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July 2008

Recs

9

Jim Rogers on Oil, China and Commodities

July 31, 2008 – Comments (5) | RELATED TICKERS: USO , FNMA , FMCC

Rogers on Oil, China and Commodities

 

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6

Diebold Accidentally Leaks Results Of 2008 Election Early

July 31, 2008 – Comments (0)

Diebold Accidentally Leaks Results Of 2008 Election Early

 Such a Funny Video.

 


Diebold Accidentally Leaks Results Of 2008 Election Early 

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4

The Misery Index

July 30, 2008 – Comments (0)

If you want to check it out and check out the graphs. The link is here.

 I can't post pictures here but check it out it is worth ur time.

http://thevolatilitysoma.blogspot.com/2008/07/misery-index.html 

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4

NxStage Medical A good red thumb?

July 30, 2008 – Comments (1) | RELATED TICKERS: NXTM , MER

Just doing some research for some red thumb's in caps and I came across Nxstage medical (NXTM), Your one stop shop for all your renal care needs. What a disaster this company is. Inventories way up last quarter along with executive compensation, which is of course needed to "retain top talent". 

"The Company has experienced negative operating margins and cash flows from operations and it expects to continue to incur net losses in the foreseeable future."

Who is dumb enough to give this company a line of credit?? Lets Find out?

"In November 2007, the Company entered into a credit facility with Merrill LynchBusiness Services Inc. consisting of a $30.0 million term loan and a $20.0 million revolving credit facility. The Company drew $25.0 million under the term loan at closing, and drew the remaining $5.0 million on March 25, 2008."

With issuing that line of credit in Nov. 2007 I doubt they securitized it. And some people wonder why Merrill Lynch is in trouble... having massive write downs, fire sales, and massive shareholder dilution?

What a bright future NxStage Medical has."The Company expects that its existing resources will be insufficient to satisfy our liquidity requirements beyond 2008 and the Company will need to sell additional equity, issue debt securities, obtain capital through strategic investment, or otherwise obtain additional capital to fund its capital requirements beyond 2008. Additionally, beginning in 2009, the Company will need to begin paying down the principal under its revolving credit facility."


I don't short stocks under $10 - 12 but I do give them red thumbs in caps...  [more]

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2

Adam Smith, Policy Makers and Westies

July 29, 2008 – Comments (0)

Being an econ junkie I am a big fan of adam smith and lately and some of the things he wrote apply so well today.  [more]

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5

Hilary off the Map?

July 28, 2008 – Comments (0)

A political blog by CNN today had something interesting on Hilary.(1)  I think that Hilary was so angry that it took her a full two days to cool off.  As my dad said the other night, she see's Obama as ruining her destiny....  [more]

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4

Most Children Opposed To National Health Care

July 27, 2008 – Comments (4) | RELATED TICKERS: HUM

Did Anybody else see this video?  [more]

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6

China Part 1 of 10.

July 25, 2008 – Comments (3)

As you all know I have been reading a lot about China.  It is actually really interesting.  I am sitting on a lot of cash in different currencies and haven't really generated any new idea's so I am really doing my research in China.  Before I invest somewhere I want to know the culture, before I really invest in China I am gonna take a trip there.  [more]

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6

What do gas prices look like across the country

July 24, 2008 – Comments (7) | RELATED TICKERS: USO

Lets take a look here.    [more]

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5

Fiat Money lol

July 24, 2008 – Comments (0) | RELATED TICKERS: NEM , FXF

A guy from Tocqueville Fund's was on CNBC this morning and said something that made me truly laugh out loud.

 

(he was asked about one of his largest holdings (Nemont mining), Ticker NEM) .... he replies "I don't know about you but I am not to confident in the gov. to manage their fiat money"  That made my day.   I guess there are some decent mutual fund managers out there.

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4

Absurd

July 23, 2008 – Comments (0) | RELATED TICKERS: FNMA , FMCC

I found this part of the new bailout news absurd"The Treasury would be barred from providing aid that would cause a breach in the federal debt ceiling under the agreement, a constraint aimed at limiting any taxpayer losses. The debt limit would be raised to $10.6 trillion from the current $9.815 trillion.
The plan would give Paulson power to restrict the companies' dividend payments and require regulatory approval of the salaries of top executives."The Treasury secretary would get power to make unlimited equity purchases
in and lend to Fannie Mae and Freddie Mac to prevent a collapse in the firms that account for 70 percent of new U.S. mortgages" These are quotes from Bloomberg articles.  They better not pay a dividend.....I thing.... Privatized profits and socialized losses.   [more]

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5

China

July 23, 2008 – Comments (3)

Lately I have been doing a lot of research on China.  I have been compiling resources.  I don't have much personal money to spend on access to sites but I was wondering if any of you other fools have any good resources.  I check out the free IMF stuff.  [more]

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6

What People are not talking about at Fannie Mae

July 22, 2008 – Comments (1) | RELATED TICKERS: FNMA , FMCC

I have not posted much because I have been pretty busy lately.  I was on a private conference call this afternoon with a guy who a top level exec at fannie mae for 20 plus years.  These were not equity analysts they were private investors on this call.  The guy opened my eyes to a lot of interesting things.  If yeah cut the insider bs because all this stuff is in their financial statements if you want to take the time to look for it.  I believe some of the real problems lie in the credit enhancement products that fannie and freddie use.  Also all the repo and swap counter parties are in serious trouble so nothing is trading.  As long as there is no liquidity, there are gonna be problems.  Part of the reason credit got out of control is the liquidity and the size of the market to move it around.  This has changed.  Basically Fannie is doomed.  [more]

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4

FITB

July 20, 2008 – Comments (0) | RELATED TICKERS: FITB , AIG

I currently hold short positions in FITB and AIG, Barrons mentioned them in this weekend's article about how they represent a good buying opportunity.  Investing is all about conviction.  I have done my research and still hold my believe that no matter what happens to the price they are still screwed.  Options are great mechanisms for hedging, against a short moving against you 100 or 200 plus %.  on FITB it has gone against me $3, I am hedged at 18.40.  For AIG I am hedged at 35.60.  I love being a maverick and then being proved right in the end.  [more]

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6

The Name of the Game is Bailout

July 17, 2008 – Comments (4) | RELATED TICKERS: XLF , IAI , FNMA

The Name of the Game is Bailout

One of my favorite books is “The Creature from Jeckyll island”  At the end of the second chapter on page 39, the author talks about what goes on.

Chapter Name “The Name of the Game is Bailout”
Page 39:

“Although national monetary events may appear mysterious and chaotic, they are governed by well-established rules which bankers and politicians rigidly follow.  the central fact to understanding these events is that all the money in the banking system has been created out of nothing through the process of making loans.  A defaulted loan, therefore, costs the bank little of tangible value, but it shows up on the ledger as a reduction in assets without a corresponding reduction in liabilities.  If the bad loans exceed the assets, the bank becomes technically insolvent and must close it's doors.  

    The first rule of survival is therefore to avoid writing off large, bad loans and if possible to at least continue receiving interest payments on them.  To accomplish that, the endangered loans are rolled over and increased in size.  This provides the borrower with money to continue paying interest plus fresh funds for new spending.  The basic problem is not solved, it is postponed for a while and made worse.  

    The final solution on behalf, of the banking cartel is to have the federal government guarantee payment of the loan should the borrower default in the future.  This is accomplished by convincing Congress that not to do so would result in great to the economy and hardship for the people.  From that point forward, the burden of the loan is removed from the banks ledger and transferred to the taxpayer.    Should this effort fail and the bank be forced into insolvency the last resort is to use the FDIC to pay off the depositors.  The FDIC is not insurance because the presence of "moral hazard" makes the thing it supposedly protects against more likely to happen.  A portion of the FDIC funds is derived from assessments against the banks.  Ultimately however they are paid by the depositors themselves.  When these funds run out the balance is provided by the Federal Reserve System in the form freshly created new money.  This floods through the economy causing the appearance of rising prices but which, in reality, is the lowering of the value of the dollar.  The final cost of the bailout therefore, is passed on to the public in the form of a hidden tax called inflation.”


Anybody think that the fed is not doing such a great job?
Just thought I would share this.

George  [more]

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2

Geico??

July 17, 2008 – Comments (2) | RELATED TICKERS: BRK-A , BRK-B

Well the effects from the Creature Of Jeckyll island coming out and that monotone beareded feller opening his mouth are still being felt by my caps portfolio today and somewhat my real one, although I am mostly cash....  [more]

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6

Bernanke Stop Speaking

July 16, 2008 – Comments (4)

Every time Bernanke opens his mouth he costs me a bundle in caps points and a bundle in my portfolio.  825 points was quite a haircut for my caps score.

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7

The Implications of Indymac

July 15, 2008 – Comments (2) | RELATED TICKERS: XLF , XHB

The Implications of Indymac Based on its sheer size.

 George

http://thevolatilitysoma.blogspot.com/2008/07/impact-of-indymac.html 

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4

Oil Volatility Index

July 15, 2008 – Comments (0) | RELATED TICKERS: USO

They just launched a new thing called the OVX.  I just posted about it in my blog here, mainly because I have trouble posting pictures or graphs in caps.  [more]

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8

A Bottom in Financials?

July 15, 2008 – Comments (6) | RELATED TICKERS: XLF , IAI , FNMA

I don't think so.   Check some stuff from the latest FDIC report here.  [more]

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6

Free Industry Analysis

July 15, 2008 – Comments (2) | RELATED TICKERS: SLB , CCJ

Every week, I read the Economist, Barrons, WSJ, an many other publications.  Yes there are some great articles in there and opinions.  But where I find the most valuable research that helps me to understand things is annual reports.  Whenever I want to know about an industry I do some looking on wikipedia but then I usually pull up the companies with the biggest market caps, narrow them down (usually by looking at the ones the least amount of analysts follow) and download their annual reports.  There is some great analysis on industry trends in these.  For example check out SLB's last annual report it has a great article on the state of engineers in the oil and gas business.  Right now I am working my way through a bunch of Natural gas players industry reports.  Another cool one to check out if you want to learn more about Nuclear Power is Cameco's annual report and website.  Ticker CCJ.  Oh yeah on most investor relations websites they have power points that they used at some investment bank conference for you to download.  I just thought I would post this because it is a place I don't think many people look for research.   Best of all its Free.....  [more]

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12

Researchers Versus Traders

July 14, 2008 – Comments (2) | RELATED TICKERS: XLF , SPY , LEH

I've noticed something in these markets, this just hit me while watching bloomberg this morning / early afternoon.  There was a large private investor talking about how research has deteriorated (research provided by analysts on the street).  Being a reader of lots of research I agree with this.  Hence why I do my own research.  There is an analyst right now on bloomberg talking about what stock prices reflect and what the market thinks about certain financial companies.  Las time I check the trading was left to the traders and analysts were supposed to provide a deep look into the fundamentals of the company?  [more]

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5

Fannie, Freddie & Einhorn

July 13, 2008 – Comments (0) | RELATED TICKERS: FNMA , FMCC , XLF

If individuals create demand for something, shouldn't we let the free market provide that too them?  That debate is pretty much irrevelant at this point.  Credit Slips has a nice piece on fannie and freddie and chapter 11. (1).  Einhorn (one of my favorite people) has a really nice piece on Privitized profits and socialized risk...(2) *This link is a pdf download.  [more]

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4

Weekend

July 12, 2008 – Comments (0) | RELATED TICKERS: SPY , XLF , SKF

I have not been blogging as much because of the enormous amount of news coming out.  I think this is going to be a long weekend glued to Bloomberg and Reuters.  Man I really am a finance junkie.    [more]

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9

T Boone Pickens

July 09, 2008 – Comments (3) | RELATED TICKERS: USO , RIG , HAL

Anybody else seen these T Boone Pickens commericials more than a dozen times in one day?  [more]

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2

Outlook for today Part 1. 7.8.08

July 08, 2008 – Comments (0) | RELATED TICKERS: SPY , AA

I am just posting a link because I am too lazy to redo it in caps format and have an appointment today.  Link here.  [more]

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7

What Went Wrong at Indy Mac?

July 07, 2008 – Comments (3) | RELATED TICKERS: SPY , XLF

The Center for Responsible Lending has a nice piece of what went wrong at Indy Mac.  Well Researched and well done. It is a PDF Page.  Check it out here.    [more]

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2

Wimbledon Final

July 07, 2008 – Comments (0)

I am not sure how many of you are tennis fans but my little brother plays and follows it intensely.  I went to an early round of wimbledon when I was in london the other week.  The Final Match was one of the best tennis matches I have ever seen.  [more]

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6

FT trusting Humans

July 07, 2008 – Comments (1) | RELATED TICKERS: MER , MS , GS

There was a great article in the Financial times I came across when I was traveling the other week.  I sometimes find that the stuff in the back of the paper is great stuff to save.  [more]

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4

Barrons and CALM

July 07, 2008 – Comments (3) | RELATED TICKERS: CALM

I was scanning through some of my caps picks today and looked at Cal-Main Foods (Ticker CALM) Up about 2%.  I remember seeing the piece on Barrons in it yesterday, guess a lot of people really do read Barrons.  [more]

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11

Inflation

July 06, 2008 – Comments (2) | RELATED TICKERS: FXF , DBC , SPY

I love listening to Will Rogers talk about innovation.... "There have been 3 great innovations since the beginning of time, fire the wheel and central banking...." There are many ways to approach inflation, some see it is as good, others see it as bad, I'm with Milton Friendman, not Bill Phillips..... From a psychological standpoint The Economist gets it right "High and unstable inflation makes it impossible to achieve the feats of co-ordination that underlie a successful economy. If you do not know the purchasing power a year or two hence you cannot make plans and contracts over such spans of time." (Economist, October, 1999) Keynes has a nice quote about inflation: "As the inflation processed and the real value of the currency fluctuates widely from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery." This quote made me think about a lot of things, most specifically securitization, personally I think securitization is a bad idea, my main point being that it distorts the relationship between debtors and creditors, which are the "ultimate foundation" of capitalism. A side note but, If you read about China, they way agreements approached (or contracts as some people like to say) in their society is very interesting. Inflation has many effects, fundamentally I believe inflation is always bad, Inflation distorts price signals, which lead to a misallocation of resources, uncertainty is created due to differences in average and relative prices, which usually leads to reduced investment. All and all what do I know, I'm just a 19 year old kid..... in long run were all screwed.....  [more]

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9

Random Thoughts

July 04, 2008 – Comments (5) | RELATED TICKERS: SPY , FXF , DBC

I just posted this in my other blog but thought I would post it here.  [more]

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6

Italy is Corrupt.

July 03, 2008 – Comments (3)

Be careful if you go to italy.  Rule #1 do not book things through your concierge, they are corrupt.  While I was here we hired a driver all day for 2 days, to show us sites and take us out to a vineyard.  Luckily we got an honest guy.  He explained how they rip people off at hotels, say you call a conceriage to book a driver for a full day.  The conceriage calls around and gets quotes, the averge is about 390 Euro's for 8 hours, well the conceriage books one that cost 270 Euro's, then when you pay the bill at your hotel you are charged a markup in my case they tried to charge me 390 when really the driver's company was charging 270....  The conceriage pockets the extra 120  Luckily I did not fall victim to this, because I was informed, I paid 270 for each day and said f**k you, you corrupt Piece of S**t to the conceriage.....  I'm staying in a time share club thing so I didn't have to register a credit card with my hotel, it will be interesting to see what the hotel does......  [more]

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6

Theory of the Firm and Economic Moats

July 01, 2008 – Comments (3)

Lately I have been reading about theory of the firm (it is actually a number of theories) and thinking about how to apply it to investment analysis.  I like having some philosophical analysis because it helps paint the picture along with the fundamentals.  Theory of the firm is a way of describing the way in which a firm exist's in the market.  Or as wikipedia says it seeks to answer 3 questions.  [more]

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