Value Investing – Page 40

Industry Ranks November 2012

Posted on 7 November 20127 November 2012 by David Merkel

My main industry model is illustrated in the graphic.? Green industries are cold.? Red industries are hot.? If you like to play momentum, look at the red zone, and ask the question, ?Where are trends under-discounted??? Price momentum tends to persist, but look for areas where it might be even better in the near term.

If you are a value player, look at the green zone, and ask where trends are over-discounted.? Yes, things are bad, but are they all that bad?? Perhaps the is room for mean reversion.

My candidates from both categories are in the column labeled ?Dig through.?

If you use any of this, choose what you use off of your own trading style.? If you trade frequently, stay in the red zone.? Trading infrequently, play in the green zone ? don?t look for momentum, look for mean reversion.

Whatever you do, be consistent in your methods regarding momentum/mean-reversion, and only change methods if your current method is working well.

Huh?? Why change if things are working well?? I?m not saying to change if things are working well.? I?m saying don?t change if things are working badly.? Price momentum and mean-reversion are cyclical, and we tend to make changes at the worst possible moments, just before the pattern changes.? Maximum pain drives changes for most people, which is why average investors don?t make much money.

Maximum pleasure when things are going right leaves investors fat, dumb, and happy ? no one thinks of changing then.? This is why a disciplined approach that forces changes on a portfolio is useful, as I do 3-4 times a year.? It forces me to be bloodless and sell stocks with less potential for those with more potential over the next 1-5 years.

I like some technology names here, some energy, some healthcare-related names, particularly those that are strongly capitalized.? I?m not concerned about the healthcare bill; necessary services will be delivered, and healthcare companies will get paid.

I?m looking for undervalued and stable industries.? I?m not saying that there is always a bull market out there, and I will find it for you.? But there are places that are relatively better, and I have done relatively well in finding them.

At present, I am trying to be defensive.? I don?t have a lot of faith in the market as a whole, so I am biased toward the green zone, looking for mean-reversion, rather than momentum persisting.? The red zone is pretty cyclical at present.? I will be very happy hanging out in dull stocks for a while.

That said, dull is hard to find these days.? Where will demand remain strong, or where will demand rebound are tough questions.

The Red Zone has a Lot of Noncyclicals

What I find fascinating about the red momentum zone now, is that it is laden with noncyclical companies.? That said, it has been recently noted in a few places how cyclicals are trading at a discount to noncyclicals at present.

So, as I considered the green and red zones, I chose areas that I thought would be interesting.? In the red zone, I picked IT services and beverages.? Stable industries.

In the green zone, I picked most of the industries.? If the companies are sufficiently well-capitalized, and the valuation is low, it can still be an rewarding place to do due diligence.

That said, it is tough when noncyclical companies are relatively expensive to cyclicals in a weak economy. Choose your poison: high valuations, or growth that may disappoint.

But what would the model suggest?

Ah, there I have something for you, and so long as Value Line does not object, I will provide that for you.? I looked for companies in the? industries listed, but in the top 4 of 9 financial strength categories, an with returns estimated over 15%/year over the next 3-5 years.? The latter category does the value/growth tradeoff automatically.? I don?t care if returns come from mean reversion or growth.

But anyway, as a bonus here are the names that are candidates for purchase given this screen.? Remember, this is a launching pad for due diligence.

Full disclosure: long for me and clients: HPQ, VLO, TOT, TEL, INTC, CSCO, VOD

On Time Horizons

Posted on 3 November 2012 by David Merkel

Why are time horizons important?? Because people have future goals that they want to meet.? We typically invest money today because we have some need that we are trying to meet in the future, whether that is college expenses, retirement, or some other less common need.? Institutionally, that could be funding a charitable endowment, a pension plan, or the liabilities of a life insurer (or other insurer, but life liabilities are long).

Most retail investment advice is short-term in nature: the analyst has determined that something good or bad will happen in the short-run, so buy or go short now, respectively.? In general, such investment advice has not worked out well.? Why?? For the most part, it is very difficult to time corporate events.? It is better to try to gauge longer-term prospects, and invest accordingly — but that means you have to have no need for the assets in the short-run.? As is said in many places, you are only investing what you can afford to lose.

Few invest that way, because it is in our nature to be jumpy.? We look for short-term gains when we should be patient.? Many stocks are like crops that may take years to mature.? Yes, if you get the timing right, you can do far better, assuming you have better places to reinvest.? Making a clever move is one thing, but a series of clever moves is tough.? Investing is easy, but changing horses, and selling and buying to make a big kill is tough.

Now bonds offer more precision on time horizons.? Invest today, and barring default, your principal comes back at maturity. With equities, we rely on arguments that over the long run equities don’t lose money.? There is nothing structural to support this; ask the Japanese if they agree.? (I could comment on equity markets that have gone out of existence for a time, but I refrain.)

At present, the CAPE10 and Q-ratio indicate that stocks are not likely to return a lot over the next 10 years.? The same is true of most high-quality bond investments.? Also, true of most high-yield investments when expected losses are netted out.

In an over-indebted world, the marginal efficiency of capital is low — we need a certain amount of bad businesses to fail, so that capital can be reallocated to ventures that are more promising.? No one likes failure in the short-run, but it yields good results in the long-run — more promising ideas get capital.

We don’t need more houses, banks, autos, etc.? The bailouts were a failure because they perpetuated a part of the economy that was in oversupply.? Thus we have had a weak recovery.

Back to time horizon.? I am not crazy about buying bonds here.? The risk-reward is awkward, but the same is true of stocks.? That said, the variability on stocks is greater normally, but with rates so low, it may be similar.

If this does not sound optimistic, you understand me well.? Perhaps that means that cash, gold, or foreign currency bonds might be better, though I have my doubts on foreign bonds.

I’m going to keep doing what I always do.? I buy cheap, well-capitalized stocks, in industries that are out of favor.? I manage money with a view to holding stocks for 3-5 years.? Though it has not worked well for me recently, it has worked well in the past, and I will pursue my opportunities there.

Sorted Weekly Tweets

Posted on 26 October 2012 by David Merkel

Insurance

Insurers Must Boost Reserves for Residential Mortgage Bonds http://t.co/z1Plcc9z Pretty trivial; change small, not worth making $$ Oct 26, 2012
The Randian and the Bailout http://t.co/45wGJSo2 Without a tax gift from the US Tsy, $AIG couldn’t pay off the bailout http://t.co/2O4k7vpA Oct 25, 2012
For that last tweet, full disclosure, long $AIZ for clients and me Oct 24, 2012
Assurant Reports 3rd Quarter 2012 Financial Results http://t.co/pTbHUunV Over 8.75 yrs $AIZ has shrunk its share count from 142M to 78M $$ Oct 24, 2012
Weschler Rise From Grace Leads to Role Advising Buffett http://t.co/uUlYUPVK Interesting tale of a guy who can deal4 & value companies $$ Oct 22, 2012
Goldman Sachs Creates a Dividend+Buybacks Measure, & 4 Insurer Stocks Shine http://t.co/myQ8Ga1e I own 2 of them 4 clients. Which 2? $$ Oct 22, 2012

Central Banking

Here Comes the Dollar Wave Again http://t.co/5EO5Ejve Defend exports, import inflation, asset bubbles “Our currency, but your problem.” Oct 25, 2012
Approach risks ?distorting? decisions & ?it might be economically inefficient 2try2 push prices up so much,? Shiller http://t.co/Bs5GJPGX Oct 24, 2012
Redacted Version of the October 2012 FOMC Statement http://t.co/2jOMkLje Note: CPI inflation is at 2%, also inflation expectations rising $$ Oct 24, 2012
FOMC Statement: http://t.co/E2BOFdrr Oct 24, 2012
“We fail 2c the direct link, or even an indirect link, btw the size of the Fed’s balance sheet & the unemp rate” http://t.co/bM149U5Z $$ Oct 24, 2012
Buffett: ‘”I get a little worried about continuously expanding” the Fed’s balance sheet, he said on CNBC.’ http://t.co/KWIVYBIS $$ Oct 24, 2012
Traders Calling Singer?s Bluff on Intervention as Koruna Gains http://t.co/Y1ml4EZ4 Czech National Bank playing with fire, will burn $$ Oct 22, 2012
Would mean that the external effect of loose monetary policy have been played out, & the next big move is coming (but from where)? $$ Oct 22, 2012
Worst Carry Trades Show Central Banks at Stimulus Limit http://t.co/IDxi6uVq Interesting thought: if carrytraders can’t make money… $$ Oct 22, 2012

Fiscal Cliff

Firms Hit Brakes Before Fiscal Cliff http://t.co/z1Plcc9z Tap brakes is more like it. Most think we won’t go over the cliff #gridlock $$ Oct 26, 2012
Aha! Here’s The REAL Reason Corporate Executives Are Freaking Out About The Fiscal Cliff http://t.co/oS8VZpsi Favors initiatives of Dems $$ Oct 22, 2012

Other

How Supap Kirtsaeng?s Textbooks Idea Led to Supreme Court http://t.co/h1CDWk1q What rights exist to re-sell something that you bought? $$ Oct 26, 2012
The Plot to Destroy America’s Beer http://t.co/3ElPpvvx A tale of cost-cutting, quality reductions. Light beers ascendant. $$ Oct 26, 2012
Sandy Nears Jamaica, Forecasters Weigh New England Threat http://t.co/R1HNSDm8 High Incidence, Low Power 4 Tropical Storms in 2012 $$ Oct 24, 2012
Calling All Germs http://t.co/BkfuReQq Cellphones Are Great for Sharing Photos?and Bacteria; Cleaning May Harm Screens $$ Oct 23, 2012
Romney?s Air Force Comparison Misses U.S. Edge in Jets http://t.co/3lFkg4KL There r some situations where more lower tech jets would help Oct 24, 2012
Dean, Marathon Split-Offs on Tap http://t.co/m5OLbAuI Post-split $DF looks interesting, if boring. More room 2 focus $$ Oct 22, 2012

Energy

Shale Glut Becomes $2 Diesel Using Gas-to-Liquids Plants http://t.co/sjUDsrVK This is the Holy Grail, because gasoline is tough2produce $$ Oct 26, 2012
The internal combustion engine is far from dead http://t.co/Ewa60lrw Most real improvements in energy efficiency deal w/fossil fuels $$ Oct 22, 2012
Americans Buying Fewer New Cars in Lifetime http://t.co/viB6dIlU long-term probably not a good sign; autos drive a lot of the economy $$ Oct 22, 2012
The Myth of Affordable Energy – Interview with Ed Dolan http://t.co/8jWI1faC Energy efficiency is increasing. Full cost pricing desirable $$ Oct 20, 2012

Demographics

Russian Funds Band Together to Repel Government Cash Grab http://t.co/72KWo3Bg Gotta b careful on pension funds cuz govts like 2 raid them Oct 26, 2012
More Americans delaying retirement until their 80s http://t.co/dZM4Tmqm This is the way it should be. Retirement s/b 4-5 years at most Oct 25, 2012
Can Japan?s Elderly Become Its Growth Engine? http://t.co/eqhsu54i This seems like wishful thinking to me. Spending from savings <> wages $$ Oct 24, 2012

Financials

U.S. securities regulator questions need for new broker standard http://t.co/iNUVJKIp Extending fiduciary standards 2 brokers in question Oct 24, 2012
Forcing frequent failures http://t.co/OL6WSfOM @interfluidity hits a home run in dealing with bank failures, & how to regulate Oct 24, 2012
Low Rates Pummel Banks http://t.co/577Fsc1i Borrowers Benefit, but Industry Lending Profits Hit Lowest Level in Three Years $$ Oct 23, 2012
Marsico: When Going Private Goes Wrong http://t.co/Vxyc40u7 June 2007 was the wrong time 2 LBO, then performance lags $$ My sympathies2them Oct 23, 2012
3 key money topics Romney-Obama debates ignored http://t.co/7j79IQ4V Housing prices, Investor protections & Retirement Savings $$ Oct 23, 2012
The end of stock market crashes? http://t.co/VjIALNEm I’m sorry, but the conclusion is bogus. Even if its works, only some could escape $$ Oct 23, 2012
Mortgage risks underestimated, economists conclude http://t.co/TFDpqz70 FHA uses a model that leads it to underestimate delinquency risk $$ Oct 22, 2012
Annaly Says Michael Farrell Dies After Cancer Diagnosed http://t.co/n5VNgi8m He was kind2me ~2000; willing2share ideas w/little me $$ $NLY Oct 22, 2012
Mortgage REITs: Not Just Yet http://t.co/20kPVBs2 I would be careful here & reduce exposure… they are always unstable vehicles $$ Oct 21, 2012
The Winner for Investors Is… http://t.co/eBQM5Ws4 @jasonzweigwsj points out the connection between returns & politics is tenuous $$ Oct 21, 2012

Economy

Firings Highest Since 2010 as Ford to Dow Face Slump http://t.co/9q87q63I This is the US economy. We can’t support workers relative2profit Oct 26, 2012
Weak Tea at Unilever Persists Amid Innovation at Rivals http://t.co/ryqjkEof Did not even know that Lipton was a Unilever brand $$ $UL $UN Oct 24, 2012
Doom Heralded at Hayman by Widening Trade Deficit: Japan Credit http://t.co/CZS09whs Japan?s debt is the ?cleanest dirty shirt.? Not. $$ Oct 23, 2012
Hunger Stalks My Father?s India Long After Starvation End http://t.co/dkVTXxaO Long article, makes me grateful that I can feed my kids $$ Oct 23, 2012
Electrolux, Philips Warn Of US Slowdown http://t.co/6k5hxTe2 Another soggy data point; less demand 4 bigger-ticket consumer items $$ Oct 22, 2012

Retweets

Ya, true RT @glenntyrpa: @barnejek @AlephBlog @sikorskiradek Yea. When did Japan invade China? Was that 1930? 🙂 we Americans forget. Oct 26, 2012
RT @PragCapitalist: Today’s financial tip: don’t ever buy a boat. Instead, find a friend with a boat. If necessary, buy the friend. … Oct 24, 2012
Clever RT @BradErvin1: @AlephBlog @PragCapitalist This is Buffett, courtesy legacy @kevindepew articles @Minyanville http://t.co/dGTNG9kl $$ Oct 24, 2012
Stinks, just stinks RT @ritholtz: THE SELLSIDE: SAME AS IT EVER WAS Courthouse News Service http://t.co/K9LDmj5m via @CourthouseNews $$ Oct 24, 2012
RT @KathrynTully: The last of Sarah Thornton’s top reasons for quitting art market surely belongs in top 10 reasons not to be a journo. … Oct 24, 2012
RT @emckean: LOVE THIS RT @aniajakubek: There’s a Polish saying that means “Not my problem” & literally translates to “Not my circus … Oct 24, 2012
SIFMA gets an infamous big name to speak to them RT @LaurenLaCapra: #greenspan http://t.co/rjVlCfV5 Oct 23, 2012
At my house too RT @retheauditors: Halloween is dead to me. Oct 22, 2012

Replies

#FF @NickTimiraos @carney @grossdm @annsaphir @ritholtz @ToddSullivan @PlanMaestro @RolfeWinkler @LaurenLaCapra @davidgaffen @jennablan $$ Oct 27, 2012
@TraderNewsFeed No, I don’t think that. I think we should enjoy our work, and enjoy it for as long as we can, until we can no longer work $$ Oct 26, 2012
@rjwile True, but that’s the price of not saving enough. There is no right to a retirement. Someone send the EU the memo. $$ Oct 26, 2012
@OVVOFinancial I largely agree. Reducing the real value of debts would help. My only fear is that nominal incomes might not grow much $$ Oct 25, 2012
@OVVOFinancial Missed that, thanks. Still, the Chain-weighted PCE deflator is 1.5% yoy at present. Oct 25, 2012
@barnejek oops Oct 24, 2012
@PragCapitalist A boat is a hole in the water into which you pour money $$ That said, the recession created a lot of used boats 4 sale Oct 24, 2012
@tebaho I am not a Romney backer Oct 24, 2012
@EddyElfenbein lifted the stake above 50% by 1995. Oct 24, 2012
@EddyElfenbein In 1977, GEICO was ~6% of his public investments, before $BRK.B acquired 33% of the company by 1980, and buybacks + Oct 24, 2012
@EddyElfenbein In 1981, GEICO was ~30% of his public investments — no data on how big his private investments were then $BRK.B $$ Oct 24, 2012
@EddyElfenbein 1996-7 around 16% of pretax income. Prior to that, it was not wholly owned, and so Buffett acctd 4 it as an investment $$ Oct 24, 2012
@EddyElfenbein $BRK.B would not want to live without GEICO, but in my opinion, it could live without it Oct 24, 2012
@EddyElfenbein It’s about 5% of BRK’s pretax profits. The float it generates is very short and is only 5% of liabilities. Oct 24, 2012
@PragCapitalist It’s a conglomerate fueled by a set of huge insurance companies, where assets r sourced privately & publicly $$ $BRK.B Oct 24, 2012
@PlanMaestro @aarontask @TheStalwart I think it is spurious correlation b/c I c many other variable that r weak. US economy is flat. $$ Oct 24, 2012
@felixsalmon In the NT Greek, there r2 words for God’s will, &1 tells u God ordains everything, the other, he doesn’t approve everything Oct 24, 2012
@CflGator I would ask the question, how is $TGT going to deploy the capital? The answer probably lies there. Oct 24, 2012
@LDrogen America’s politicians have always made appeals based on religion, & then abandoned the religious voters that support them (not new) Oct 24, 2012
@joshuademasi I realize with Japan, it is unlikely 4 there 2b an external default, until the external debt gets big enough Oct 24, 2012
@aarontask This is a stock versus flow issue. The banks reap capital gains now, but it will reduce their future interest margins/income $$ Oct 24, 2012
@CflGator Think they are trying to free up capital for alternative uses. Oct 24, 2012
@LDrogen But all people have unprovable a priori opinions, and many will affect their views on public policy, whether “religious” or not Oct 24, 2012
@LDrogen It becomes the same paradox that philosophers go through with respect to the concept of free will vs determinism Oct 24, 2012
@LDrogen Even 2a Christian like me, God’s will is a highly nuanced, b/c there r 2 words in NT Greek 4 “will” & they mean different things Oct 24, 2012
@LDrogen One of my close friends came into existence as a result of a rape. Two good people adopted him; biological mother was courageous Oct 24, 2012
. @aarontask will look for it — if anyone has a link 2 it, pass it 2 me Oct 24, 2012
@joshuademasi Nations with their own currencies don’t have to default on debts. I think some will choose to default for political reasons $$ Oct 23, 2012
“This brings up something @ritholtz would say ~ blog traffic goes up during a crisis?” ? David_Merkel http://t.co/9U0OxjLe $$ Oct 23, 2012
@joshuademasi Not sure he will lose; he has a decent chance of being correct. Japan has preceded the global economy for past 20 years $$ Oct 23, 2012
“5. Tadas, as you have said before, investment/finance blogging is hard. And many of the best of us?” $$ David_Merkel http://t.co/EuaE0hmB Oct 23, 2012
@StephenShiflett I distrust polls generally. I am not a Romney supporter. Most statistical comments in the media r not well-founded $$ Oct 23, 2012
@StephenShiflett Stratification matters more. The size was smaller than most polls I c, & instant senses of who 1r often not correct Oct 23, 2012
@DUNNER2 @CBSNews Now there was a poll that no one asked for, the sample size was far too small, but actually had a real impact. Sad. Oct 23, 2012
@Shwaver should be more like 5% if the poll is well stratified, and most polls aren’t Oct 23, 2012
@thejudge1082 @cbsnews I would criticize that as well. Most polls are too small and not well stratified Oct 23, 2012
@nmariecrumbie @DJDougMadrid @cbsnews I am *not* a backer of Romney. I am voting for the Constitution Party. I am a statistician, are you? Oct 23, 2012
@Justsaying1104 @CBSNews size *always* matters. I am a statisticiam by training. The hyper-short news cycle forced out a poll Oct 23, 2012
@Justsaying1104 @cbsnews of course size matters — what I object to is trying to get instant answers to what people are thinking $$ Oct 23, 2012
@ituzzip On a 500 person poll the error bounds are wider +/- 5%. But Rs answer polls less often than Ds. Oct 23, 2012
@JW28 Sorry, I am not a Romney backer Oct 23, 2012
@DJDougMadrid I don’t believe in instant, & I am voting 3rd party. Oct 23, 2012
@StephenShiflett Most polls I see are double that, it was still small, given the short time after the debate. Oct 23, 2012
@CBSNews Small sample size Oct 23, 2012
@TheStalwart I think you are fair and balanced, because A third of the time I agree, a third I disagree, and a third I an in-between. $$ Oct 23, 2012
@wallstCS FD: long $SFG — You do realize that revenue is not a useful valuation metric for insurers, right? Earnings & Book r relevant $$ Oct 22, 2012
@groditi @GaelicTorus it drives a lot of technology development, materials science, design (or lack thereof), advertising, energy efficiency Oct 22, 2012
@BradErvin1 No, the point is that corrupt governments tend to spawn corruption in society Oct 20, 2012

The Rules, Part XXXIV

Posted on 22 October 201223 October 2012 by David Merkel

“Once something is used for hedging purposes, it becomes useless for predictive purposes.”

I know this is kind of a trivial insight now, but when I originally wrote it, it was more cutting-edge.? That said, it is still not fundamentally understood by most.? Most still look at a fragment of the puzzle.? Few look at the whole.

My poster-child for fragmentary thinking is this article: The end of stock market crashes? Do I disagree that correlations begin rising among risky assets toward the end of a bull market?? Not at all.? I have even written about it on occasion.

But if few understand this, then only a few will take shelter when correlations get high.? The rest will continue the disorderly party until the “market cops” show up in the bear market.

If it becomes a widespread idea, a market rule, etc., it may constrain behavior for some time, leading to no large crashes, but after a long while with no crashes some will assume that such crashes are not possible, and the rule is out-of-date.? Four? examples:

Stocks should yield more than Treasury bonds.
Stocks should yield more than 3%.
Q-ratio
CAPE10

Many items that have intermediate-term wisdom, and are known to have that wisdom, eventually get ignored.? The first two I listed were common market nostrums in their day.? The second seem to have more long-term validity, but get ignored by many who say, “It’s different this time!”

But even if everyone agrees that a certain risk measure is a correct risk measure, and it becomes a part of the market’s furniture, that doesn’t mean risk ceases.? It does mean risk takes a different form.? I think of all of the people decided not to take equity risk during 2000-2007, and decided to invest in residential real estate, or take risk through CDOs, subprime RMBS, etc.

Yes, they avoided risk in the stock market.? They ran into something far more fundamental.? The risk from all risky assets, public, private, leveraged, unleveraged, is everywhere, and it is very difficult to hide while taking risk.

The markets incorporate a lot of rules that have partial validity.? They are known variably, and apply variably.? At some points these rules seem sharp and prescient.? At other times they seem weak and outmoded.

This brings me back to my view that the market is an ecosystem where no strategy has permanent validity.? Strategies ebb and flow as many parties search for scarce returns.? There are well-known limits to markets, like the Q-ratio and CAPE10.? If the markets come up with another one, like risky asset correlations, it will have validity, restraining speculative behavior, until people overwhelm it, and a new bust happens.

The boom-bust cycle cannot be repealed.? But it takes many forms.

With Preston Athey at the Baltimore CFA Society

Posted on 16 October 2012 by David Merkel

I don’t think I have mentioned this publicly, but I am on the board of the the Baltimore CFA Society.? My main task is to be co-chair for Programs, though I also like working with college students via the CFA Institute’s Global investment Research Challenge.

In general, I help where I am asked to help.? The two times that I have been on the board of the Baltimore CFA Society, I joined because I was asked.? I don’t need to lead.? I am very happy to not lead, except when things are confused, and no one is leading.

One of the fun things about being on the program committee is that you get to interact with a bunch of interesting potential speakers, some of whom turn you down, and others that accept the invitation.

And so it was my great pleasure to introduce Preston Athey (AY-thee), to speak to the Baltimore CFA Society.? He manages the T. Rowe Price Small Cap Value Fund.? That fund has 4 stars from Morningstar over 3 and 5 years, and 5 stars over 10 years.? It has other awards from Money Magazine and Kiplinger’s, and I’m pretty certain a number of others.

When he sat down at our table, prior to the talk, we talked about finding good companies in bad industries, which is a concept near and dear to me.? So he asked us what industries are hated now?? I volunteered shipping and coal, and later mentioned steel.

I then introduced him to the Society, and he gave his talk.? He highlighted four things:

The CFA Institute has capitulated to the academics who teach the nonsense of the CAPM.? Volatility is not risk.? Risk is the permanent impairment of capital.? (I commented that when the economics profession went mathematical in the ’40s and ’50s, they felt everything had to be quantified, whether it was correct or not, and that anything that made the math simple was a boon to being able to publish “research.”
The companies that actually do buybacks, as opposed to merely announcing them, do very well, and that is intensified for those that buy back stock at high free cash flow yields.
Lower turnover in mutual funds tends to lead to better performance.? He attributed it to having more conviction in the companies that you buy.? His turnover rate is 10%, and half of that is due to buyouts.
As a result, he talked about letting your winners run, though he also mentioned trimming positions to reduce risk.? That is similar to what I do.

He also mentioned how new management with a company that has gone nowhere can produce large returns.? Analyzing the nature of the new management is necessary — their past track record, current incentives, etc.? During the Q&A, he handled a number of questions — one that stuck out to me was industries where there are non-economic competitors.? I think of Chinese steel companies as an example that has finally failed.? The world does not need that much steel, even at current prices.

Aside from that, he was a Gentleman, as a few informed me he would be… a really nice guy.? Wish I had gotten to know him earlier.

Now if you want to know more about him, I have some articles here:

We had a great time with Preston Athey today, and for those that hung around thereafter, he answered many more questions.? Truly generous with his time, and gracious.

Sorted Weekly Tweets

Posted on 12 October 2012 by David Merkel

Hoisington Capital Management

. @paulnovell It will be public in a few days — they e-mail it out to friends & clients b4 posting it here: http://t.co/pZ4jJrQ1 $$ Oct 12, 2012
Prior tweets courtesy of Van R. Hoisington & Lacy H. Hunt, Ph.D. Whole thing will be posted here http://t.co/pZ4jJrQ1 in a few days $$ Oct 12, 2012
@wanderinggull Which? I don’t know. What was meant to produce “ever closer union” seems to be producing the opposite. Nobel = Pollyanna Oct 12, 2012
Until the excessive debt issues r addressed, the multiyear trend in inflation, & thus the long Treasury bond yields will remain downward $$ Oct 12, 2012
“During all of the Fed actions since 2008 the velocity of money has plummeted and now stands at a five decade low” Hoisington & Hunt Oct 12, 2012
A jump in daily essentials has a more profound negative impact on living standards in economies with lower levels of real per capita income. Oct 12, 2012
How the Fed expects economic traction from higher stock prices when rising commodity prices r curtailing real income & spending is puzzling Oct 12, 2012
These three studies show that the impact of wealth on spending is miniscule?indeed, ?nearly not observable.? Hoisington Oct 12, 2012
“Fed Chair Ben Bernanke and other Fed advocates believe the ?wealth effect? of QE3 will bring life to the economy.” Hoisington Oct 12, 2012
Prior Tweet a quotes Hoisington & “unintended consequence of these Federal Reserve actions, however, is to actually slow economic activity” Oct 12, 2012
QE3 is a tacit admission by the Fed that earlier efforts failed, but this action will also fail to bring about stronger economic growth. $$ Oct 12, 2012

Please Follow

#FF @japhychron @danprimack @treehcapital @insidermonkey @vitaliyk @herbgreenberg @tracyalloway @nancefinance @marykissel @diana_olick $$ Oct 13, 2012
Please follow Cato Scholar and JHU professor that I learned a lot from: @steve_hanke Oct 10, 2012

Market Dynamics

As an aside, there’s kind of a rule of thumb for Bermuda insurers on buybacks: >1.3x tangible book: special dividends. <1.3x TB buybacks $$ Oct 12, 2012
The Buyback Epidemic http://t.co/l9SvTwZM @reformedbroker notes that buybacks make less sense, the higher valuations get. I concur $$ Oct 12, 2012
New Regime http://t.co/L2JaQC2J @reformedbroker notes a sea change in the markets. I’ve been heading that way; still thinking about it $$ Oct 12, 2012
CNBC: Jim Rogers vs. Marc Faber (FULL) 10/04/2012 http://t.co/b5sEOEZb Faber & Rogers on the same segment? What a hoot! $$ $GLD $SPY $TLT Oct 12, 2012
Bubble-Era Financing Returns as Profits Falter http://t.co/yhxBEFxq Pay-in-kind bonds return, very nice. 2 years of rally left at most $$ Oct 11, 2012
Wrong: Bullish Sign for Stocks: Leverage Is Up http://t.co/1Qvcdkh9 What matters more is whether leverage will rise in the future $$ Oct 09, 2012

Rest of the World

Zhang Weiying: China’s Anti-Keynesian Insurgent http://t.co/TGNGlo9e Fascinating tale of an Austrian economist surviving in China $$ Oct 13, 2012
Hollande Robbed of Growth Engine as Companies Cut Investment http://t.co/ZGdrllIG Logical 2 invest less when EU & France r a mess $$ Oct 12, 2012
EU Wins Nobel Peace Prize http://t.co/VoTaN3ZK Nobel committee finally “jumps the shark.” The EU is unstable; a war waiting 2 happen $$ Oct 12, 2012
Spanish Bonds Risk Forced Selling as Rating Approaches Junk http://t.co/yO8XWNl4 The Rating agencies r flawed, but on credit they r honest Oct 12, 2012
IMF?s Blanchard: Healing From Crisis Could Take Decades http://t.co/NXYmLjU3 Crisis won’t b healed until total debt levels normalize $$ Oct 11, 2012
IMF Sees ?Alarmingly High? Risk of Deeper Global Slump http://t.co/B7Dg9Ah9 A stopped clock is right twice/day, $ the IMF is right now $$ Oct 09, 2012
Iran Low on Options as Hyperinflation Concerns Spark Gold Dash http://t.co/rYqDjinO Hyperinflations spawn currency substitutions: gold, $$ Oct 09, 2012
Chavez Win Called by BofA Sparks Selloff as Barclays Flops http://t.co/DNPxpVzO Sad that Chavez won, but the bonds reflected a loss $$ Oct 09, 2012
Why a U.S. buyout firm is investing in Greece http://t.co/26oB31e9 ht: @danprimack – Companies w/global markets insensitive 2 local probs $$ Oct 08, 2012
Sicily, a Portrait of Italian Dysfunction http://t.co/w3dn2JFe Core Europe is to Italy as Italy is to Sicily. $$ gone & hard work starts Oct 08, 2012
Cheapest Chinese Stocks Since ?97 Not Enough to Signal Rally http://t.co/rTEm2MNF Noneconomic actors compete & drive down future profit $$ Oct 08, 2012
The Iran Hyperinflation Fact Sheet http://t.co/bitjVaqn From my former professor @ JHU, Steve Hanke. Financial sanctions r biting in Iran $$ Oct 07, 2012

US Real Estate

OCC Forced JPMorgan, Wells Fargo to Write Down Home-Equity Loans http://t.co/qxXjXBoS FD: + $WFC – ’bout time. Recoveries poor on HEL $$ Oct 12, 2012
California Leading U.S. Out of Housing Bust http://t.co/oEaOG4nf I would be wary of “dead cat” bounces here $$ Oct 12, 2012
Tech Firms Become Real- Estate Trusts http://t.co/GrHU2bo5 Tech firms that own a lot of real estate take advantage of becoming REITs $$ Oct 11, 2012
Not New York Towers Rise With Embrace of Yield http://t.co/3MKpRdVi When vacancy rates r this high, ordinarily rents fall. Y not now? $$ Oct 08, 2012

Agriculture

Milk-Cow Drought Culling Accelerates as Prices Jump http://t.co/WvHEturP Anything involved in animal husbandry is having tough time now $$ Oct 11, 2012
Midwest Drought Claims Poultry Producer http://t.co/9K4cL3Gx Many firms involved in the meat biz r having a rough time now. $$ Oct 11, 2012

Other

I’m not much of an #Orioles fan, but don’t you have to love a team of nobodies who can challenge the highly paid #Yankees? $$ Oct 12, 2012
The UN has declared today as the International Day of the Girl Child http://t.co/L0nS6wtd Sex selection abortion kills the most girls $$ Oct 11, 2012
If Only T. Boone Pickens Had Died http://t.co/tpXYGeCV Score: TB Pickens 0, Wealthy donors 0, Oklahoma State Univ. 0, Life Actuaries 1 $$ Oct 08, 2012
Musk?s SpaceX Launches Craft for Space Station Deliveries http://t.co/Z3MH68Ud Space age begins as governments r less of a factor $$ Oct 08, 2012
California Facing $5 Gasoline Stirs Brown to Relax Rules http://t.co/uQUPOz8f There is a pain point 4 everyone, just found 4 CA gas $5 $$ Oct 08, 2012

Comments

“Good post, Josh. You have identified many of the best. No one of us covers it all; it’s a strong list” ? David_Merkel http://t.co/3Qg6WWZk Oct 10, 2012
At this rate, growing tobacco should be prohibited. Oh, wait, we tried that with alcohol. Never mind. $$? http://t.co/hU9nI6l2 Oct 09, 2012

On Angela

@PavChyt @matinastevis Her *former* husband. She kept the name b/c it was good politics. She did not keep him. Oct 08, 2012
@PavChyt @MatinaStevis I received the name Merkel at birth. Angela got it from her 1st husband. At least people r spelling it right now $$ Oct 08, 2012

Retweets

RT @MuniCredit: Citi Muni Presentation: http://t.co/ONrQe9gA #muniland h/t: @bondgirl Oct 12, 2012
I appreciate retweets RT @LSilverspar: Not enough for the value of your posts. If you value the retweets, I will do so far more often. $$ Oct 12, 2012
My week on twitter: 22 retweets received, 22 new followers, 16 mentions. Via: http://t.co/SPrAWil0 Oct 11, 2012
RT @danprimack: Every time people get all worked up over a national presidential poll, I wonder if the electoral college was eliminated … Oct 08, 2012
True of many notable CEOs w/earnings 2 smooth RT @rcwhalen: GE’s Jack Welch Knows All About Cooking the Books http://t.co/5vJeRux6 $$ Oct 08, 2012
RT @Convertbond: “Markets are increasingly distorted by Central Banks, attempts to squeeze drops of growth from overindebted developed w … Oct 07, 2012
Shock! $$ RT @BarbarianCap: Revised Greek GDP figures show recession deeper than thought http://t.co/FCspv2gU. > data released friday night Oct 06, 2012

On Dividends

Posted on 10 October 201210 October 2012 by David Merkel

Dividends are kind of a craze now, as people focus on income in an environment where income with reasonable risk is hard to come by.? Now, I used data from S&P to create this graph.? I suppose I could go further back in history and use Schiller’s dataset, but the era of high dividend yields on stocks is over, at least for now.? I can be taught, but I don’t see a lot of present relevance to pre-1990 dividend yields.? The prices of stocks as income vehicles has been bid up, and buybacks absorb much of the free cash flow from mature corporations.

That said looking at 1989 to the present, what do we see?? Dividends rose at a rate of 4.72%/year over the period, and people were willing to capitalize dividends at a rate that grew at a rate of 2.07%/year over the period.? The total return being 9.47%/year over the period leaves 2.42%/year to be the return from the dividends, and capital gains from reinvested dividends.

In one sense, the blue line above gives a fair statement of the crisis we have gone through.? Profits got smashed in 2008-2009, much more than in 2002.? (Note that financials were the core of the recent crisis but were in good shape in 2002.)? In both cases, dividends came back.

In another sense, the blue line is not indicative of the crisis.? Labor force participation has dropped incredibly.? The unemployment rate may be low, but only because many have given up on finding jobs.

My only counsel here is not to seek dividends for their own sake, but accept them if offered in a firm that offers good prospective returns.? I do not look for dividends, but 31 out of my 34 holdings pay dividends, and the average dividend (including non-payers) is 0.7% higher than the S&P 500 dividend yield at 2.75%.

I don’t so much believe that dividends have value, as many companies that pay dividends have value.? Free cash flow is valuable, and results in dividends, buybacks, and reinvestment in the business.? Find those firms that produce free cash flow, and dividends will typically follow.

Got Cash? (Part 2)

Posted on 7 October 2012 by David Merkel

In the first part of this irregular series, I tried to point out the value of having some slack assets should attractive opportunities present themselves.

I try to raise cash in my equity strategy as valuations rise.? I try to reduce cash as valuations fall.? It doesn’t work perfectly, but I do think it reduces risk, and it might improve returns.

Buffett also views cash as valuable.? He views it as a call option on other assets, as is noted in these two articles.? With cash, your downside is limited — you can just sit and wait for a good opportunity.? In one sense, if you wait too long, the opportunity cost of cash could be significant, but over most 5-year periods there is a drawdown in asset prices that avail good opportunities.

Cash gives you options, perhaps not options in the same sense as “puts and calls,” but options in the sense of choices that are easily achieved.? Particularly for Buffett, who is the choice of many who want to exit their private business, and want their culture/friends to survive, rather than receiving top dollar as a sales price.

Even as the Fed tries to make cash less attractive to hold, it is still valuable to those that prize flexibility.? That is the virtue of cash, and it is impossible to erase.

Broken Ruler

Posted on 6 October 2012 by David Merkel

Sorry for the lack of publishing recently.? I have not been feeling well.? Not sure what it is, but I am feeling a little better now.

Under normal circumstances, where a few defaults don’t threaten the whole economic system, and the government is running close to a balanced budget, and the Fed isn’t in a liquidity trap that they themselves created, there are relationships that are useful for analyzing value in the markets.

During those times the slope of the yield curve tells you a lot, and credit spreads tell you a lot as well.? But when the Fed tries to incite yield lust through QE, with Fed funds near zero, all of those relationships end.? The same is true for those who rely on yield curve slope to indicate likelihood of recession or expansion.

These are not normal times.? Yield spread relationships do not reflect risk differentials.? Collateralized Loan and Debt Obligations have returned.? That indicates we are in the final phase of this credit cycle.? When we begin to lever up junk credit, we have 2-3 years to go or so, before the credit cycle crests.? The issuance of junk bonds has reached new highs, and again, defaults will take 2-3 more years to ripen.? Like 2005-2007, the credit ratings for the junk being issued are more weighted to single-B and CCC debt, rather than BB debt.? 2015 could shape up to be really interesting.

For now, does that mean we play on, given that the credit cycle has been seemingly repealed?? Maybe.? If we’re only talking about junk bonds, what matters is being conservative at the time of crisis.? Junk bonds rarely trade off in a slow manner.

The tough question is what impacts the big four economic problems will have on asset returns:

1) Does the Eurozone centralize, dissolve, or muddle interminably?

2) Does China’s GDP growth slow dramatically, or even shrink, or respond to “stimulus?”

3) Does aging Japan finally have difficulty rolling over government debt at low rates?

4) How does the US emerge from long-term unsustainable monetary and fiscal policies?

5) How does the rest of the world deal with most of the large powers attempting to cheapen their currencies, thus forcing them to let their currencies rise, or import loose monetary policy?

Okay, five problems… the point is that when few are pursuing sustainable policies globally, it is difficult to make plans, because there are few historical analogies to guide us.

This is partly a problem because when there does not seem to be anything that is risk-free offering a positive nominal return, investors are even more prone to make subpar investment decisions, because a risk-free asset is needed to allow investors to tune their risk levels.? Retail investors, and most professionals would have a hard time with all assets being risky.

As for me at a time like this, I am trying to manage by avoiding companies that carry too much financing risk, and those with ill-defined business models.? Sometimes it works better, but while the financing bubble expands, I fear my caution is ill-rewarded.

My motto is “safe and cheap.”? I will keep doing this; it does not mean that I will always win, but it does mean that I will likely win in the long run. Lord helping me.

Sorted Weekly Tweets

Posted on 28 September 2012 by David Merkel

My week on twitter: 34 retweets received, 1 new listings, 33 new followers, 40 mentions. Via: http://t.co/SPrAWil0 Sep 27, 2012

Energy

Natural Gas Cars Are On The Road; Potholes Remain http://t.co/T9KxgbCa Optimistic that CNG & LNG will get enough distribution 2b viable $$ Sep 29, 2012
United Airlines will study Delta’s refinery bid http://t.co/iHEuWvfp This will not end well; fundamentally different businesses $$ $UA $DAL Sep 29, 2012

Rest of the World

Japan Data Show Recession Risk Growing http://t.co/UArgdWd4 “Find someone who is optimistic about the economy & ask them how they can b” Sep 29, 2012
Shanghai Bonded Copper Stocks May at Record, Survey Shows http://t.co/MMrqmsmi Glut of gluts, what will China do with a flat economy? $$ Sep 28, 2012
Toyota Unplugs Electric Car Hype http://t.co/s36gMkcZ Indeed it is hype, better 2 run cars on Natgas or gasoline $$ less waste 4 now Sep 28, 2012
China Bankrolling Chavez?s Re-Election Bid With Oil Loans http://t.co/y3tAN7WF China wants oil, Chavez wants $$ , a match made in… Sep 28, 2012
SNB Disputes S&P Estimate of Bond Purchases http://t.co/eC1AxRkc Well of course they would dispute it, harms their policy credibility $$ Sep 28, 2012
Spanish Bonds Slump as Marchers Plan Further Protests http://t.co/Sq3eiO1n Eurozone is a political construct, will agreement persist? $$ Sep 28, 2012
Why Asian Airlines Reign Supreme http://t.co/yNcjYfce It is amazing how great service drives the rankings $$ Sep 28, 2012
The real extent of China?s economic hard landing http://t.co/n6g2jBCP By one measure, China’s real GDP growth rate is 1.6% $$ Sep 24, 2012
Is China Burning? http://t.co/PxfPOebV China stirs up anti-Japanese hatred to divert attention away from the weakening economy $$ Sep 24, 2012
India Bids for ConocoPhillips Assets in Canada http://t.co/cIc6wlut Spidey sense says India will get the worse of it $$ FD: + $COP Sep 24, 2012
Aussie Debacle Flags China Hard Landing as Iron Market Melts http://t.co/8PKnupSl China sneezes, the Australians catch a cold $$ Sep 24, 2012
How weak must the Danish economy be, for them to do this? Are their banks in that bad of a shape? $$ http://t.co/vNR7Utt5 Sep 24, 2012

Credit Markets

Junk Bonds in US Poised for Biggest Retreat in 4 Months http://t.co/rIqU3rjt 2 early 4 a washout; no significant defaults on the radar $$ Sep 29, 2012
U.S. 30-Year Mortgage Rates Fall to Record Low of 3.4% http://t.co/EB2UZaic Those that r not inverted can refinance; tough 4 rest $$ Sep 28, 2012
Mortgage-Bond Spreads Cap Biggest Weekly Drop Since December ?08 http://t.co/cjGISver Anticipates Future Fed buying, doesn’t help much $$ Sep 22, 2012

Central Banking

Money For Nothing: Inside the Federal Reserve http://t.co/QoHuWfGb Independent, non-partisan, non-conspiracy-theorist documentary comingsoon Sep 29, 2012
Bernanke Put: Beware of Easy Money http://t.co/bPsdilQM The lure of free money brings out the worst in all of us. $$ Sep 28, 2012
Plosser Says QE3 Risks Fed Credibility, Won?t Boost Jobs http://t.co/ffkpU2Jh Right; once we r @ the zero bound the Fed is impotent $$ Sep 28, 2012
Fed Helps Lenders? Profit More Than Homebuyers http://t.co/CYz6O8r0 Offering 2buy RMBS benefits existing holders more than anyone else $$ Sep 28, 2012
Sean Fieler: Easy Money Is Punishing the Middle Class http://t.co/Lg2yzUCs Who gets benefits of productivity improvement? Ppl or Govt $$ Sep 28, 2012
A time of hoarding and inflation fears, 1930s edition http://t.co/wOkNf0Uj @izakaminska tells us about inflation worries in the 1930s $$ Sep 25, 2012
Signs Of The Gold Standard Are Emerging From Germany http://t.co/YPLrNcvz Not likely; would be interesting 2c Germany go Euro -> Gold $$ Sep 24, 2012
‘Free’ Checking Costs More http://t.co/QXxPaQCH Another casualty of Fed policy, which disproportionately hurts those less-well off $$ Sep 24, 2012

US Politics

U.S. Unease Over Drone Strikes http://t.co/Hlc2djCz This is yet another reason y much of the Muslim world hates the US $$ Sep 28, 2012
US Ties Libya Attack to ‘Powder Keg’ in Mali http://t.co/998UPNLd When did the Obama administration know this, y wasn’t it disclosed? $$ Sep 28, 2012
Ryan at the AARP http://t.co/ZgXiPrkr He didn’t trim his ideas and still won applause. AARP leaders more liberal than members $$ Sep 24, 2012

Market Dynamics

Where stock market will be in fall of 2016 http://t.co/AolvDXon Seiver’s model indicates a flat market for the next four years $$ Sep 29, 2012
Wrong: An Easy Strategy For Bulking Up On Yield http://t.co/HYbdXqzT Better to buy companies w/strong dividend capacity than high divs $$ Sep 28, 2012
New Wave of Workers Tries Novel Approach: Save More http://t.co/sE9pp03d Everything old is new again; save $$, do not rely on returns Sep 28, 2012
Ken Fisher: Bull Market Is Halfway Done http://t.co/xDEa0MXq I am a moderate bull now, but I find that large cap leadership could fail. $$ Sep 28, 2012
Are financial advisers worth their fee? http://t.co/HdRYJ3ak Gamma: value of protecting an individual from buying high & selling low $$ Sep 28, 2012
Prospects for Stock and Bond Returns Are Dim http://t.co/IYAVPFAU The performance difference will depend on inflation vs deflation $$ Sep 24, 2012
Pension Crisis Looms Despite Cuts http://t.co/9ZW8eUeR Eventually state constitutions will be amended 2 roll back existing benefits $$ Sep 22, 2012
Borrowing Against Yourself http://t.co/kB7IVuN2 Debt against investments is usually a bad idea unless ur a specialist in the business $$ Sep 22, 2012

Miscellaneous

Auto-Insurance Cost to Rise 2.8% to $839, Group Says http://t.co/8XLCC4CE Insurance companies pass costs & reduced interest through $$ Sep 28, 2012
Scientific Reproducibility: Begley’s Six Rules http://t.co/8EkCDsMP Following the 6 rules would reduce the # of articles published $$ Sep 28, 2012
Gordon Moore’s journey http://t.co/PHYlU3Nq Long Q&A w/a founder of Intel; An accidental entrepreneur who knew his weaknesses $$ FD: + $INTC Sep 24, 2012
Bronte Capital?s short waves http://t.co/EHhxTO4j Do not underestimate John Hempton; bright guy. Very good @ spotting bad ideas/frauds $$ Sep 22, 2012
Yale Versus Norway http://t.co/aSF8PEZR Worth a read. My sympathies r w/Norway here, but I fear they r tooting their horn @ a bad time $$ Sep 22, 2012
Cheating Upwards http://t.co/UtDtRjSD Children r less ethical now than 35 years ago, who were less ethical than 35 years ago, who were… $$ Sep 22, 2012
Push to Let College Students Carry Guns Picks Up Steam http://t.co/ke6zM1Si Who is responsible for my protection? Me or the Govt? Me $$ Sep 22, 2012
How to Stop Hospitals From Killing Us http://t.co/QKOsAOpy Should b known: going 2a hospital can kill you. 6th leading cause of death $$ Sep 22, 2012

Responses

@AOverheard Could b a good move, would have to review the Stat statements. I sold my shares at a split-adjusted $290. Buying debt:no-brainer Sep 29, 2012
@historysquared In the process of raising 8 children (5 adopted) I have seen 1) those w/limited abilities expand them 2) those w/great + Sep 29, 2012
@historysquared abilities waste them. 3) those w/great abilities improve them, & 4) those w/limited abilities improve only a little Sep 29, 2012
@groditi Of all the companies that I own $SPLS worries me the most. Stronger than bricks & mortar competitors, but can they beat $AMZN? $$ Sep 28, 2012
@munilass I think both of those insights r correct; algorithms r only as good as the problems they r applied 2; most people don’t like logic Sep 28, 2012
RE: @bloombergview Well reasoned.? No arguments here. $$ http://t.co/ChJ9BDib Sep 26, 2012
RE: @bloombergview “Luck” happens when preparation meets opportunity, There are exceptions like Sixto in South Africa? http://t.co/JmFQSDFB Sep 26, 2012
@volatilitysmile All financials, or just depositary financials… would agree if it is the latter. Sep 25, 2012
@pjackson @LaurenLaCapra @_tpr @japhychron As an example, consider the tax reform act of 1986; almost all tax preferences lost. $$ Sep 25, 2012
@pjackson @LaurenLaCapra @_tpr @japhychron Or prepare for the day of the “grand bargain” where everyone’s ox is gored 4 the good of all $$ Sep 25, 2012
@pjackson @LaurenLaCapra @_tpr @japhychron I think you have to plan for the day of crisis, so that you can be ready to say, “Do this.” $$ Sep 25, 2012
@MerrittJennifer @LaurenLaCapra It would not be immediate, but housing prices would fall, & so would refinancing $$ Sep 25, 2012
@pjackson @LaurenLaCapra @_tpr @japhychron Lauren asked what we would do, not what was possible. Only a crisis will see actions taken $$ Sep 25, 2012
@japhychron @LaurenLaCapra @_tpr so that Medicare covers less: cheap fixes & palliative care; state rtees: deal to reduce all benefits $$ Sep 25, 2012
@LaurenLaCapra @_tpr @japhychron Hard to fit into a tweet; phase out GSEs & Int ded, shrink FHA, ag lending, scale back SS, redo Medicare + Sep 25, 2012
@LaurenLaCapra @_TPR @japhychron Ultimate Q is how many things we *can/should* subsidize, particularly w/GSEs, entitlements, state rtee bens Sep 25, 2012
RE: @bloombergview When the government or Fed buys the securities of companies, it plays favorites. We should make th? http://t.co/3ndyaApd Sep 24, 2012
@GregorMacdonald Re: gold, have u seen this? http://t.co/5rPvqfEz Re: solar, have u seen this? http://t.co/tZiaP5mV Wonder what it costs? Sep 22, 2012
@abnormalreturns Stocks r correlated w/inflation expectations. Gold is negatively correlated w/real rate of interest. Facts. $$ Sep 22, 2012
@etpxp Hard to do a real test. Sep 22, 2012

Retweets

In praise of all-cash compensation. RT @EpicureanDeal: Defending the Indefensible http://t.co/a7pGhqLr featuring @LaurenLaCapra Obvious $$ Sep 22, 2012
RT @volatilitysmile: “a failed president is running slightly ahead in the polls of a challenger who has a real CV but is so politically … Sep 24, 2012
At low OASs?! No $$ RT @PIMCO: Gross: How many Treasuries you own is not the question. How many 3 and 3.5% 30 year mtges is. Own mortgages Sep 24, 2012