Global Macro Trading Journal
- Thread starter Daal
- Start date
Although there was no socialist president since Mitterrand, France did have a couple of socialist governments in the meantime.
Looks like the sunday main news was the mess in Greek elections (glad I was short - can't say I'm always on the right side of the market).
Now I guess one should be careful of easing pressure in Europe - any idea how long until the new governments can organize and mount pressure on Germany ?
Note as well that the CAC has been performing better under socialist than right wing government - or what the french call right wing
Looks like the sunday main news was the mess in Greek elections (glad I was short - can't say I'm always on the right side of the market).
Now I guess one should be careful of easing pressure in Europe - any idea how long until the new governments can organize and mount pressure on Germany ?
Note as well that the CAC has been performing better under socialist than right wing government - or what the french call right wing
Asshole of the month award: Charlie Munger
"gold is a great thing to sow into your garments if you're a Jewish family in Vienna in 1939"
http://www.businessinsider.com/char...oure-a-jewish-family-in-vienna-in-1939-2012-5
I'm liking a lot of the comments on that article:
"I am a historian. I like the fact that the gold coins of long gone countries are still worth their weight in gold. The paper notes of said long gone countries? They're worth zero unless for novelty or historical interests."
"I like the part where gold is out performing Berkshire Hathaway over the last 3, 5, and 10 years."
"Civilized people do not allow a system to develop that is a ponzi scheme and full of manipulation and corruption."
"There must have been a reason that pre-holocaust Jews sewed gold into their garments. Perhaps its because they didn't feel that their wealth was well-protected when denominated in Deutsche Marks. I wonder why they went to gold? They must have just been crazy old gold bugs."
"Buffet and Munger are smart enough but let's not discount that being in the right place at the right time is 90% of success. Building a business in post WWII America (where we had no effective competition for a couple decades), then riding the largest credit bubble in human history, then morphing from a free-enterpise businessman into a co-dependent relationship with Washington, DC and Wall Street with friends in high places. That's the difference. Also, it's easy to bash gold when you're 85 years old and worth billions. Try being 30 or 40, knowing full well the system that old fools and greedy Boomers built will collapse not to long after their dead. Gold sounds pretty attractive in that case."
"gold is for optimists... ammunition is for pessimists"
Civilised people buy gold as a hedge against the depredations of uncivilised people.
History buffs will remember the events of 1936 when Leon Blumâs Front Populaire came to power with âNew Dealâ rhetoric and Communist backing. Investors rushed for the exits, forcing the franc off the Gold Standard. The money crossed the Channel.
âConversations in French became increasingly commonplace in the City of London, as French citizens made arrangements to open sterling bank accounts,â writes Barry Eichengreen in Golden Fetters, my favourite book on the Great Depression.
http://www.telegraph.co.uk/finance/...-ten-weeks-to-avert-a-French-bond-crisis.html
EUR exits would highly likely to be bearish for the EUR. If you are 'not sure' its because you haven't studied history. The EUR standard is a gold standard but even less trustworthy. Capital flights and flows were rampant in the 30's after devaluations or even just rumors of devaluation. No one likes to lay odds on their real purchasing power
Intrade puts changes of any EUR exit at 43% by next year's end. Guys like Buiter whom I respect, rates the chance of a Greece exit at 50-75% or so
âConversations in French became increasingly commonplace in the City of London, as French citizens made arrangements to open sterling bank accounts,â writes Barry Eichengreen in Golden Fetters, my favourite book on the Great Depression.
http://www.telegraph.co.uk/finance/...-ten-weeks-to-avert-a-French-bond-crisis.html
EUR exits would highly likely to be bearish for the EUR. If you are 'not sure' its because you haven't studied history. The EUR standard is a gold standard but even less trustworthy. Capital flights and flows were rampant in the 30's after devaluations or even just rumors of devaluation. No one likes to lay odds on their real purchasing power
Intrade puts changes of any EUR exit at 43% by next year's end. Guys like Buiter whom I respect, rates the chance of a Greece exit at 50-75% or so
There are signs that it is happening again, says Louise Cooper from BGC Partners. If Italians were the biggest foreign buyers of top properties in London last year, the French are catching up this year in the £3m to £5m range.
âLondon property is like German Bunds - somewhere safe to park cash,â she said. Is it capital flight? Hard to tell.
âLondon property is like German Bunds - somewhere safe to park cash,â she said. Is it capital flight? Hard to tell.
Hussman showed a characteristic of the Dividend Growth model that I found interesting
http://www.hussmanfunds.com/wmc/wmc120507.htm
I've used this model(modified) in the past to estimate stock returns because it's simply a expected value type equation that shows how much one should pay for a stream of cashflows
To illustrate this, suppose you have a company that is expected to earn $2 per share next year, pays half of earnings out as dividends, and grows at 5% annually each year, ad infinitum.
In order to expect a 10% return from this stock over the long-term, you would pay $20 a share today (essentially giving you 5% from expected price growth and 5% from dividend yield). In order to expect a 6% return on this stock, you would pay $100 [5% growth + 1% yield: P = D/(k-g)].
Now let's wipe out all of the earnings and dividends in the coming year, but leave the long-term flows unchanged. If you do the math, you'll find that in each case, the value of the stock drops by only about 90 cents. The only way you'll get a huge change in the price of the stock is if you've misjudged the whole stream of long-term cash flows (which is what I believe analysts are doing by failing to adjust for profit margins and using a single year of earnings as the whole basis for valuation), or if you change the long-term prospective return that the stock is priced to achieve.
My view on this is simple - if you've overestimated the long-term stream of cash flows by failing to adjust for elevated profit margins, if the prospective return on stocks is unusually low even on the basis of normalized earnings (as it is today), and if you've set your portfolio up in a crowded trade that takes record-high beta exposure to market fluctuations (as many institutions have now done), you just might be in for some trouble.
http://www.hussmanfunds.com/wmc/wmc120507.htm
As profits lag NGDP, even though they nominally could be rising, the fact that their growth rate has changed has a large impact on the amount one should be willing to pay for the asset
http://www.hussmanfunds.com/wmc/wmc120507.htm
I've used this model(modified) in the past to estimate stock returns because it's simply a expected value type equation that shows how much one should pay for a stream of cashflows
To illustrate this, suppose you have a company that is expected to earn $2 per share next year, pays half of earnings out as dividends, and grows at 5% annually each year, ad infinitum.
In order to expect a 10% return from this stock over the long-term, you would pay $20 a share today (essentially giving you 5% from expected price growth and 5% from dividend yield). In order to expect a 6% return on this stock, you would pay $100 [5% growth + 1% yield: P = D/(k-g)].
Now let's wipe out all of the earnings and dividends in the coming year, but leave the long-term flows unchanged. If you do the math, you'll find that in each case, the value of the stock drops by only about 90 cents. The only way you'll get a huge change in the price of the stock is if you've misjudged the whole stream of long-term cash flows (which is what I believe analysts are doing by failing to adjust for profit margins and using a single year of earnings as the whole basis for valuation), or if you change the long-term prospective return that the stock is priced to achieve.
My view on this is simple - if you've overestimated the long-term stream of cash flows by failing to adjust for elevated profit margins, if the prospective return on stocks is unusually low even on the basis of normalized earnings (as it is today), and if you've set your portfolio up in a crowded trade that takes record-high beta exposure to market fluctuations (as many institutions have now done), you just might be in for some trouble.
http://www.hussmanfunds.com/wmc/wmc120507.htm
As profits lag NGDP, even though they nominally could be rising, the fact that their growth rate has changed has a large impact on the amount one should be willing to pay for the asset
It's actually worse than that. This line was in response to a question about David Einhorn.
Having played a lot of competitive golf, I've spent a lot of time in the grill rooms and card rooms of the types of country clubs Munger's a member at (LACC, for one, I believe). These places don't know what century it is. They're still served by black waiters in white suits named Sneddley, If there are any jewish members, they're of the very old German-money type (these are the types that call jews not of their class, kikes).
Gold is not something civilized people invest in, but silver is I guess, as Buffett bought up like one third of the world's supply years ago (losing millions). The truth is that both of these guys are ugly little rent-seekers (and underperforming the S&P again this year).