Search found 225 matches

by cato
Thu Nov 13, 2008 11:59 am
Forum: Investing - Theory, News & General
Topic: Liar's Poker update
Replies: 34
Views: 9318

Hi Cato, You may know these quotes on "Carthago delenda est" already . . . . . . Pete Thanks Pete, I had not remembered these. One must bear in mind that Voltaire and Smith were writing in a day when the bases of wars were typically petty squabbles among royals, many of whom were related ...
by cato
Wed Nov 12, 2008 8:50 pm
Forum: Investing - Theory, News & General
Topic: Liar's Poker update
Replies: 34
Views: 9318

but he must have done something right and had some skills and some talents to get into that position and get paid that much while at the firm. He went to Princeton, got a BA in history and then got a masters degree in economics from the London School of Economics. And his father was a corporate law...
by cato
Mon Nov 10, 2008 5:14 pm
Forum: Investing - Theory, News & General
Topic: Help me evaluate this secondary TIPS offering
Replies: 28
Views: 4976

I believe that is called a principle trade, and it is a big conflict of interest. The guy you call acts like he's getting you the best price but they if they are on the other side of the transaction the spread could be 3 to 5%? Not to be nitpicky..... but it's a "principal" trade and it's...
by cato
Sat Nov 08, 2008 5:06 pm
Forum: Investing - Theory, News & General
Topic: Stocks rise on bad news. Is this the bottom?
Replies: 65
Views: 10950

There were 18 new Boglehead users yesterday versus an average of 25 in Feb. 2007. When the average number of new Bogleheads is less than 5 per day, then and only then, will we have reached a bottom. Maybe Taylor or one of the site admins could generate a nice graph of new users from phpBB to chart a...
by cato
Sat Nov 08, 2008 1:48 pm
Forum: Investing - Theory, News & General
Topic: DFA CEO Gives $300 Million to U Chicago
Replies: 31
Views: 5374

Sounds like a bitter liberal to me. :shock: Wow. Couldn't be further from the truth. Though, I do need to recant a little here.... I concur with mountainmoney's remarks: If somebody doesn't contribute to what we deem to be the most worthy charity or contributes in a way that glorifies themselves a ...
by cato
Sat Nov 08, 2008 11:27 am
Forum: Investing - Theory, News & General
Topic: DFA CEO Gives $300 Million to U Chicago
Replies: 31
Views: 5374

Nice that he's giving it away. Too bad it's going to a part of the Univ. of Chicago that's already fabulously wealthy and has spent lavishly on fancy new buildings. The UofC is one of the most faculty-centric universities I know of. Students tend to be an afterthought at best, and are generally cons...
by cato
Thu Nov 06, 2008 1:28 pm
Forum: Investing - Theory, News & General
Topic: Surviving Inflation In Muni Funds
Replies: 12
Views: 3039

I've created my own synthetic instrument, with a combination of Muni bond funds, TIPs and the inverse long Treasury ETF (TBT). If the value of the Munis is undermined by inflation, I should recoup it with the TIPs and the inverse treasury ETF. Going long with TIPs and short on nominal treasuries sh...
by cato
Wed Nov 05, 2008 2:10 pm
Forum: Investing - Theory, News & General
Topic: Surviving Inflation In Muni Funds
Replies: 12
Views: 3039

I've created my own synthetic instrument, with a combination of Muni bond funds, TIPs and the inverse long Treasury ETF (TBT). If the value of the Munis is undermined by inflation, I should recoup it with the TIPs and the inverse treasury ETF. Going long with TIPs and short on nominal treasuries sho...
by cato
Mon Nov 03, 2008 4:57 pm
Forum: Personal Investments
Topic: Questions re an alternative to VIPSX
Replies: 5
Views: 1853

With all the talk about TIPs here recently, I'm suprised that few people mention the TIP etf. I bought $100K worth last week. The commission was $8 at Fidelity. The expense ratio is .20%, which I believe is the same as VIPSX. The yield is also somewhat higher. Am I missing something? Is there someth...
by cato
Mon Nov 03, 2008 4:52 pm
Forum: Investing - Theory, News & General
Topic: Purchasing Individual TIPS Bonds in Secondary Market
Replies: 7
Views: 1887

Vanguard's spreads for TIPS were about 10 bp before the liquidity crunch. But there was some question that you could actually buy at the asked price. Since the liquidity crunch the 75 bp seems to be the norm at Vg. Previously I could usually buy at Schwab a little lower than Vg but not always. The ...
by cato
Sun Nov 02, 2008 5:29 pm
Forum: Investing - Theory, News & General
Topic: Fear of Deflation Overblown IMHO
Replies: 22
Views: 3604

Re: Fear of Deflation Overblown IMHO

I think it is a little overblown given our current environment of increasing supply of money. ......During the early part of Great Depression, the government dramatically increased the monetary base (the part of the money supply controlled by the government). .. Sorry, but that's no really correct....
by cato
Sat Nov 01, 2008 11:34 am
Forum: Investing - Theory, News & General
Topic: High TIPS yields - liquidity crisis or deflation?
Replies: 24
Views: 5124

We now have massive liquidity injections all around the globe, and since inflation is a monetary phenomenon how is possible to have a sustained period of deflation? Larry, A monetarist might refer to the formula MV = PQ : the amount of money in the system M times the velocity of money V (the number...
by cato
Sat Nov 01, 2008 10:55 am
Forum: Investing - Theory, News & General
Topic: Q & A - Common Misconceptions about the CPI
Replies: 5
Views: 1617

Yes, it is highly relevant for investments affected by inflation, i.e. all investments. For example, here's one extremely important point: http://www.bls.gov/cpi/cpiqa.htm#Question_2 What does this mean? They've taken great care to establish that using OER (owner equivalent rent) doesn't *understate...
by cato
Sat Nov 01, 2008 10:08 am
Forum: Investing - Theory, News & General
Topic: High TIPS yields - liquidity crisis or deflation?
Replies: 24
Views: 5124

See my post in this thread: http://www.bogleheads.org/forum/viewtopic.php?t=26833. The last YOY deflation occurred 54 years ago. All the deflationary periods occurred because of mistaken *tight* monetary policy even while the money supply was declining. We do not have tight money right now. Inflatio...
by cato
Sat Nov 01, 2008 12:06 am
Forum: Investing - Theory, News & General
Topic: Historical Deflationary Periods-length and severity
Replies: 3
Views: 1231

Do you know the last calendar year when CPI-U was negative?............................ 1954! That's right, 54 years ago. And that was by only 7/10ths of a percent. Out of the last 100 years, only 10 have had negative CPI growth. Most of them were during the 1930s. If you read Friedman and Schwartz'...
by cato
Fri Oct 31, 2008 11:46 pm
Forum: Investing - Theory, News & General
Topic: tips anomaly
Replies: 59
Views: 10096

I'm a bit surprised Larry is picking up the lower end of maturity on TIPS. But even with an unusually high YTM, the fact that the yield curve is inverted makes the decision less straight forward then those presented in Larry's book. I think normally Larry would go to the longer end. However, most o...
by cato
Fri Oct 31, 2008 7:02 pm
Forum: Investing - Theory, News & General
Topic: tips anomaly
Replies: 59
Views: 10096

Cato \ You miss the point, your explanation cannot possibly be correct. How does your explanation explain how the yield on the 5 year is say 3% and the year on the ten year is 3.1 but the yield on the 8 year is over 3.7%. NUTS, no explanation I can think of to explain this other than there was a bi...
by cato
Fri Oct 31, 2008 5:12 pm
Forum: Investing - Theory, News & General
Topic: tips anomaly
Replies: 59
Views: 10096

The efficient market predicts that we will undergo massive deflation in 2015. What makes you so certain you know better?



Milton Friedman says to George Stigler: "That's not a REAL $20 bill lying on the sidewalk there. If it were, someone would have picked it up already."
by cato
Fri Oct 31, 2008 8:55 am
Forum: Personal Investments
Topic: oil/energy transmission pipeline investments - opinions?
Replies: 30
Views: 5760

Re: IRA then?

It seems one of the biggest drawbacks, is the tax paperwork. To get around that, would it be a good idea to invest via an IRA? No, unless it's in very small amounts. Some portion of the MLP distribution is typically UBTI income. If that portion exceeds $1000, you will actually have to pay taxes on ...
by cato
Thu Oct 30, 2008 7:49 pm
Forum: Personal Investments
Topic: TIPs spread and rational pricing
Replies: 6
Views: 1692

TIPS will rally within the next 7 days. How do I know? Because I transferred a Welltrade account to Fidelity so I can buy individual TIPS w/o commission..... I have a Fidelity account and can't say I'm real thrilled with the spreads on the TIPs - they look to be about 0.8%. That's comparing to stoc...
by cato
Thu Oct 30, 2008 6:38 pm
Forum: Personal Investments
Topic: TIPs spread and rational pricing
Replies: 6
Views: 1692

TIPs spread and rational pricing

The Cleveland Fed branch no longer thinks TIP pricing is rational. I normally use their site to check on inflationary expectations. Now they say this: http://www.clevelandfed.org/Research/data/TIPS/index.cfm As a closet market-timer, I'm still pondering how one might play this. In the last two days,...
by cato
Fri Oct 24, 2008 10:45 am
Forum: Investing - Theory, News & General
Topic: monetary theory question
Replies: 8
Views: 1937

Re: monetary theory question

Isn't this the first time in history that the global market is essentially based on a currency that is NOT backed by a commodity? What do you mean "first time in history?" It's been that way for nearly 40 years. The dollar was de-coupled from gold in 1971. Previuosly, other currencies wer...
by cato
Sun Oct 12, 2008 10:21 am
Forum: Personal Investments
Topic: Harvard using hedge funds to force the market down?
Replies: 32
Views: 6265

That is value that Yale is creating for the children of the United States, and their children's children unto the generations, and for the sum of knowledge and culture that is western civlisation and the human race Correction: "children of the United States," should be "privileged ch...
by cato
Tue Sep 16, 2008 5:35 pm
Forum: Personal Investments
Topic: Have my cash in MS Active Assets Money Trust - AVIXX
Replies: 3
Views: 1736

MS earnings beat expectations today.
by cato
Tue Sep 16, 2008 4:58 pm
Forum: Personal Investments
Topic: Summary of impacts of an AIG failure
Replies: 47
Views: 16992

Reading that article just leads me to the same question -- what is SIPC insurance covering if all assets are held in a trust that can't be touched by creditors? Let's say your broker never put the stock certificates you gave him in that trust... then he goes bankrupt. The trust doesn't have your sh...
by cato
Mon Jul 21, 2008 4:36 pm
Forum: Investing - Theory, News & General
Topic: What asset class is cheap now?
Replies: 47
Views: 10524

. . . Long-haul pipeline MLPs like OKS, KMP, TPP, EEP, EPD have revenue contracted years in advance. . . . Upstream oil and gas MLPs, like LINE, EVEP, BBEP, CEP, VNR get revenue from mature oil and gas assets. . . .. I just want to point out the following 1-day results for these stocks: OKS +2.28% ...
by cato
Sat Jul 19, 2008 8:22 pm
Forum: Investing - Theory, News & General
Topic: What asset class is cheap now?
Replies: 47
Views: 10524

Not precisely an asset class, but MLPs are very cheap right now. I generally believe in EMH, but restrictions on ownership in IRA and institutions may hinder effiicent pricing of these stocks. They were a favorite of hedge funds, who leveraged them heavily for the yield spread. There was a cascade o...
by cato
Sun Jul 06, 2008 2:55 pm
Forum: Investing - Theory, News & General
Topic: What are your top two choices for MLPs?
Replies: 22
Views: 7460

Check the MLP boards mentioned above. Though I would note that they tend to focus on factors like growth rates and DCF ratios, sometimes downplaying important size and business risk factors. For stability, I would consider MLPs that focus on long-haul pipelines, like OKS and EEP. I disagree somewhat...
by cato
Sun Jun 01, 2008 10:51 pm
Forum: Investing - Theory, News & General
Topic: almost mid-year- report card,what is your YTD return?
Replies: 63
Views: 13061

YTD: +7.78% including distributions. 49% Pipeline MLP 20% E&P MLP 10% US (VTI) 7% Emerging (VWO, DGS, DEM) 5% Global (VEU) 4% Global small (GWX, DLS) 3% Small Value (VBR) 1% Canroy Not diversified, I know. But beating every major index for the last 1, 2,3, 5, 10, 15 previous years. The E&P M...
by cato
Thu May 15, 2008 9:14 pm
Forum: Investing - Theory, News & General
Topic: How to invest in Dubai?
Replies: 68
Views: 22256

Yeah. It makes total sense to invest your capital in a part of the world that already has the biggest surplus of investment capital in all of human history.

Say, with all that construction, they probably need energy too. Maybe you can invest in a company that exports oil to them.
by cato
Sat May 03, 2008 10:46 am
Forum: Investing - Theory, News & General
Topic: 3x Leverage ETFs Coming - Giddyup
Replies: 10
Views: 3691

Shorting the 2X ultra-short funds has enabled me to get near top of the Motley Fool CAPS player ratings in only a month. Can't wait till they get the 3X bear funds going. I might be able to win the sucker.
by cato
Tue Apr 29, 2008 11:37 am
Forum: Personal Investments
Topic: I want to create my own Muni TIP fund
Replies: 1
Views: 849

I want to create my own Muni TIP fund

Seeing current attractive yields and being a high-tax paying Californian, I'm tempted by CA munis. However, as a monetarist I see a distinct chance of severe inflation in the future. It is, after all, "always and everywhere" a monetary phenomenon. So I'd like to construct my own Muni TIPs ...
by cato
Sun Apr 27, 2008 11:40 pm
Forum: Investing - Theory, News & General
Topic: What does "PUSHING ON A STRING" mean?
Replies: 16
Views: 6109

I think the LewRockwell definition that turns up first in a Google search is closest to how monetary economists apply the term. Rick's definition: A phrase used to describe when the Fed has lowered interest rates to the point where another rate cut would make no difference in economic growth. They w...
by cato
Thu Apr 24, 2008 7:13 pm
Forum: Personal Investments
Topic: Need a good stock trading system
Replies: 23
Views: 4742

* Watch the podcast videos from "The Market Guys" - they're full of... good tips. * Jim Cramer's "Mad Money" show also has lots of good trades - that most people don't know about * "Fast Money" is another good show that not very many people see. * If you sign up for an ...
by cato
Mon Apr 21, 2008 11:34 pm
Forum: Investing - Theory, News & General
Topic: Getting really tempting not to market time in real estate
Replies: 37
Views: 6581

Hey, you're in Vegas, why not just go for $300K on the Pass line. Odds are better!
by cato
Sun Apr 20, 2008 10:06 pm
Forum: Investing - Theory, News & General
Topic: My idea for a quant fund...
Replies: 8
Views: 2275

So what happens when you randomly pick a stock with a market cap of $100 million and a trading volume of 5,000 shares and give it a 3% weight?

You might also re-pick some stocks you just sold and incur wash sale problems. That would suck.


-- cato
by cato
Sun Apr 20, 2008 12:52 pm
Forum: Investing - Theory, News & General
Topic: Oil as an Investment
Replies: 13
Views: 3108

. . . High growth independents are priced to premium without question, with very high P/E multiple. The major oils in the USA are prices below the SP500 index multiple, and the reasons are either higher costs of production (rigs now cost over 500k day for deepwater), or the market expects oil price...
by cato
Sat Apr 19, 2008 11:10 pm
Forum: Personal Investments
Topic: Buffett on indexing
Replies: 7
Views: 2820

Buffett on indexing

Apologies if this has already been posted. From this week's Fortune: "..if they're not going to be an active investor -- and very few should try to do that-- they should just stay with index funds. Any low-cost index fund....." "Their investment strategy should factor in that a) if yo...
by cato
Sat Apr 19, 2008 9:12 am
Forum: Personal Investments
Topic: 3 International Models... which one?
Replies: 7
Views: 2156

Re: International Model?

SpaceCommander wrote:For an International Model, my vote is for Gisele Bundchen...

Now THAT'S an international model! :D
THAT model carries currency risk, because she's not dollar denominated:

http://news.bbc.co.uk/2/hi/business/7078612.stm
by cato
Thu Apr 10, 2008 10:32 pm
Forum: Personal Investments
Topic: international small and tax efficiency
Replies: 3
Views: 1395

It seems like it's all speculation as to what these funds will do. DLS has only paid two dividends in its existence: one for $0.25 in 12/06 and one for $1.47 in 12/07. As I understand it, many of the constituent stocks pay once-a-year dividends -- typically early in the year. This is quite common in...
by cato
Sun Apr 06, 2008 2:55 pm
Forum: Personal Investments
Topic: Am I overdoing it? Everything into 1 fund?
Replies: 14
Views: 3442

I agree with just about everything said above, but feel they missed one big thing: you're 25, working at minimum wage and you've saved 20K and have 4 months emergency money. WELL DONE SO FAR! There are a lot of older people with much higher wages who have saved a heckuva a lot less. I saved my first...
by cato
Sat Apr 05, 2008 1:48 pm
Forum: Investing - Theory, News & General
Topic: Great interview on NPR/Fresh Air on financial crisis
Replies: 34
Views: 7466

Seems to me the guest had reasonable credentials. From his bio on the U of Maryland web site: . . . Thanks Harold, I saw that. And it underscores my point: the people informing and making policy for financial markets should have a grounding in economics, finance, and securities markets rather than ...
by cato
Sat Apr 05, 2008 1:24 pm
Forum: Investing - Theory, News & General
Topic: Great interview on NPR/Fresh Air on financial crisis
Replies: 34
Views: 7466

You see subprime loan losses reported in the media a lot. Most of them fail the ask the question "who profited it the banks' losses?" The banks are only the intermediaries. They earned some fees. To the extent they kept some loans on their books, they had losses. For all the losses, someb...
by cato
Sat Apr 05, 2008 10:32 am
Forum: Investing - Theory, News & General
Topic: Great interview on NPR/Fresh Air on financial crisis
Replies: 34
Views: 7466

IMO, this is a very political interview. Very NPR. No surprises here: * NPR interviews a Lawyer about finance and the economy (they'd do as well to interview a plumber). I wonder if all the economists were out of town that day. * The Lawyer says we need more laws and more government. A plumber woul...
by cato
Thu Apr 03, 2008 6:19 pm
Forum: Investing - Theory, News & General
Topic: Social Security Sham: what is my real income tax rate?
Replies: 77
Views: 13830

Re: Wow

I never thought that I would read anything that surpassed the label on a 32oz bottle of Dr. Bronner's castille soap. I finally have. Thank you, Unkonwn_Contrarian! Though, I'm wondering if your post wasn't just an attempt to dis-credit legitimate criticism of Social Security by associating it with a...
by cato
Tue Apr 01, 2008 7:09 pm
Forum: Investing - Theory, News & General
Topic: Social Security Sham: what is my real income tax rate?
Replies: 77
Views: 13830

I remember one of Friedman's lectures where he said roughly the following: Look carefully at your paystub. It doesn't say Social Security; it says FICA -- "Federal Insurance Contributions Act" This may well be the most efficient any government has ever been: they've managed to tell 2 lies ...
by cato
Tue Apr 01, 2008 6:50 pm
Forum: Personal Investments
Topic: I'd like to invest in renewable energy ETF's but...
Replies: 18
Views: 3475

Re: I'd like to invest in renewable energy ETF's but...

What are your views on renewable funds? Gee. Do you think you're the first person this occurred to? Or, did you miss the articles in Forbes, Money, US News, Smart Money, Kiplinger's, Newsweek, Time, Fortune, and Mother Jones about how it's going to be the next big thing? I don't care for Ken Fisher...
by cato
Sun Mar 30, 2008 10:26 pm
Forum: Personal Investments
Topic: Master Limited Partnerships - Are They Safe?
Replies: 8
Views: 2088

What about CANROYs? When you buy a Canroy, you will pay almost twice as much per barrel or mmcfe as you would if you buy a US MLP, such as BBEP, CEP, LINE, or EVEP. Moreover, there are some serious tax problems coming soon with Canroys: 1) In 2011, the royalty trust structure will be abrogated and ...
by cato
Sun Mar 30, 2008 10:20 pm
Forum: Personal Investments
Topic: Master Limited Partnerships - Are They Safe?
Replies: 8
Views: 2088

If you have any inclination to buying MLPs, now is probably the time. A lot of hedge funds were heavily into them, peaking last summer. Most of these funds were very heavily leveraged and now they are getting viciously squeezed by bank margin calls and their fellow hedgies selling off. Some striking...
by cato
Mon Mar 24, 2008 7:06 pm
Forum: Investing - Theory, News & General
Topic: Profunds leveraged ETFs
Replies: 20
Views: 5242

market timer wrote:The market was up 2% today, so SSO added 2% more exposure at the close of trade.

Ah, now I see what you mean by an implicit mometum strategy. I did just find Russell's earlier reference to the Indexroll site. I'm going to check that out, too.

thanks