The markets are nervious. When the new Greek government revelead that the former government had been hiding debts and that the real debt burden of Greece is the double of what had been known, it was discovered that PIIGs were hiding in the woods. They are Europe's indebted countries, basically bankrupt, with bonds worth little to nothing. Should one go down, the markets would panic like with Lehman. Wechtel writes in Alpha:
True, conditions aren’t exactly the same. They are much worse.
The US economy is weaker, having shed around 10 million jobs since then. The Federal Reserve has already shot most of its bullets. In 2007, the Fed had yet to resort to its unprecedented stimulus package of special bank borrowing facilities, bailouts, takeover off bad assets, cut interest rates from 5.25% to 0.25% (from September ’07 until now), taken over AIG for $85 billion (September ’08, and later another $40 bln given), initiated TARP for $700 Billion, bought close to $2 trillion in assorted US Treasuries, agency mortgage backed securities and debt (March 2009-forward)
He advises USD hedges, gold and oil, and other hard assets. For the rest of 2010, the fear and uncertainty should continue to favor the US Dollar and other safe haven assets. TASE, Israel's STock EXchange, is a safe heaven for the intrepids.
7 comments:
Weak U.S. economy would lower demand for oil, wouldn't it?
We are talking about uncertainty and fear. Oil's price may go up if global uncertainty and chaos increases. But I dont take my word, I frequently misjudge oil.
On the other hand, this commenter doggytwit above seems to be a computer. Artificial intelligence they call it, do they?
Al Fin has an article here on the volatility in oil prices.
J, I'm not a computer — I merely have Asperger's syndrome. Can you really believe government statistics? — Freddie Mac & Fannie Mae had plenty of statistics, mostly bogus. I see your point in this case — this issue is a possible attack on Iran with consequent volatility in the oil market. But in the realm of oil futures speculation can you hope to compete with the experts? Isn't it better to stick with ideas such as are found in:
(1) "The Warren Buffett Way" & "The Warren Buffett Portfolio" by Robert G. Hagstrom
(2) "Warren Buffett Speaks" by Janet Lowe
(3) "The Midas Touch" by John Train?
Yes, J, I see what you mean, I guess I am an computer.
What ideas doggytwit?
1) Buy and hold
2) Buy low, sell high
3) Invest in gold, land and precious stones.
4) Don't panic, don't get pscyhed out.
5) Look for well managed companies
These are pretty prosaic pointers, one's grandmother could have given same fatuous advice. We on the other hand are seeking Alpha, setting out for El-Dorado, yearning to return with boats laden with the wealth of the Indies.
Ivan, you are correct that Buffett really has no precise ideas in the sense of testable statistical models. When he says look for honest management with a good business with a "moat" around it that protects the franchise — well, what does that really mean? It means Buffett has good business intuition but he can't really explain anything in precise or testable terms. But if Bufffett doesn't understand a business extremely well he doesn't invest.
First rule of investing: Don't lose money.
Second rule of investing: Never forget the first rule.
Just avoid tulip mania and stuff you don't understand — which for the typical investor is almost everything.
THE AMATEURS WHO DREAM OF EL-DORADO usually discover that they are the building blocks of someone else's El-Dorado.
Ivan, the more I think about it, the more I would have to say that Buffett does have good ideas.
Simplify, simplify, simply. — Thoreau
Simplicity is the ultimate sophistication. - Leonardo
For investing in NYSE stocks consider this:
(1) 20% of stocks have above avg honesty in accounting;
(2) 60% of stocks have avg honesty in accounting;
(3) 20% of stocks have below avg honesty in accounting.
The (3) category is where to look for stocks to short.
Never buy a stock unless it's in the (1) category. In order to understand the level of honesty in a company's accounting you need to understand accounting fairly well and to understand the fundamentals of the business extremely well. Virtually no amateurs can do this.
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