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August 2008

Recs

8

The Real Deal with GDP growth

August 28, 2008 – Comments (1)

Most of ya'll have probably heard (yes I said ya'll).  The GDP growth number of 3.3% ,(1) which was jaw dropping to me.  Stefan Karlsson had a nice piece on it.  Link here (2).  [more]

Recs

8

MBIA sketchballs?

August 27, 2008 – Comments (8) | RELATED TICKERS: MBI

Am I the only one who is skeptical of MBIA?  I posted about it in my blog. (here)

 

http://thevolatilitysoma.blogspot.com/2008/08/puts-on-mbia.html 

Recs

4

FDIC report

August 26, 2008 – Comments (2)

These reports just make me all the more bearish...

 

http://www4.fdic.gov/qbp/2008jun/qbp.pdf 

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5

Time to go long Small Regional banks?

August 26, 2008 – Comments (5) | RELATED TICKERS: NCC.DL , FITB , XLF

I like this guys article although I have a different spin. Most of the small banks that people are looking to go long are ones that are in trouble (I'll get to this in a second) there are a handful of the small regionals that held loans on their books, didn't go insane with HELOC lending and are a small SnL paying a dividend chugging along, I'm talking banks that probably won't rank in the top profitability wise because they have liquid balance sheets. (e.g. assets that are short term liquid instruments and liabilities that are short term liquid instruments). Usually a more liquid balance sheet equates to less profitability. Look at the banks in ok financial shapes share prices (there are not many of em out there) most of their share prices have been stagnate and have not declined 75% or from their all time high's. So why are you even looking, its gonna be hard to find a margin of safety here. I wouldn't touch banks until home values bottom out, so you can see where people stand equity wise and accurately assess a banks balance sheet. Ok you see lets look at NCC, FITB, those ones in trouble, yeah to put a value you better be a real expert, in bankruptcy court, and in the banking industry, which I am not and I am fine sitting on the sidelines. Most people that talk about going long banks are not experts.  [more]

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4

It's never different this time.

August 26, 2008 – Comments (0) | RELATED TICKERS: SPY , QQQ , XLF

Or as Stat's Geek Says, you can't have it both ways.  [more]

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5

A Respone to TMFDeej.

August 24, 2008 – Comments (2)

 I had been thinking about your post about Soro's Deej, and it led me to another conclusion about soro's.    [more]

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2

David Walker and Why I Won't own dollars

August 24, 2008 – Comments (0)

I went to see the world premier of I.O.U.S.A. on thursday night. The main reason I went was to see the commentary afterwards by Buffett, David Walker, Peter Peterson and some others which was outstanding. Some very sharp people. It is really the first time I disagreed with Buffett. After this I have become a big fan of david walker. I highly reccomend you read the transcript from afterwards here. I have been confronted with something for a very long time. Do I go completely non USD, for the longer term. After doing a lot of thinking on this subject I have slowly been selling my dollars and buying some other currencies or investing in ETF's denominated in those currencies. I plan to get to a point to where I don't hold any dollars in my portfolio.  To have a hard currency we need a balanced budget. My thinking concludes: That in order to have a fundamental change in our fiscal policy and balance the budget there has to be pressure put on politicians the way david walker describes it:

"Now, what we have to do is to recognize and reward elected officials, Democrat, Republican, Independent, whatever, who tell the truth and who stand up and try to help make touch choices sooner rather than later to make sure that America's future is better than its past and reject the BS and the nothing types of solutions and, you know, platitudes that we hear from so many politicians today. The three most powerful words in the constitution are the first three. And we're gonna solve-- we can solve any problem in this country once, we the people wake up and demand that our elected officials start making tough choices and hold them accountable if they don't. The pain associated with doing nothing must be greater than the pain associated with doing something."(Honestly I could not have said it better.)

But back to the subject, from what I observe as a college student, I really don't have faith in the American people to stand up until they really feel the pain from being screwed by a collapsing currency. Once I see a fundamental change in washington to take place I will think about Owning dollars in my portfolio, until then, forget it.  [more]

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6

Investment Biker

August 22, 2008 – Comments (6) | RELATED TICKERS: DBO , DBC , DBA

I just got finished with Jim Rogers book, Investment biker, a book I would highly recommend to just about anybody.  Two things that he said really stuck out to me:  [more]

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3

I.O.U.S.A.

August 22, 2008 – Comments (6)

Did anybody go check out the world premier last night? It was a well done documentary, pretty much like I expected it except I expected it to be a lot like Gores "an Inconvenient truth" but I.O.U.S.A. focused on the fiscal problem we are facing and not on a political affiliation or what you believe personally.  I found the commentary afterwards pretty interesting especially the comments by David Walker. 

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10

Back to Einhorn

August 18, 2008 – Comments (1) | RELATED TICKERS: ALD

Somebody that I pay a lot of attention to and look up too a lot is David Einhorn. He made a speech last october that still sticks out me. I decided to repost it. He hits the nail right on the head with this one..

"What strikes me the most about the recent credit market crisis is how fast the world is 
trying to go back to business as usual. In my view, the crisis wasn’t an accident. We didn’t 
get unlucky. The crisis came because there have been a lot of bad practices and a lot of bad 
ideas. Securitization is a mediocre idea. Re-securitization of already securitized assets into a 
CDO is a bad idea. Re-securitization of CDOs into CDO-squared is a really bad idea. So is 
funding a pool of long-term illiquid assets with very short-term funding in the so called asset 
backed commercial paper market. And as I will get to in a moment, it is a horrendous idea to 
delegate most of the responsibility for assessing credit risk to a group of credit rating 
agencies, paid for by the issuers rather than the buyers of bonds. 
This crisis came for exactly the right reason. There is a big flaw in the structure of our 
credit markets. The bad structure induced lenders to take imprudent risks and make 
imprudent loans, which, of course led to losses. What is unique about this crisis compared to 
others is that the losses are in illiquid, opaque structures scattered around the world. Why 
should anyone be surprised? We got what we deserved."  [more]

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4

What I've been Reading

August 15, 2008 – Comments (3)

Just to give you all an update.  I do this because I would rather post one link that 15 lol.  [more]

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6

The Future is Frugality

August 13, 2008 – Comments (4)

If you have not read this post from Mish I highly recommend it.  It is an outstanding work titled, the future is frugality.

 

http://globaleconomicanalysis.blogspot.com/2008/08/future-is-frugality.html 

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7

Why I don't believe in deflation

August 13, 2008 – Comments (7) | RELATED TICKERS: FNMA , FMCC , SPY

Prelude:  [more]

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4

Jeff Matthews on Buybacks

August 12, 2008 – Comments (0)

I looked this post up again it is so funny I can't get over it.  Everytime I read it I laugh.  The link is here scroll down to the august 8th post for 1007.  [more]

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4

Basic Volatility

August 11, 2008 – Comments (0)

Being a math / econ major I have been reviewing some of my math, for classes in the fall. Just thought I would share some with you all. 
I also have been updating some of my volatility models. In a nutshell 

"Volatility is a statistical measure of flucuations in the price of a share, a market index, or the value of any asset."

It is generally taken to be a proxy for risk, though I disagree with this and can debate it for hours. Volatility equates to the percentage standard deviation of the price of a stock, index or other asset. If you are not framiliar with standard deviation it is a statistical term, it measures the degree of disperson from a "line of best fit" calcualted using regression analysis.

To find it you take the arithmatic average of a series of numbers and then subtract each number fro mthe average to give the "distance" from it. Then square the differences, add up the rest, divide this by the total number of values you have minus one. Take the square root of that and there you are. Basically It looks like this.

SD^2 = sum (X - Xa)^2 / n-1

SD = standard deviation
X = your number (eg. share price)
Xa = average of n numbers ( this is where things can get tricky)

your vol. % is then.

V = SD x 100 / Xa

You can use excel to calculate these. Personally I use time series analysis in some of my models. But as a rule of thumb the time period you use should be similar to the maximum time you are likely to hold the asset. 

Be warned you can run into trouble when basing some of your values on garbage, # 1 rule in quantiative finance is garbabge in garbage out. I have been reviewing this model and what it really comes down to is your estimates for variables, that is where I am running into trouble. For this I decided to go back to basics, Delta and Gamma, this complicated things further.  More on this later.  [more]

Recs

4

Conflict in Georgia

August 08, 2008 – Comments (8) | RELATED TICKERS: RSX

Just posted some stuff about in my blog here. Of course the first thing I think is how is this going to affect the markets on monday??

 

http://thevolatilitysoma.blogspot.com/2008/08/conflict-in-georgia.html 

Recs

4

Consulting?

August 06, 2008 – Comments (2) | RELATED TICKERS: HIL

A company that I really like right now is Hill International.  I am not going to divulge much of the details but picked it to outperform awhile ago.  Take a look at what they do I see demand for their services growing in this environment......

Recs

3

The Real Deal with Oil

August 02, 2008 – Comments (0) | RELATED TICKERS: USO

I just posted something about here.

 

http://thevolatilitysoma.blogspot.com/2008/08/real-deal-with-oil.html

 

I tried to stick to the facts in this one. 

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