This is what happens after a blow of top.
Not pretty not pretty at all.
I think bonds and stocks may follow in 2018.
Too much overvaluation and no returns.
2018 - the year of downside protection
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There have been 21 items by Jimbo (Search limited from 24-May 17)
BERKSHIRE _HATHAWAY - REVERSION TO UNDER THE MEAN
When Berkshire was founded way back when tis first ten years of average return was 19
Much greater that the S and P return of 2 per cent.
Not bad.at all - great out perfromance
Unfortunately its last ten years of returns have been 9.
Which is less than the 10 per cent for the Sand P
Thats right you would have been better of investing your money in an S and P index fund.
THE LONG SLOW CAPITAL BURN
Buy Swisis ten year bonds and give 5% of your capital away over the ten year period..
Just owning bonds is giving away your money!!!!
Without higher rates????.
Bonds are trading below the "Capital Neutrality " level.
Prices need to fall further.
THE CAPE DOES NOT LIE
CAPE of 33 for the S&P
Australia much cheaper with CAPE of 18.
I am not optimistic for US stocks in 2018,
Still optimistic for Australian Stocks.
The whole tax cut and repatriation of funds for stock buybacks has such a last gasp feel to it.
THE GOVERNMENT PROSECUTION ETF
I note that after the Government let up on its regulatory and fines avalanche on Citi Group and Bank of America their share prices doubled in fairly quick order.
Will the same happen with Wells Fargo???? which is currently being given the same treatment.
There should be an ETF that takes advantage by investing in these sought of companies that are being subjected to the full force of the tender regulatory attentions of the Government!!!!
It of course needs a catchy name for marketing purposes.
Let me see.....The Tom and Jerry ETF.???? ........the Regulatory Waterboarding ETF?????
How about the TORQUEMADA ETF!!!!
AMERICAS TRULY WONDERFUL MORTGAGE MARKET
In the USA of A Uncle Sam dresses up as Santa Claus every day of the week for the American Home Buyer
He takes away all the risk, hurt and pain with wonderful 30 Year fixed rate mortgages
and no need for a deposit....97% financing!!!!!!! .
However the risk is not destroyed.....no no no.... it is merely transferred to a BAG HOLDER
Who it this BAG HOLDER you might ask????
Well through the magic of Freddie and Fannie its the US Taxpayer
(Well really right now the holder of US treasuries given the Governments taste for deficit financing).
What could go possibly Wrong?????
Subprime 2.0 perhaps????
Its gets even better
Because the banks got so burned in subprime 1.0 they are letting the non bank lenders with no capital take on the task of originating and servicing the loans
Isn't that nice of them
No more nasty fines from the government or write downs if all the loans go suddenly south.
Well except for the NBL's that is,
But by then the Government will just be an unsecured creditor in the Bankruptcy courts.
FANNIE AND SUBPRIME 2.0
Fannie now allows lenders to pay for closing costs
Cant wait for the 120% housing loan so "Owners" (thats a joke word) can pay off credit card and car loan debts.
After all following the logic to its ultimate conclusion why not put the car and credit card loans on the tab, back them with a government guarantee and securatise them as well.
Thats the next logical step.
THE BIG BOND FREE LUNCH
Who says there are no free lunches in financial markets
There are plenty of them!!!!! - Most provided by Governments
Take Freddie and Fannie paper
Pays almost 1% over treasuries
And all guaranteed (OK implied guarantee ) by the US government,
All so the us homeowner can get cheap 30 year funding.
Why own treasuries when you can own agency paper which is the same thing and pays a higher rate!!!!
GM AND THE EINHORN PLAN
Now that I think about it the plan was to borrow more and buy back stock while maintianing the dividend.
Replacing the dimes in front of the streamroller with silver dollars to juice the stock.
Increasing the market reality price of the stock but at the same time decreasing its actual real reality price,
This would turn the stock in to a Coyote Cliff ETF candidate,
ETF SUGGESTION OF THE DAY
THE AMAZON RETAILER SHORT ETF.
Full of all the retailers Amazon is crushing right now.
Or perhaps a different name - something more sexy for marketing purposes.
How about the Amazon Anaconda ETF,
INTRODUCING THE MUNICIPAL SINGLE STATE SHORT ETF
Since we have single state municipal bond funds why not have single state municipal bond short ETF's
The Puerto Rico Bond short ETF
The Illinois Bond short ETF
The Conneticut Bond short ETF
I think this will be a growing theme from now on.
TREASURIES - THE GIFT THAT KEEPS ON GIVING
No not a GIFT to the bond holder - Its a GIFT to the BORROWER the US Government!!!!!!!!!!!
At 2% interest with 2% inflation and 0.5 tax you are giving away 5% of you capital whenever you buy a new 10 year bond.
And yet people are still buying them all the time!!!!!
Bond need to pay 3% to compensate for inflation and tax and that is with a NIL return for the time value of money,
Add in a decent 3% return for the time value of money and 10 year bonds should be returning 6%.
DEEP STATE MATHEMATICS FOR BEGINNERS
(or why politics matters to stocks)
Trump Vs Deep State
Recap and Release Vs no recap and release
Very significant Fannie and Freddie share price increases Vs Worthless Fannie and Freddie shares
ICELAND IS BOOMING
So Iceland lets all its banks go broke
So I presume the countiy should be in a permanent economic depresion
But the OECD says the economy is boominjg growth is 7% the fastest growing economy of all OECD economies!!!
Thats what happens when you get a decent debt reset,
Unlike say Grreece
No debt reswt there.
It saved its banks and is in a permanent depression.
Iceland is having the tourism boom greece should have had,
FANNIE MAE STOCK as A Politicical INDICATOR
As I have previously stated you can use the stock price of FANNIE MAE as a fairly good indicator of the Trump Vs Deep State battle.
Its been downhill since the election
Was November 2016 PEAK TRUMP???
INTRODUCING A NEW ETF
First I introduced the Trump ETF
Then I introduced the Deep State ETF
Now I Introduce the Smart Trump/Deep State Arbitrage ETF
This ETF automatically arbitrages (by moving capital) between the Deep State and Trump ETF's depending on whether the news is positive or negative for Trump in any one week.
FREDDIE, FANNIE AND THE DEEP STATE
is the Deep State a recap and release sort of guy????
I think not,
Is President Trump - I still think so
So the deep state vs the president is really recap and release vs status quo.
I notice that Bill Ackman has loaded up on Fannie and Freddie
Late to the party as always
He stayed too long at the Valeant Party = stayed long after it had ended and lost $4 billion.
The rule of parties states that you arive early and you depart early!!!!!
Sober and still in control of your faculties and capital.,
The way to have played Fannie and Freddie was to have loaded up on options in May 2016 and sold when Trump got elected
Because the Deep State counter attack could well win!!!
In which case Freddie and Fannie stock is worthless.
Indeed the Fannie and Freddie stock price is a good way of keeping the score between Trump and the Deep State.
If Bill wants a pharma stock try TEVA.
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