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starbucks4ever (97.24)

October 2008

Recs

1

Need the bond bubble to burst

October 30, 2008 – Comments (0)

As long as enough fools are willing to buy bonds, the housing and stock markets are reinflatable. That's why I'm saying we're at a bifurcation point. We can't crash equities unless housing goes lower, and we can't make it go lower unless some of the fools start questioning the wisdom of lending  dollars to Sammie at negative real interest rates. Too bad we have so many fools, especially abroad.

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4

It's not 1998

October 27, 2008 – Comments (5)

With all respect to S&P's downgrading (which they amply deserve: after all, they ARE right about 50% of the time :)), I suspect the rumors of Russia's default have been slightly exaggerated.  [more]

Recs

1

The next bubble to burst: Option/ETF

October 22, 2008 – Comments (2)

Reviewing my performance thus fur, I was forced to come to an unlikely conclusion: the only way I can earn a cent in this market is to buy S&P puts and ultrashorts. The remarkable part is that buying puts and ultrashorts seems to work under any conditions. Timing does not matter. Bad entry point? Don't worry, 3-4 trading days will justify your decision anyway. Your portfolio is down 30%? Never mind, double down, and in 2 days it will shine again. In other words, any fool can make money. Which means we're in a bubble.  [more]

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6

Yet another rich parasite goes begging

October 20, 2008 – Comments (4)

California asking for a government handout is like Warren Buffett, Jr. signing up for public assistance.  [more]

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3

This was the bottom - sort of

October 08, 2008 – Comments (7)

As I kept pointing out, US stocks are not entirely worthless. Barring a desintegration of the mortgage market (which won't happen without help from the outside), 9200 should be it. This is 35% below the maximum level, and every top fool has capitulated and announced that this market has no bottom. Now, that was it. The Chinese Central bank can still spoil the party, but perennial stupidity of US bondholders seems to be a reasonably safe assumtion. Let us pray for the Bank of China to come to its senses, dump its bonds and sink the mortgage market, but let us also buy this bottom, very cautiously, and with no margin. The danger of missing the next rally is too great, and we don't know if the bear cavalry from Bejging will ever arrive.   [more]

Recs

5

If you dump me, I will float and you will drown, said the Scorpion to the Frog

October 08, 2008 – Comments (0)

Americans like to think that they're driving the Chinese growth. Hence, the logic goes, it's a positive-sum game, what's good for America is good for China, and the Chinese have the responsibility to make sure that we succeed. To that end, they should be supporting our dollar, subsidizing our mortgage rates, and shipping to us a ton of their already cheap goods essentially for free. True, we pay them with dollars coming off from our printing press, and all our expence is the price of paper and ink, and we know it, and they know it, and we know that they know, but they should still keep the music playing because, the logic goes, where else will they find consumers willing to consume so many consumer goods?  [more]

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7

It's closer to the bottom, but China holds the key to the puzzle

October 06, 2008 – Comments (1)

For the first time in many years, US stock valuation are begining to look attractive. They are not a screaming buy yet, but all these real companies like DE, CAT, LMT, RTN, ISRG, MSFT must be worth something. In the long run, they should do fine.    [more]

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3

The next Bear Sterns will come from China

October 06, 2008 – Comments (0)

Why you should invest in subprime loans:  [more]

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4

Buffett, shmuffett

October 04, 2008 – Comments (5)

Berkshire's pop is driven by the psychological effect of Goldman and GE acquisitions, plus short-covering, rather than by fundamentals. The gain in market cap has far exceeded the actual potential gains on Baffett's investment.  [more]

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7

The real reason why we are going to approve the bailout

October 02, 2008 – Comments (0)

Too many people dressed in suits and ties depend on it. Buffett has made an $8 billion bet that the bailout will pass. Do we want to make the greatest man in the history of mankind (sarcasm intended) to look like a fool? Goldman and Sachs stand to make billions. Can we let Paulson's employer lose this great opportunity? GE and other financials are going to go up. Any company will go up when it gets to keep the profits and to put losses on the government's balance sheet. And with the companies up goes the wealth of shareholders. Of course the business America is all for it. And so should you be, provided you happen to be in the right place at the right time and own the right kind of stuff, in the right quantity. It's strictly the matter of quantity. Inflation? That's too bad. Portfolio gains? That's very good. Missed your chance to buy stocks on the cheap? That's not so good. Who benefits? Why, the one who's done with accumulation of shares and is about to get into the distribution mode. Who pays with opportunity costs? The one who's still in the accumulation mode. Who  pays the bill? The one who owns little or no shares. The wealth trickles up. The bailout rhethoric trickles down. The Congress pays lip service to free enterprise, then approves the bailout like a monk who observes his fast by crossing his meat and calling it fish. The lower classes hope for improved affordability of all things bought with credit. Sellers react by rising the ask prices. Producers look forward to the new liquidity forthcoming from consumers and nervously anticipate a higher bill for their input costs. Owners of businesses with moats smile shyly and count their gains. Bankers prepare to write more loans. Financial specialists update their models, in which new loans provide borrowers with enough money to repay the old loans. Ratings agencies prepare their explanations of why new loans never have to be paid back because they get refinanced with new loans, which then get refinanced with still newer loans. Lobbyists prepare to put the last tranche of loans on the government's balance sheet. Chinese officials report to their government how they prevented their loans to the US from going sour by writing still more loans to the US. Gold bugs are digging holes in the ground, congratulating themselves with how they are smarter than everyone else. Everybody is happy.   [more]

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5

Who needs credit and why?

October 02, 2008 – Comments (0)

As tape worms are doing their best to brainwash you into believing that you can't live without tape worms, that is, as Paulson and his friends are trying to convince you that our economy will perish without financiers, let me pose the following question.  [more]

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4

More ramblings about the bailout.

October 01, 2008 – Comments (0)

How many times have heard this line?  [more]

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