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carseller

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Posts posted by carseller

  1. In this weeks Investor Chonicle (25 June - 1st July ) p30, they looked at a reader's million pound (nearly) portfolio.

    THERE WAS NO GOLD IN IT OR GOLD STOCKS.

    100% paper promises as far as I could see.

    I cant understand how gold can rise, with houseprices going down as a trend going forward. Gold will rise because of rising inflation ,and so will house prices, boosted by negative real interest rates. Golds rise will also express the rise in rents on a house, that may rise even faster than the price of the house, making the house cheaper, even if the price goes up. The same kind of adjustment took place in the late seventies.

  2. Oh, it is a bubble, for sure, and I think its going to go highter still, it migh have 2-5 years left. Gold have the bubble mentality, and it also have the strenght, resisting any violent corrections like other commodities, thats typical of something in a bubble. The article with the graphs you showed just prove my point, that gold is on a bubble path. I dont espect everyone to be buying gold even it is a rising bubble. The most important thing so far is the demand from institutional money, hedge funds , etc.

    You cant say that the nasdaq was not in a bubble in 1997 or 1998, but was in 2000. It was in a bubble during the whole cycle (because of the psychology surrounding it), and thats what I see in gold too.

    I have observed regular people, such as the staff in a food store discussing gold as far back as two years ago. However I dont see the lack of everyone talking about it as a proof its not a bubble. I can't remember everyone talking about crude when it was peaking in 2008, or about homebuilders for that mtter.

  3. I think gold is about to enter the final bubble stage, before peaking towards the end of this business cycle. Im sure gold already is in a bubble.

    Before it is that they dont make enough land, and now it is that you can't print gold. The psychology surrounding gold makes me so sure it is a bubble, similar to the Nasdaq around 1998, Homebuilders 2003, etc

  4. I think the correction might be over. I think Buffett's stealing of the railroad (first he want's to buy, then the BNI management jack down the 2010 outlook so the share price drop 10 dollars), and why not vote? it's just a scam, but it seems these big companies, with small owners here and there is run for their management, or minority owners, not for their majority owners, and no one dare to question Buffett, but the deal is of course good for him and his shareholders, and bad for BNI shareholders that are not short term speculators. Just look at the stake of the management, no wonder they wanted to sell to make a quick buck. The value of the company, even at 100 bucks is better than the competitors. In valuing railroads over the long haul P/S is the magical parameter.

    I think Gold should do well, silver, other railroads, maybe even oil seems to recover. There is starting to get some pressure on higher interest rates and inflation. The 10 year notes are starting to crack. I think China is on the way to a mega bubble.

    I saw the 1200 % debt to gdp ratio in Ireland, the 400 % in the UK. It's banana republics economics from here on I think. I think inflation is going to be bad once government bonds loose the speculative demand, and Asian currency management demand.

  5. So Jan Hatzius is a pointless waste of Squidster money. Unless of course he/she wasn't paid to come up with an accurate prediction.

    Bouncey bouncey (but beware - it may be shortlived!).

    My impression is that there is something about this rally since march that have taken the more seasoned child's of the great bull-market of the 1980-1990-s off guard, causing them to short it, only to get hurt by the market. Back then it was a market they could understand, fundamentals, etc. It seems the market and the economy are finding different ways to grow, in spite of worries of a japan like deflation. I think it was the same thing that happened from 2003. It's basically been a liquidity driven weak dollar even't since 2003, that went through a correction, like the 2008 version of the 87 stock market crash (for emerging market economies), only to be back on now, even it seems to be running out of steam.

    Stocks like Apple have been hitting new all time highs signaling the ongoing secular bull for emerging market's. I have talked to people living in Asia, and the demand for things like Iphones is insane. The biggest driver is that it's an expensive item to them, therefore it commands a premier status, not seen here, it's not like here were more or less everyone can have one without making a sacrifice. It's hard to comprehend how strong a brand Apple have established in emerging Asian market's.

    I think the next driver for this have to be weakness in US government bonds, and surprising strength in emerging market's. If that don't materialize then it have to drift back down.

  6. A thing you can look at as a long term investment opportunity is BNI, burlington nothern santa fe.

    It's like buying gold at 650-700 dollar at the price it's trading at now. That's an accurate calculation.These things were tracking eachother before the crisis. BNI was tracking CHF/USD, and GOLD (note that gold and CHF is trading totally in pair), now there is a temporary disconnect with railroad due to the weak US economy, but I think it will reconnect. I think it's one of the best and cheapest ways to get on the inflation bandwagon. It even looks like it's around a technical good entry point. It could move further down towards the 200 day moving average, but I doubt it will move beyond that.

    The beauty of that stock compared to gold, is that it will rally even with a strong dollar. When they get a strong economy the share price should be much higher than it is today.

    I think these shares are going to cross at some point. I think the reason BNI failed to track MON since 2006 were the weak US economy. With a strong economy, their charts are likely to cross.

    BNI vs MON

  7. lol - expectations management again....

    http://ftalphaville....g-with-goldman/

    Wednesday morning in New York. There's less than 24 hours until the release of the third-quarter US GDP report and Goldman Sachs has just lowered its forecast.

    Citing today''s durable goods report, Goldman economist Jan Hatzius has cut his estimate to 2.7 per cent from 3 per cent.

    .....

    Does this sound familiar?

    It should do, because this is the same Goldman Sachs economist who was remarkable prescient in predicting US nonfarm payrolls earlier this month. Hatzius raised his forecast for payrolls — predicting a fall of 250,000 instead of 200,000 — the day before the data were due. Sure enough, a day later September payrolls were revealed to have fallen by 260,000 — about 85,000 more than the average analyst estimate.

    Analysts are currently predicting a 3.3 per cent rise in Q3 US GDP.

    Are we in for a repeat?

    Could be, however it could also be that Goldman are playing the long side here, and think's the number is going to be a surprise on the upside. Then they have perfect time given those statements to reverse their trades. I mean, when they are selling they send that women Cohen, the permabull, on bloomberg, and when they are buying they make statements like the 2,7 % estimate. So what they really are saying is like 4 % maybe, I hope I don't sound to nuts here.

  8. Railroads became a bit oversold after the poor results and outlooks of the railroads. I think they are a big sticky due to that huge move a couple days ago. It don't have to be bullish. In general those stocks was very sticky also after November to the low earlier this year. They are holding due to inflation pressures in spite of a weak economy. The effect is similar to what is seen in gold, just not as great.

    From 2003-2008 the profits at many companies increased similar to the increase in the price of gold. That was companies that was not affected by the weak economy, fertilizer companies comes to mind. If the economy is strong again, there is a lot of room for those rails to gain, as they have basically drifted along since 2006, when there is earnings that reflect the inflation between 2006-2009, and a strong economy at the same time, they will perform very well.

  9. I don't think we've seen this. Jeremy Grantham's Q3 newsletter....

    http://www.gmo.com/websitecontent/JGLetter_ALL_3Q09.pdf

    It seems he suspect that we are a week after or so at the end of a 1930 like rally then, I think that is wrong.

    I think we are heading towards the political process of a second stimulus package, and perhaps more QE from the FED, I think the march low will hold. I have reduced my positions, and upped my cash stake to around 80 %. I think the short sellers might bring out the truth, and that could possibly be that those who think the US will hum along without a 2 stimuli package is living in fantasy land I dont know. On the other hand, a lot of the high beta stocks are now down a levels, that seems in line with previous corrections in this rally. However at those times, it was a belief that the economy was heading up ,now I think MR market is moving towards the double dip camp again.

  10. I consider even upping my stake in gold today.

    The 3m libor vs feds funds rate interest rate is very low, around 23 bps, or bubble conditions. I think gold is ready to blow up. Right month. good technicals, etc.

    I think it might be right to go for gold now.

    Maybe this will be like the earlier moves, just down again, and inside a range, but it could also be the break. like with the nasdaq in 1999. If that happens , they will be unable to stimulate the economy as much as they want to, and might move right into a double dip, with higher interest rates in a bad economy.

  11. This move in gold have lasted some time, the things that used to strenghten when the dollar weakened have failed to do so this weak, instead we have had gold, yesterday and today. I sold stocks and moved into gold today. I have felt gold is about to break eighter down or up for some time.

    I don't know what's happening, but I have noticed one thing that is interesting, the moves in gold lately, as I see it is a pure safe haven move now, with treasuries.

  12. Short covering rally at the open in US today, then straight down, Quite a fall today, it's certainly sure that it's some sort of correction or who knows is occuring now I think. It's like if the US market will follow China down, just with a lag.

  13. KO?

    My point is that most would rather buy some speculative gold mining company with no yield, PE in the 50-60, return on equity of 3-4 % and generally totally nuts, in all aspects other than pure wild speculation, while with KO, you have better yield than in 1982, and return on equity of 27 % with only 10 % debt of the equity.

  14. If this turns into a double DIP, I think this will be like buying KO in 1981

    http://finance.yahoo.com/echarts?s=KO#symbol=KO;range=my

    The price of the company is similar to in 1988 (return on equity and yield is the same, but debt is much lower now). (that was when Buffet bought his stake).

    What I suspect is that in regards to KO this is like 1975-1977, and you will an inflationary storm for the next years, perhaps doubling the KO yield to 6 %, with oil going above 200 dollars. Then you get a 1980 like recession, then a sharp recovery, then the double DIP.

    What my point is, if this is a double dip, then buy KO now, if it's not, buy the inflation hedges now, then wait some years, then in 2013-2014 sell your inflation hedges and buy KO.:)

  15. Not sure I understand this.

    Hold stocks now in case there is a double dip (which of coruse there will be)? Stocks will fall. Better to buy after the dip.

    Also, why a double dip after gold is 'much higher'? How much higher? Surely with the next dip, commodities will dip too?

    Changing the subject:

    Dr Bubb: You and Larry P were absolutely 100% adamant there was going to be a major pullback. You were vociferous in your ultra short term forecast. I think it is only right you step up to the plate and comment on what did not happen.

    Edit spellong!

    What I mean, is that it's really unknowable if there will be a double dip, so I would not invest with an expectation of a double dip, as that seems like a fools game. A double dip would be if all the stimuli backfired, and caused large hikes in long term rates and therefore force the FED to raise rates a lot faster and harder than forecasted to rein in inflation, the second dip would then be in around late 2010. I think it's more likely that this will be a regular expansion, perhaps ending with very high gold prices somewhere around 2014. I think the odds are against a double dip. I am even doubting the willingness to raise rates, instead I think there is possible with a path towards hyperinflation, if there is a squeeze on interest rates to finance the budget, I rather think the FED would finance it, than that rates would be seriously raised. Brutal rate rises would come if inflation comes into the 15-20 % range, and that must be years away.

  16. 3 weeks ago he called (teasingly obviously) the top at 1037 on the SPX.

    He suggested we'll revisit the breakout at 950 first as we head lower and pointed out the gap at 910 (bigger ones elsewhere) which hasn't been filled.

    Joy Division/New Order of course yep (Pete Hook, lately of Monaco, knows ex mrs RK very well, if we're name dropping) So many, I haven't got time to make a list ......... ;)

    wood061806a.gif

    It's an interesting technical formation. In my opinion the emerging market related stocks, and railroad and such is in stage 14, in a cycle that started in 2003, but to fit into the pattern, the first peak emerged in 2005, the second in 07, and the last one in around june 2008.

    Like here:

    http://finance.yahoo.com/echarts?s=BNI#cha...urce=undefinedc

    Even Coca Cola company had this formation, the first 3 peaks between 1986 and 1988, the went on to complete the formation in 2000, however, due to the very inflationary policies in the US, you don't get the down move at the end, instead US stocks like KO simply moves flat nominal, while the real value declines.

  17. I am beginning to suspect a turnaround in the dollar, where the dollar instead of going down, goes up when the US stock market strengthens. I think this cross will really come into play if the big bank shares break really out of their 200 days moving averages.

  18. An interesting thing that is a difference between Japan and the US, (I am comparing the US now with Japan in 1989), is that many large japanese companies were trading at ridiculous dividend yields. Now the corresponding companies in the US, have yields that are much larger than in Japan at that time. I am thinking of the multinationals such as KO, JNJ, KFT, PG, MCD.

    What that suggest, is that it's possible that the secular-bull in the US from 1982-2000, might go on if long term interest rates decline (perhaps after a series of rate hikes as in a double dip) , as stocks then will seem as an attractive investment because of the yield advantage to bonds. If yields in the US was to follow japan's yields after 89, I doubt the stock market would, however, I doubt yields will head lower.

    However, judging from past experience and other secular bears, a yield around 3-4 % is not what's typical of the end of secular bears. That would be more like around 6% dividend yield. Another wave of inflation, with a flat dow, would take care of that, before some sort of secular boom again could begin.

  19. Good point, carseller.

    But did you go long on this one in the end?

    http://www.google.com/finance?chdnp=1&...E:EK&ntsp=0

    Still looks like a dog IMO.

    There are solid buys still out there but it is difficult to tell the wheat from the chaff. I am nervous of some of these big companies who could still go under completely in a double dip - many of them have a lot of debt.

    If you are worried about a double dip, you could take the KO's the JNJ's, those style of companies, with 27 % of return on equity, with using only debt to equity of around 10 %. It think it's impossible for companies like that to go bankrupt.

    The only trouble is that you won't be able to get fantastic returns. However a double dip, implies a US boom after inflation get's killed, and that should be very good for that kind of stocks.

    However, i think the time to worry about a double dip, is when gold is much much higher.

  20. Yes, that is what's puzzling me. He is arguing for continuing deflation. Gold looks like the breakout could be to the upside, so perhaps it will be due to something perhaps geo-political rather than a weakening dollar, that's assuming the dollar does bounce. Or it may be a safety play which isn't dollar related i.e. it could be Euro or Asia related perhaps or something else.

    When you had the bull market in gold in the late seventies and in 80, in it's peak weak gold moved 20 % up in just 1 week and was volatile like crazy. I don't see that conditions have been like that. Gold back then was topping out like the Nasdaq in 2000. When the dollar entered a bull then, gold was already in a bear market.

    look at sugar, totally on the loose. If the dollar is in a bull, we are heading for a double dip recession. I think it's more likely that gold have further to go, that long term interest rates will increase further, and that gold will top out as inflation is becoming a serious problem, and rates have been hiked a lot. I just think that gold have all the ingredients to being a bubble, I just don't think a 1000 dollars is really a bubble price, that would be more like 5000 dollars, and therefore I think it's likely that the dollar bear have further to go as the dow/ gold relationship moves towards 1:1. meaning that this is a very inflationary expansion, before rates is hiked, and you get a fed created recession, and then a new deflationary expansion as after 82, or 1950.

    Another thing: I think american stocks like JNJ, Coca Cola and the like is actually cheap. The reason for that is how well they hold up during this huge crisis. If it's cheap it holds up well (or if it is in a bubble like gold).

    JNJ now, is like in 1977 probably.

    http://finance.yahoo.com/echarts?s=JNJ#cha...ource=undefined

    But could also be like 1975

    Both companies are earning around 27 % return on equity, that's real numbers. in my opinion very well.

  21. I'm going with Prechter on the dollar bottoming. I'm going to take my silver profits and looking to short into WTIC (I don't think we've seen the lows yet) and probably more equity shorts. No idea what will trigger another deflationary dash for cash but something will turn up. I'm not sure which way gold will go this time- I guess it depends on the nature of the dollar bounce.

    http://www.cnbc.com/id/32448451/site/14081545

    Edit: Prechter video.

    I think the dollar can get stronger, but not for the reasons he quote. I think the dollar will get stronger, if there is a pressure in the US to raise rates, and the odds of that start to increase. However the question is against what, as I think the gold price might increase more in value than the dollar, relative to other currencies.

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