Back from a brief vacation and feeling refreshed, if a bit sunburned. There will be further vacationing, I hope soon.
This morning on my kayak, plodding the gulf coast, I observed an area of coastline that had probably an eight foot sand cliff due to severe beach erosion. All the mansions along this part of the island were threatened to some small degree by the menacing cliffsides in their own backyards. Some yards were losing trees and shrubbery over the ledge and it made good shade for me on my reflective rest. Where the vegetation is soon to go over you can see all the roots hanging suspended.
The benefits of living on the beach would be tremendous. For people who like that sort of thing anyway. But why would you ever buy or build a house there? Erosion is a constant threat which requires dredging, which costs money. If you can find a private insurer to cover your beach property your rates will be astronomical at best. Many states are in the insurance game as well encouraging risk taking on the part of buyers and builders with artificially low rates. In other words, taxpayers get put on the hook in a big way for risks taken by a small handful of property owners. Socialization of risk.
Worst of all for these homes is just the sand and salt themselves which persistently corrode coastal structures. These houses are literally build on shifting sands. We've erected these structures and drawn maps of our coasts and islands. Problem is we've failed to recognize that these coastal areas are constantly shifting and impermanent. It is sheer arrogance to think we can dictate our terms to nature. It's the other way around and we'd be prudent to anticipate and mitigate. Man wins today. Nature will win in the long term and from now on "The Skeptic" will only rent his beach houses.
NOTE: Actually man and nature will both lose.
NOTE II: Jet-skis are for filthy buggards only. The lame and weak.
Friday, July 6, 2007
Friday, June 29, 2007
This Week's Stock Pick
Generally speaking the stock of the week is produced through technical analysis. "The Skeptic" reads the tea leaves after every market session to predict the future. Most of the picks generated are short to intermediate term trades. This week though I bring you a fundamental analysis big picture call.
DBA- Powershares DB Agriculture Fund (current price $26.70). A straight up Ag play, this fund is 25% corn, 25% soybeans, 25% wheat and 25% sugar. A direct bet on higher agricultural commodity prices. Looking ahead a few years out, this is where you want to be. Oil, water and fertilizers- required inputs to produce these crops on an industrial scale have become more expensive. This is a secular trend that will continue for many years to come.
Disclaimer- The author owns shares in this fund. This post is not intended as a recommendation and if you buy these shares you may trigger a plague, thereby reducing demand for these commodities, making this fund a big loser.
DBA- Powershares DB Agriculture Fund (current price $26.70). A straight up Ag play, this fund is 25% corn, 25% soybeans, 25% wheat and 25% sugar. A direct bet on higher agricultural commodity prices. Looking ahead a few years out, this is where you want to be. Oil, water and fertilizers- required inputs to produce these crops on an industrial scale have become more expensive. This is a secular trend that will continue for many years to come.
Disclaimer- The author owns shares in this fund. This post is not intended as a recommendation and if you buy these shares you may trigger a plague, thereby reducing demand for these commodities, making this fund a big loser.
Thursday, June 28, 2007
Dead End
In the small corner of the world "The Skeptic" calls home the local government plans to spend $25 million, before inevitable cost overruns, to expand a nearby road. The road in question was virtually a white elephant when it was built just over twenty years ago. Now it receives significant traffic as an outlet for new communities that have sprung up everywhere on every available piece of real estate. It all just sort of sprawls out in every direction. Our closest interstate highway is planned to widen from 4 lanes to 10 in the upcoming years. More millions to be invested in our drive everywhere for everything lifestyle.
These are just plain bad investments. Every person having their own vehicle or two, that they then have to drive to accomplish nearly any errand, is just not sustainable. No way. We are going to have to find ways to drive less and stop investing in our motoring past/present. Instead we need to invest in public transportation and rezone our communities to a walkable scale through multi-use zoning. It's painful to think we might have to change our lifestyles and sacrifice some comforts but we had better start having this conversation now when we can still plan ahead. More likely though that false comfort and blissful ignorance will persist amongst the populous until we have a full blown crisis. The crisis of course is end of the cheap oil era followed by price and supply destabilization. Technology is not going to save us.
We are at an inflection point in the history of the world. We can either look forward or throw good money after bad. Most will not want to admit that we have invested our national wealth in houses close to nothing, accessible only by car, in the twilight of the cheap oil era. Our entire infrastructure is built around our motor vehicles. We are going to need a miracle to sustain this. "The Skeptic" doesn't believe in miracles or fairy tales.
These are just plain bad investments. Every person having their own vehicle or two, that they then have to drive to accomplish nearly any errand, is just not sustainable. No way. We are going to have to find ways to drive less and stop investing in our motoring past/present. Instead we need to invest in public transportation and rezone our communities to a walkable scale through multi-use zoning. It's painful to think we might have to change our lifestyles and sacrifice some comforts but we had better start having this conversation now when we can still plan ahead. More likely though that false comfort and blissful ignorance will persist amongst the populous until we have a full blown crisis. The crisis of course is end of the cheap oil era followed by price and supply destabilization. Technology is not going to save us.
We are at an inflection point in the history of the world. We can either look forward or throw good money after bad. Most will not want to admit that we have invested our national wealth in houses close to nothing, accessible only by car, in the twilight of the cheap oil era. Our entire infrastructure is built around our motor vehicles. We are going to need a miracle to sustain this. "The Skeptic" doesn't believe in miracles or fairy tales.
Wednesday, June 27, 2007
More Gross
Gross on derivatives:
You were wooed Mr. Moody’s and Mr. Poor’s by the makeup, those six-inch hooker heels, and a “tramp stamp.”
Link
You were wooed Mr. Moody’s and Mr. Poor’s by the makeup, those six-inch hooker heels, and a “tramp stamp.”
Link
Monday, June 25, 2007
Anything but Revalue
Check it out. Read this article.
This is a slow motion train wreck worth keeping an eye on. Financial dark matter, hidden from sight and illiquid, is deteriorating. The players in these complex transactions are levered to the hilt. The Bear Stearns fund mentioned in this article started with $600 million in equity and borrowed up to $6 Billion!
This hidden from view market is a ticking time bomb. The players are not marking to market their exposure so until a trade happens or a rating agency downgrades your exotic security of choice you can pretend everything is OK and continue to value your exposure to this mess at par. Hence the reason Bear would throw another $3 billion of good money after bad. Normally when a fund blows up they admit their suckery and liquidate. In this case liquidation would cause all other players to come to grips. So the market is frozen and waiting for the inevitable downgrades which are very slow in coming since the rating agencies get paid by the players.
This is a slow motion train wreck worth keeping an eye on. Financial dark matter, hidden from sight and illiquid, is deteriorating. The players in these complex transactions are levered to the hilt. The Bear Stearns fund mentioned in this article started with $600 million in equity and borrowed up to $6 Billion!
This hidden from view market is a ticking time bomb. The players are not marking to market their exposure so until a trade happens or a rating agency downgrades your exotic security of choice you can pretend everything is OK and continue to value your exposure to this mess at par. Hence the reason Bear would throw another $3 billion of good money after bad. Normally when a fund blows up they admit their suckery and liquidate. In this case liquidation would cause all other players to come to grips. So the market is frozen and waiting for the inevitable downgrades which are very slow in coming since the rating agencies get paid by the players.
Thursday, June 21, 2007
Wednesday, June 20, 2007
Random Skepticism
Look here. We are going to have to get our heads out of our asses in this country. We are completely out of touch with reality. Our entire way of life is unsustainable. We drive everywhere for everything and haven't invested in public transportation. We over consume and under produce. Paris Hilton is news and we are still debating evolution in the 21st century!
The sooner we acknowledge the real issues we face the better. Yet, we are clearly lacking in political leadership. We are so preoccupied with the terrorist threat but we are rotting from within.
The sooner we acknowledge the real issues we face the better. Yet, we are clearly lacking in political leadership. We are so preoccupied with the terrorist threat but we are rotting from within.
Monday, June 18, 2007
This Week's Stock Pick
OK. I have to admit something.
Last week's stock pick was suck-ass. WMT still looks good as long as the breakout is intact but it's a slow moving ship. Absolutely a play it safe pick. With the market weak it was a conservative large cap bet with a minimal defined risk.
Meanwhile there are stocks going nuts all over. Left and right. The market is a speculative orgy. More than a few oil stocks I follow went up 10% last week. Obviously it has paid to remain bullish on that sector. Many others too. Technology offers opportunities. There are so many good ideas. All with the economy at large in stagnation. Hmm.
So let's get speculative shall we. This week I'm picking a local favorite. ALCO- Alico Inc. They are a Florida agricultural company with interests in citrus, sugarcane, cattle and sod. The stock appears to be completing a long term consolidation. Friday's closing price was $60.60 . The risk in anticipating a breakout is that you're early.
Disclaimer: This is not a recommendation. If you buy this stock based on this post you should put down the bottle and seek professional help.
Last week's stock pick was suck-ass. WMT still looks good as long as the breakout is intact but it's a slow moving ship. Absolutely a play it safe pick. With the market weak it was a conservative large cap bet with a minimal defined risk.
Meanwhile there are stocks going nuts all over. Left and right. The market is a speculative orgy. More than a few oil stocks I follow went up 10% last week. Obviously it has paid to remain bullish on that sector. Many others too. Technology offers opportunities. There are so many good ideas. All with the economy at large in stagnation. Hmm.
So let's get speculative shall we. This week I'm picking a local favorite. ALCO- Alico Inc. They are a Florida agricultural company with interests in citrus, sugarcane, cattle and sod. The stock appears to be completing a long term consolidation. Friday's closing price was $60.60 . The risk in anticipating a breakout is that you're early.
Disclaimer: This is not a recommendation. If you buy this stock based on this post you should put down the bottle and seek professional help.
Monday, June 11, 2007
Gross Turns Bearish
Bill Gross, the kingshit of all bond managers, has turned bearish on bonds. In other words, he expects higher interest rates. Consider the implications.
Link
Link
This Week's Stock Pick
This one is totally counterintuitive.
Often the market does things which seemingly don't make a lot of sense. A stock will go up despite substantial headwinds and/or headline risk. Or a company that's executing successfully will have a stock that just keeps dropping in excruciating fashion. This is just one way the market takes money from the crowd.
Enter...WMT- Wal Mart. A company facing several headwinds in a world of rising gas prices. First off, those gas prices especially hurt the low-end, or value-conscious, consumers WMT thrives off. If any company relies on trucking it's WMT so they face price pressures there too. For good measure, they are widely hated and have little to no growth.
The share price of this underperformer is pretty much where it was in 1999. More recently, WMT has traded in a range between $50 and $41. For two years. The only excitement for the bulls was a false breakout in October of last year. Well, it just surmounted $50 again. This breakout seems more likely to lead to higher prices but you'll know it's another false signal if it closes much below $49.
Disclaimer: The author does own this stock and is not a broker. In no way should this be considered a recommendation. If you buy this stock, based on this post, the company will go out of business.
Often the market does things which seemingly don't make a lot of sense. A stock will go up despite substantial headwinds and/or headline risk. Or a company that's executing successfully will have a stock that just keeps dropping in excruciating fashion. This is just one way the market takes money from the crowd.
Enter...WMT- Wal Mart. A company facing several headwinds in a world of rising gas prices. First off, those gas prices especially hurt the low-end, or value-conscious, consumers WMT thrives off. If any company relies on trucking it's WMT so they face price pressures there too. For good measure, they are widely hated and have little to no growth.
The share price of this underperformer is pretty much where it was in 1999. More recently, WMT has traded in a range between $50 and $41. For two years. The only excitement for the bulls was a false breakout in October of last year. Well, it just surmounted $50 again. This breakout seems more likely to lead to higher prices but you'll know it's another false signal if it closes much below $49.
Disclaimer: The author does own this stock and is not a broker. In no way should this be considered a recommendation. If you buy this stock, based on this post, the company will go out of business.
Friday, June 8, 2007
Wednesday, June 6, 2007
Tuesday, June 5, 2007
More Statistical Manipulation
Had been intending to post something on the subject of employment statistics and their intentionally misleading nature. Fortunately, someone did the work for me. Good article- check it out.
Link
Link
Are You Ready for $5 Gas?
You should be. It seems all but inevitable. Maybe this summer, maybe not, though the farther out on the horizon you look the greater the likelihood. Our refineries are overstretched, not to mention frequently blowing up. There is a secular bull market in oil and supply is peaking. No coincidence, I'm sure. We've picked all the low hanging fruit and new energy sources will be increasingly difficult to exploit i.e. more expensive.
Hurricane in the gulf? $5 Gas.
Add to that, a weakening dollar and geopolitical concerns. The world's oil reserves are primarily in unstable regions. Think Venezuela or Nigeria. Iran and it's proximity to the Strait of Hormuz, through which 20% of the world's oil passes. Consider too that we face increased competition for resources due to growth around the world. There are an awful lot of Chinese buying their first cars. Chavez doesn't like our foreign policy so he'll sell his oil to China.
Bad news for GM. It's time to start planning for a future with higher gas prices. This country is going to need more public transportation. We're going to need to figure out how to grow and manufacture more goods locally instead of shipping in them in from across the globe.
Hurricane in the gulf? $5 Gas.
Add to that, a weakening dollar and geopolitical concerns. The world's oil reserves are primarily in unstable regions. Think Venezuela or Nigeria. Iran and it's proximity to the Strait of Hormuz, through which 20% of the world's oil passes. Consider too that we face increased competition for resources due to growth around the world. There are an awful lot of Chinese buying their first cars. Chavez doesn't like our foreign policy so he'll sell his oil to China.
Bad news for GM. It's time to start planning for a future with higher gas prices. This country is going to need more public transportation. We're going to need to figure out how to grow and manufacture more goods locally instead of shipping in them in from across the globe.
Monday, June 4, 2007
This Week's Stock Pick
"The Skeptic" has been wildly bullish on precious metals generally, and silver specifically, since about 2001. This is how "The Skeptic" makes his money, by seeing the future. You may ask how it is that "The Skeptic" can see the future. Well that's none of your damn business.
Silver has been in a consolidation phase for just over a year now. Meanwhile, central banks around the world have continued to print money, the silver ETF (SLV) has continued to drain supply from a tight market and there have been a range of new products introduced that use silver. "The Skeptic" has been patiently waiting for silver to end this consolidation in anticipation of an explosive move in prices. That time has not yet come but it appears imminent.
Be aware...at some point silver is going to go ballistic. In anticipation of silver completing this current consolidation "The Skeptic" is ready to start putting some money to work. As a result this week's pick is SLW- Silver Wheaton. Buying Silver Wheaton is a direct bet on higher silver prices. Just like the commodity itself SLW has been consolidating for a year. You can bet that when this stock gets a couple closes above the $12 mark it will gain serious momentum. Currently SLW is sitting right at that magical $12 mark.
Disclaimer: Author does own this stock and is not a broker. Should you buy this stock based on this post you might lose all your money and end up living in the street.
Silver has been in a consolidation phase for just over a year now. Meanwhile, central banks around the world have continued to print money, the silver ETF (SLV) has continued to drain supply from a tight market and there have been a range of new products introduced that use silver. "The Skeptic" has been patiently waiting for silver to end this consolidation in anticipation of an explosive move in prices. That time has not yet come but it appears imminent.
Be aware...at some point silver is going to go ballistic. In anticipation of silver completing this current consolidation "The Skeptic" is ready to start putting some money to work. As a result this week's pick is SLW- Silver Wheaton. Buying Silver Wheaton is a direct bet on higher silver prices. Just like the commodity itself SLW has been consolidating for a year. You can bet that when this stock gets a couple closes above the $12 mark it will gain serious momentum. Currently SLW is sitting right at that magical $12 mark.
Disclaimer: Author does own this stock and is not a broker. Should you buy this stock based on this post you might lose all your money and end up living in the street.
More Debate Coverage
The Democrats were in New Hampshire tonight for their latest debate. CNN's coverage was loaded with second-rate commentary. Really contrasted poorly with MSNBC's coverage of their hosted debate. However, the questions to the candidates were better than previous debates. They wasted less time, relatively speaking, with assinine questions. Here is a brief synopsis, by candidate:
Hillary- She faced a lot of jabs tonight. Everyone seemed prepared to take their shot. She did reasonably well considering. As the frontrunner she appropriately played it safe. The only thing Hillary said that made me curse at the TV was a reiteration of her whole "I didn't make a mistake authorizing force in Iraq but if I knew then what I know now..." That's balderdash. "The Skeptic" does not get national intelligence breifings, nor does he have a staff of fact-checkers, yet he still would have told you invading Iraq was a bad idea at the time. Why? Mostly common sense. So either she has bad judgement or voted as she did in pure political calculation, which is worse. She also likes to claim that no one thought Bush would use the authorized force because he claimed he would let inspectors finish their work. So she is a bad judge of character to boot.
Obama- He fared better in the debate format that he previously appeared uncomfortable with. He spoke eloquently yet offers no real leadership. He's done very little to distinquish his positions from Hillary's.
Edwards- He was aggressive. He attacked Hillary. He mixed it up with Obama. Well done. I appreciate the fact he admitted more than once he was wrong to vote for Iraq war authorization. It's an easy dig at Hillary but nonetheless refreshing. They never even covered Edwards' big issue- poverty.
Biden- Did a lot to help himself tonight. He spoke forcefully about Darfur. Appeared passionate about the issues generally. Biden is likable and intelligent yet doesn't offer much beyond foreign policy experience. In this crowd you could do a lot worse than Biden.
Richardson- Likeable but not the least bit presidential. No longer worthy of consideration.
Dodd- yawn
Kucinich- "The Skeptic" loves the fact that this guy doesn't pander. Someone in the audience asked a question about what we can do to rebuild the military, which was directed to him. Part of his answer was that we should reduce defense spending. Overall, it seemed he, along with Biden and Edwards, fared the best tonight.
Gravel- Vitriolic as ever, Gravel continued throwing bombs. I'm sure, beyond this election cycle, the parties will find a way to exclude guys like Gravel or Kucinich or Ron Paul from future debates. That would be a shame. You'll hear more truth spoken by these fringe candidates then all the others combined.
Hillary- She faced a lot of jabs tonight. Everyone seemed prepared to take their shot. She did reasonably well considering. As the frontrunner she appropriately played it safe. The only thing Hillary said that made me curse at the TV was a reiteration of her whole "I didn't make a mistake authorizing force in Iraq but if I knew then what I know now..." That's balderdash. "The Skeptic" does not get national intelligence breifings, nor does he have a staff of fact-checkers, yet he still would have told you invading Iraq was a bad idea at the time. Why? Mostly common sense. So either she has bad judgement or voted as she did in pure political calculation, which is worse. She also likes to claim that no one thought Bush would use the authorized force because he claimed he would let inspectors finish their work. So she is a bad judge of character to boot.
Obama- He fared better in the debate format that he previously appeared uncomfortable with. He spoke eloquently yet offers no real leadership. He's done very little to distinquish his positions from Hillary's.
Edwards- He was aggressive. He attacked Hillary. He mixed it up with Obama. Well done. I appreciate the fact he admitted more than once he was wrong to vote for Iraq war authorization. It's an easy dig at Hillary but nonetheless refreshing. They never even covered Edwards' big issue- poverty.
Biden- Did a lot to help himself tonight. He spoke forcefully about Darfur. Appeared passionate about the issues generally. Biden is likable and intelligent yet doesn't offer much beyond foreign policy experience. In this crowd you could do a lot worse than Biden.
Richardson- Likeable but not the least bit presidential. No longer worthy of consideration.
Dodd- yawn
Kucinich- "The Skeptic" loves the fact that this guy doesn't pander. Someone in the audience asked a question about what we can do to rebuild the military, which was directed to him. Part of his answer was that we should reduce defense spending. Overall, it seemed he, along with Biden and Edwards, fared the best tonight.
Gravel- Vitriolic as ever, Gravel continued throwing bombs. I'm sure, beyond this election cycle, the parties will find a way to exclude guys like Gravel or Kucinich or Ron Paul from future debates. That would be a shame. You'll hear more truth spoken by these fringe candidates then all the others combined.
Sunday, June 3, 2007
Ron Paul- The People's Champ
"I don't think we have a republic anymore," he tells me, sitting up in his chair. "I think we have a very domineering federal government, where we have a world empire we have to manage every single day."
http://www.salon.com/news/feature/2007/06/02/ron_paul/?source=whitelist
http://www.salon.com/news/feature/2007/06/02/ron_paul/?source=whitelist
Friday, June 1, 2007
GDP Shrivels
First quarter GDP came in at 0.6%. The slowest rate in more than four years. When you consider the government's wild underestimation of inflation that GDP number is, in real terms, probably negative. So the economy contracted in the first quarter.
Thursday, May 31, 2007
Signs of Impending Doom
Lake Okeechobee is on fire. For those unfamiliar, Okeechobee is the second largest freshwater lake in the continental U.S. with a drainage basin that covers over 4,600 square miles. The water levels at "Big O" are at their lowest- EVER. The lake has receded far enough for 5,000+ acres of former lake bottom to actually catch on fire. The fire remains mostly inaccessible to firefighters as they are not really equipped to fight fires in lakes.
Maybe hurricane season, which starts June 1, will bring much needed rain to Floridians.
Maybe hurricane season, which starts June 1, will bring much needed rain to Floridians.
Wednesday, May 30, 2007
ATM Broken
The housing ATM is out of service. Those people who have been living beyond their means thanks to a rising tide of home equity had better start saving. The whole refinance game is kaput. What are you going to do now if you've been living comfortably by using your house as an ATM? Interest rates are higher and home prices are down in many cases. Time to stop going out to dinner three times a week. Time to stop buying all that crap you don't need...and charging it.
Equity withdrawal has certainly provided a wind in the sails of our economy. Without it we won't be seeing much growth in GDP. Furthermore, most of the nation's job growth the last couple years has been housing related. Brokers, appraisers, agents, roofers, electricians. Here in SW Florida you couldn't walk five feet without running into a mortgage broker and they were generally obnoxious and arrogant about their new found success. The number of available jobs in housing related sectors will not grow but contract.
Belt tightening time. Prices are drifting lower, rates are drifting higher, there is enough inventory to choke on and lending standards are being tightened. There has already been a lot of bottom calling. Strikes "The Skeptic" as premature.
Equity withdrawal has certainly provided a wind in the sails of our economy. Without it we won't be seeing much growth in GDP. Furthermore, most of the nation's job growth the last couple years has been housing related. Brokers, appraisers, agents, roofers, electricians. Here in SW Florida you couldn't walk five feet without running into a mortgage broker and they were generally obnoxious and arrogant about their new found success. The number of available jobs in housing related sectors will not grow but contract.
Belt tightening time. Prices are drifting lower, rates are drifting higher, there is enough inventory to choke on and lending standards are being tightened. There has already been a lot of bottom calling. Strikes "The Skeptic" as premature.
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