Insiders are hardly infallible, but when their activity starts hitting extremes, it's worth paying attention to. It's telling that so few insiders find their own stock attractive.
Link To Video
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Monday, August 31, 2009
Friday, August 28, 2009
Chart Of The Day: Bear Market Rallies
Today's chart of the day comes from "Chart of the Day." This clearly shows just how impressive the current rally has been. It is the longest duration bear market rally since 1929 and is close in magnitude to the huge 1929-1930 rally. History doesn't necessarily have to repeat itself, but this should give the bulls some pause. A strong knee-jerk rally following large bear markets is very much the norm, as is a further significant decline. With few ingredients in place for a new secular bull market, things are unlikely to be "different this time."
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Thursday, August 27, 2009
Financial Innovation At Its Worst
Ah! Financial "innovation" lives on.
From a TimesOnline article:
So, what will West Register do when it comes time to mark these "assets" down? Sell them back to RBS, of course!
The strategy of our leaders (here and abroad) is clear. The problem is to be kicked down the road as far as possible. They have unfortunately chosen to gradually recognize losses (and hope for a rebound) over many years rather than dealing with the problem of nonperforming loans in one fell swoop. This is one of many headwinds we will face over the next few years. We clearly learned nothing from the Japanese experience of the last 20 years.
Furthermore, this specific activity is clearly not a sale. I would go so far as to call it fraud. This type of activity should result in firings for some while others should be made bunkmates of Madoff.
The same company executives who drove their firms to technical insolvency are still in charge. The same regulators who couldn't foresee or detect the credit crisis are still in charge. The same Washington elite that continues to waste taxpayer money, pick the winners, destroy the dollar, inflate the money supply, and exponentially boost our debt are still in charge. Nothing constructive seems to have been learned from this crisis. We will not adopt prudent financial policy until it is inevitably forced upon us.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
From a TimesOnline article:
Britain’s taxpayer-owned banks are selling repossessed property assets to their own subsidiaries to avoid billions of pounds of losses that would be incurred by selling them in the open market.
Royal Bank of Scotland (RBS), which is part-owned by the Government, has set up West Register to buy properties taken over by RBS after borrowers had fallen into default.
The strategy of our leaders (here and abroad) is clear. The problem is to be kicked down the road as far as possible. They have unfortunately chosen to gradually recognize losses (and hope for a rebound) over many years rather than dealing with the problem of nonperforming loans in one fell swoop. This is one of many headwinds we will face over the next few years. We clearly learned nothing from the Japanese experience of the last 20 years.
Furthermore, this specific activity is clearly not a sale. I would go so far as to call it fraud. This type of activity should result in firings for some while others should be made bunkmates of Madoff.
The same company executives who drove their firms to technical insolvency are still in charge. The same regulators who couldn't foresee or detect the credit crisis are still in charge. The same Washington elite that continues to waste taxpayer money, pick the winners, destroy the dollar, inflate the money supply, and exponentially boost our debt are still in charge. Nothing constructive seems to have been learned from this crisis. We will not adopt prudent financial policy until it is inevitably forced upon us.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Saturday, August 22, 2009
Dogbert The Portfolio Manager
As usual, it's funny because it's true. This is similar to the advice on how to start an investment newsletter. Buy a large mailing list. Send a free sample newsletter to half of the list screaming that the market will go lower next week. Your free newsletter for the other half pounds the table that the market is going higher. At the end of the week, send 2 new missives out only to those who received the "accurate" first newsletter. Tell half that the market is going up and the other half that it's going down. Wash, rinse, and repeat a half dozen times, and you end up with a subset of that initial mailing list who think you're a genius and may be ready to pay big bucks for your infallible advice.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Sunday, August 9, 2009
Cell Phone Margin Pressure
I'm far from constructive on the stocks of the cell/smart phone manufacturers at current valuation levels. It's certainly true that they operate in a growing market, but I expect competitive pressure to increasingly depress margins in the future. With every manufacturer expecting to gain share, something will have to give, and that something is bound to be price (RIMM just released a $49 phone that will be sold at WalMart). This should provide a strong headwind to strong and sustainable profit growth for the industry.
RIMM will struggle to maintain share and profitability, and PALM will likely find it difficult to make serious inroads without resorting to price cutting. NOK and MOT are unlikely to sit still. Even Apple will have to fight hard to maintain its lead, and we've already seen them bring their price down significantly. Pricing pressure (greater than the norm in the tech space) is unlikely to abate for this industry any time soon, so the pressure is on to innovate while cutting costs.
It doesn't help when new competitors can set up shop on a shoestring budget and get a product on the market in just a few months. From the "Fabless and Fearless" article in the Economist:
Disclosure: Aspera Financial, LLC is short PALM and RIMM.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
RIMM will struggle to maintain share and profitability, and PALM will likely find it difficult to make serious inroads without resorting to price cutting. NOK and MOT are unlikely to sit still. Even Apple will have to fight hard to maintain its lead, and we've already seen them bring their price down significantly. Pricing pressure (greater than the norm in the tech space) is unlikely to abate for this industry any time soon, so the pressure is on to innovate while cutting costs.
It doesn't help when new competitors can set up shop on a shoestring budget and get a product on the market in just a few months. From the "Fabless and Fearless" article in the Economist:
MediaTek’s technology has revolutionised the manufacture of mobile phones in mainland China. A handset firm there used to need 20m yuan ($2.9m), 100 engineers and at least nine months to bring a product to market. Now 500,000 yuan, ten engineers and three months will do. As a result, Chinese handset-makers now number in the hundreds. Many churn out shanzhai (or “bandit”) phones: knock-offs of established brands, labelled “Nckia” or “Sumsung”. Others are true innovators, making handsets with big speakers or with two slots for SIM cards, so that one handset can be called on two different numbers.
Disclosure: Aspera Financial, LLC is short PALM and RIMM.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Saturday, August 8, 2009
Quote Of The Day: Geithner And The Debt Ceiling
It should come as no surprise that the Treasury is once again asking Congress to boost the debt ceiling as we're fast approaching the current $12.1 trillion limit. Of course, we can expect Congress to again open the retractable roof of this ceiling and comply with Geithner's "request." I was particularly amused by the following quote.
From a letter to Senate Majority Leader Harry Reid:
So, if I've maxed out my credit card it only makes sense that my credit card company further boost my credit limit so that my other creditors can remain confident in my debt-paying ability. Right.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
From a letter to Senate Majority Leader Harry Reid:
"It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations" - Tim Geithner
So, if I've maxed out my credit card it only makes sense that my credit card company further boost my credit limit so that my other creditors can remain confident in my debt-paying ability. Right.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
TED Video: Charter Cities
Very interesting and thought-provoking speech by Paul Romer on how to boost development in the third world.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Chart Of The Day: Massive Head Fakes
The current rally may feel good, but let's keep in mind the following chart from David Rosenberg at Gluskin Sheff:
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Friday, August 7, 2009
Quote Of The Day: Paul Tudor Jones
Though our ranks are thinning, it seems I still have some company. The following is from Tudor's recent client letter. Paul resides squarely in the "non-idiot" camp.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
“Impressive counter-trend rallies are a feature, not an oddity, of secular bear markets. We are not inclined to aggressively chase the market here. Many doubts remain about the sustainability of this recovery, most prominently the weakness of household income growth.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Chart Of The Day: Baltic Dry Index
While the market is busy rallying on backward-looking news, few seem to have noticed that the Baltic Dry Index (BDI) appears to again be rolling over. The BDI measures shipping prices of various dry bulk cargoes and is a solid indicator of what is actually and currently happening in the global economy.
The index had benefited recently from a rebound in commodity purchases (particularly iron ore) by China. However, it is likely that Chinese fiscal stimulus may have led to a stockpiling of ore which will need to be worked down. The recent weakness in the BDI may be corroborating this view. This is one to watch.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Thursday, August 6, 2009
Quote Of The Day: Human Learning
I found this quote from Douglas Adams to be rather appropriate given our policy response to this balance sheet recession and the re-emergence of bubble dynamics.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
"Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so."
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Table Of The Day: CEO Pessimism
Despite analyst and market enthusiasm for better-than-expected earnings results, CEOs have become less confident more recently. Perhaps, they realize that cost cutting is getting more difficult while revenue continues to fall -- an ugly recipe. Their outlook also does not bode well for employment. The market had better hope that the CEOs (Chief Executive Optimists) are wrong.
Table from Chief Executive article:
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Wednesday, August 5, 2009
Chart Of The Day: Non-Business Bankruptcies
Hat tip to Calculated Risk.
Full CR article
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Full CR article
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Tuesday, August 4, 2009
Quote Of The Day: Hot Waitress Indicator
Well, it seems at least as reliable as anything coming from the government. From Hugo Lindgren in a New York magazine article:
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
"The indicator I prefer is the Hot Waitress Index: The hotter the waitresses, the weaker the economy. In flush times, there is a robust market for hotness. Selling everything from condos to premium vodka is enhanced by proximity to pretty young people (of both sexes) who get paid for providing this service. That leaves more-punishing work, like waiting tables, to those with less striking genetic gifts. But not anymore."
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Saturday, August 1, 2009
Elaine Morgan On Our Aquatic Ancestry
This is a wonderful and fascinating TED discussion by Elaine Morgan. Her theory of our evolutionary past is certainly interesting and thought-provoking. I imagine Elaine would have made a wonderful professional investor given her independence and strong instincts to question the herd.
click here if video does not appear
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
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