Wednesday, June 9, 2010

Back From Holiday

I trust everyone had an enjoyable Memorial Day holiday. We took an extended holiday here at Prudens Speculari, as yours truly celebrated a birthday as well. spending our time off in lovely Cape Cod Massachusetts or Tax-a-chusetts as many locals there call it.

Our travels took us to Hyannis, Nantucket, Martha's Vineyard, Provincetown, Newport, and finally Boston. We had the opportunity to see Chappaquiddick and the spot where Mary Jo Kopechne passed away. Shockingly there is not a memorial or marker of any kind commemorating the spot where she died. Truly shameful Massachusetts.


Among the manner great things we saw included charm of Boston. Paul Revere House, the old North Church, in the great city of Boston.

We also found time to see some of the beautiful homes, which is putting it midly, of the gilded age in Newport. The Breakers, The Marble House, The Elms, to mention a few. The Cliff Walk is a must do for anyone visiting as is dinner at the Castle Hill Inn. Wonderful food and views off the peninsula.

We had an absolute fantastic time but alas now back to work.

Some Random Thoughts.

CNBC
You happen to catch this new lunchtime dud on CNBC called Strategy Session? Do yourself a big favor and DON'T ! If you have, you might have noticed all the flashing and blinking screens behind the boobs in chairs. Reminds me of the California gold rush where the only ones made wealthy were the purveyors of picks and shovels to the dreamers, like todays data providers. 10 screens make you ten times as smart. Too funny.

Boston
Did you realize that Boston is home to over 90 post secondary educational institutions? I was not aware the number was that high. Did you also know that when school is in session the city's population swells by approximately 300,000. Something to keep in mind when the bubble that is a university education hits. Unfortunately Boston will be hit hard.

Wall St.
Has you broker called you to buy a little BP on sale here with that generous dividend yet?

Fox News
Caught a little Bill O'Reilly while away and watched his rant on how banks aren't lending to anyone blah, blah, blah. Now O'Reilly is no dummy but it is shocking to see his economic illiteracy on a regular basis. Newsflash Bill, it's called pushing on a string coined to describe Japan. You can lower rates to zero and still no one borrows.

First off Mr. O'Reilly, you must realize the banks are no longer in Angelo Mozillo/idiot lending mode anymore. As shockingly as this may sound the you can fog a mirror you qualify standards of yesterday are gone. The people and entities who desperately need the money to stay afloat don't qualify, never have and most probably never will, and the ones who do qualify aren't stupid enough to borrow.

Further, in an inflationary environment Mr. O'Reilly, your obligation (money borrowed) is diminished or made less as a dollar borrowed today is paid back with a much cheaper dollar in the future. Conversely in a deflationary environment, which we have now, your obligation is increased as your purchasing power increases. Ergo;

Inflation rewards profligates and debtors punishing savers and ......

Deflation rewards savings and prudence and punishes debtors.

I hope this helps Bill. Also you can do yourself a huge favor going forward. Do your own research. When travelling around, local or afar, ask business men and women around you if they would borrow a mill, check that, a half mill, no check that again, a quarter mill right now to expand their business, introduce a new product/service or take over a competitor. You might just get the same response and puzzled look I often get when I pose the same question....."
What? Are you high ?!"

Dollars to doughnuts Bill, the ones who desperately need the money, having viewed their balance sheet and income statement, you would never lend to them not at least without a taxpayer funded backstop and even then you might prefer using that backstop to trade crude oil, gold or S&P futures.

If you are still having trouble understanding this Mr. O do ask a Polish borrower who, as any astute observer knows you should always consult a qualified advisor on any financial matter, most especially the carry trade, took said advice from advisor and avoided the high rates and boredom of the simple Polish zloty mortgage and instead explored the excitement of borrowing at much lower rates in the much cheaper, at the time, Swiss Franc. Only to now be saddled with an income in worthless zloty's and an obligation in rising Swissy's. Nothing like quality advice for a trained professional is there?

I will be posting some interesting charts shortly.

Housekeeping Notes;

While away I was stopped out of my long GLL position at $39.48 for a loss of 2 pts on 1 unit.



Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $22.52
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $92.15
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @93.48


4 comments:

displacedRhody said...

Here's a tidbit that I bet you didn't know: One in 4 children in Newport RI are below the poverty line. http://www.city-data.com/poverty/poverty-Newport-Rhode-Island.html.

I'm 15 generations Newport but broke the chain and had my kids in FL!! Better odds ;)

Harleydog said...

DPRhody,

Did not realize the numbers. thx for the link much appreciated.

HD

Anonymous said...

First time commenter, longtime fan. Of course I wait til the post about my home area - shocking, that about there not being a memorial to Mary Jo Kopechne. Most everything else is named after the glorious/notorious Kennedys in Massachusetts - perhaps the state name itself is not too far behind?

Curious what the college bubble is you speak of: I can understand the home prices in Boston still being inflated even during a national downturn (b/c of doctors, professors, biomedical researchers still driving up prices?)(or due to the small area available for new development?) - actually, no I don't. Besides the transient college population you speak of, the overall population is decreasing, too, where we will lose a House of Representative seat or two. Yet prices are largely where they were, and renting is worse.

From a practical standpoint, there IS a dearth of college degrees (or at least unfinished attempts with the student loans coming due) for kids that never needed them, but how can there be a bubble for a piece of paper that really only granted one 'social capital' to begin with?

-Rich

Harleydog said...

Rich,

thx for the note and reading, much appreciated.

The short version on the college bubble I speak of is tuition. Sallie Mae was created to make education more affordable via student loans and like every other gov't scheme to make things affordable they get priced out of site. Fannie, Freddie, FHLM you name it. Free money = Fiasco GUARANTEED !

Locally here Michigan State a few months ago announced an 2.5% tuition hike for in state students 5% for everyone else. In this economy no less.

The skyrocketing increases in tuition over the last few decades, fueled by free money and useless diplomas, which in most cases results in the sheepskin holder is left 6 figures in debt and a skill set which would not even qualify him/her to drive a bus.

College football/basketball coach salaries are the creme de la bubble. But just look at any tenured, distinguished professor salaries of the 3 stooges on my All-Imbecile squad Rosen, Farmer and Munnell.

The college bubble fostered a housing bubble in college town. Tell someone you have, are or will be buying or developing student housing in a town with a university and you most likely will be congratulated on your acumen.

I agree with you comment with one caveat, there is a dearth of useful degrees in engineering and biology and math.

be well,
HD