Gold Reserves and Defaults

Six years since last post and GLD hasn't changed!  A good investment?  Good enough to appreciate in value relative to CAD, however it won't beat many of the tech and healthcare stocks returns over last 5 years.

On Mar 1, 2014, SPDR GLD was $123.61 USD. After a drop in Dec 2015 to $101, Dec 2016 to 109.61, Dec 2017 upwards to 123.65, plummeting Sept 2018 to $112.78 until now.

Feb 15, 2019 it closed at $124.80.  However, that USD is worth much more now in CAD terms.

Kitco 5 year gold price

https://www.kitco.com/charts/popup/au1825nyb.html

Mar 1, 2014, CADUSD=X conversion was $0.90, plummeting to $0.71 in Jan, 2016, and staying in a range of $0.73-$0.80.  Currently at $1 CAD = $0.75 USD.  A 21% decrease in value vs. USD since March 1, 2014.

Gold is $1749.60 / oz CAD as of Feb 15, 2019.  $1,486.14 on Mar 3, 2014.  Almost an 18% increase.  So has it lost value or remained consistent due to the US exchange rate?

Is it still a good idea to use GLD in USD as a hedge against CAD losses and inflation?   Seems so.

Canada is a commodity country.  Looking at commodities over last 5 year term is a pretty sad state of affairs.  S&P GSCI Energy TR is down -16.50%.  Petroleum TR is similar at -16.03%  Precious and Industrial Metals TR have had the least losses in this period, at -1.33% and -1.49% respectively.  Commodities should come back to the mean over the next few years.

So where is the growth happening?  Google comes through with a list of the
100 Highest Non-Leveraged 5 Year ETF Returns.
https://etfdb.com/compare/highest-5-year-returns/no-leveraged/

Semiconductors, Software, Medical Devices and Health Care, Tech, Tech, Cloud Computing and Internet have been the darlings of last 5 years.  Perhaps the trend will change back to Energy, Commodities, and Metals?

Another post I had back in 2012 was about Greece Defaults.  I was interested in the effects defaults have on the markets and how the banks and funds trade defaults.  According to wikipedia, Greece defaulted again in 2015.  Since 2014, Argenina, Ukraine, Venezuela, and recently Barbados defaulted. Compare this to the Great Depression and 1983 Latin American debt crisis, where many countries defaulted in a single year.  The most significant defaults have been in recent years, with Greece, Ecuador, Argentina, and recently Venezuela. 

The Greece hangover and 2009 global financial crisis will likely have repercussions and aftershocks for many years, since they were such dramatic events.  The Database of Sovereign Defaults, 2017 paper seems to conclude the defaults on Sovereign debt since 1990 have dramatically decreased in proportion to the world public debt and GDP.  With the exception of 2012 and 2013, total debt defaults have remained fairly consistent (and lower than previous years) since 2007.

Another trend in the news around 2011 was the downgrading of US Debt by S&P.  A Canadian analyst made the news with an S&P downgrade, and was in this scathing report again last year about Canadian Bank risk.  An interesting tidbit is that China didn't allow defaults before 2014, and S&P has entered the Chinese market this year, with Chinese defaults on the rise and in the news.

Seems like many books will be written about this period in history.

S&P | S&P GSCI | Americas

Key indicators - S&P GSCI Index

The only commodity holding up YTD appears to be Grains, and only because it's up almost 8% MTD.  Agriculture and non-energy holdings seem like a good place to be right now.  Long term, PM holdings are still a good investment.  Right about now, cash still seems like king to me.

The S&P GSCI® is widely recognized as a leading measure of general price movements and inflation in the world economy.  It provides investors with a reliable and publicly available benchmark for investment performance in the commodity markets, and is designed to be a “tradable” index. The index is calculated primarily on a world production-weighted basis and is comprised of the principal physical commodities that are the subject of active, liquid futures markets.

S&P | S&P GSCI | Americas

10 ways to download historical stock quotes data for free

10 ways to download historical stock quotes data for free:
Sounds a bit spammy but this is an oldish list from 2009 to download stock data that includes some access to Canadian stocks.

'via Blog this'

ABX - Graphical P&F - Charting Tools - StockCharts.com

ABX - Graphical P&F - Charting Tools - StockCharts.com: "ABX"

Odd chart, almost looks like it's been programmed to look this way.... Algo trading anyone?  Looks like it's getting squeezed.

http://ca.finance.yahoo.com/echarts?s=ABX.TO#symbol=abx.to;range=2y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

'via Blog this'

Greece Defaults

After months (or perhaps years) of uncertainty, Greece has restructured their debt and therefore defaulted, though some may try to avoid that term.   This will likely trigger a Credit Default Swap (CDS) event.

According to Wikipedia:
Credit default swaps have existed since the early 1990s, and increased in use after 2003. By the end of 2007, the outstanding CDS amount was $62.2 trillion,^[4] falling to $26.3 trillion by mid-year 2010^[5] but reportedly $25.5^[6] trillion in early 2012.^[7]

That's a lot of coin.  Nobody knows how much the CDS sellers of Greek debt are on the hook for, since they could be hedged or exposed to counterparties that are also affected by the default.  Perhaps $3.7 billion to $700 billion Euros, give or take?

There was plenty of uncertainty in the markets related to Greece over the last year and the fact that perhaps CDS instruments were not worth the paper they were printed on. (if they were printed at all)   Last year Greece experienced what could only be considered a default, and yet there was no CDS event.  That's kind of like losing a limb and then your insurance company claims you might find it somewhere and decides not to pay.  This week's changes may renew enthusiasm towards these types of financial weapons of mass destruction.

The magnifying glass welded by the trading community will move towards the next ant, focused on burning another Euro-zone country, or maybe a counterparty affected negatively by the Greek default.

The Greek Crisis: Greek debt swap triggers massive payouts: "It means there will be a net $3.2bn pay-out on CDS contracts, according to the data warehouse Depository Trust & Clearing Corp, in a boost for the relatively new market in sovereign debt protection that could also benefit eurozone debt markets amid worries that a failure to trigger could have undermined an important hedging instrument for holding government bonds.


However, there was a long delay over the decision by the ISDA determinations committee, which is made up of 15 global banks and investment funds, that annoyed some investors.


Uncertainty still hangs over the CDS market as an auction process to decide the amount of pay-outs may not take place for another week."


I believe there is an effort to bankrupt some of the world's largest entities, in order to collect CDS payouts, and short the stocks as they fall.  The CDS market is not transparent - there is little regulation though perhaps that is changing as more of these types of actions are revealed.  Like snowballs rolling with an avalanche, the increase in borrowing costs hurt companies and sovereigns, causing borrowing costs to increase and likelihood of debt metrics to rise.  It is an effect that would be tough to reverse, kind of like racking up 28% credit card debt with little income coming in to pay it back.

Banks and funds keep a close eye on risk, and CDS instruments are one of those things that have quite a few different types of risks.   Country risk, liquidity risk, currency risk, political risk, and jump risk.

Jump risk is probably the one risk CDS sellers do not want to see, and CDS buyers are all into.  For a buyer of CDS, this is like winning the lotto overnight, provided the payout happens and doesn't get diluted by overbought coverage.

I wonder if Greece will go the way of GM, a leaner, meaner country.  All of a sudden 70% of the debt gets written off?  The money has to go somewhere.

Their ETF fund GREK was up 23% shortly after launching in December 2011.  According to it's P&F chart, it's in a Descending Triple Bottom Breakdown.

ETFs with Greek exposure.
http://etfdb.com/country/greece/

SEA, a tiny 32M cap fund with one of the largest exposures was down 46% last year.  There was a huge amount of volume in February.  Perhaps there is a correlation to the launch of the iPad 3?  Apparently the iPad is to shipping what Harry Potter was to booksellers.

I don't own any of these funds.

Deposit Rates Could Turn Negative in This Bizarro World

Bank’s don’t want your money.  They have the benefit of cheaper wholesale money vs. retail money, and just like a self-storage locker it costs them to secure, insure and heat your money.  If it’s cheaper to buy wholesale vs. used, then why buy used?

This article makes some mentions about the 80/20 rule, and currently we’re in the 80% fear, 20% greed mode.  Retirees are joining their friends at staggering levels, and pretty soon there might be more capital sitting in banks than there is deployed to real assets, and companies are cash-rich. 

Watch the next few years as the adult demographic segment moves to the elderly demographic segment, and 20% of the US population is adult, 80% is elderly or child. 

From Wolfram Alpha, some info on the US population.

---

Distribution:

The 30-year bond has surpassed commodities as the investment of choice, signaling great fear in the markets as investors park their Ferraris and drive their winter-beater BMWs.  When it flips around, watch for money to fall into things like food, precious metals, and energy.  Until we get another boom of tweens and teens and twenty-somethings, consumer and discretionary will continue to fall by the wayside.

For those retirees having more than $50 million in the bank, watch for your bank manager to treat you like Tony Montana.  We just can’t handle that much money Tony, our investors are asking questions!

Back in November, Geller predicted that a major bank would begin to charge depositors for deposit accounts of over a certain size and earlier in August, the Bank of New York Mellon sent a letter to institutional depositors informing them that the bank would begin to charge fees on deposits above $50 million.

Deposit Rates Could Turn Negative in This Bizarro World

US Downgrade

How is it that the City of Peterborough, Ontario gets the same rating (actually, better) than the US Government? Nikola Swann was the secondary analyst on the Peterborough rating, and the primary analyst on the US Government downgrade.

Truly a Black Swann day today on the markets.

Top Canadian Stock Screeners | Million Dollar Journey

Bunch of Canadian stock screeners.

Top Canadian Stock Screeners

Top Canadian Stock Screeners | Million Dollar Journey

Looking to the Future with Options

As time progresses, options become riskier and riskier to hold.  Good Traders, like good drivers, look as far ahead as possible.  


But what a lot of option traders don’t appreciate is that time decay kind of gums up the works for this calculation. Options lose value by the amount of their theta each day. But theta doesn’t come out of the option price on the closing bell each day. Professional traders have been around the block. They know theta is coming. So they move the day in their models ahead sometime during the trading day (i.e., before the end of the day) to get ahead of the game. In fact, towards the end of the week, they generally start taking time out of their models more aggressively because they need to take out a total of three days of decay to account for the weekend. Often, by the end of the day Friday, they have moved 
their models ahead three full days to reflect Monday’s theoretical prices


So is the secret to winning in the stock market to not look at yesterday's close but to look at the next 3 days of potential opens and what the futures/options markets are doing?

Volatility Index Alternatives

Using VIX in combination with CDS premiums (how much a company has to pay to borrow) indicates to me volatility in the market and risk of owning an individual stock (along with Beta).  There's a more accurate/up-to-date way of doing things with VIF and VIN.


Now, here is the fun part. It is a little known fact that the CBOE actually maintains separate indices for the near-term month VIX (VIN) and the far-term month VIX (VIF). Just pop those tickers into your streaming quotes and you too can watch not just the VIX, but the two components used in the VIX constant maturity blend. Right now, for instance, I show a VIX of 17.88, a VIN of 16.98 and a VIF or 18.23.  Just be sure to keep track of the SPX options series roll eight trading days before the VIX options expiration.


There are even some ties to individual stock prices.

http://vixandmore.blogspot.com/2011/01/cboe-to-publish-vix-style-volatility.html

• Amazon (AMZN): volatility ticker: VXAZN
• Apple (AAPL): volatility ticker: VXAPL
• Google (GOOG): volatility ticker: VXGOG
• Goldman Sachs (GS): volatility ticker: VXGS
• IBM (IBM): volatility ticker: VXIBM

Financial blog wars » Investment Postcards from Cape Town

Top of 2010

Josh Brown, writer of The Reformed Broker blog, this year again compiled a table of financial bloggers. Investment Postcards received the honor of being included in the Big Picture category.

Josh commented as follows: “First, some caveats – I tried to include all the blogs I keep up with at least semi-regularly.  There may be some newer or less frequently updated blogs that aren’t here – please no hard feelings if we missed you, there’s always next year.  I also didn’t include all the tweeters and video bloggers, many of whom I consider to be great in their own right.”

Here’s the 2010 list.

Financial blog wars » Investment Postcards from Cape Town

BERKSHIRE HATHAWAY INC.

Warren's letter to investors was released last month.  My 1 share of Berkshire Class B stock has taken a big hit since September, primarily due to lack of confidence in the markets and adjustments to valuations across the board.  Ticket to the annual meeting is getting cheaper...

Warren has an excuse for this - the bad guys are getting the handouts while the good guys are suffering, with no end in sight.  He admits to making some stupid mistakes, and also inadvertently avoiding even stupider ones by having his "lowball" offers rejected.

Perhaps if Warren bought a new home it would set an example for the rest of America... since he has been living in the same one for the last 50 years.   If not a new home, perhaps a car company?

Warren & Co. still beat the S&P by 27% last year... not a bad deal until you consider they also lost 9%, and much more as of this year.

I don't take yearly gain/losses #'s too seriously.  Unless you bought the stock at the Jan 2 price and sold at the Dec 23 price, your losses and gains are something different.  In addition, currency exchange also has a dramatic effect if you do not live in the US and are dealing in USD.

Some further insight into what I have figured is the primary reason why companies are failing:

Now, imagine that all of the city’s bonds had instead been insured by Berkshire. Would similar belt-
tightening, tax increases, labor concessions, etc. have been forthcoming? Of course not. At a minimum, Berkshire would have been asked to “share” in the required sacrifices. And, considering our deep pockets, the required contribution would most certainly have been substantial.

I believe insurance on debt and recent risk management practices have caused this spiral, as speculators of this insurance and increasing spread values force their "names" to default after being unable to borrow.  Why else would some of the largest companies in the world get dragged into the quagmire of bankruptcy?

The type of fallacy involved in projecting loss experience from a universe of non-insured bonds onto a
deceptively-similar universe in which many bonds are insured pops up in other areas of finance. “Back-tested” models of many kinds are susceptible to this sort of error. Nevertheless, they are frequently touted in financial markets as guides to future action. (If merely looking up past financial data would tell you what the future holds, the Forbes 400 would consist of librarians.)

99 years of historical data can't be wrong Warren!  :)

Another reason for the economic downward spiral is the loss of confidence in the entire system, due to a number of Ponzi schemes.  It is ironic that Charles Ponzi's company was called the Securities and Exchange Company.  It's no surprise that people will look the other way while they are making money, and then as soon as there is some government intervention and scrutiny about shady deals that money will go running for the hills.

Another cause for the downfall?  Megatrends... baby boomers harvesting their retirement pensions before they disappear.  The root cause, however, has been explained very clearly.

Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood
using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols.

Our advice: Beware of geeks bearing formulas.

BERKSHIRE HATHAWAY INC.

Stocks Bear Market How Low Could it Go? :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

 

How Low Can It Go?

Stocks Bear Market How Low Could it Go? :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

Paris 2008: Lamborghini Estoque LIVE - Autoblog

For the billionaire who's stock portfolio now compels him or her to car-pool, comes a new 4-door Lambo sedan.

Baby seat optional.

Paris 2008: Lamborghini Estoque LIVE - Autoblog

$XAU:GLD - SharpCharts from StockCharts.com

 

Ugly chart.

$XAU:GLD - SharpCharts from StockCharts.com

Techdirt: Apparently The Financial Crisis Is The Fault Of Flickering Computer Screens

How many of you as investors have requested paper copies of annual reports?

So the 3 of you that have, how many got beyond the glossy photos?

You must be the one holding cash right now.

It's all the fault of the OK button.

The whole thing, starting with the subprime, is the fault of the computer. I was just talking to a banker the other day, and not that long ago, 20 years ago, an investment banking house, let's say, Lehman Brothers, when it got a package of mortgages, they would go through every mortgage, every single one, and they'd throw out the ones that just seemed absurd, they just wouldn't accept them. Things used to arrive on paper. Today things arrive on a screen, and a screen is back lit, and one of the biggest pains in the neck is trying to read something dully written and complicated on a computer screen. It will drive you nuts -- I mean, try it sometime. Now they say, "Oh, to hell with it," and they just accept the whole package. And if it hadn't been for that, they'd be going over each loan. What's happened is the backward march of technology.

Techdirt: Apparently The Financial Crisis Is The Fault Of Flickering Computer Screens

YouTube - Strong bad - important rap song

Kidz don't play wit 2 many knives

Wish I listened to this before buying into the markets last week.

naked capitalism: Credit Default Swap Worries Go Mainstream

This article is from February, 2008.  It applies now more than ever after the FRE/FNM bailout.

Strange that the 2 entities weren't halted after the news of their impending bailout.

naked capitalism: Credit Default Swap Worries Go Mainstream

Bloomberg.com: LSE Trading Crash

 

The breakdown left traders in Europe's financial capital in limbo as equities around the world rallied on the U.S. government's takeover of mortgage lenders Fannie Mae and Freddie Mac. The LSE, Europe's oldest independent exchange, said attempts to fix its biggest computer failure in more than eight years was ``taking longer than expected.''

``The LSE will come out of this very, very badly,'' said Omer Bhatti, head sales trader at WorldSpreads Group Plc in London. ``People will begin to think seriously about having alternatives.''

Bloomberg.com: Worldwide

Hewlett-Packard: Hewlett-Packard Crowned Head Of The Stupid Shipping Gang After Packing 32 Sheets Of Paper In 17 Boxes

 

This is a good reason not to buy HP stock. Unless they charge for shipping!

Leading the stupid shipping gang takes creative incompetence, and Hewlett-Packard is clearly up to the task. Other companies might have turned to email when faced with the challenge of shipping sixteen software licenses. Not Hewlett-Packard! HP went looking for a box. A really big box, which they filled with sixteen smaller boxes, each containing two precious pieces of paper ensconced in a layer of protective foam.

Hewlett-Packard: Hewlett-Packard Crowned Head Of The Stupid Shipping Gang After Packing 32 Sheets Of Paper In 17 Boxes

ING DIRECT Canada: The Tax-Free Savings Account

ING has started marketing a tax free account for Canadians... whenever the budget for 2008 gets approved.

So what does this really mean? Soon you will have all the features that you have come to expect from ING DIRECT – like high interest, no fees, no minimums – PLUS the added benefit of no taxes on the interest earned in your Tax-Free Savings Account. Your hard earned money has already been taxed – now the interest it earns won't get taxed again.

ING DIRECT Canada: The Tax-Free Savings Account

FDIC Bank Closing Information for IndyMac Bank, F.S.B., Pasadena, CA

Another one bites the dust - to the tune of $1 billion in uninsured deposits.

On July 11, 2008, IndyMac Bank, F.S.B., Pasadena, CA was closed by the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. All non-brokered insured deposit accounts have been transferred to IndyMac Federal Bank, F.S.B., Pasadena, CA ("assuming institution") a new FDIC-insured Federal Mutual Savings Bank. No advance notice is given to the public when a financial institution is closed.

FDIC Bank Closing Information for IndyMac Bank, F.S.B., Pasadena, CA

Investors see higher risk of GM default: Financial News - Yahoo! Finance

Things are getting messy out there.  It used to be that $33k or $66k would have been okay for swap insurance.  Then it was $100k.  Risk-free borrowing was virtually, well, free.

Now it costs over $3 million to borrow $10 million? 

Not gonna happen.  Money no longer grows with CDS.  How does it work?

The cost to insure GM's debt with credit default swaps rose to 33.5 percent upfront, or $3.35 million per year for five years to insure $10 million in debt, plus annual payments of 500 basis points, according to Markit.

Investors see higher risk of GM default: Financial News - Yahoo! Finance

The Fed Overnight rate has gone from an average of 3.94% in January to it's current rate of 1.98%... or free money... however it's not going to last.  The hold on Fed funds caused a plunge in the markets that could cause another "cry wolf" scenario over the weekend and someone to bail.

Will it be GM?  GE?  Boeing?  Oshkosh B'gosh?

Libor spike could be the cause of this too... or the opposite?

Some large caps with low P/E's

Altria - smoking will probably go up after today.
Barclays - Nobody wants a bank stock in this day and age... even if it yields 14%.  Down by half 52wk.
ING Groep - Your money?
Lloyds TSB - Nobody wants insurance... Even if it yields 14%?  Down just below half 52wk.
National Grid - What's wrong with UNG & electricity in the UK & US?

Interesting to note that ADRs are the lowest P/E.... probably due to the premium in holding them.

Other low P/E - high Yield stocks... according to Google Stock Screener.

 

Company Name Symbol  Market Cap  P/E Ratio  Dividend Yield (%)  52w Price Change (%)   Aircastle Limited  AYR 622.98M 4.13 11.42 -79.40 Anthracite Capital Inc.  AHR 501.18M 4.64 15.29 -37.61 Arbor Realty Trust, Inc.  ABR 203.16M 2.36 24.08 -61.48 Bank of Ireland (ADR)  IRE 9.44B 3.45 12.54 -53.92 Barclays PLC (ADR)  BCS 40.19B 4.65 14.72 -58.42 Capital Trust, Inc.  CT 415.33M 3.96 12.74 -41.69 Gramercy Capital Corp.  GKK 624.75M 2.22 18.78 -56.45 KeyCorp  KEY 5.51B 5.72 13.01 -68.56 Lloyds TSB Group plc (ADR)  LYG 35.28B 5.40 14.82 -44.49 MCG Capital Corporation  MCGC 317.60M 4.59 25.47 -74.31 Northstar Realty Finance Corp.  NRF 529.59M 2.66 16.25 -30.64 Universal Insurance Holdings, Inc.  UVE 140.26M 2.63 12.38 -55.06

Aircastle - +Gas price = -AYR

Anthracite - Dividend increased, along with going to the market? Sounds fishy...

Arbor - Structured finance??? Who does that anymore?

Bank of Ireland - On strike.

I could go on... there's nothing that's of interest here though... except maybe Gramercy?

Keycorp raising 1.5B and halving dividend.

Lloyds buying a bank?

MCG Capital?  Too small to worry about.

How about Colonial BancGroup?  Last year?  $22/shr.  This year?  $4/shr.

Raises $333 million in the markets.

Robert Lowder has been CEO since 1981.  He's 65?  Time to retire? 

He probably wishes he did last year.

The second-largest bank in Alabama isn't doing so well, according to the share price.

Might be worth a look.

Save a drowning victim...

Berkshire's philosophy for financial metrics.

CM: One metric catches people. We prefer businesses that drown in cash. An example of a different business is construction equipment. You work hard all year and there is your profit sitting in the yard. We avoid businesses like that.

Reflections on Value Investing: 2008 Berkshire Hathaway Shareholder Meeting: Detailed Notes

Some publicly listed companies that are "drowning in cash" at the moment.

Heidrick & Struggles International Inc. (HSII) - down 40% Y/Y

Cryo-Cell International Inc. (CCEL.OB) - down 68% Y/Y

Apparently swimming in cash is a bit different than drowning in it, as these 0 debt companies seem to indicate.  It's not 0 debt, it's Cash Flow that's King.

Microsoft Corporation (MSFT) - down 3.6% Y/Y

Berkshire Hathaway Inc. (BRK-A) - up 13.5% Y/Y

Reflections on Value Investing: 2008 Berkshire Hathaway Shareholder Meeting: Detailed Notes

Financial investment advice for small amounts of money.

For someone with $50+ billion dollars in the bank, I wonder what a small amount really is?

Q23: With small sums of money, what strategies would you pursue?
WB: If I were working with small sums of money, it would open up thousands of possibilities. We found very mispriced bonds. We found them in Korea a few years ago. You made big returns but had to be small size. I wouldn’t be in currencies with small amount of money. I had a friend who used to buy tax liens. I’d look in small stocks or specialized bonds. Wouldn’t you say that Charlie?
CM: Sure.

Reflections on Value Investing: 2008 Berkshire Hathaway Shareholder Meeting: Detailed Notes

More on tax lien certificates.

This really only applies to the U.S. though.  Nothing to add.

The system in Canada for dealing with delinquent taxes is much different than in the U.S. This is a non-technical, non-official, very much abbreviated summary of how it works in Canada: The local government does not take action on delinquent property taxes until they haven’t been paid for three years. Then any entity with an interest in the property (such as the mortgage holder) gets a chance to pay the taxes and foreclose on the property. If no such entity takes action, then the opportunity becomes available to the public, and the entire process can take four years. In Toronto, for example, they see just one or two of these a year open up to an investor.

If you want to find out more about how tax liens work and how common they are in a particular area, the best thing to do is to contact the real estate section of your municipality.

Charlie Don't Surf - Reflections on Value Investing: 2008 Berkshire Hathaway Shareholder Meeting: Detailed Notes

Charlie Munger is one of my mentors.  Here's a good tidbit from the latest AGM for Berkshire that pretty much sums up the subprime crisis, and the "risk management" field when it comes to complex investments like CDOs and SIVs.

CM: You can see how risk averse Berkshire is. We try to behave in a way so that no rational person will worry about our credit. We also try to behave in a way that if people don’t like our credit we wouldn’t notice for months. That double layering of protection against risk is like breathing. The alternative culture is you call a man a Chief Risk Officer, but often he is man who makes you feel good while you do dumb things. Like the Delphic oracle, a dumb soothsayer, and how can he do dumb things if he has a PHD and can do all the advanced math! You crave a system such that you torture reality to fit a structure that doesn’t match with extreme situations in reality, you feel confident because you compute the risks, but you haven’t -- you have just clobbered up your own head.

Reflections on Value Investing: 2008 Berkshire Hathaway Shareholder Meeting: Detailed Notes

Boo-yah

I always enjoy a good conspiracy story.  This one takes the cake.  Put on your tinfoil hat... cause there's lots of it in this one.

But Cramer don’t know nothin’ about nothin’. And Herb thinks the SEC investigation is an outrage. So Herb and Cramer have commandeered CNBC. They are live on CNBC. Herb has jabbered something about a conspiracy - a conspiracy to get Herb. And now Cramer is going to show us something.

Deep Capture Blog

And the moral of the story?  There's no morals on Wall Street.

In Play ® - Yahoo! Finance - The basics of investing.

Crystallex has been a speculative stock for years... the permit has always been "one month away".

No longer... 

10:39AM Crystallex announces the Director General of the Administrative Office of Permits has denied request for the authorization to affect natural resources (KRY) 1.65 -0.03 : Co announces it has become aware that the Director General of the Administrative Office of Permits at the Ministry of the Environment and Natural Resources of Venezuela has issued a communication to the Corporacion Venezolana de Guayana, the owner of the Las Cristinas concessions, denying a request for the authorization to affect natural resources to carry out exploration activities in the mining area of Las Cristinas in Sifontes, Bolivar State. In issuing the communication, the Director General cites sensitivities surrounding indigenous peoples, the small miners and the environment in the area generally known as the Imataca Forest Reserve, which contains a number of mining projects, which like those of Crystallex, are seeking the required permits to continue their development and exploitation. The communication by the Director General appears to be in conflict with the Las Cristinas EIS approval, Construction Compliance Bond Request and Environmental Tax request issued by the MinAmb (that Crystallex posted and satisfied last summer) and the communication appears to be in opposition to all mineral mining in the Imataca Region. (stock is halted)

In Play ® - Yahoo! Finance - The basics of investing.

Why Things Cost $19.95: Scientific American

People following price in stock investments will appreciate this.

University of Florida marketing professors Chris Janiszewski and Dan Uy suspected that something fundamental might be going on, that some characteristic of the opening bid itself might influence the way the brain thinks about value and shapes bidding behavior. In particular, they wanted to see if the degree of precision of the opening bid might be important to how the brain acts at an auction. Or, to put it in more familiar terms: Are we really fooled when storekeepers price something at $19.95 instead of a round 20 bucks?

Why Things Cost $19.95: Scientific American

Holiday Patterns/FinancialCalendar.Com - Thousands of Holidays, No Vacations

FinancialCalendar.com is the source of worldwide calendar data.

There are similar year-to-year variations in the number of weekends, with the result that the number of working days can also be very variable (see chart below). The different weighing methods produce different numbers (an average of 259.1 days on a population-weighted basis, 251.4 for GNP and 251.6 for stock market capitalization) because many countries with below-average GNP work a six day week.

This gives rise to an interesting economic question: Should GNP be higher in years when there are more working days? Not being economists, we're not qualified to answer that question. However, we can point out that the effect is very significant in some years. For example, in 2032 there will be 0.9% more working days than in 2031 (see chart below).

Holiday Patterns/FinancialCalendar.Com - Thousands of Holidays, No Vacations

Computational Finance - Using your Nvidia card to perform risk analysis with Cuda

High-end graphics card GPUs like Nvidia's 8800 are hundreds of times more powerful than Intel Duo-Core CPUs.  So why not use them for something other than graphics?

A great way to justify purchasing a couple of these for your home/work PC for something other than just gaming.

Monte-Carlo Option Pricing with Multi-GPU support
This sample evaluates fair call price for a given set of European options using Monte-Carlo approach, taking advantage of all CUDA-capable GPUs installed in the system.
GeForce® 8 Series
Quadro® FX 5600 or later
Tesla™
Download - Windows
Download - Linux

---

Monte-Carlo Option Pricing
This sample evaluates fair call price for a given set of European options using Monte-Carlo approach.
GeForce® 8 Series
Quadro® FX 5600 or later
Tesla™
Whitepaper
Download - Windows
Download - Linux

---

Black-Scholes Option Pricing
This sample evaluates fair call and put prices for a given set of European options by Black-Scholes formula.
GeForce® 8 Series
Quadro® FX 5600 or later
Tesla™
Whitepaper
Download - Windows
Download - Linux

---

Binomial Option Pricing
This sample evaluates fair call price for a given set of European options under binomial model.
GeForce® 8 Series
Quadro® FX 5600 or later
Tesla™
Whitepaper
Download - Windows
Download - Linux

Computational Finance

Credit Rating Agencies: (the full global list)

Large list of credit rating agencies.  According to Moody's site, the Chicago Fed index reveals a recession may end by Q3.  What did I say about predicting the future??? 

At 64 credit rating agencies worldwide (Mar-2008), this list is only one more than our previous tally, see the historical list. Listing all the world's credit rating agencies is a hopeless task, but several kind people have written to me so this compilation represents significant turnover, see the nine names dropped from prior list.

Interestingly, mechanical credit scoring continues to gain acceptance and application. This trend is fueled by: a) increased uniformity and electronic reporting of financial information, 2) decreased "name recognition" of borrowers by investor/lenders, as 3) credit becomes more global, 4) an increased ability to make use of a quantitative value within the growing tide of Credit Value-at-Risk models/systems, and 5) regulator incentives for some to adopt an Internal Models Approach.

Credit Rating Agencies: (the full global list)

Top 10 of the TSX

 

Suncor's looking like it's hit some downward resistance from it's big drop and bigger recovery today.  Looks like a $92-$100 trading range, with a nice bounce going forward.  Currently sitting at $95 so the pendulum could tilt either way.

SU
http://tinyurl.com/33cxmb

Manulife looks a bit frightening... if the bottom drops out of $34 support level it's hard to say where it goes.  It did recover a bit from the insurance sector drop last week.  Upside is $38-$40.  Probably going to stay range-bound for a bit.

MFC
http://tinyurl.com/3a8w5p

Royal Bank is another one with a long way to go down if the bottom drops out. A fairly decent recovery today up to $46.68 is much better than a couple days ago, where the low was $42.82.  Looks to be stable around the $43 range.  Upside could be $51.

RY
http://tinyurl.com/2l95ht

RIMM looks strong.  Upside to $112.  Downside to $94.  Closed in strength at $104.94.  Watch for weakness Monday.

RIMM
http://tinyurl.com/2o7o5l

Encana was fairly flat today and probably hit some resistance against the resources/energy selloff.  With a floor of $70 and a close of $75.71, there appears to still be some upside. Perhaps back up to $78 or above?  Or did it peak last week and it's all downhill from here.

Hoping it is, only because the resources and commodities sector is too hot to maintain a stable global economic environment.  Something needs to give.

ECA
http://tinyurl.com/34uwqk

Looking for more downside in TD, $56 - $58 range, appears to be resistance at $58.  Currently $61.29.  Upside potential could be much greater than downside, especially if something happens with the CBH deal.  Upside could be anywhere from $70-$75.

TD
http://tinyurl.com/388djw

BNS has an ugly chart. 'nuff said.  Head and shoulders on a P&F chart?  It is at lows, so popping back up to the $48 mark would give some decent upside potential.  Currently $44.18.

BNS
http://tinyurl.com/33cupa

Potash is at resistance levels around $138.  Still kicking myself for not buying it at $86 a couple of years ago before the split.  Could bounce to $162.  $147.57 current.  Down 6.68%. 

POT
http://tinyurl.com/3czll8

CNR is above bottom resistance at $48.67, resistance around $46, upside around $52-$53.  I'm in Monday on CNR I think.  Need someplace to park cash for a bit.

CNR
http://tinyurl.com/2kc2zt

Barrick, blech.  Down 20% today.  I'm a buyer Monday... not.  Seriously though, short covering Monday will probably bring it back to the $46-$48 range if things don't continue to deteriorate with the price of gold.  When it rains it pours in commodities, so the downside for gold has got to be the $820/oz range. 

ABX
http://tinyurl.com/3dm48y

Ugly day today in stocks

"We live in a world in which we need to share responsibility. It's easy to say 'It's not my child, not my community, not my world, not my problem.' Then there are those who see the need and respond. I consider those people my heroes." - Fred Rogers

It's Mr. Rogers birthday today.  The banks, financials and stock markets need a hero.

It will be a full moon in the UK this weekend.  Overseas markets are none too happy today with the margin requirements on CFDs being moved from 25% to 90%.  Oddly enough the FTSE is fairly flat.

"You are going to see a lot of forced selling," said one leading London stockbroker.

- no foreign travel for easter holidays by senior bank of england staff, supposedly means UK clearer in trouble.

- LLOY LN IR actually denied fundings probs.

- HBOS denied prob to Merril’s , but as yet, not to the mkt, still being sold.

- RBS annual report which was released last night apparently shows massive    funding requirements.

- ARE UK BANKS THE SUB PRIME OF WORLD BANKING CONSIDERING THAT NONE HAVE    CONFESSED TO ANY CREDIT PROBS YET, IS BARC MADE OF TEFLON ?

- UBS, Swiss Govt apparently asked CSGN to put togther rescue package for UBS in   case that the crisis worsens.

- Soc Gen, BNP says no merger interest, spec thats because they have more horrors

MF Global warning adds to market worries - Telegraph

http://ftalphaville.ft.com/blog/2008/03/19/11714/panicky-banks/

And then there's the plummeting gold price.  I see a bottom forming today... or perhaps on Monday.  Something about an election overseas is causing some tensions...

Two U.S. aircraft carriers, including the USS Kitty Hawk, have been sent to the Taiwan region for training exercises during this weekend's Taiwanese election, a U.S. defense official said on Wednesday.

http://news.yahoo.com/s/nm/usa_taiwan_carriers_dc;_ylt=Av2Uoji3qkE2UlCECsHrB_sDW7oF

Who suffers in a bear market? The bears...

 

``There is a good analogy to Long-Term Capital,'' said Anthony Sanders, a former director of mortgage-bond research at Deutsche Bank AG who starts next month as a professor of finance and real estate at Arizona State University's W.P. Carey School of Business in Tempe, Arizona. ``They were all friends with Bear Stearns when they thought the spreads were huge. Now that the market has turned, Bear's standing there like the lone grizzly.''

Bloomberg.com: Worldwide

Chart of the Day: Debt Tranche Correlation - Finance Blog - Felix Salmon - Market Movers - Portfolio.com

So what happens when all spreads become equal? Fire sale...

High correlation is one of those weird things which pops out of the financial markets when you get strange bedfellows such as a credit crisis combined with a very low corporate default rate. Just as currency futures don't predict the future movement of currencies (they're entirely a function of interest rates), the correlation figure doesn't really measure how likely a massively-correlated simultaneous wave of defaults is. Instead, it just kind of pops out when you get forced liquidations, like we're seeing in the CLO and CDO markets, where Everything Must Go.

Chart of the Day: Debt Tranche Correlation - Finance Blog - Felix Salmon - Market Movers - Portfolio.com

Yuck...

I wonder what would happen if you click HELP for explanation?  What do the red lines mean?  Can't be good.

Mish has the scoop here.

 

I'm surprised that Washington, DC, doesn't show up in this grid.  A 2000% increase in taxes could really cause trouble.

wm-alta-pool.png (image)

Big pimpin: How an information system helped nail Eliot Spitzer and a prostitution ring | Between the Lines | ZDNet.com

 

So whether you transfer $100,000 once or 10 transactions of $9,999, the Feds will have no trouble picking you out of a line up.

According to the Associated Press, this investigation began with a suspicious activity report on Spitzer. The Wall Street Journal reported that Spitzer’s transactions looked like they were kept below $10,000 to avoid federal reporting rules. This behavior to avoid the $10,000 threshold also helps the Feds find strange behavior, say 150 transactions between $7,000 and $9,000. The Journal notes:

How an information system helped nail Eliot Spitzer and a prostitution ring | Between the Lines | ZDNet.com

I wonder how many other high-level government officials are waiting for something to come out of this...  This kind of stuff has been going on for thousands of years.

The Credit Market tanks, the Fed releases $200 billion dollars in a TAF, and a more permanent auction "loan" against illiquid debts, the markets still struggle, and the news is focused on politics as usual.

Moving bad balance sheets to the US Government

The Fed's offering 28-day term lending with bad mortgages as collateral, in a $200 billion dollar temporary bailout.

Today's steps indicate the Fed is increasingly concerned about the investor exodus from mortgage debt, which threatens to deepen the housing contraction and the economic slowdown. While they fall short of the calls by some analysts for the Fed to make outright purchases of mortgage debt, the central bank left the door open to expanding the effort.

Bloomberg.com: Worldwide

If the banks juggle this properly, doesn't it mean that treasuries show up in the balance sheet as opposed to bad debts?

US corporate bond spreads approach widest on record | Funds | News | Reuters

Once upon a time, CDS premiums were in the $30k to $50k range.

That was a long time ago...

Credit default swaps on Lehman Brothers'(LEH.N: Quote, Profile, Research) debt traded near 300 basis points, or $300,000 a year for five years to protect $10 million of debt, while Goldman Sachs'(GS.N: Quote, Profile, Research) swaps were around 215 basis points, the analyst said.

US corporate bond spreads approach widest on record | Funds | News | Reuters

Another bubble - Commodity funds?

Ever since GLD, USO, MOO, PBW, PHO, etc. have come on the market, I have noticed an increase in the prices of underlying commodities.  Chicago Futures were the original market to play the commodities game, and because of the complexity of getting into the market the average investor didn't bother.

Getting into an ETF is as simple as point and click.  It's easier than going to a coin dealer and buying gold.  It's easier than trading futures on an exchange, even though some of the products do just that for you.

It is a proxy for speculation, and speculation can be quite different from reality.

So other than Ethanol artificially inflating prices, ETFs and commodity index funds appear to be doing the same.

The "culprit" is the new breed of commodity index funds. Each week over the last two months, between $5bn and $10bn of fresh money has been pouring into the Goldman Sachs Commodity Index, the Dow Jones-AIG Commodity Index, and other funds, according to a UBS study. Together, the indexes now hold $200bn.

Fears of a commodity crash grow - Telegraph

Let's just hope they get the double-short ETFs out fast enough to get the price of bread back down to a normal level.

The price of gold plummeted today.  Perhaps $975 rounded is $900?  Since you can't cut a bar of gold in half without losing some of its value, maybe this is the case.

BullRunner, following the Market

Gold hit $990/oz today before dropping back to $983... still on it's way to $1000?

Gold, sitting at $975/oz is getting dangerously close to my "1 month or so" $1000/oz call.

BullRunner, following the Market

I seem to remember bailing on gold at $700 in May of 2006, after getting in at $580.  At the time I thought it was a good call, since the price of the metal plunged back to $590 before recovering.  The metal became range-bound between $620 - $680 for almost 6 months in 2007, before the credit crisis boogeyman and the Bernanke put brought it up past the $800 mark.

Right now there's not a long way to go to $1000/oz... but my guess is that we round up just past $1k and then drop back to low $800 by May.

Based on the 1 year RSI we're way overbought here, for GLD anyway.  Unless we see some more serious writedowns, that is...

But are investors too shellshocked to care about writedowns?

Hurt by the deepening credit crisis, Bank of America Corp. said Tuesday its fourth-quarter earnings fell 95 per cent, and Wachovia Corp. reported that profit tumbled 98 per cent.

http://money.aol.ca/article/us-banks-bgt/131728/

And of course, Buffett is bottom-feeding.

"We were getting calls on large portfolios," Mr Buffett said in an interview on CNBC yesterday. "People who were out on a limb financially are getting that limb sawed off."

I wonder if this relates to the news about all the size 12 feet surfacing on Canada's coastlines.

If it was the right hand or left foot, the US could blame it on Iran.

But really, is the USD weakening, or is it just that the Yuan is tightening?

The PBOC has let the yuan rise much more quickly in recent weeks. The currency climbed as high as 7.1122 per dollar on Thursday, the highest level since it was depegged from the dollar in July 2005 and allowed to float within managed bands.

http://www.guardian.co.uk/feedarticle?id=7343736

Exchange rates probably have a lot to do with what's going on in world markets, and what's going on with the economy.  Things are tough for Canadian manufacturers, especially the paper mills who have seen profits plummet.

"The dollar is by far the worst of all our problems," he told the committee Thursday

http://money.aol.ca/article/bank-economy-2nd-writethru-bgt/132524/

Amero, anyone?  One solution to the strong Canadian dollar would be to place it in the same basket with Mexico & the USD, and maybe throw in Zimbabwe dollars. 

Ameroz for all...

BullRunner, following the Market

Gold, sitting at $975/oz is getting dangerously close to my "1 month or so" $1000/oz call.

We can see this with the price of gold, which is up $21.60/oz today.  10 year gold since June '07 has gone vertical.   60 day gold shows 3 distinct peaks, with a 4th peak forming.   Point and Figure chart doesn't indicate any bottom.  Are we on our way to $1000 gold in the next month or so?

BullRunner, following the Market

There's 20 days until the Taiwan UN referendum.  Airstrikes in Gaza have buried the peace process.  Iran meets Iraq for the first time.  My thoughts are that market volatility and world politics will keep the price of gold at all-time highs.

Not to mention the abuse the USD has been receiving lately.

Here's JPYUSD=X.  Looks like the YEN is getting stronger as the carry trade unwinds and oil sales are done in Japanese currency and Euros.

Here's EURUSD=X.  Seems to be a pattern here.

Of course, the EUR isn't getting off too easy.  Even though it's strengthened against the USD, the YEN is still beating it up recently.

Here's JPYEUR=X.

In other news, it looks like The Donald isn't getting his golf course any time soon.

The Scottish Government announced yesterday that the issue will be decided by a public local inquiry.
Finance Secretary John Swinney claimed the move will give all parties for and against the proposals for the Menie Estate near Balmedie in Aberdeenshire the opportunity to state their case.

But the US tycoon last night expressed surprise over the inquiry, and warned: "Nobody is going to invest in Scotland." Mr Trump also revealed he knew of companies that had already been put off by the controversy.
Announcing his decision, Mr Swinney said: "This application raises issues of importance that require consideration at a national level.

They are even taking the Trump coat of arms into question.

The Court of the Lord Lyon invoked a law dating from 1672 which means Mr Trump must register a coat of arms.

A spokeswoman for Mr Trump said they were working with the court to register the coat of arms.

The businessman has been using the banner on promotional material and official clothing while mounting his bid to create the resort at the Menie Estate in Aberdeenshire.

Lyon clerk Elizabeth Roads said the use of the Trump International Golf Link Scotland design, which bears the Trump family name below a spear-wielding fist and a shield, was being investigated.

The person responsible for the current political fiasco is supposed to be Councillor Martin Ford, who voted against the deal due to environmental issues.  He is apparently now a "non-person" and has lost any positions on committees he served.

That vote was annulled by the Scottish Government, a move which was unthinkable until last month. 

Daily Dose of Excel & Dollar-Cost Averaging

Volatility isn't always a bad thing.

In the volatile market, I have about $700 more in my account than if the market was steady. Either way the stock is $1.24, I was just able to buy more of it in the volatile market. It’s the underlying fundamentals of a company that determine its stock price over time, but the utter wackiness of investors that determine it in the short term.

I believe investment folk call it dollar-cost averaging when you invest the same amount of money periodically. What do you think? Should I rejoice at each downturn?

Daily Dose of Excel

Subprime in pictures

DANGEROUS VISUALIZATIONS

In other cases, there may be good ways to visualize something but it is not clear that they should be visualized. The danger comes from the power of images to confuse the viewer or to distort data.

Provisional Theories

A scientist who is just beginning to work out a theory might create pictures simply to test out some ideas. The problem comes in when the quality of the graphics is better than the quality of the theory. Since it is so easy to construct flashy computer graphics, even half baked ideas are endowed with a believability beyond that which even the originator intends. Perhaps researchers should be encouraged to make low quality graphics on purpose for theories that are not yet well supported.

After reading Jim Blinn's (MS Research) paper on Visualization, I asked myself... what does subprime look like?

A major factor in the growth of CDOs was 2001 introduction by David X. Li of Gaussian copula models, which allowed for the rapid pricing of CDOs. 

Of course!  It's a pyramid!  In the "before" photo, the green indicates the happy folks at the top.  Red indicates some serious problems at the bottom.

The bottom seems to have fallen out of the "after" photo.  Happy times?

More on CDOs from Wikipedia.

Miller Center of Public Affairs - Gerald Ford Speeches

This speech resonates today's economic woes.  "We must Whip Inflation Right Now." from Gerald Ford, 1974.

"A stable American economy cannot be sustained if the world's economy is in chaos. International cooperation is absolutely essential and vital. But while we seek agreements with other nations, let us put our own economic house in order. Today, I have identified 10 areas for our joint action, the executive and the legislative branches of our Government.

Number one: food. America is the world's champion producer of food. Food prices and petroleum prices in the United States are primary inflationary factors. America today partially depends on foreign sources for petroleum, but we can grow more than enough food for ourselves.

To halt higher food prices, we must produce more food, and I call upon every farmer to produce to full capacity. And I say to you and to the farmers, they have done a magnificent job in the past, and we should be eternally grateful.

This Government, however, will do all in its power to assure him--that farmer--he can sell his entire yield at reasonable prices. Accordingly, I ask the Congress to remove all remaining acreage limitations on rice, peanuts, and cotton.

I also assure America's farmers here and now that I will allocate all the fuel and ask authority to allocate all the fertilizer they need to do this essential job.

Agricultural marketing orders and other Federal regulations are being reviewed to eliminate or modify those responsible for inflated prices."

Miller Center of Public Affairs - Gerald Ford Speeches

So what is the US doing to "Whip Inflation" today? Farmers are hoarding food speculating that higher prices will be coming soon.  Higher prices are coming due to scarcity of foods.  And the US, as the world's "champion producer of food" is turning that food into petroleum.

It has been over 34 years since this speech, and the cycle has returned in spades.  Even the players are the same.

$60 billion in closed funds are left hanging

As banks are unwilling to take risks or leave capital on the table, investors in 'cash-equivalent' preferred shares receive no bids for their shares.

``You've got $60 billion in which the holders believed until recently they could liquidate on par on demand and suddenly that $60 billion is frozen,'' said David Kotok, chief investment officer of Cumberland Advisors Inc. in Vineland, New Jersey, which manages $900 million in assets.

Bloomberg.com: Worldwide

If the ABCP market was $30 billion, then this is it's bigger brother.

Why I'm not trading right now... and why charts sometimes lie.

I have turned into somewhat of a technical analyst, though I still have a lot to learn about when to sell and how to control losses.  Back in January of 2007 I bought USO at a dip low of around $42 that could have ended up being a $75+ gainer.  At a financial conference, I pointed it out to the Metastock rep there, who called it one of the best calls he had seen.

I sold out at 14% so I wouldn't get greedy.  Could have been almost 50%.

Along with stop gains, I believe in stop losses.  Right before the crash in January, I put a couple of "stink stop" bids on a few of the stocks I owned.  All of them were grabbed from me at the low of the day (all at losses), and by the next day they were all above what I had paid for them. 

Intervention by the Fed at it's finest.  Technical analysis of the charts would have told me we were in for a long ride down.  Realistically I should have known that government intervention will skew results beyond what a chart can predict.

After that, I became a bit more disillusioned with the whole market itself.  And this is the main reason why I don't feel like touching stocks any more.  Because the market isn't acting right.

"If a stock doesn't act right don't touch it; because, being unable to tell precisely what is wrong, you cannot tell which way it is going. No diagnosis, no prognosis. No prognosis, no profit. It is a very old thing, this of noting the behavior of a stock and studying its past performances." - Jesse Livermore

Bill Cara: Cara's Commentary & Community Chat, Tues., Feb. 19, 2008, 7:57am ET

Of course, in this case, we know what is wrong.  The loss of faith in global markets and financial institutions.

We can see this with the price of gold, which is up $21.60/oz today.  10 year gold since June '07 has gone vertical.   60 day gold shows 3 distinct peaks, with a 4th peak forming.   Point and Figure chart doesn't indicate any bottom.  Are we on our way to $1000 gold in the next month or so?

Oil also hit $100/barrel today, after various issues with Texan oil refineries and Venezuela.

BMO didn't do too well today after announcing writeoffs.

"Part of the problem is that they're just writing this off, writing that off,"said Chyanne Fyckes, chief investment manager at Stone Asset Management.

"I think if they had any idea about how bad it was, they would just go ahead and write it off and be done with it. But they're not doing that this time because they don't know what's going on and that's what I find very disconcerting."

I'm not sure that anyone knows exactly what's going on and how bad the current financial situation is with the banks.  How do you value illiquid assets?  What risks are you taking on if your risk models aren't accurate?   

Financial Alchemist: Importing Financial Web Data into Excel, part 2

For the technical analyst, Excel is the #1 tool in the toolbox.

A particular model I want to highlight is the EPS_Estimates_MultiSource_v5 that you can download from the files section.
Following trends in analysts’ EPS estimates can be a valuable tool. Research suggests that companies experiencing downward revisions will likely receive more in the future. This spreadsheet shows the trends in EPS revisions. In addition, the model tracks historical EPS announcements. This can be valuable information too, especially if the company has been surprising on the upside and estimates have just started to be revised upward. This may depict a situation where The Street hasn’t fully grasped the potential earnings growth. This may lead to an undervalued situation if there is evidence that growth is underestimated and not priced into the stock.

Financial Alchemist: Importing Financial Web Data into Excel, part 2

Credit card rates for the bond markets?

 I wonder if they will offer job loss insurance for $2 per month, or Air Miles on their bonds if they end up paying 14% credit card-style interest?  We'll see in 2 weeks what this brings... but it doesn't look good.

Investors set prices for bonds by bidding for them at bond auctions approximately every month. If the bonds are perceived as risky, investors can demand a higher interest rate to buy them, and the interest rate rises. If they are perceived as so risky that no one wants to buy them and the auction fails, the bonds automatically rise to the maximum rate allowed for the person who previously bought them and is now stuck with them until the next month's auction.
In Citizens' case, that maximum rate is 14 percent.

Source: Bond troubles may dog Citizens - New Orleans Louisiana Local & Small Business News – Economics & Finance News Articles - NOLA.com

Apparently nobody wants bonds due to the amount of risk involved if any of the insurance companies default.  Over $10 billion worth of bonds failed to auction this week, which, according to the article, could cause rates to rise anywhere from 8-14% during the next auction.

It doesn't help that they lost their data during the last storm.

"For any of these, we're going to have financial data," she said.
Citizens has been unable to produce an audited financial statement since the 2005 storms because of problems with its computer system, and the group has been working for most of the past year on extracting the data and reconstructing it so that it can be audited.

Wednesday March 5, 2008 is the next full moon if you're superstitious.  With the stock market (and now the bond market) the way it is,  throwing dice, reading palms or dealing tarot cards are about the best ways to predict future prices.