Speculation – Page 12 – The Aleph Blog

Sorted Weekly Tweets

Posted on 2 February 2013 by David Merkel

God gave proverbs to the Jews; Epigrams were of the Romans. Now we do the same through tweets, why do I sense bad omens? #badpoetry Feb 02, 2013

Credit

One of Warren Buffett’s Greatest Trades http://t.co/wnU2g1z4 Comparing Buffett winding up his partnership to lack of distressed opps now $$ Feb 01, 2013
Be Very Afraid When Fear Disappears From Markets http://t.co/t8wKalsQ Low implied vols, low yields, High Q-ratio & CAPE10 $$ Feb 01, 2013
How a $91 million loan on the Marlins ballpark will cost Miami-Dade $1.2B http://t.co/F2u2rZbP Poway-style debt in Florida $$ cc @munilass Jan 31, 2013
Big, Rich, and Wobbly: Wall Street Banks Are Still Sicker Than You Think http://t.co/irKmQqLy Mohamed A. El-Erian explains the problems $$ Jan 30, 2013
In US Debt We Trust- The Transfer from Private to Public Debt http://t.co/2nq1pGCn Total debt hasn’t declined much from peak, gov debt up $$ Jan 30, 2013
Chavez?s 681% Returns Mean Socialism Buoys Goldman http://t.co/IYPD6fEJ Give Chavez credit, at least his country paid what they owed $$ Jan 30, 2013
4 Reasons the Junk Bond Rally Will Continue in 2013 http://t.co/r7SF05NJ Check my comments. I like this site, but disagree w/the thesis $$ Jan 30, 2013
Pimco to DoubleLine Leveraging as Yields Retreat http://t.co/LBUsmfQ6 Here comes leverage; PIMCO and Doubleline gear up to get returns $$ Jan 30, 2013
US Not So High Yield Bonds : “It’s Starting To Feel A Lot Like 2007” http://t.co/PZ0dOyzC More like 2005-6, we need more leverage 4 2007 $$ Jan 30, 2013
The US High-Yield Corporate Bond Conundrum http://t.co/w0wlsn7s & this leads to buybacks & M&A. It all depends on how aggressive it gets $$ Jan 30, 2013
Investors Pivot Back to Banks http://t.co/ixvSSGf8 Bank bonds are likely safe, the stocks r another matter $$ Jan 30, 2013
Too Soon to Celebrate for Europe’s Banks http://t.co/cKT6OXli Let them deal with the mountains of bad debt & restructure them $$ Jan 30, 2013
Can anyone tell me why HY loan defaults are up, while HY bond defaults are down? http://t.co/gxfVA5za Usually they move in tandem $$ Jan 29, 2013
And very few LP CEFs at discounts, which is also true for HY bond CEFs. Preferred funds look a little more promising, but still pricey $$ Jan 29, 2013
Looking at bank floating rate closed end funds, a few r at high prems 2 NAV, such that if u bot the trust 2 liquidate would get 0% return $$ Jan 29, 2013

Companies

Newell Rubbermaid Goes After $127B Health Market http://t.co/lcarSSmS Interesting 2c consumer prods comps go after the healthcare mkt $$ Feb 01, 2013
Chevron Realigns Its Gas and Midstream Organization http://t.co/u1WoIl2Y Sort of thing u do, prior to splitting co into 2 | FD: + $CVX $$ Jan 31, 2013
Good 4 refiners $$ http://t.co/q3lVpoI5 US crude oil inventories are well above the upper limit of the average range for this time of year Jan 31, 2013
Container Shipping Faces Merger Urge as Money Dries Up http://t.co/7Kur08t6 Capital-intensive biz is tough when financing not plentiful $$ Jan 31, 2013
Oh, Full disclosure two tweets ago, I am long Valero, $VLO Jan 30, 2013
$ACE ?s Greenberg Asks ?Why R We Doing Guidance?? http://t.co/dKtvopDX Evan has impressed me after leaving $AIG | Chip off the ol block $$ Jan 30, 2013
Valero Looking at Rail, Barges to Ship Canadian Crude to Gulf http://t.co/diLQGBZC Cheap oil in middle of N. America wants2get2the Gulf $$ Jan 30, 2013
Singer Chases Icahn With Stake in Cheapest Oil Company Hess http://t.co/Hk4ynp6q Worth reading 2 understand activist investors $$ Jan 30, 2013
Fund Outflows? Blame the ‘Cliff’ http://t.co/QOq13Jn8 $TROW is a good firm. If anyone should not get fund outflows, they would b one $$ Jan 30, 2013
Fannie To Allow Walkaways by On-Time Borrowers http://t.co/Nnx00VfR & so taxpayers will pick up the losses for walkaways on FNMA mtges $$ Jan 30, 2013
Software Firms Find Tax Advantages http://t.co/5G2QXmmD A good transfer-pricing accountant is worth his weight in gold. $$ Jan 30, 2013
Apple Reverse Convertibles: How Brokerage Firms Pervert Everything http://t.co/4ugTpgTe Don’t buy structured notes. Listen2 @reformedbroker Jan 29, 2013
How Apple’s Fall Bit Bondholders, Too http://t.co/60fmfhle Structured notes: Wall St. gives u a small increase in yield & lots more risk $$ Jan 27, 2013

Central Banking

Japan’s lessons for America’s budget warriors http://t.co/ftUKEJPa Think this might be the start of unsterilized monetary policy globally $$ Feb 01, 2013
What finally convinced me to sell my long bonds 30 bps lower than now was market’s reaction to the Fed in December. http://t.co/vQONtgBC $$ Feb 01, 2013
The Fed?s Actions Are Counterproductive http://t.co/THDwyijc If printing $$ or issuing credit could bring prosperity, it would be here now Jan 31, 2013
2 early to celebrate ECB’s balance sheet reduction http://t.co/srQiQJ4Q @soberlook right again: off-Bal Sheet gtees dwarf BS improvement $$ Jan 31, 2013
Fed Policy Is a Drag on the Economy http://t.co/T3Wx0ezh I have argued the same here: http://t.co/l7MyjNLM John Taylor 4 Fed Chairman $$ Jan 30, 2013
Anyone else notice that all FOMC meetings are now 2 days long? Gives them more time to come up with creative errors in monetary policy $$ Jan 30, 2013
The Ghosts of 1994 http://t.co/Hdf2UFLi 2 things are different now: Fed was hawkish in ’94, few expected prepays 2 decrease so much then $$ Jan 30, 2013
What Happened To Markets The Last 15 Times The Fed Tightened… http://t.co/zq4TRGxg Long article, but instructive on tightenings $$ Jan 30, 2013
With Each Central Bank Move, Nations Are Impoverished More http://t.co/70lBSDeQ Combined actions of Central banks create global infation $$ Jan 30, 2013
USD-JPY: Short Term Reversal? – Hara-kiri http://t.co/K9N3Viom Japan leads the race to the bottom. Will they stop sterilizing asset buys? $$ Jan 30, 2013
There are two things lacking that were present in 1994: a hawkish Fed, and expectations that RMBS prepays… http://t.co/DHekaqIN Jan 29, 2013
The Unintended Consequences Of The Greatest Economic Experiment http://t.co/0hEH3VS1 The Fed won’t admit it, but it is flying blind $$ Jan 28, 2013

Rest of the World

Greek Companies Test Bond Waters as Exit Risks Fade http://t.co/fOgUn41S I guess every dog has its day. Sleep w/dogs, wake up w/fleas $$ Feb 01, 2013
Best Stock Pickers Trawl Frontier Markets as US Funds Lose http://t.co/yfAKqI7t When mgrs seek unusual venues 4 investing, risk is up $$ Feb 01, 2013
Deutsche Bank Improved Its Capital Ratio By Changing Risk Measures http://t.co/jWTc73pR Risk mgmt is easy when you can alter standards $$ Feb 01, 2013
Spain’s crisis strategy under fire as economy buckles again http://t.co/Qeaeotx0 The ECB?s Mario Draghi is ?itching? 2buy Club Med bonds $$ Jan 31, 2013
Japan?s Government Proposes First Spending Cut in 7 Years http://t.co/DHpOH3II The journey to fiscal sanity begins w/a single cut $$ Jan 30, 2013
Canadian Mega Housing Bubble http://t.co/GwbpWMGs Quietly, the average Canadian HH has accumulated more debt than US & UK HHs. Who knew? $$ Jan 30, 2013
Chinese currency 2 loosen exchange rate: business chief http://t.co/q6zNLSGh Easier said than done; is China willing 2 absorb volatility $$ Jan 30, 2013
Scandal of Italy’s Monte Paschi means questions for Draghi http://t.co/mufcYFkI Had some reg oversight over Monte dei Paschi solvency $$ Jan 30, 2013
The Super Bowl, Chicken Wings and the FED – a Risky Mix ? http://t.co/EDCV958k The Fed has no idea what it is doing, the same as in 2007 $$ Jan 30, 2013
Why We?re at the End of Cheap China http://t.co/kSW2tbWG Argues there is more consumption going on in China, hidden in coprporate perks $$ Jan 26, 2013
The Biggest Housing Bubble in the World Is in … Canada? http://t.co/GgUfyM74 Interesting 2c France, Sweden, HK, & Singapore on the list $$ Jan 26, 2013

Speculation

Forget the ‘Rotation’, Here’s the Source of the Money Pouring Into Stocks http://t.co/tn4Dxs39 ~$30B of special dividends get reinvested $$ Feb 01, 2013
ML Fund Managers Survey – Jan 2013 http://t.co/GR19wML6 Professionals r hedging less equity risk, flexible capital increasingly committed $$ Feb 01, 2013
Bill Gross: Be very afraid of the markets http://t.co/k7Ouhax3 Favors: Currencies of creditworthy countries, short bonds, gold, HQ debts $$ Jan 31, 2013
Whan financial institutions start buying gold as an inflation hedge, only 2 possibilities remain: a top in gold prices, or hyperinflation $$ Jan 30, 2013
SP500 Earnings Optimisim : But let’s revise them lower! http://t.co/bPXqFSos We should expect actual earnings 2 come in below projections $$ Jan 30, 2013
Upside Risks http://t.co/AuT58IEC @reformedbroker gives us the bull’s case; I’m agnostic on market direction; think long yields will rise $$ Jan 29, 2013

Market Dynamics

Goodwill Is Bad News for US Assets http://t.co/8ctt5UeQ Not all goodwill is bad; if it produces extra cash deserves 2b treated as asset $$ Feb 01, 2013
It’s the Stocks You Don’t Own That Matter http://t.co/M3pDaeFl @herbgreenberg talks about new Forensic Accounting ETF $FLAG | Good idea $$ Jan 31, 2013
Your ETF Owns Too Little Amazon, &Other Index Quirks http://t.co/UOZINiEc Float-weighting underweights ?owner-operators? which do better $$ Jan 31, 2013
Asset Allocation & Rebalancing: (Still) Competitive Together http://t.co/FrLCygAY Rebalancing global value-weighted index: good strategy $$ Jan 31, 2013

US Economics

US GDP Q4 2012 Weaker with a Strong Mix http://t.co/ZmVlZZ52 In Q3, few talked about the weak mix, but yes, result better than headline # $$ Jan 31, 2013
U.S. Economy Unexpectedly Contracts in Fourth Quarter http://t.co/dmKSsHlf After getting upside surprises, shouldn’t we get one down? $$ Jan 30, 2013

US Politics

US government warns of hack threat 2 network gear http://t.co/lZvMgyOe Disable feature known as Universal Plug & Play on your network $$ Jan 30, 2013
How President Obama Lost His Shirt to John Boehner http://t.co/VZwfxqiw Interesting argument; not sure it’s correct. Seemed like a tie $$ Jan 28, 2013
Women?s Path to Ground Combat Strewn With Obstacles http://t.co/DkVG9UDM Only the strongest ~5% of women will be able 2b in combat $$ Jan 28, 2013
Bipartisan Immigration Plan Counters Republican Orthodoxy http://t.co/nL9Q8RFp Has some chance of passing 4 the 1st time in 6 years $$ Jan 28, 2013

Other

Psst…This Is What Your Co-Worker Is Paid http://t.co/3lUOLmT9 I’m not sure this is a good idea. What someone is paid is personal $$ Jan 31, 2013
Bombarded by Ads, Few Drivers Switch Car Insurer http://t.co/LsyjydyM Average ppl have an agent they trust until they get burned $$ Jan 30, 2013
Backyard Farming Gets Fancy http://t.co/0FqwgxRr High-End ‘Homesteaders’ Want Pricey, Stylish Tools; The $1,300 Chicken Coop $$ #noway Jan 30, 2013
15-Year-Old Creates Test for Pancreatic Cancer http://t.co/qrRalNtv This fellow beat the child of a friend of mine who came in third $$ Jan 30, 2013
Derivatives trader: ‘The trouble is, regulators are idiots’ http://t.co/PTJpQe9G In general, true. This is why dumb regulation is better $$ Jan 30, 2013
Liability Issues Create Potholes on the Road to Driverless Cars http://t.co/VDVux7vV If a driverless car has an accident who pays? $$ Jan 28, 2013

Wrong

Wrong:Piracy and Fraud Propelled the US Industrial Revolution http://t.co/JONyDRPd Doubt that explains more than 3% of American Success $$ Feb 01, 2013
Wrong: Alan Blinder:Everything You Think You Know About the Crisis Is Wrong http://t.co/gTVjTm4t TARP a failure; encourages moral hazard $$ Jan 31, 2013
Wrong: Morgan Stanley Buys Argentine Stocks as YPF Deal Lures BlackRock http://t.co/MdXXq1uu Until expropriation ends, avoid Argentina $$ Jan 31, 2013
Wrong: Bitcoin?s Gains May Fuel Central Bank Concerns http://t.co/bXNdgp9c Chart here: http://t.co/Xaz8cxbh Thin speculative market $$ Jan 28, 2013

Comments & Retweets

RT @japhychron: The Real, and Simple, Equation That Killed Wall Street | Guest Blog, Scientific American Blog Network http://t.co/9YDmZu … Feb 02, 2013
RT @BankersUmbrella: @AlephBlog …buying on margin at 5y high in NYSE, fund inflows higher than just before techbubble burst, net sales … Feb 01, 2013
You can say that again $$ RT @paulnovell: @AlephBlog unless you own an east coast refinery. Mid continent refiners are killing it Jan 31, 2013
@GlennBusch I almost moved to Poway to work for the last remaining large life insurer in San Diego; Offer fell through, company failed later Jan 31, 2013
@steve13smith So how are you doing at Minyanville & otherwise? Jan 31, 2013
@steve13smith Are you my friend from RealMoney days? Good to hear from you. Yes, I signed up on a Wednesday. It’s a useful summary to me. Jan 31, 2013
You can say that again RT @credittrader: $SPY vs $VIX – oops – http://t.co/ARvpNfRP Jan 30, 2013
Feels like it to me. RT @StockTwits: Has Value Turned a Corner? http://t.co/GQnUMCcw via @eddyelfenbein $$ Jan 30, 2013
@RossJaklik I don’t market. People ask me to manage their money. They get a clone of how I invest my own money. If that is not legitimate… Jan 30, 2013
@RossJaklik @faithmight @abnormalreturns In order to receive fees for investing OPM, you must pass the regulatory hurdles Jan 30, 2013
@RossJaklik @faithmight @abnormalreturns And to manage OPM legitimately, u have to start a firm like $TROW $LM $JNS $BEN $$ Jan 30, 2013
@wesbury @cabaum1 I want to get rid of the neoclassical economics monoculture at the Fed, & replace w/Actuaries & Value Investors $$ #dreams Jan 30, 2013
@prchovanec Enjoy it, friend. I have 8 kids, 5 adopted. Every age is fun, & has sorrows. Enjoy your kids while u can; they grow up fast $$ Jan 30, 2013
Little kids r so cute $$ RT @prchovanec: 3-year-old son William on new twin baby sisters: “Can they talk? What did they say?” Jan 30, 2013
Thanks, have ~3 more to go $$ RT @BarbarianCap: Great “101-level” series in the last few days on insurance investing over on @AlephBlog #ff Jan 30, 2013
+2 RT @niubi: ?@prchovanec: Twin baby girls Alice and Rachel Chovanec born at Amcare hospital in Beijing at 6:45am this morning!? Congrats Jan 30, 2013
premiums r so migh my nose is bleeding! $$ The RT @groditi: HY and Levered Loan CEF discount snapshot http://t.co/HH8tyX7x Jan 29, 2013
“You are not going to get as much from me, then. Not going 2 use Stocktwits as my Twitter client.” ? David_Merkel http://t.co/78eWsIVF $$ Jan 29, 2013
+1 RT @allstarcharts: Here is one chart that bothers me: $IWM vs $DJIA spread peaked weeks ago as $SPY makes new highs http://t.co/Bt9c6mlB Jan 29, 2013
@aenbrnood @GuldbergPeter I think both of your ideas have merit, thanks Jan 29, 2013
“”As for the part of the budget that won’t take care of itself, President Obama fought an ugly and?” ? David_Merkel http://t.co/ueQBGOkp $$ Jan 29, 2013
@prchovanec Leverage at each point in the chain of lending amplifies the impact of dodgy nonbank lending, esp when loans r short-dated Jan 29, 2013
A weakness in investment grade bonds RT @Convertbond: $DELL 5 Year CDS, Lesson on what an LBO can do to a credit.. http://t.co/foe7W2gf $$ Jan 28, 2013
@Danny_5079 That covenant is only common with junk bonds, though a few BBB bonds have it. That’s all. Jan 28, 2013
@Danny_5079 via arbitrage. Should have no effect on the deal, unless the bonds had a covenant requiring buying the bonds @ 101% in a buyout Jan 28, 2013
@Danny_5079 of the company & its pre-existing debt, thus leading to a decline in the value of debt, raising yield spreads. CDS reacts to it Jan 28, 2013
@Danny_5079 In a buyout debt is issued to finance the purchase that is equal or senior in terms of claim priority, reducing creditworthiness Jan 28, 2013
“They have to lure retail back in before the next bear?” ? David_Merkel http://t.co/lCQ1ex1c Jan 27, 2013
“If the risk parity players r still levered long credit, then they r the CDO equity of this cycle. End will b ugly” http://t.co/uR8ji9Ty $$ Jan 26, 2013
My problem is this: we have a dysfunctional credit market where yields are too low, and protections are… http://t.co/7mYgP0VQ Jan 26, 2013

FWIW

My week on twitter: 46 retweets received, 7 new listings, 87 new followers, 32 mentions. Via: http://t.co/SPrAWil0 Jan 31, 2013

An Echo, but not Sound

Posted on 25 January 201325 January 2013 by David Merkel

Time for my penny stock scoreboard:

Ticker	Date of Article	Price @ Article	Price @ 1/24/13	Decline	Annualized	Splits
GTXO	5/27/2008	2.45	0.040	-98.4%	-58.6%
BONZ	10/22/2009	0.35	0.019	-94.6%	-59.2%
BONU	10/22/2009	0.89	0.074	-91.7%	-53.4%
UTOG	3/30/2011	1.55	0.009	-99.4%	-94.1%
OBJE	4/29/2011	116.00	1.780	-98.5%	-90.9%	1:40
LSTG	10/5/2011	1.12	0.061	-94.6%	-89.2%
AERN	10/5/2011	0.0770	0.0002	-99.7%	-99.0%
IRYS	3/15/2012	0.261	0.015	-94.3%	-96.4%
NVMN	3/22/2012	1.47	0.070	-95.2%	-97.3%
STVF	3/28/2012	3.24	0.600	-81.5%	-87.0%
CRCL	5/1/2012	2.22	0.350	-84.2%	-91.9%
ORYN	5/30/2012	0.93	0.280	-69.9%	-84.0%
BRFH	5/30/2012	1.16	0.316	-72.8%	-86.3%
LUXR	6/12/2012	1.59	0.018	-98.9%	-99.93%
IMSC	7/9/2012	1.5	1.480	-1.3%	-2.4%
DIDG	7/18/2012	0.65	0.085	-86.9%	-98.0%
GRPH	11/30/2012	0.8715	0.428	-50.9%	-99.1%
IMNG	12/4/2012	0.76	0.747	-1.7%	-11.6%

	1/24/2013		Median	-94.4%	-90.1%

You have to admire the consistency of capital destruction among promoted penny stocks.? Tonight’s loser-in-waiting is Echo Automotive.? Here is the bullet points to illustrate the future carnage:

Minimal Revenues
Negative net worth
Negative earnings and getting worse.
Management sucking in a lot in salaries.
The long list of stock promoters engaged by DH Media LLC.? This is only the email effort.? They paid $1.9 million to disseminate the shiny, colorful 10″ x 14″ “newsletter” via snail mail.??? They paid $25,000 to the tout that wrote the copy, or maybe, spiffed up DH Media’s bullet points. Add in disclaimers in 5-6 point type.
Risk factors list longer than you can shake a stick at.
Predecessor company “Canterbury Resources” was pursuing mining interests in New Zealand.
Predecessor acquirer company “Controlled Carbon” was working on solutions to reducing carbon emissions.? They now own 70% of the combined company, paying four cents a share for their stake. (So why does it trade at near 80 cents a share now?
Now the combined company has some solutions that will double fuel mileage on vehicles that use gas.? What a wonder.

If you really had a technology that could double gas mileage, you would set up a joint venture, or a licensing agreement with one of the major automakers, and divide the profits? off of their high vehicle sales.? You would make a bundle doing that.? You would not buy a shell company in a different industry and let costs get out of control.? That looks like management does not have a real technology, but is simply trying to “take something off the top” through salaries and benefits, and perhaps rewarding friends.? After all, in the stub of the third quarter, Echo blew threw virtually all of the new capital that it raised, and for what?

The company might or might not be affiliated with the promoters.? The promoters say the company is not affiliated with the promotion.? In one scam, Luxeyard [LUXR] a different set of promoters did reveal that the company was paying the promotion to facilitate sales of stock.? The proof is in the pudding.? If Echo goes and does a PIPE or a secondary IPO, maybe there was some hidden affiliation.

The promoter also says they won’t trade for 90 days.? Now, the economics of this one is tough, because the parties that owned “Controlled Carbon” own 70% of Echo Automotive.? Dilution at low prices does not favor them, and I don’t see how they could easily monetize a large portion of their stake.

That leaves the remaining 30% of the company to be traded.? The promoter has spent over 2 million to promote the stock.? Unless he owns a big chunk, and sells into this wave, I don’t see how he makes money.? And if he does sell into the wave, and a lawsuit is brought later, that would stand against them in court that they violated their disclosure.? Maybe they take that risk anyway — they are working at the edge of the law anyway.

Except, maybe a lot of scammers work together as in this example from the FBI.? I’ve posited that idea before.? Given all of the non-identifiable shell companies involved, that could be going on here also.? It would be interesting to try to prove the existence of and break a ring like that.

Anyway, steer clear.? The company is horrid, and with promoters around, those that buy and hold for any significant length of time (say 1-3 months) are 99% certain to lose money.? Don’t be one of the pockets that gets picked.

Sorted Weekly Tweets

Posted on 19 January 2013 by David Merkel

Central Banking

Records Show Fed Wavering in 2007 http://on.wsj.com/SgLPoG 4 all of their vaunted intelligence, the Fed was worried, but clueless in 2007 $$
Three Stages of Fed Grief: Key Quotes From 2007 http://t.co/X4ygwdqU Slowly realized the economy they overlevered was getting worse $$ Jan 18, 2013
Fed Concerned About Overheated Markets Amid Record Bond-Buying http://t.co/wDckfD77 The sourcerer’s apprentices note there is a problem $$ Jan 17, 2013
Paul Moreno: Gold, Greenbacks and Inflation: A History and a Warning http://t.co/75M1jNRo Ppl forget the degree the Fed has debased $$ Jan 17, 2013
Once you turn base money into short-term debt, can you go back? http://t.co/pG3gxBwA @interfluidity ideas getting deserved attention $$ Jan 16, 2013
First Shots Are Fired in Global ‘Currency War’ http://t.co/y6GJi0V5 Japan leads “race 2 the bottom.” Who will b first 2 stop sterilizing? $$ Jan 16, 2013
Currency Moves? & Central Bank Bravado http://t.co/zt7BI1As Posit that the yen is falling due to war risks & Japan biz risks in China $$ Jan 16, 2013
Abe Rocket-Start Lowers Sony Risk With Market Fuel http://t.co/J4cLgQKJ Loose monetary has spillover benefits 2 indebted corporations $$ Jan 16, 2013
I’ll grant this: the government always has some role in money, even commodity money like a gold standard… http://t.co/QtVI3oeC Jan 12, 2013

Rest of the World

Pressure Rises on China to Scrap One-Child Policy http://t.co/iDfZ0Ssl No better way 2 have a demographic crisis; change long overdue $$ Jan 18, 2013
Default Alarm Rings as Trust Loans Jump Sevenfold http://t.co/2tr1vFnq China is so messed up that it makes the Eurozone look good $$ Jan 17, 2013
Singapore Curbs Industrial Property Sales to Avert Bubble http://t.co/vZQhsdya Increases bid-ask spread; can’t fight fundamentals $$ Jan 17, 2013
Mongolia?s Erdenes TT Halts Coal Exports to Biggest Buyer China http://t.co/hoTHAxxZ Probably either gross malfeasance or bribery $$ Jan 17, 2013
European Dividends Tumble to Four-Year Low as CEOs Hoard http://t.co/D6YdzVqD Favor European Exporters over their Domestic companies $$ Jan 17, 2013
Euro at 10-Month High Poses Economic Threat, Juncker Says http://t.co/bk0FsVEE The #currencywars continue. Rule: Beggar thy neighbor $$ Jan 17, 2013
Russia Says World Is Nearing Currency War as Europe Joins http://t.co/OvVu0ZMH Accept export slowdown? Monetize debt? Stupid QE-like stuf? Jan 17, 2013
Rio Tinto CEO Steps Down http://t.co/lqWyRPES Every CEO should have etched on his wall: “Paying up 4 scale acquisitions is dumb” $$ $RIO Jan 17, 2013
China Capital Flow: Foreign Direct Dis-Investment http://t.co/V8erkuxL Foreign inv’t inflows falling, domestic inv’t outflows rising $$ Jan 17, 2013
China Starts Losing Edge as World’s Factory Floor http://t.co/pG7uOFqX SE Asia benefits as China becomes more expensive 2 operate in $$ Jan 16, 2013
Norway Sees Deeper European Job Pain as Default Fears Recede http://t.co/ztbfvp0H Rising NOK makes exports less competitive &fewer jobs $$ Jan 16, 2013
Often when FX vols spike it means something might break, like the SNB not able continue its EUR peg. But if… http://t.co/fydAlRSX Jan 16, 2013
HSBC needs 2 end its Ping An silence with simple answers http://t.co/8xVAWiHD much alleged insider deal information has been circulating $$ Jan 14, 2013
Mainland alchemists turn damaged zinc into solid gold http://t.co/W4zu69k7 An example of how Chinese banking system papers over bad debts $$ Jan 14, 2013
Rumor: large backlog of Chinese companies want to IPO, but having hard time slowing the required 2 years of rising earnings $$ Jan 14, 2013
Neighbors Grow More Wary of China http://t.co/aYMUvLs2 Ex-pat Chinese moving in, looking a little graspy w/respect to resources, etc $$ Jan 14, 2013
Mineworker Debt Mounts as South African Lending Booms http://t.co/hTkXyCTc There are few places in the world without debt overages $$ Jan 14, 2013

Market Impact

Deutsche Bank Derivative Helped Monte Paschi Mask Losses http://t.co/PeqTdPBT Bad investing led to losses 2 hide. Enter Deutsche Bank $$ Jan 17, 2013
reaching for yield http://t.co/zFaWCA7h @researchpuzzler notes tight junk spreads, but + Ed Meigs & Dan Fuss r ?naysayers on junk credit $$ Jan 17, 2013
Short-term Debt and Financial Crises: What we can learn from US Treasury Supply http://t.co/UG1RvuHm Qty issue ST fin’l sector debt->crisis Jan 17, 2013
22 Insights From The Most Successful Investors In History http://t.co/4u3QVRJL Very nice assemblage of quotes from the best investors $$ Jan 16, 2013
[Will] the Bond Bubble Finally Burst? http://t.co/1c7hOX4W Synthesis of a variety of views: Yes, but not in the short-run… $$ Jan 16, 2013
FINRA to brokers: know your high-yield securities http://t.co/DJHC5NvT Intelligent words from FINRA; b able2show clients all possibilities Jan 16, 2013
The High Yield Market is “Completely Out of Control.” http://t.co/GBUfGOa9 Watch risky debt buyers; c if they need things 2go right2survive Jan 16, 2013
Gold Forecasters Splitting on Peak for Bull Market http://t.co/EIEgk2Al Most-accurate gold forecasters>price will probably peak in 2013 $$ Jan 16, 2013
Whatever Happened 2 Good, Old-Fashioned Accountants? http://t.co/aFofQ4Mv @retheauditors explains y basic blocking&tackling go a long way $$ Jan 17, 2013
Yale May Buy More Hedge Fund Assets After Favoring Cash http://t.co/D0cP9LDV Timing feels wrong here w/credit spreads tight & vol low $$ Jan 16, 2013
Baupost Group Sitting On 116% Return From Madoff Claims http://t.co/u4MYuhJI Bankruptcy judge said ?seller?s remorse,? denied his effort $$ Jan 16, 2013
Leeway on Repo Rules Is Cut Back http://t.co/B16EXZfR “…we’re basically saying all repos should be accounted for as borrowings,” $$ Jan 16, 2013
Inside the Self-Driving Index Funds That Finish First http://t.co/XPEfHyE4 @jasonzweigwsj $BLK low fees, shares sec lending revenue $$ Jan 15, 2013
How2use Twitter & Facebook 2 make $$ from shares http://t.co/lXXw321E Just watch: this causes the next ‘flash crash’ h/t: @abnormalreturns Jan 14, 2013
KRS Spin Machine Is Smearing The Truth Again http://t.co/VGGSkxHX Kentucky Retirement Systems does not use RFPs -> “pay to play” @ KRS $$ Jan 14, 2013
US Not So High Yield Bonds : “It’s Starting To Feel A Lot Like 2007” http://t.co/QUGhAMqC Will supply grow, or will misfinancing start? $$ Jan 14, 2013
SP500 Revisited – Testing 1484/1500 zone and reversal after? http://t.co/8TMktTjD Argues for a correction in stocks in the near term $$ Jan 14, 2013
Hedge-Fund Leverage Rises to Most Since 2004 in New Year http://t.co/rwFVhRmz H0: flexible $$ overallocated to stocks now> correction due Jan 14, 2013
39% of Fund Managers Beat the S&P in 2012 http://t.co/xRx3Juik It was a growth year & not a value year. 48% would b the 10-yr average $$ Jan 13, 2013

Billionaires

I suppose Bloomberg could write a book about hidden billionaires, and call it “The Billionaire Next Door.” http://bloom.bg/WN9Jo8 ?#yeah $$
Erie Billionaire Hagen Revealed as Car Premiums Surge http://t.co/BsMEp8gu $ERIE interesting company w/a unique asset-lite biz model $$ Jan 17, 2013
Hidden Billionaire Milking Saudi Dairy Fortune in Desert http://t.co/XAoRKBRp Bloomberg likes ‘outing’ obscure billionaires like this $$ Jan 14, 2013

Personal Finance

Why you can?t avoid dumb 401(k) mistakes http://t.co/fffPsn0k Plan sponsors chase hot managers & avoid passive options $$ Jan 16, 2013
Behind the indexed annuity curtain http://t.co/Qo7RdSX9 Avoid. Surrender charges r long & high 2pay commission; opaque int crediting $$ Jan 16, 2013
One in four savers has 401(k) ?leakage? http://t.co/TRBsFfwx Retirement seems far away, but $$ needs r near, so ppl tap their 401(k)s Jan 16, 2013
Seven Resolutions to Get Your Nest Egg in Shape http://t.co/cqNqpxJF Good basic advice 4 ordinary people taking care of the nest egg $$ Jan 16, 2013
E-Filing and the Explosion in Tax-Return Fraud http://t.co/9SAE6oPL Identity theft; 1 reason y I do it myself & file on paper $$ Jan 14, 2013
Housing Problems: Where To Get Help http://t.co/3hrCyQFy @retheauditors gives advice to those having issues with foreclosures $$ #goodstuff Jan 13, 2013

Banks and Investment Banks

More Ideological Excuse Making for Bad Banks http://t.co/0wjkQq3n It takes two to tango; it takes two to make a loan. Both deserve blame $$ Jan 17, 2013
A tempest in a spreadsheet http://t.co/W2mwYeHO A reason y having robust “smell tests” r needed when mathematical models get complex $$ Jan 17, 2013
Mortgage Nanny Added to Lender Job Description http://t.co/nRRonPBL Caveat Emptor:May make probs worse by creating illusion of safety $$ Jan 17, 2013
Wells Fargo to Start Jet-Leasing Venture http://t.co/a0FwgcNn FD: + $WFC | I like the fact that theyr starting small #organicgrowth $$ Jan 17, 2013
Jefferies Sets Table in Pay Clash http://t.co/s6utAuEy Or, they could jump 2 $JEF soon 2b $LUK. $$ motivates better, but conflicts occur Jan 16, 2013
Bankers Get IOUs Instead of Bonus Cash http://t.co/fKrpWXZL Will tie employees more tightly, unless they jump to related industries $$ Jan 16, 2013
Report of $JPM Management Task Force Regarding 2012 CIO Losses http://t.co/i7x0Ifi4 [132pp PDF] If interested in $JPM, summary in 17 pgs $$ Jan 16, 2013
Municipalities Should Ditch Wall Street Derivatives Deals http://t.co/Jqmgjllk If Wall St is on other side of table, watch your wallet $$ Jan 16, 2013
Banks say new agency’s oversight is slow, costly http://t.co/aHIGFRUh Banks pine away over the regulatory laxity they had 6-10 years ago $$ Jan 16, 2013
Goldman?s ?Secret? Team Shows Volcker?s Folly http://t.co/fovIyDRf Difficult to stop prop trading, better 2 remake I-banks partnerships $$ Jan 14, 2013
Bank Deal Ends Flawed Reviews of Foreclosures http://t.co/7DoTN8yA absurd, $$ will b distributed w/little regard 2 who was actually harmed Jan 13, 2013

Economic Policy

Portfolio Manager Creates Dazzlingly Deep Presentation On What’s Really Going On With The US Economy http://t.co/vcRHWwEe Long but good $$ Jan 17, 2013
Obama Finds Path to Congress Deals Goes Through McConnell http://t.co/B763HV1u Give him his due; has a nose that can sniff out deals $$ Jan 16, 2013
The Next Tax Increase http://t.co/7beI2QUO What the US Govt has belongs 2 the US Govt. What belongs 2u is subject 2 negotiation $$ Jan 16, 2013
Swap the Debt Ceiling for a Rule That Makes Sense http://t.co/NVYjvTD8 Maybe limit total liabilities of US Gov’t to 2x GDP? Way past that Jan 16, 2013
Why U.S. might be ?a nation of deadbeats? http://t.co/UuOHrKlt Consumers have been paying down debt, but walking away from more $$ Jan 16, 2013
A Credit Downgrade Warning Both Sides Should Listen To http://t.co/TbB3Gbdn Rating agencies r more honest than US Govt. Fitch may d/g US $$ Jan 16, 2013
Treasury Bill Rate Curve Inverts Amid Debt-Ceiling Showdown http://t.co/0KOQqC7A Bill curve showing some inversion due 2 debt ceiling $$ Jan 16, 2013
Money-Printing Will Lead to an Inflation in Another Guise http://t.co/erqP71P7 Debt overload & slack capacity short circuit credit growth $$ Jan 16, 2013
Two Warning Signs for Treasuries http://t.co/BdAcNkHE “yield curve btw 2&10 years is starting to steepen” Resistance 2 neg real rates up $$ Jan 16, 2013
TIPS Implied Inflation 4 2018-22 rose over 2012; flat now http://t.co/R28O77bX 2014 Inflation rising http://t.co/VCfupYLT $$ Fed target 2.5% Jan 16, 2013
US states flirt with major tax changes http://t.co/EnZmtggx Red states moving toward sales & away from personal/corporate income taxes $$ Jan 14, 2013

States & Municipalities

California, Unsaved, Speeds Toward a Wall of Debt http://t.co/pyrObgbr Constants in life that r not comforting: gimmicks in CA budget $$ Jan 17, 2013
California Could Be the Next Shale Boom State http://t.co/r0QChYDh Energy could flow from the Land of Squandered Advantages $$ Jan 16, 2013
Pension Funding Gap Widens for Big Cities http://t.co/a76JAJT0 Expect 2c many fights where bens cut 4 new, active & retired employees $$ Jan 16, 2013

Companies

Suitors Interested in H-P’s Autonomy, EDS Units http://t.co/AXdvxjei Wouldn’t put 2 much into this; $HPQ won’t get good prices $$ Jan 16, 2013
Genworth Shares Soar Amid Plan for Mortgage Insurer http://t.co/Jqmgjllk $GNW moves deck chairs on the Titanic; rewarded for now $$ Jan 16, 2013
Chevron Signs Deal for More Oil Exploration Acres Off China http://t.co/Yqb7yY7g FD: + $CVX smiles as it rides the tiger $$ #risks Jan 16, 2013
My Favorite Tobacco Stock Is Intel? http://t.co/Wupvh1qk @CharlesSizemore explains y it should deliver returns, amid hatred $$ FD: + $INTC Jan 16, 2013
TNT Left at Altar Gets No Immediate FedEx Deal http://t.co/QSdDHarC “FedEx in a good position to wait this out & let TNT come to them.” $$ Jan 16, 2013
Latest IPOs Arrive In The Form of New MLPs http://t.co/cq7XuIKv All of the new MLPs r energy-related $$ Jan 14, 2013
ARM CEO East Says Phooey to the ?Transistor Cliff? http://t.co/wfiIeQau Cost, speed, & power use r the key factors 4 logic chips $$ Jan 14, 2013

Miscellaneous

Davos Pitch for Dynamism Rams Into End-of-Growth Debate http://t.co/1bNvkwD7 I don’t think growth is ended, but bad finances interfere $$ Jan 17, 2013
Global Piracy @ 5-Yr Low http://t.co/YgJlRQSh 2012: Pirates boarded 174 ships globally v 439 in 2011, people taken hostage 585<-802 $$ Jan 16, 2013
NRA Labels Obama Hypocrite on Guns for Child Protection http://t.co/DqIsubsA Administration doesn’t like the argument; hits close 2home $$ Jan 16, 2013
Kidnap insurers eye sales as euro crisis bites http://t.co/w5CfiwOe Stable rates: More competition, & armed guards 4 sea transport $$ Jan 16, 2013
Mathematicians coming of age to become the most sought after professionals http://t.co/thXJdgsS Nerds of the world unite! Big data 2analyze! Jan 16, 2013
The Margin Debate http://t.co/zE6p5oO1 Labor share of US GDP has fallen because growth in the global capitalist labor force, wages fall $$ Jan 13, 2013

Financial Blogging

Your guide 2the financial blogosphere http://t.co/9mkoln2n Comprehensive list of finance bloggers. I’m listed under “Trading & Investing” $$ Jan 14, 2013
What are the 100 Top (Anglo-Saxon) Finance Blogs? A Pseudo-Scientific Study http://t.co/I9UU32zP I ranked higher than I expected 🙂 $$ Jan 14, 2013
The purpose of this site http://t.co/Bp4sqw5o @reformedbroker ‘s excellent piece on how his blogging helps him think & invest better $$ Jan 14, 2013

Painting Kate Middleton

@judehere Perhaps this then? http://t.co/hstcUqPq Jan 16, 2013
@judehere That’s okay. You say he painted the Queen? That’s interesting. Is there an image of that out on the web? Jan 16, 2013
‘ @judehere She seems to be a nice lady, so I wouldn’t be a fan of that. But Freud died in 2011, so the possibility is not there. Jan 16, 2013
But this portrait of Kate Middleton is worse in my opinion http://t.co/LBMKplpo No wonder only 19% like it. (2/2) $$ Jan 16, 2013
Learning to draw, I copied a photo of a friend w/pencil. Another friend said “You took a very pretty girl, & turned her in2 pretty girl” 1/2 Jan 16, 2013

Michael Pettis

Pettis: What I will watch in 2013: 10 things: hard commodity prices, trade numbers, Spanish Bonds, Target 2, & Japan (2/2) $$ Jan 14, 2013
Pettis: What I will watch in 2013: 10 things: China growth, Debt trajectory, financial scandals, bank activities, inflation (1/2) $$ Jan 14, 2013
Pettis: Imbalances can continue for many years, I argue, but at some point they become unsustainable & the world must adjust by reversing $$ Jan 14, 2013
Pettis: Policymakers do this by shortening their time horizons &managing from crisis2crisis, rather than sorting out the underlying problems Jan 14, 2013
Pettis: policymakers… taking steps that protect them from the consequences of the crisis but that also make the crisis worse. $$ Jan 14, 2013
Pettis: It is interesting that policymakers are so pleased by an end (temporarily, I assume) to the financing crisis. $$ Jan 14, 2013
Pettis:We ended 2012 in a burst of optimism for Europe, w/everyone cheering Mario Draghi 4having ?saved? the euro, but I am deeply skeptical Jan 14, 2013

Wrong

Wrong: How to Find a Fund Manager Who Can Beat the Market http://t.co/2Nq1Z9b2 Doesn’t understand difference btw correlation & beta $$ Jan 15, 2013
Wrong: US Budget : Federal finances continue to improve http://t.co/HKzv6pLK It is a *spending* problem that started w/Bush 43, not revenue Jan 15, 2013
Wrong: Municipal Bonds May Not Be Safe From Income Taxes http://t.co/MnIQIdor Would be a big shift, hit blue states hard. Won’t happen $$ Jan 14, 2013
Wrong: Chris Hayes’ Brilliant Explanation Of Money Is One Of The Best Things We’ve Ever Seen On TV http://t.co/e0kxN5oZ #goldstandard $$ Jan 13, 2013

Comments and Retweets

Good night. Blessings to all. Jan 18, 2013
@cogent_rambling Think of judges in a court. No one will forgive a man for doing wrong in one area, because he has done good in others Jan 18, 2013
@cogent_rambling It’s not a question of weakness but wrong. Divorce your wife for no good reason, cheat at your craft, all amounts 2 wrong Jan 18, 2013
@cogent_rambling Good question. God created Lance with a weakness. If Lance had trusted God, he could have overcome it, but he didn’t. Jan 18, 2013
@cogent_rambling Not those that are God-given. Mt 5:48: “Therefore you shall be perfect, just as your Father in heaven is perfect.” Jan 18, 2013
@cogent_rambling One last point: in the view of Jesus is there is no balancing. The least amount of evil poisons any good. Jan 18, 2013
@cogent_rambling Read some of the writings of Kahneman & Tversky. Bad things have 3 times the force of good things. Good doesn’t erase bad Jan 18, 2013
@cogent_rambling Okay, I get it. But doing good things does not erase bad things. Doing things that are notably bad tarnishes anything good. Jan 18, 2013
@cogent_rambling I have heard the word as a part of popular culture, but have no idea what it is beyond a phrase. Jan 18, 2013
@cogent_rambling Okay, I’ll bite. His charitable endeavors, but what else? Jan 18, 2013
@sallyeastman1 Well said Jan 18, 2013
My view: Lance Armstrong is best ignored. Close the browser window, change the channel on the TV, he will go away. I don’t care about him $$ Jan 18, 2013
@AboveAvgOdds Off to meet w/u & Chris Mayer in downtown Baltimore Jan 17, 2013
Endorse. I have read over half of these $$ RT @TheStalwart: The 22 books that Dylan Grice says you must read. http://t.co/QSOWvuBc Jan 17, 2013
@graemehein good point, but most simple models have obv intuition. Complex models have more potential 4 error b/c of 2nd+ order effects $$ Jan 17, 2013
@cate_long Others that did the same in 1994: Piper Jaffray’s Institutional Gov’t Income & FPA’s Fundamental US Gov’t Strategic Income funds Jan 17, 2013
@cate_long Combined w/levering them, and not having the mathematical savvy to price them right http://t.co/5vkUxgO6 Story near the bottom Jan 17, 2013
@cate_long Cate, you’re right, I’m wrong. At the time, David Askin & those like him were notable. W/Citron it was mostly structured notes Jan 17, 2013
@kirstensalyer Sorry, that honor belongs to the first quantitative hedge fund manager, Ben Graham, who was doing that in the 1920s Jan 17, 2013
@cate_long Also used complex RMBS. There was kind of a contest 2c how much negative convexity one could absorb in exchange 4 yield Jan 17, 2013
RT @maxrudolph: #unintendedconsequences when pension regs set up EA designation cut off practitioners from ALM development. Still catchi … Jan 17, 2013
Well done $$ RT @LaurenLaCapra: Jim Chanos talks to @Reuters about Herbalife & whether Ackman or Loeb will win out: http://t.co/sV7B604o Jan 17, 2013
@finsovet @prieur @vitaliyk Honored 2b included in such a group Jan 17, 2013
Think this analysis is correct, but uncertain $$ RT @mickwe: 3D printing is a lot of hype and it’ll never go mainstream http://t.co/8wkr5oxp Jan 17, 2013
I just left a comment in “7 gut checks before the stock market?s opening bell” http://t.co/MrSqVXZF Jan 17, 2013
@niubi If so, good for him. He revolutionized my economic thinking with his last book. Looking forward to the next one. Review copy coming Jan 17, 2013
+1 RT @dpinsen: Paging @TomFriedman: comment on How a ‘model’ employee got away with outsourcing his work to China http://t.co/wukYAV8T $$ Jan 17, 2013
+2, scrap IFRS RT @Alea_: +1 Britain should scrap IFRS accounting standards, MPs told http://t.co/woWmyC2v Jan 16, 2013
@oddballstocks very different mindsets; marketing and operations r different from finance, which is still different from investing Jan 16, 2013
@oddballstocks I did that as well from 1992-1998. Tried very hard to select non-name-brand mgrs w/durable competitive advantages Jan 16, 2013
‘ @ClayNickel It depends on how equitylike the bonds r, & the financing composition of the holders. If the bonds r financed w/sig debt.. $$ Jan 16, 2013
RT @Matthew_C_Klein: The big deal about the German gold story isn’t that they’re taking some of it out of NY but that they’re moving *al … Jan 16, 2013
RT @Matthew_C_Klein: @izakaminska has a thoughtful take on the base money debate between @interfluidity and @NYTimeskrugman http://t.co/ … Jan 16, 2013
‘ @joshuademasi Good point. After all, most nations would love to swap for Norway’s economic situation. $$ Jan 16, 2013
@earwulf Good insights both. We live in “interesting times” in the full meaning of the Chinese curse Jan 16, 2013
@ReformedBroker Rieder is a bright guy, as is my friend Ed Meigs at First Eagle; HY is okay for the short run, but 2 years out… $$ #Boom! Jan 16, 2013
@earwulf Yes Jan 16, 2013
@earwulf No, I don’t really find them persuasive. I do think that some Central Bank will stop sterilizing asset purchases, start new phase Jan 16, 2013
@JacPatterson I thought about that too, & think he really meant “English Language” Finance Blogs Jan 15, 2013
“But that also means you have to keep more $$ around if the puts get exercised, which Buffett had & many don’t.” http://t.co/uEIRn5i3 Jan 15, 2013
@joelight @spbaines the paragraph that starts ‘To screen out such “closet indexers,”‘ is factually wrong, does not understand statistics Jan 15, 2013
@joelight @spbaines I’m not arguing w/R2 as a proxy for active share, though there r better measures; article says correlation, means beta Jan 15, 2013
+10 Mmmmm… RT @dpinsen: Bresaola, lemon, olive oil, Parmesan, and basil joining forces for a great sandwich. http://t.co/pMMVmoI5 Jan 14, 2013
@abnormalreturns I’ve run into a *lot* of people trying to do this. Some are cleverer; not sure how it will work out… Jan 14, 2013
@JayLeonard but gold does control inflation and limits the government’s ability to use monetary policy for its own ends Jan 13, 2013
@JayLeonard Much of the difficulty is not gold vs not gold, but how banks were regulated — short liabs carrying long assets Jan 13, 2013
@GuldbergPeter Thanks, though I have heard that Canada *may* have issues. Jan 12, 2013
RT @GuldbergPeter: “@AlephBlog: Is there anyplace in the world that hasn’t overlent on real estate? Sweden, Canada and actually to some … Jan 12, 2013

FWIW

My week on twitter: 40 retweets received, 1 new listings, 67 new followers, 65 mentions. Via: http://t.co/SPrAWil0 Jan 17, 2013

Sorted Weekly Tweets

Posted on 22 December 2012 by David Merkel

Macroeconomics

Here’s my plan for reducing the deficit: http://t.co/XJPjf8A5 #mydeficitplan via @wsj Draconian, I know, but the budget shoould b balanced Dec 21, 2012
Canada?s exports crucial as sluggish growth continues: IMF http://t.co/iIOJ6PoF Bank of Canada should raise rates 2 reduce excessive debt $$ Dec 21, 2012
Everything You Need To Know About the Economy in 2012, in 34 Charts http://t.co/aXnjSkR0 Good stuff; could have been formatted better $$ Dec 21, 2012
Fiscal Cliff’s Dirty Secret: It’s Not About Taxes At All, But Too Much Spending http://t.co/UY8rKW9h We need 2 deal w/SS, Medicare & Defense Dec 20, 2012
We?ve Nationalized the Home Mortgage Market. Now What? http://t.co/YSCrvVmK Congress loves 2 have cows around that they can milk for $$ Dec 20, 2012
EU Banking Re-Unions http://t.co/khSA0co0 The lack of a timetable indicates that things aren’t really finalized; not sure this will fly $$ Dec 20, 2012
?Spending Cuts? Lose Something in Translation http://t.co/DYFxVMno Only in DC is reducing planned growth in spending called a cut $$ Dec 20, 2012
Money Funds Brace for Flood http://t.co/4J7VWuxx MMFs r between a rock & a hard place: loose Fed policy & regulatory over-reach $$ Dec 20, 2012
Wall Street’s Biggest Geniuses Reveal Their Favorite Charts Of 2012 http://t.co/at12mMsV Very long, but lots of good stuff $$ Dec 20, 2012
My forward estimates, derived from TIPS are rising, 2014 inflation, and 2018-2022 inflation. The latter has… http://t.co/tgrGfiDG Dec 19, 2012
Estimated 2018-2022 inflation rate continues to rise: http://t.co/ebqeM5KJ Stagflation may be coming. cc: @federalreserve #stagflation $$ Dec 19, 2012
Estimated 2014 inflation rate continues to rise: http://t.co/ZrvIc5Nk Stagflation may be coming. cc: @federalreserve #stagflation Dec 19, 2012
Economics may be dismal, but it is not a science http://t.co/I6B9LbSw No universal economic theory, & new economic thinking must be eclectic Dec 18, 2012
Fisher: Fed Risks ‘Hotel California’ Monetary Policy http://t.co/fRKOYl9d When the Fed starts 2 tighten, it will b hard 2 do $$ Dec 17, 2012
FDIC Guarantee Program Set to Expire After Senate Block http://t.co/qPdQNWQF Will squeeze the short end of the yield curve further $$ Dec 17, 2012
US Banks Lack Liquidity to Withstand Crisis, Study Says http://t.co/psmQEP1z Liquidity mismatches r pernicious; key risk gets ignored $$ Dec 17, 2012
Mkts r discounting mechanisms. Temporary events like bond ratings, debt ceiling & fiscal cliff should not affect market much $$ Dec 17, 2012
So, as an example, if the govt runs a deficit, it should not stimulate much b/c people discount future econ adjustment b/c of more debt $$ Dec 17, 2012
Same 4 monetary policy; the Fed can “stimulate” as much as it likes; mkt players discount the future removal of policy, inflation, etc. $$ Dec 17, 2012
Cliff? What Cliff? http://t.co/QEvklDQU Or maybe, just maybe investors don’t care whether we go over the “fiscal cliff” or not. $$ Dec 17, 2012

Stocks & Sectors

There are 272 gold & silver companies trading on US exchanges or OTC. 59 of them have mkt caps > $100M. 22 of them have mkt caps > $1B $$ Dec 21, 2012
Aviva Sells US Life Business to Apollo for $1.8B http://t.co/UqM2kqyr When Aviva bot Amerus, I said that they overpaid massively. Proof $$ Dec 21, 2012
Value Investing In Practice: A Conversation About Oaktree Capital http://t.co/4FVok5wz Good value investing does not hyper-diversify $$ Dec 20, 2012
ICE in Deal to Buy NYSE http://t.co/ik348vsZ New era; expect 2c more deals like this. As an aside average holders of $NYX stock lost $$ Dec 20, 2012
Buffett’s Leading The Corporate Buyback Surge http://t.co/U3piJgDv He has the $$, & 1.2x BV is a defensible floor ||| FD: + $BRK.B Dec 19, 2012
Investment Fads and Themes by Year, 1996-2012 http://t.co/cvLFKyRE @reformedbroker on what the broad themes this year & back to 1996 $$ Dec 19, 2012
Alterra up after deal, analyst positive on Bermuda peers http://t.co/Y5jTB40c Room 4 a new round of consolidation. $MKL buys $ALTE $$ Dec 19, 2012
$ALL Bets on Home Insurance as Stock Rally Withstands Sandy http://t.co/XBQOOSB5 Insured damages (excl flood) low4 Sandy; premratesflat $$ Dec 19, 2012
Stocks Held Hostage as CEOs Plan Spending Cuts http://t.co/5c7nBKAS It is difficult to avoid deflation; so much uncertainty presently $$ Dec 18, 2012

Credit & Fixed Income

Swaps ?Armageddon? Lingers as New Rules Concentrate Risk http://t.co/QK3s19Hz Clearinghouses r not a panacea; it is possible 4 them 2 fail Dec 21, 2012
Americans Hacked Don?t Know Chamber Left Them Alone http://t.co/DSBDUijq Common programs place yr computr @ risk; CoC defends SW makers $$ Dec 21, 2012
The Indianapolis 500 of Corporate Bonds Yields http://t.co/dCamXED3 Too much $$ flowing into corporate credit; feels like 2006 Dec 20, 2012
India Cash-for-Gold Loans Hide Shadow-Banking Risks http://t.co/BGnO4YWI 2much lending creates a mess; 2much secured lending creates a panic Dec 20, 2012
Pimco Sees Spreading Slowdown Boosting [Australian] Bonds http://t.co/oDFSkGoF Pimco buying the debt of fringe developed nations $$ Dec 19, 2012
CAB Legislation Expected in January http://t.co/TSuxBmM4 California legislation proposed 2 limit issuance of Capital Appreciation Bonds $$ Dec 19, 2012
Why China May Be Facing US-Style Credit Crunch http://t.co/99xMzC3M “To some extent, this is fundamentally a Ponzi scheme,” [Xiao] said. $$ Dec 19, 2012
Pimco’s Gross Cuts Back on MBS http://t.co/4FaxLTKq Lightening up on MBS & Corporates, buying developed fringe, sticking w/TIPS $$ Dec 19, 2012
Mind the rate risk http://t.co/nVqjlWW9 Rates may stay low 4 a while, but when they run up, total returns could b worse than 1994 $$ Dec 19, 2012
Spain House Prices – Deconstructing Spain http://t.co/7ARRPZqS Housing prices continue 2fall, more foreclosures, setting up bad bank fund $$ Dec 17, 2012

Energy

Valero Received Approval 2 Ship US Crude 2 Quebec Refinery http://t.co/ojABCqu1 Could b start of something big: US exports oil FD:+ $VLO Dec 20, 2012
Extracting shale oil from a Dead Cow http://t.co/bok4bNE7 Interesting: after the expropriation of Repsol that oil majors line up4more $$ Dec 20, 2012
Gasoline at US Pumps Drops to Lowest in a Year on Supply Gain http://t.co/4pI5SXiV Good news coming to users of refined fuel products $$ Dec 19, 2012
California refiners dreamin’ of shale oil face hurdles http://t.co/vJgiW4rm Many efforts t get cheap oil 2 CA; $24/bbl price difference $$ Dec 17, 2012

Other

CEOs Concerned about the Time and Cost of Implementing Predictive Analytics http://t.co/QcABrcFH Big data facilitates cluster pricing $$ Dec 20, 2012
In the Flesh: The Embedded Dangers of Untested Stem Cell Cosmetics http://t.co/de2aio1V Adult stem cells can do as much harm as good $$ Dec 19, 2012
The First Time Tech Ruined the Music Business http://t.co/d0RE4002 As technologies improve all manner of “rights” issues crop up $$ Dec 18, 2012
Advisers Question Modern Portfolio Theory http://t.co/lLbCVvgL Look through the security 2 the underlying economics of the investment $$ Dec 17, 2012
Twitter has started rolling out the option to download all your tweets http://t.co/IIOVO6mJ Not common yet, but may b coming soon $$ Dec 17, 2012
Schools Safer Than 1990s as Educators Anticipate Killers http://t.co/aQaB6G6Q Students r far less likely2b killed in school than elsewhere Dec 17, 2012
Highest-Paid California Trooper Is Chief Banking $484,000 http://t.co/JwgYWfg2 Giving officers comp time rather than $$ 4 unused vacation Dec 17, 2012
‘Followers for sale’: Twitter’s very own black market http://t.co/HKCqo074 Fake Follower Check will estimate how many followers r real $$ Dec 17, 2012
SEC Says Asset Firm Manipulated Trades to Enrich Some Clients http://t.co/L8IJQ77k I remember their ads, proclaiming their track record $$ Dec 17, 2012

Wrong

Bad idea: Africa Dreams of Building Telescopes to Study Space http://t.co/gSwkKIBs Would make more sense 4 Africa to fix agriculture $$ Dec 20, 2012
Wrong: US should intervene in Nagorno-Karabakh process at the highest level http://t.co/2tJTKtht We should stick 2r own business $$ Dec 18, 2012
Wrong: This is why I generally don’t like Quartz; pretending to be smart $$ RT Our favorite charts of 2012 http://t.co/w2bvLDvX Dec 18, 2012

Replies & Comments

“This would have been a better article if you had put separators between each graph/explanation.” ? David_Merkel http://t.co/uoMy61H1 $$ Dec 21, 2012
@EddyElfenbein Thanks, Eddy. Dec 19, 2012
@geekpryde Hey, thanks for the kind words, I appreciate that you follow me. Dec 19, 2012
@VIXandMore Ludwig is letting us down, and 3 days after his birthday. Call Schroeder 😉 Dec 19, 2012
@Alea_ Cool new avatar, I like it Dec 19, 2012
@Money_in_Stereo Well said, though I am not an expert there. Thanks for sharing that. Dec 18, 2012
@BarbarianCap Hint: if company is offering u a nice buyout, they r offering less than its worth, unless u no more about when u will die $$ Dec 18, 2012
@volatilitysmile @carney I knew a close adviser of Mozillo; he told me stories of how disconnected Angelo was w/reality in 2009 $$ Dec 17, 2012
@nicster There have been many changes, but they are all local, and don’t make the news. US Govt was stupid on the shoe bomb. Local better $$ Dec 15, 2012

Retweets

Amazing RT @moorehn: “the average lifespan of American musical superstars in the pop, rock and rap genre is only 45.” http://t.co/uXVNuStF Dec 20, 2012
Practically. Old bond mgr rule: underweight the most rapidly growing debt class $$ RT @ToddSullivan: didn’t they already do student loan? Dec 20, 2012
Remember deriving formula when younger $$ RT @munilass: Twelve Days of Christmas and tetrahedral numbers http://t.co/VVNnyU2V (via @ptak) Dec 20, 2012
You can say that again $$ RT @japhychron: @AlephBlog Always funny the way they call economics a science. Studying people is anything but. Dec 18, 2012
Banks are insolvent & w/large & rapidly growing budget deficit $$ RT @FGoria: DJ: Cyprus May Be Days Away From Default — Fin Min Official Dec 17, 2012
Sad & dumb $$ RT @carney: You’d never guess who has a completely self-serving & bonkers theory of the financial crisis. http://t.co/LIAd8WqB Dec 17, 2012

Twitter Summary

My week on twitter: 72 retweets received, 1 new listings, 85 new followers, 132 mentions. Via: http://t.co/SPrAWil0 Dec 20, 2012

Another Penny Stock to Avoid

Posted on 5 December 2012 by David Merkel

I received a “newsletter” today from Legendary Stocks.? Now with a name like “Legendary Stocks,” you would think the companies would have a long prior existence.? But the stock mentioned I can’t even find on EDGAR, which is different from all the other penny stocks I have analyzed.

As with all the rest, this doesn’t smell good.? This is a company with small revenues, negative earnings, and negative book value.? Though it trades in the US under the ticker IMNG, I can’t find much data on it.? Even their website has no investor data.? That is abnormal.

Oh, this was a part of Legendary Stocks, 5-point type size? disclaimer:

Legendary stocks has been contracted to receive and manage budget of eight hundred thousand dollars by a third party prime star communications agency for coverage of iMing. In addition, The Legendary stocks expects to receive new subscriber revenue as a result of this advertising effort. [Emphasis mine]

Leaving aside the concept that many Chinese stocks listed in the US are scams, where assets and earnings are misrepresented, there is little independent data to work with here.

But given the 93% decay rate on promoted penny stocks, I predict that by my next birthday, 12/5/2013, IMNG will trade for less than 10 cents a share, adjusted for reverse splits from the present.

I say to all who hear me: avoid promoted stocks.? Buy what you have analyzed: don’t trust what others think, even me.

Not a Diamond, it is Only Graphite

Posted on 1 December 20122 December 2012 by David Merkel

It’s been two months since I have written about promoted penny stocks.? Let’s start with how the penny stocks I have written about have done.

Ticker	Date of Article	Price @ Article	Price @ 11/30/12	Decline	Annualized	Splits
GTXO	5/27/2008	2.45	0.018	-99.3%	-66.3%
BONZ	10/22/2009	0.35	0.029	-91.7%	-55.2%
BONU	10/22/2009	0.89	0.087	-90.2%	-52.7%
UTOG	3/30/2011	1.55	0.020	-98.7%	-92.6%
OBJED	4/29/2011	116.00	1.500	-98.7%	-93.5%	1:40
LSTG	10/5/2011	1.12	0.036	-96.8%	-94.9%
AERN	10/5/2011	0.0770	0.0003	-99.6%	-99.2%
IRYS	3/15/2012	0.261	0.090	-65.5%	-77.6%
NVMN	3/22/2012	1.47	0.210	-85.7%	-94.0%
STVF	3/28/2012	3.24	0.390	-88.0%	-95.6%
CRCL	5/1/2012	2.22	0.430	-80.6%	-94.0%
ORYN	5/30/2012	0.93	0.205	-78.0%	-95.0%
BRFH	5/30/2012	1.16	0.459	-60.4%	-84.1%
LUXR	6/12/2012	1.59	0.041	-97.4%	-99.96%
IMSC	7/9/2012	1.5	1.200	-20.0%	-43.2%
DIDG	7/18/2012	0.65	0.270	-58.5%	-90.7%
GRPH	11/30/2012	0.8715	0.8715	0.0%

?Now	11/30/2012		Median	-89.1%	-93.0%

And now a little bit of news:

1) Obscene Jeans Corp. [OBJED] did a 1-for-40 reverse split.? Almost no one makes money on reverse splits.? But it does allow the company to reboot, issue more cheap shares, and continue the scam.

2) I was contacted by a lawyer suing Luxeyard [LUXR].? Won’t give most details, but it does not surprise me that the stock has dropped so much in so little time.? The dilution from the stock offering did a lot of it, and losing money is the rest.

3) It is fascinating to me that promoted penny stocks tend to lose value at a 93% per year basis.? That is very reliable.? None of the penny stocks above have gains.? They all lose.? So, why should anyone invest in them?? No one should.

I toss out the idea that there may be some good small-cap companies out there that deserve attention.? Run stock screens, and analyze them yourself.? Don’t trust the pitches of others.? If you must listen to those that pitch small cap stocks, at least stick with someone that has no agenda, like AAII.? Go ahead, invest in their shadow stock portfolio.? It has trounced the averages.

Graphite, not a Diamond

Okay, here is tonight’s promoted stock: Graphite Corp.? At first, I was kind of surprised by the pedestrian nature of this stock, but as I looked at it, I realized, “Okay, yeah, graphite pricing has gone up a lot since the Chinese started to ration their sales, since in the past, they were 80% of the supply.”

But Graphite Corp. has no revenues, negative earnings, scanty book value, and has never mined an ounce of graphite in its existence.? It’s management team is not a top-flight bunch of miners.? It is a development stage company that was once targeted to be a “third party reseller of medical office business solutions.” (see page 5)

This is typical of penny stock promotions.? The promoter spins a great tale, but there is little to nothing there.?? Graphite is produced in mines, but it is also produced synthetically.? The high prices for certain types of graphite may create new technologies that allow synthetic graphite to be produced in larger, purer sheets.? That’s a speculation on my part, but large price moves, like that of high-quality graphite moving up 150%, invites not only new mines, but new technologies.

Okay, but let’s look at the development of this company, and how its stock got issued:

This is the statement of shareholder’s equity from the recent 10-Q.? I have added the last column to show you the prices where stock was issued.? No insider ever received stock at prices higher than a nickel per share.? Ask yourself, why can’t you get stock at a nickel per share, so that you could sell it at 87 cents per share?

Also note the way the share count has ballooned — they keep issuing shares, because they have little cash to pay parties with.? Five years ago, 1.5 million shares.? Today, nineteen-plus times that — 28.7 million shares.? And the company has done nothing aside from raising money, and unsuccessfully speculating.? If we liquidated the company now, we would get 2.28 cents per share, not the 87 cents it has recently traded at.

The only way a company gets that kind of valuation is through promotion/advertising.? And what were the incentives for those that put this in my mailbox today?

The writer had this incentive:

John Person Inc., dba National Futures.com did not receive any direct compensation (other than future subscription revenues, the amount of (which is not known at this time) with respect to the publication of this Advertisement. John Person Inc. has received $20,000 in cash compensation from Greenstone Media, LLC. to endorse this advertisement. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this newsletter as the basis for any investment decision .While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Only invest in monies you can afford to lose.

To their credit, the bolding is theirs.? What incentive did the advertiser have?

Third Party Advertiser/Advertising Agency IMPORTANT NOTICE AND DISCLAIMER: Greenstone Media, LLC., the third party advertiser, has paid $1,179,405 to Diamond Spot Media, LLC (DSM) as of October 24, 2012 for this advertising effort in an effort to build investor awareness. DSM shall retain any amounts over and above the cost of creating and distributing this advertisement which advertises The Bottom-line Newsletter coverage of Graphite Corp. Advertising services include; production, outsourced advertising copywriting services, mailing and other related distribution services and advertising media placement costs. Greenstone Media LLC, the third party advertiser, is a company based in Charlestown, Nevis. Greenstone Media LLC. the third party advertiser, has represented to DSM in writing that it does not own any shares of Graphite Corp. except for restricted stock which Greenstone Media, LLC. has represented to DSM in writing that it will not sell, pledge or hypothecate or otherwise agree to dispose of for 90 days following the initial dissemination of this advertisement. Greenstone Media LLC., has also represented to DSM in writing that neither it nor its affiliates will buy or sell any shares of Graphite Corp. during the period that this advertisement is being disseminated by DSM or third party media vendors.

That’s a weak disclaimer.? “Affiliates” may not mean owners or clients.? My sense is that large owners of Graphite Corp will use this opportunity to sell stock, feeding losses to a gullible public, and they could be the ones that funded the stock advertisement.? Makes a lot of sense, after all, who would benefit most from the advertisement?

As I often say, “Don’t buy what someone wants to sell you.? Buy what you have researched and you know has value.”? With promoted stocks, they are selling financial poison.? Avoid it like the plague, unless you get a kick out of losing 93%/year to scammers.

Bombing Baby BDC Bonds

Posted on 24 November 201224 November 2012 by David Merkel

After reading Jason Zweig’s good piece, “Should You Bottle Up Your Money in ‘Baby Bonds’?” I said to myself, “But what does the prospectus look like?”? So I went to EDGAR, and pulled up the prospectus for Fifth Street Finance Corp’s 5.875% Senior Notes due 2024.

Please understand — I get squeamish with the unsecured bonds of exotic financial companies.? Losses on the bonds of financial companies when they fail tend to be far worse than those of industrials or utilities.? That is a major reason why financial bonds typically yield more than similarly rated non-financial bonds.? They are more risky.

So, looking through the deal summary terms, we learn:

At $75 million, the deal is small.
It’s a 12-year deal — that’s done to confuse buyers, because it gets priced off the 10-year Treasury, giving the illusion of more spread.
Quarterly pay of interest which raises the effective yield a touch.
Senior subordinated, but…
effectively subordinated to all our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness, including without limitation, the $206.3 million of borrowings under our credit facilities outstanding as of October 10, 2012; and
structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of Fifth Street Funding, LLC, Fifth Street Funding II, LLC and our SBIC subsidiaries.
The bonds are callable at par after 5 years.

The structural protections here are weak.? You are lending to a financial holding company where many of the assets are pledged to other creditors.? More on that in a moment.

The risk factors for a business development company like Fifth Street are significant, and can be found here, all eighteen-plus pages of them.? But the risk factors of the debt are more significant, and can be found here.? Here are the main headings:

The Notes will be unsecured and therefore will be effectively subordinated to any secured indebtedness we have currently incurred or may incur in the future.
The Notes will be structurally subordinated to the indebtedness and other liabilities of our subsidiaries.
The indenture under which the Notes will be issued will contain limited protection for holders of the Notes.
There is no existing trading market for the Notes and, even if the NYSE approves the listing of the Notes, an active trading market for the Notes may not develop, which could limit your ability to sell the Notes or the market price of the Notes.?
If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Notes.

Unsecured holding company debt can be weak, because with some subsidiaries there may be regulatory limits or private limits to upstreaming capital to the holding companies.? That puts financial holding companies in a weak position, because when financial conditions get bad liquidity can get very tight.

And with business development companies [BDCs], which own and finance small-to-medium sized businesses, there is a lot of idiosyncratic risk including:

Your downside is 100%, but your upside is capped.
BDCs tend to be speculative investors.
Many of the assets held are subject to third-party security interests, which lessens the rights of unsecured lenders to the holding company.
BDCs, life REITs, have to pay out 90%+ of taxable income in order not to face corporate taxation.? That forces BDCs to continually go to the credit markets for financing.? But what if the market is no longer favorable for a year or two?
BDCs are placid weather vehicles, and more so the bonds.? One might be better off holding 30% Treasuries and 70% BDC stock.? At least you have more downside protection, and more upside.

So put me in the camp of those that have no interest in BDC debt.? It is a weak instrument, and regardless of what the rating agencies say, they are not investment grade risks.

On Hedge Funds

Posted on 22 November 2012 by David Merkel

I don’t think hedge funds are an optimal way to manage assets.? Here are some of my reasons:

The fees are too high.? Why pay 2% of assets, and give up 20% of the profits?
Hedge funds, aside from Commodity Trading Advisers and Global Macro funds, tend to be correlated, yield-seeking, and volatility-averse.? Why pay up for correlated performance?
The statistics behind hedge fund marketing suffer from backfill bias, survivor bias, and a few other biases.

Actual returns from hedge funds trail buy-and-hold returns by a significant margin.? Investors in hedge funds are poor timers of investment.? Though past results do not indicate future returns, investors act like that.? No one will add money to a losing fund, even if that is the point where it might start to do better.

To me it seems that we are running into the limits of arbitrage.? Shorting is unnatural, and so are many derivatives.? How much do you have to pay up to get someone else to take the other side of the trade?

Only so much stock/bonds, etc., can be lent out and shorted with no additional cost.? Beyond that, shorts have to pay up, and that crimps their profits.

This is one big reason why I am happy to be a long-only value investor.? I only have to focus of businesses making money versus their current share price.? I don’t have to deal with the games surrounding shorting.? That simplifies my decision making considerably.

On Hucksters

Posted on 21 November 2012 by David Merkel

I get my share of requests for help.? Some are from naive friends (but not so naive that they don’t ask me) are solicited on Nigerian scams.? A few quick analyses, and I can tell them: don’t do it.? This is a scam.

Then there are people who trot a business idea past me.? Some of the ideas sound pretty good, but upon further examination, I wonder why it hasn’t worked so far.? Probing that, the answer is that “business partners failed me.”? Mmm… I can understand that once or twice but when it repeats, it makes me look at the entrepreneur.

There was one guy who had a compelling idea regarding health insurance that I thought was promising, and so I let him into my network of contacts, while saying to them “This might be promising or not.? There are some good ideas here, but he is too certain of his views, and that worries me.”? A variety of talented executives looked at his idea, and passed.? A friend of mine gave it some attention, thought it had promise, and he met with him, worked with him, but he proved unstable.? In the end, he blamed us.

That typifies hucksters.? Someone else is always to blame, and they have this great untapped concept, but no one will help fund their genius.

So now, I have a client who approached me regarding an investment in the energy sector pitched to him by a friend.? I help my clients.? If they have investment issues away from me, I will take some time to give them my opinion.

But here’s the problem:

The illustrated returns are too good to be true.
The CEO has no experience operating an energy company.
The CEO’s career has gone here and there, but has not amounted to much, such that he can’t fund a $500K project on his own.
All of the helpers/directors in the illustration document have other jobs now, and may or may not be available to help if the project develops.
Some of them have overstated their resumes, or have stated things that can’t verified.
Some board members are questionable.
The opportunities, if true, are of a reasonable size such that small cap public E&P companies could take advantage of the opportunities.
The core idea is that there are a lot of small lazy oil producers who are unwilling to invest to improve output.
The pitchbook mixes in gold mining and clever trading of energy contracts — those are different businesses.? I want developmental stage businesses to focus.
If the first opportunity costs only$500K, you mean the whole group of interested parties doesn’t have $500K to invest?? I don’t want to invest where the management/board is not invested to the hilt.

I don’t see this as a valid concept, and will tell my friend/client to not invest.

All that said, I want to say to all my readers that good investing considers uncertainty, and focuses on the possibility of loss.? Bad investing focuses on possible gains.

Good investing sardonically asks “Why am I the lucky one?“? There are a lot of Baby Boomers out there who have not done well, and are looking for one miraculous venture to give them the retirement that they dreamed of.? They will take chances with the money of others that they would never do with their own.

To my readers: be wary of private investment opportunities.? Beware of those that are very certain they will succeed, but they need your money to succeed.? The certainty is incompatible with the request for external funds in most cases.

Hucksters are always certain; good investors are skeptical.

Sorted Weekly Tweets

Posted on 17 November 2012 by David Merkel

Cato Institute Monetary Policy Conference

@ToddSullivan Good conference, videos will b posted here: http://t.co/wu2DCMY2 & Plosser’s talk will b here: http://t.co/VH1zLn30 #CMC30 $$ Nov 16, 2012
Plosser: “Such an exit depends on the Fed?s ability to be systematic and transparent about its policy decisions.” $$ #CMC30 Nov 15, 2012
Plosser: ” Avoiding these risks is dependent on the Fed executing a graceful exit from this period of extraordinary accommodation” #CMC30 $$ Nov 15, 2012
Plosser: “The fourth principle is to strive to ensure central bank independence.” $$ #CMC30 Nov 15, 2012
Plosser: “The third principle is to be clear and transparent in communicating to the public the policy actions that are taken.” #CMC30 $$ Nov 15, 2012
Plosser: ” One way to do this is for the central bank to articulate a reaction function or rule that will guide policy decisions.” #CMC30 $$ Nov 15, 2012
Plosser: “…by describing how they will conduct policy in a way that is consistent with those goals. ” $$ #CMC30 Nov 15, 2012
Plosser: “The second principle is for policymakers to make a credible commitment to their goals…” #CMC30 $$ Nov 15, 2012
Plosser: “And in so doing, policymakers must acknowledge what policy can and cannot achieve.” $$ #CMC30 Nov 15, 2012
Plosser: “The first principle is to be clear and explicit about the goals and objectives of policy.” #CMC30 $$ Nov 15, 2012
Plosser: “I believe sound and effective central banking should focus on 4 guiding principles.” $$ #CMC30 Nov 15, 2012
Plosser: “Moreover, it is unlikely that regulatory reform as embodied in Dodd-Frank has substantially addressed the TBTF problem.” #CMC30 $$ Nov 15, 2012
Plosser: “The ability of monetary policy to influence employment has long been recognized as tenuous at best.” $$ #CMC30 Nov 15, 2012
Plosser: “It is very hard to quantify the risks associated with our unconventional policies. But they are real.” $$ #CMC30 Nov 15, 2012
Plosser: Blurring the boundaries between monetary & fiscal policies can pose institutional risks 4the central bank & its independence #CMC30 Nov 15, 2012
Plosser: “Moreover, it is difficult to identify the appropriate moment to begin tightening policy, even in the best of times.” #CMC30 $$ Nov 15, 2012
Plosser: “Yet, history tells us that central banks tend to find it easier to lower interest rates than to raise them.” #CMC30 $$ Nov 15, 2012
RT @PhilFedComDev: Read Plosser?s speech: ?Good Intentions in the Short Term with Risky Consequences for the Long Term.? #CMC30 http://t … Nov 15, 2012
Chen: “Rise of the individual in China.” McDonald’s in China originated “I’m loving it.” #CMC30 $$ Nov 15, 2012
Huang: Being a reserve currency lowers trading costs, lends prestige. Serves as a “Trojan Horse” for reform in China. Seiniorage. #CMC30 $$ Nov 15, 2012
Huang: 400 years ago, China was a reserve currency with 30% share of Gross World Product. $$ #CMC30 Nov 15, 2012
Schwartz: Monetary must be rules-based because we don’t really understand what monetary policy does in the intermediate-term #CMC30 $$ Nov 15, 2012
Schwartz: Debt Intolerance: Debt> 90% GDP in developed countries. 60% in emerging markets. Spain at 90%+ in 2013. #CMC30 $$ Nov 15, 2012
Schwartz: Quasi-gold standard — ECB was supposed to be independent. No exploiting money illusion. No devaluation. No excessive debt. #CMC30 Nov 15, 2012
Wolfgang M?nchau: Fundamental problem of Eurozone: No bailout, no default, no exit (inconsistent). #CMC30 $$ Nov 15, 2012
Stark: Crisis policies not well thought out, ad hoc, reactive, leaves too much to the ECB to do, too little done by govts #CMC30 $$ Nov 15, 2012
Stark: Countries did not get the practical impacts of sharing a currency. $$ #CMC30 Nov 15, 2012
Stark: Some countries were allowed to join the Euro who really were not qualified. Rules were not upheld. #CMC30 $$ Nov 15, 2012
Stark: ECB will ride to the rescue of European Governments. This is not a sustainable policy. Adjustments need to take place. #CMC30 $$ Nov 15, 2012
O’Grady: Opens by saying that the Euro was started with good intentions. (DM: low praise that it was not designed to fail.) #CMC30 $$ Nov 15, 2012
Taylor: Dual mandate came in when monetary policy was way too loose, and inflation high. Leads 2 2 much discretion in monetary policy #CMC30 Nov 15, 2012
Taylor: Argues that the policy of promising to hold Fed funds low to 2015 inconsistent with where the Taylor rule would indicate #CMC30 $$ Nov 15, 2012
Taylor: Argues that Fed funds were too low for too long 2003-2004, and that regulatory rules were not enforced. Partially blames GSEs #CMC30 Nov 15, 2012
Taylor: Last 30 years — 1982-2002 good monetary policy, in his opinion. 2002-2012 bad monetary policy. $$ #CMC30 Nov 15, 2012
Warsh: Fed is a price-maker, not a price-taker, affects risk-free rate, & it affects the pricing of all assets, distorting investment #CMC30 Nov 15, 2012
Malpass: Capital allocation is getting warped by the Fed, leading to higher prices for gold and corporate bonds, mortgage bonds, etc. #CMC30 Nov 15, 2012
Malpass: Fed is sucking duration out of the fixed income markets more rapidly than the Treasury is issuing. $$ #CMC30 Nov 15, 2012
Malpass: The Fed is a giant, heavily leveraged SIV, borrowing short and lending long, w/only $55B of equity capital. #CMC30 $$ Nov 15, 2012
O’Driscoll: Failure to forecast the Great Recession lessens the legitimacy of the Fed to engage in discretionary policy. #CMC30 $$ Nov 15, 2012
Warsh: Price stability should b the main mandate. Maximizing sustainable employment is important, but outside the remit of the Fed #CMC30 $$ Nov 15, 2012
Warsh: Communications matter, but they are not everything. What the Fed does is more important than what the Fed says. #CMC30 $$ Nov 15, 2012
Warsh: Argues that 2008 was a panic and Fed actions were justified. Today, that’s not so, where monetary policy is weak. #CMC30 $$ Nov 15, 2012
Warsh: Diminishing returns to monetary policy. Monetary policy can be really strong at some moments, and very weak in others. #CMC30 $$ Nov 15, 2012
Poole: Current economic problems are not monetary in nature. ECB has violated or circumvented many strictures in its charter. #CMC30 $$ Nov 15, 2012
Poole: QE2 was a mistake — there were already excess reserves at the banks. $$ #CMC30 Additional reserves will not solve the problem Nov 15, 2012
I asked my question on asset-liability mismatch — Hoenig: the answer was the usual that you can’t end maturity transformation #CMC30 $$ Nov 15, 2012
@ToddSullivan Hoenig: Misguided, too complex, need simpler regs and more discretion for regulators #CMC30 $$ Nov 15, 2012
Hoenig: Unlimited liability would be good, but you will politically never get there. #CMC30 $$ Nov 15, 2012
Hoenig: Need to rethink the capital approach. Dump Basel. Simplify, it is too easy to game. Need a simple tangible capital ratio #CMC30 $$ Nov 15, 2012
Thomas Hoenig suggests that we are sowing the seeds of the next financial crisis #CMC30 $$ Says we should be skeptical of new regulations Nov 15, 2012
Bernanke cut rates 8/2007-9/08 in the midst of a solvency problem as opposed 2a liquidity problem. Cutting rates wld/did not work $$ #CMC30 Nov 15, 2012
If incomes do not grow to meet the need to finance incremental debts incurred, you set up a debt financing crisis. #CMC30 $$ Nov 15, 2012
Vernon L. Smith, “Leverage cuts far deeper on the downside than on the upside.” #CMC30 $$ At the Cato Institute’s 30th Monetary Policy Conf Nov 15, 2012

US Politics

Changing the Conventional Wisdom on Wall Street http://t.co/HzU13GRB Ideas 4 tough leaders 4the SEC. 2 more: @ritholtz & @reformedbroker $$ Nov 17, 2012
Obama Said to Reject Request to Ease Corn-Based Ethanol Law http://t.co/9LWxZi2h Increases pollution too. Ag states win again $$ Nov 16, 2012
What the New President Should Consider http://t.co/Ah99K6tx Paul Volcker tells us that we need to balance the budget & grow the economy $$ Nov 16, 2012
Why Hispanics are Natural Democrats and what the GOP can do about it http://t.co/XKLbPPcq IMO the GOP can’t do much about it at all $$ Nov 14, 2012
Receivership Does NOT End GSEs http://t.co/qrEbx3Di The current law forbids the receiver 2 “revoke, annul, or terminate the charter” $$ Nov 14, 2012
10 Leadership Lessons from Simpson Bowles http://t.co/6JC5CLzc 11. Everything must be on the table. Everything. Including Medicare & SS $$ Nov 14, 2012
http://t.co/hxqRMzaG Series on economic “cliffs” in the world today. If US cliff only costs 1% of GDP, might b worth doing 2 balance bdgt $$ Nov 14, 2012

Credit Markets

Do Junk-Bond Investors Have Garbage for Brains? http://t.co/ZYYvK1db Financial repression tempts investors 2 take underpriced risks $$ Nov 16, 2012
‘Junk’ Bonds Sing Postelection Blues http://t.co/Rf4isEqO Room 2b constructive here, cash flow is adequate 2 service most HY now $$ Nov 16, 2012
BlackRock?s Junk-Bond ETF Has Record Withdrawals as Rally Fades http://t.co/C79GC6Gl Poster child 4 the current risky debt panic $$ Nov 14, 2012
Credit-Fueled U.S. Car Sales May Need Help From Incomes http://t.co/0iRq46j1 Been here b4; can incomes cover debt pmts w/room 4 error? $$ Nov 14, 2012

China

Pettis’ articles at the WSJ http://t.co/yS8vQMi3 & http://t.co/c78EI02P & at Foreign Policy http://t.co/8lNMbOUV Tough change $$ Nov 16, 2012
Xi Inherits an Economy That Needs Work http://t.co/bhS5DaC7 A decade of malinvestment should give way 2 a free economy, but it won’t $$ Nov 13, 2012
Examining China?s ?Shadow Stimulus? http://t.co/6Rv7HHGZ Avoid Chinese wealth management products, they are likely 2b Ponzi schemes $$ Nov 13, 2012
Wary of Future, Professionals Leave China in Record Numbers http://t.co/0pI04Bso Let them come 2 America! Throw the doors open 4 them! $$ Nov 13, 2012

Eurozone

Pettis on Spain: “Given how rapidly the political environment is deteriorating, I have little doubt it will leave the euro.” $$ Nov 16, 2012
Multinationals Find Loopholes Galore in Europe http://t.co/EZlRNNNY Wonder when the developed countries reconcile corporate tax policy? $$ Nov 16, 2012
Europe Gives Greece 2 More Years to Reach Deficit Targets http://t.co/N34PPFWQ Extend & pretend, no way Greek Debt/GDP gets below 120% $$ Nov 13, 2012
Ex-Goldman Bankers See Crisis Opportunity in Greek Insurance http://t.co/XvzZRWYE There may be value scouring the PIIGS for investments $$ Nov 13, 2012
Rajoy Aims to Stem Evictions as Suicide Darkens Crisis http://t.co/LdKVjUv5 Spain has it tough. Not much the government can do though $$ Nov 13, 2012
EU budget talks collapse http://t.co/6SvZ6nrC Austerity works when the problems are small; when problems are big, inflation is the cure $$ Nov 13, 2012

Rest of the World|

Funds Bet Against Japan Inc. http://t.co/6rIDALbP Hedge funds buy protection on the CDS of large Japanese companies, timing a problem $$ Nov 16, 2012
Jordanians Protest Fuel-Subsidy Cut, Demand King?s Ouster http://t.co/hMdSsnrY When conditions r poor, even small changes lead 2 panic $$ Nov 16, 2012
Japan Megabanks? $6.7 Billion Stock Losses May Spur Selloff http://t.co/gNOLmkuY Losses will b taken; banks disentangling from industry $$ Nov 15, 2012
Canadians Aren?t Heeding Debt Warnings http://t.co/nv2Pbt9R Debts grow as low rates lead to overleverage in the Canadian economy $$ Nov 14, 2012
US Conference Board fears Brics miracle over as world faces decade-long slump http://t.co/zXyjNdmU Overindebted world growth soggy $$ Nov 14, 2012
Hedging China risks, Japanese firms turn to booming Southeast Asia http://t.co/mmiuBPGB Japan spreads its manufacturing risk 2 new places $$ Nov 14, 2012
http://t.co/OtaZcRhc How are debt levels in Israel? Are they catching the disease creeping up on Australia, Canada, & Sweden? $$ Nov 14, 2012
Brazilian Stocks Squeezed by Rousseff as Valuations Increase http://t.co/PnNddJun This is why I have sold my Brazil holdings: Dilma $$ Nov 13, 2012

Companies

SandRidge Investor Revolt Mounts Over ?Critical Failures? http://t.co/zSmC0YlK $SD mgmt bets natgas prices will rise relative 2 crude $$ Nov 16, 2012
Twinkie Maker Hostess to Shut Down After Strike http://t.co/sAq4PrCb Delivers a sweet loss 2 all stakeholders, but Twinkies will return $$ Nov 16, 2012
Amazon and the art of evasion http://t.co/0DA7kIgj You have to understand, at its heart, $AMZN is a nonprofit enterprise, killing many $$ Nov 15, 2012
Goldman Using Technology to Become Wal-Mart of Wall Street http://t.co/h8pGuaSe Low cost wins in commoditized space, but machines err 2 Nov 14, 2012

Wrong

http://t.co/cWlyHVR8 Too many neoclassical economists. They didn?t foresee the last crisis; how will they do better next time? $$ Nov 14, 2012
Wrong: 6 Ways to Profit from the “New Saudi Arabia of Energy” http://t.co/md6bNR81 One stray misunderstood “fact” can do a lot of harm $$ Nov 13, 2012
Wrong: Is the Insurance Industry Doing Enough to Address Climate Change? http://t.co/06gAsTgF Climate always changes; nothing has changed $$ Nov 13, 2012
Wrong: ‘Baby Berkshire’ Leucadia matures with Jefferies deal http://t.co/HYo4f3MA $LUK does not have the cheap finance of $BRK.B $$ Nov 13, 2012

Other

Federal deficit hits $120 billion in October; bad start to fiscal year http://t.co/Bo3TQqZx By 2017 Obama might triple debts of 2009 $$ Nov 14, 2012
Public pension funds face vast shortfall http://t.co/R2qMQJe1 <- Summary article. Protections 4municipal bens-> http://t.co/xDkQKW8n $$ Nov 14, 2012
Buffett company to close Va. newspaper, cut 105 jobs http://t.co/51FGQGE9 Small newspaper not far from DC; no reason 4 it to exist $$ Nov 14, 2012
$BAC Offers to Buy $MBI Bonds to Block Amendment http://t.co/VTAeeIW0 $300M goes from stockholders to 5.7% bondholders $$ #poof Nov 13, 2012
5 money moves a post-bubble buyer is making now http://t.co/8HqPJRWe Main idea: buy what is despised now. Don’t take normal risks $$ Nov 13, 2012
10 things 401(k) plans won?t tell you http://t.co/o0VWXmim Main point is that average people are not good at managing pension assets $$ Nov 13, 2012
New DNA Techniques End Mystery of What Ails Baby Patrick http://t.co/3SrJ9R7j Analyze DNA after an abnormal birth. 2nd order effects? $$ Nov 13, 2012

Replies

@CJEHunt @euromoney Many thanks, Christopher. Remember that 1 fondly. Remember discussing theses w/ @Steve_Hanke @ Balt CFA mtg ~2000-1 $$ Nov 17, 2012
@euromoney Thanks for the #FF . U did an article in 1998 that was prescient about troubles the Euro would have. Could I get a copy of it? Nov 16, 2012
@BloombergView don’t know who to send this 2, but big disimprovement on the US bonds page on the BB web: http://t.co/2sJ5NEDK less data $$ Nov 16, 2012
‘ @TheCreditBubble Akre and Hawkshaw Nov 16, 2012
@EddyElfenbein But it is not too much if it is a non-profit. After all, an absurd valuation is still absurd at double absurd. $$ Nov 15, 2012
@researchpuzzler My mom used to say that 2 me, but positively because her parents were bright Nov 14, 2012
. @ctindale @BlackRaven999 Eric Hovde used to say that. We don’t repeat our parents mistakes, we repeat those of our grandfathers $$ Nov 14, 2012
@thinkingtrades I remember getting heckled writing pieces at RealMoney on the husing bubble 5/2005 & Subprime RMBS 11/2006 Can b forseen $$ Nov 14, 2012
@BlackRaven999 @ctindale U r right that if they had an effective model, steps might b taken 2 avert a crisis. Tough 2 fight a boom though $$ Nov 14, 2012
@ctindale @BlackRaven999 Used to work 4 a hedge fund that was predicting the crisis. Problem was we were 2 early. Made $$ at end though Nov 14, 2012
@euromoney Yes, that is why in developed mkts. Also, the knock-on effects hit GDP more rapidly from a sell-off in bonds than equities $$ Nov 14, 2012
@euromoney I worry about that too. Unintended consequences in the bond markets would b much more severe than in equity markets $$ Nov 14, 2012
@felixsalmon & terminated in 12/2008: 10Y Tsy avgd 2.42% then… prob a good move in hindsight, though terminating 1yr earlier/later better Nov 14, 2012
@felixsalmon This story says the swaps were put on in 2004: http://t.co/n3dWsLMF 10Y avgd 4.27% then. Nov 14, 2012
@felixsalmon @jennablan They put on the swaps while he was President 2001-6, not enough data, but the 10Y avgd 4.40% over his Presidency $$ Nov 14, 2012
@mickwe @BradErvin1 and thanks to both of you — I got 4 notes on this; I appreciate my readers. Nov 14, 2012
@mickwe @BradErvin1 Mistake in pasting HTML that left code behind that was invisible in the editor, but visible once published. Fixed now Nov 14, 2012
@PlanMaestro Maybe $MBI could offer to sell itself 2 $BAC, or offer a minority stake in the healthy sub in exchange 4 their consent $$ Nov 13, 2012

Retweets

Will certainly turn out moist $$ RT @BarbarianCap: Bacon-wrapped Thanksgiving turkey. The American Eater wins again. http://t.co/Il1RaiET Nov 16, 2012
Both RT @researchpuzzler: Q from @jasonzweigwsj: is it HY investors that are crazy or policymakers? http://t.co/hneJaRrq how about both? $$ Nov 16, 2012
That tweet just fell on my head. Ow. RT @EddyElfenbein: So Newton was right. $AAPL does obey gravity. Nov 16, 2012
Interesting CEF sorter, thanks RT @abnormalreturns: A big jump in the number of CEFs trading at a +15% discount. http://t.co/XORvF8eA $$ Nov 16, 2012
You can say that again. Yahoo too $$ RT @gilaniali: If that use Gmail they should turn on two factor authentication. http://t.co/5YyAlYF2 Nov 16, 2012
Cultural prob $$ RT @niubi: ?@ChinaGeeks: NEW 2NON POST: Why Rural Chinese Kids Don’t Go to College http://t.co/QEVlINtG the meritocracy… Nov 15, 2012
RT @researchpuzzler: RT @DavidSchawel: One of the first days in a LONG time that the credit markets have shown some cracks – will be int … Nov 14, 2012
War threats via Twitter. Twitter has arrived $$ RT @kept_simple: Until Obama RTs the IDF, how can we be certain he supports Israel? Nov 14, 2012
The central point RT @ctindale: @BlackRaven999 it’s the central differentiator neo classical don’t factor in debt levels Nov 14, 2012
Talking about dealer mkts $$ RT @moneyscience: Financial markets going through worst period in decades, says ICAP boss http://t.co/3haobsSa Nov 14, 2012
Not surprised $$ RT @kaylatausche: BREAKING: House report released tomorrow to show decisions by Corzine led to #MFGlobal collapse. Nov 14, 2012
Last year of 10Y Tsy: http://t.co/KisbqSMv RT @felixsalmon: Whoa, when did that happen? RT @jennablan: Oh, wow, 10-year now at 1.60% $$ Nov 14, 2012
+1 😉 RT @ReformedBroker: .@LukeRussert doesn’t understand that for Nancy Pelosi to step down, someone from Kansas must drop a house on her Nov 14, 2012
$$ Will kill us if Fed Chair RT @pdacosta: Fed’s Yellen says rates may need to stay near zero until early 2016 to forcefully lift employment Nov 13, 2012
RT @joshuademasi: @AlephBlog “purpose of studying eco is not to acquire a set of answers to eco ?s, but to learn how to avoid being dece … Nov 14, 2012
+1 RT @JonathanProber: @AlephBlog Perhaps many economists would agree we should try to become less reliant on economists in general? Nov 14, 2012
RT @prchovanec: Funding of China’s investment-led growth is shifting from bank lending to alternatives promising higher returns on same … Nov 13, 2012

Comments

“How is $FB counted in this? IPO shares, shares unlocked, or total market cap?” ? David_Merkel http://t.co/TOX6vQuF $$ http://t.co/CyrvguQ8 Nov 16, 2012
“Anything that can survive a nuclear war can certainly survive a mere bankruptcy!” ? David_Merkel http://t.co/l3KAxKo4 $$ cc: @danprimack Nov 16, 2012
Three of my friends had their email accounts hacked today. Anybody else experience something similar? $$ Nov 16, 2012
I track 76 13F filings — oddest thing of the qtr is that two of them sold everything down to only one long position. $$ Nov 16, 2012
“I think you made the right decision, Tadas. All bloggers have to have sustainable lives, including you” Merkel http://t.co/yPaYpLj7 $$ Nov 15, 2012
“You know things are tough in the Middle East when there r groups more extreme than Hamas” ? David_Merkel http://t.co/zKMtnAJs $$ Nov 15, 2012
I think Buffett instructs whoever files the 13F for $BRK.B to make it as difficult as possible to import into Excel Nov 14, 2012
Professional investors would be sad if retail left the mkt. Lucy would feel the same if Charlie Brown gave up trying to kick the football $$ Nov 14, 2012
13F filings are so much fun; so many ways to obscure the data Nov 14, 2012
Carnage among levered CEFs that hold risky debt — many down 3%+ Nov 14, 2012
After the hurricanes in 2004-5, ppl said it was global warming, just in time to get 6 low hurricane damage years. 1 storm creates panic $$ Nov 13, 2012
“Though you are not new, of bloggers originating since 2009, you are my favorite.” ? David_Merkel http://t.co/PPw0N6SR $$ Nov 13, 2012