Saturday, July 28, 2012
07/28/12 My Summer Trip to China and Europe/ The psychology of boarding (cont'd)
70% China
7/27> Kick off. Started the 'on boarding' by moving 13% of the portfolio into FXI @ 33.5x at the open.
7/27> Guided tour. Another 57% of the portfolio was checked into the ICHKX tour cabin at the close for a 30-day lock up.
30% Europe
A side trip to Europe begins Monday> VGK in 2 allotments, 50/50 Monday and Tuesday.
Looking back, the 'all aboard' was sounded by Draghi on Thursday. However, I was mentally focused on the FB/ZNGA debacle, and ultimately lost money on a distraction while global markets spiked. Yes, shit happens and I fell behind. Time to pick up my bags and catch up with the tour group.
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No worries. FB traders had better stay awake. When they least expect it> payback, bro.
ReplyDeleteHoly crap. The big guy just came by doing his imitation of Captain Underpants, and I kid you not> he's wearing a blue pair with sharks on them! Are you listening, Sharkie? This can only mean one thing> the markets are about to rock!
ReplyDeleteThere were more euroleader/banker assurances/promises made Friday, creating the response that began ~ 13:20
ReplyDeleteThis comment has been removed by the author.
ReplyDeletefalse start, hammered a 100 mile hilly ride in 5 hours yesterday and as a result I'm too damn sore to stand up or do any "honey do's" so I'm going to use my time wisely and refresh all my scans and look at a bunch of charts while womens skeet shooting plays softly in the background...lol
ReplyDeletejb- I have to agree with tof's scenario> the markets will hit new highs within the next month (starting perhaps with some backing and filling on Monday and/or Tuesday), followed by a shakeout in September/October to test investors. Then a sustained/sustainABLE lift to new highs in Q1 2013.
ReplyDeletehey 2nd, yes seems very likely. could be quite bloody come mid-Oct.
DeleteThis pattern also matches with that scenario - in the chart, the red line is the average election year cycle since 1928 from Bespoke. The current year chart stops around June 13th, but if you look at the SPY chart, it fits pretty well and did continue down to June 4th and has been moving up since. If the pattern holds, August should be a really good upwards month, followed by a Sept-early Oct correction, then an uptrend to the end of the year finishing near the year highs.
ReplyDeletehttp://www.safehaven.com/article/25802/can-we-expect-an-election-rally
Wow, that's uncanny, BB! We can call it the 'odds on' bet, then.
Deleteif this happens we should probably think about the support/resistance areas. i'm assuming a rally to 1,420 to make it appear like a double top, then a drop to 1,370 or more likely 1,325-1,330. then rally to new highs / 1,500. either way i wouldn't look to be getting short at all but rather selling some if we rally higher and hoping to buy back lower if you're looking to trade it. there's always a chance we don't drop so i'm guessing a break of 1,380 would stop us out of everything and we would be looking to go long again at around 1,335. again, this is if you're looking to trade it. nothings certain.
ReplyDeleteI think you're right. Shorting during the correction might work if you're nimble, but would likely involve a few gut checks.
DeleteIf China comes back strong like 2nd thinks then C might be a solid play on it. You get a combo of strong international growth and exposure to the US housing industry. Trades at 6 times earnings. Assuming they get back to paying a 45% of net income as dividends and get back to old highs of net income ($20 Billion or about $7/share) it could be a 12 to 15% dividend on current stock price. If this pans out I would assume this happens within 3 or 4 years. Just something to think about for you fellas looking to build long term positions.
ReplyDelete"We'll do what it takes (anything) to save the euro."
ReplyDeleteSounds like an admission, and a desperate one at that.
Coincidentally, Bespoke updates their election year chart this morning calling it "Can It Really Be That Easy?"
ReplyDeletehttp://bespokeinvest.squarespace.com/thinkbig/2012/7/29/can-it-really-be-that-easy.html
I'd be more worried if no one questioned it.
DeleteTEX - Hit one out of the park(based on reaction), will MTW?
ReplyDeleteWDC - Is this PE still "in the weeds", sure looks like it to me...
ReplyDeleteI'm guessing everyone's thinking like I am...Well, what's next?
ReplyDeleteGood thinking. What's next is probably either wait and see Germany's response or bet Germany buckles and gives in??
DeleteKinda seems like it's going to be the buckle I guess.
DeleteF - Gotta be a buy, don'tcha think?
ReplyDeleteI hope so!
Deletepicked up a little SVNT only because of the chart pattern...and that it has $110 Million in cash vs $50 Mill mkt cap. was a no brainer winner in many eyes in 08 and 2010. i've followed it since. long at $.716 avg.
ReplyDeleteNSPH- The heavy selling continues. Man, every time it creeps back up a huge wave of shares push it back under.
ReplyDeleteyeah it's definitely stalling out. could be due for another dip down to the secondary-ish level. it's a volatile one.
DeleteHussman's letter sounds like he's taking a lot of hits from his fund holder's.
ReplyDeleteWhat I don't get is why a guy who is down 30% over the last 8 years (since 2004) while the S&P is up 25% still gets picked up be Seeking Alpha.
If you want to be bearish though, he says current market conditions are in the lowest 0.6% of times. Think valuations only look somewhat cheap because profit margins are too high.
Hussman's trades are based on historical averages. Right now, the problem (as I see it), is that averages have been/are being challenged in unconventional ways. Almost everyone I read mentions 'challenging' conditions.
Deleteearnings on 8/1 for FSLR. will be lots of fireworks over there. i have some cash ready if it breaks $13.8 before earnings. would like to get long there.
ReplyDeletewow, cannot find a damn thing to trade, PA is weak as are the internals. Would be surprised to see an accelerating sell off as the day wears on
ReplyDeleteYep.
DeleteWould be good to have a flat, consolidation type day today after the big upmove we had the last few days.
DeleteGuys- I don't think we get the big 'sell off' sideliners are looking for.
Deletesilver is looking decent...looking closely at AUMN. david - what assurances do we have that this isn't going BK?
ReplyDeleteNUGT actually might be the best play since gold and silver seem to trade in tandem.
Deletegive me some of what she's taking!!!!
ReplyDeletehttp://www.guardian.co.uk/sport/2012/jul/30/ye-shiwen-world-record-olympics-2012
JB - I swam competitively for 15 years of my life...at my peak I was top 10 in the country and was training with a few people that were the next step up above me at #2-3 in the country. These people used to work their ass off and one of the girls was just a beast. the only problem is she didn't dope. she got 3rd at olympic trials back in 1992 and 1996 and she told me there was a temptation for her to take supplements to get to the next level. there is no way in hell that this girl from china isn't on something illegal. Ryan Lochte is one of the hardest trainers ever and her split in the freestyle leg of the IM was faster than Lochte's.
DeleteMark - this 15k to 20k share bid keeps popping up on NSPH.
ReplyDeleteseeing that as well, looks like someone is playing games to me.
DeleteYeah, I've seen it a few times. Could be stuffing. I don't know. If it breaks this flag to the upside a measured move gives us new highs. I kinda doubt it though.
DeleteLater players...
i'm prepared for a move down to $2.5.
DeleteIf you look, all of the bigger upside buy's get eaten up by ADF's. That's usually not a good sign.
DeleteCNH - Tomorrow BMO
ReplyDeleteNSPH - I really hope they don't drop this one to my stop limit... sure looks like it's gonna happen. I should just take profit and prepare for reload.
ReplyDeleteSeems like momo rats deserting, or someone(s) shorting?
SQNM - Starting a new pinch on daily, got a ways to go before it's tightly formed. ADX+DI daily is nearing 10 though, likely to cause a bounce?
Looks like maybe $2.55 support test coming? That might get the daily ADX/MACD pinch set up and get weekly ADX +DI to 10?
Got my order in for 5k at the 2.55
DeleteNSPH - Could just be testing the 20SMA? That probably has to happen at a minimum.
ReplyDeletei'm thinking this might be more of a trading stock...some clarity on placements etc will come out on the aug 7 earnings call.
DeleteAgreed, as long as we're on this side of Aug 7th
Delete2nd - FXI - I'm curious as to why you weren't buying this one two weeks ago while it was at bottom of channel? If you can recall...., probably b/c the world was flying apart?
ReplyDelete(I've noticed the world is usually flying apart as many stocks are in the bottom of their channel.)
Two weeks ago was Before Draghi. Now it's AD.
DeleteFSLR coming up on a potential breakdown. I'll be buying some on a close under $13.8
ReplyDeleteactually sorry not on a close under 13.8...just a break of $13.8
DeleteGGB - Failed breakout, but the channel is pointing up.... The same can't be said for many in this space, including FCX
ReplyDeleteLoad up on the next visit to channel bottom.
Bigger picture on the markets I think we're going to get one more 25% or so drop before the next bull market. First I think we could get a move to new highs and then we drop down to 1,200. We go into a shallow recession and the pullback lingers for 8 months or so. Sentiment drops to all time lows and no one wants anything to do with the market. That's when we leverage up.
ReplyDeleteWe need another glimpse of Draghi's pearly-white smile and slick used-car salesman tongue...
ReplyDeleteThen he can get back to work manipulating LIBOR
Citrix Systems CTXS @ 72.39
ReplyDeleteOut @ 73.50....but I bet it goes higher
DeleteNSPH - 100 share trades controlling price, thank the self-serving HFT's for providing liquidity...
ReplyDelete"david - what assurances do we have that this [AUMN] isn't going BK?"
ReplyDeleteHow can a company that has no debt go bankrupt? The management predicts that they will use up their spare cash down to a few million dollars in 3Q2012 and then become cashflow positive in 4Q2012. After that, over the next year, they predict they will generate $20M in cash, which they will then use at the end of 2013 to double their production of gold/silver (raising it to 4M AgEqOz per year).
Silver is leading gold to the upside -- that's how it is supposed to be during a real uptrend...
ReplyDeleteGold needs to get jiggy with it, then maybe I'll dip a toe in the water. So far, Eurozone has just smiles and unfulfilled promises as far as I know.
DeleteI responded/commented under the appropriate posts above. Other than that, I'm doing my best to 'ignore' the news.
ReplyDeleteI opened a position in EZU @ 27.1x early in the day.
Happy I offed FB last Friday.
ReplyDelete500 FB @ 23.13
ReplyDeleteJust a trade, right? O/w, I'd wait until August 16.
DeleteB&H is dead
Deletesmacked in teh face
Deletestopped at 22.15
NOK is trading exactly like Natty was. Unfortunately I only have a whopping 6,600 shares of it left in the accounts. I really wish I loaded that baby up because I can envision a scenario where the iPhone 5 is a flop and NOK is trading at $5 by September.
ReplyDeleteafter looking at this for a while i picked up some more NOK on margin...at 2.15 - 2.16. haven't used margin in a couple of years and will most likely regret doing it.
DeleteCraig- Re LINE, do you happen to know the timing of the next the ex-div date?
ReplyDeleteLINE - 8/3/12 is ex-div, according to my broker, rating is buy updated 3/23
DeleteRight. 8/3 ex, 8/7 record, 8/14 pay. $0.725
DeleteThanks- that's one awesome yield.
DeleteSHAW - Taking half off here...
ReplyDeleteInteresting Report which support's 2nd plan to go into China, Hong Kong, and (especially) Europe based on based on te 10 year cyclically adjusted P/E ratio. Not surprisingly, Greece at the top of the list and I'm sure it will be a great buy at some point if you can pick it, but also, tier 2 northern European countries like Belgium and Holland high on the list. USA and Canada near the bottom of expected returns.
ReplyDeletehttp://greenbackd.com/2012/07/30/new-global-research-on-graham-shiller-cyclically-adjusted-price-earnings-cape-ratio/
It certainly provides support for buy-and-hold. The fact that CAPE has been shown (in the past) to be a reliable predictor of long-term returns is a powerful psychological tool. Kind of like a steady hand on the wheel as markets churn.
DeleteJeff Saut's always interesting commentary (http://www.raymondjames.com/inv_strat.htm) includes the following:
ReplyDeleteSuch frustrations are being reflected in ISI’s latest hedge fund survey that shows long equity exposure has declined to 44.1%, which is lower than the 47.2% equity allocation at the August 8/9th “emotional low” of last year. Meanwhile, retail investors are on track to redeem another $5 billion from equity-centric mutual funds this month, bringing the YTD total redemption to about $37 billion, the second biggest outflow next to 2008. Then there is the shrinking stock exchange volume combined with investor apathy as reflected in the AAII’s (American Association of Individual Investors) survey that week before last had the “bulls” at only a 22.19% reading. Typically when the bullish sentiment reading is below 25% stocks rally on average 5%; and that is exactly what happened last week as the SPX climbed 4.3% from Tuesday’s intraday low of 1329.24.
i was at the verizon store to grab an ipad charger yesterday and got too talking to girl there about the new iphone...asked if theyre seeing lots of people waiting for the new iphone to come out and she said not really. she said the samsung galaxy is the new hot phone. it got me thinking about how nokia could do the same in the future and how cheap it is now if they do turn it around. thats what gave me the urge to buy some today. i still think losing jobs could one day cause it to lose some luster or at least open the door a little for nok
ReplyDeleteApparently before he passed on, Jobs said he had a personal beef with phones running DROID b/c he felt they represent IP theft? I can't comprehend why this would be the case, absent any physical similarities DROID doesn't contain APPL code as far as I know. Sure, maybe there are similarities but the same can be said for many appliances.
DeleteI don't see the merit in AAPL's suit.
speaking of patents nok the crazy part about nok is they have $700 mil in royalties off their patents. theyre starting to imbed the navteq tech in cars now so i wonder how much patent power that tech brought to nok
DeleteMaybe it has to do with Google's illegal use of Java in their software for Android phones? Larry Ellison is suing Google for this right now...
DeleteFrom what I've read Google infringes on quite a few patents through the course of their business. Probably one of the biggest risks to them as an investment, but most likely they will just pay up and move on.
Deletei like the nok idea, thx.
Deleteon friday I bot dow and phm
ReplyDeletephm is a breakout play, the market was all giddy, homebuilders are back and going to the moon, and i wanted in. so i bot a few shares. with my max $500 stop loss though it really is just a few shares
dow - love/hate relationship here. bot at 29.30 with a stop around 27.50, i thought DOW would get more love even though my charts show it in a downtrend. It's currently sitting just below the mid may resistance so it's not looking too healthy. I'm guessing peeps think they may not do so well paying out a 4.4% divvy at today's close.
...and i wanted in.
ReplyDeleteYour crack me up Porta Patomous.
CNH - This one reports in the morning, Amsterdamski!
ReplyDeleteNSPH - Upgraded by Piper Jaffray from $4 to $2
ReplyDeletehttp://finance.yahoo.com/news/nanosphere-upgraded-overweight-neutral-piper-094743830.html
From $4 to $2! $2 to $4 wouldn't be an upgrade, would it?
DeleteJust saw that. Maybe we can get something to sell into here.
DeleteLove the comment about activity. Hopefully placements are in the 50+ range this quarter. If that happens this stock will get to $5.
Delete5K off @ 3.07. This is kinda strange. The shares sold but it didn't show up on my trading screen where all of the sales tick by. I wonder if it was the MM and the shares will total at EOD???
DeleteMy POS penny stocks are doing well this morning. NOK:
ReplyDeleteNokia Corp. (NOK, NOK1V.HE) Chief Executive Stephen Elop and several board members purchased more than one million shares of company stock last week on the open market in a move that the company says shows commitment by senior leaders and confidence in the Finnish handset maker's future.
Mr. Elop purchased 275,000 shares, raising his Nokia holdings to 425,000 shares, and Risto Siilasmaa, the company's new chairman, purchased 333,000 shares. At least five other board members also purchased shares last week, during which Nokia traded in a range of 1.40 euros to 1.74 euros .
The stock acquisition comes at a critical crossroads for Mr. Elop and the company's board as they scramble to downsize the company and conserve cash. Nokia has reported a stream of red ink in recent quarters and is losing considerable market share in the mobile phone market. Its Lumia smartphone, which runs on Microsoft Windows technology, has been well reviewed by critics but significantly trails competitors like Apple Inc.'s (AAPL) iPhone in terms of sales volume.
Mr. Elop has said the upcoming launch of a new handset running on Microsoft's forthcoming Windows 8 software is expected to give the company a significant lift, but the months leading up to that phone's launch could be challenging.
The stock purchases were disclosed by Nokia this week. Shares of Nokia traded up 3.7% Tuesday at EUR1.86 , 52% lower than the EUR3.90 mark that Nokia was trading at in January.
"The purchases underscore the board and our leaders commitment to Nokia and confidence in our future," Nokia spokeswoman Susan Sheehan said in an email to The Wall Street Journal .
News of the purchases follow a recent decision by the board of directors to beef up the amount of stock options that are available as compensation for key senior leaders who are not on Mr. Elop's senior management team. Nokia made the move in an effort to better retain talent as the company restructures.
NSPH - I'm out @ $3.03, ready for the pullback now.
ReplyDelete5k more @ 3.12
ReplyDeleteAdded to EZU @ 27.3x. Opened BAC @ 7.28.
ReplyDeleteOffed NSPH @ 3.06 (flat).
F - Bid entered at $9.04, doubt it dips that low but what the heck, maybe?
ReplyDeleteDollar was off considerably this morning, BTW, then bounced back up, LOL!
5K more off @ 3.14. That's all of the shares I set up pre-market.
ReplyDeleteYou guys scared me out too. I sold most of my shares at around $3.08 avg. Bird in the hand or whatever it is they say.
ReplyDeleteThat was that big bar?
DeleteAnother 10K off @ 3.07.
Deleteyeah. One of them was a big bar b/c I went to sell 5k shares and accidentally hit 50k. Had to cancel it after realizing what I did wrong.
DeleteYour lucky, I've done that the other way on the bid. that's a lot more scary. If NSPH it's my next sale level drinks tonight!
DeleteTBF - I can't figure out which way this POS's headed...
ReplyDeleteGeithner - So what did the pipsqueak have to say in Europe yesterday, I bet a whole lot of nothing.
ReplyDeleteCNH - Wonder if this one delivers the sugar with tomorrow's earnings.... Hmmm
ReplyDeleteFSLR cranking. That means a miss and big move down on earnings right?
ReplyDeleteI picked up another 20k shs of NOK at 2.28.
ReplyDeleteNSPH just cracked the top 10.
ReplyDeleteFinish the sentence: "With a lower high"
DeleteARII - Sure had a nice breakout
ReplyDeleteMTW - Having trouble overtaking the 200 ahead of earnings, breakout fakeout?
TEX - We know the story
CNH - I'm hoping for a disappointment to buy into, actually. This is the company that makes New Holland tractors(Cadillac tractors on par with DE), they bought F's tractor line decades ago.
ok guys we need to decide on FIO. my old boss still has a big position in it and he's convinced they're going to get bought out. i can see the argument for it. there were rumors that OCZ was getting bought out and the CFO at STX was saying they are looking to make an acquisition in the SSD sector.
ReplyDeleteMy issues are: (1) I really just don't understand the company enough to know if they will be commodotized, (2) they're still only marginally profitable, (3) everyone is expecting a buyout.
However, I think the $18/19 area is a big area of support and there's a chance they blow out earnings here and rip this stock back up to $30.
Starter position FIO $19.7
ReplyDeleteAdded a small amount of SVNT at $0.65. Totaly crap shoot stock.
ReplyDeleteEMMS - Seems like PE is low on this one?
ReplyDeleteT3D- MDW news?
ReplyDeleteNAV - Interesting battle....
ReplyDeleteAdded some more FIO at $19.55 to $19.60. Keeping the position fairly small.
ReplyDeleteNOK closed its first of many gaps at $2.38. My guess is it pushes to $2.50 then settles in that area for a few days then makes its assault on the next gap at $2.8
Later gators.
ReplyDeleteLook at this one. TFM
DeleteMark - I've been following them and WFM for a while. Great stories.
DeleteIn that space I like SMBL, BNNY, AMNF
DeleteSWC - Well maybe this POS's not completely dead after-all, LOL Don't count your chickens.
ReplyDeleteTFM - Wow, the balance sheet figures for this one on Finviz must be way behind the curve.
ReplyDeleteDamn, I can only guess a politician somewhere must've thrown cold water on today's party...
ReplyDeleteThis is complete BS and if this shit keeps up, I'm gassing up the boat and taking the remainder of the week off.
OK I get it. I'm wrong on FIO. Sold 40% at loss at $19.1 avg.
ReplyDeleteScrew it...sold rest at $19.0 avg.
DeleteGood move, no need to keep riding it down as long as sellers aren't done.
DeleteAdded some more NOK at $2.36. If we know that these big cap companies go in cycles then isn't it safe to assume that buying NOK at $2 after it has fallen from $40 would be a smart move? The move in NOK definitely looks like a bottom is in. If you look at the moves off the bottom in stocks back in 2009 or 2003 like PIR, SCSS or off bottoms in 2003 in WFR or 2007 in JRCC...they all ripped higher day after day, leaving many in disbelief. And the majority of them all came back to their old highs. So I feel like we should ignore the fact that it has moved up 35% in a week and instead focus on the fact that it has moved down 95% off it's highs. If you add up the sum of its parts, NOK could theoretically be worth at least $5 a share assuming huge haircuts to things like its patent portfolio and the value of Navteq.
ReplyDeleteWhat I'm expecting is NOK will stall at around $2.50 and bounce around for a few days or a week between $2.25 and $2.5. And then it pushes higher. I think the odds of the stock pulling back below $2 is pretty much out the window.
"buying NOK at $2 after it has fallen from $40 would be a smart move?"
DeleteAgreed, I appreciate the philosophy of buying low and selling higher. This is why I placed a bid on F this morning, just in case a pullback fade or momentary loss of confidence dropped the price back to support.
TSM - Looks like 27th earnings announcement was well received.
ReplyDeleteCMI - Initial positive response to this morning's earnings.
ReplyDeleteGold - Well, I'm glad to see David's heads-up yielded positive results even if it was only temporary(WIP), good job David!
ReplyDeleteCP, don't forget: "An Explosive Rally In Gold And Silver Is About To Begin"
Deletehttp://seekingalpha.com/article/734091-an-explosive-rally-in-gold-and-silver-is-about-to-begin
The gold/silver bull market will finish when the G6 nations will get their budget deficits under control. We are nowhere near that...
Yesterday Geoff posted the gold chart since 2004, which shows that declining wedges with flat bottoms have occurred before, and as I recall, the last two prompted the media to tout the end of the gold bull market. But they were wrong, and there is no reason why they will be right this time.
Daily Obituaries, Spotlight on Spain....
ReplyDeletehttp://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100019218/temptations-of-a-peseta-default-in-spain/
Just purchased 3000 more shares of PNPFF at $0.87, bringing my recent total to 10K shares at the average cost of $0.86. Its 2-year chart is a beauty -- how can the totally flat, low-volatility section that started in late May resolve anywhere but up?
ReplyDeleteActually, if you look carefully at the 6-month chart of PNPFF, you'll see that last Friday it made a 5th higher low since late May -- how much more is needed in order to prove that the bottom is in???
DeleteWe have previously discussed the importance of the Debt/GDP ratio for forecasting currency weakness and inflation. Some people keep pointing out that there were periods in the past when Debt/GDP ratio was growing, but we did not have a rally in commodities. To which I replied, that the LEVEL of the Debt/GDP is also important – at low levels, this ratio can be ignored. However, at high levels, this ratio becomes the dominant force in the economy. Here is what Hussman wrote on Sunday:
ReplyDelete“Up to a certain point, which seems to be about 100-120% debt-to-GDP, countries can pull themselves from the brink of sovereign crisis through a combination of austerity (spending reductions), restructuring (putting insolvent financial institutions into receivership and altering the terms of unworkable private and public debt), and monetization (relief of government debt through the permanent creation of currency). Austerity generally reduces economic growth (and corporate profits) in a way that delivers less debt reduction benefit than expected, restructuring is often stimulative to growth because good new capital no longer has to subsidize old misallocations, but is politically contentious, and monetization of bad debt produces clear but often quite delayed inflationary pressures. None of these choices is simple.
Moreover, once countries have created massive deficits and debt burdens beyond about 120% of GDP – typically not to accumulate productive assets and investments that service that debt, but instead to fund consumption, bail out insolvency, and compensate labor without output – austerity produces further economic depression, restructuring becomes disorderly and produces further economic depression, and attempts at monetization tend to be hyperinflationary.”
USA is ALREADY at 100% Debt/GDP ratio (if we don't count the future unfunded liabilities), and it will be at 120% in a couples of years at the current rate. So delayed inflationary pressures are already a given, and hyperinflation will occur if Bernanke keeps buying 10-year Treasuries below 2%.
So how can anyone say that the gold bull market is over??? The explosion in gold is just starting!
DeleteThe issue with this argument is many people/companies/governments are cash flow oriented. With US government rates so low, the incremental debt isn't really hurting the cash flow as the steadily decreasing rates keep the interest payments down. That is how Japan is able to manage such a huge debt (250%+ I think) because rates are less than 1%.
DeleteAt some point rates will rise and also these debts will need to be paid off, but I think the government is just hoping to get GDP up to 7% growth (real GDP + inflation), so that would increase annual GDP by over $1 trillion per year and wipe out the deficit problem.
Sure, that's a viable solution. But it will require getting inflation to the 4-5% range and then making sure that it doesn't go any higher. In any case, with such inflation, gold will go much higher, since today people are pricing gold at 1.5% inflation...
Deletewhat good is getting this argument about govt debts right if hussman is broke before it happens? id rather focus on whats working in the markets now. lets say hyperinflation happens. or a depression. will it happen overnight? and if it does what good is it if ur broke before it happens? i mean if thats the case we're all broke overnight and id rather have money between now and then.
DeleteThat's why I am not investing into Hussman's fund, but rather extracting one cool insight from his writings and then focusing on it exclusively, without any hedging. I recall reading an article a while ago about the importance of discerning the dominant force affecting a certain security or sector, and investing with that dominant force while ignoring the noise. That's what I am trying to do with gold now. More precisely, I am doing it with AUMN, which should explode higher within a year even if gold/silver stays in place. Their dominant force is expanding production, and even if they suffer some delays (they did in 1H2012 because their equipment was held up by customs in Argentina), the long-term value of their stock is determined by their average cashflow over the next 20 years, and a 6 month delay is totally unimportant in the grand scheme of things.
DeleteHaha - right on TOF. The way Hussman's going he won't have any money left by the time his predictions possibly come true. He should get together with Bill Gross and talk about how horrible things are and miss a doubling in the S&P.
ReplyDeleteActually, Mark's chart buddy Objective Trader, has some interesting charts showing gold is ready for a big move. I personally don't buy it as I think the price of gold got way ahead of fundamentals when it went from $250 to $1800 in about 12 years, but gold is such a hard thing to value, so perhaps it could go a lot higher.
I'll listen to Objective Trader any and every single day over guys like Hussman and Gross who are salesmen.
DeleteObjective Trader vs Biased Trader.
DeleteBiased Traitor?
DeleteGold - Buying weakness and selling into strength seems like the only way to survive. This is consistent with Santa's method, come to think of it. I guess he must have some experience navigating through this neck of the woods.
ReplyDelete