Archive for May 2011

Ed’s Daily Summary for May 31st   4 comments

DRR: -0.62 to $38.31 (-1.59%, -5.13% overall)–bought at $40.38
EMLC: 0.24 to $27.50 (0.88%, -0.25% overall)–bought at $27.57
GPE_PA: -0.01 to $25.29 (-0.04%, -0.02% overall)–bought at $25.295
PFF: 0.02 to $40.09 (0.05%, 2.27% overall)–bought at $39.20
SPXU: -0.48 to $14.97 (-3.11%, -5.43% overall)–bought at $15.83
TMF: 0.24 to $38.14 (0.63%, 12.18% overall)–bought at $34.00
VGLT: 0.13 to $62.28 (0.21%, 1.73% overall)–bought at $61.22

OVERALL: -0.33%

I am just glad this wretched month is over, although I am NOT looking forward to doing my monthly portfolio summary tomorrow. It will be ugly, and I mean Clara Peller in a thong ugly…

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Posted May 31, 2011 by edmcgon in Portfolio

Rhyming History   11 comments

Mark Twain is alleged to have once said, “The past does not repeat itself, but it rhymes.” While the United States may not suffer from Visigoths sacking Washington, the U.S. does seem to be following a similar economic path, which in Rome’s case left them vulnerable to those Visigoths.

The most obvious example of similarities between the two countries is the currency devaluation:

The chart above (from Thunder Road Report via Zero Hedge) shows both Ancient Roman inflation and U.S. inflation, both due primarily to currency devaluation.

In brief, Ancient Rome devalued it’s currency by using less and less precious metals in it, until the currency was nothing more than a fiat currency. The inherent problem with fiat currencies is governments tend to get seduced by the ease in which they can just print/coin more money for their spending. The difference between a dictator printing more money for his own selfish use, and an elected or appointed government body doing the same is moot, as the results inevitably end the same way: The people lose faith in the value of the currency.

In the U.S., something similar is happening, but as the chart above shows, it is not too late to stop the inevitable from occurring. But you only have to listen to the political discourse to recognize the American people are no different than a selfish Roman emperor, unacaring about the value of the currency in their own quest for “more”. So the sycophantic politicians will provide more to their constituents, or else lose their jobs.

By the way, if you think the “independent” Federal Reserve will not allow this to happen, consider what they have been buying with QE2: Federal debt (treasury bonds).

I bring this up as a reminder that the end of QE2 is mainly the time to prepare for QE3, which will be inevitable because the politicial elite will be unable to stop spending, making hyperinflation and the devaluation of the dollar just around the corner.

Who would have thought “Visigoth” rhymes with “Bernanke”?

Posted May 31, 2011 by edmcgon in Economy, Editorial/opinion

Ed’s Daily Notes for May 31st   27 comments

1. Quote:

“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis…Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”–Mark Mobius, chairman of Templeton Asset Management

2. The latest on Greece: It’s a mess, although the markets are optimistic. Now all they need is private holders of Greek debt to “voluntarily” extend their repayment schedule, and for the Greeks to accept more austerity measures. I put the odds on that working about the same as my winning lottery ticket…

3. The hits just keep coming for Japan: Rising unemployment and a potential debt rating downgrade. For some reason, I am picturing Lloyd Bridges playing the Japanese Prime Minister and saying something like, “I picked a bad day to quit amphetimines…”

4. Now HERE is an example of a bad investment: The California Public Employees’ Retirement System (Calpers) bought some land in Arizona back in 2006 for $400 million. The land was sold last week for $32.5 million. I can’t speak for any of you, but that definitely makes me feel better about every bad investment I ever made.

5. It is jobs week on the economic reporting front, capped off by Friday’s unemployment report for May.

6. What is it about bankers and New York hotel maids? This is starting to sound like a bad joke.

Posted May 31, 2011 by edmcgon in Economy, Market Analysis

Memorial Day Open Thread   52 comments

UPDATE 5/30/11: Just a reminder that the U.S. markets are closed on Monday, May 30th. I will resume posting on Tuesday.

My portfolio is down a tiny fraction right now, but I am going to call it an early weekend, since I don’t really have any plans to buy anything today. I actually would rather see what happens on Tuesday before deciding anything.

Happy Memorial Day weekend folks! Although it doesn’t have anything to do with Memorial Day, I thought for this weekend’s open thread (where you folks can discuss any topic you like, just keep it clean and civil), I would share one of my favorite Marx Brothers scenes, this one from the film A Day at the Races:

Posted May 27, 2011 by edmcgon in Open Thread

Ed’s Daily Notes for May 27th   59 comments

1. PayPal is suing Google for their new plan to allow for payments over smartphones, claiming that Google stole their idea. Of course, the fact that Google’s current “vice president of payments” spent 9 years with PayPal is just a coincidence…

In better news for Google, they have “doubled the number of video ads that it places on partner sites in the past year, a sign it’s making headway in a push to expand display advertising.

2. Apple pc users now have access to something which Windows users have enjoyed for years: scareware, those nasty little programs which tell you your computer is infected with a virus, and if you pay them, they will get rid of it. Welcome to the 21st century Apple users…

3. Remember the budget President Obama submitted in February? The one which did NOT include debt payments? It died in the U.S. Senate, by a vote of 97-0. As Chico Marx once said, “It’s anonymous!”

4. “The global recovery is gaining strength and is becoming more self-sustained”. This is a statement from the G-8 meeting in France. (The G-8 includes leaders from the U.S., Russia, France, the U.K., Italy, Germany, and Canada.) But with statements like that, the G-8 is obviously being run by Baghdad Bob…

Of course, the world economy “gaining strength” must be why U.S. treasuries are doing so well…

5. As if there aren’t enough worries in the world now, let us add Chinese drought to them. Although good for crop prices in the U.S. and Europe, there is no guaranty the U.S. and Europe can provide enough food for China if the Chinese drought continues or gets worse this year. The tenuous political situation in China could get MUCH worse if they have food shortages. If we ever needed a reason to end our silly corn ethanol subsidies, this is a darned good one.

Posted May 27, 2011 by edmcgon in Economy, Market Analysis

Ed’s Daily Summary for May 26th   10 comments

DRR: -0.32 to $39.80 (-0.80%, -1.44% overall)–bought at $40.38
EMLC: 0.12 to $27.15 (0.44%, -1.52% overall)–bought at $27.57
GPE_PA: -0.06 to $25.29 (-0.24%, -0.02% overall)–bought at $25.295
PFF: -0.03 to $40.01 (-0.07%, 2.07% overall)–bought at $39.20
SPXU: -0.22 to $15.63 (-1.39%, -1.26% overall)–bought at $15.83
TMF: 0.94 to $37.97 (2.54%, 11.68% overall)–bought at $34.00
VGLT: 0.42 to $62.09 (0.68%, 1.42% overall)–bought at $61.22

OVERALL: +0.29%

Posted May 26, 2011 by edmcgon in Portfolio

Sell PowerShares DB Crude Oil Double Short ETN (DTO)   Leave a comment

When you’ve had a double short for 9 days and it’s done nothing, it’s time to eject the dog. That is why I am selling PowerShares DB Crude Oil Double Short ETN (DTO) today. Details to come…

UPDATE: I sold it for $46.66. The final line:
DTO: +0.56 today, -1.89 overall to $46.66 (+1.21% today, -3.89% overall)–bought at $48.55

Posted May 26, 2011 by edmcgon in Portfolio Moves