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Old 06-01-2010, 03:00 PM   #261
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In 2008 all the forces of government were used to stop the financial collapse, with good effect. Now those forces are starting to be thrown into reverse at a time when inflation trends are still heading downward . . . Japan here we come!.
Someone has been hitting the Tiki Bar a little early for some Mai-Tais.......
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Old 06-01-2010, 03:07 PM   #262
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Absolutely, I understand the risk you mention. I think that the possibility of ramping up of correlation of deal failure risks is a very real issue, although difficult to quite put my arms around. I think that the performance record of these funds through some very challenging environments ('08-'09 in particular) suggests that it is perhaps less than terrifying, though. I also suspect that in a crisis environment (when correlations gap toward 1, generally) merger arbitrageurs who are not leveraged have some innate protection in that these are frequently partially or all equity deals on both sides (i.e. company A is really offering its shares in exchange for Company B's shares), so the arb position is long the target, short the acquirer. In such cases, when everything goes into freefall both the long and the short equities drop and you are more or less market neutral.
Thanks Brewer, I will definitely look at the funds you mentioned.

Ha
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Old 06-01-2010, 03:13 PM   #263
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Your looking for value doesn't seem foolish to me, quite the contrary.
Thanks!

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Gold may be getting ready to go to the moon, but it is starting from a high enough perch that a big fall could be very harmful. I tend to be very aware of risk in any investment, and my experience has been that risk goes up with price, even if this might be contrary to some academic's theory. In fact, I usually take comfort if my practice is contrary to Professor Ivory's research.
That's food for thought.

Do you by any chance have a webpage or a post where you elaborate about your approach to investing or lessons learned from 40y in the market? I wanted to check out your posts, but you're eh... quite the prolific poster!
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Old 06-01-2010, 03:14 PM   #264
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Thanks Brewer, I will definitely look at the funds you mentioned.

Ha
Hmm, not quite my point, but if you see anything untoward other than what I have already mentioned I would be keen to hear it.
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Old 06-01-2010, 03:16 PM   #265
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Of course we do. It's obvious to anyone willing to look at the facts. But not everyone is. And that is because many people aren't conducting an economic analysis, they are engaging in political argument disguised as economic analysis. You see, government intervention couldn't have been beneficial because government is always bad. Don't you remember Ronald Reagan "Government isn't the solution, it's the problem"? Well that is a universal truth, to some. And it is applicable in every situation, without exception. So all you need know about the current crisis is that there was a massive government intervention and then you already know the outcome . . . it's very, very, very bad. We don't need to look at the facts. We don't need to consider how the decline was arrested and how all of the worst case predictions failed to materialize. All we have to do is project future calamity 10, 15, 20 years down the road. That way we can pretend forever that "it's too soon to tell". It's far easier to do that then to admit that your world view is flawed.
You're right, the massive bailout process prevented economic collapse. I don't see how anyone can argue with that. It's like if you lose your job and all your investments, you can just put all your purchases on a charge card. Even better, on someone else's charge card. Bingo, troubles are over! It's just taxpayer money, and it doesn't have to be paid back yet. Live a little! Enjoy! There can't be anything wrong with a plan like that. And if anyone says there is, they're just full of sour grapes and trying to make a political statement. There's no reality behind it. See, look at these pretty little charts! They prove it.

These are not the droids you are looking for...you can go about your business...
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Old 06-01-2010, 03:20 PM   #266
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You're right, the massive bailout process prevented economic collapse. I don't see how anyone can argue with that. It's like if you lose your job and all your investments, you can just put all your purchases on a charge card. Even better, on someone else's charge card. Bingo, troubles are over! It's just taxpayer money, and it doesn't have to be paid back yet. Live a little! Enjoy! There can't be anything wrong with a plan like that. And if anyone says there is, they're just full of sour grapes and trying to make a political statement. There's no reality behind it. See, look at these pretty little charts! They prove it.

These are not the droids you are looking for...you can go about your business...
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Old 06-01-2010, 03:50 PM   #267
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Thanks!
I wanted to check out your posts, but you're eh... quite the prolific poster!
True, and most of them are worse than useless!

No, I don't blog about this or anything, I am not selling anything, and I find it can get tedious fast to explain complex and perhaps contentious material for free.

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Hmm, not quite my point, but if you see anything untoward other than what I have already mentioned I would be keen to hear it.
haha- I understand that you are not shilling these things.

Ha
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Old 06-13-2010, 07:50 AM   #268
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Uncertainty Restores Glitter to an Old Refuge, Gold

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And gold bugs, often dismissed as crackpots who hoard gold bars in the basement, are finally having their day.
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To be sure, gold buyers have always been motivated by fear. What has changed is that some of the most respected investors on Wall Street are now among the fearful.
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But now Mr. Arbess, a Harvard Law graduate and a generally conservative investor, is very serious about gold.

Spiraling deficits in the United States, Japan and Britain are unsustainable, he said, and could eventually hurt confidence in what are called “fiat currencies” — paper money not backed by gold, including the United States dollar.
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Old 06-13-2010, 03:02 PM   #269
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You're right, the massive bailout process prevented economic collapse. I don't see how anyone can argue with that. It's like if you lose your job and all your investments, you can just put all your purchases on a charge card. Even better, on someone else's charge card. Bingo, troubles are over! It's just taxpayer money, and it doesn't have to be paid back yet. Live a little! Enjoy! There can't be anything wrong with a plan like that. And if anyone says there is, they're just full of sour grapes and trying to make a political statement. There's no reality behind it. See, look at these pretty little charts! They prove it.
Is there an economic argument here, or merely a puritanical one?

Because if there is an economic argument, maybe you could walks us through your preferred alternative policy proscriptions and the implications.
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Old 06-13-2010, 03:13 PM   #270
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To the gold bugs:
If things are really different this time, and we're heading into an apocalyptic collapse of "fiat currencies," what is it that makes gold an effective "store of value?" It has very limited and specific inherent usefulness/value in itself, its value is mainly founded on demand based on historical attraction and herd mentality with no underlying basis in utility. If it's really "different this time", how do you know the herd will run the same way?

I have a hard time understanding the logic which derides paper currencies as being based on nothing (and having worth only as long as people believe they do), but which doesn't acknowledge that the same is fundamentally true of gold.
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Old 06-13-2010, 03:48 PM   #271
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To the gold bugs:
If things are really different this time, and we're heading into an apocalyptic collapse of "fiat currencies," what is it that makes gold an effective "store of value?"
Their fiat argument would have a lot more credibility if someone actually ditched the U.S. dollar.

Two years ago when the world's credit froze up, everyone scampered to the safety of the dollar.

I wonder when the Chinese are going to dump $800B of U.S. Treasuries for euros and... and... and... um, I'll think of some other currency eventually. Swiss francs? The British pound? Yen? Won?

I wonder when OPEC is going to stop calculating the value of a barrel of oil in terms of dollars. If they've given up on their plan for euros then maybe they could do it in ounces of gold!
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Old 06-13-2010, 03:52 PM   #272
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I had this discussion with a gold-bug friend in the late 70s. I tried to get him to understand that if civilization really did collapse, as he was sure it would within a couple of years, he would have a hard time eating all his gold. If you really expect civilization to collapse buy farmland then you can support yourself.
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Old 06-13-2010, 04:48 PM   #273
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Their fiat argument would have a lot more credibility if someone actually ditched the U.S. dollar.

Two years ago when the world's credit froze up, everyone scampered to the safety of the dollar.

I wonder when the Chinese are going to dump $800B of U.S. Treasuries for euros and... and... and... um, I'll think of some other currency eventually. Swiss francs? The British pound? Yen? Won?

I wonder when OPEC is going to stop calculating the value of a barrel of oil in terms of dollars. If they've given up on their plan for euros then maybe they could do it in ounces of gold!
China Wants Yuan to Replace the Dollar as Global Currency | Jutia Group

and, ahem, from the "Gold Speculator", so you know it's unbiased:

China wants new one-world currency ... IMF to save the world? - Gold Speculator

My niggling concern is that the Chinese are going to become the dominant power unless they can get all hung up in a nice expensive war that puts a sea anchor on their economy. Think they are too smart to conquer the US in a military way - just letting us defend against the attack they aren't pursuing while they build dominance in infrastructure and manufacturing. Much to be said for a unified system of government rather than a system focused on the Dems and Publicans tearing each other down and trying to hinder each other.
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Old 06-13-2010, 05:15 PM   #274
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My niggling concern is that the Chinese are going to become the dominant power unless they can get all hung up in a nice expensive war that puts a sea anchor on their economy. Think they are too smart to conquer the US in a military way - just letting us defend against the attack they aren't pursuing while they build dominance in infrastructure and manufacturing. Much to be said for a unified system of government rather than a system focused on the Dems and Publicans tearing each other down and trying to hinder each other.
My thoughts exactly.

(And just for the record: I don't own any Gold... or gold equities.)
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Old 06-13-2010, 08:19 PM   #275
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I think I'd rather have goats than gold. I get this herb goat cheese at Trader Joe's that is to die for. Plus they mow the lawn. They're cute too.

Even the fainting ones...

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Old 06-13-2010, 08:56 PM   #276
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I think I'd rather have goats than gold.

Even the fainting ones...
Late one night we quietly slipped a fainting goat into the hotel room of our sleeping VP of Operations. The descendants of all who were involved will be telling that story around the campfire for generations...
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Old 06-14-2010, 07:11 AM   #277
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Yeah, and if they want to do that they need to allow free convertibility of their currency, which they have no plans of doing anytime soon. Too much of China's "economic miracle" is based on indirect export subsidies (and import tariffs) through currency manipulation to even think about the Renminbi as a reserve currency.

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Much to be said for a unified system of government rather than a system focused on the Dems and Publicans tearing each other down and trying to hinder each other.
And much to be said against it. China has a largely managed economy. The prevailing wisdom on this board seems to be that even the smallest government involvement in the U.S. economy is devastatingly harmful. Yet there also seems to be a simultaneous acceptance that massive intervention by the Chinese in their economy is an advantage. Both can't be true.
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Old 06-14-2010, 07:39 AM   #278
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China Wants Yuan to Replace the Dollar as Global Currency | Jutia Group

and, ahem, from the "Gold Speculator", so you know it's unbiased:

China wants new one-world currency ... IMF to save the world? - Gold Speculator

My niggling concern is that the Chinese are going to become the dominant power unless they can get all hung up in a nice expensive war that puts a sea anchor on their economy. Think they are too smart to conquer the US in a military way - just letting us defend against the attack they aren't pursuing while they build dominance in infrastructure and manufacturing. Much to be said for a unified system of government rather than a system focused on the Dems and Publicans tearing each other down and trying to hinder each other.
Maybe in 20 or 50 years. For now, China has large structural problems in its economy/society that the regime is preoccupied with managing, and that looks to remain the case for the forseeable future. In the meantime, there money to be made on the effects that China's needs and action have on the rest of the world...
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Old 06-14-2010, 08:44 AM   #279
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And much to be said against it. China has a largely managed economy. The prevailing wisdom on this board seems to be that even the smallest government involvement in the U.S. economy is devastatingly harmful. Yet there also seems to be a simultaneous acceptance that massive intervention by the Chinese in their economy is an advantage. Both can't be true.
Actually, IMHO, neither is true...
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Old 06-14-2010, 09:18 AM   #280
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Actually, IMHO, neither is true...
I'm with you.
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