"Good" day today!

[BOBOT]

Dow down 270+ so far. DW's bi-monthly 403b contribution will buy more shares, as will all our reinvested divs (oops, they were reinvested yesterday, but that was down too).
Woohoo! Wonder how long the "good" times will last?

 

[jclarksnakes]

I like the way you think.

 

[Andre1969]

This is awful to say, but I'm hoping for it to drop by more! My 401k contribution will post tomorrow, reflecting today's closing prices. And, if the market drops enough, it might tempt me to rebalance just a little.

I read a news article the other day, in Yahoo news or whatever, that predicts the market might rally a bit in June, but then do a big sell off in July. So they're saying that June might be a good time to sell off, and then buy back around August/September.

Of course, like anything else, take it with a grain of salt.

 

[braumeister]

Woo-hoo! Buying opportunities coming up fast!

 

[audreyh1]

Here we go again! At least we can't blame W2R for yelling that thing that rhymes with "glee" within the past week! But it looks like she did yet again call one of those local tops.

 

[GrayHare]

For weeks like this I maintain a few low-ball open orders on quality companies. Always nice to pick up a good dividend stock at a low price while others are fearful.

 

[73ss454]

I did some Roth conversions today within Wellesley and picked up a few shares of GE since it was down for the day. Also pays a 3.6% yield so it's all good.

 

[FIREd]

I am tracking a handful of stocks that are getting near "buy" territory. Still too early to pull the trigger. There is always next week though.

 

[eytonxav]

Here we go again! At least we can't blame W2R for yelling that thing that rhymes with "glee" within the past week! But it looks like she did yet again call one of those local tops.

Maybe we need W2R to yell whoa and hopefully this will be the bottom

 

[brewer12345]

Meh. After the keel-haulings we have endured the last few years, this just feels like a bump in the road. At least, so far.

 

[JPatrick]

I wuv my MUB.....

 

[BOBOT]

Meh. After the keel-haulings we have endured the last few years, this just feels like a bump in the road. At least, so far.

 

[NYEXPAT]

I hope it continues for awhile longer as a strong Dollar is good for Expats living in natural resource rich exporting countries and fixed income retirees!

 

[kumquat]

Let the markets do as they want. Today was a great day, the fifth aniversary of "Bye-Bye MegaCorp". And my NW is still 125% of that great day.

 

[W2R]

Meh. After the keel-haulings we have endured the last few years, this just feels like a bump in the road. At least, so far.

Yes, I hardly know what all the fuss is about. It must have been a slow news day.

As for Whees and Whoas, I'll save them for later. My birthday is in a week, so maybe the market will produce a nice little local maximum type Whee! for me. Hmmmm, I'll check my crystal ball....

 

[Nords]

Woo-hoo! Buying opportunities coming up fast!

Today was a very good day to sell puts on Berkshire Hathaway, and sometime in the next six months I bet it'll be a good time to buy more EFV. But I think I'm going to wait until after the 17 June Greek elections before I even look at the prices.

 

[james22]

Consider hedging your BRK with BNI protection, Nords?

Belligerent Bears Batter BNI's 'Buffett-Black-Swan' Bet | ZeroHedge

 

[2B]

Today was a very good day to sell puts on Berkshire Hathaway, and sometime in the next six months I bet it'll be a good time to buy more EFV. But I think I'm going to wait until after the 17 June Greek elections before I even look at the prices.

I no longer think the Greek elections matter. Spain and Italy are demonstrating that they don't have the political will to balance their budgets. Since Germany is the only one left with the credit rating to borrow against, they get to decide if they are willing to work until they're 68 so the Italians, Greeks and Spaniards can retire at 60 or before. Even if they do, their credit will quickly become trash and then the whole house of cards collapses.

The old euro is going to disappear very soon. The problem is everyone is trying to play out the charade as long as possible.

 

[BigNick]

I no longer think the Greek elections matter. Spain and Italy are demonstrating that they don't have the political will to balance their budgets. Since Germany is the only one left with the credit rating to borrow against, they get to decide if they are willing to work until they're 68 so the Italians, Greeks and Spaniards can retire at 60 or before. Even if they do, their credit will quickly become trash and then the whole house of cards collapses.

The old euro is going to disappear very soon. The problem is everyone is trying to play out the charade as long as possible.

I think this is a bit of an over-simplification. Spain was running the best-balanced budget of the Eurozone until, like Ireland, they had to cope with bailing out their banking sector (Ireland's got into trouble over CDOs etc, Spain's over a property bubble). And Italy owes most of its debt to its own citizens, so there's a limit to how willing the creditors will be to pull any particular trigger. All three of those countries, plus Portugal, seem to be taking their austerity medicine without too much complaint.

There are two reasonably simple solutions to the Euro's problems: inflation and Eurobonds. Both are currently anathema to Germany (inflation because of what it led to for them in the 1920s, Eurobonds because Germany does not want to end up de facto running the fiscal policy of 16 other countries), but at some point, Germany will work out that these are less bad than the alternatives.

 

[foxfirev5]

I made my monthly Roth contributions yesterday along with moving a little bit of ST Corp bond fund to equity income. Over the next year I plan to move all the ST bond into dividend funds so the dips are slightly appreciated. This is basically housekeeping as I have a decent Stab value fund in my 401K so we don't really need the ST corp. In any event I'm sticking to the 45/40/15 allocation. Historically this has enabled me to ride out the dips and not do anything irrational.

 

[2B]

I think this is a bit of an over-simplification. Spain was running the best-balanced budget of the Eurozone until, like Ireland, they had to cope with bailing out their banking sector (Ireland's got into trouble over CDOs etc, Spain's over a property bubble). And Italy owes most of its debt to its own citizens, so there's a limit to how willing the creditors will be to pull any particular trigger. All three of those countries, plus Portugal, seem to be taking their austerity medicine without too much complaint.

I agree that Ireland is taking "austerity" reasonably well but Spain and Italy are having some serious [-]riots[/-] demonstrations against it. How well their economies were doing before they went into the crapper is pretty much irrelevant. None of them show any signs of coming back to life anytime soon. Based on the current euro "rules," budget deficits must be controlled within limits none of these countries except Germany are meeting. The bond vigilantes are issuing their verdicts on the likelihood of success of these countries efforts. This is despite very liberal rules on using sovereign debt as collateral with the ECB. Without this, I doubt any country on the euro except Germany could sell any bonds.

You can get over 6% on Spanish and Italian bonds. How many have you picked up?

There are two reasonably simple solutions to the Euro's problems: inflation and Eurobonds. Both are currently anathema to Germany (inflation because of what it led to for them in the 1920s, Eurobonds because Germany does not want to end up de facto running the fiscal policy of 16 other countries), but at some point, Germany will work out that these are less bad than the alternatives.

It's already been demonstrated that these countries (except Ireland) won't let Germany run their fiscal policy. Eurobonds would "solve" this problem just until people figure out that this eliminated the need for "austerity" and unlimited spending was back in order. At that point it would be obvious to all that Germany can never pay back everyone's debts.

With the totally disjointed fiscal policies, how is inflation to be controlled? Does every government just decide to print their own excess euros ala the US Federal Reserve? Does the ECB just magically increase everyone's bank balance by 50% or so and raise everyone's pay?

Unfortunately, this is a very simple issue. The euro was created as "fixed" currency every country supported with balanced (or nearly balanced) budgets. If they can't do this, the euro will not survive. The only way to make it work is the "United Europe" with a single government controlling all aspects of their "federal" government. That will never happen.

 

[Nords]

I no longer think the Greek elections matter. Spain and Italy are demonstrating that they don't have the political will to balance their budgets.
The old euro is going to disappear very soon. The problem is everyone is trying to play out the charade as long as possible.

I agree with your political and economics opinions.

However hysteria, doom, and gloom are going to hammer the share price down at least another 5-10% before there's any change in sentiment.

But if I was really confident of that then I'd be buying call options, not just biding my time.

Consider hedging your BRK with BNI protection, Nords?

Was it just a week ago that we suggested buying Burlington Northern CDS as the cheapest Black-Swan bet against Buffett and Bernanke's ebullience? The answer is yes. And from the start of May the cost of protection has doubled from around 15bps to just over 30bps - quite a surge as it seems more than a few funds thought this a worthwhile trade to tuck in the back pocket at a minimal carry cost. At 32bps mid (31/34), it remains cheap still from a carry perspective and while we are approaching the initial profit target, the reason for buying this low cost, long vol trade is the huge convexity upside should things go a little more pear-shaped for the Octogenarian-of-Omaha - or more specifically for the US equities in general. We do note that if this keeps pushing past our other profit-targets then some should be covered since counterparty risk will rapidly become an issue (unless the Fed officially becomes a CCP)

Yeah, "Tyler Durden" says it ever so much more clearly than I did...

No need to hedge. Berkshire's share price is going to have to drop down into the $60s (and stay there) before I get exercised, and the worst that will happen is I'll end up owning more Berkshire shares. I'd even do that on margin. Berkshire's stock-buyback commitment (http://www.berkshirehathaway.com/news/sep2611.pdf) will start purchasing shares before it drops below $70.

Two years, two dozen trades, and $31K later I'm really really happy that I persevered through McMillan's damn options textbook. We've only been exercised once... and it was part of rebalancing. Best paying hobby ever.

 

[james22]

Berkshire's stock-buyback commitment (http://www.berkshirehathaway.com/news/sep2611.pdf) will start purchasing shares before it drops below $70.

They are authorized, not committed, to buy before shares drop below $70.

I still like to think I'll be able to purchase below $70 as Buffett finds more attractive investment opportunities post any crash.

 

[Nords]

They are authorized, not committed, to buy before shares drop below $70.
I still like to think I'll be able to purchase below $70 as Buffett finds more attractive investment opportunities post any crash.

IMO that's a distinction without a difference. I don't think Buffett will be able to imagine any other investment opportunities more attractive than his own stock below $70/share. Not even the New Orleans Times-Picayune.

But, hey, you don't have to hope & pray. Sell your own puts at a $70 strike and see what happens.

 

[james22]

I may. Just ordered Options as a Strategic Investment and McMillan on Options, Second Edition. Thanks for the recommendation.