Stock Market News & Stocks to Watch from StraightStocks » George Soros

LEAP Options

Ahmad Hassam — Mon, 16 Nov 2009 11:20:10 +0000

British Pound is known to be a stable currency. Great Britain is a strong economy. But, Great Britain was finding it difficult to stay within the tight exchange rate band set by the European Monetary Union (EMU) in the early'90s. One person who made history with options was George Soros who is famously known as the man who broke the Bank of England.

George Soros lectures on capitalism versus an open society

Prieur du Plessis — Fri, 30 Oct 2009 08:56:23 +0000

This post features video recordings of a lecture series by George Soros at the Central European University in Budapest, discussing capitalism versus an open society.

Face-to-face with George Soros

Prieur du Plessis — Mon, 26 Oct 2009 08:40:42 +0000

Chrystia Freeland, US managing editor of the Financial Times, interviewed George Soros, the legendary fund manager, about the state of the world economy, relations between the US and China, his investment performance and regulating bankers' compensation. A link to the transcript of the interview is also provided.

Prieur’s readings (October 26, 2009)

Prieur du Plessis — Mon, 26 Oct 2009 08:37:08 +0000

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy. Please also add the links to any other worthwhile articles you would like to share to the comments section.

Feedback from Buttonwood Gathering

Prieur du Plessis — Mon, 19 Oct 2009 08:12:12 +0000

The Buttonwood Gathering, a conference bringing together global regulators and bankers to discuss and debate new ideas and develop a new set of guidelines moving forward, has just taken place. Michael Panzer, writer of the Financial Armageddon blog, was in attendance and has kindly shared some of the more interesting quotes on his blog, as reported in this post.

Hidden Traps Make Bank Stocks a Bad Deal

Contrarian Profits — Tue, 06 Oct 2009 18:02:43 +0000

pBillionaire investor George Soros said yesterday (Monday) that the U.S. recovery would be a slow one because of all the “basically bankrupt” financial companies impeding it./p pU.S. Federal Reserve Chairman Ben S. Bernanke and Congress agreed Friday that the financial system – not the American taxpayer – should bear the costs of bank bailouts. a href="http://en.wikipedia.org/wiki/Sheila_C._Bair"Sheila Bair/a, head of the a href="http://www.google.com/finance?cid=14918074"Federal Deposit Insurance Corp/a. (FDIC), a href="http://www.moneymorning.com/2009/09/29/fdic-banks/"wants the banks to ante up $45 billion/a – three years’ worth of deposit-insurance premiums – to bail out the fund that insures bank deposits./p pWhen it comes to bank stocks, we all know that there were a number of strongema href="http://www.moneymorning.com" class="alinks_links"Money Morning/a/em/strong readers shrewd enough to buy Citigroup Inc. (NYSE: a href="http://www.google.com/finance?q=NYSE%3AC"C/a) shares when the foundering giant’s stock price was below#8230;/p

Is This the Time to Be a Contrarian?

Money and Markets — Wed, 23 Sep 2009 13:56:58 +0000

Many successful investors and speculators, like Warren Buffett and George Soros, are said to be contrarians. But what does this really mean? And is it true? Let's have a look at the concept of contrarianism to find out whether it can give us some guidance during these ...

Stock markets – what to do now

Prieur du Plessis — Thu, 03 Sep 2009 08:52:23 +0000

Risk aversion has re-entered the investment equation with risky assets such as equities and commodities bearing the brunt of the selling orders, while gold bullion, government bonds, the US dollar and the yen are attracting safe-haven money. The global stock market pullback seems to be gathering momentum, and this post discusses what one should do at this juncture.

Derivatives Are Evil And Must Be Destroyed

Trading School — Thu, 20 Aug 2009 12:30:05 +0000

Recently I had the opportunity to meet with one of the most excitable options traders and educators in Las Vegas…his name is Mark Longo and he’s the founder and main options guy at TheOptionsInsider.com. I was able to spend about 45 minutes just chatting with him about what’s going on in the options world, what’s [...]

The Seven Myths of U.S. Healthcare Reform

Justice Litle — Wed, 29 Jul 2009 12:58:38 +0000

pWhen it comes to healthcare reform, people believe some very strange things. Or so says Cliff Asness, founder of AQR Capital Management. Today, the seven biggest #8220;myths#8221; are exposed#8230;/p pMy little brother and his fiancée dropped into Reno/Tahoe for the weekend. They were wending their way west to go apartment hunting in San Francisco, visiting friends and family along the way./p pOn Saturday we took a two-hour catamaran cruise up at the lake. It was as perfect a day as I#8217;d ever seen it. The water was so clear and blue, you could see 30 feet down through the netting of the boat. The sky was just as blue – not a cloud to be seen – and the day was just#8230;/p

Covered Calls: Five Steps to Make Profitable Option Trades

Contrarian Profits — Fri, 17 Jul 2009 18:51:08 +0000

pThe mainstream “press” does not want you to pay attention to option strategies such as covered calls. There is a conspiracy here - and it’s meant to keep you ignorant to a sector of the market that just doesn’t fit in with the “buy stocks and mutual funds” mantra that makes Wall Street money./p pYou see, there are no upgrades or downgrades for covered calls, LEAPs, or puts./p pIt’s because most mutual fun managers can’t see beyond what they have been taught, which has predominantly been to “buy stocks.”/p pSure, they’ve heard of options and even know how they work, but they are scared of showing options on their portfolios because the “Average Joe” that invests in mutual funds still looks at options#8230;/p

Covered Calls: Five Steps to Make Profitable Option Trades

Investment U — Thu, 16 Jul 2009 21:17:51 +0000

Covered Calls: Five Steps to Make Profitable Option Trades by Karim Rahemtulla, Advisory Panelist The mainstream “press” does not want you to pay attention to option strategies such as covered calls. There is a conspiracy here - and it’s meant to keep you ignorant to a sector of the market that just doesn’t fit in with the [...]

Here’s Why It’s Time to Ban Credit Default Swaps

Contrarian Profits — Wed, 15 Jul 2009 14:15:09 +0000

div class="entry" pAsk U.S. Rep. Maxine Waters, D-CA, about credit default swaps and she’ll offer this warning: Ban them now or expect a reprise of the ongoing global financial crisis – which the derivative securities helped create. When it comes to elected officials, Congresswoman Waters is not one I would typically feel that I have a lot in agreement with. /p pA representative of a low-income district in Los Angeles, Waters is a senior member of the House Committee on Financial Services and has distinguished herself in the past by her sharp attacks on the financial sector and capitalism in general – what her own Web site describes as her “a href="http://www.house.gov/waters/bio/" target="_blank"no-holds-barred style of politics/a.”/p pHowever, Congresswoman Waters’ bill to prohibit a href="http://www.investopedia.com/terms/c/creditdefaultswap.asp" target="_blank"credit default swaps/a – introduced last Friday#8230;/p/div

What You Need To Know About Covered Call Trading

Contrarian Profits — Tue, 14 Jul 2009 17:37:49 +0000

pAs promised last week, this is the start of a series on options strategies I’ve planned in order to show you a world of possibilities that the mainstream “press” quite simply doesn’t want you to pay attention to. At the risk of sounding like a conspiracy theorist, I firmly believe that most investors are intentionally kept in the dark about anything that breaks away from the “buy stocks and mutual funds” mantra that makes Wall Street money./p pMost mutual fund managers can’t see much further beyond Investing 101, and too many people in general are skeptical of options altogether. The problem is that they have no idea what they’re missing./p pThe options market was created for professionals, institutional money managers, and those who#8230;/p

Faber and Greenspan: Shills for Fed Snake Oil

Adrian Ash — Mon, 06 Jul 2009 23:00:21 +0000

pem“Just how can the Fed credibly promise to be irresponsible…?” Here’s a thought—that tiny handful of investors and analysts warning how Fed policy risks hyper-inflation are in fact doing the central bank’s work.br / /em/p pThe Fed emwants/em you to believe hyperinflation is looming. Or at least, it emshould/emwant that, if doubling its balance-sheet – purchasing and lending against investment junk – is going to work the wonders that modern central-bank theory says it can. And the Fed certainly wants you to believe it will stop at nothing to avoid deflation (”whatever means necessary” as the chairman put it a href="http://goldnews.bullionvault.com/deflation_bernanke_032320094" target="_blank"back in 2002/a)./p pSo anyone touting the a href="http://www.freemensch.com/2009/06/the-ever-present-threat-of-hyperinflation.html" target="_blank"hyperinflation risk/a in public is playing the shill, a decoy – seemingly unconnected – proclaiming the miracle powers of Dr.Ben Bernanke’s snake oil to#8230;/p

The Ghosts of 2008, Gold Stocks, A Currency Play, Bank Role Reversal and More!

Contrarian Profits — Mon, 06 Jul 2009 20:00:42 +0000

pDeja vu all over again… are stocks just following the 2008 playbook?#8230; Bill Jenkins shares his favorite global currency#8230; Gold bugs beware: Gold chart forecasts a sell-off#8230; Yet league of famous funds (and a href="http://www.contrarianprofits.com/articles/author/chris-mayer/" class="alinks_links"Chris Mayer/a) are buying up gold stocks#8230; Plus, are we reading this right? A bank bails out the government?/p p strongWe’re scanning markets of the world today and scratching our heads…/strong haven’t we heard this before?br / strong There was a scare at the start of the year /strong#8211; banks were in trouble, the housing market was crashing and unemployment was rising. The S#38;P fell at a rate unseen in a long, long time. But then,a href="http://dailyreckoning.com/a-suckers-rally/"a sucker’s rally/a! The worst was likely over, they said… stocks were oversold. The U.S. consumer, China and oil companies promised to#8230;/p

Video-o-rama: Roller-coaster ride into the long weekend

Prieur du Plessis — Sat, 04 Jul 2009 06:04:08 +0000

The holiday-shortened week saw investors pondering the depth of the economic rabbit-hole. As investors vacillated, most financial markets were characterized by a roller-coaster ride. Friday's worse-than-expected jobs data left no doubt that the economy was in recession. The highlights of the discussions were captured on video and are included in this video-o-rama compilation.

Stay Out of the Water

Bill Bonner — Fri, 03 Jul 2009 18:30:59 +0000

pNEW Unemployment figures Show We#8217;re Still Lingering in Depression./p pThis week began with shrieks of joy. First, a federal court came down on Bernie Madoff like a brick on a bald head. Madoff, convicted of lying to investors, drew a sentence that only a sea turtle or a swamp oak could complete. Then, like children playing in the sea, investors were teased by one wave of good news#8230; and tickled by the next./p pBloomberg reported that “Wall Street’s largest bond-trading firms say the worst may be over for investors#8230; ” Then, General Electric’s CEO, Jeffrey Immelt and famous investor George Soros both said that the crisis is “behind us” and that growth will begin again next year. Finally, analyst John Dorfman opined#8230;/p

The U.S. Treasury Moves The Goal Posts

Contrarian Profits — Wed, 01 Jul 2009 14:40:29 +0000

pA 4-day rally gets stopped at the border#8230; Home Prices fall at a -18.12% pace#8230; Alice Rivlin gives her 2-cents#8230;br / * Kiwi bond maturities galore next month#8230; And Now#8230; Today#8217;s Pfennig!br / Good day#8230; And a Wonderful Wednesday to you! As tradition with the Pfennig would have it, here#8217;s my introduction to July#8230; There I was#8230; On a July morning#8230; Looking for love#8230; With the strength of a new day dawning, and#8230; The beautiful sun#8230;/p pYes, for those #8220;old rockers#8221; from the 70#8217;s like me#8230; That#8217;s Uriah Heep, at their best!/p pOK#8230; So, welcome to July! The last day of June was quite the volatile one to say the least! There we were waiting for the S#38;P/CaseShiller Home Price Index to print, and show that home prices were#8230;/p

Words from the (investment) wise for the week that was (June 22 – 28, 2009)

Prieur du Plessis — Sun, 28 Jun 2009 08:37:06 +0000

“Words from the Wise” this week comes to you in a shortened format as I do not have access to my normal research resources while on the road in Europe. Although very little commentary is provided, a full dose of excerpts from interesting news items and quotes from market commentators is included.

Prieur’s readings

Prieur du Plessis — Fri, 19 Jun 2009 09:45:25 +0000

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

Wall Street vs. Main Street: The Regulatory Battle Begins Tomorrow

Jim Musselwhite — Tue, 16 Jun 2009 17:24:53 +0000

By Shah Gilani Contributing Editor Money Morning [Editor's Note: Is it a new bull market, or just a bear-market rally that's going to separate investors from the last of their cash? For the shrewdest investors, it may not matter. A new offer from Money Morning is a two-way win for investors: Noted commentator Peter D. Schiff's new [...]

Forex Trading: An Interview With Forex Market Expert Thomas Fischer, Part 1

Investment U — Mon, 15 Jun 2009 21:14:17 +0000

Forex Trading: An Interview With Forex Market Expert Thomas Fischer, Part 1 by Dr. Scott Brown, Education Director of Investment U Forex trading is hot, hot, hot right now. And one of the biggest reasons why is that traders are using leverage to amplify returns by 200 times - where $1 controls $200 worth of foreign currency. [...]

An Option on Monetization and Inflation

Bullish Bankers — Tue, 09 Jun 2009 11:00:29 +0000

You want to place a bet on future inflation? Well, an opportunity for you to bet on inflation is now in the works. The hedge fund Universa Investments L. P. is planning to open a fund in the near future that will allow you to back up your concern with the possibility that [...]

An Embarrassing Day for America: What it Means for Your Investments – #Government Bonds, #Tim #Geithner

Dr. Steve Sjuggerud — Tue, 02 Jun 2009 13:00:00 +0000

BBy Dr. Steve Sjuggerud/BBRBR Yesterday, a bunch of Chinese people laughed at us...BRBR What was the joke? U.S. Treasury Secretary Tim Geithner told a crowd of students in Beijing that the trillion dollars worth of U.S. government bonds the Chinese hold are "very safe."BRBR Students laughed. They know the truth.BRBR It was an embarrassing day for America. I never thought I'd see it...BRBR In my career, I've learned there's nothing surer in finance than this: When a Treasury Secretary explicitly tells you "your money is safe," then your money is in big trouble.BRBR I started my career covering emerging markets. One of our running jokes was "He's as honest as a Latin American politician on the eve of devaluation."BRBR You see, the statement "we will not devalue the peso" was one of the simplest indicators we followed. When we heard that from a Latin American politician (and especially a treasury secretary), we knew the peso in that country was about to be devalued. It was almost a lock the country's currency was about to crash.BRBR Why? The simplest answer is, when your country's currency is safe, you don't have to tell people it is... You never hear the Swiss or the Norwegians begging you to "just trust us," for example.BRBR And it's not just Latin America...BRBR On June 30, 1997, Thailand's prime minister declared, "We will not devalue our currency." Two days later, Thailand's currency lost half its value. That was the first domino to fall. Soon after, several Asian countries devalued their currencies. And yes, before each devaluation, each finance minister said the currency wouldn't be devalued.BRBR While it's not so rare in emerging markets, it hasn't happened in recent times in large, stable countries – particularly countries like the U.S. The last time I can remember is back in 1992...BRBR In August 1992, England's treasury secretary Norman Lamont said, "There are going to be no devaluations... We will do whatever is necessary, and I hope there is no doubt about that at all."BRBR Soon after, George Soros made $10 billion betting against the treasury secretary. England devalued its currency, and Soros became a billionaire on one of the most famous trades in history.BRBR This week, U.S. Treasury Secretary Tim Geithner meets with Chinese leaders. His top goal is to reassure them their money invested in U.S. dollars is safe.BRBR But I think the treasury secretary doth protest too much. The historical record is terrible. Position yourself accordingly.BRBR Good investing,BRBR SteveBRBRdiv class="feedflare" a href="http://feeds2.feedburner.com/~ff/dailywealth/rss?a=AwCgkqc-Rp8:G9cHQEaoD04:yIl2AUoC8zA"img src="http://feeds2.feedburner.com/~ff/dailywealth/rss?d=yIl2AUoC8zA" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/dailywealth/rss?a=AwCgkqc-Rp8:G9cHQEaoD04:7Q72WNTAKBA"img src="http://feeds2.feedburner.com/~ff/dailywealth/rss?d=7Q72WNTAKBA" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/dailywealth/rss?a=AwCgkqc-Rp8:G9cHQEaoD04:V_sGLiPBpWU"img src="http://feeds2.feedburner.com/~ff/dailywealth/rss?i=AwCgkqc-Rp8:G9cHQEaoD04:V_sGLiPBpWU" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/dailywealth/rss?a=AwCgkqc-Rp8:G9cHQEaoD04:gIN9vFwOqvQ"img src="http://feeds2.feedburner.com/~ff/dailywealth/rss?i=AwCgkqc-Rp8:G9cHQEaoD04:gIN9vFwOqvQ" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/dailywealth/rss?a=AwCgkqc-Rp8:G9cHQEaoD04:TzevzKxY174"img src="http://feeds2.feedburner.com/~ff/dailywealth/rss?d=TzevzKxY174" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/dailywealth/rss?a=AwCgkqc-Rp8:G9cHQEaoD04:69LSlcDtVW8"img src="http://feeds2.feedburner.com/~ff/dailywealth/rss?d=69LSlcDtVW8" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/dailywealth/rss?a=AwCgkqc-Rp8:G9cHQEaoD04:qj6IDK7rITs"img src="http://feeds2.feedburner.com/~ff/dailywealth/rss?d=qj6IDK7rITs" border="0"/img/a /divimg src="http://feeds2.feedburner.com/~r/dailywealth/rss/~4/AwCgkqc-Rp8" height="1" width="1"/

Prieur’s readings

Prieur du Plessis — Mon, 25 May 2009 06:51:23 +0000

This post provides links to some thought-provoking articles I have read over the past few days that you may also find of interest.

Words from the (investment) wise for the week that was (May 11 – 17, 2009)

Prieur du Plessis — Sun, 17 May 2009 08:32:46 +0000

A long-awaited reversal in the monumental global stock market rally since early March finally arrived last week. “Less bad” economic reports provided investors with little comfort, sparking a reassessment of their risk appetite and leading to profit-taking on most bourses. On the other hand, safe-haven assets attracted buying. Read all about this and the implications for financial markets in the weekly “Words from the Wise” review.

Soros Cuts Petrobras, Picks up Retail and Nuclear

Michael E. Brisky — Sat, 16 May 2009 18:14:00 +0000

The fund filings are out. If you're wondering, these are the funds I like to track, and sometimes follow by buying the same stocks:br /br /-George Soros (Soros Fund Management)br /-Seth Klarman (Baupost Group)br /-John Paulson (Paulson amp; CO.)br /-Warren Buffett (Berkshire Hathaway)br /-David Einhorn (Greenlight Capital)br /-Bill Ackman (Pershing Square Capital Management)br /-Steve Cohen (SAC Capital Advisors)br /br /Today, I'm going toa href="http://www.bloomberg.com/apps/news?pid=newsarchiveamp;sid=a_RT.rEuHt4M" take a quick look at Soros' holdings/a.br /br /blockquoteSoros Fund Management LLC, the investor’s hedge-fund firm, sold 5 million U.S. shares of Petrobras, as the Brazilian company is known, according to a filing today with the U.S. Securities and Exchange Commission. The New York-based firm’s remaining 32 million shares of the state-controlled oil company were valued at $963 million at the end of the quarter.br /br /The hedge fund also held 5.6 million shares of Saskatoon, Saskatchewan-based Potash at the end of the quarter, compared with 5.9 million shares as of Dec. 31. br /br /Soros bought 9.28 million shares of Macy’s Inc., the second-biggest U.S. department-store chain, bringing its holding to 9.85 million shares. The firm added 4.26 million shares of Lowe’s Cos., the second-largest home-improvement retailer, bringing its investment to 5.36 million shares. pSoros also added 1.35 million shares of Wal-Mart Stores Inc., the world’s largest retailer, lifting his stake to 1.82 million shares of the Bentonville, Arkansas-based firm.br //pSoros also bought 968,000 shares of Entergy Corp., the second-largest U.S. operator of nuclear power plants, and 3.59 million shares of Houston-based Plains Exploration amp; Production Co. in the first quarter. Soros sold off its stake in Schlumberger Ltd., the world’s largest oilfield-services provider, and U.S. coal producer Consol Energy Inc./blockquotebr /br /My take on his holdings/moves:br /br /I was surprised he owned that much Petrobras to begin with. The long-term outlook is great for them, but they need oil prices to be higher to be very profitable (much of their reserves are deep offshore and will require high costs to extract). Overall, a stock I like though.br /br /I'm not surprised he bought retail. With the consumer in trouble, these many of these stocks were flat out cheap (especially in early March, when he was probably buying).br /br /I'm most intrigued with him picking up a stake in Entergy (a href="http://finance.yahoo.com/q?s=ETR"ETR/a). They are the second largest producer of Nuclear power in the U.S. They just reported an okay quarter. The numbers were down, but they reaffirmed '09 guidance. They don't serve a lot of industrial clients which has helped them from being hit too hard by the recession. I do like the idea of buying into nuclear a bit. There is a lot of pressure coming down soon on carbon-burning plants with the talk of cap-and-trade, or something like it coming. Nuclear might benefit, even if it just means people moving their money out of the other stocks and into these. br /br /I like their chart too. I'm not a professional with technical analysis, but one of the indicators I watch fairly close are the moving averages and volume. The 20 day EMA just crossed over the 50 day EMA and was supported by strong volume. This is typically a bullish sign. This was largely due to the pop after earnings, so I don't want to read too far into it, but it could be a positive. I'm going to watch this stock, and might be interested in taking a position.br /br /br /a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_VQGtBvsQTCg/Sg8HlJf23WI/AAAAAAAAApw/sEDmB74NOQM/s1600-h/ETR.png"img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 400px; height: 333px;" src="http://4.bp.blogspot.com/_VQGtBvsQTCg/Sg8HlJf23WI/AAAAAAAAApw/sEDmB74NOQM/s400/ETR.png" alt="" id="BLOGGER_PHOTO_ID_5336492418243419490" border="0" //abr /Disclosure: Nonediv class="blogger-post-footer"img width='1' height='1' src='http://res1.blogblog.com/tracker/819581243324579563-3084469424198026144?l=briskycapital.blogspot.com'//div

The ECB “Buys Into” Spanish Property

Edward Hugh — Thu, 14 May 2009 12:08:00 +0000

by Edward Hugh: Barcelonabr /br /span style="font-family:arial;font-size:78%;"/spana href="http://3.bp.blogspot.com/_ngczZkrw340/SgiAR06lzrI/AAAAAAAAN1E/-NbHseEOV1Q/s1600-h/ecb+one.png"img id="BLOGGER_PHOTO_ID_5334654802370875058" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 399px; CURSOR: hand; HEIGHT: 264px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SgiAR06lzrI/AAAAAAAAN1E/-NbHseEOV1Q/s400/ecb+one.png" border="0" //abr /br /blockquote“The 60 billion euros they announced is peanuts for an economy the size of the euro zone,” economics professor and former Bank of England policy maker Willem Buiter said at a conference in Dublin yesterday. “I expect they will announce more or that the recession in the euro zone will be longer and deeper than would otherwise be necessary. They have a record of being somewhat behind the curve.” /blockquoteblockquoteEuropean car sales dropped 12 percent in April.... Bayerische Motoren Werke AG’s registrations dropped by almost one-third to 55,633 even as the German market expanded 19 percent, helped by the government’s 2,500 euro ($3,400) sales bonus .........Spain extended its auto-sales slump with a 46 percent plunge in registrations, the largest among the continent’s main markets, while U.K. sales dropped 24 percent. Eastern European registrations dropped 21 percent, almost twice the rate of decline in the west, as Romanian demand fell by more than half./blockquotebr /The title to this post, and the accompanying photo are obviously a joke. But behind every joke there lies a grain of truth, and my present one is no different from all the rest in that sense, since the ECB is now indirectly buying into a piece of the Spanish property action, and they are about to do so by the acquisition of an instrument known generically as "covered bonds", the purchase of 60 billion euros worth of which was announced by the ECB last week, much to the surprise of the assembled press conference journalists, many of whom either couldn't believe or couldn't understand what they were hearing (see transcript extract below). These instruments may be generically known as covered bonds, but in Spain we call them a href="http://html.rincondelvago.com/cedulas-hipotecarias.html"cédulas hipotecarias/a.br /br /The only covered bond most of the journalists who attended the press conference seem to have been aware of, however, was the German one - known as Pfandbrief - and hence the move was seen as some sort of "sweetner" for a fairly reluctant Bundesbank. In fact things are rather different, since in both Spain and Ireland some form or other of covered bond is to be found at the heart of the wholesale money financing strategy invented by the banks (in the early years of this century) when they realised that bank deposits alone were not going to prove sufficient if they wanted to make good on all the mortgage provision opportunities the low interest rate policy (2%) being pursued by the ECB was creating. As it happens, I have long taken an amateur's interest in the subject of covered bonds (and cédulas hipotecarias), in fact I got interested in them just as soon as I realised what an important part of the Spanish picture they were. You can find a convenient summary of what they are, how they work, and why understanding them is important if you want to get to grips with the current Spanish crisis a href="http://spaineconomy.blogspot.com/2008/01/cedulas-hipotecarias.html"here/a.br /br /Really, and to cut a long story short, refinancing the cédulas has become important since they were originally issued on a short term (5 or 7 year duration) basis (presumeably to keep debt servicing costs down), but since they were matched against mortgages which were issued with a 20 to 30 year maturity, they were always going to need rolling over (and over, and over), and again, since the quantity of money involved is large (anywhere between 250 and 300 billion euros between now and 2014 at a guess), and since virtually nobody has wanted to know about buying them since the US sub prime crisis broke out in August 2007, they had become a big potential headache for the Spanish authorities, with something like 50 billion euros in the current Spanish bank bailout programme being earmarked for easing the renewal process.br /br /Indeed so important have the cédulas been that you could virtually say that the current Spanish crisis was inaugurated in September 2007 when the wholesale money markets were closed to the Spanish banks who wanted to sell them, even if after hours and hours of talk-show debate (and miles and miles of column print) devoted to the crisis, hardly any Spanish voter knows what they actually are.br /br /Well, to cut a very long story short, the good news is that the refinancing issue is now probably (and bar the shouting, and the details) as good as resolved, so if you haven't the time, interest or inclination to get involved in more of all the detail on this I suggest you now jump to the conclusions section, were I muse a little bit on what some of the political counterparty consequences of this new level of risk assumption by the ECB are likely to be.br /br /br /strongQuantitative Easing, Financing Spanish and Irish Mortgages, Or What?/strongbr /br /Basically, most observers have now spent the best part of a week looking into the tea leaves and trying to discern just what it was which lay behind last Thursday's announcement. So peculiar was the announcement (or at least the manner in which it was made) that Bloomberg even have an article headlined "a href="http://www.bloomberg.com/apps/news?pid=20601085amp;sid=aDlZ61bGB_f4amp;refer=europe"Covered Bond Market Seizes On Plan For ECB Purchases/a", which explains how the complete confusion now reigning in the secondary market for these instruments (due to the incredible uncertainty over what securities policy makers will actually buy, how they will pay for them, and how great the final quantity purchased will be) has meant that trading in the bonds has all but ground to a halt (again). And this as a consequence of a move which was intended to support the market is a strange result, to say the least.br /br /The initial confusion has only been added to by a href="http://www.bloomberg.com/apps/news?pid=20601068amp;sid=awcLBfFkE07Yamp;refer=economy"recent public disagreements between governing board members/a, and the statement from European Central Bank council member Marko Krnajec (governor of Slovenia's central bank) to the effect that the bank is likely to increase its asset- purchase program from the initial 60 billion euro plan provoked immediate reaction, in particular from Germany’s Axel Weber, who opposes outright asset purchases and has been pushing for the ECB to set an interest-rate floor beyond which they will not reduce further. Indeed Weber was very explicit in reaction to Krnajec yesterday, saying that he sees “no need” for the ECB to buy further private assets to support lending. “I currently don’t see the need for outright purchases of further private debt obligations,” he is quoted as saying. (Joellen Perry at the WSJ Blog a href="http://blogs.wsj.com/economics/2009/05/13/ecb-predictability-a-casualty-of-the-crisis/"has a piece covering similar gound/a, as she says, maybe ECB predictability has now become the main victim of the crisis, while Claus Vistesen makes basically the same point in his a href="http://clausvistesen.squarespace.com/alphasources-blog/2009/5/1/ecb-communication-all-at-sea.html"ECB Communication - All at Sea? /aand his a href="http://clausvistesen.squarespace.com/alphasources-blog/2009/5/7/quantitative-easing-a-lecb.html"Quantitative Easing à l`ECB? /aposts.)br /br /The dispute goes even further, and extends not only to what to buy, and how much, but even to how to pay. Kranjec on being asked how the ECB planned to fund its debt purchases, said: “This has yet to be agreed. As a central bank we are creating money. We have no limits with funds to finance projects.” While Weber told journalists tersely: “Note well: It’s not our goal simply to print money.”br /blockquotebr /The new uncertainty about the ECB’s actions may be undermining marketbr /confidence at a crucial moment. An ECB report Wednesday suggested revivingbr /investor confidence is key to kick-starting bank funding markets that have driedbr /up amid the crisis. Lacking steady access to traditional funding sources such asbr /bond and inter-bank lending markets, the report said, European banks couldbr /curtail lending to households and firms, dampening economic growth.br /Joellen Perry, Wall Street Journal Blogbr //blockquotebr /br /So what is the goal? This is really the key issue, and trying to follow the ECB's ruminations in this sense is more akin to watching a mystery play unfold (in every sense of that expression). Well, where do we look for clues? I can think of no better way than by examining the question and answer to-and-fro Trichet himself had with the journalists in the press conference. So here we go, lets see if you can make sense of all this. The issues are, remember:br /br /a) Does the decision to buy covered bonds constitute quantitative easing?br /b) If it is quantitative easing, is it to ease credit, or fend off deflation?br /c) Why was the decision taken now?br /d) Will the ECB "print money" to finance the purchases, or will the acquisitions be "sterlised"br /e) Why covered bonds as opposed to, say, commercial paper?br /br /br /***********************************************************************************br /br /"The Governing Council has decided in principle that the Eurosystem will purchase euro-denominated covered bonds issued in the euro area. The detailed modalities will be announced after the Governing Council meeting of 4 June 2009."br /Jean Claude Trichet, Speaking at the Press Conference Following the Rate Setting Meeting, 7 May 2009.br /br /Question - My second question comes back to the covered bond issue. I wondered if you could explain your general rationale behind this specific asset class? And in that vein, if I can recall correctly, covered bonds are mainly used by the banks in which a lot of German is spoken for refinancing, and not so much in the rest of the euro zone. So are you not implicitly delivering an advantage here to banks that use this particular asset to refinance?br /br /Trichet - On the covered bonds, I remind you that we are in the euro area of 329 million people, this is a single market with a single currency, and what we are doing is what we judge appropriate for the single market with a single currency. All of us in the Governing Council are striving to take the right decisions expected by the 329 million fellow citizens. Covered bonds were considered by the Governing Council as a segment of the private securities markets that in general has been particularly affected, more so than others, in terms of the impact of the financial turbulences.br /br /Question - Firstly a question on the covered bonds. Can you tell us how you came to the figure of around €60 billion? Is that some estimate of the amount of stimulus you feel you ought to be injecting into the economy? Is that what your thinking was? And secondly how are you going to pay for this? Will the purchase be sterilised or can we write that you are going to be printing money?br /br /br /Trichet - On your first question, I give you a rendezvous for the next meeting when we will discuss all the technicalities for this operation, which is new for us and which calls for appropriate handling. Around €60 billion is only an order of magnitude, appropriate for attaining our goal, to help to revive this particular segment of the market.br /br /With regard to sterilisation, it is included in the question of the exit strategy. I mentioned in the introductory remarks that we consider this issue as absolutely decisive. We have to be up to the present exceptional circumstances. And I don’t want to repeat all the areas where we were the first central bank to act and to take bold decisions. Whether it was the longer-term refinancing of commercial banks, or at the beginning of the turmoil being the most forthcoming central bank as regards its collateral framework, or when we had to take bold action in particular at the very beginning of the turbulence on 9 August 2007. As regards today’s decision taking into account all elements we considered that we could and we should go beyond what had been until now our main channel for enhanced credit support mainly by the refinancing of commercial banks which has, by the way, produced important results. I would like to mention en passant the figures which show that thanks to the decisions we have taken so far - they don’t incorporate of course the new decision taken today - our one-year money market has lower interest rates than in the sister central banks’ money markets. This is also the case at least with one sister central bank for the six- and the three-month money market interest rates. One has to take into account everything, and in particular our handling of our own money market with our full allotment, fixed interest rates procedure, the very forthcoming attitude we have as regards longer-term refinancing, which has even been enlarged today and the collateral that we accept. That being said the Governing Council considers sterilisation and the exit strategy absolutely essential to maintain the maximum amount of credibility in the medium and long term. The public debate emerging on whether or not some central banks are paving the way at the global level for future inflation is extraordinarily counterproductive. We, central banks – and I’m sure that we are all in agreement on this – are determined to solidly anchor longer-term expectations and eliminate these fears about future inflation.br /br /br /Question - Just again on covered bonds. I understand that you are not ready to answer the question of how these purchases will be financed, but perhaps you could give us an idea of the reasoning behind that decision. Are you doing this to lower any credit spread between covered bonds and the risk-free interest rate, or is the main motivation behind it to inject more liquidity into the system?br /br /Trichet: No, the idea is to revive the market, which has been very heavily affected, and all that goes with this revival, including the spreads, the depth and the liquidity of the market. We are not at all embarking on quantitative easing.br /br /Question - One question for clarification because I obviously mistook something for what it isn’t. When I heard about this covered bond programme, I mistook it for quantitative easing. Can you explain to me why it isn’t?br /br /Trichet: If I might use our own vocabulary, it is part of our “enhanced credit support” operations. We have used this expression for quite a long period of time because we consider all the non-conventional measures we have taken in connection with the refinancing of banks as enhanced credit support. If you wish, you could call that credit easing, because it is a way of improving the functioning of the market that had been affected particularly markedly by the financial turbulences.br /br /**********************************************************************************br /br /br /As can be seen above, initially observers were completely bemused by the decision. Some saw the move to buy covered bonds as an attempt to boost a market which was now facing competition from state-guaranteed bond issues, while others, like Bodo Winkler, capital market expert at the VDP covered bond association, which represents banks that issue German covered bonds (or Pfandbriefs) argued the very presence of the ECB in the market would bring indirect benefits.br /br /br /"Interest from an institution as renowned as the ECB could be a significant support to the market. It would mean the ECB would have these quality assets - covered bonds- on its books,"he said. Winkler also argued that the meer presence of ECB activity would help lower spreads for the bonds, which in the German Pfandbrief case are securities created from either mortgage loans or public sector loans. The German market is in fact one of the oldest and largest (dating from the mid 1990s), while the Spanish market is more recent, but has now become the second largest.br /br /Others have also suggested that, depending on how the purchases are conducted - in the primary or secondary market - acquisitions might indirectly free up banks to acquire new bonds themselves, thus also bolstering the market. While the Spanish cedual market has remained virtually a dead duck (Santander did issue a cedula following the ECB decision, for the first time in many months, and at 122 base points above what they were earlier paying) the German one has remained active and German banks issued 7.33 billion euros of Pfandbrief in January (down 42 percent year on year and by nearly half from September's 13.8 billion euros). Data from Thomson Reuters show that Germany is still the largest originator of covered bonds, closely followed by Spain. The two countries account for around a third of the euro zone market each. France is next at just under 20 percent, while Italy has a mere 2 percent.br /br /The exact size of the wider European covered bond market is the source of some confusion, with estimates raning between 700 billion and 1.5 trillion euros. Some analysts estimate that if the ECB sticks with the BB rating currently applied in deciding whether bonds are acceptable as collateral for their lending operations, then around 450 billions worth of covered bonds would be eligable for purchase. (NB - this is the big change, at the present time Spanish banks can take cedulas and deposit them with the ECB as collateral for borrowing, now they will be able to sell them to the ECB direct).br /br /According to the data supplier Dealogic the covered bond market has contracted by €136billionn since May 2007, and currently stands at €1,118 billion.br /br /In general it is possible to say that the analyst response is that the ECB's decision to buy bonds for the first time in its history raises almost more questions than it answers. Reponses from Annegret Hasler and Frank Will (see below) are typical.br /br /blockquote"Nobody knows what exactly this means for covered bonds. No one knows whether this will be purchases on the primary market or on the secondary market, and this makes a big difference," said Annegret Hasler, a covered bonds analyst at Commerzbank. "Market participants are likely to go on hold until they know further details."br /br /"What we don't know is if the ECB will focus primarily on covered bonds in trouble, maybe Irish covered bonds, or if they are focused on certain Spanish cedulas?" RBS covered bond strategist Frank Will said on a call for clients. "It is also not clear how they will divide the 60 billion over the various countries."/blockquotebr /How to spread the spend is a contentious issue in the euro zone because the covered bond and mortgage markets are more developed in some countries than others, opening the ECB to political heat. The premium that investors demand to hold covered bonds from Spain and Ireland fell on Friday, suggesting they are seen as the most likely beneficiaries.br /blockquote"There are only two housing markets in Euroland which are currently experiencingbr /significant distress: Spain and Ireland," said UniCredit credit strategistbr /Markus Ernst. "Any partial support of specific regions or covered bondbr /issues would surely raise political criticism." /blockquotebr /br /Italy's La Stampa unsurprisingly (since Italy has only 2 percent of the covered bond market) suggested last Friday that the decision was largely designed to help German banks - they obviously don't know about the cédulas! Germany's Boersen-Zeitung billed the move as the "ECB steps up the fight against recession", while the more "in the know" Spainish daily El Pais ran with "ECB activates money printing machine to combat crisis".br /br /UniCredit economist (and my RGE monitor co-blogger). Aurelio Maccario noted wryly: "Somebody somewhere is probably saying they should also think of something else to help other markets like the Italian market," he said. He also made clear that another key question was whether the ECB would effectively inject another 60 billion euros into markets, or neutralise the purchases' impact on money supply. "To sterilise you have to do exactly the opposite measure with exactly the same amount. If you buy 60 billion euros of covered bonds then you sell 60 billion of some other assets, corporate bonds, government bonds for example ....If you want to sterilise it by selling other assets, you risk rising other spreads, you risk rising long term interest rates. And then if you don't sterilise it then it is a pure easing, which you can label as quantitative easing."br /br /br /As I have been pointing out, Maccario gets right to the heart of the matter here, since some Council members, and most notably the German contingent (Axel Weber and Juergen Stark) have been busy expressing reservations with the whole idea of purchasing debt in the first place, while other policymakers like the Greek and Cypriot contingents (Athanasios Orphanides and Lucas Papademos) have been pushing for broader purchases of private securities as a way of keeping deflation from the door.br /br /But as Deutsche Bank economist Mark Wall points out, sterilised purchases would obviously help the covered bond market but it would have little impact on either companies or households, so it would be hard to see the point, and it would be even harder to see why Trichet would consider sterilised purchases to constitute the use of new monetary tools. "In terms of the aggregate effect on the economy, if they are sterilising it they are neutralising it," Wall said.br /br /Spreads on covered bonds from Spain and Ireland have tightened since the decision, pulling government bond spreads with them, suggesting that markets are expecting the volume of purchases to increase, and Spain and Ireland to be the principal beneficiaries. Spreads in Spain and Ireland had been way up, with Spanish covered bonds maturing in 10 years typically trading at about 200 basis points over mid-swaps, compared to about 300 basis points over mid-swaps for an Irish covered bond and just 60 basis points for a German issue.br /br /According to Royal Bank of Scotland analyst Harvinder Sian "The impact on periphery spreads we think is very profound ... This is a credit-easing after all, so we should expect the positive momentum, and that's exactly what we've got." In support of his view Harvinder pointed to the fact that the premium that investors are demanding to hold debt issued by euro zone countries other than Germany fell have fallen, with 10-year Italian, Greek and Spanish spreads among those hitting their tightest levels since late last year. In the government bond market, the 10-year Greek/German yield spread narrowed to as low as 160.3 basis points on Friday, the tightest since early December 2008, while the equivalent Irish/German spread also closed in to 163.8 basis points - the narrowest since early January. "The idea that the ECB is buying assets now does spread risks across the euro area in terms of the economy and the momentum going forward," according to Sian.br /br /br /strongSo What Are The Consequences (Political or Otherwise) Of All This For Spain?/strongbr /br /Well first of all this is obviously very good news from a Spanish point of view. The Spanish economy is evidently in the throes of a major correction (most of which has yet to get underway) which will involve moving from a construction and consumer debt driven economy to an export driven growth model.br /br /But in the path of this correction lie three very strong impediments.br /br /1) The need to refinance the cédulas (estimated cost 250 to 300 billion euros)br /2) The need to resolve the issue of the growing volume of builder and developer non-performing loans (or the million plus empty houses) - estimated bank expoure 470 billion euros (Bank of Spain data).br /3) The complete lack of competitiveness of Spanish wages and prices.br /br /Basically, we can see a solution in three parts here. The ECB will refinance the cedulas as we move forward (done). This will not only help the banks, it will take some pressure off government finances, and it will effectively give support to the last-man-standing in the Spanish real world economic arena, Bank of Spain Governor Miguel Angel Fernandez Ordoñez. I don't expect to see more interview in El Pais with deputy prime minister Maria Teresa Fernández de la Vega, accusing him of being alarmist about the reserves of the Spanish pension system. He who pays the piper, we should remember, effectively calls the tune.br /br /Which brings us to the second point, the housing overhang, and the bad loans that go with it. Now while the details remain far from clear, I fully expect Spain to follow in some shape or form the "Irish solution" of either buying the houses direct, or buying the loans which go with them (with or without the creation of a bad bank). But neither Spain nor Ireland will be able to sustain the volume of public borrowing necessary to finance this move unaided. I therefore fully expect the issue of EU Bonds to raise its head again. (I have spelt out what this is all about a href="http://fistfulofeuros.net/afoe/economics-and-demography/the-eu-bonds-story-rumbles-on/"in this post here/a). As it happens, a journalist friend of mine interviewed EU Economy Commissioner Joaquín Almunia recently, and asked him explicitly about Commission intentions here. I am adding the exchange as an appendix, and as you will see, he neither says yes, nor does he say no, what he says is that they are a logical development, and that they will come gradually, which is EU speak for "they are in the pipeline" (so, this item is effectively done too).br /br /So we are left with the third point, the correction in wages and prices, also known as "the budget from hell". It is most obvious that with the Spanish economy likely to contract between 5 and 7 percent this year (it contracted at a 7.2% annualised rate between Q4 2008 and Q1 2009), and to continue to do so next year, and the government fiscal deficit likely to run at over 9% (the present EU Commission forecast is for just under, but there will be overshoot since the contraction will be more rapid than they are anticipating) then Spanish public finances are headed for an acute crisis. And given the (by then) growing dependence of the Spanish economy on direct EU support then, as I said above "he who pays the piper will call the tune", and the "budget from hell" will be imposed, whatever José Luis Zapatero think he wants.br /br /Evidently ten years of bad craftsmanship cannot be put straight in a day, but Europe is going to have a good try at doing so. The EU is now "in media res" of that much needed restore and restoration work to remedy its institutional deficiencies and address its "crisis overload" problem. Remedies are available and being developed, even if getting Europe's leaders to talk about them explicitly is something akin to leading a reluctant father-to-be up to the altar.br /br /EU (rather than exclusively national) bonds can and will be created. These will effectively give Europe a fiscal capacity that is, for all intents and purposes, equivalent to that of the U.S. Treasury. Second, given the deflation problem, the European Central Bank can now follow the Bank of England and the Swiss National Bank by entering the next tier of quantitative easing, expanding its balance sheet and starting to buy those crisp new EU bonds in the primary market.br /br /Quantitative easing, which is simply a generic way of referring to all the recent attempts to boost money supply when interest rates fall close to zero, becomes in this particular case a euphemism for "printing money," with the unusual characteristic that this time, inflation is exactly what we are looking for. And if we don't get it, well, as Paul Krugman wrote in a recent New York Times op-ed on Spain, we run the risk of ending up with a European economy that is depressed and tending toward deflation for years to come.br /br /The most important thing to realize is that the arrival of deflation is not only a threat; it is also an opportunity. Having the power (nay the necessity) to print money should give Europe's central administration one hell of clout should it need to use it, and it will. As Joaquín Almunia said not so long ago, "You would have to be crazy to want to leave the eurozone right now," given the economic climate. It's precisely this fear that will serve as the persuasive stick to accompany that ever so attractive financial carrot which is now being dangled forth. (Assuming, that is, that Europe's leaders understand: in this case at least, sparing the rod would only amount to spoiling not only the child, but all the brothers and sisters and aunts and uncles, too.)br /br /So though the first argument in favor of buying cédulas hiptecarias and issuing EU bonds (etc) might be an entirely pragmatic one - namely that it doesn't make sense for subsidiary components of EU, Inc., to pay more to borrow money when the credit guarantee of the parent entity can get it for them far cheaper - the longer-term argument is that the ability to make such purchases and issue such bonds might well enable the EC and ECB to become something they have long dreamed of becoming: an internal credit rating agency for EU national debt. Caveat Vendor!br /br /strongAppendix: Extract From Interview With Joaquín Almunia/strongbr /br /br /strongQuestion/strong - The Euro has proved to be an effective shield protecting eurozone economies from the shocks of the crisis. But some argue that the crisis has highlighted the fact that European financial markets are fragmented and that there is a need for a single market for government bonds. George Soros argues that “a eurozone bond market would bring immediate benefits in addition to correcting a structural deficiency”. It would lend credence to the rescue of the banking system and allow additional support for the more vulnerable EU members. Do you agree?br /br /br /strongJoaquín Almunia/strong - As the Commission itself pointed out in the report on 10 years of Economic and Monetary Union published in May 2008, the euro-denominated bond market indeed remains very fragmented on the supply side. The issue of European bond issuance has been discussed on and off for several years now and even more frequently since the financial crisis started. I think this is something we should consider in future to promote greater financial market integration and more efficient European government bond markets. But I also think this is likely to be a gradual process. Better coordination of national government bond issuance, for example, could be a first and necessary step.br /br /I would like to stress also, that for all governments, both inside and outside the euro area, the best way to gain credibility in investors' eyes and avoid problems with financing is to carry out responsible fiscal policies.div class="blogger-post-footer"img width='1' height='1' src='http://res1.blogblog.com/tracker/8991369883287712098-4410657511711099959?l=globaleconomydoesmatter.blogspot.com'//div

U.S. Stocks About To Make U-Turn?

Trading School — Thu, 07 May 2009 11:36:30 +0000

I think it’s about time for a compelling argument that the stock market could be making a turn around…right? Well like it or not Chrisopher Hill, editor of Investorazzi.com, has come to make an argument that he’ll be defending in the comments section! So if you think otherwise tell him why! =================================================================== Equities have been on a [...]

How Gold Will Top $2,000 Per Ounce

Chris Mayer — Thu, 30 Apr 2009 20:07:03 +0000

pFor the first time in a couple of decades, some of America’s most successful, big-name investors are buying gold./p pDavid Einhorn, the hedge fund manager who predicted the downfall of Lehman Bros., recently bought gold for the first time. And then there is John Paulson, the guy who made billions of dollars by correctly anticipating the housing bust and credit crisis./p pPaulson just plunked down $1.3 billion for an 11% stake in AngloGold (NYSE:a href="http://www.google.com/finance?q=NYSE:AU"AU/a). He’s also got a big position in Kinross Gold (NYSE:a href="http://www.google.com/finance?q=NYSE:KGC"KGC/a)./p pPeter Munk, the 82-year-old chairman and founder of Barrick Gold, also offers up his own anecdote about gold’s broadening appeal. “I have had more phone calls in the past six months than ever before – from people who have#8230;/p

Top Investors with investment outlook.

Vlada Kynsky — Sun, 19 Apr 2009 08:53:00 +0000

I have listed already two times some a style="font-weight: bold;" href="http://stockweb.blogspot.com/2009/03/top-gurus-best-investment-for-2009.html"investment recommendations from top investor gurus Warren Buffett or George Soros/a but also a style="font-weight: bold;" href="http://stockweb.blogspot.com/2009/04/jim-rogers-latest-investment-picks.html"investing strategy of Jim Rogers/a.br /br /Today I bring you some summary from Kenneth Fisher and David Tice.br /br /U.S. stock index Samp;P 500 may rise by up to 70% from its March's low. With this claim came billionaire Kenneth Fisher. Since 9th of March the index has increased by 28 percent. The largest five growth since 1938. The growth was largely driven by the financial sector. Fisher believes that the bear market corrections are not so great. He believes that the shares are the cheapest in several decades. Billionaire Kenneth Fisher believes that the index from March's low can grow around 60-70 % until March 2010.br /br /Fisher recommends buying shares in emerging markets, shares of energy companies, mining, metals and technology titles. And stay away defensive titles.br /br /His view is in contrast with the portfolio manager David Tice. David sees the current growth as correction. He expects the index to decline by 62%.div class="blogger-post-footer"http://stockweb.blogspot.com/atom.xmlimg width='1' height='1' src='http://res1.blogblog.com/tracker/6675237082283386719-3541749938080995891?l=stockweb.blogspot.com'//div pa href="http://feedads.googleadservices.com/~a/tscNRXtjaIz_MMMNoxaSj7k387w/a"img src="http://feedads.googleadservices.com/~a/tscNRXtjaIz_MMMNoxaSj7k387w/i" border="0" ismap="true"/img/a/pdiv class="feedflare" a href="http://feeds2.feedburner.com/~ff/Stockweb?a=yAFYCGkVeks:aC5ahLJWJj0:yIl2AUoC8zA"img src="http://feeds2.feedburner.com/~ff/Stockweb?d=yIl2AUoC8zA" border="0"/img/a /div

Markets Are a Mixed Bag

Richard Shaw — Sat, 18 Apr 2009 17:58:20 +0000

Nietzsche said “Out of chaos comes order”. Obama says there are signs of green shoots and glimmers of hope. George Soros and Nouriel Roubini say if you thought 2008 was bad, you ain’t seen nothin’ yet. Quite a range of possibilities! How to deal with them? Getting out of the way of the 2008 [...]

Silver: The Everyday Gold

Bullish Bankers — Wed, 15 Apr 2009 02:29:11 +0000

Precious metals and commodities have been all the rage lately, with talks about a reflation play being a staple to every portfolio. But with all the talks about gold and oil being a safeguard against government spending destroying the value of the dollar, it is a wonder that silver has remained hidden for so long. Many [...]

Video-o-rama: Five in a row for stock markets

Prieur du Plessis — Fri, 10 Apr 2009 08:14:38 +0000

The holiday-shortened week witnessed relatively few news and economic reports, but the major US stock indices nevertheless scored their first five-week stretch of gains since October 2007. A mixed bag of video clips was produced of which the more interesting ones are featured in this post.

Top gurus: The best investment for 2009.

Vlada Kynsky — Sat, 07 Mar 2009 22:50:00 +0000

Based on the investor poll, commodities seem to be the most appealing investment for 2009. Followed by stocks, bonds and cash as the worst asset class for the year.br /br /divIn this post I would like to gather opinions about investing in 2009 from top investor gurus. Let me start with Warren Buffett. Warren called stock market bottom already in mid 2008 and have started to add equity positions to his holding. Last actions show buying interests in railroads companies. He increased stake in Burlington Northern (BNI). Despite of declining volume, earnings have gone up by 19%. Other interesting picks from industry are Union Pacific with 35% earnings growth or CSX Corp (CSX) with 16%. /divbr /divAnother two top investors, Donald Coxe and David Winters, like railroads. Companies will benefit from low energy costs. P/E vary in range of 6 - 8 for the top companies in the sector with book value equalling to the current share price. Still amazing growth rate makes attractive PEG ratio./divbr /br /diva href="http://www.amazon.com/gp/product/0470377097?ie=UTF8amp;tag=stoceasteurot-20amp;linkCode=xm2amp;camp=1789amp;creativeASIN=0470377097"img id="BLOGGER_PHOTO_ID_5310766483597424706" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 200px; CURSOR: hand; HEIGHT: 200px" alt="" src="http://3.bp.blogspot.com/_28p7XDn4Qb0/SbOh-qvf-EI/AAAAAAAAB0g/n9sqbo8gvH8/s200/guru+investor.jpg" border="0" //aGeorge Soros is one those investors betting on oil price rebound. His major favorite in Brazilian Petrobras (PZE). In February he also upped stake in Best Buy (BBY)./divbr /divAt the end of this post let me give you one tip for the book stronga href="http://www.amazon.com/gp/product/0470377097?ie=UTF8amp;tag=stoceasteurot-20amp;linkCode=xm2amp;camp=1789amp;creativeASIN=0470377097"Guru Investor/a/strong. You can find out and follow some good tips in past from investors like Peter Lynch, Benjamin Graham, Warren Buffett or others. Now the book is discounted on Amazon by 34%./divbr /br /div/divbr /br /div/divdiv class="blogger-post-footer"http://stockweb.blogspot.com/atom.xml/div pa href="http://feedads.googleadservices.com/~a/xrDOFp29E4TWs3r-Ih-wqnkqN0A/a"img src="http://feedads.googleadservices.com/~a/xrDOFp29E4TWs3r-Ih-wqnkqN0A/i" border="0" ismap="true"/img/a/pdiv class="feedflare" a href="http://feeds2.feedburner.com/~ff/Stockweb?a=WdHDedUveeI:EZLkLuNEpD4:yIl2AUoC8zA"img src="http://feeds2.feedburner.com/~ff/Stockweb?d=yIl2AUoC8zA" border="0"/img/a /div

Soros sees no bottom for world financial “collapse”

Alex Stanczyk — Fri, 27 Feb 2009 06:03:24 +0000

Sat Feb 21, 2009 4:19pm EST NEW YORK (Reuters) - Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis. Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the [...]

The U.S. Government: Devious or Just Plain Stupid…

Contrarian Profits — Thu, 26 Feb 2009 12:00:19 +0000

pBen Bernanke - the #8220;Sultan of Spin#8221; himself - came out Wednesday and echoed the misguided hopes of CNBC#8217;s Trillion Dollar Survey from January. He optimistically believes that the crisis will be resolved before the end of 2009#8230;that 2010 will be a year of recovery./p pHis hopeful yet empty words caused me to reflect on the progress of government intervention through this crisis so far. And I can come to only one conclusion;/p pI#8217;m praying that they#8217;re devious./p pThat their measures are intended to fail. That they#8217;ve got some secret plot#8230;a conspiracy going on. Otherwise it means our leaders - politicalem and/em economic - are just plain obtuse - complete with dunce caps./p pBecause there#8217;s no other way to explain the abysmal failure of rhetoric and#8230;/p

And Then There’s This…Tuesday, February 24th, 2009

Contrarian Profits — Tue, 24 Feb 2009 20:05:58 +0000

pAs per normal, every little rally attempt in early Far East trading in Sydney got firmly sold off#8230;and by the time that London opened for business on Monday morning, gold was down about $12. /p pFrom there#8230;it and silver rose until about lunchtime in London#8230;the silver fix. Then gold and silver both got sold off again until just before the London p.m. gold fix#8230;which turned out to be the lows of the day for both metals#8230;and then away they went to the upside. Silver#8217;s vertical spike at lunchtime in New York got hammered#8230;and gold kind of died quietly at the same time. Gold was never allowed back over $1,000#8230;and silver#8217;s new high price [for this move] was not allowed to stand#8230;as#8230;/p

Dear John: Please tell us the truth about the economy – we can handle it

Bernard Hickey — Mon, 23 Feb 2009 20:55:12 +0000

Here’s some free advice to Prime Minister John Key. I’m being a bit cheeky here, but it’s advice that’s well meant and genuine. I’ve met Key a couple of times and was always impressed with how much he “got” New Zealand and wanted to do the right thing for the country in the long term. Sometimes [...]

Soros, Latest to Predict the Worst is Yet to Come

Contrarian Profits — Mon, 23 Feb 2009 11:30:27 +0000

pRenowned investor a href="http://www.reuters.com/article/newsOne/idUSTRE51K0A920090221" target="_blank"George Soros said Friday the world financial system has effectively disintegrated/a, and there’s no near-term bottom to this financial crisis in sight./p pSpeaking at a dinner at Columbia University, Soros actually compared the current situation to the breakup of the Soviet Union, and said that the whipsaw effects of the crisis are actually more severe than the Great Depression./p p#8220;We witnessed the collapse of the financial system,#8221; Soros told his audience. “It was placed on life support, and it’s still on life support. There’s no sign that we are anywhere near a bottom.#8221;/p pHe said the bankruptcy of. strongLehman Brothers Holdings Inc. (OTC: a href="http://www.google.com/finance?q=OTC%3ALEHMQ" target="_blank"LEHMQ/a)/strong in September marked a turning point in the functioning of the market system./p pHis comments echoed those made earlier#8230;/p

Soros:Crisis Worse Than Great Depression

Michael E. Brisky — Sat, 21 Feb 2009 14:57:00 +0000

George Soros is often referred to as one of smartest investors in the world. His ties to politics always make me question what he means a bit, but this time, I think he's being clear. br /br /blockquoteRenowned investor George Soros said on Friday the world financial systembr /has effectively disintegrated, adding that there is yet no prospect of abr /near-term resolution to the crisis. Soros said the turbulence is actuallybr /more severe than during the Great Depression, comparing the current situation tobr /the demise of the Soviet Union. He said the bankruptcy of Lehman Brothersbr /in September marked a turning point in the functioning of the marketbr /system. "We witnessed the collapse of the financial system," Soros said atbr /a Columbia University dinner. "It was placed on life support, and it's still onbr /life support. There's no sign that we are anywhere near a bottom."br /br //blockquoteThen again, the Obama camp is working on lowering expectations and this kind of talk helps their cause. If people get scared, they are more likely to go along with things like the economic stimulus bill. And when we pull out of this slump, they will end up looking better.br /br /Anyways, these are some serious words from someone who knows what he's doing. We'll see what plans Geithner and Co. come up with this weekend.br /br /a href="http://www.reuters.com/article/businessNews/idUSTRE51K0A920090221?feedType=RSSamp;feedName=businessNewsamp;rpc=23amp;sp=true"Article via Reuters/a.

How to Follow George Soros to Mega Oil Profits

Contrarian Profits — Sat, 21 Feb 2009 01:10:42 +0000

tr HIDDEN VALUE /tr tr pDear Reader,#160; /p pIs China buying gold to protect itself from the worst financial crisis in history?#160; /p pAlthough we can#8217;t be 100% sure, we can make a compelling case.#160; /p pThis from Ed Steer, who writes for our friends over at Casey Research#8230;#160; /p ul pIn the last three days, I#8217;ve noticed that there has been a change in pattern during Far East trading. It#8217;s not a lot, but it#8217;s something I haven#8217;t seen since I started watching the Kitco gold charts about ten years ago. A buyer [either going long, or covering short positions] is active in Hong Kong trading [in both gold and silver] that I#8217;ve never seen there before. Is it something#8230; or is it nothing? I know that#8230;/p/ul/tr

Investing in Crude Oil: The Best Way to Play Oil’s Imminent Rebound

Investment U — Thu, 19 Feb 2009 16:11:02 +0000

Investing in Crude Oil: The Best Way to Play Oil’s Imminent Rebound by Louis Basenese, Advisory Panelist Senior Analyst, The Oxford Club Billionaire investor George Soros and I don’t normally see eye to eye. He supports drug decriminalization, assisted suicide, America bashing… and a host of other off-the-reserve liberal causes. I don’t. I’m an old-school Reagan conservative. (Full disclosure [...]

Investors Return to Latin America – Analyst Blog

Zacks Market Commentaries — Wed, 18 Feb 2009 18:31:39 +0000

We have Buy recommendations on these Latin stocks: Petrobras (PBR), Telesp (TSP), Oi Participacoes (TNE), Cemig (CIG) and Sabesp (SBS).

Are International Investors Back in Latin America?

February 2009 might be the first month since May 2008 with positive flow from international investors in the Brazilian Stock Exchange (Bovespa). At this point it is just a hope, but there are some positive signs.

Until February 12, 2009, the flow from international investors to the Bovespa reached US$1.5 billion (US$650 million). Some international investors are seeking some opportunities in Latin America and other emerging markets, as there is a growing sentiment that the region will outperform more developed economies such as the U.S., Europe and Japan.

Yesterday, the well known international investor George Soros announced he has doubled his stake in Petrobras (PBR) to 1.45% of the capital of the company. This is great news -- however, the international economic environment remains quite uncertain and the price of most commodities that Brazil exports such as iron ore and steel remains very volatile. The same is true regarding oil.

We have few doubts that Latin America will outperform more developed economies during this crisis. Nevertheless, we still believe it is too soon to bet on commodity producers, as the economic crisis seems to get worse each day.

We continue to recommend increasing exposure in Brazil, however we prefer companies that are more exposed to the domestic market -- mainly companies that pays high dividends. In this sense, electric and telecom utilities are good choices. We like Telesp (TSP), Oi Participacoes (TNE), Cemig (CIG) and Sabesp (SBS).

Read the full analyst report on PBR

Read the full analyst report on TSP

Read the full analyst report on TNE

Read the full analyst report on CIG

Read the full analyst report on SBS

"PBR" Free Stock Analysis: Buy? Sell? Hold?
"TSP" Free Stock Analysis: Buy? Sell? Hold?
"TNE" Free Stock Analysis: Buy? Sell? Hold?
"CIG" Free Stock Analysis: Buy? Sell? Hold?
"SBS" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Gold and the Fear Trade

Money and Markets — Thu, 12 Feb 2009 03:22:45 +0000

I would like to state for the record that what's happening to the U.S. economy is freaking me out. And I think that if you're not scared, you're not paying attention. That said, there are positive steps you can take to protect ...

Bet Against a False Premise…Buy Gold

Bill Bonner — Thu, 08 Jan 2009 14:00:14 +0000

pLook at the economic goings-on that take place on this, the third rock from the Sun…The Dow is up again - could this be the beginning of a major rally?…pinning hopes on a stimulus package…much talk of cutting taxes, but not of cutting spending…Find a premise that is wrong, and bet against it…for gold bugs, it#8217;s now or never…and more!/p pCaptain#8217;s Log: Year of our Lord 2009, 6th day…/p pWe have landed on a strange and wonderful watery planet - the third planet in orbit around the sun, a minor star in the Milky Way galaxy. Well, they say it is watery planet. Where we are, it is icy. But the locals say it warms up and the ice melts. We#8217;re suspicious;#8230;/p

Buying into the Health Care Comeback

Contrarian Profits — Wed, 07 Jan 2009 15:45:57 +0000

pHow many times have you looked at a stock chart and thought, emIf only I had bought shares five years ago? /emIf we all had time machines, we would be millionaires. But we have not had the luxury of playing Monday morning quarterback with our investments. Until now, that is…/p pThanks to the recent stock market crash, we have the opportunity to pick up seriously cheap shares that were flying high until mid-September. In some cases, this is a chance to hop into a time machine and buy these stocks before they became household names. Until recently, these stocks were the darlings of Wall Street. And when the market stabilizes, these stocks could quickly return to favor…/p pThere are few defensive plays#8230;/p

History Points To Huge Opportunities Amid The Gloom

Andrew Gordon — Wed, 07 Jan 2009 13:42:35 +0000

p style="text-align: left;"Last year, the illusion of permanent wealth and prosperity was shattered. Just as The Great Depression followed the #8216;roaring#8217; 20s, so we now face a huge correction to years of unrestricted gains. But take the historical parallels further, and strongAndrew Gordon/strong says this year could be your best chance in decades to secure your financial future./p p style="text-align: left;"This from Investor#8217;s Daily Edge:/p blockquotepWe thought we were in a #8220;New Era.#8221; We thought the party would never end./p pSaving was out. Why save when stock prices were going up so fast. For almost eight straight years the stock market knew only one trajectory and that was up. #8220;Buy now and pay later#8221; defined not just a financial strategy but a lifestyle. And not only for the#8230;/p/blockquote

George Soros is Blamed for the Ukrainian Currency Collapse

Fred Fuld — Tue, 30 Dec 2008 15:52:00 +0000

According to a financial publication in Hungary, the noted investor George Soros, who was born in Hungary, is being blamed for the a href="http://www.kyivpost.com/business/32502" target="_blank"Ukrainian hryvnia currency crisis/a.div class="blogger-post-footer"div class='adsense' style='text-align:center; padding: 0px 3px 0.5em 3px;' script type="text/javascript"!-- google_ad_client="ca-pub-2427831169011625"; google_ad_width=300; google_ad_height=250; google_ad_format="300x250_as"; google_ad_type="text"; google_ad_channel ="8681602088"; google_color_border="FFF3DB"; google_color_bg="FFF3DB"; google_color_link="1B0431"; google_color_url="1B0431"; google_color_text="29303B"; //--/script script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js" /script /div

Create A Stock Market Trading Plan

Investment Education Staff — Sun, 28 Dec 2008 17:01:10 +0000

A stock market trading plan will not guarantee your success in the markets, but a good plan will enable you to work methodically toward your stock market trading goals while reviewing on a regular basis what is working and what is not. It will act as a roadmap for your trading journey. It will enable you to respond positively and constructively no matter what happens with your individual trades. And, most importantly, it will help you control the only thing a trader can control: his or her own actions.

STARmeter Ratings of People in the Financial Field

Fred Fuld — Tue, 23 Dec 2008 07:47:00 +0000

IMDB.com, also known as Internet Movie Database, publishes STARmeter ratings of anyone who has ever had anything to do with show business. I'm still not clear about how they calculate this, or what it really means, but here is a list of several people connected to the stock market along with their STARrating change from last week. br /br /Suze Orman -26%br /T. Boone Pickens -19%br /Jim Cramer +3%br /Timothy Sykes +6%br /Dylan Ratigan +20%br /George Soros +26%br /Warren Buffett +127%br /The a href="http://Stockerblog.com"Stockerblog/a proprietor +193%br /br /How my rating increased so much, I can't even guess. Go figure.div class="blogger-post-footer"div class='adsense' style='text-align:center; padding: 0px 3px 0.5em 3px;' script type="text/javascript"!-- google_ad_client="ca-pub-2427831169011625"; google_ad_width=300; google_ad_height=250; google_ad_format="300x250_as"; google_ad_type="text"; google_ad_channel ="8681602088"; google_color_border="FFF3DB"; google_color_bg="FFF3DB"; google_color_link="1B0431"; google_color_url="1B0431"; google_color_text="29303B"; //--/script script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js" /script /div

“We’re going to see $200 oil at some point” Jim Rogers

Alex Stanczyk — Sun, 14 Dec 2008 14:16:41 +0000

“We’re going to see $200 oil at some point” Jim Rogers Rogers buys oil last week as price drops Thu Dec 11, 2008 12:49pm EST By Herbert Lash http://www.reuters.com/articlePrint?articleId=USTRE4BA4HD20081211 NEW YORK (Reuters) - Renowned commodities investor Jim Rogers said on Thursday that he bought oil last week as crude prices collapsed to near four-year lows and that the world [...]

A ‘Credit Cycle Bust’ That Cannot Be Stopped

Contrarian Profits — Fri, 05 Dec 2008 19:31:08 +0000

p style="text-align: left;"This is no ordinary downturn. After the biggest credit bubble in history, we face a correction on an unimaginable scale. Make no mistake about it: This is a credit-cycle bust that the government cannot stop. The losses are already catastrophic. And the massive unwinding is nowhere near finished yet#8230;/p p style="text-align: left;"The following is an excerpt from a href="http://www.contrarianprofits.com/articles/author/bill-bonner/" class="alinks_links"Bill Bonner/a and James Davidson#8217;s crisis report, emHow to Survive and Prosper in the Coming Global Depression./em/p pContrarian Profits readers are probably familiar will Bill#8217;s commentary from his a href="http://www.dailyreckoning.com" class="alinks_links"Daily Reckoning/a column. But here is some information about James Davidson:/p pDavidson is a self-made multi-millionaire, venture capitalist and best-selling author./p pHis books include Blood in the Streets, Financial Reckoning Day and The Sovereign Individual./p pAs an author and editor of private financial advisory#8230;/p

Reflexivity revisited

DanielXX — Sat, 29 Nov 2008 08:29:00 +0000

img src="http://photos1.blogger.com/img/43/5843/160/thinking.jpg"br /br /emfont color="#0000FF"(P.S: Sorry for any disturbances the advertisements above may have caused you)/font/embr /Let's review the various perspectives about the relationship between stock prices and "business fundamentals" as most people understand it. First, there is the advice given by the Sage of Omaha about Mr Market being manic-depressive and that the prices he/she/it quotes can have a disconnect with underlying fundamentals. Then there is the typical technician's/efficient market theorist's view that price reflects underlying fundamentals, even though it might not seem so at the time to the outsider. And then there is George Soros, who advocates that market prices can actually emactively influence/em fundamentals. The last view is known as reflexivity, a term coined by Soros.br /br /Despite Soros' celebrity fund manager status, reflexivity has never really caught on in popular investment literature, partly because it does not really have mathematical grounding. It is more of a philosophy than anything else, in its recognition of the two-way feedback between price and fundamentals, instead of the traditional view that fundamentals drive prices. But in the aftermath (I hope) of this credit crisis, it deserves serious all-round consideration and recognition now. br /br /First of all, by virtue of the fact that Soros was among the first to recognise the seriousness of this crisis, calling it the greatest financial crisis since the Great Depression, his market ideas and philosophy deserve special elevation. Now everybody knows the current crisis as .... yes, "the greatest financial crisis since the Great Depression". Talk about parrots. But more importantly, the mechanics and evolution of this financial crisis indeed has the feel of a price-induced death spiral about it.br /br /The most obvious linkage is market confidence. There is nothing that unnerves the self-assured long-term "fundamentals-driven" investor more than to watch the market value (and his net worth) of his investment drop day by day; it has the effect of shaking his conviction to the point of changing his perspective from "Mr Market is wrong" to "Mr Market might know something". The same applies to the bond investor of course, who will be driven more by credit concerns than earnings concerns (bond investors also tend to believe in market efficiency more). This is all fine if the stock is trading on the secondary market and the business is self-sustaining without funding concerns, because the business doesn't really care what price it's worth according to Mr Market, as long as its suppliers and customers continue doing business with it. Operations-side partners tend to be less market-sensitive; however financial-side partners are hyper market-sensitive, and this is where declining market valuation can feed into faltering confidence. If the company is constantly dependent on financing cashflow (not necessarily from stock market or bond market) to sustain its operations, or if indeed (in the case of banks) market trust is integral to its business model, then the reflexivity effect is particularly influential. Indeed, in Soros' original illustration of the reflexivity effect, he highlighted the case of REITs, which often funded new property purchases through issue of new units and therefore depended heavily on high market prices of their units to purchase these new properties at above-average yields ..... sort of a Ponzi scheme in my opinion. Today, REITs face a different market confidence-related concern .... they have trouble rolling over their current debt.br /br /Another linkage is the interaction between market valuation and regulatory requirements. For the current crisis, the most obvious example is the mark-to-market rule which requires financial institutions to mark their financial assets at current market prices; given the collapse of mortgage securities and almost every other kind of financial asset except Treasuries, banks and insurance companies have taken a severe hit on their balance sheets. Regulatory requirements (eg. Basel 2 accord) requiring them to be sufficiently liquid or solvent then force them to have to raise cash, either by issuing new shares or bonds, or deleveraging through selling assets on the open market; any such measures are undertaken at unfavourable prices and adds further to the deterioration in market confidence.br /br /Although I have pointed out earlier that operational-side partners tend to be less market-sensitive than financial-side partners, they will eventually be affected if asset prices correct significantly across entire markets. This is what is happening now as the financial crisis spills over to the real economy. Corporate customers unable to obtain trade financing have difficulty paying for ship charters, so ship owners are hit. Retail customers unable to obtain easy home loans or auto loans stop buying homes and cars, while those that hold significant paper wealth have effectively had their net worth halved or more, hence retailers are hit together with their previously free-spending customers. This is the capital market-to-economy linkage that presents another facet of reflexivity.br /br /Such a positive-feedback spiral can feed on itself in the way that panic does. What are "fundamentals"? At the end of the day, it is hugely dependent on confidence. Without confidence that the future can be better, consumers will not consume. Without assurance that future consumer demand will grow, businesses will not invest. The demand curve is actually heavily dependent on sentiment, security and other intangibles; demand is what generates growth; it IS the fundamentals. br /br /That is why the government has to come in to intervene, the way Keynes advocated and the way Soros believes has to be to break the reflexive spiral. It has to inject confidence through being the capital provider of last resort, revise regulatory requirements (or at least ease them), and provide counter-cyclical demand. Those who believe in letting the markets cure themselves, such as the Austrian school, the market fundamentalists and even Jim Rogers, are just hallucinating. Especially for Jim Rogers, I cannot understand why he was working with George Soros for years but does not seem to understand the government's role in breaking this crisis? br /br /Those who want to read further about reflexivity should read Soros' book "a href="http://goodstockbooks.blogspot.com/2007/09/alchemy-of-finance-george-soros.html"The Alchemy of Finance/a" (link to my book review) where he expounds on his pet theory in greater detail.

The Sequel To The G-20’s Secret Debt Solution

Larry Edelson — Fri, 21 Nov 2008 14:12:24 +0000

PMy G-20’s Secret Debt Solution article last week set off quite the buzz all over the investment community, including on this blog. I was flooded with comments from readers.brbrWhile some think I've lost my mind, I do have history on my side (not to mention some distinguished company in my camp, including George Soros.)brbrI elaborate more on this and the new monetary system I told you about last week in A title=Larry Edelson Money and Markets column 112008 href=http://www.moneyandmarkets.com/more-on-the-new-monetary-system-6-28166 target=_blankmy current Money and Markets column/A. I also answer some of the many questions I received. Given the importance of all this, I encourage you to A title=Larry Edelson's Money and Markets column 112008 href=http://www.moneyandmarkets.com/more-on-the-new-monetary-system-6-28166 target=_blankread it now/A.br/P

Don’t Waste a Weekend

Contrarian Profits — Fri, 14 Nov 2008 18:24:36 +0000

I don’t know about you, but I don’t plan to spend the weekend glued to the computer or TV waiting to see what the world’s finance mavens do at the “G20″ summit.

Yes, the British prime minister and the French president are eager for some sort of “new Bretton Woods” to come out of this process. Yes, George Soros has remarked on a number of occasions, always with the same careful choice of words, that there is “no suitable alternative” to the dollar. But does that mean we’re going to wake up Monday morning with a new international currency regime backed by gold? That gold will be revalued to $10,600 an ounce, or even $53,000?

Maybe. But not now, I’m guessing.

The most compelling argument against…

Traxis Partners LP | Hedge Fund Tracker Notes

Richard C. Wilson — Wed, 12 Nov 2008 17:54:15 +0000

Traxis Partners, LP

Traxis Partners LP | Hedge Fund Notes

The following piece on Traxis Partners, LP and Barton Biggs (pictured left) is being published as part of our Hedge Fund Tracker Tool, our daily effort to track hedge funds in the industry.

Resource #1: (11.12.08) Barton Biggs, managing director of hedge fund Traxis Partners, says he doesn’t see the redemption tsunami predicted by billionaire George Soros and others.

Soros has said he expects two-thirds of hedge funds to be closed down by a wave of redemptions as investors cash out. Economist Nouriel Roubini went so far as to warn that the resulting rush of stock sales would shut down stock markets for two weeks or longer.

Not gonna happens, says Biggs, a former Morgan Stanley strategist, writing in Fortune. During the bear market of 2000 to 2003, hedge funds still posted positive returns, Biggs points out, and the result was a boom in the industry.

“Big money and greed attracted less qualified, inexperienced, and trading-oriented participants,” he admits, but the exit of those fund managers won’t kill the business. “For one thing, the panic has abated, and since most funds have losses to make up before they can begin to earn their performance fee again, investors who redeem now are forgoing a free ride,” Biggs says, with the caveat that, of course, a fixed fee remains in place. Sure, several thousand small funds might close, but the big “multi-strategy” funds will stay on, he says.

Biggs expects $350 billion to leave the now $1.4 trillion hedge fund market by the middle of 2009, of which $150 billion is already gone. If the remaining $250 billion were to evaporate, no big deal, Biggs says. Source

Read about more hedge funds within our Hedge Fund Tracker Tool.

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Mr. Market Laps Up China Bailout Plan

Contrarian Profits — Mon, 10 Nov 2008 12:34:25 +0000

The U.S. isn’t the only country rolling back on free-market principles. Communist China is also busy bailing out its economy. Over the weekend, the People’s Republic announced a $586 billion ’stimulus’ plan of it own. U.S stock futures are up on the news.

- Italy may be the next country to ‘rescue’ its economy with taxpayers’ money. According the The Times the Italian government was working on plans over the weekend to pump as much as $26 billion into its biggest banks.

- Uncle Sam is about to bailout AIG from its bailout. Apparently, the original handout was too tough on poor old AIG. So now its going to get a sweeter deal. This from the WSJ:

The U.S. government reached a deal…

M3 Money Supply Chart, Baltic Dry Index Chart

Alex Stanczyk — Sat, 08 Nov 2008 14:11:32 +0000

M3 Money Supply Chart M3 Money supply represents the amount of money added to the money supply. The Federal Reserve stopped reporting this (gee I wonder why) but it is still tracked by private firms. I have watched this closely over the last few months, as I wanted to see if we were going to see a [...]

Signs of a Tradable Bottom

Justice Litle — Fri, 31 Oct 2008 19:19:36 +0000

This week’s rally is one of the strongest in decades. Justice Litle says there are several indicators pointing to a “tradable bottom” in the market. That means a great chance for short-term profits, even if there are more sell-offs down the road.

This from Taipan Daily:

As I write to you on Thursday afternoon, the Dow and the S&P are firmly in the green. That doesn’t mean a whole lot by itself, of course. These days you never know what the last hour will bring. (On Wednesday the Dow snuck in a 400-point reversal… in the last fifteen minutes of trading!)

Market wackiness aside, though, I think we could be close to a tradable bottom here. That is to say, a time to start scouting…

John Devaney | Booed? Apparently Not | His Response Here

Richard C. Wilson — Wed, 29 Oct 2008 15:01:39 +0000

John Devaney

John Devaney | Hedge Fund Manager

A few days ago I read an odd article within the New York post on John Devaney and how he was supposedly booed off of stage at a recent conference. Click here to read this article now. This seemed far fetched but I figured anything could happen in today's market environment. Here is an excerpt:

Devaney, who made no friends after his United Capital Markets' flame-out left investors with zero payout, began to speak during a Monday morning discussion at the conference but soon began a rant on why the markets were wrong and he was right.

The crowd began to boo and the microphone was taken away from him, according to several spies in attendance.

This morning Mr. Davaney is claiming that this story has been completely fabricated by a competitor within the industry. I know this happens more often than it should in the investment industry so I'm publishing his letter here:
______________________________________

In response to an inaccurate story published in the New York Post on Sunday, October 26 United Capital Markets, Inc. would like to make the following statement:

To New York Post, Teri Buhl, and your Investor Source:

Most of the content in "Devaney Booed off Stage," which appeared in this past Sunday's (October 26th) New York Post, is completely false. There was no booing, nor did anyone leave the stage. This is totally fabricated. This type of false reporting is compounding problems that the finance industry is having in restoring confidence. Articles of this nature are placing the financial system at more risk by falsely attacking industry participants. We are one of the few dealers in the ABS/MBS community providing liquidity and making an effort to help the markets. The parts about my brokerage firm and asset management firm having troubles in 2007 and this year are true. The rest of your story is inaccurate.

You called me and told me that a hedge fund investor of United Capital Asset Management ("UCAM") is very upset about his losses and does not wish me well. Ms. Buhl, you did not attend the conference. You spoke to a person who called you with the sole intention of trying to malign me and my firm by having you write a negative story. Furthermore, it is absurd that you would consider someone credible who told you that he was plotting to steal artwork from my yacht and who had been drinking.

Normally, I ignore this type of media attention, but as someone who has supported the ABS/MBS conference industry for almost 9 years now, I felt like I wanted to speak out against this attack on myself and importantly, the industry conventions that are integral to transferring information and ultimately to healing our markets.

I might note that beginning in 1999, I started supporting industry conferences, including American Securitization Forum ("ASF"), as well as Information Management Network ("IMN"), with payments now totaling almost $3 million. We have given back a portion of our earnings by paying for sponsorships, entertainment, and dinners in an attempt to increase industry participation. As the ABS industry has expanded, the conferences have grown in attendance from about 300 people in 1999 to a high of 6,000, in recent years. I have offered my own time and effort to appear at almost every conference, twice a year, for 9 years now, serving on boards and committees and also speaking on some 40 panels. You might say that this is a commitment to my industry.

I am sorry for any investor who has lost money in any investment in the past 18 months. It has been a very tough environment for any investor who has been long the bond market in structured finance securities: RMBS, ABS, CMBS, and CDOs. These markets have crashed and the best "AAA" bonds are trading at 50 cents on a dollar and almost everything else at 10 cents or below. This market crash has unfortunately created large losses across a very wide spectrum of institutions and individuals.

All investors are accountable for their investment decisions. You could be at an investment bank, regional bank, prop desk, fund of funds, insurance company, hedge fund, or CDO manager and this still applies. It doesn't matter who you are or what side of the fence you sit on; it is important to realize that if you or your investment committee "pulls the trigger" on investments or strategies that you remain accountable for the results.

I certainly think that I have displayed my accountability to this marketplace and to this industry. I have lost in excess of $100 million of my personal wealth investing in this market sector alongside all others. I was the 2nd largest investor in my hedge fund, managed by UCAM, with approximately 15% ownership. In addition, UCM, my broker/dealer, has also struggled immensely. At the end of 2007, UCM sustained very bad losses that nearly wiped out the firm's equity.

Beyond just being responsible for my personal investments, I continue to attend and participate at the conferences, striving to be part of the solution to the market's severe troubles. Fortunately, I was diversified and did not have all of my net worth in junk bonds. I have sold a huge string of my personal assets in order to recapitalize and continue this market making commitment. Like all financial firms, UCM continues to observe these extraordinary conditions and looks forward to implementing a strategy that will serve our clients while returning us to profitability.

We own almost 100 bonds in UCM and affiliated accounts across almost all sectors of structured finance and have purchased most of this paper this past quarter. Instead of crawling under my desk and hiding from people or feeling sorry for my own losses, I embraced the industry and its challenges by holding my head up high and being proactive about solutions to the marketplace. We are providing value.

This strong commitment is how UCM has traded more than $50 Billion notional of illiquid over-the-counter, mainly non-investment grade, products in 9 years. We have emerged as a leader over this period in secondary markets for all asset backed sectors which have come under distress, including aircraft ABS, CDOs, franchise loans, manufactured housing, subprime, distressed credit cards, second liens, and of course RMBS. Our firm has provided liquidity to countless institutional accounts, buying in competition when many underwriters would not.

This same commitment was given to our asset manager. Our main hedge fund strategy made 49% and 42% returns in 2005 and 2006, respectively. In 2007, the fund was almost wiped out, succumbing to unexpected forces that included in hindsight: the wrong investments, deteriorating fundamentals, REPO lenders seizing collateral, and an avalanche of supply driving down prices and impairing liquidity. In 2008, the fund was seized by lenders and all equity was eliminated.

It takes an honest individual to admit that he was wrong. UCM and UCAM were long in 2007 and were wrong. Any investment other than cash or a short position in fixed income, was the wrong investment. By printing these false stories, the New York Post is greatly compounding the loss of confidence in the marketplace and in these important industry gatherings. This same type of reckless reporting has, in some part, contributed to the demise of other financial firms, like Lehman Brothers, and has further stressed the worldwide financial system.

In February 2009, UCM will turn 10 years old. On this occasion, we might tell our clients and dealer friends, "Be accountable for your investments, hold your head up high and maintain a commitment to your job and your industry. Don't give up."

John Devaney
Chief Executive Officer, United Capital Markets, Inc., United Capital Asset Management LLC

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George Soros Hedge Fund Industry Predictions

Richard C. Wilson — Wed, 29 Oct 2008 14:46:42 +0000

George Soros Predictions

George Soros Hedge Fund Predictions

Just a quick note to let you know we have updated the Hedge Fund Tracker profile for George Soros after his recent speech at MIT where he predicted the hedge fund industry to fall from 50-75% from its peak.

To view the updated profile please click here: George Soros

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Swiss Guru Felix Zulauf Braces for Soft Economic Depression

Eric Roseman — Tue, 28 Oct 2008 19:12:54 +0000

There are only a few global-minded investors I really listen to when it comes to gaining insight on the markets. Most of today’s money managers are too mainstream and remain obsessed with beating their benchmarks. What a waste of time. My favorite market seers in Europe include Marc Faber and Felix Zulauf.

I’ve been following Felix Zulauf’s career for about 15 years. In 1990, he founded Zulauf Asset Management AG in Zug, Switzerland. He currently manages money for global investors in the Zulauf Europe Fund, which is actually profiting during this disastrous year. Zulauf was bearish starting in 2006 and positioned his funds accordingly.

The ‘Soft’ Depression

Zulauf believes we’re entering a soft economic depression. If not for the government’s backstops on October…

Why Brazil ETF (EWZ) Is Now A ‘Screaming Buy’

Contrarian Profits — Mon, 27 Oct 2008 13:05:21 +0000

Horacio Marquez says the credit crisis is giving investors another chance to profit from Brazil’s long-term success story. The country is rich in natural resources, has a solid banking system, and a strong economic outlook. He recommends buying the iShares MSCI Brazil Index (NYSE: EWZ) in increasing increments over the coming 8 weeks.

This from Money Morning:

Brazil’s economy has been given a second chance. And so have prospective investors.

Brazil will use that second chance well – shouldn’t we?

Although there are a number of ways to play this promising “BRIC” (Brazil, Russia, India and China) market, including some excellent companies, the best way to capitalize on Brazil’s terrific prospects is through the iShares MSCI Brazil Index (NYSE: EWZ).

Brazil’s Shrewd Game Plan for the Current Financial…

Grigory Pasko: Oleg Kozlovsky Receives Human Rights Award

Robert Amsterdam — Wed, 22 Oct 2008 21:59:20 +0000

Award finds a hero By Grigory Pasko, journalist As is being reported on the Human Rights in Russia website, coordinator of the Oborona movement, Oleg Kozlovsky, has received the Human Rights Award, conferred annually by the human rights organization Human Rights First. As they reported in the press-service of the organization, the 30th jubilee award ceremony will take place in New York on 23 October. Among the previous laureates of this award are the Russian human rights advocate Ludmilla Alexeeva, UN High Commissioner for Human Rights Mary Robinson, philanthropist George Soros, dissident Natan Sharansky, senator Edward Kennedy, and other people who have made a significant contribution to the defense of human rights in the world and in their countries – reports Human Rights First.

George Soros Portfolio

Declan Fallon — Mon, 20 Oct 2008 15:24:00 +0000

In September I took a look at a href="http://zignalsblog.blogspot.com/2008/09/buffett-way.html"Warren Buffett's/a stock holdings. In this post I will look at George Soros's stocks. The information was pulled from a href="http://www.stockpickr.com/port/George-Soros/"Stockpickr/a and is ehhh... not the most up to date given his third greatest holding was that bastion of financial security, Lehmans. The a href="http://www.marketfolly.com/2008/08/checking-in-on-warren-buffett-berkshire.html"13F/a on which the holdings were pulled were current for June 20th of this year - I suspect things have changed a little since.... br /br /span class="fullpost"Topping his holdings is Petroleo Brasileiro S.A. (strongPBR/strong). The stock has given back nearly all of its 2007 run up but is currently trading at support of a modest up trend dating back to 2005. The stock is also trading near support of a broadening wedge which encompassed the crash of 2008. The stock yields a disappointing 0.30% but the company did report a href="http://www.marketwatch.com/news/story/petrobras-reaches-record-oil-production/story.aspx?guid={AC06D002-C3BA-44F0-B338-F783A58EE8D9}siteid=yhoof"record oil production/a for September. br /br /a href="http://4.bp.blogspot.com/_WWGUfU1tOjI/SPyl2DZJ89I/AAAAAAAAAgY/_xYd9df881A/s1600-h/PBROct20.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://4.bp.blogspot.com/_WWGUfU1tOjI/SPyl2DZJ89I/AAAAAAAAAgY/_xYd9df881A/s320/PBROct20.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5259260812904231890" //abr /His second company is Potash Sakatche (strongPOT/strong). Another poor yielding stock (0.5%). a href="http://www.cnbc.com/id/27239433/?__source=yahoo|headline|quote|text|par=yahoo"Joe Terranova/a of CNBC's emFast Money/em suggest's this as a long pick but it has an ugly chart - the kind of chart which rarely recovers in a short space of time. That is not to say it doesn't trade at value, but it might be best to practice patience with it:br /br /a href="http://3.bp.blogspot.com/_WWGUfU1tOjI/SPyqQ4dV_gI/AAAAAAAAAgg/8xh9ArZO8nI/s1600-h/POTOct20.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://3.bp.blogspot.com/_WWGUfU1tOjI/SPyqQ4dV_gI/AAAAAAAAAgg/8xh9ArZO8nI/s320/POTOct20.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5259265671871987202" //abr /Ignoring Lehman which was his third biggest holding, his third big holding is Conocophillips (strongCOP/strong). The stock has in the past few years moved in steps. The first took it to $50-70, the next to $70-90 before the final push above $90 proved a step too far and it fell back into the $50s. The stock was a href="http://finance.yahoo.com/q/ud?s=COP"upgraded/a by Oppenheimer and Credit Suisse. br /br /a href="http://4.bp.blogspot.com/_WWGUfU1tOjI/SPytvi8vUkI/AAAAAAAAAgo/XFyY8nSkc3w/s1600-h/COPOct20.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://4.bp.blogspot.com/_WWGUfU1tOjI/SPytvi8vUkI/AAAAAAAAAgo/XFyY8nSkc3w/s320/COPOct20.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5259269497208918594" //abr /An interesting holding of his is Wind River Systems (strongWIND/strong). Unlike the aforementioned stocks it hasn't crashed down from a high (the stock last traded at an high in 2005). There is a trading range dating back to 2006 which was breached at the January low, but held on the subsequent retest of the January low. Prices now trade at this support level - the question is whether it holds here or makes another push to the January low? There were postive rumblings by a href="http://www.forbes.com/2008/09/19/radio-shack-cablevision-pf-trades-in_dp_0919dailytrades_inl.html?partner=yahootix"David Penn/a at emForbes.com/em back in September, but since then the stock has given up an additional 15% discount. Is it worth it? br /br /a href="http://4.bp.blogspot.com/_WWGUfU1tOjI/SPywTiNzPUI/AAAAAAAAAgw/x3GpfK8qnZQ/s1600-h/WINDOct20.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://4.bp.blogspot.com/_WWGUfU1tOjI/SPywTiNzPUI/AAAAAAAAAgw/x3GpfK8qnZQ/s320/WINDOct20.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5259272314510589250" //abr /If you would like copies of these charts with these annotations please email me at declan-at-zignals.combr /br /span style="font-size:80%; color:#cccccc;"Dr. Declan Fallon, Senior Market Technician, a href="http://www.zignals.com"Zignals.com/a the free stock alerts, market alerts, and stock charts website /span/span

Andrew Lahde | Hedge Fund Closure Letter to Investors

Richard C. Wilson — Fri, 17 Oct 2008 20:53:40 +0000

Andrew Lahde

Andrew Lahde | Hedge Fund Closure Letter

Past Post: Andrew Lahde | Andrew Lahde Capital Hedge Fund Notes

I just received this note and letter from a trader in the industry after noticing that over 2,000 people today had read my former post on Andrew Lahde and his Lahde Capital Fund. Here is Andrew's fund closure letter with a short intro courtesy of Portfolio:

Andrew Lahde, manager of a small California hedge fund, Lahde Capital, burst into the spotlight last year after his one-year-old fund returned 866 percent betting against the subprime collapse.

Last month, he did the unthinkable -- he shut things down, claiming dealing with his bank counterparties had become too risky. Today, Lahde passed along his "goodbye" letter, a rollicking missive on everything from greed to economic philosophy. Enjoy.
___________________________________

Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding. Instead, I am writing to say goodbye.

Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, "What I have learned about the hedge fund business is that I hate it." I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.

There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list those deserving thanks know who they are.

I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don't worry about my employees, they were always employed by Mr. Springer's company and only one (who has been well-rewarded) will lose his job.

I have no interest in any deals in which anyone would like me to participate. I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life -- where I had to compete for spaces in universities and graduate schools, jobs and assets under management -- with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established.

On the issue of the U.S. Government, I would like to make a modest proposal. First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government. Capitalism worked for two hundred years, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man's interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft's near monopoly. I believe there is an answer, but for now the system is clearly broken.

Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won't see it included in BP's, "Feel good. We are working on sustainable solutions," television commercials, nor is it mentioned in ADM's similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products. Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won. At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country? Ah, the female. The evil female plant -- marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country. My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let's stop the rhetoric and start thinking about how we can truly become self-sufficient.
With that I say good-bye and good luck.

All the best, - Andrew Lahde

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United Kingdom Leads European Nations in Coordinated Effort to Cut Off the Credit Crisis

Money Morning — Tue, 14 Oct 2008 08:30:23 +0000

By Jason Simpkins Associate Editor Governments across Europe yesterday (Monday) took the first step in a new, coordinated effort to subvert the widening credit crisis and restore functionality... Money Morning is here to help investors profit han...

Goerge Soros: Financial Crisis Is the ‘End of an Era’

Contrarian Profits — Sun, 12 Oct 2008 17:48:47 +0000

Billionaire investor George Soros told Mill Moyers on PBS that this is the "end of an era."

Soros predicted the crisis in subprime loans punctured the lung of the financial markets.

In the interview, Soros slammed Treasury Sectretary Hank Paulson. He said the onetime Goldman Sachs boss was part of the very Wall Street system of "financial engineering" that caused the crisis in the first place.

Soros also said the American consumer economy -- what he called the "motor" of the world economy -- has now been switched off.

Watch it here.

Goerge Soros: Financial Crisis Is the ‘End of an Era’

Contrarian Profits — Sun, 12 Oct 2008 17:48:47 +0000

Billionaire investor George Soros told Mill Moyers on PBS that this is the "end of an era."

Soros predicted the crisis in subprime loans punctured the lung of the financial markets.

Soros also said the American consumer economy -- what he called the "motor" of the world economy -- has now been switched off.

Watch it here.

Strong dollar, simple logic… We think!

Jack Crooks — Wed, 01 Oct 2008 13:12:12 +0000

Key News
• Economists rushed on Wednesday to predict a UK interest rate cut next week, as a survey of manufacturers was more pessimistic about the sector’s output than at any time since the last British recession in the early 1990s. (FT)
• European manufacturing contracted more than initially estimated and unemployment rose to the highest in a year as the deepening credit crisis slowed growth.

US Economic Events (WSJ):
8:15a.m. Sep ADP Employment Report: Expected: -53K. Previous: -84K.
10:00a.m. Aug Construction Spending: Expected: -0.5%. Previous: -0.6.
10:00a.m. Sep ISM Manufacturing Business Index: Expected: 49.5. Previous: 49.9.

Quotable
“Many momentous historical developments occur without the participants fully realizing what is happening.”
George Soros

FX Trading – Strong dollar simple logic we think!
We are guessing the “momentous historical development” that launches the US dollar into a new multi-year bull trend was the credit crunch. It is a game changer on risk appetite and correlation of every asset class (but the dollar) going up at the same time, as the dollar credit was the driver. We have marked the Credit Crunch on our long-term dollar – gold chart next page:

US Dollar Index (black line) vs. Gold (blue line) Monthly 1972 – 2008

Simple logic or are we all wet? Don’t answer that!

• Strong dollar soothes system-wide credit concerns (it’s still the world’s money)

• Strong dollar makes oil cheaper (less dollar borrowing by countries to buy oil)

• Strong dollar mollifies commodities prices and inflation expectations (allows for rate relief needed in Asia and Europe)

• Strong dollar helps US consumption (imported goods cheaper i.e. increases purchasing power)

• Strong dollar helps periphery exports (liquidity draining from emerging markets, exports required to re-liquefy)

• Strong dollar helps German exports (and European manufacturing)

• Strong dollar combined with rising US yield differential (as ECB and BOE and RBA and SNB…cut rates) might create a self-reinforcing flow of hot money (speculative capital) into the US looking for a home, thus reducing the burden of fiscal policy to stimulate the private sector

If this logic is correct, then these are our guesses:

• European currencies continue to head much further south

• Commodity dollars sag

• Crude prices are pressured lower for a time

• Gold is finished in this cycle

• Spreads and interbank tension start to normalize

• Stocks—we don’t even wish to venture a guess

• World—it does not end.

• Congress—If wishing could make it so; but it can’t. Stuck with them we are.

Regards,

Jack & JR

George Soros Hedge Fund Notes

Richard C. Wilson — Mon, 15 Sep 2008 11:54:21 +0000

George Soros

George Soros Hedge Fund Notes

The following piece on System Absolute Return is being published as part of our daily effort to track hedge fund events in the industry. To review other hedge fund related announcements please see our Hedge Fund Tracker Tool.
______________________________________________

Billionaire George Soros's hedge fund may have lost at least $120 million on its stake in Lehman Brothers Holdings Inc., mostly acquired in the second quarter, as the investment bank suffered its worst financial result.

Soros Fund Management LLC, which manages $20 billion, purchased 9.47 million shares, or about 1.4 percent of New York- based Lehman, between March 31 and June 30, according to a filing with the Securities and Exchange Commission. The losses could be as high as $380 million, depending on when New York-based Soros purchased the stake and if he still owns the shares.
AllianceBernstein LP, Wellington Management Co. and Janus Capital Group Inc. also bought Lehman shares in the second quarter. Lehman today reported a $3.9 billion third-quarter loss, the biggest in its 158-year history, and said it will sell a majority stake in its asset-management unit, spin off commercial real-estate holdings and cut its dividend.

``There was a belief that Lehman was too big to fail,'' Geoff Bobroff, an investment-industry consultant in East Greenwich, Rhode Island, said of the reason investors may have bought the stock. ``They may still be rewarded if a buyer surfaces who will pay more per share than what they paid.'' more......

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Jim Rogers: How the Federal Reserve Will Fail and the One Sector Every Investor Should Be In

Keith Fitz-Gerald — Sat, 06 Sep 2008 17:19:26 +0000

Keith Fitz-Gerald Investment Director Money Morning/The Money Map Report VANCOUVER, B.C. - The U.S. financial crisis has cut so deep - and the government has taken on so much debt in misguided... Money Morning is here to help investors profit h...

Star Resorts Development Inc. (SRDP.OB): Playing the Tourism Boom in Latin America

QualityStocks — Sat, 06 Sep 2008 02:18:56 +0000

Star Resorts Development (SRDP) is real estate development company focused on Latin American markets, particularly Argentina. The company specializes in tourism property for affluent travelers and owns a ski resort, Cerro Bayo Mountain Resort, as well as a 47-acre vineyard called Mendoza. Star Resorts Development’s partner in the Cerro Bayo project is already projecting a [...]

News About Warren Buffett, Jim Rogers and the Presidential Elections are Money Morning Highlights; More to Come This Week

William Patalon lll — Mon, 01 Sep 2008 09:59:19 +0000

By William Patalon III Executive Editor Money Morning/The Money Map Report Although the Money Morning staff was off enjoying the Labor Day holiday today (Monday) - meaning that we... Money Morning is here to help investors profit handsome...

Exclusive Interview: Jim Rogers Continues to View China as the World’s Best Long-Term Profit Play

Keith Fitz-Gerald — Tue, 19 Aug 2008 23:15:07 +0000

[The Second of Two Parts.] Keith Fitz-Gerald Investment Director Money Morning/The Money Map Report VANCOUVER, B.C. - Despite its many problems, China remains such a strong long-term profit play... Money Morning is here to help investors profit hands...

Exclusive Interview: Jim Rogers Predicts Bigger Financial Shocks Loom, Fueling a Malaise That May Last for Years

Keith Fitz-Gerald — Tue, 19 Aug 2008 01:19:47 +0000

[The First of Two Parts.] Keith Fitz-Gerald Investment Director Money Morning/The Money Map Report VANCOUVER, B.C. – The U.S. financial crisis has cut so deep – and the government has... Money Morning is here to help investors profit ha...

Round-table Discussion: How to Prevent the Next Bubble

Prieur du Plessis — Thu, 03 Jul 2008 14:01:49 +0000

"The financial crisis has shown that markets are bubble-prone and that laissez-faire regulation doesn't work. The authorities need to get a grip if we are to avoid a mega-bubble. But we may need an even deeper crisis for that to happen." That is the co...

Forget IF there’s speculation in commodities. Ask “WHY?”

Mike Larson — Fri, 06 Jun 2008 07:30:00 +0000

Congress is up in arms. And the Commodity Futures Trading Commission (CFTC) is on the warpath. Their target: Speculators in the natural resources market. The CFTC said this week that it's ...

CNBC Bonus Bucks Trivia: On June 3, George Soros said oil prices will not “crash” any time soon. What reason(s) did the billionaire cite?

William Trent — Thu, 05 Jun 2008 13:10:09 +0000

On June 3, George Soros said oil prices will not “crash” any time soon. What reason(s) did the billionaire cite? Hungarian-born Soros said commodity index trading “is still inflating the bubble,” but oil prices have “a strong foundation in reality.” While I’m not exactly counting on a crash, I’m hoping I can restock my oil position (USO) [...]

MARKET COMMENT June 3, 2008 Today markets fretted about Lehman Bros.

David Fry — Tue, 03 Jun 2008 22:54:51 +0000

MARKET COMMENT June 3, 2008 Today markets fretted about Lehman Bros. and pondered the messages from Bernanke and impending congressional hearings regarding commodity market “speculation”. The dollar rallied from Bernanke’s comments and commodity markets were pressured by it and potential congressional action. Volume picked up substantially from the malaise of the past few weeks and breadth was negative particularly on NASDAQ volume.

More Recession fear thanks to Soros

Stockmasters Staff — Tue, 03 Jun 2008 16:18:25 +0000

Billionaire investor George Soros said an oil price bubble is working with fundamentals in the market that may lead to a recession in the world's largest economy. Use caution Masters, the impact of the press and Soros can move things.

The story from Bloomberg:

A letter to Warren Buffett

DanielXX — Fri, 08 Feb 2008 06:14:00 +0000

(P.S: Sorry for any disturbances the advertisements above may have caused you)
Dear Sir,

It is too expensive to buy a dinner with you so I thought I'd write instead to highlight an investment proposition to you --- one that would bring you running like an oversexed teenager in a whorehouse.

I am one of your fans, but unlike the countless others who profess their admiration for your investment philosophies and insights I am more a fan because of the enormous wealth that you possess, which makes you the first, second or third richest man in the world at various times, depending on Mr Market's daily evaluations of Microsoft's future and Mexico's potential.

My investment proposition is true to my patriotic nature --- come to Singapore to explore the wonderful bargains available that will allow you to diversify out of the terrible sinking US dollar, which I understand is your prime objective now. You may know that you are not the first one; a former affliate of George Soros is here already, allegedly to teach his happy daughter Mandarin.

This is not a cigar-butt proposition; it is not just a one-puff thing. This is a long-term story, and I happen to know that you absolutely love the long-term. A big ship takes time to turn, so it'll take you a while to switch out of your US assets into the secular rise of Asia --- with its domestic consumption and infrastructure buildup themes --- but you'll see the investment returns well before your breath wears out. And Singapore stands poised at the heart of the Asian story. It is increasingly mentioned in the same breath as the other Asian financial capitals: Hong Kong, Shanghai, Tokyo, Sydney. It is the logistics heart of Southeast Asia and the transhipment and transit hub of resurgent Asia. Ditto its refining hub; add to that its positioning along the entire value chain from research to services to alternative fuels to trading, plus the abundant resources from its neighbours and you have the makings of an Asian Houston in the future. You have a domestic reflation story, fuelled by government commitment to a rising population, new massive investments (two spanking new casinos) and a likely multi-decade remaking (together with associated investments) of the country towards services and away from manufacturing, and you have what you could call a country PE re-rating (upwards). Currently it is a developed country growing at developing country pace (5-7%). It might be volatile, but that's not a problem with you, I would imagine, you of the Mr Market and his crazy moods analogy.

That's the fundamental story for you.

You were recently quoted as saying that you don't believe a credit crunch will happen, and on this point I agree. There is plenty of cheap money around. Much of the current ready-to-invest money, however, resides in Asia's reserves and the Arabs' petrodollars, as evidenced by the sources of the buying sprees in the recent recapitalisation exercises of your US banks. In the wake of the US financial problems which are leading to downward pressure on both US equities and bonds alike, and given the long-term falling US dollar which reduces attractiveness of Treasuries, I would imagine (as you might have done so ten steps in advance of me) these money would go towards building up their own domestic economies (to cushion export stagnation) AND towards investing in still-buoyant themes --- which is of course Asia as a whole. What Mr Market will not pay in these current times, way-above-market-valuation M&A deals will: just look at the tussle for Rio Tinto (or even Yahoo! in the US). Check out the Middle-East funds and how they're moving acquisition targets from the traditional West to Southeast Asia, China, India. The general point in this is that Asia is the destination of significant liquidity in the absence of credible substitutes (since developed world equities and bonds have become risky), and there're still not many liquid and deep equities markets in Asia which thus limits their options.

That's where Singapore comes in, long-term liquidity-wise.

And sentiment is depression-like, which must surely complete the holy triumvirate of favourable investment criteria in your eyes. I can tell you from Ground Zero that the spectre of the Asian crisis ten years ago still weighs heavy on the guts of many who still want to wait for stock prices to hit rock-bottom before they want to buy. My reading is that should the stock prices hit their predefined level, they will again find excuses not to buy. Thus it is the mirror image of the "buy high, sell higher" mentality in bull markets; now we have the "sell low, buy lower" hope. It would be impolite to brand both as "greater fool" behaviour, though I am tempted. I will instead call it "a decoupling of the right and left brains"*. Local blue-chips have generally corrected 25% off their highs and now trade at 13-14X PE (historically 15-16X), while smaller companies have probably dropped 40-50% on average, in anticipation of a US recession. Among them are China-linked stocks of which about half or more trade at single-digit PEs, even as their Shanghai or HK-listed counterparts continue to trade at three times that PE, and even as we await a wave of Chinese QDII funds fanning out to invest outside China. And the mouth-watering proposition here is that the earnings of most of these companies are not leverage-enhanced ie. they are funded mostly by equity, unlike many US companies which often jazz up asset ownership and profits with debt and financial restructuring. There is capacity for growth with such balance sheet cushion, as you obviously would understand.

That is a cross-sectional view of the Ground Zero sentiment and valuation picture. It brings to mind one of your sayings: "Be fearful when others are greedy and greedy only when others are fearful".

Finally, I would like to express my admiration for the design of your Berkshire Hathaway website. It is truly one of the most iconoclastic corporate sites I've seen for a US top-10 company. I guess your best friend Bill Gates must have lent you some of his best Web design talent to come up with the site.

By the way, if you should decide to buy stocks on the Singapore market, please let me know which ones in advance since I'm the one who highlighted this proposition.

And last but not least, kateks die pain pain!

Cheers,
Danielxx

* Left brain-right brain: Left-brain focus on logical thinking, analysis, and accuracy. Right-brained subjects, on the other hand, focus on aesthetics, feeling, and creativity.

My views on the US subprime crisis

DanielXX — Sat, 26 Jan 2008 09:21:00 +0000

img src="http://photos1.blogger.com/img/43/5843/160/thinking.jpg"br /br /emfont color="#0000FF"(P.S: Sorry for any disturbances the advertisements above may have caused you)/font/embr /The crisis which erupted in August last year is now generating a full-blown domino effect on the "real" US economy and half a year after things have developed sufficiently for me to make an informed opinion on the state of affairs so far and how things could go from here.br /br /Firstly, a confession to make. Although my mental analysis framework was pointing to a reduction in equities allocation as the problems in the US led to one hole after another in its economic fabric, I instead shifted my allocation to more defensive themes and stocks well-supported by NTA (net tangible assets), but ultimately it turned out everything was hit anyway. So the lesson of the day was not to ignore the tide, especially when it had a fundamental basis.br /br /Two qualitative analysis frameworks work well here (which I sadly discounted). Firstly, that the general market is driven by three factors: fundamentals, liquidity and sentiment, and that one should watch out if the first two look to be declining or when the last factor is peakish. That credit creation (and hence liquidity) would be affected was clear, while the fundamental situation seemed mixed for a while as the US employment situation remained strong until December. Sentiment was mixed. It was a time to be careful. The second analysis framework was described in an earlier article: "a href="http://mystockthoughts.blogspot.com/2007/08/financial-statement-as-analysis.html"The financial statement as an analysis framework/a". It showed a systematic way of thinking about revenues, costs, profits and how they eventually filtered through to stock valuations via P/E ratios, which were a function of liquidity. As liquidity declined, as did sentiment, there was a P/E de-rating, which is essentially what has happened over the last few months, especially for the small/mid caps and China stocks in particular. It remains to be seen whether the E will be affected in the coming months, in which case there could be another round of downward pressure on stock prices.br /br /Another major issue is with regard to the seriousness and enormity of the crisis. There are actually two parts to this issue: how deep the crisis could become in the US, and how the rest of the world could be affected (the so-called decoupling hypothesis). br /br /For the first part, the situation has the potential to deteriorate and comparisons have been made to the a href="http://stocktaleslot.blogspot.com/2005/09/1997-asian-financial-crisis.html"Asian financial crisis/a a decade ago where currency failures led to corporate bankruptcies led to mass loss in consumer confidence. The contagion effect within the various credit sectors and now consumer and business confidence in the US certainly shows that developed economies are not immune to such domino effects, and it would take a brave analyst to say things are not going to grow more pear-shaped, especially when everyone now seems to be talking themselves into a self-fulfilling prophecy that is recession. But there are several mitigating factors: (1) rate cuts are implementable without a seriously deleterious effect on exchange rates because of the USD's position as global reserve currency, an option not available to the hard-hit Asian nations in 1997 (indeed, they were forced to raise rates which worsened things); (2) the employment situation still looks relatively robust which if it continues might suggest the banks could actually write back some of those CDO losses if defaults are less than market prices suggest; (3) US companies have stronger balance sheets than during 1999-2000, derive more profits from overseas operations than ever before, and hence there is less potential for sudden bankruptcies (and mass loss of jobs). Arrayed against these mitigating factors are the sobering facts: (1) consumption constitutes 70% of US GDP, and hence a decline will filter through to GDP stagnation strongly; (2) asset values, of which home and stock market valuation are dominant, form two of the three pillars of consumer liquidity (especially when loans can be drawn against home equity --- a US invention), and asset values are almost certain to fall; (3) pessimism suggests US businesses will be reluctant to invest in new capacity. I feel things might swing more to the downside, though I feel the market is discounting this quite aggressively already. Actually, I am seeing a soft rather than hard landing where the economy slows as consumers spend less and businesses invest less, but no panic as general job losses and hence debt defaults are limited. (You notice I focus on the "credit demand" side and do not talk about the "credit supply" side (ie. the banks): that is because I feel there is general internal commitment to do big-bath writedowns that will put a bottom on valuation, general commitment from US government to support them, and general commitment from international governments to recapitalise them; the worst might be behind them. As a caveat, I will be watching the development of the monoline insurers episode and the moves of the credit ratings agencies closely.)br /br /As for the decoupling issue, my view has always been that Asia decoupling from the Western economies is wishful thinking, because even if trade flows can decouple, it is quite impossible to expect financial flows to as well. I have been avoiding exporters as long-term holds for 1.5 years now given that US consumption has been slowing down since late 2006 ("a href="http://hottrendswatch.blogspot.com/2006/12/us-consumption-slowdown.html"US Consumption Slowdown/a"), but financial flows are impossible to trace though. But --- Asian economies have strengthened structurally both macro-wise and micro-wise since the painful lesson ten years ago and are in a position to substitute domestic investment for loss in export growth given their healthy surpluses. What it means is that if positioned correctly in correct sectors, one might still be able to make money. The likely credit destruction process in the West, however, means profit-taking must be more disciplined and less ambitious.br /br /The third issue I wish to talk about is with regard to the management of this crisis by governments. There are many who criticise the Fed's emergency rate cut as being panicky behaviour that will send a signal that the economy is worse than it looks or that it is creating a moral hazard, or that the Bush tax plan is ineffective. They seem to want markets to right themselves by massive plunges to price in the desperate situation. I wrote something about this in a forum and I thought I will reproduce it wholesale here as representative of my thoughts:br /br /"It is naive to think that the market and the economy can be separate from each other. George Soros' views on their inter-relatedness has been well-espoused and indeed, they can feed on each other in a death spiral if not managed. US markets have operated under what he calls market fundamentalism and if a free hand is given for markets to run they can become unstable because confidence and psychology is a big part of markets.br /br /Understood in this context, we might be able to better understand the Fed's predilection for emergency rate cuts. They are signalling to the markets that they will not let market death spirals happen and further destabilise the "real economy". A big source of consumer expenditure, besides income, is the wealth effect from asset values, as well as from consumer debt/borrowing. Market valuations hence constitute a bigger part of the real economy than people give credit for. When banks mark down their balance sheets based on market value, as happened recently, the assumption is that markets produce "fair value". But is it true? My view is that mass hysteria and complete loss of confidence has produced unrealistically low valuations of many high-quality debt; because of mark-to-market requirements, banks have no choice but to write down up to 70% of their value. Probably the true value, in the form of discounted cashflows, is between the mark-to-market and mark-to-model valuations. br /br /If the confidence crisis is allowed to develop and those in a position to do something instead do nothing, then that will truly be reproachable behaviour."br /br /If one believes that the market is efficient all the time, then perhaps it's best to let the invisible hand rule. Behavioural finance has identified the flaws in such assumptions due to human psychological tendencies that distort rational behaviour and especially in extreme times these tendencies can be exacerbated either by rapidly falling prices or even rumours that might have seemed absurd in more normal times. Left unchecked, instabilities could develop and feed on themselves; perception becomes fundamentals which further reinforces perception. That, incidentally, also applies to many other things in life.

Listening to Opinions on Market Turmoil

Richard Shaw — Tue, 21 Aug 2007 01:19:05 +0000

Sometimes it’s better to listen than to talk. That’s where we are today concerning the current market turmoil. The following are excerpts from the PIMCO montly letter and a piece in Fortune Magazine called “Crisis Counsel” . Bill Gross (Chairman, PIMCO) “[August newsletter] No longer will double-digit LBO returns be supported by cheap financing and shameless covenants. [...]

CSX: Railroads are a Buy

Todd Sullivan — Sat, 04 Aug 2007 21:15:33 +0000

Over year ago my sons and I were waiting at the train station in Worcester, MA for a family member to come for a visit. My kids, who were three and thought Thomas The Tank Engine was (and still is) the coolest thing in the world wanted to leave early that day so they could [...]