assumption that the regulations for Municipalities and their pension obligations will not be what has been found in the past.

 

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