Aug

21

1. One often talks about the difficulty of proving the gravitational attraction, and of course the much more important question of expectation around rounds. However, one light at end of tunnel, is that there have been at least eight excursions back and forth around Mr. Big Round in S&P: 1000. No other round has anything like this.

2. The Israeli market predicted or preordained every move n the S&P for last x weeks.

3. The POMO is a license for the banks to feather their nests at the expense of the poor unlucky souls whose debt is not guaranteed, and whose losing assets must be sold at distress.

4. There is always a web between currencies and other markets, a feeding chain if you will. But the web is always changing just when the public gets on to it, as Bacon would say.

5. The market abhors stability like the man a —-

Michael Bonderer reports:

John Mackey, the objectivist and entrepreneur, penned an op-ed on his suggestions for healthcare in the WSJ on August, 11, 2009. This has led to a 'progressive' furor and calls to boycott the company he co-founded, Whole Foods Market Inc. The least that any Daily Speculator can do is go out of his way to spend money in his stores. I have linked his piece and the WSJ's editorial follow-up.

David Higgs remarks:

Walter Isaacson's book Einstein tells of the difficulties Albert dealt with on his generalizing gravity in his Entwurf theory. It wasn't until he applied mathematics to it that he started to get the problem correct. Not sure if mathematics the answer here with the human element such a dominating element, be it a Madoff, a GS, an Obama or anyone else out to swindle the little guy, yet the wall of worry sure seems to hold true…

Steve Leslie surveys:

Don't look now but Dow 9500, S%P 1022, NAZ 2014, GS 163. In the words of Roseann Cash: "My baby thinks he's a train." Stock market up 50% since March.

Cash for Clunkers ends Monday — 450,000 cars sold as a result. One program that the Government got right. Now the dealers need to get their money from government — only 2% paid out so far. Is it true that the next thing is cash for appliances?


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3 Comments so far

  1. Sriranjan on August 21, 2009 6:45 am

    Dear Victor:

    Am reading your book ‘Practical Speculation’ and I think its one of the best books on trading and investing I have read. Unfortunately, mid-way while reading your book, I realized that I have also parted with some of my hard-earned salary on some ‘Technical Analysis’ books lying on my book-shelf.

    Here in India, the correlation between low P/E stocks and high returns is poor, but still a lot better than the correlation between technical analysis and returns.

    The business news channels are often invaded by the body snatchers aka technical analysts. But if they are able to coin a term for every possible market move, even if each individual technical analysis sounds bogus, on the aggregate don’t they stand a chance of being right? Isn’t this technical analysis industry really a conspiracy to come up with more and more exotic methods of basically tracking each move so that their superset of methods should match the market returns (aka throw mud on the wall and see what sticks?)

    Just a layman’s observation, but here in India, I don’t hear any ‘Technical Analysts’ talk about Absolute Returns, just excess returns over market? It’s those ‘Value Investing’ folks who keep harping about ‘Absolute Returns’.

  2. craig on August 21, 2009 4:22 pm

    Hitler Annoyed He Missed Bull Market (video)
    http://www.ritholtz.com/blog/2009/08/hitler-annoyed-he-missed-bull-market/

  3. michael bonderer on August 26, 2009 10:03 pm

    On the Planet Earth this is a No Brainer. In the Alternative Universe that is the the 'progessive' left it is a non-starter.

    When Charlie Gibson of ABC News posed the question of Capital Gains Tax cuts and made the observation that empirical evidence is unambiguous as to the government revenue Inflows during one of the last presidential debates, then candidate Obama dismissively responded by saying something to the effect of "… Charlie it's just not fair…".

    The facts are these and as reported by the WSJ in August 2007 when the first available from the National Bureau of Economic Research tax data revenue were made available after the Bush Capital Gains Tax reduction:

    "The preliminary 2005 data just released from the Treasury Department show more of the same. The amount of tax paid by those earning more than $1 million a year increased to $236 billion in 2005, up from $132 million in 2003, the year of the tax cut. This was a 78% increase in taxes paid by millionaire households."

    and further from the same August 24, 2007 piece,

    "The boom in the stock and housing markets clearly had a lot to do with the expansion in the number of millionaires in America, but lower tax rates on capital gains and dividends also caused a huge jump in reported income. The National Bureau of Economic Research found an "unprecedented surge in regular dividend payments after the 2003" Bush tax cut. Likewise, the lowering of the capital gains tax was followed by a 150% increase in the amount of capital gains unlocked by the 15% tax rate. Lower tax rates expanded the tax base."

    Simply put, a policy to immediately cut capital gains taxes are revenue positive. Empirically, the revenue positive characteristics have been bourne out in every instance where capital gains taxes have been cut, from the early 60s Kennedy tax cuts, to Bill Clinton's capital gains tax cuts in the mid to late 90s and most recently as we have just seen with the Bush cuts; capital gains tax cuts generate revenue. Given our present circumstances, what are we waiting for?

    What's the downside here? We get more revenue. The USD bounces strong. Interest rates remain well bid. Oil moves lower. International Capital flows increase to the US and USD assets. Equities instantly move big. Housing not just bottoms, but moves up as measured by Case-Shiller (just look at their data around these time frames). Job formation instantly moves positive. Gold plummets. Hospital maturity wards jump in occupancy. Life becomes good again on the Planet Earth.

    And the retort we get is exactly what Candidate Obama responded to Charlie Gibson that summer evening in some American city hosting one of the debates, "Charlie, it just doesn't seeem fair…"

    What doesn't seem fair to me is the blind ignorance regarding the empirical data associated with a policy to cut capital gains taxes. We no longer have the luxury of time. This is a no brainer. We must act decisively and immediately to do things that both increase revenues into the Treasury and inject honest incentives to business formation and after tax rate of returns on USD capital. We have no time to debate in Alternative Astral Planes.

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