Hi CB and Thread, I do not know the precise temperature here at Kailua neighborhood on Oahu Island, about 30 minutes drive across a mountain from Honolulu. The temperature is such that one is equally comfortable sleeping under a light comforter with whisper mode air-conditioning as one is under a sheet with natural outdoor airflow.
I am not clear on the time of day, because my PC is displaying Hong Kong time, and my watch is amongst my single piece of luggage. I know it is 3 hours after I got up. I know it is the afternoon, when my friend has gone off to a baseball game with his son who lives with his ex-wife 5 minutes walk away. My friend and I had a late night, going to the clubs, after dinner with another family friend of three generations. We had dinner at the Dew Drop In on Pensacola Avenue, a highly recommended family eatery serving Sichuan cuisine. The kids go to the same ‘good’ school in town, and amused each other, watched Dark Angel while dining, and the adults talked of weightier matters.
We spent the night, or morning, in town because no one wanted to be the designated driver, and all wanted to keep living. Mostly locals haunted the clubs last night, Friday. Some businesses did not bother to open due to lack of traffic. I bought a pair of Maui Jim sunglasses from the Sunglass Hut at Ala Moana Mall, and we were the only customers for the 15 minutes we were there. The in-town apartment where we recovered from our club-hopping, a 3500 sqft full ocean view penthouse on top of a hotel, was bought for 900k from bank foreclosure 12-18 months ago was priced at the short peak period for about 2mm plus, but is now illiquid and not leased due to lack of demand and relocated Japanese weddings. From the large wrap-around lanai balcony we can see half a dozen hotels along the Waikiki Beach and note that all town-facing rooms appear to be unoccupied.
Nothing is on my agenda today, and even less is on for tomorrow. This is the place and now is a time where ‘doing nothing’ is respectable.
My friends have sustained what appears to me to be consequential losses in the market place, feeling less liquid, and are looking at what appears to me to be enormously large, or even psychology altering, payment of capital gains tax no longer able to be delay. People are talking in terms of 1-2 years of cash reserve to be segregated from investment portfolio (to discipline themselves from buying the dips down to the last month’s of expense money). Acquaintances of friends are in the process of reducing monthly fixed expenses … smaller residences, less expensive schools, cancelled holidays. A Tokyo based bond trading chief pal just reneged on escrow to buy land and house in Hawaii.
My friend will speak to an upper-end real estate agent and a mortgage banker in the next week to get a sense of delinquency and default, and bank foreclosure trends and policies. I understand that the national guards who are called up for active duty cannot be foreclosed on, and their jobs must be held open for them for a while, and we are wondering what the impact is on bank foreclosure policy on their remaining customers.
On the plus side, I understand that 300 billion extra dollars is a lot of money to be pumped through the economy within 24 months. I appreciate that short term real interest rate is close to zero or even negative. I understand that certain security, defense, electronic and some infrastructure companies will benefit more from the pumping of money than others.
On the minus side, I am concerned that the consumers in the US locomotive economy have yet to give the equity, bond and real estate markets around the globe a final shove, sending it to the last leg of what may turn out to be a equally (percentage speaking) long drop downward from what we have already experience.
On the uncertainty side, we have a new complication based on an old conflict, to be resolved or not resolved until we know, when we know, if we know.
I am at the beginnings of an urge to window shop …
It is now Saturday night, after swimming, dinner and we have decided no clubbing tonight, until tomorrow night. The days some how fill up with the only task at hand, nothing and whatever, without guilt and less remorse.
Message 16430550
To Mark’s comment, <<You want the US to expend its resources empowering others? … resentment towards all things American?
If you want stability and a level playing field, I suggest you pony up some of your own PGMs to foot the bill>>
You are right that the responsibility is not exactly to be envied, and the benefit is costly. I personally do not resent anything American, enjoying the innovations, openness, hedonistic tendencies, and fun. The political and geo-political BS are problems for others to curtail and take care of, by and by, attrition and exhaustion, or enlightenment and understanding. I (we) just need to ascertain the risk premium associated with the process, and price it into our portfolio allocation equation.
My Hawaii-based buddy and I had a conversation about the gold vs. platinum hedge. Gold is a better hedge, platinum is a better investment, both will likely maintain longer-term value, but each will shine at different phases of the downturn and recovery, if they shine at all.
Message 16430976
To Elmat’s comments, <<Look to Israel ... Marcos, Suharto … were created to protect US interests. It didn't work either.
… need … dilution of power … dilution of capital … too powerful country … not good … Western Europe … ties binding them economically to many countries.>>
America had picked some very unsuitable, and often incompetent friends over the years, all to fulfill various requirements to fight an ideology that could have been more effectively countered via trade and commerce. Now, with victory over communism essentially a done deal, longer lasting and more threatening and intractable problems re-emerge. I would say one too powerful country is no good. Two is better, three is best, and four would be superfluous. I recommend the Chinese classic book titled “The Romance of the Three Kingdoms” and treaties on “The Spring and Autumn and Warring States Period” for a quick read on Chinese geo-political thinking.
I view the aggregation of the European States into the EU as a positive event, to be encouraged and welcomed, warts and all. I do not believe dilution of capital would be a good thing, and especially in the context of diluting power, which is a good thing, if not done to anarchical excess.
Message 16431264
On Bicycle’s comment, <<… China observations interesting, and wondered about their accuracy. I've never visited China.>>
Most first-time American visitors I know to China are surprised by what is taking place there, sometimes flabbergasted, and see the developments generally in an upbeat and optimistic light. The place is on the move, improving, and may prove to be beneficial for all. Lot’s of bugs and wrinkles to work out, given the scale of the issues, and the weight of the problems.
Most repeat American visitors I know are shocked by the speed of progress and the rapidity at which failing initiatives are abandoned, and alternative solutions tried.
Message 16431856
On DAK’s observation, <<Circle of life.... puffed up assets get marked down until someone is willing to buy [steal] them. A wise sage once said: "I wait until the money is lying right there on the floor, then I go pick it up." Now that the manic chasing of shares has ended, and the downturn is gaining momentum there will be plenty to pick up for those that can still bend over. I've got bushel baskets in the garage.>> and
Message 16432403
CB’s topic, <<Assuming, for the sake of discussion, that the economy was in the process of turning around, what stocks would you invest in?>>
I do not know, but have some random thoughts, backed by no conviction at the moment (I am assuming something else will go wrong, be they tax sales, another terror attack, financial accident, more firings resulting in seizing up of consumer spending, whatever) … with some equities aggregated starting now, and some later, at lower still prices … assuming less dependency on ME oil, economic recovery, some trends …
Cendent – asset free ride on economic recovery, corporate recovery;
Energy infrastructure plays – GE, ABB, and eventually, even Enron, assuming electricity and electrical and gas transmission will go in some way to ease dependency on the ME;
Oil service plays (Halliburton, Schlumber whatever);
Financial services (American Express, MSDW, Merrill Lynch, Citi Corp);
Paired trade on long China vs. short Japan/Korean steel companies;
Paired trade of continental (i.e. Marriott) vs island resorts (i.e. Club Med) - long continental, short island, followed by reverse of paired trade;
Buy stronger airline starting now, and unwind at first profit;
Other transport companies, when anticipating recovery;
REITs – Newhall Land for gated and planned communities under nice sun and Catellus Property owning Bay Area wharf properties, and Castle & Cook Properties (?) owning Lanai and other Hawaiian properties;
Insurance companies, starting with a little of AIG now;
Walmart, Gap, popular retailers, and some luxury goods dealers like Tiffany and such;
Age care - ?;
Entertainment companies – AOL Time Warner, Vivendi; and
Information infrastructure companies – ATT wireless, SBC, Comcast, QCOM (yes, Maurice, soon I will buy even this!), MSFT, etc.
Top two ADRs from each country represented on NYSE, or top two companies directly from each and every overseas stock market (i.e. Ayala Corp and San Miguel from Philippines, etc);
Impala and Anglo Platinum – assuming fuel cell rollout, hard drive and auto recovery; and
For abracadabra frenzy value, probably look at some gene (food, medicine) companies, rather than the CSCOs and other box-makers.
Like I said earlier, random thoughts backed by zip conviction at this moment.
Now it is 12:00am in Hawaii, and it is time to go out and play.
Chugs, Jay |
