A bearish day at the library

[soupcxan]

I skimmed three books today at the library:

"Fooled by Randomness" by Taleb
"Irrational Exuberance" by Shiller
"The Coming Generational Storm" by Kotlikoff and Burns

Suffice it to say, I wanted to run home afterwards and put my money under my mattress. The sky is falling! Maybe I should try balancing things out with "Dow 36,000" next time.

 

[Cut-Throat]

For a good balance try to get a hold of a copy of "The Great Depression of 1990" by Ravi Batra.  People sold all of their stocks in the late 1980's and bought a cabin in the mountains and put their money under their mattresses. They missed the runup of stocks the following 10 years.

When the next stock market crash happens there will be folks lining up to tell you "I told you so!" - It could  be Petey Peterson, Hoc*s or maybe even Batra will surface again, saying that his calculations were off by 15-20 years.

But rest assured, stocks will dive and one of these soothsayers will tell you he predicted it!

 

[Mr._johngalt]

"Stocks will dive..........predictions"................
Not me! I don't know and I don't care.

JG

 

[soupcxan]

JG, you're becoming my role model more and more each day. Except for the GM bonds - you're on your own with those.

 

[Mr._johngalt]

I don't own any GM bonds. It's GMAC. I think there
is a difference, but I might be wrong. Doubt it though, as that happens so seldom

Anyway, I have read all I can find on this issue. People
more informed than I think these bonds are a can't miss
buy. I guess what impressed me the most was that
the pros (at least the ones I read) saw the risk just about like I did. I usually rely on my own instincts, but it's always
nice to find others in tune. Anyway, as I've said before,
if I had the cash and was not loaded up
I would still be a buyer.

JG

 

[cute fuzzy bunny]

I could be wrong, but I dont think GM's captive finance company, independent or not, is going to enjoy a happy life after GM declares bankruptcy.

Its not rated sub BBB for nothing...

 

[wildcat]

I wonder if CT catches fish like that in real life....every cast.

 

[Spanky]

" ...I wanted to run home afterwards and put my money under my mattress"

I think it is better to buy gold or other "hard" assets.

 

[Mr._johngalt]

Hello th. I'll go out on a limb and predict that if the
GM situation got "chewy" enough, the profitable GMAC
part will be spun off in some way. Otherwise, it would
be like deliberately letting the gold go down with a
scuttled ship. OTOH, as noted previously, I would be
very surprised if any such thing transpired. I have worked with a lot of financial basket cases. If there
was ever one with the size and momentum to weather
the storm, GM is it. Heck, if they just dismantled it
by pieces I could be long dead before they got done.

JG

 

[wildcat]

JG -

Seems like GM would want to spin off the GMAC unit to help fund their pension obligations and other debts. I am in no way gonna make the leap but it makes sense to me.

 

[Martha]

GM apparently announced in January its intent to "separate" GMAC from GM. Here is a link to an article that discusses GM/GMAC intertwined issues. http://www.larouchepub.com/other/2005/3211gmac.html

 

[soupcxan]

My crystal ball says:

1) Spinoff GMAC to preserve it's value and keep the debt rating from sliding any further.
2) Have GM file for BK reorg while still operating (producing cars for GMAC to finance).
3) GM gets BK power to renegotiate union contracts and slash benefits.
4) PBGC assumes GM's pension liabilities.
5) GM emerges from BK down the road as the lean, mean, american auto machine and slaughters the remaining "big two."

 

[Nords]

5) GM emerges from BK down the road as the lean, mean, american auto machine and slaughters the remaining "big two."

Yeah, just like Chrysler!

No wait, there's gotta be a better example-- I know, the airline & steel industries!

Oh, forget it.

 

[ER@40]

"Fooled by Randomness" by Taleb

Excellent read. Doesn't discourage investing, just discourages naivety, i.e. Fooled by simple probability and standard deviation when predicting future markets.

He advocates betting against the market a lot, paying small premiums on long shots so if bad things happen a killing will be made, and otherwise you only lose a little.

Its like cascading spread betting at the track, placing bets on a whole series of long shots.

 

[preben]

He,he - I feel the same when I read the dailyreckoning.com with my morning coffee. After that I feel like selling all and loading up on gold bullions, canned food and armor piercing ammo...

 

[unclemick]

Ben

Perhaps a morning read here - for a little balance.

Or a doughnut /pastry with the morning coffee for an 'uplifting sugar high'.