The Next Depression ?

[SC]

Bruce - Thanks for the links! I'll be sure to check those out.

These two are among my favorites that focus on economic news and analysis:

http://www.rgemonitor.com/blog/setser/

http://calculatedrisk.blogspot.com/

SC

 

[laurence]

Waikiki's streets are paved with gold!

You know, my last business trip to Hawaii, the host took me out drinking at a Martini bar near the office, then on our walk back to the office to pick up our cars, she turns to me and says, "hey did you know this street is where all the transvestite hookers ply their trade?"  I was shocked, Honolulu just seems like too small a town to support such a specialized community.  Evidently many guys don't know they are a John to a "John" (vice "Jane") when they pick up their dates.  Just a friendly warning to any of you single guys/sailors who visit that lovely state.  

Hmm....upon reflection, if this post doesn't set me up, nothing will....

 

[REWahoo]

You know, my last business trip to Hawaii, the host took me out drinking at a Martini bar near the office, then on our walk back to the office to pick up our cars, she turns to me and says, "hey did you know this street is where all the transvestite hookers ply their trade?"

Wow! That John Nords Jane sure is a nice host hostess ... oh nevermind.

 

[brewer12345]

Business Week did this math in an article a few years back and arrived at the same pitiful wage rate.

But then they made in interesting point-- that the mothers who were working for less than minimum wage were developing job skills that provided a source of income if they were divorced, and within 10 years they were making a much higher salary with more compelling math.  BW's conclusion was that everyone should develop work skills instead of being totally dependent on the family's one salaryman.

Well, a couple of (drunken) thoughts on this one:

- I like to think I am an above average salaryman. The many letters after my name and this year's earnings indicate this is so, and I have (unfortunately) not had a spell of unemployment since 1998. I like to think that its not much of a worry. The research showing that married men earn morethan their single couterparts suggest that I have reason not to worry.

- DW is the recipient of 2 master's degrees from a very snooty East Coast university. I suspect that if I were not around she would be more than capable of earning a very nice living. I have supported her every step of the way (financially and , more importantly, emotionally) in setting up her business because I know that it keeps her skills fresh, keeps her options open, and makes her feel like more than just a housewife. That benefits both of us. Having said that, I suspect that she will never be an employee again, since she likes being self employed and our net worth is definately on teh trafjectory that means it will never be an issue.

 

[cute fuzzy bunny]

The point is up for discussion. How can anyone know for sure what the future will bring, but there are lots of smart people on this board with lots of interesting opinions and ideas. That ok with you ?

Perfect okay with me, gus. Just wanted to know what you expected. We seem to have these "doom and gloom" posts about twice a day. Always with the same results.

Those that believe there will be doom and gloom will do what they do and no matter what anyone else says, will still believe all there will be is doom and gloom. Those that dont will do what they do and will believe what they believe.

Just wondering what was expected. Same thing or something different this time.

Give the man a break-- he's venting and hoping that someone will make him feel better about the economy. Many of us have repetitively demonstrated that we don't always have to post with a purpose!

Wasnt 'breaking' on him at all, I was honestly curious as to what his objective is, as the same posts keep coming up...only thing I cant think of is he's expecting something and not getting it.

Without a wall of worry, the market can't rationally climb higher. The more doom & gloom, the more I'm inclined to be fully invested. Then when it nosedives, I'm ready to ride it out, or even get out. But when everyone's smiling & cheerful while the market rockets up in 200-point daily increments, that's when I get worried.

I completely agree.

Weren't you looking at leading economic indicators a few months back?

Not seriously. I look at all of them. When they all say the same thing and folks here are concerned, I give it shrift. When most of them are saying all is well, I feel ok about things, and there are just a few bears posting the same dang stuff three times a week, I feel like i need to buy more equities.

 

[brewer12345]

Freebie on doom & gloom:

If you want to (cheaply) hedge against a market collapse, buy deeply out of the money puts on the major money centaer banks (JP Morgan, Goldman, Bear, Lehman, etc.). In a market "event" these stocks will collapse, especially since anyone in the business will realize that they have no clue about their derivative counterparties. You'll reliably lose money, but it can be a cheap way to sleep at night.

 

[haha]

Freebie on doom & gloom:

If you want to (cheaply) hedge against a market collapse, buy deeply out of the money puts on the major money centaer banks (JP  Morgan, Goldman, Bear, Lehman, etc.).  In a market "event" these stocks will collapse, especially since anyone in the business will realize that they have no clue about their derivative counterparties.  You'll reliably lose money, but it can be a cheap way to sleep at night.

Thanks for the suggestion. I'll do it Monday.

Ha

 

[riskadverse]

You know, my last business trip to Hawaii, the host took me out drinking at a Martini bar near the office, then on our walk back to the office to pick up our cars, she turns to me and says, "hey did you know this street is where all the transvestite hookers ply their trade?"  I was shocked, Honolulu just seems like too small a town to support such a specialized community.  Evidently many guys don't know they are a John to a "John" (vice "Jane") when they pick up their dates.  Just a friendly warning to any of you single guys/sailors who visit that lovely state.  

Hmm....upon reflection, if this post doesn't set me up, nothing will....

HBO had a special on this . . . from what I remember . . . the he/shes were rarely picked up by someone who didn't know the score, and they professed that they made more money than straight hookers.

 

[cute fuzzy bunny]

Hmm....upon reflection, if this post doesn't set me up, nothing will....

So how much did it cost and did you still act "surprised"?

 

[brewer12345]

Thanks for the suggestion. I'll do it Monday.

Ha

Ha, were you joking or not? Sometimes hard to tell around here.

 

[haha]

Ha, were you joking or not?  Sometimes hard to tell around here.

No, not joking. I have all the QQQQ puts I want to own, and was looking for something else that might show strong downward momentum in the right circumstances. Morgan seems to fit the bill.

Ha

 

[brewer12345]

No, not joking. I have all the QQQQ puts I want to own, and was looking for something else that might show strong downward momentum in the right circumstances. Morgan seems to fit the bill.

Ha

I think JPMC, Bear Sterns and Goldman would probably best fit the bill. They have the largest exposure to hedge funds, the biggest credit default swap operations (woo-boy, the stories I could tell you about how loosely those desks are run), and all three have ramped up their proprietary trading positions (where they put their own capital at risk instead of just being middlemen). Pick puts that are far enough out of the money so that you pay a pittance.

 

[laurence]

So how much did it cost and did you still act "surprised"?

Three hundred dollars! Wait!

 

[cute fuzzy bunny]

Unfortunately I dont know if you got a good deal or not.

 

[bpp]

You know, my last business trip to Hawaii, the host took me out drinking at a Martini bar near the office, then on our walk back to the office to pick up our cars, she turns to me and says, "hey did you know this street is where all the transvestite hookers ply their trade?" I was shocked, Honolulu just seems like too small a town to support such a specialized community. Evidently many guys don't know they are a John to a "John" (vice "Jane") when they pick up their dates. Just a friendly warning to any of you single guys/sailors who visit that lovely state.

Not a very useful tip warning without the name of the street...

 

[haha]

I think JPMC, Bear Sterns and Goldman  would probably best fit the bill.  They have the largest exposure to hedge funds, the biggest credit default swap operations (woo-boy, the stories I could tell you about how loosely those desks are run), and all three have ramped up their proprietary trading positions (where they put their own capital at risk instead of just being middlemen).  Pick puts that are far enough out of the money so that you pay a pittance.

JPM looks like the Full Meal Deal. The only negative is the $1.36 dividend. The others you mentioned have very low open interest, and the puts seems to be relatively high priced. If we get an up day tomorrow I'll go shopping. At $30, JPM, would yield 4.5%, but that is at the high end of current, non-stressed bank yields. By late fall, it may not be outrageous at all.. Nothing to bet the farm on, but still might be good value.

Ha

 

[Delawaredave]

All your "crisis factors" are true today - and should not be ignored.   However, the last 100 years has had many times also where a pile of crisis points also applied (wars, gas crisis, inflation, etc).

I do thiink it is best to stay heavy in equities, but also gradually diversify heavily globally, and diversify across asset classes, and capitalization.

Hundai just announced last night plans to build a car plant in USA - the reason for doing this is not to build higher quality cars, not to lower costs, rather to diversify their production assets  - especially as the Korean currency appreciates against the dollar.

As a kid, I used to ice skate on ponds - when the ice got thin, your best safety precaution was to drop to you hands and knees and "spread out and not panic"

That's what  I'm doing now...........

 

[brewer12345]

JPM looks like the Full Meal Deal. The only negative is the $1.36 dividend. The others you mentioned have very low open interest, and the puts seems to be relatively high priced. If we get an up day tomorrow I'll go shopping. At $30, JPM, would yield 4.5%, but that is at the high end of current, non-stressed bank yields. By late fall, it may not be outrageous at all.. Nothing to bet the farm on, but still might be good value.

Ha

Maybe, but I am not a particular fan of large bank equities. Practically speaking there is no conceivable way to figure out what is going on wihin the business or what level of risk they have assumed. No thanks. There are much more attractive opportunities in smaller banks and thrifts, plus you occasionally et a pop from M&A.

 

[kat]

As a kid, I used to ice skate on ponds - when the ice got thin, your best safety precaution was to drop to you hands and knees and "spread out and not panic"[/b]

That's what I'm doing now...........

Thanks, Delawaredave, for the image I can understand. I can some days wish I had the kind of brain that could still crunch numbers -- or care to -- or look at spreadsheets or graphs -- or care to. Ice skating on ponds and the safety advice -- I get it!


NewYorkKate

 

[Nords]

Not a very useful tip warning without the name of the street...

Well, I can understand Laurence being reluctant to give away his favorite hunting grounds, but I'll trade you for Rappongi streets.

Start in "west" Waikiki at the intersection of Kalakaua & Kuhio. Stroll north along the little side streets (pick any one!) toward the Ala Wai Canal. When you reach Ala Wai Boulevard, turn east and then go south at the next block (across Kuhio) until you reach Kalakaua again. Turn east again, go north at the next block back to the Ala Wai, turn east again, and go south again. Keep mowing the lawn, so to speak, until you run out of Waikiki at Kapahulu (by the zoo). Before you encounter their animals I'm sure you'll attract some sort of attention.

Or you could just stroll slowly along Ke'eamoku Street.

I'm not trying to imply that these streets are filled with prostitutes or that you should avoid them. They're quite safe (I'm still talking about the streets!). There are also bars, stores, hotels, vacation condos, touts, street performers, lots of visitors, and undercover cops. It's just a little difficult to read the nametags or figure out the occupations unless you're taking this stroll at 2 AM... It ain't Main Street at Disneyland but it's not like NYC's 42nd Street used to be.

 

[cute fuzzy bunny]

There are also bars, stores, hotels, vacation condos, touts, street performers, lots of visitors, and undercover cops.

I see you have your excuses already laid out..

 

[haha]

Maybe, but I am not a particular fan of large bank equities.  Practically speaking there is no conceivable way to figure out what is going on wihin the business or what level of risk they have assumed.  No thanks.  There are much more attractive opportunities in smaller banks and thrifts, plus you occasionally et a pop from M&A.

Brewer, you are forgetting that we are discussing puts.

Ha

 

[brewer12345]

Brewer, you are forgetting that we are discussing puts.

Ha

Hmm, I thought so, but then you started talking about value in relation to JPMC. You meant that the puts are a good value? That would square with what you said. Didja buy some?

 

[haha]

Hmm, I thought so, but then you started talking about value in relation to JPMC.  You meant that the puts are a good value?  That would square with what you said.  Didja buy some?

After looking at the price and the low volume/poor liquidity in the Jan07 JPM puts, I decided to stick to QQQQ puts as my bear play. Bought some Jan07 37s. I want to be able to hold into Q4-2006. If the QQQQ reaches 37, my collection of various puts should increase >= $10,000 per 1 point drop on the QQQQ.  I have some at the money, some slightly out, and some pretty far out of the money. These low strikes are long term, so if the QQQQ starts down in earnest it will be worth having them. I guess if volatility picks up, I should gain delta on these quicker than I would otherwise expect. If we get down to 34, I am making $25,000 per point on the QQQQ. The QQQ (forerunner of QQQQ) came kissing close to 20 in the fall of 2002,where it halted its long descent from 110 or so during the late great mania. It then turned around. and made it 37 or so by Christmas 2003. Since then it has only managed to add 3 or 4 points, depending on what day you look.

My money says this is one tired dog, and this is the infamous Year 2 of the US Presidential election cycle.

Anyway, if it works for me, I can buy a nice Seattle condo and get the hell off the farm. If it doesn't, turnips anyone? 

Ha

 

[brewer12345]

Gotcha. For the moment I am not hedging. I think the time will come this summer, looking for fallout this winter or early next year. Its cheaper if I wait. In the meantime, I have jettisoned most of my highly economically sensitive stuff and added exposure to stuff that doesn't particularly depend on the broader economy.