Buffet has lost almost $1.5 billion in past 48 hours on IBM and $1.2 billion in KO today. Thats $2.7 bill loss on these 2 turkeys in a 48 hour period while the entire market is on a tear. Luckily I sold all my IBM and KO over a year ago coz of well advertised declining sales. Wonder what made Buffet get into IBM recently?
Just shows that ALL humans are by definition stupid, some less, some more. The best one can hope for is to be less stupid...no more. No such thing as a smart human being.
I confess to be trying to be smart alecky or more charitably to be using the Socratic method i.e asking a question whose answer i believe i already know.
FWIW here is my answer to the absence of inflation despite the ominous terms like Fed "inundating us with trillions of dollars from thin air" etc.
Fact is that Fed printed about $3.5 or perhaps 4 trillion. Sounds enormous? It is NOT!
Coz in the mighty 2008 Bush-Greenspan economic debacle we the American public lost about $50 trillion in net worth. We recovered a good deal of the loss in the stock market but the average American's net worth is not in stocks but in the value of his house and that has not recovered much. I think we are still in a $20 trillion hole so printing $4 trillion is small potatoes. That is why no inflation and no increase in consumer optimism or mood.
True recovery will only come with more jobs and higher job participation. Nothing else. Question is how do we get that when we ignore the domestic economy and keep fighting overseas while increasingly bugging and spying upon our own citizens and scaring them with stories of imminent homeland invasion etc.
I think we remain in the $20 trillion hole for as far as the eye can see.
Excuse me but the Lynch &Graham advice about buying when there is blood in the streets is one of the single most dishonest advice there is.
Because it assumes that we always sit around with large amounts of un-invested cash earning next to nothing in money market funds or are ready to go into margin debt and incurring sizable margin cost.
Why do u think inflation is a no show despite ur quote that "the Fed inundated the economy with more than $3.5 trillion since 2008"?
In fact its deflation which threatens.
Weren't we taught that printing large sums of money out of thin air is a sure way towards "inflation hell"?
So what gives?
But jack did u not indulge in short term if not day trading when u said a few days ago u lightened up on wmc? Were u successful at making 2 right sequential decisions and get back in at lower prices?
Frankly i am not good at that myself.
Thanks guys. I get the slowing of prepays with rising rates being a plus. The LIBOR part is less clear. wahoo says a low libor is good but would not that rate also go up with rising bond yields? OK I'm ignorant and will try to read up on libor.
alkov i have most of my mreits in mtge but mreits are only about 4% of my total portfolio (tho a larger part of my roth where they exclusively reside). Yes if they were more than 4% of my total, youbetja i would be more educated.
Thank you but I still do not understand what advantage buying bonds or their equivalent would give in 2012 when yields were so low and bond prices high even if they were interest only or IO. (Unless inverse IO means he was shorting bonds or something). To my mind buying in summer of 2013 when bond prices crashed and yield shot up 100 basis points almost overnight would have been more advantageous. But what do I know!
Could u kindly explain to us dummies what IOs and inverse IOs mean. To my thinking bond and bond like investments were very priced high (expensive) in 2012 when their yields were scraping the bottom at below 2%. How could one make good buys of bond like investments then unless one was on the short side making a killing when short rates jumped 100 basis points in early summer of 2013 thanks to Bernanke's intemperate remarks about a strong economy?
I do recall the previous CIO mentioning a "secret sauce" no longer available in jargon above my head so u r probably referring to the same. Thanx.
Vultures are very good for the environment too....essential even. But they need sickness and death for their OWN survival while benefiting the world. In fact the Parsis or Zoroastrians who feed their dead to the vultures have been desperately trying to save them from the onslaught of DDT in India.
OK enough about vultures. We agree on the main thing i.e. the economy.
But will just agree to disagree on the utility of vultures.
Hey jack do u now agree that mreits are "vulture" investments meaning they feast on a sick/dying economy?
I agree that ours and the world's economies are sick and liable to get sicker.
But don't worry we have enough money to wage new and expanding wars. The Boss told us so.
I am not talking so much about Dems and Repubs but one specific person i.e. Hillary. She is the one who signed off on the very self destructive Iraq war without even reading the position papers nor asking a single question and defended her action for years. Just see her now, criticizing BO for holding back in the ME saying Obama's "not doing stupid" is not "policy". She is in a hurry to get involved in Syria and "tougher" (meaning war IMO) on Iran and I strongly suspect re introducing "boots on the ground" in Iraq, her prior stomping ground.
Look at the company they keep marrying her daughter with great pomp into the family of a convicted felon. She goes to the highest bidder. Has she ever put America first?
This is not to say there are no patriotic Dem or Repub politicians but Hillary is not amongst them. All I want is a a patriot with intelligence above the baseline. She has the latter but alas not the former.
Compare Clinton and stock market performance before and after Republican take over of Congress in Nov 1994. There is a world of a difference. Clinton hurt the economy and stock market in his first 2 years. But within a month of the Republican take over stocks took off like a rocket ship because the meddling Clinton hands got tied up.
Honestly Ray the Clintons are poison for the economy and non-mreit stocks. Worse than W? Perhaps not but not far behind. We need an intelligent and above all PATRIOTIC Republican in the WH say Christie or even Jeb Bush (I know he is W's brother, but a totally different fish). Amongst the Dems I could go with Eliz Warren or Jim Webb (who IS running). With Hillary we will have 3 new self destructive ME wars in no time. She will not be putting America first.
Yeah I remember that. Wonder if youtube has it.
Anyway what do u expect from an alcohol pickled brain?
Yep youtube has it plus many other priceless bushisms.
My fear is that crooked Hill will be equally disastrous for our economy and stocks (xcept for mreits which thrive on misery)
Warren B aka Oracle of Omaha has confidently predicted a Hillary win in 2016. Now that may be OK for mreits since she will be another destroyer of the economy but the rest of the market will be toast.
I will be selling my non mreit portfolio by election day.
As a wise man said: "Fool me once, shame on u. Fool me twice, shame on me."
All good questions. First of all wmc is holding up despite the crashing of the general market.
Yes its under performing the average mreit probably coz some fear it paid out too much and won't be able to maintain the 70c quarterly div. Any cut in payout is considered very bad. So how sure is one that it can maintain 70c and not have to cut? That has to be the reason for relative under performance.
jack your strong buy sentiment disappeared and u started timing the market which is seldom a good idea since then one must make not just one but 2 right decisions in sequence. First when to sell and then again when to buy back. As a student of statistics u should know the deck is stacked against u.