Here are two freebies for Wednesday, April 30. The details for these set-ups, in addition to the details for all the ideas from April, can be reviewed here:
I tried to pull the “busy young executive” schtick on a “customer relations representative” named Jody. She said I had already enjoyed two 60-day extensions and all she was able to offer now was $20 off the subscription price (recently raised to $119). I said I’d renew for $59. She couldn’t do it. I cancelled. Jody regretted losing me.
Everybody and his grandmother has been watching the key Fibonacci retracement levels in gold: $883.55 (38.2%), $837.47 (50%), and $791.40 (61.8%). If $883 fails then $837 should hold things. If $837 fails then $791 is surely in the cards.
The problem with guys like Jim Sinclair is they get religion and lose their objectivity. One of the most important traits that all good traders share is their agnosticism, or you could say, flexibility. You never want to get locked into one world view and start ignoring what the chart is telling you.
Related: Calling the Top in Gold… Again, March 22, 2008
Jeremy Grantham engages in some armchair quarterbacking and fairly vicious Greenspan bashing in his latest Quarterly Letter (PDF). There are a few good bits within his rantings, including this one:
“… the two great economic setbacks of the 20th Century – the 1929-34 Depression and the rolling depression in Japan since 1989 – were both preceded by major asset bubbles and speculation. Milton Friedman and his troops can maintain that this suggested relationship between bubbles and troubles is nonsense and that all that was needed was good monetary policy. My response is that this view represents a touching faith in economic and financial theory of which tricky humans make a mockery.”
But Grantham has an even more touching faith: the Fed has the ability to move against the formation of major asset class bubbles, assuming they can accurately identify those bubbles as they form. That’s an idea that deserves to be mocked.
Prison For Tarnished Chinese Copper Trader
“Liu thought the price had peaked in early 2004 and would soon turn south. He reversed that call by selling short … He was wrong. Market prices continued to climb. He tried to solve the problem by running away. Liu fled soon after copper prices passed the benchmark US$3,000 per ton in early 2004. His supervisor, however, persuaded him to return to work.
Liu came back and tried to recover the losses. But like any desperate gambler, he chose to increase the stake … Copper shot up to US$3,700 per ton by October. Liu disappeared again. And SRB was left with short positions on 200,000 tons, holding a paper loss of US$606 million.
SRB formed a task force to tackle the crisis. A few months later, four auctions were launched to sell 80,000 tons of copper to Chinese companies … as the settlement date for most of positions approached, the task force shipped 66,000 tons of copper to LME’s transaction warehouses in Singapore and South Korea.
According to the court, all the short positions Liu built were closed by April 2007. To settle the deals, SRB released 133,000 tons of reserve copper for auctions and deliveries.
Chinese officials argued that the government was only responsible for half the debt to overseas securities firms that loaned money to Liu, since he had forged the loan documents.”
The numbers don’t add up, but it sounds like the foreign brokers were left on the hook for as much as 67,000 tons? Ouch.
– via niubi –
Related:
How to Lose Several Hundred Million Dollars, May 10, 2006
Copper, Phelps Dodge, and the Elusive Liu Qibing, January 28, 2006
Checking Up on the Liu Qibing Squeeze, December 1, 2005
The Squeeze Goes On (Sung to the Tune of The Beat Goes On), November 17, 2005
Here’s the latest addition to my Zippo collection. I believe it was released in 1998. Isn’t she a beauty?
Related: Bling!
From this week’s interview in Barron’s:
“Many people today still don’t realize that the growth companies of this decade are global infrastructure, commodity and energy companies and not necessarily firms making deodorant, soda, diapers or drugs. We’re not buying yesterday’s winners that are now trading for 20 times earnings.
Coca-Cola is a great company but it’s a 20-P/E stock that has annual earnings growth of 10%. I want to buy the reverse, a 10 P/E stock growing at 20%. For the past 20 years, people thought the only areas of secular growth were consumer products, health care and technology. They treated economically sensitive companies as deep cyclicals and didn’t value them properly. These are the growth industries of this decade.”
True, but I still like KO, and PEP for that matter.
Letter from China: Crazy English, by Evan Osnos
Great profile of Li Yang, founder and chief evangelist for Li Yang Crazy English. Sure, it’s over 6,000 words long, but it’s worth it.
“‘The jury is still out on whether he actually helps people learn English,’ Bob Adamson, an English-language specialist at the Hong Kong Institute of Education, said. The linguist Kingsley Bolton, an authority on English study in China, calls Li’s approach ‘huckster nationalism.’ The most serious charge—one that in recent months has threatened to undo everything Li has built—holds that the frenzied crowds, and his exhortations, tap a malignant strain of populism that China has not permitted since the Cultural Revolution.
…
‘How can we make Crazy English more successful?’ Li Yang asked me, his voice rising. ‘We know that people are not going to be persistent, so we give them ten sentences a month, or one article a month, and then, when they master this, we give them a huge award, a big ceremony. Celebrate! Then we have them pay again, and we make money again.’He turned toward the assembled employees and switched to Chinese: ‘The secret of success is to have them continuously paying—that’s the conclusion I’ve reached.’ Then back to English: ‘How can we make them pay again and again and again?’”
Legg Mason Value Trust Letter to Shareholders: First Quarter 2008
“For investors who are trend followers, or theme driven, or who primarily build portfolios around forecasts, or who employ momentum strategies, price is dispositive. When they do badly, it is because prices moved in a direction different from what they thought. For value investors, price is one thing, and value is another. When prices move against us, it usually means that the gap between price and value is growing, and our future expected rates of return are higher.”
Try using that “deferred outperformance” line when you have a two-year track record, lol. To everyone I buried in my Ten Favorite Financial Stocks, don’t worry, our outperformance has just been deferred.
