Frustrating market

[hyten1]

i know there are more important things to complain and worry about

 

but this market has been very frustrating... it keeps going up

 

its hard to see after you sold a position, thinking that you'll be able to buy it back lower, and see the stock continue to go up :)

 

i have been searching/looking for new ideas, so far have not found anything interesting, many stock that i am watching and would buy it if the price drop

 

is anyone feeling the same?

 

i can see how i would under perform the market when the market shots up, with expanding market multiple

 

 

[Guest deepValue]

I've been in cash (100%) for the last few months. I usually spend about three hours each Monday complaining about the lack of bargains, spend the rest of the day planning my next vacation, then spend the next six days on my vacation.

 

It's not so bad when you manage your own account.

[Uccmal]

I've been in cash (100%) for the last few months. I usually spend about three hours each Monday complaining about the lack of bargains, spend the rest of the day planning my next vacation, then spend the next six days on my vacation.

 

It's not so bad when you manage your own account.

 

lol;

 

I have been recirculating the same holdings like farts in a spacesuit.  Markets go down, I buy a stock of Leaps (bac, jpm, aig), markets go up, I sell them.  About 5-7% of my portfolio is churning every couple of weeks right now - quite lucrative really. 

[DTEJD1997]

The number of bargains out there has certainly dropped, no question about it.

 

A year ago, there was long list of interesting candidates, now it maybe 1/5 the size of what it is.

 

I am also finding that I am having to mine further & deeper to get the bargains.

 

A good analogy is a gold miner having to crush more rock to get the same amount of gold.  The vein of bargains is rapidly getting mined out.

 

There are bargains out there still, some in the small community banks.  I am also finding some good bargains in China & Hong Kong.  And no, these are not the reverse "scam mergers".

 

I sold BBBI & ARKR today to buy more NTE.

[Parsad]

I've been in cash (100%) for the last few months. I usually spend about three hours each Monday complaining about the lack of bargains, spend the rest of the day planning my next vacation, then spend the next six days on my vacation.

 

It's not so bad when you manage your own account.

 

lol;

 

I have been recirculating the same holdings like farts in a spacesuit.  Markets go down, I buy a stock of Leaps (bac, jpm, aig), markets go up, I sell them.  About 5-7% of my portfolio is churning every couple of weeks right now - quite lucrative really.

 

Same, but this is what worries me!  We have had a great year so far, but I'm just doing what I always do...buy cheap and then sell it as the market rationalizes prices.  In the meantime, we keep lots of cash. 

 

I'm getting very worried...very worried that the markets are just blowing off every piece of disturbing news.  Spain is in a full-on Depression, not unlike the 1930's in the U.S....Japan is being incredibly aggressive with their monetary policy...China is slowing...U.S. is recovering, but still tepid in many ways. 

 

Yet, asset prices for almost everything except commodities is ballooning!  Buffett has been right for several years now...I'm concerned that Prem will be right in the near future.  Cheers!

[fareastwarriors]

I've been in cash (100%) for the last few months. I usually spend about three hours each Monday complaining about the lack of bargains, spend the rest of the day planning my next vacation, then spend the next six days on my vacation.

 

It's not so bad when you manage your own account.

 

 

Sounds like a pretty good life.

[Icarus]

I've been around 15-25% cash the past few months.  It seems like bad news is ignored. Some companies that miss estimates still see their stock jump up.

[ShahKhezri]

I just want to say I was talking to an MD at an investment bank today, the discussion revolved around where to look for investments...his answer was that he takes all of his money in his checking account and buys JNK/HYLD/M.Reits/MLP's because "it's so much better than what I'm getting in my checking account"

 

I was shocked, if people that know a lot of finance/investing are making these kind of "reach for yield" decisions, I can't imagine what people that know a little about finance/investing are doing.

 

 

 

[meiroy]

Spain is in a full-on Depression, not unlike the 1930's in the U.S...

 

The unemployment numbers from Spain are completely unsustainable... Hunger is growing in Greece as well. People are hungry and we know what that means. Either it explodes or austerity is stopped. Imagine how the markets will react if tomorrow it is officially announced austerity failed and they are changing a direction...

 

[valuecfa]

Spain is in a full-on Depression, not unlike the 1930's in the U.S...

 

The unemployment numbers from Spain are completely unsustainable... Hunger is growing in Greece as well. People are hungry and we know what that means. Either it explodes or austerity is stopped. Imagine how the markets will react if tomorrow it is officially announced austerity failed and they are changing a direction...

 

Hotels are still a little pricey though (Idon't think the depression in US had hotels at such lofty prices). I checked Madrid about a week ago and it is comparable to other major European cities

[scorpioncapital]

The easiest strategy is to buy a good investment and forget about it. You don't have to worry about when to sell or buyback. And you don't miss out when it shoots up. Conversely you also have to watch it go down, but so what if you're holding for a long time?

[enoch01]

From Buffett's letter this year:

 

When the partnership I ran took control of Berkshire in 1965, I could never have dreamed that a year in which we had a gain of $24.1 billion would be subpar, in terms of the comparison we present on the facing page.

 

But subpar it was. For the ninth time in 48 years, Berkshire’s percentage increase in book value was less than the S&P’s percentage gain (a calculation that includes dividends as well as price appreciation). In eight of those nine years, it should be noted, the S&P had a gain of 15% or more. We do better when the

wind is in our face.

 

To date, we’ve never had a five-year period of underperformance, having managed 43 times to surpass the S&P over such a stretch. (The record is on page 103.) But the S&P has now had gains in each of the last four years, outpacing us over that period. If the market continues to advance in 2013, our streak of five year wins will end.

 

I got nervous when I read that.  Yes I know that Berkshire is big, and significant outperformance is harder the bigger you get.  But it wasn't too long ago that he and Charlie were saying they were hopeful to outperform by a few points going forward.

 

So I speculate that this streak is not quite over yet.  Now I don't think that's because Berkshire will have explosive growth in book value in the future.  Rather, I think that it will maintain the streak because it will perform better than the S&P during a decline.

 

[berkshiremystery]

You should all stare at the China bubble.

 

They have the largest shopping mall in the world and it's 99% empty since its 2005 opening !!!

 

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CNN: The largest shopping mall in the world, China's abandoned mall

http://www.youtube.com/watch?v=d8WitBOWL0M

 

Ghost Cities - China

http://www.youtube.com/#/watch?v=wm7rOKT151Y

 

http://s11.postimg.org/glec2gow3/image.jpg

 

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New South China Mall (the largest shopping mall in the word)

http://en.wikipedia.org/wiki/New_South_China_Mall

 

List of largest shopping malls in the world

http://en.wikipedia.org/wiki/List_of_largest_shopping_malls_in_the_world

[Charlie]

"Spain is in a full-on Depression, not unlike the 1930's in the U.S..."

 

"Hotels are still a little pricey though (Idon't think the depression in US had hotels at such lofty prices). I checked Madrid about a week ago and it is comparable to other major European cities"

 

House prices in Spain are still very expensive. No depression prices.

 

"Hunger is growing in Greece as well. People are hungry and we know what that means."

 

Next week I will make holiday in Greece. I don´t think they hunger. They eat very healthy and live with no stress, so they live very long. Check the greek food at the Berkshire annual meeting. It´s very good.

Also no depression holiday prices in Greek.  ;)

 

[DTEJD1997]

You should all stare at the China bubble.

 

They have the largest shopping mall in the world and it's 99% empty since its 2005 opening !!!

 

-----

 

 

I have read some reports on that, and it is true, that mall is very empty.  There are also some other tremendous boondogles going on, but don't let a couple of anecdotes trick you into thinking a whole country is in a bubble. 

 

Maybe China is and maybe it is not.  There could also be "bubble" prices in certain areas too.

 

I can remember being in law school back in the 90's and people talking about the property bubble in Shanghai.  They built buildings that were empty! or very nearly so...Clearly Shanghai has expanded GREATLY since then.  Also since then there have been ups & downs.

 

What is not in dispute is that the largest migration of people in human history is under way in China.  That of people moving from the country to the cities.  That is also going to continue into the future.  We are talking about tens of millions of people per year.

 

I've seen some of the progress made in Hong Kong, and Shenzen.  It is simply incredible.

 

I've known for a long time that China has made progress in industrialization, but I'm shocked at just how much that is, especially in the larger cities.

 

There are certainly bubble like areas such as this mall and the ghost town of Ordos.

 

BUT I would just be a bit skeptical about these "main stream media" reports of what is going on in China...it is much complicated than that...

[txitxo]

I'm getting very worried...very worried that the markets are just blowing off every piece of disturbing news.  Spain is in a full-on Depression, not unlike the 1930's in the U.S....Japan is being incredibly aggressive with their monetary policy...China is slowing...U.S. is recovering, but still tepid in many ways. 

 

  What moves prices is not reality, but changes in the perception of reality. One year ago Spain was going to leave the euro and become a new Argentina. But now it seems that we just have a few years of near Depression ahead of us. Wonderful news!

 

      Between the Rogoff & Reinhardt fallout and the Japanese buying up all the bonds they can find, I am even starting to feel a little optimism about Spain's economic prospects for the first time in 8 years. And in any case, total market cap /GDP is 66%, near all time lows of 63%, and now that includes companies like Santander, BBVA, Telefónica, etc. which make most of their money outside Spain. 

 

 

[giofranchi]

now that includes companies like Santander, BBVA, Telefónica, etc. which make most of their money outside Spain.

 

txitxo,

that’s exactly why they cannot afford the Euro. They would be much more competitive with a currency that truly makes economic sense for Spain. The same applies to Italy and others. Keynes was right, and again we won’t solve our problems until either we get to a United States of Europe, with a political, banking, and fiscal union, instead of only a monetary union, or Italy, Spain, and others get back to their currencies. I don’t see a third way to solve our problems. In Italy I keep hearing politicians talk about many things, yet no one speaks about the real problem: Italy has been losing in competitiveness on Germany and northern Europe in general for 12 years now, the gap is getting wider and wider, and prices in Italy are still way too high. And yet, no one even tries to tackle this most crucial issue!

 

giofranchi

 

[giofranchi]

"Spain is in a full-on Depression, not unlike the 1930's in the U.S..."

 

"Hotels are still a little pricey though (Idon't think the depression in US had hotels at such lofty prices). I checked Madrid about a week ago and it is comparable to other major European cities"

 

House prices in Spain are still very expensive. No depression prices.

 

"Hunger is growing in Greece as well. People are hungry and we know what that means."

 

Next week I will make holiday in Greece. I don´t think they hunger. They eat very healthy and live with no stress, so they live very long. Check the greek food at the Berkshire annual meeting. It´s very good.

Also no depression holiday prices in Greek.  ;)

 

Yes! As I have said prices in Italy, and I guess also in Spain, and maybe even in Greece, are still way too high to be truly competitive! And the cause is simply that we do not have a currency that makes economic sense.  :(

 

giofranchi

[txitxo]

now that includes companies like Santander, BBVA, Telefónica, etc. which make most of their money outside Spain.

 

txitxo,

that’s exactly why they cannot afford the Euro. They would be much more competitive with a currency that truly makes economic sense for Spain. The same applies to Italy and others. Keynes was right, and again we won’t solve our problems until either we get to a United States of Europe, with a political, banking, and fiscal union, instead of only a monetary union, or Italy, Spain, and others get back to their currencies. I don’t see a third way to solve our problems. In Italy I keep hearing politicians talk about many things, yet no one speaks about the real problem: Italy has been losing in competitiveness on Germany and northern Europe in general for 12 years now, the gap is getting wider and wider, and prices in Italy are still way too high. And yet, no one even tries to tackle this most crucial issue!

 

giofranchi

 

  Of course, Gio. In hindsight, we would had been much better off with an independent currency. Borrowing costs for the private sector would have been much higher, and the housing bubble would not have inflated so much. But there is no going back. I think the recent Soros article explains very well the situation. The main point is that if Spain and Italy leave the euro,  it would be financial Armageddon for everybody. The costs, both economical and political would be enormous, equivalent to those of losing a war, the EU would break up and individual countries, including Germany, would become internationally irrelevant.

 

  So Germany has to choose between going back to the DM (which would be costly but feasible) or eventually accepting Eurobonds and an easing of austerity, to quench social rebellion in Southern Europe and avoid spontaneous euro exits. The Germans can stall, kick and scream, but the logic of Soros is unimpeachable. They have no other way out. They've beaten everybody in their path so far, but now they are stuck in front of Moscow and winter is coming.

 

  So we may have to endure the current absurd situation a bit longer, certainly until the German elections, but eventually we will have Eurobonds, and the ECB will print as much money as required to get to a not-so-ugly deleveraging. If German public opinion cannot take it, they will have to leave the Euro. Although I don't think that will happen. The new DM would shoot up like a rocket, and German industrialists must still have nightmares about Northern Italians with a cheap currency... ;).

 

[giofranchi]

So Germany has to choose between going back to the DM (which would be costly but feasible) or eventually accepting Eurobonds and an easing of austerity, to quench social rebellion in Southern Europe and avoid spontaneous euro exits. The Germans can stall, kick and scream, but the logic of Soros is unimpeachable. They have no other way out. They've beaten everybody in their path so far, but now they are stuck in front of Moscow and winter is coming.

 

Speaking about Mr. Soros, I must admit that most probably I am the one who doesn’t get it…  ;D Still, I think Eurobonds could be the third way to solve our problems… which won’t work! Eurobonds mean that the Germans must accept to share all the liabilities, without retaining control over the assets… would you ever accept something like that? It would be like starting a business with a partner of yours: you put up all the capital, and he controls all operations?! Would you ever do that? Even if you trust him very much? I wouldn’t. Because it doesn’t make any economic sense.

Again, either you we a “White House” in Berlin, or every nation will get back to its currency. Nothing else makes economic sense to me. But… I am no George Soros, so I must be surely missing something here!  :(

 

giofranchi

 

[txitxo]

So Germany has to choose between going back to the DM (which would be costly but feasible) or eventually accepting Eurobonds and an easing of austerity, to quench social rebellion in Southern Europe and avoid spontaneous euro exits. The Germans can stall, kick and scream, but the logic of Soros is unimpeachable. They have no other way out. They've beaten everybody in their path so far, but now they are stuck in front of Moscow and winter is coming.

 

Speaking about Mr. Soros, I must admit that most probably I am the one who doesn’t get it…  ;D Still, I think Eurobonds could be the third way to solve our problems… which won’t work! Eurobonds mean that the Germans must accept to share all the liabilities, without retaining control over the assets… would you ever accept something like that? It would be like starting a business with a partner of yours: you put up all the capital, and he controls all operations?! Would you ever do that? Even if you trust him very much? I wouldn’t. Because it doesn’t make any economic sense.

Again, either you we a “White House” in Berlin, or every nation will get back to its currency. Nothing else makes economic sense to me. But… I am no George Soros, so I must be surely missing something here!  :(

 

giofranchi

 

Gio, have a look at this link:

 

http://en.wikipedia.org/wiki/Eurobonds

 

  What you mention is option 1) in "Three approaches to Eurobonds", i.e. "Full eurobonds with joint liability". I don't think anybody is seriously suggesting that, it would be totally crazy. What Soros talks about is some variant of the  blue/red  bonds proposal of von Weizsäcker and Delpla. It reduces the deficits immediately in the countries with problems, gives the EU a powerful tool to censor individual country budgets and it can even be fine-tuned to avoid free riding. 

[jay21]

Stumbled across this quote for Charlie Munger, which is great:

 

It's in the nature of stock markets to go way down from time to time. There's no system to avoid bad markets. You can't do it unless you try to time the market, which is a seriously dumb thing to do. Conservative investing with steady savings without expecting miracles is the way to go.

[giofranchi]

Gio, have a look at this link:

 

http://en.wikipedia.org/wiki/Eurobonds

 

  What you mention is option 1) in "Three approaches to Eurobonds", i.e. "Full eurobonds with joint liability". I don't think anybody is seriously suggesting that, it would be totally crazy. What Soros talks about is some variant of the  blue/red  bonds proposal of von Weizsäcker and Delpla. It reduces the deficits immediately in the countries with problems, gives the EU a powerful tool to censor individual country budgets and it can even be fine-tuned to avoid free riding.

 

txitxo,

it is DIFFICULT. And men don’t manage difficult things very well. Things should be kept as easy to manage as possible. As soon as they get to be complicated, you can bet on some terrible mistake to be committed and some sort of crash to come.

Tell me of a currency union that really lasted throughout history… not a single one. Because they are extremely difficult to manage, in an already highly complex system like human society is.

If you tell me that the blue/red bonds proposal of von Weizsacker and Delpla is just a tool to keep us from the brink of disaster, while we work our way to a “White House” in Berlin, than I could agree. Vice versa, if anyone (Mr. Soros included) tells me that it might be the final and permanent solution to all our problems… well, then I have to disagree. Because I don't understand it.

The Euro might be the first currency union to be really long lasting, without a political, banking, and fiscal union, but why? I cannot see any true reason.

So, the only questions that matter, imo, are: do you really see a "White House" in Berlin? And, if so, how long will it take us to get there?

Because in the meantime we must go on dealing with difficult things...  :(

 

giofranchi

 

[Aberhound]

I'm getting very worried...very worried that the markets are just blowing off every piece of disturbing news.  Spain is in a full-on Depression, not unlike the 1930's in the U.S....Japan is being incredibly aggressive with their monetary policy...China is slowing...U.S. is recovering, but still tepid in many ways. 

 

  What moves prices is not reality, but changes in the perception of reality. One year ago Spain was going to leave the euro and become a new Argentina. But now it seems that we just have a few years of near Depression ahead of us. Wonderful news!

 

      Between the Rogoff & Reinhardt fallout and the Japanese buying up all the bonds they can find, I am even starting to feel a little optimism about Spain's economic prospects for the first time in 8 years. And in any case, total market cap /GDP is 66%, near all time lows of 63%, and now that includes companies like Santander, BBVA, Telefónica, etc. which make most of their money outside Spain.

 

The Great Depression was made worse by government actions to allow cartels and to encourage unions which prevented the markets from clearing and stagnation. Businesses won't invest unless they think they will profit. How can you invest if you don't know what the exchange rate, regulations and taxes will be let alone the danger of social unrest. Government workers don't fear losing their jobs to the lower bidder so costs stay higher than the market clearing price and labour is left unused. There should be twice the number of teachers at half the rate but young expensively trained teachers can't bid lower to get jobs and remain unemployed. This explains the high prices in the midst of high unemployment and is a signal for more stagnation.

 

For me the central banks buying stocks is a signal to start selling as they are even dumber than the shoe shine boy of Kennedy fame. Eventually the central banks will have to sell all liquid assets to support the bond market which will cause a crash in the stock market. Central banks sell puts and derivatives on the long government bond market so they must prevent a sudden rise in long term government bond rates or suffer massive losses. In a crisis the stocks will be sold to buy the bonds to keep the bond prices down whatever the losses incurred in selling the stocks. On the contrary they would perceive the stock market crash a good thing as it would support the bond prices.

[giofranchi]

txitxo,

I think the image in attachment tells the whole story: with the Euro, for Italy to close the gap in competitiveness with Germany, prices should decline by as much as 28.5%. How could Eurobonds solve this enormous problem?

 

giofranchi

Pocket-Changes.bmp