Tuesday, April 29, 2008

The Oracle has Spoken: Confirmation and Validation

In Ancient Greece, some were believed to have the unique power of seeing the future. Kings, nobles, and government officials consulted the Oracle on many occasions. The Oracle at Delphi was even said to influence government policies, marriages, and wars. On Monday, the Oracle of Omaha spoke as well. During an interview on CNBC, Warren Buffet shared some market insight with the viewer audience (1). Here is a summary of the interview:
1. We are currently in a recession.
2. The recession will last longer than most people think.
3. Current trade policies will continue to weaken the U.S. dollar.
4. An over-active Fed has damaged the financial stability with the bail out financial institutions. (2)
5. The Fed should re-evaluate decisions about further rate cuts.

Buffet's market foresight, uncanny ability to read market conditions, and insight to develop winning strategies has earned him the prestige of America's most prized investor. Hopefully we can all learn from him! Mr. President, Congress, and the Fed should pay particular attention on this one. Unfortunately, I smell politics on this one. (3) Congress will slow additional moves so the winner of the Barack and Hillary show has a chance against McCain.

Confirmation and Validation
As the stimulus package reaches families throughout the country, the President is anticipating a recovery, or at least temporary relief. It becomes suspicious when the government hands out checks which will go to one of three areas:

1. oil companies (6)
2. financial institutions in the forms of various credit cards
3. banks and mortgage companies (4)

The last point deserves additional remonstrance. If you live in a thriving metropolis like Denver, there is a good chance that the neighbor living to the left or right of you has either a home equity loan or is on a ARM loan. That's right, almost 30% of people in that town are in over their head. I wonder what that factor would look like if they threw in the revolving debt gauge like credit card default rates...now that would be interesting. Maybe the name of that city should be changed from the "Mile High City" to the "City of Drowning Debt."

At the end of the day, maybe it is the government's wish to give the average American a hedge bet on a wave of inflation that we are bound to see sooner than later. I wonder if I could request my money in gold or silver...now that would be a real gift! Let's see how much of this money is either saved or pumped back into the stock market? My guess is that figure will be less than 5%. (5)

New Financial Plays
COF 1/50s
INP Exposure to a non-dollar stock

On the Radar Screen

DE +, ADM +, ZEUS +, and IOC +, PBRA +, APA +, KMG+, RKH-, SRS +

I've Been Published...Click the link below...
My Domino Effect article received a number of reviews. Approximately 40% positive 40% negative 20% additional questions or neutral.

Help for the Tribe...
Sure the season is early...and the Tribe has made up quite a bit of ground over the past week. I would like to see more consistency on batting and base-running. Also, the bull-pen needs a bit of help. I would like to see the Tribe build a .500 record with the idea of finishing May with a move into the division leader spot.

Sources Cited:
1. http://www.247wallst.com/2008/04/warren-buffett.html
3. http://www.13wmaz.com/news/national_story.aspx?storyid=51821
4. http://promo.realestate.yahoo.com/worst-cities-for-homeowner-debt.html
5. http://www.nber.org/releases/
6. http://www.gravmag.com/oil2.html

Godspeed Officer Kevin
Keep Officer Kevin in your thoughts and prayers. His unit has been called up for over seas duty in Iraq.


boom and doom said...

Congratulations on getting published! That is outstanding. Your success is the feedback your article generated. That is about the most feedback I've seen for any article written on Seeking Alpha. I also commend you on responding back to your critics. Very forthright! And also for clarifying your thinking on V and MA. Your comment explains your reasoning which was lacking in the original article. My only suggestion is that it is important to make sure your spelling/typing is accurate. People will dismiss you because of that irregardless of how good your content is. Great job and I'm very impressed. Maybe you can share with us next week the process you went through to get your article published.
Take care, B&D

AX said...

Concur, B&D. Most of the negatives were addressed towards grammar, not content. Dismiss the negatives however, as there is little support for their arguments. People like to write in and poop on you, but don't back what they're saying with any logic. Many of the negs are also stock pumpers (reference V winner and solar champion to name a few).

B&D, would love to see you take a crack, simply go the site and submit. Along with hedge fund managers and economists, ordinary joes like us can get published. Any thoughts on the following?