Wednesday, April 29, 2009
For a must read OPED the Bank of America/ Merrill merger I encourage you to read this piece that appeared yesterday in the WSJ. ( the same day as above) So much trust has been broken and it is hard to imagine how we are going to build it back. There are going to be books written about how this deal got done and the whole truth is yet to come out.
I am off again, this time to Atlanta for the Women’s Funding Network conference. Sorry the blogs have been few and far between as heaven knows there is MUCH MUCH to write about.
Thursday, April 23, 2009
So needless to say the news out there is just horrible. For a well articulated piece on why I think this rebound in the market is short lived read Martin Wolf’s piece in yesterday’s FT called “Why the ‘green shoots’ of recovery could yet wither.” I, like him, believe that we are still in the ‘early stages of a long and painful deleveraging and restructuring’ process. The IMF just recently upped their estimate of system wide loan losses up to $4.1 trillion and how much of that has been accounted for? I don’t know but it someone has the answer please do share. All these massive government programs are working hard to cushion the global economy’s free fall, but bottom line; we are still in a downward trajectory, albeit at a slower rate than earlier in the year.
So what does this mean from an investment perspective? For me it means remain defensively positioned, maintain liquidity, and look for lower entry points for both domestic and international equities. In the fixed income space I think opportunities do exist and I will pay attention to funds that are emerging out of the TALF and Public/Private Partnership Programs. I think you need to be careful about adding too much duration in your portfolios as although there is short term deflation, I worry longer term about the opposite. More importantly however is the massive amounts of debt issuance the government needs to do combined with how much debt that is already outstanding. YES the fed is buying treasuries, especially at around 3% on 10 year notes, but trying to effectively front run the fed and ignoring fundamentals is a dangerous game indeed. Might be ok for professional traders that are in the flow of information and flow, but for you and me??? Not good. I did spend a lot of time today talking to some exceptionally smart and experienced guys who are launching a venture capital fund in the digital media space, which was really fun. Their primary focus area is in gaming and is amazing to think about how so many other areas, like media, are being game ‘ified’.
Well my pillow is calling my name so of to sleep for a mighty early wake up call. I am heading to Colorado tomorrow for the weekend so the next post may not be until Monday. Wishing you all a wonderful weekend…..
Sunday, April 19, 2009
Friday, April 17, 2009
David is one of my favorite investment and economic thinkers. Below are some recent thoughts too good not to share.
"There are five things we have learned over the past month
1. Whenever the S&P 500 slices to a new low, it’s time to cover shorts. Every new low in the past 18 months was met by a vigorous bounce, especially the last two.
2. Be wary of upward spasms where financials and consumer discretionary lead the way, because they typically go into these bear market rallies with the largest short positions. Also, be skeptical when the rally is led by low-quality stocks.
3. Investors seem to be enamored with the second derivative (rate of change in the rate of change) in the economic data even though bear markets usually end just in advance of a turnaround in the first derivative (the rate of change itself).
4. There seems to be confusion between an actual improvement in the economy and an improvement relative to the post-Lehman trend, when the economic indicators began to implode at annual rates of 30%-70%. Even Wily Coyote hits the ground at some point.
5. The profits recession is two-thirds of the way through; there is another one third to go. Equity investors pay for profits, and with one-third of the downturn still ahead of us, it is difficult for us to be excited about any sustainable rally in stock market."
Thursday, April 16, 2009
Wednesday, April 15, 2009
Tuesday, April 14, 2009
Sunday, April 12, 2009
Wednesday, April 8, 2009
The markets reversed course yesterday whether due to exhaustion from the strong move up, profit taking on recent purchases, the anticipation of some soon to be reported horrible earnings numbers, or news that credit related losses continue to rise dramatically. According to RGE monitor "IMF Boosts Global Loss Estimate To $4 Trillion: RGE Monitor Calculates $1.8 Trillion Fall On U.S. Banks/Brokers, $2 Trillion On European Banks, Remainder On Asia." I remember last year when the talk was that losses could hit $1 billion and the raging bears were predicting $2 to $2.5. The question is, and I will have to dig for the answer, how much of this losses have been effectively taken. With the new rules on mark to market accounting, meaning you don't have to, they can be hidden for some time. It is somewhat ironic to me that almost on the same day the gov't announced this private/public program to rid the banks of toxic assets, they changed the rules so they were less incentivized to do so. What also seems to be a little odd is that given the total losses are projected to be in the US around $1.8 trillion, if the gov't just figured out a way to eat a good part of that upfront, would that not have been a lot cheaper then what they have done already over the past 12 months? Yes big number, hard to swallow, probably impossible to sell to congress and the public.... but, as my mother always use to say when taking a band-aid off me - "rip it off quickly, it hurts, but it is over".
Monday, April 6, 2009
Friday, April 3, 2009
6 hours later - just read another article talking about the problems of this program - worth adding to the collection. READ THIS.