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cato

What's your take? Tell us how you would tweak the EMH definition. Paul The Rational Expectations (Robert Lucas) formulation of EMH makes essentially the same point but is much more defensible (and accurate, I believe). That is that markets are not "always right" (per Fama), they're just n...

cato

When Anastasius died, the imperial treasury had the biggest surplus in centuries, despite the 3 expensive wars during his reign. The roman army was mainly financed by plundering newly conquered areas. So the military costs for Rome would logically be higher in peaceful times. By Anastasius' time, t...

cato

Boy, guys are charitable. I really view this as a pre-election gift from the "ruling class" in both parties to the voters. Didn't they do that sort of thing in ancient Rome? Well sort of. There is a very clear Roman precedent for the Laffer curve, incidentally. Anastasius I (emperor in Co...

cato

GMO predictions are popular on this board. But, I have not seen any follow-up on the accuracy of those predictions. Does anyone have any information on whether GMO predictions are any better than chance? Rick Ferri http://www.cxoadvisory.com/gurus/grantham/default.asp "Based on our judgment, J...

cato

I knew that you can't deduct margin interest when you buy tax-free securities. I didn't know that you couldn't borrow to buy CDs &etc. You can -- they're just not letting you borrow against them. If you have sufficient marginable assets (stocks, bonds, ETF's, etc.), you could borrow against the...

cato

Thanks for the responses all. I knew that you can't deduct margin interest when you buy tax-free securities. I didn't know that you couldn't borrow to buy CDs &etc. Thanks, MT, but I don't think I'll be doing anything with futures or options at this point. I just thought if there were a complete...

cato

I'm currently on about $200,000 of margin at Fidelity, at a rate of 7.25%. The margin rate is only 4.25% if your margin balance is over $500,000. Given my situation, wouldn't it make sense to borrow an additional $300,000 and just buy Fidelity's US Govt reserves MM fund with it? That fund currently ...

cato

No. You can't short or buy Put options on the stock. Whether you arrange for a family member do so in your behalf is an open question.

In the case of my company, I did buy Puts on an index that correlated .99 with the stock -- which is perfectly legal.

-cato

cato

Just out of sheer curiosity what makes this post and the comments that follow any more correct than the opinions given on financial porn stations such as CNBC? Only difference I see is that many of those people typically more experience and actually work in the market. Just an observation. :twisted...

cato

I opted for ETFs, partly because I want to have everything in the same place and be able to tax-harvest losses. I'm now having second thoughts. The TLH is a lot harder than you might think. Trying to work two trades simultaneously and not have one run away from you isn't simple. This is further comp...

cato

Tramper Al wrote:Market order? Today of all days? For a TLH transaction which must be paired (timed) with its other side?

We're talking about 1.5 million trading volume with a bid/ask spread of 1-2 cents. It's more dangerous to go with a limit order and have one side run away from you.

- cato

cato

It's amazing how our poll majority vote may be close to the actual percentage loss at the close due to the Fed funds rate cut . Collectively we seem to be a pretty accurate bunch of educated investors . :) I'm going to bet on the Ken Fisher "look for the holes" in the normal distribution ...

cato

I thought I'd take advantage of some price drops to do a little TLH today. I put in a market order with Fidelity. For 25 minutes, I couldn't get status on it. Then it was shown as pending. Another 30 minutes later it was shown as partially filled (about a dollar off the price when the order was plac...

cato

Fed pandering. The specter of Moral Hazard. The Fed can temporarily avert big market declines by lowering nominal rates -- Just as I can stop my two year old's tantrum by giving him chocolate ice cream. Neither strategy is good for the long term.... I'm also annoyed at losing the opportunity to do s...

cato

Looks like the Fed may have saved your bacon. I hope you'll take the opportunity to re-assess your "strategy."

-cato

cato

Correct me if I'm wrong..but does that graph indicate that its possible (if you are lucky) to buy SCV for less than the intrinsic value? Yes, it is an overlay of SCZ (not SCV) and its intrinsic value and yes you could buy it a discount. BUT....... consider most of the component stocks will not be t...

cato

PlainJane wrote:You also forgot the entry for up!

OptimistJane

Shhh! I'm trying to get the market to humiliate me, by going for the one option that I didn't provide.

cato

stratton wrote:You forgot the entry for "don't know."

Paul

That's because nobody does know. This poll is only soliciting wild-assed guesses. If I wanted the opinion of somone who thought they knew, I'd go to a premium brokerage house or a hedge fund.

cato

I'm going to put my money on 3%.

Either people will come to their senses or there will be Govt action (I'm not in favor of the latter at this point).

cato

I'm toying with the thought of some TLH here too. Be careful when you're dealing with high volatility and extremely low volume! (Don't try it tomorrow) Not only are you likely to get killed on the B/A spread, you may be selling way below the intrinsic value. Check out the last 5 days of SCZ: http://...

cato

[quote="Gekko"]futures now up???

Nope. Notice the levels. That's from the close of last night's/this morning's futures session. They're still way down. Just not as much as earlier today.

- cato

cato

The events of the last few weeks have destroyed my belief in efficient markets. Markets may be somewhat efficient in the long term, but in the short term they more share characteristics of a pyramid scheme. You really can't ignore money flows. There is way too much volatility in the system to possi...

cato

Most previous global market "crashes" have followed waves of unbridled optimism and extreme valuations, e.g. Japan in 1990 and the "dotcom" boom in 2000. Are we seeing anything like that today? When I look around, I see: * S&P yielding over 2%. And this isn't just the banks. ...

cato

Regarding rate cuts, has anyone read this article in Fortunate Magazine arguing that another rate cut is a bad idea? http://money.cnn.com/2008/01/18/news/economy/cure.fortune/index.htm?postversion=2008012107 I agree. Easy money is no more effective in controlling economic growth than chocolate ice ...

cato

Why aren't MLPs considered a separate asset class? Why are REITs the only sector that gets to be a separate class and is therefore coveted by diehards? It's a puzzle to me. REITs sometimes move independently of the equity markets, but I think a lot of that has just been in the last decade. Compare ...

cato

Until recently I was about 70% in pipeline MLPs (I'm now diversifying). Here's how I've done in the last 3 months: BPL: -11.8% EEP: +.2% EPD: -2.6% KMP: +7.4% OKS -3.6% TPP: -6.0% These numbers will improve when they pay a 1.5-2% dividend in a couple of weeks. By contrast: S&P: - 13.7% RUT: - 18...

cato

On January 8 the 50-EMA crossed down through the 200-EMA on the S&P 500 daily chart, generating a long-term sell signal and declaring that we are now in a bear market. This was confirmed this week when the weekly 17-EMA crossed down through the 43-EMA. Let me say that these signals are not 100%...

cato

- cato Citigroup delenda est. :? :? Awesome. I think that's going to to be my sig. line now. Back in 1980, I was one of a few Chicago undergrads who got to have lunch with Walter Wriston. I still remember him telling us the line that he will be remembered for: "a country can't go bankrupt.&quo...

cato

As I mentioned in another thread, the incorporation of owner equivalent rent (30% of CPI), made inflation look lower than it was during the housing boom and will now make it look worse than it really is during the bust. Indeed, the gain in the CPIs Housing component (i.e. owner equivalent rent + oth...

cato

http://www.youtube.com/watch?v=v5Xkv5tjXMw

:lol:

- cato

cato

If I had to guess, I would say we will experience significantly higher inflation in the coming years. M3 growth (as best we can see it from un-official statistics) has skyrocketed. I also think the official inflation statistics will overstate true inflation going forward. During the housing boom the...

cato

The real estate market doesn't "clear" in a general sense the way equity markets do, so EMH doesn't necessarily apply.

The real estate Futures market does clear, though it's not super liquid at this point. It says that prices will be 20% lower. So I guess I agree with that....

cato

matt wrote:. . . . He cloaks the strategy with this "constant equity exposure" idea, but there is one true, simple reason behind what he is doing: greed.

The rest of us, on the other hand, invest out of selfless goodwill towards others.......

-cato

cato

OK. So who knows what rate is used for TIPS???

-cato

cato

You have a huge stake in the company because it provides your income and you have more options coming (presumably). Therefore, the best move towards diversification is to sell it all now. So what if you take 5-10% hit because others are selling? You can capture the additional upside with your curren...

cato

I wish I still played with stocks - I'd start thinking about buying Intel if it stayed below 20. I'm still a believer in "play fund" (5% of your portfolio) to invest & time individual stocks. You just need to track it carefully so you can compare performance. If nothing else it will c...

cato

I second the Fund Manager recommendation. FM can pull your transactions automatically from just about all the major brokers and fund families. I'm still doing the trial. I will probably spring for the Pro version because I want fun stuff like Sharpe ratios and betas.

-cato

cato

They are both fine books. There's actually less overlap than you might think. Bernstein's book takes a higher level look at the general principles of, and the rationale for, intelligent asset allocation. Rick's book provides that too, but delves much more into the details of what you really need to ...

cato

Ethanol is toxic (unless you go to Brasil) -- it's not even environmentally friendly. True ethanol is not toxic. The stuff you buy in stores is "denatured" -- i.e. deliberately poisoned so you won't drink it. I use it as a solvent for removing bike tire glue. Annoys the hell out of me tha...

cato

This unfortunately happens a bit. It's a real good reason not to mess around with paper certificates. My brother-in-law neglected to trade some tech shares for a name change, they were turned over to the state of California, which sold them for about 1/10 of what they're currently worth. So that's t...

cato

I put in a limit order to sell 1000 BPL today at 49.65. I just got a notification that I sold 78 shares -- almost a dollar above the current bid/ask of 48.70/48.72 and .05 over the day's high. I'm not complaining. Tough luck for the other guy though. I wonder how that can happen. I guess it pays to ...

cato

The tool I'm playing around with now, G-Sphere, from Gravity investments seems to do most of this. It allows you to optimize on Sharpe or Sortino ratios. You can minimize Std Dev. "Semi Variance" (down-side covariance), or the probability of maximum drawdowns. It pulls historical data auto...

cato

I've been thinking about this a bit lately. In retrospect, it looks like you could make money on a bubble, knowing that it's a bubble. I certainly did on the Internet bubble. But I don't think I'm going to try again. The oddity about the last few bubbles is that many people were calling for them to ...

cato

Thanks guys, It's not so much the dividends that I'm looking for. It's just that I noticed DVY seems to have a lower P/B ratio than just about any Value fund. The other thing I noticed is that, when I run my portfolio through the Mean Variance Optimizer it signficantly drops the portfolio SD and inc...

cato

Opponent Process wrote:
she's only 31? I thought she was like mid-40's.

That article is from 9 years ago.

cato

Google "pushing on a string." Japan had effectively zero interest rates for quite a while, which didn't stop them for having a chronic recession for years.

-cato

cato

If the housing prices go down another 22% like one of you predicted.... That wasn't one of us, that's what the MARKET predicts. Personally, I don't think I'm smarter than the market. Your mileage may vary. There are some interesting arbitrage opportunities here. If someone really thinks prices will...

cato

I thought I'd resurrect this thread as I've been trying to acquire my value tilt lately. My original choice was Vanguard Value ETF (VTV). However, I noticed a couple of things: * Liquidity is quit a bit better for DVY. It has 4 times the volume and much smaller bid/ask spreads. * DVY is actually mor...

cato

Don't expect to deduct all of that mortgage. You're already in AMT territory and likely be even more so in the future. Actually the mortgage deduction is one of the few thing not touched by the AMT. What hits you is the phased out CA income tax deduction. Paul Duh. Thank you for the correction. The...

cato

Oh, and if you think your house is going to appreciate....... the all-knowing market suggests otherwise: http://www.cme.com/trading/dta/del/delayed_quote.html?ProductSymbol=SFR&ProductFoiType=FUT&ProductVenue=G&ProductType=hng The market is pricing an additonal 22% decline (backwardation...

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Re: Having Fun with The EMH

Risk free returns??

NOT a day for TLH!

Just as I feared...................

Poll: How far down will the S&P close tomorrow?

Re: more futures

Thank G*d for MLPs (and not REITs!)

Re: Some words from Cato about the markets this year.....

Some words from Cato about the markets this year.....

Sold some share nearly 2% over market and over day's high??