patrick.net

My grandfather used to regale us with stories about how he was in on the horse racing racket in Philly in the 1930's. He'd win tons of money because he knew the owners, trainers, and track folks. It was all rigged. They didn't win money from each other; they won it from the schmoes in the stands that had no idea how it all worked.

So if you're busy poring over balance sheets and annual reports, you've already lost.

stocksjustgoup says

My grandfather used to regale us with stories about how he was in on the horse racing racket in Philly in the 1930’s. He’d win tons of money because he knew the owners, trainers, and track folks. It was all rigged. They didn’t win money from each other; they won it from the schmoes in the stands that had no idea how it all worked.
So if you’re busy poring over balance sheets and annual reports, you’ve already lost.

I used to be a paid assistant with a handicapper, that knew the ropes like that. I would organize his bets, before we got to the window, and made sure he had all trifecta and perfecta bases covered with his horses paired with others that could place or show combinations.

He constantly said, "these people are betting on leggings and blinder colors, they should just give their money to me." People that knew him, and understood I was placing his bets, would accost me, constantly ... "So who does Jerry like in the ninth?"

Mum was the word, one hint of Jerry's long shot horse, could make it favorite with in minutes.

so far 75% of reported S&P companies met or beat earnings estimates. Good news..
on the other side soverign debt with the Greek Gov't is putting pressure on Euro
which is pushing the dollar high as some flee for safe heaven but neg on stock.

The fundementals on valuations are pretty good, but these prices provide a good entry point.

At the and of the day, everyone has to buy toilet paper to wipe their bottom. Might as well be
as shareholder of the TP maker.

Growth? What growth?

A local big-box retail store is planning to revamp their aisle layouts a bit so they don't have empty shelves.

Any "growth" you are seeing is inside the ego-inflated heads that produced these unbelieveable numbers.

They simply cannot say "negative growth" or decline so they do some voodoo accounting and everyone repeats this garbage like it's real.

Yes of course, those Euro and Asian countries are immune to such flim-flammery and their "growth" is totally believable and sustainable. Forgive me for being dense, why should I think that China for example cracking down on 3rd mortgages could indicate they have funny business waiting to go kaboom on them. How's the "growth" on that pool of ships sitting idle? I wonder how often Google updates it satellite photos....

SF ace says

Why does all the new venture capital funds in the silicon valley focus in these areas?

Why were there so much VC in Silicon Valley in dot-com period, but yet it went bust?

Availability of VC funding is not measure of sustainability.

Global companies like to bounce around in order to arbitrage wages & gimmes from the governments. Therefore this year's plant in Isreal could be shut down in 5 years in order to move it someplace cheaper. What's your definition of sustainable investment timeframe?

I vividly recall the article about the community that went to great lengths to get a Pfizer plant in, which is now being closed, and everyone in the community is left wondering why they got hit by a truck. Same community with the famous court-case about Eminent Domain land seizure can't think of the name of it. They "invested" up front, got not much in the way of tangible long-term benefits, and the corporation skated out when the numbers said to. Rinse & repeat all around the world.

Being a curious sort I opened up Google Earth for the first time in ages. There is actually a widget from vesseltracker.com that will show you all the vessels on the earth they track within 24 hours ago, with active ones as green and idle ones as red. There are a metric ton of red dots off the coast of Singapore still. Also near Shanghai. This "growth" you speak of doesn't seem to involve a boom in import/export shipping.

Footnote: It's odd I see no ships idle off either coast of Mexico. Shrug. Security issues?

stocksjustgoup says

My grandfather used to regale us with stories about how he was in on the horse racing racket in Philly in the 1930’s. He’d win tons of money because he knew the owners, trainers, and track folks. It was all rigged. They didn’t win money from each other; they won it from the schmoes in the stands that had no idea how it all worked.
So if you’re busy poring over balance sheets and annual reports, you’ve already lost.

My dad works one week a year. He goes on vacation to Saratoga with the boys and comes back with his spending money for the year.

All I hear all day long is... "Import Okay - No China!" Sorry Charlie, you go bust now!

I dunno Sparky that's a LOT of red dots and very few green ones:

Yes China, an economic powerhouse for some years now. And yet things can turn on a dime:

“We work really closely with SASAC, the state-owned enterprise regulator in China, and there are literally trillions and trillions of renminbi of, frankly, defaulting loans already in China that no one is doing anything about,” Neil McDonald, a Hong Kong-based business restructuring and insolvency partner with Lovells LLP, said at an Asia-Pacific Loan Market Association conference yesterday. “At some point there’s going to be a reckoning for that.”

http://www.bloomberg.com/apps/news?pid=20601110&sid=aJhBD4AeX8WA

Considering China's rigid control of information, what is really happening right now?

SF ace says

even if those bubbles prove a point, you do realize singapore is not within the boundary of China right?

Yes I'm sorry was this thread restricted to China now? I did mention Singapore earlier and thought to take time to post a snapshot. I dunno what "foreign" means to everyone in this thread, Euro zone and Asia in general. Obviously for SF Ace it's all about China, but I see this port as a red flag. You want same thing for Shanghai OK fine.

Same for Shanghai. It's not apparent at this scale, but down near Ningbo is absolutely covered with overlapping red dots.

Well it started OFF about USA but has drifted around. If I have drifted outside my lane without signalling I apologize. In a global economy, China-Israel-India are in fact dependent on other countries. Who are they selling their goods to in order to facilitate growth without end? Or are you a "decoupling" believer?

Looking at shipping containers isn't that useful, unless you've got similar results from years past. I've heard that china doesn't like to import because it slows down their exporting time. They want the ships coming in empty because otherwise they fall behind in getting things out. Usually they're full of something cheap, like recycled paper or something.

Regardless, the red dots are impressive, but without historical data, it's pretty hard to tell whats going on. China is most likely keeping up with most of it's exports, they are exporting a lot of crap which needs replacing often.

SF ace says

still doubt china’s growth?

And how exactly it proves anything about sustainability, as you claimed?

I dont have a link, but i remember reading something about a month ago about how all these people in china were taking out loans to invest in the stock market....

I see your points SF Ace.

However I agree with some of the counter-views expressed here:

http://www.foreignpolicy.com/articles/2009/06/22/think_again_asias_rise

The tension of unfettered capitalism within a rigid command-economy seems to me like juggling bottles of nitroglycerin while riding a donkey. They've done stunning well with it up to this point, however you only have to slip once and BOOM!

At one point it seemed unquestionable that Japan would sit atop the economic world, until their RE bubble imploded and started their Lost Decade. Perhaps your record at picking horses will prove better than mine. Dumb luck I got out of Toyota stock before this brake mess started up....

The Japanese never had the population to rule the world.

The Chinese have a massive population that can still do minion work, while a strong middle class is being built. China has to control it's markets because if they didn't the sheer number of people coming in from rural areas would just decimate the economy. 800M people heading towards the cities would be impossible to deal with. It might appear that they are teetering, but I'm betting even with a few trip ups, they've got another 5-10 years of holding things together.

Rarely do things go BOOM. They usually collapse and new people come in to support them. No one is going to allow a full BOOM over there. It'll collapse like our housing market. People will step in, either the government or others who believe they can make money with the new situation, and things will stabilize.

pkennedy says

Rarely do things go BOOM. They usually collapse and new people come in to support them.

My history book is regularly punctuated with BOOM. Perhaps you have the toddler version.

From the FP article on China:

"Declining fertility pushes up the age of the citizenry and shrinks the percentage of people in the workforce, and so impedes growth."

I hate economists with the heat of a thousand suns.

What Mr-Smartypants-with-the-Nobel isn't accounting for is overpopulation, underemployment, and the bell curve distribution of IQs. Geez, looking at the author's bio in Wikipedia gives me the shivers. Whattaidiot.

We all can't be brain surgeons or knowledge workers. A service economy generates a lot of free GDP -- the piano teacher teaching the accountant's kids -- but at the end of the day we all gotta eat and use stuff, and this stuff has fixed limits of supply and creation.

The more crowded we get the more our GDP is siphoned off into land value and the rentiers who parasitically subsist from it.

I think the small sizes of the Scandinavian economies are the secrets to their successes, if we can call it that.

At any rate, if I were looking for a stable kingdom I'd take a lot of land and few people over many people and no land any day.

even if those bubbles prove a point, you do realize singapore is not within the boundary of China right?

Singapore is the transit hub to Asia and it makes sense to park ships there. The crews can be shipped in from neighboring regions and ship service infrastructure is ready-to-go there. IOW, ships parked there are waiting for loads to take to or from China.

how will China's economy grow if the rest of the world tanks? All the wealth are concentrated in the cities and the ruling class in the rural areas. Most of china is still dirt poor. As impressive as the cities have grown, the vast majority is still too poor to consume most of that it produces.

SF ace says

As a investor, I need to know these trends. A friend who works in Sequoia Capital has a bigger VC team in China and India, than Silicon Valley. They are literally funding all their new money there whereas in years past all that VC money went to local startup here.

A sad fact indeed. What is more telling the current local funding is going to 'game' consumer toys vs real tech products which the valley was know for decades ago.

I didn't think I'd wear this hat enough for it to need a wash, but here we are.... again.

DOW in recent days is amazingly desperate.

"We're seeing a strong rally today on hopes that there will be some sort of lifesaver for Greece's debt problem"

DOW index went up 200 points not because the economy there is alive and going strong, but because there still is the oxygen tube attached in the nose.

WTH is this?

seaside:

The problem with your analogy is that we won't be ripping out any oxygen tube. There won't be anyone turning off the equipment and allowing things to blow up. The government will do whatever is required to keep things going. There will be those trying to profit from it, but in general nothing major is going to happen.

If earning as really just based on the fact that companies down sized, to get back to profitability.. well isn't that normal business? There might be extra employees out there now looking, but those business are health and strong again. Perhaps many won't have substantial growth, but they are in a healthy position. They aren't going to roll over and go bankrupt.

I don't think the markets have substantial reasons to go up to 14,000, but on the flip side there also isn't a huge reason to drop to 6,000 either. Everything seems decently stable right now, with few people showing massive losses, and few showing massive profits.

The comment on china having an aging propulation, without the people to replace them due to fertility rates -- what a load of crap. They have 800M in rural areas waiting for their turn to get into the country. Their might be fewer children in the cities, but there are plenty waiting in rural areas for their chance to move in and take up the slack.

It's not my analogy. I copy & pasted the quote from CNN article.

http://money.cnn.com/2010/02/09/markets/markets_newyork/index.htm

Bailing out a nation, and market responding this sensitive on something like that shouldn't be happening when everything is ok. I think this qoute alone tells us that the market as whole is not stable enough to be ok, and we're still far from recovery.

Of course, they'll do anything to prevent collapse, just like US did to banks. They won't go down and out, but they knew they're on long and rough road to recovery. That's a part of normal business, and is good news. But is it good enough to boost DOW up 200 points in few hours? Not just Greece, but Spain, Portugal, Ireland, and even England is not in good shape, and DOW will go up several hundreds points each time when those nations gets their own bailout? This made me chuckle thinking WTH the DOW is doing.

It is embarassing when we think about strong economies like some european contries, US, Japan and china is going belly up altogether at the same time.

I too don't see the reason why DOW has to go down to 6000 or shoot up to 14000. My bet is about 9000 and stabilizing right there for a while and going up slowly though, that's my opinion only. I don't know about chinese economy. It ain't look rosy to me especially if there's any change in their currency exchange system, or if US imposes hefty tariff on chinese goods, or if japanese falls further down. We just never know.

Almost every country has "something" happening at all times that looks drastic and immeasurable. When all the big events clear up, lower level ones are elevated to drastic proportions. The tug of war will always be there, people plugging holes will always be there.

What really screws up an economy is several large melt downs happening at the same time. The housing bust would be a good example of loans, housing problems, job losses due to housing problems, wars being fueled, stock market crash, etc. Right now there are several long term issues, such as debt sitting on our plates, but nothing immediate and impending. One or two issues at a time can be cleaned up. I suspect over the next year, arm rates, foreclosures, and more banks going under will cause blips, but things don't look terrible.

I'm guessing about 9K is a good number as well. 200 points up or down isn't major. 5 days of 200 ups, matched up with 2 500 point down days. We'll just grind away, going up and down for the next 2 years. A potentially good time to make some good money by buying on the large swings, since we're going to keep swinging back to about 9-10K each time.

China isn't going to change it's currency. It would balance out over time, but it would put many people out of jobs, as the chinese markets had to quickly change gears and change their customer bases to point their products at the best leverages countries for them.

Countries aren't likely to tariff them, too many countries need those imports, too many different sectors would be effected in so many unknown ways, that it wouldn't be worth the risk to see how people would cope. No one is add anything that would further rock the boat they are in, even if it seems that they might do some good with it, the potential unknowns could be terribly expensive right now. We have enough potential boat rocking events coming up in the economy, no one is going to add to them.

E-man says

The correction is almost over. Start building your position if S&P hit 1020. If it drops to 970, load up the truck. These are some good names you may want to look at buying on this pull-back: AAPL, GOOG, PCU, SID, GDX. For longer term, GS, COP, BP are relatively safe bets.
If S&P breaks below 860, GET OUT!

I wouldnt load up. A better move is to add your pre-arranged 5% from cash. Just average in keeping your risk in losses low if S&P drops in short term. You avoid the knee jerk reaction of getting out.
My earliest purchases ,which I still have, date back to the mid 80s, with no reason to get out.

So the funny thing about "anti-government" Randists is watching them scramble to rationalize. On the one hand the best thing government can do in ALL cases is get out of the way. Except of course if we are talking about a day when the markets are getting slaughtered, in which case the most critical thing is for government to do SOMETHING DEAR GOD ANYTHING to bring the indices up a few points. Even Larry Kudlow on CNBC frothing at the mouth about it Greece must be rescued by the EU or we'll all perish.

seaside says

DOW index went up 200 points not because the economy there is alive and going strong, but because there still is the oxygen tube attached in the nose.

WTH is this?

meh... it's better than nothing.

E-man says

^You’ve been around longer and have seen things that I haven’t seen. Sincerely thank you for the advice :o)

Flip side, you will see things I will never see.

Hat is on again today as it goes plus and minus of 10K: