| User | Post |
|
6:24 pm
August 19, 2011
|
somrh
| | |
| Member | posts 336 |
|
|
As for the main question, I'm still looking for short opportunities. I think this could be a huge financial blow up. I am now in the belief that we are heading for something like the Great Depression of the 30's in the US or Japan's lost decade (it's two decades now, right?). This could get ugly. I'll present some of the evidence that makes me believe this.
US Private (not Public) Debt to GDP
In particular, look at Figure 1. Our debt levels have been increasing since the 40's and they are now higher than they were during the Great Depression. Given that our recent economic has been partly fueled by increasing debt levels (more on this below), how are we going to continue GDP growth? This has been called by many to be a much needed deleveraging recession much like the Great Depression. So we are going to see private consumers and businesses start getting rid of debt. What effect will that have on GDP? On the money supply? On asset prices? Compare borrowing money to fuel consumption to paying off debt in spite of consumption and ask what that will do to GDP.
Mortgage Equity Withdrawal – Effect on GDP
If you look at the second chart, we can see the modeled effect of not having mortgage equity withdrawals on GDP growth. And given that many folks have had their equity wiped out from them, they can't withdraw on it anyway.
Greece / Europe
One of the big concerns around which there is much uncertainty is Greek debt and credit default swaps. As far as I'm aware, no one really has any idea what a Greece default would entail for the financial system. We could see a situation similar to AIG if there's a lot of exposure which would rock European financial markets.
Declining Populations in the developed world
While I see this as a good thing for resource consumption, it's a bad thing for dealing with debt problems. And there's a lot of debt. Debt can grow provided that its growth doesn't outpace GDP growth. It's much harder to get GDP growth without an increasing population. Japan and the US has one advantage over many European nations – we can print money.
Overall, I think this will get pretty ugly and be like that for some time. Right now I'm looking for short side opportunities. When prices look good I'll be looking at resource based investments, India (which I may just play with some ETFs) and the like.
The big question (and I'm hoping someone here has done some research on this): how would you play the Great Depression? Because I'm thinking we're going to see high unemployment, low GDP growth and declining asset prices for some time. Here's an interesting article I found (hopefully you can all come up with something better):
15 Great Stocsk from the Great Depression
|
|
|
5:56 pm
August 19, 2011
|
somrh
| | |
| Member | posts 336 |
|
|
Wasn't it recently that Sprint was unwilling to supply more cash for CLWR? I suppose that might be a good move if they want a better price for the stock but CLWR may have difficulty raising capital. (I haven't followed CLWR too much… I have a small position in Sprint so I notice things there.)
|
|
|
1:24 pm
August 19, 2011
|
leongcpa
| | |
| Member | posts 13 |
|
|
Looking at adding BOLT, MSFT, CSCO. I like all three businesses – all three are cash cows imo. Almost bought BOLT today, but decided to wait until next week.
|
|
|
7:52 am
August 19, 2011
|
Jae Jun
| | |
| Admin
| posts 1464 |
|
|
remind me next time to do more reading before the talking.
Rumor has it that Sprint is looking to acquire CLWR. Already up huge amounts from that brief bottom we saw.
|
|
|
3:12 am
August 16, 2011
|
Graeme
| | Austin, Texas | |
| Member | posts 183 |
|
|
Interesting. I'm afraid this one goes over my head a bit: if they lose money every year and pay their bills through a cycle of debt (and then repay that debt with some earnings + more debt) why would you price their stock at the value of their assets?
|
|
|
10:46 am
August 15, 2011
|
Jae Jun
| | |
| Admin
| posts 1464 |
|
|
Yep at first glance, that is what caused me to pass, but the question is really whether their underlying assets are worth much more than that.
|
|
|
4:31 am
August 15, 2011
|
Graeme
| | Austin, Texas | |
| Member | posts 183 |
|
|
I think I'll sit tight til BOLT comes down. LEAP and CLWR…I dunno…negative earnings and negative cash flow for the better part of ten years kinda raises a red flag for me  Not to mention 3.0+ debt/equity. Call me old fashioned.
|
|
|
11:51 pm
August 13, 2011
|
Jae Jun
| | |
| Admin
| posts 1464 |
|
|
Not yet. At $11 I do believe there are other things out there. Even LEAP and CLWR could be worth a very small position. They have assets that are being severly discounted.
For LEAP, it's the network, for CLWR, it's the spectrum.
|
|
|
10:23 am
August 9, 2011
|
Graeme
| | Austin, Texas | |
| Member | posts 183 |
|
|
BOLT at $11.50. You tempted?
|
|
|
12:06 pm
August 8, 2011
|
Jae Jun
| | |
| Admin
| posts 1464 |
|
|
it's just like 2008, 2009. Nobody can time it, so if you get to buy something when it goes on sale, dont look back.
At the moment, my portfolio is getting murdered. Much moreso than the market, but I'm not fazed at all. I guess it's why I was able to do so well in 2009 when it recovered because I kept buying small positions as it kept going down.
The more things are on sale, the more you should buy. Rather than just buying it in one big shot, spreading out the purchases seems best.
|
|
|
11:41 am
August 8, 2011
|
Graeme
| | Austin, Texas | |
| Member | posts 183 |
|
|
Ok, so the US is downgraded, it's the end of the world, yada yada. This too shall pass.
There's a lot of cheap stuff starting to appear, three of which I have my eye on: CLF which is already below my 50% undervalued value, BOLT which is rapidly approaching it and BAM is nearing my $25 buy price.
My question is, how are people going to play this? Or more generally, how ought one play a big tailspin? Do you wait til the dust settles in order to not be subject to the gut wrenching volatility? Or do you buy when they hit your target, not caring what the next few weeks of volatility will bring?
My head says that I buy once my target hits and then don't even look at the portfolio for a month, but seeing that red is brutal.
Thoughts?
|
|
Home
