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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (72125)	10/16/2006 1:35:22 PM
From: ild	Read Replies (1) \| Respond to of 110194

@hedge fund regulation -- trotsky, 12:21:01 10/16/06 Mon there have been repeated attempts by the financial oversight bureaucracy to expand its powers further via introducing regulation of hedge funds. so far, these attempts have thankfully gone exactly nowhere (the most recent one has been struck down by a court ruling). allegedly this is 'necessary to avert a big systemic fund failure', but it should be clear to everyone that this is NOT what it is about. in reality, it's about increasing the State's power over how private entities may dispose of their property. you can rest totally assured that increasing regulation will achieve only two things: 1. a further erosion of economic liberty. and 2. additional costs for tax pax payers (it won't come cheap). what it will NOT achieve is 3. 'avert a catastrophic failure'. it's all a huge pile of sand anyway - the fault lies not with how private entities deal with a fiat money world - it's the system as such. this article captures many of the basic problems succinctly: theaustralian.news.com.au @housing bubble bust update -- trotsky, 11:58:57 10/16/06 Mon yes, there is, or rather WAS, no bubble, right, but there sure is a bust: "Foreclosure rates, default notices soar " "San Diego County is experiencing mortgage foreclosure rates not seen for the past eight years, two monitoring companies reported yesterday." signonsandiego.com @everybody hates the Yen -- trotsky, 11:31:22 10/16/06 Mon " Hedge-fund managers and other large speculators placed a record amount of bets the yen will decline against the dollar, according to weekly data from the U.S. Commodity Futures Trading Commission. Wagers on euro gains fell. The difference in the number of wagers by hedge funds and other large speculators on a decline in the yen compared with those on a gain -- so-called net shorts -- was 123,598 on Oct. 10, which was 19 percent higher than a week earlier. It was the second straight week of record net yen shorts. " bloomberg.com freecotcharts.com @using honest money is now a crime in the US -- trotsky, 10:27:28 10/16/06 Mon "A trendy alternative to legal tender, the Liberty Dollar, could now land coin-aisseurs in prison for up to five years, according to federal prosecutors. "Although we haven't had any of these types of cases in Montana yet, the statute says using one of these coins as legitimate money could be a crime," said Kurt Alme, assistant U.S. attorney for Montana. "It looks like if you make or attempt to pass a coin of gold or silver as current money it's a crime." Becky Bailey, public affairs director for the U.S. Mint, said prosecutors with the Department of Justice determined last month that passing off Liberty Dollar medallions as official U.S. tender is indeed a federal crime, albeit with a fuzzy threshold for prosecution." billingsgazette.net oh, so it's a 'fuzzy threshold for prosecution'? this could get interesting if it goes to court, since the accused need only produce a copy of the constitution. the court may well determine that fiat money is really the 'crime'. anyway, more proof that liberty has died - in this case, economic liberty.

To: ild who wrote (72125)	10/16/2006 2:13:18 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

Let's assume Google (GOOG: sentiment, chart, options) is truly "worth" $500 (and the writer of this piece certainly demonstrates that these valuation methodologies can be terribly flawed). Why would anyone want to own it at its current price of about $425 for the $75 upside when downside risk is clearly huge? they would own it because (IF one believes the starting assumptions) at $500 GOOG is at "fair value". that doesn't mean GOOG trades at $500 for the next 20 years, but that FROM $500 GOOG would appreciate at the historical market rate of around 11% nominal, which was a 7% real compound rate last century. so at $500 even GOOG should be a buy, or at least a "Market Perform". the problem, of course, is the ridiculous assumptions the analcysts must make to arrive at those calculations. individual investors should take heart that people on Wall Street listen to the likes of Meeker, with their pathetic fantasy analyses which presume to know what the Internet investment world will look like 10 years from now. Mutual funds such as the one run by Mr. Miller are up to their eyeballs in Google shares in fairness, it should be pointed out that Miller's Legg Mason Value fund has beaten the SPX for 15 years running--an unprecedented streak among the many thousands of mutual funds. i would be surprised if Schaeffer's record is anywhere near as consistent as Miller's. one of the things Miller has done over the years is stray a long ways from traditional value investing to buy growth franchises he thought did not properly discount future earnings growth. whether GOOG works out well for him remains to be seen. personally, i think GOOG is an overpriced advertising stock that will go down with the economy. it also seems overloved and underhated (shorted) as Schaeffer notes. even if it all works out great, i doubt it will provide a good forward return. QCOM printed $100 on Jan 3, 2000 because of all the great things that were supposed to happen to it over the next decade. well, all those great things happened and the stock is now at $40--that's a 60% haircut on nominal value and more like a 75% haircut in real terms. and investors had to endure an 88% drawdown from that Jan 2000 price just a couple years later. i think GOOG may be like QCOM the past 7 years, where the fundamentals work out great but the stock goes down anyway because it was so overvalued. that is, imo, a 95% BEST case scenario. 99% is, imo, Meeker's scenario.