Curiosity Over Pride (FYI: To comment, send an e-mail to scifidink@gmail.com)

Thursday, May 6, 2010

Krugman thinks Greece will withdraw from the Euro anyway

The fact he even thinks it means others are thinking it too...

The first rule of disasters is don't panic.

The second rule of disasters is if you are going to panic, you better be the first to do so.

Britain is not in much better shape and with a public sector that now accounts for more than 52% GDP, Britain has issues.

This is quite interesting in light of the following report from the UK's own NHS, health access disparities have significantly increased in the UK despite equality being a primary goal of the NHS.

So what will happen to US banks?

Have they sufficiently looted the US Treasury to withstand a collapse of US treasury funding?

I guess the better question to ask is: where are the stable war-chests?

This is getting scary. Maybe Edwardo is correct and we should all keep some physical bullion in a can at home.

... My wife will never agree to this btw.

20 comments:

Thai said...

Comments

Dink said...

"This is getting scary. Maybe Edwardo is correct and we should all keep some physical bullion in a can at home.

Seriously scary. But I still maintain that I don't want precious metals. I want machines that will make potable water and connect me to the intertubes. And, of course, yurts.

"... My wife will never agree to this btw."

I'm in the same boat. Being married to a reasonable person has so far been a blessing (nearly two decades). Of course, I can imagine a scenario where the US Treasury implodes and zombies roam the night, but we still pay our property taxes and mow the lawn. Its the right thing to do. We are civilized people dammit! :)

JP said...

We are in the middle of a "Fourth Turning/Crisis Era/K-Cycle Winter."

Private debt is going to continue to be destroyed.

Equities are going to continue through the current secular bear market. We may still be in a cyclical bull market. Or we may not.

The banks have enough capital to survive.

Everyone is going to continue to buy U.S. debt for now and yields will continue to decline, for now.

Gold is going to remain in a secular bull market and eventually have a blow off spike, as it always does.

I'm finally making back my losses from 2009, so I am content.

Dr John said...
This comment has been removed by the author.
Dr John said...

I am buying $50 gold Eagles. 1oz gold each. 1 a week. Problem is I just started a few months ago. I hope I lose big on them. That will mean I will do well with the rest of my money. I worry a lot about all of this. Thai can you give me some Xanax if I drive to your ER?

Thai said...

I really should try investing again but I so much prefer the Rubic's Cube mental masturbation of the whole thing.

I have enough worry about other people's health every day.

People trust me so I will trust (some) people.

I often wonder what my adviser is doing but I think all of us can agree without even asking that he probably wonders the same thing as well.

Everyone have a wonderful weekend

Dr John said...

I have said this before Thai but your knowledge and interest of finance seems far beyond anyone I know in everyday life at least on a macroeconomics but I certainly can understand wanting to divest yourself of the whole thing.

I have had bad experiences with money managers and they have turned out to be mostly salesman. If I go down it is at least at my own hand.

Suicide can be a noble gesture after all I guess.

Thai said...

I like my manager.

He has made some good calls.He has made some terrible bad calls. He does have a system. He is bright and seems VERY ethical.

My money is invested in the exact same portfolio he has his own money in (only he makes the additional 1% off mine)

He thinks about this stuff all day and I'm thrilled to give him the 1% to make the tough calls.

I read about it for hobby/fun like others watch sports (which means I enjoy it and if I was serious, I might stop enjoying it which seems far more tragic to me).

Everyone needs a hobby

Be well

JP said...

Thai says:

"I read about it for hobby/fun like others watch sports (which means I enjoy it and if I was serious, I might stop enjoying it which seems far more tragic to me).

Everyone needs a hobby."

I suppose that investospeculating is pretty much my only hobby, other than commenting on this blog and a few others.

I got into it when I was at Duke when my roomate was dating the sister of the President of Excite, who made $250 million during the dot com days. She was trying to get her brother to give Stanford $1 million so that they would let her into law school there.

Mostly, learning about it made me feel like a catastrophic failure at the time (the dot-com boom), because I realized that I would never make it to that level, being that I had $100,000 in debt and other people had insta-millions.

Then I realized the level of fraud endemic to the entire financial system and the essentially random allocation of resources during manias.

So, I figured out how to market time, essentially based on the fraud, and, viola, at least I can make money in market crash-type events.

The best year I had recently was 2008.

2010 is going well for me so far.

2009 just confused me, and I had all of my money with John Hussman from April on, who kept everything hedged, with a slow loss as the rally continued.

I haven't really been able to make much money since 2008 until April of this year to the present.

If I can't apply what I learn, what's the fun in it? ;)

Thai said...

Well I'm glad you joined us.

Where do you see the best investments this year?

Besides 30 year treasuries and gold, and I guess inverse ETFs (shorting) if you've got bigger kahunas than I (kudos for calling that), do you see anywhere else?

Thai said...

"Then I realized the level of fraud endemic to the entire financial system and the essentially random allocation of resources during manias."

This is the biggest tragedy

Of course I guess nothing good ever happened were it not for speculative irrational exuberance so it is a kind of catch-22.

Edwardo was commenting the other day how he kind of agreed with the communists that there is tremendous mis-allocation of resources and I have to say I really do agree with him.

Yet implicit in this is always the issue of viewpoint/morality since it is always relative to any particular viewpoint/morality.

Thai said...

By the way, do you have a good link on Fourth Turning/Crisis Era/K-Cycle Winters besides Generational Dynamics?

JP said...

I'm officially confused as to market direction again. Kind of like I was in all of 2009.

Treasury yields look like they have room to move up again and gold looks like it has room to move down.

The problem is that everything here depends on random panicky injections of liquidiy into European markets.

The next good seasonal trade is likely to be going long equities in 4Q of this year, looking to catch the "Presidential Cycle Year 3" wave where liquidity is plentiful and the markets go up regardless of the fundamentals. That assumes that liquidity is plentiful, however.

There's an entire chat board dedicated to generational theroy over at www.fourthturning.com

Mike Alexander has a number of articles on the longwave theories out on the Internet. He posts as MikeBert over at www.fourturning.com. He's also got a number of his old articles posted over at www.safehaven.com.

JP said...

Well, Thai, your investment advisor is much better than me.

I've only returned 3% annualized over the past 5 years. Looks like your advisor is returning a little over 5%. (Agressive portfolio)

2005 was the last time I was 100% equities. Then I basically went to cash, and then I started buying some short funds in March 2007 until the government started messing with the short selling. I wasn't short the real crash in 2008, since I had been driven out of the short fund by the government.

These massive federal/EU interventions keep destroying my ability to tell what is going to happen going forward.

Although I'm used to them now.

I suppose that this recent intervention will make gold go up again.

Thai said...

Steve Cucchiaro (Windward's founder) has done very well for my family and me and for that I'm very grateful.

Oddly enough, December 2005 was when I moved to Windward. And I was in the aggressive portfolio. But in March 2009 I move most of my money into an "experimental portfolio" Windward created specifically with deflation in mind.

Unlike the other portfolios, which now have quite a bit of money in them, I think there are only a few people in this portfolio (about 1/2 dozen). I think it's called the Windward Global Opportunities Portfolio (but what's in a name?) and last I checked, Steve had about 1/3 of his own personal net worth in it (he moved some of his money from this Aggressive portfolio).

I figure we both sink together if it flops. Who knows?

Anyway, the largest allocation (41%) is to equities (about 60% foreign/40% domestic) and hard assets come in second at 28% of the portfolio which includes the biggest position in the entire portfolio: DBC (21-22% of the portfolio). Unfortunately DBC has been hammered in this recent correction and is now down 6% YTD.

So I'm up 27.5% cumulative since 12/15/2005 (which is about 4%/year) and the portfolio is up 2% YTD '10.

S&P is up 4% YTD as one of my benchmarks so I'm still happy as the portfolios are designed to be very stable not bounce around nearly so much which let's me sleep at night (and poke fun at other investors who think they have this thing all figured out).

... Although they do have a 1% advantage on me and long term that is a hard tailwind to overcome.

Steve has told me on many occasions that the alpha for the entire financial services industry is quite negative (as you would expect) so I am taking my chances.

Thai said...

Re: "The problem is that everything here depends on random panicky injections of liquidity into European markets."

I think this is deliberate (I mean the random nature) of the injections.

At least the random nature to you and I.

But I do not think they are so random to people like Hell.

Thai said...

Here is a Barron's Article on Windward in.pdf format

JP said...

Thai says:

"So I'm up 27.5% cumulative since 12/15/2005 (which is about 4%/year) and the portfolio is up 2% YTD '10.

S&P is up 4% YTD as one of my benchmarks so I'm still happy as the portfolios are designed to be very stable not bounce around nearly so much which let's me sleep at night (and poke fun at other investors who think they have this thing all figured out)."

Trading in this market is like trying to ride a bucking bronco.

I've picked a few core funds at the moment that have shown stability, and which I understand. I tend to trade around in them. It's not so much "trading", however, as it is changing asset allocation. I normally hold for significant periods of time (6 months and more), but I have no problems liquidating when I get confused as to the market action/market direction.


I use:
Hussman Strageic Growth Fund
Hussman Total Return Fund
Permanent Portfolio

as my core holdings.

When I want to short, I buy the Grizzly Short Fund

The problem going forward is that equities are basically priced to return nothin after inflation for the next 7 years and bond yields are in the gutter.

No one is going to really make any money for the next several years and lots of traders are going to get burned.

I certainly don't have time to day trade, but I understand enough and have learned enough to see a really good swing trade, like we just experienced in equities.

It's the massive liqduity injections that thoroughly confuse me.

JP said...

I just looked at my performance.

My most recent positive periods were from

May 2008 through April 2009.

and

January 2010 - present.

So it took me from May 2009 to the end of the year to figure out what was happening enough to reposition myself for gains.

Thai said...

By the way, I don't trade stocks as I said but for family reasons I have been following a company called CREE for about 15 years. My father used to work in the Semiconductor Equipment Manufacturer Industry and knew a number of the people who founded the company.

He thought they would be huge one day and as such I owned some in 1998-1999 and did pretty well a before the NASDAQ crashed in 2000 (I got out in time).

I have been thinking about owning it again as it looks like they may actually seriously make it into the incandescent bulb space after all.

Anyway, you might look into it

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