Financial topics

[freddyv]

The SDS has outperformed Gordo by a good deal and that's if you just bought and held...

What are you, my accountant?? Hahah. What is my ROI? What timeframe are you talking about?
SDS is down 40% from its high, and if the market just rallies another 20%, which is certainly possible, SDS will go down another 40% from these levels.

Just stating the facts as I know them; you stated that you were up 50% in this market while the SDS is up more than that. The SDS was up as much as 2.5x (its low from late summer of 2007) during the October panic.

If you follow ETF's the one I can't figure out is DUG. I was lucky in that I bought in at the right time and sold at the right time but it seems to go down even as the price of oil goes down. SDS has been fairly predictable but some of these ETF's are downright scary in the way they move. SRS is another one that has been going whacko lately.

--Fred

[freddyv]

http://seekingalpha.com/article/111208- ... sb_popular

A very interesting article. Rakesh Saxena says that a Great Depression Not Imminent, But Inevitable. Make sure you read the first comment.

--Fred

[JWest]

A little off topic (man, are you guys tedious!).....

but a lot of people seem to be thinking that this Madoff scam is the largest ponzi scheme in history.

http://www.marketwatch.com/news/story/m ... 3BBE37D%7D

And here I was thinking that honor belonged to Social Security.

[freddyv]

...if you simply drop the probabilistic prediction to 99.9% probability, I can more easily accept that.

I think that's a good point, John. You're really on to something with Generational Dynamics but too often you leave out the possibilty of a dynamic at work that may not be factored in because we simply don't have the perspective from which to see it. For example, it seems completely plausible to me that since we are so aware of the depression in the 1930's that we are actually able to keep our current crisis from getting that bad. That would point to an even larger dynamic, perhaps of societal evolution or perhaps it just means we will have a worse depression the next time.

One thing that is always in the back of my mind in considering Generational Dynamics is that humanity has evolved over the aeons. Life is better generation after generation, as a general rule and we have solved many of the problems we have been faced with. Yes, we create new problems but so far we seem to be able to deal with anything new that comes up. We once lived out of doors and had to spend most of our energy on survival. We once accepted slavery and women as second-class citizens. Not too long ago it took weeks to cross our country and now we do so in hours.

Perhaps the difference this time will be that nations do not act in as much self-interest as before. Or perhaps we have the meltdown, as we obviously are having, but the actual wealth that the average person in the country has will make the entire experience much less painful than during the Great Despression.

Yes, there's no doubt that things will get worse, but betting on the sun to explode, as Jeff Macke likes to point out, is not a winning proposition for anyone.

--Fred

[freddyv]

Hi All, read an interesting predictive article, "Financial System in Collapse" by Alar Tamming and Dr. Krassimir Petrov.

http://www.marketoracle.co.uk/Article7675.html

It's quite apocolyptic and has some interesting insights along the lines of Generational Dynamics.

My view of all these various theories is to decide which ones seem to be feasable and then keep an eye on them to see which seem to be playing out, if any.

Keep in mind that the creator of the "vision" is Alar Tamming, who is a gold dealer, so he might just be trying to stir up some sales.

--Fred

[nanook]

Fred,

I agree with you that living standard has improved over the last 7000 years (since the days when "home" was a hole in the ground). However, compared to that time scale, the generation-to-generation time scale is like saying that because the Dow Jones Industrial Average went from 10 to 8000 in the last 100 years, therefore the stock market must have been gaining month-to-month.

From hearing the talking heads, I'm not at all convinced that the society in general is learning the lessons of 1929-1946. What percentage of people today know that Hoover launched public works programs, and was very heavily engaged in wage and price support? That FDR ran on a platform of shrinking government, balancing budget, and sound (gold) money? In other words, his electoral mandate in 1932 was to do exactly the opposite of what he ended up doing? That FDR's New Deal did not end the Great Depression? On the other hand, how many times have you heard this week alone, that WWII ended the Great Depression? Does that even make sense? That you have to have gasoline ration card to buy gas, no new car produced at all for half a decade, moms have to work because dads and brothers are sent off to war and die on a different continent, somehow that's rescuing a country from the Great Depression?

[John]

-- Australian dollar

> I have been following your weblog and read a few from the past.
> Very true and accurate wish I have read it before the Australian
> Dollar drop like a rock.

> Just wondering what do you think the trend would be for the
> Australian or currency floated against the US since they have drop
> it to zero.

I wish I had better news for you, but unfortunately, the news is
pretty bad, as I indicated in an article that I posted earlier
today.

** Ten 'outrageous' predictions for 2009 from Saxo Bank
** http://www.generationaldynamics.com/cgi ... 19#e081219

A lot of Australia's foreign exchange comes from mining and exporting
commodities -- copper, iron ore, etc. -- and the collapse of
commodities prices indicates that 2009 will be a very bad year for
exports for Australia, which will be bad for the Australian dollar.
The layoffs of 14,000 people from Rio Tinto is a sign.

Sincerely,

John

[John]

-- Earnings estimates and auto sales

Here's the latest summary from CNBC Earnings Central:

> Earnings Central Stats as of Friday, December 19th:

> The blended earnings growth rate for the S&P 500 for Q4 2008,
> combining actual numbers for companies that have reported, and
> estimates for companies yet to report, fell to 0.5% from 5.9% due
> in part to downward estimate revisions in the Financials and the
> Energy sector.

> On July 1st, the estimated growth rate for Q4 was 59.3%, and by
> October 1st, the estimated growth rate had fallen to 46.7%. (Data
> provided by Thomson Reuters)

> http://www.cnbc.com/id/15839135/site/14081545/

Here is the table of Q4 earnings growth estimates over time:


Date 4Q Earnings growth estimate as of that date
------- -------------------------------------------
Feb 6: 50.0%
Jul 1: 59.3% Start of previous (3rd) quarter
Oct 1: 46.7% Start of quarter
Dec 5: 10.0%
Dec 12: 5.9%
Dec 19: 0.5%


From CNBC today:


US Auto Sales - Nov 2008 vs Year Ago
> GM - down 41.3%
> Ford - down 30.6%
> Chrysler - down 47%
> Toyota - down 33.9%
> Honda - down 31.6%


Sincerely,

John

[abs]

mannfm11,

What do you think about this: http://www.youtube.com/watch?v=_LDBOPcHpeo

about 2:40 in is the meat.

You know, I saw that interview when it first aired and didn't pick up on that. Powell actually states, point blank, that there will be a new crisis on or about January 21/22!!!! That is shocking and what in the world does he know that we don't?

[John]

-- Colin Powell interview

Here's a transcript of that portion of the interview:

> MR. BROKAW: If you were called into the Oval Office on January
> 21st by the new president, whoever it happens to be, and he said
> to you, "General Powell, I need from you your recommendation on
> where I begin. What should be my priorities?" Where would you
> start?

> GEN. POWELL: I would start with talking to the American people
> and talking to the world, and conveying a new image of American
> leadership, a new image of America's role in the world.

> The problems will always be there, and there's going to be a
> crisis come along in the 21st or 22nd of January that we don't
> even know about right now. And so I think what the president has
> to do is to start using the power of the Oval Office and the power
> of his personality to convince the American people and to convince
> the world that America is solid, America is going to move forward,
> and we're going to fix our economic problems, we're going to meet
> our overseas obligations. But restoring a sense of purpose, a
> sense of confidence in the American people and, in the
> international community, in America.
> http://www.msnbc.msn.com/id/27266223/

I think that Powell was simply responding to Brokaw's hypothetical.

John