Skip to main content

Posts

Showing posts from June, 2009

GDP Country Growth Rates For 2009

Below is an interesting piece from Bespoke Research tabulating the expected GDP growth rates for 2009. Only China and India are expected to register positive year on year expansion. The rest are in various stages of contraction. What's interesting is the BRICs are doing very well relatively, with the exception of Russia, mainly due to its own undoing, excessive reliance on resources exports and not enough investments into infrastructure and services.

The other interesting point is that resource rich countries do not have it so bad, in fact they are among the better performers.
Below are the 2009 estimated GDP growth for 21 countries. As shown, only China and India are expected to actually grow in 2009, while the other countries are expected to contract. China's 2009 GDP growth estimate is at 7.66%, while India's is at 4%. The US is closer to the top of the list than the bottom with an estimate of -2.49%. It ranks only behind Canada among other G-7 countries. Japan and G…

150 Years For Madoff

Is a crime a crime, or the severity dependent on the amount that was "fraudulently obtained" by the perpetrator? Court rulings have maintained that the sum of money lost is a primary factor. Another factor has to be how many people were defrauded or affected? If Madoff had bilked the US Treasury for the same amount, somehow I don't think the media would make such a big hoo-hah over the case. Collective mob anger (which is understandable and justified) do sway the severity of the crime. So, if you are going to 'steal money', steal from one party only, or at least try to minimise the number of affected parties.

Sentenced to 150 years in prison on Monday, Bernard L. Madoff, the convicted Ponzi schemer, got one of the nation’s most severe sentences ever handed out in a white-collar crime case.

In recent years, some of the most notorious financial miscreants have received sentences of about 15 to 30 years. Below, a graphical look at of some of the longest prison terms f…

China's Liquidity Traps & Benefits

China has been ramping up lending over the last 7 months. Yes, it was with good intentions. Yes, it was actual lending not just for show. Yes, banks in China were "asked" to do their bit to lend aggressively. While there is a lot of good to have money circulating around, it will also weigh down on those borrowing on the "unqualified" end of the spectrum, people who willing take on more debt than they should. Its a mini time bomb. No, it will not implode yet. What the figures below shows to me is that China's equity markets will have a major run up right through the end of 2009. When you pump in so much liquidity, there are very few places for it to surface. We may see a combustion effect only maybe in the second half of 2010.

China's credit card debt that was at least six months overdue rose 133.1 percent year on year in the first quarter to 4.97 billion yuan (727.67 million U.S. dollars), the People's Bank of China, or the central bank. Debt overdue by …

Update On Marketocracy Portfolio

Fund Performance for salvadordali's Mutual Fundfund rankings

For the six month period ending March 31, 2009 your fund outperformed 97.8% of the other funds on our site. Your forum and other privileges are based on this ranking

My portfolio was started on 1st August 2008. Marketocracy lets you manage a virtual portfolio of $1M in a simulated trading environment, allowing you to track your performance accurately and compare your fund management skills to other investors and professional fund managers. Yes, they do take into account transaction cost as well. If your track record turns out to be one of the best, you could be hired to help manage a real fund at Marketocracy. It's a great place to learn, and a great place to prove your talent. They also have important rules to ensure that you are running an actual investing portfolio and not just sitting on cash:No position can exceed 25% of your total portfolio value.
Half your portfoli…

The History of the Middle Finger & "Fuck You"

This may be the most often used word in the English language, probably after the word "the". But how many of us know the origin of the words "fuck you". Culture and history are intertwined and can explain how things are the way they are today. Teenagers reading this can share the origin of "fuck you" with their parents the next time they get reprimanded for using the phrase - once you can explain the history to your parents, its not so bad. Somehow I think the story is true because I have read and heard many times before about 'giving him the bird' - which I thought was silly although that had overt nasty overtones. Now it all makes sense.

The History of the Middle Finger & "Fuck You"

Well, now......here’s something I never knew before, and now that I know it, I feel compelled to send it on to my more intelligent friends in the hope that they, too, will feel edified. Isn't history more fun when you know something about it?

Befor…

Current PE Ratios Comparison & Buffett's Latest Interview

In a recent interview with Warren Buffett:

On whether he will cash out of Goldman Sachs:
No, no, no. I will keep those Goldman warrants right through their full -- they've got four and a quarter years or so to run. But I think we'll make a lot of money out of those.On the possibility of the United States losing its AAA Rating:
As long as you're issuing money and you're issuing debt in your own currency, you can print money. The U.S. -- no, I think we will have a AAA for not only as long as I live, but as long as you live, which is more important.
On whether unemployment will continue to rise:
It’s going higher—business has not bounced back. We have not come off the bottom yet. It will work out in the end. Since 1776 it’s been a mistake to bet against America . America solves its problems. How soon, nobody knows. But we have not come off the bottom yet. And it will work out in the end.
On inflation in the United States :
What we’re doing raises the probability significantly of…

Insiders' Selling & Beating Warren Buffett At His Own Game

There are plenty of investors who monitor the buying and selling by company insiders, i.e. senior management and substantial shareholders. There were two major waves of buying by insiders, in November last year and March this year, and they have proven to be very astute in timing the markets. Now insiders have been net sellers for 14 consecutive weeks. That might not be as bearish an indicator because the length of time is a lot longer than usual, indicating that this time the insiders could be wrong. Secondly, the fact that the net selling is so prolonged may hint at more long term institutional and private funds are re-entering the markets. Even insiders cannot always be right.
By Steven Russolillo (WSJ)
Insiders are selling their company shares at a pace not seen in two years, providing further evidence that the recent stock-market rally may be coming to an end. Insiders of S&P 500 companies have now been net sellers for 14 consecutive weeks, according to research firm InsiderSco…

Economic Impact Of H1N1 Should It Worsens

There is some genuine concern now over the H1N1 virus. Fact, this is nowhere as deadly as the H5N1 which ravaged HK and most of Asian economies. H5N1 has a mortality rate of 58%, while the newer strain is not as deadly. There is sufficient antiviral for the new strain unlike the scramble for H5N1. Experts predict that during a pandemic up to 30% of the global workforce could either be off work due to sickness or stay away due to fear. Absence levels at the expected rates would cause severe problems. The economic impact of H1N1 is more global tha H5N1. If conditions worsen, the impact will initially appear in two primary aspects of business. The first will be the availability of the workforce, the second and more unique impact will be in the market place.

Left unchecked, real estate values would be slashed, bankruptcies would soar and the insurance industry would be decimated. Naturally airlines would be one of the most directly impacted, followed by the tourism sector, in particular e…

China's Growth Sustainable???

China has led the way by asking its banks to loosen the lending taps, and that has been reflected in the broader economy. China is an important export market for most of the smaller Asian countries. China's stimulus plan is a huge kicker, and the country has begun to stockpile a lot of soft and hard commodities. The black spot is that the easy credit has seen outstanding balances on credit cards more than doubled in the most recent quarter. Can China continue on its merry ways to lead the way to stimulate the rest of the world out of the recession?

China's economy seems to have re-accelerated from the lows of Q4 2008 and Q1 2009 helped by significant government investment and credit extension. While exports continue to deteriorate, reducing the trade surplus, government investment has surged and consumption influenced by government investment is holding up, suggesting that that the Chinese economy may grow at a faster pace in Q2 and Q3 2009 than the 6% rate at the beginning of…

Jim Rogers Views Summarised

I don't have a terribly high opinion of Jim Rogers. Big picture guys can take a terribly long time before they are proven right - my adage, if you are bearish or bullish long enough, you will eventually be right. The following is an updated piece on Jim Rogers' views by Market Folly:

Rogers has opinions on a vast array of topics so we'll just dive right in and try to present the updates as orderly as possible. Firstly, we want to start with the topic of the crisis in general. Obviously, Rogers thinks the United States and the U.K. are in bad shape and will be for some time. He likens the current situation to that of the 1930s. He says,In the 1930s, we had a huge stock market bubble which popped. And then politicians started making many mistakes. They became protectionist. They made solvent banks take over insolvent banks and then both banks failed in the end. They are making many of the same mistakes now. What's different this time is that we are printing huge amounts o…

Have Commodity Prices Run Ahead of Fundamentals?

Have commodity prices run ahead of fundamentals? Or is it that China has begun stock piling aggressively? Commodity prices have rallied since February on the belief that putative 'green shoots' around the world validated a V-shaped economic recovery in 2009. However, these 'green shoots' merely signal the stabilization of economic activity at low levels, rather than a return to trend growth. Even if GDP growth around the world has bottomed, growth will continue to be negative or sluggish until 2011. As such, commodity price gains are a false sign of economic recovery - like the recent spate of bear market rallies in stock markets. The strong uptrend in commodity prices has been propelled more by technicals (investment demand - arbitrage, opportunistic stockpiling at low prices) than fundamentals (real growth in physical demand and production). Commodity prices will likely snap back to reality before resuming a more moderate uptrend in line with a U-shaped global growth…

Tracking & Learning About VIX

VIX is an often quoted indicator, especially over the past 9 months, to say something about the volatility in the market place. A higher trending VIX implies a trend towards risk aversion, or higher fear ratings on all assets. Plenty of players are now looking at VIX as the most immediate indicator for sensing 'fear' in the market place. Those trying to get a forward reading will go as far as tracking the trades in VIX options. Last week's selloff in developed markets coincided with a sharp jump in VIX and a rapid run up in VIX call options, somehow that has dropped down again, as noted by Bespoke. As a rule of thumb, anytime the VIX appears to be headed north of 40, its time to exit all stocks, ... still just a rule of thumb.

----------------------------------


After settling nicely below the 30 level for about a week, the S&P 500 Volatility Index (VIX) jumped back above 30 earlier this week. Today, however, the VIX has dropped significantly below 30 once again down …