No Cuts, No Butts, No Coconuts, by Billionaire Gross

What does a government do that is too absorbed in the moment and fails to alert its citizens to the perils ahead? Cut in line, I suppose. It devalues its currency, it reflates/inflates its economy, and because that doesn’t create real wealth, it recites the mythology of a bygone era, of a “shining city on a hill” so that its citizens believe they’ve never had it so good.

Correct. Maintain US Dollar shorts and increase your allocation to international stocks.

The Unhappy Life of News Junkies, by David “I already have my yacht” Dreman

Hedge fund managers, day traders and swarms of other quick-buck types trade instantly to get the edge from news flashes. Maybe you can make money trading on these moves, but only if your transaction costs are nil and your computer is ten seconds faster than every other trader’s. Neither condition holds.

Stay away from the trading trap and stick to fundamentals. Buy stocks that are cheap and whose outlooks are good. Ignore the weekly wiggles in prices. Think of long-term risks and long-term rewards.

[Use BugMeNot to log in to Forbes… not only does Forbes stick ads within the text of their articles (an unforgivable breach of etiquette), but they also require “registration” at their site: how very 1998. Pick up the clue phone, you fools! Hello, Bono, it’s time to make some changes!]

Solid buying all day long … there isn’t a REIT fund that isn’t trading at an all-time high.

This quote from Francis Chou in this article is notable:

“When you know you’re buying a good company, it’s like getting a straight flush. They’re hard to find, so when you’ve got one, you have to capitalize on it.”

When reviewing his portfolio holdings, I see some so-so stuff, several things with decent returns, and then there’s Sears Holdings (Kmart). Kmart was his straight flush. Average cost $4,101,890 and current (June 30, 2006) market value of $23,142,677. Somehow his Asia Fund and Europe Fund both hold Sears Holdings vastly improving their performance, which would be pretty crummy without SHLD. Chou said about his Kmart buy:

“I calculated that the real estate holdings alone for Sears were worth more than $40 or $50 (U.S.) a share, and I was able to buy it for just $25 a share. Later, the analysts said the real estate was worth more like $75 to $100 a share.”

The lesson is clear: you only need one prize swine for every truckload of pigs you purchase.

- via Controlled Greed -

I’m a big fan of Belle & Sebastian, a group of seven misfits from Scotland. As always, if you can recommend any music in the same vein, please leave a comment.

Belle & Sebastian — Funny Little Frog (4.5MB mp3)

Funny Little Frog

Honey lovin you is the greatest thing
I get to be myself and I get to sing
I get to play at being irresponsible
I come home late at night and I love your soul
I never forget you in my prayers
I never have a bad thing to report

You’re my picture on the wall
You’re my vision in the hall
You’re the one I’m talking to
When I get in from my work
You are my girl, and you don’t even know it
I am livin out the life of a poet
I am the jester in the ancient court
You’re the funny little frog in my throat

My eye sight’s fading, my hearing’s dim
I can’t get insured for the state I’m in
I’m a danger to myself I’ve been starting fights
At the party at the club on a Saturday night
But I don’t get disapproving from my girl
She gets all the highlights wrapped in pearls..

You’re my picture on the wall
You’re my vision in the hall
You’re the one I’m talking to
When I get in from my work
You are my girl, and you don’t even know it
I am livin out the life of a poet
I am the jester in the ancient court
You’re the funny little frog in my throat

I had a conversation with you at night
It’s a little one sided but that’s alright
I tell you in the kitchen about my day
You sit on the bed in the dark changing places
With the ghost that was there before you came
You’ve come to save my life again

I don’t dare to touch your hand
I don’t dare to think of you
In a physical way
And I don’t know how you smell
You are the cover of my magazine
You’re my fashion tip, a living museum
I’d pay to visit you on rainy Sundays
I’ll maybe tell you all about it someday

I don’t follow the Rydex Russell Top 50 (XLG) that closely since it’s very illiquid, but it’s a pretty interesting ETF:

The investment seeks to replicate as closely as possible, before expenses, the performance of the Russell Top 50 index. The index consists of the common stocks of the 50 largest U.S. companies based on total market capitalization as represented in the Russell 3000 index.

So it holds the 50 biggest of the big cap stocks: Exxon, GE, Citigroup, Bank of America, Microsoft, etc. You can see from the chart below that the XLG began to outperform the S&P500 in late June and it has been a straight shot up since then. It’s pretty easy to see where the institutional money is going if you bother to look.

The market was weak until a massive buy program kicked in at 2 PM sharp. Consumer Staples galore on the new highs list.

I noticed this full-page ad for the Tomson Riviera development in Shanghai while reading the July 15 issue of The Economist, but didn’t blog about it at the time. What caught my eye then was that this 44-storey tower has only 74 apartments which range in size from 406 to 1,240 square meters. I’d guess that the average Chinese family lives in an apartment around 60 square meters.

Anyway, I bring it up because my friend Maria sent me this Guardian article which reveals [emphasis mine]:

Few views of China’s spectacular economic growth could be more impressive than the one offered by the property company Tomson Riviera in Shanghai. From the top floor of its sleek, luxury apartment blocks in the Pudong development zone, you can, say the brochures, look out across the Huangpu river at one of the world’s most futuristic skylines.

The panorama does not come cheap. At 180m yuan (US$23 million) for a penthouse, this is the most exclusive residential complex on the mainland. Unfortunately for the developers, it is also the emptiest.

Since it opened in October last year, the waterfront development has failed to attract a single buyer for any of its 74 apartments. The situation is so desperate that Tomson has decided to put a second block out to global public tender.

Even so, analysts say, the price is unlikely to rise for several years. They blame it on an optimistic initial valuation of £8,200 a sq metre. Others blame a housing market swamped with swanky apartment blocks and luxury villas.

Yeah, I’d say asking around 125,000 RMB (US$15,500) per square meter is a tad on the high side, just a wee little bit optimistic. The ad is trying to appeal to “investors with vision,” but you’d have to be blind crazy to pay their asking price.

Pretty good, solid tone with continuous buying more or less all day. Any day trades taken on the long side had a broad market tailwind behind them. Oil has been very weak of late … another indicator of recession?

I saw V for Vendetta the other night; it was crap.

From David Denby’s review:

“Vendetta” doesn’t have any ideas, except for a misbegotten belief in cleansing acts of violence. How strangely doth pop make its murderous way, as V might say. The quarter-century-old disgruntled fantasies of two English comic-book artists, amplified by a powerful movie company, and ambushed by history, wind up yielding a disastrous muddle.

And Stephen Hunter, the best movie critic around, gets the last word:

“V for Vendetta” is a piece of pulp claptrap; it has no insights whatsoever into totalitarian psychology and always settles for the cheesiest kinds of demagoguery and harangue as its emblems of evil. They say they want a revolution? Then give us a revolution, one that’s believable, frightening, heroic, coherent and not a teenagers’ freaky power trip.

V for Vendetta (2006)