Thursday, August 30, 2007

The Day Cramer Says He Panicked

Torward the end of the day, with redemptions looming, he couldn't take the pressure of the falling market and he sold pretty much everything. The Trading Goddess told him to go out and get a bagel. When he got back she had bought everything back. And the market had bottomed that afternoon.

Big Looming Problem? Libor is Not Set by the Fed

Rick Santelli pointed this out an hour ago from Chicago. Libor is not set by the fed and might not follow a fed rate cut.

I point out: most Countrywide "resets" use Libor.

Natural Gas Futures Very Low Again

Ohio Governor Strickland's Re-Regulation of Electricity Proposal

Read last page first, etc. Covered in today's Dispatch. All hands appear to be on board. It will be messy, if only because of the Constitution's protection of existing contracts.

Wednesday, August 29, 2007

Dog That Didn't Bark -- No Cramer Today

Yesterday did him in. For today.

Notary Signing Agents -- So Who Answers the 'Why' Questions?

Re the subprimes, the alt-A's, the second mortgages, etc.
It used to be attorneys.
From The National Notary - September 2007 at 33.

Norris on Mortgages

Click on Title. He compares various real estate locales and two year comparison, not one year.

Cramer is Lost

He went out on a limb Monday calling the prior decline "the bottom" and recommending other than defensive stocks -- retails.

Can Cramer calls and cheerleading cause the market to continue to go up in a shaky situation (like last week)? Perhaps. That's what Wall Street is about and Cramer is the most credible of all commentators.

But that damn Fed summary "reprise" from August 7, or was it August 17? (It was presented as both ways by the commentators on CNBC.) But in any event, here was a situation where getting the written summary was unsettling to the market.

Notice that Cramer does not -- never has -- recommend going short. Probably rightfully so and probably constrained by CNBC, or simply because it is not easy for the small investor. When Cramer was running his hedge fund he was not so limited.

So he's back to blaming the Fed. He's critical of them for fly fishing in Aspen instead of being on the job. There's some merit to this. Let's face it, the Fed saved us in 1998 and thus the low, low interest rates for so long.

Yesterday Cramer, by demeanor, to me, indicated awareness that he was lost, both on Stop Trading and in Mad Money. He also focused on gaming stocks in Macau on the latter program, out of desperation. Still, a solid recommendation, as it stays away from the subprime and alt-A, etc. arenas.

Convexity Capital Management and NYT Article

Click on Title.

Monday, August 27, 2007

Deregulation Article -- More Complete

Last Updated: 5:30 am Sunday, August 26, 2007
Future of electric rates hazy
Deregulation being rethought before it starts
FAIRFIELD - Retirees Pierson and Charlotte Dejager have lived in the same two-bedroom, all-electric condominium off Mack Road for 20 years. Although they're on a fixed income, Charlotte Dejager says their $150-a-month electric bills are manageable.
"We're pretty conservative," said Charlotte Dejager. "We regularly turn our thermostat down."
But what the Dejagers and other Ohioans pay for electricity in the future will be affected by an emerging debate in Columbus over the state's 8-year-old electric deregulation law.
Ohio was one of 17 states and the District of Columbia that enacted electricity deregulation laws in the late 1990s. The theory was that deregulating the electricity-generation portion of customer bills - while regulators continued to monitor the cost of transmission and distribution - would spark market competition and lead to lower rates.
For reasons ranging from the Enron debacle to the nature of electricity (it can't be stored), those lower rates haven't materialized. And in states such as Illinois and Maryland, when freezes expired, prices skyrocketed 50 percent or more.
That has raised fears among utilities, large industrial customers and others about what will happen when plans to ease the transition to market-based rates in Ohio begin expiring at the end of 2008.
"We've watched what's happened in other states, and it's not good. In Maryland, prices spiked 70 percent. We don't want to see that happen here," said Eric Burkland, president of the Ohio Manufacturers Association.
State Sen. Robert Schuler, R-Sycamore Township, chairman of the Ohio Senate Energy and Public Utilities Committee, said deregulation "is one of the most complicated issues we face ...
"But we've got to do something. If we do nothing and the state goes to a market-based system, we could see electric rates spike dramatically."
Not everyone wants to abandon Ohio's deregulation law.
Ohio Consumers' Counsel Janine Migden-Ostrander, who represents residential customers before the Public Utilities Commission of Ohio, said she's not ready to give up on the idea of a deregulated market "because we haven't given market-based pricing a chance to work."
Although the law took effect in 2000, a series of price caps and transition plans have prevented a true competitive market from developing, Migden-Ostrander and others say.
Terry Harvill, vice president of energy policy for Constellation Energy Inc., one of a handful of independent energy marketers who've established a foothold in Ohio, says: "There's a perception that the market's broken, and that's not the case."
He argues that transition plans, which have capped rates, and special rates granted to some large industrial customers in northern Ohio have distorted the competitive landscape and prevented suppliers such as Constellation from being competitive.
The Columbus-based manufacturers association has teamed with a new coalition of some of the state's largest employers, including Procter & Gamble Co., Ford Motor Co. and AK Steel, to push for new legislation to re-regulate Ohio's four large investor-owned utilities - including Duke Energy, which provides power to 680,000 customers in Southwest Ohio.
Because next year is an election year and it will take time to get any new rate plans through the utilities commission, the Ohio Coalition for Affordable Power wants legislative action before the end of 2007.
Electric rates help maintain the state's economic competitiveness, says the coalition.
"It's a huge problem." said Alan McCoy, vice president of AK Steel and co-chairman of the coalition with Robert Lapp, vice president of the Timken Co. in Canton.
AK's steel plants in Ohio use 3.5 billion kilowatt-hours of electricity each year. "Every tenth of one cent increase in electricity costs us $1 million," said McCoy.
The coalition's plan - which would encourage the utilities, through a series of incentives, to go back before the utilities commission to win approval for cost-based electric rates in exchange for granting them exclusive service areas - isn't the only plan circulating in Columbus.
The Ohio Electric Utility Institute, which represents Duke Energy and the other investor-owned utilities, has its own proposal that would allow utilities to recover the cost of new generating plants while extending the current rate stabilization plans.
But Beverly Martin, the institute's managing director, said, "We're not interested in going back to a regulated (utility) model" like that proposed by the manufacturers coalition.
"We want to make sure rates are affordable, predictable and assure that there's an adequate supply of electricity," she said.
David Boehm, a Cincinnati utilities lawyer who helped develop the manufacturing coalition's proposal, said one problem with deregulation is "who pays for new generating plants?"
The state's utilities will undoubtedly have to build new plants to meet growing demand and replace older, less environmentally friendly facilities, he said. The advantage of requiring utilities to come before the commission, he said, is that it would force them to justify their prices based on costs they incur.
Environmental advocates such as Environment Ohio say the state needs to adopt standards requiring a certain percentage of electric generation to be from renewable sources, such as wind and solar, as well as requiring energy-efficiency standards to slow the need for new generation. Amy Gomberg of Environment Ohio said both ideas would generate new jobs in Ohio and lessen the state's dependence on fossil fuels.
Consumers' Counsel Migden-Ostrander said she's also concerned that the manufacturers' plan gives larger users an option to pursue market-based rates while not giving that same opportunity to residential consumers.
She wants a plan that would require utilities to return to making long-term forecasts of demand to justify new plant construction, put limits on construction costs and require competitive bidding on new plants while requiring renewable energy sources and energy-efficiency standards to hold down future rate increases.
One of the incentives proposed by the manufacturers would allow utilities to recover the cost of constructing new generating plants while work is in progress rather than allowing them to recover the costs only after a plant is 75 percent complete. But Migden-Ostrander fears this could saddle consumers with unnecessary construction costs.
Yet to weigh in on the debate is Gov. Ted Strickland. He's promised to unveil his own proposal - which would require utilities to generate a certain portion of their electricity from renewable and advanced energy sources - early next month.
Charlotte Dejager, 80, says she doesn't know what to make of the competing electric proposals, but she's sure of one thing.
"I don't care what they say. I don't think my electric rates will go down," she said.

More Michael Lewis

Insurance companies, John Seo says, are charging customers too much — or avoiding their customers altogether — instead of sharing their risk with others, like himself, who would be glad to take it. New Orleans, as a result, is slower than it otherwise would be to rebuild. “The insurance companies are basically running away from society,” he says. “What they need to do is take the risk and kick it up to us.” They need to spread it as widely as possible across the investment world and, in the process, minimize the cost of insuring potential losses from catastrophes.

More From Michael Lewis Article

As a boy, John Seo learned everything he could about the Titanic. “It was considered unsinkable because it had a hull of 16 chambers,” he says. The chambers were stacked back to front. If the ship hit something head on, the object might puncture the front chamber, but it would likely have to puncture at least three more to sink the ship. “They probably said, What are the odds of four chambers going?” he says. “There might have been a one-in-a-hundred chance of puncturing a single chamber, but the odds of puncturing four chambers, they probably thought of as one in a million. That’s because they thought of them as independent chambers. And the chambers might have been independent if the first officer hadn’t gambled at the last minute and swerved. By swerving, the iceberg went down the side of the ship. If the officer had taken it head on, he might have killed a passenger or two, but the ship might not have sunk. The mistake was to turn. Often people associate action with lowering risk or controlling risk, but experience shows more often than not that by taking action you only make the risk worse.”

From Michael Lewis Sunday NYT

The companies’ models disagreed here and there, but on one point they spoke with a single voice: four natural perils had outgrown the insurers’ ability to insure them — U.S. hurricane, California earthquake, European winter storm and Japanese earthquake. The insurance industry was prepared to lose $30 billion in a single event, once every 10 years. The models showed that a sole hurricane in Florida wouldn’t have to work too hard to create $100 billion in losses. There were concentrations of wealth in the world that defied the logic of insurance. And most of them were in America.

Sunday, August 26, 2007

Home Depot Deal Will Unsettle the Market

Click on title. In Monday's New York Times.

T Bill Chart From the Economist

From The Economist Article. Actually this does not show that they dipped intraday to below 2% on Monday or Tuesday, I forget which.

From The Economist

Click on title. The End of the Beginning.

Natural Gas Futures Close Friday -- Low

Next low would be about $4.30 or so. See chart below.

Ohio Electric Deregulation

Cinergy Corporation owns Cincinnati Gas & Electric (Ohio) that
operates in a restructured jurisdiction, and Public Service of Indiana and Union Light Heat & Power (Kentucky) both operate in regulated, cost-of-service jurisdictions. Costs have increased much more sharply in Ohio (restructured) than they have in Indiana or Kentucky (regulated). In 2000, industrial consumers with an 85% load factor in Indiana, Kentucky and Ohio would have paid $31/MWh, $33/MWh and $34/MWh
respectively. In 2006, the same industrial consumers would be paying $38 per MWh in Indiana, and $42/MWh in Kentucky but $79/MWh in Ohio. All three Cinergy Comparison of APS in WV vs MD companies have similar generation profiles and other cost concerns, yet Ohio consumers pay almost double what the Indiana or Kentucky consumer pays.
C. The Necessary and Essential Pre-Conditions For Real Competition
Last December ELCON issued a white paper that reaffirmed its desire for real competition, but also stated in no uncertain terms that real competition simply has not happened and is not going to happen unless at least seven necessary and essential preconditions are actually implemented in a closely integrated fashion. As mentioned above in section A, ELCON members that have facilities in the present-day ERCOT
market report a high degree of satisfaction with the performance of that market as it is currently structured—meaning their expectations were largely met—because sufficient pre-conditions and an appropriate market design were in place when the market was launched. What were industrial consumers’ expectations with respect to each of these pre-conditions in the context of the FERC-approved organized markets?

Deregulation and Ohio

Click on Title.

Michael Lewis Today in NYT Magazine

Click on Title.

His book "Liar's Poker" is the best and I pick up every copy I find, hardback and paperback. Today he writes on catastrophic insurance. I haven't finished it yet.

Saturday, August 25, 2007

The Ways of Countrywide

AMONG Countrywide’s operations are a bank, overseen by the Office of Thrift Supervision; a broker-dealer that trades United States government securities and sells mortgage-backed securities; a mortgage servicing arm; a real estate closing services company; an insurance company; and three special-purpose vehicles that issue short-term commercial paper backed by Countrywide mortgages.

The Ways of Countrywide

The picture that goes along with the NYT article.

The Ways of Countrywide

Click on title.

I thought Mozilo did himself no good on CNBC this week. This article in the NYT tomorrow won't help. Because of the unique unequal bargaining/knowledge position, those in this field will evoke a wrath greater than the Savings & Loan debacle.

Note the sophisticated telemarketing gimmicks. Two days ago in seriousness I checked on a loan for a real new house we are living in (trying to sell our 35-yr wonderful house two blocks away which does have a Countrywide mortgage) and now I wonder at some of the comments made to me.

I called with calculator in hand, after refreshing my keystrokes for the various elements, Present Value being the negative number of the amount of the loan, Future Value set at zero, etc. It flummoxed the sales rep, who kept (in retrospect) trying to get on script with bigger numbers than I wanted. (I wanted to replicate my monthly payment of $812.57, at today's rates, for the new house which is being carried by a bank loan secured with stock).

I knew I had excellent credit score, but I did not show (we didn't get that far) much of annual earnings, so my psychology was: "gee, am I an 'Alt-A?'"

Friday, August 24, 2007

Cool Off With This

click on far right picture in upper right quadrant

Wednesday, August 22, 2007

Tom Friedman, Deregulation, and Saving Megawatts

Click on Title. Also for a little more info on this, type "ELCON" at the top of my blog and see their filing with the FERC this Spring, pointing out the devasting effect of deregulation on rates in southern Ohio for Duke's customers (formerly Cinergy, formerly Cincinnati Gas & Electric), compared to next door in Kentucky where Duke (formerly etc.) also operates.

Your Trip to Wal-Mart

You are in the middle of some kind of project around the house. Mowing the lawn,
putting a new fence in, painting the living room, or whatever.

You are hot and sweaty. Covered in dirt or paint. You have your old work clothes on.
You know the outfit, shorts with the hole in crotch, old t-shirt with a stain from
who knows what, and an old pair of tennis shoes. Right in the middle of this
great home improvement project you realize you need to run to Wal-Mart to
get something to help complete the job. Depending on your age you might do the following:

In your 20's:

Stop what you are doing. Shave, take a shower, blow dry your hair, brush
your teeth, floss, and put on clean clothes. Check yourself in the mirror nd flex.
Add a dab of your favorite cologne because you never know, you ust might meet
some hot chick while standing in the checkout lane. You went to school
with the pretty girl running the register.

In your 30's:

Stop what you are doing, put on clean shorts and shirt. Change shoes. You
married the hot chick so no need for much else. Wash your hands and comb
your hair. Check yourself in the mirror. Still got it. Add a shot of your
favorite cologne to cover the smell. The cute girl running the register
is the kid sister to someone you went to school with.

In your 40's:

Stop what you are doing. Put a sweatshirt that is long enough to cover
the hole in the crotch of your shorts. Put on different shoes and a hat.
Wash your hands. Your bottle of Brute Cologne is almost empty so you
don't want to waste any of it on a trip to Wal-Mart. Check yourself in
the mirror and do more sucking in than flexing. The spicy young thing
running the register is your daughter's age and you feel weird thinking
she is spicy.

In your 50's:

Stop what you are doing. Put a hat on, wipe the dirt off your hands onto
your shirt. Change shoes because you don't want to get dirt in your new
sports car. Check yourself in the mirror and you swear not to wear that
shirt anymore because it makes you look fat. The cutie running the
register smiles when she sees you coming and you think you still have it.
Then you remember the hat you have on is from your buddy's bait shop and
It says, "I Got Worms ".

In your 60's:

Stop what you are doing. No need for a hat anymore. Hose off the dog crap
off your shoes. The mirror was shattered when you were in your 50's. You
hope you have underwear on so nothing hangs out the hole in your pants.
The girl running the register may be cute but you don't have
your glasses onso you are not sure.

In your 70's:

Stop what you are doing. Wait to go to Wal-Mart until they have your
prescriptions ready too. Don't even notice the dog crap on your shoes.
The young thing at the register smiles at you because you remind her of
her grandfather.

In your 80's:

Stop what you are doing. Start again. Then stop again. Now you remember
that you needed to go to Wal-Mart. Go to Wal-Mart and wander around
trying to think what it is you are looking for. Fart out loud and you
think someone called out your name. The old lady that greeted you at the
front door went to school with you.

Tuesday, August 21, 2007

Best Explanation of Securitization of Sub-Primes

Click on Title.

Monday, August 20, 2007

Great Explanation of Those Who Packaged the Sub-Primes etc.

Click on Title.

In the case of the credit markets, participants were aware that the market was in an unusual state of hyper-activity. Commercial bankers knew that the “covenant lite” loans they were making were riskier than usual, investment bankers knew the bridge loans they were issuing were dicey, and mortgage bankers knew that subprime borrowers were skating on the edge. None of these participants were stupid, though it’s easy to think so in retrospect. Rather, all had positions of responsibility in institutions that gave them a mandate: join loan syndicates, write bridge loans, underwrite mortgages. Most had pay packages in which a significant element of pay depended on carrying out their mandate. All wanted to get high five for beating out the competition. All hoped to get paid their bonuses before the market changed course. As the old saying from the private placement world goes, “I’ll be out of here before this thing blows up!” And most of these individuals may also have hoped that there would be a second (or third) chance at some similar job if the investment did blow up in their hands. This is the essence of the “trader’s option,” the incentive to spin the wheel, to go for the double zero.As a result of small percentage changes in borrower default rates, the magic of leverage can create huge effects on the bottom tranche of a collateralized debt obligation (CDO). When this detonates, some hedge fund in Australia gets blown to smithereens. That leads a commercial bank in Germany not to want to lend to the Cerberus buyout of Chrysler, which in turn could affect autoworkers in Detroit. This hurts business confidence, which leads a Brazilian executive not to invest in more equipment for the steel mill. This is the divergence

Natural Gas Falling Big

CNBC & Cramer's Current Blind Spot -- Just Who is it Talking To? Part III

Just Who is CNBC Talking To? Part II

CNBC & Cramer's Current Blind Spot -- Just Who is it Talking To?

To the "retail" investor, CNBC is fascinating. And Cramer is unparalelled in cutting through to the real antics of Wall Street.

But even Cramer can be excused for having a "blind spot." Criticism of CNBC's presentation itself throughout the day. I enclose an excellent writing of Cramer in 1998 which is applicable to CNBC today, and to almost every day of this current crisis market, even though his 1998 article was directed to the fatuous Barton Biggs' recommending shorting the NDX at a Barron's Roundtable.
As I said in my earlier blog on trading VIX, IT CANNOT BE DONE BY THE RETAIL INVESTOR.
To sort-of explain: the only retail investor found who made a lot of money in the 1987 crash was a Philadelphia serial rapist/killer who had six or seven sex slaves chained in his basement. He had better things on his mind! and could afford to be blase about the market.
Another way of putting it from the legal field: A lawyer who represents himself has a fool for a client. And that DOES NOT mean a "retail investor+his broker" could do it either. No broker would spend his time with that investor. It's a full-time job.
So let's face it, CNBC ideas on many topics are good for the Wall Street crowd but there should be a warning at the bottom of the screen: "DO NOT TRY THIS AT HOME" or "PLEASE FAST FORWARD!"

Garbage to Natural Gas & The Biggest Cincinnati Dump (Rumpke)

Click on Title. This from the Cincinnati Enquirer:

I see no reason why this can't work. Natural Gas prices are such that there is profit aplenty. However, based on today's prices ($10.10/mcf or so projected for Duke this coming Winter) the income figures are lower than stated in the article.

Producing green power, profit
Waste byproduct will no longer go to waste
Your garbage gives gas to Mount Rumpke.

Starting Monday, that indigestion - methane gas generated by, among
other things, rotten oranges from the garbage of homes in
Southwestern Ohio, moldy grapes from Northern Kentucky and smelly
scraps from last weekend's barbecues in Southeastern Indiana - will
be recycled and readied for natural-gas pipelines at the largest
recovery plant of its kind in the world.

The $10 million Montauk Energy Capital Plant sits at the base of
the man-made mountain known as the Rumpke Sanitary Landfill.

The new plant - plus the landfill's existing 20-year-old gas-
recovery system - can refine 15 million cubic feet of methane gas a
day. With an average retail price of $13.50 per 1,000 cubic feet of
gas in Ohio - according to the U.S. Energy Information
Administration - that daily gas supply is worth $202,500 on the
retail market. That's $73.9 million a year, all from garbage.

The daily output of 15 million cubic feet at this round-the-clock
operation can produce enough natural gas to fuel 25,000 homes - as
many as there are in Colerain Township.

"This plant is doing its part with technology that is as green as
it gets, to cut down on greenhouse gas emissions while using a
renewable resource and cutting down our dependence on foreign oil,"
said Dan Bonk, an engineer and director of business development for
Montauk. The Pittsburgh firm owns, operates and staffs the new
plant as well as similar ones in its hometown and Houston.

The Rumpke site "is the largest of its kind in the world from a
capacity standpoint," Bonk said.

He pointed to 24-inch pipes moving methane gas from the landfill
and into the system. All around him, compressors hissed, generators
hummed, and filters whirred as the system went through its
shakedown phase.

• Video: How does it work? Take a tour with Dan Bonk of Montauk Energy

The world's second-largest gas-to-pipeline energy production plant
can be found at Staten Island's Fresh Kills Landfill. That site,
the final resting place for the debris from the World Trade Center,
produces 14 million cubic feet of gas a day.

"We would much rather recycle this gas and see it turned into
natural gas than flare it off or burn it through a smokestack,"
Rumpke vice president Jeff Rumpke said. "This way, we're taking a
waste and turning it into something positive."

And profitable.

Montauk buys the gas from Rumpke, sells the refined product to Duke
Energy and pays a royalty to Rumpke.

The 1.5-acre plant resembles a small refinery. With its system of
landfill wells, pipes, pumps, holding tanks and filtration devices,
the operation takes methane - a gas produced by decaying garbage -
and in minutes strips out impurities. Away go molecules of water,
carbon dioxide and hydrogen sulfide - which gives garbage its
rotten egg-type smell.

"Landfill gas is a slightly different animal from natural gas out
of an oil well," Bonk noted.

"Oil-well gas is effectively 100 percent methane. Landfill gas is
50 percent methane and 50 percent carbon dioxide," along with water
and hydrogen sulfide.

At the end of the refinery's line, the gas goes into a Duke
pipeline. From there, the landfill's byproduct is processed into
natural gas suitable for lighting a burner on a nearby home's cooktop.

Bonk sees no shortage of the plant's raw material.

"As long as they keep dumping garbage on top, it will keep decaying
and producing gas," he said.

Saturday, August 18, 2007

Subprimes -- And The Know-Nothing "Signing Agent"

F. Bruce Abel
copyright 2007

Remember when attorneys handled closings, and did such things as actually explain what the documents meant?

Now there's a new category of employment -- Know-Nothing Notary Signing Agents who do the subtle dirty-work of the lender.

They go to the homes of the borrower ostensibly to verify John Smith is John Smith. Ah, but of course there's much more! And all for the Notary Fee of $125.

Hilarious Example by Attorney Covering for His Daughter Who Took the Notary Signing Agent Course But Was Out of the Country:

August 6, 2007: Telephone call 3:30 pm from Countrywide: "Can you be in Mxxx (11 miles away) in an hour to close a mortgage?"

[negotiation of fee of $125: see below]

$21,000 15-year loan. (To consolidate his cars on the borrowing so he can deduct the interest on the mortgage). Borrower makes $60,000 a year. Wife makes -- guessing -- $20,000. Own a new 2600 sq ft home in Mxxx. (1300 plus just finished out the basement for a second 1300). All houses on very long and winding street backing up to nice woods. All the same.
The borrower, Jxxx (or Jxxxx) xxxxxx, a young (maybe 40) IT guy with Txxxxxxxx, was very smart and helped me through the process because he had taken his 1st mortgage through Countrywide and had gone through the drill. He had a Korean wife, having met her in the Army.

$1,000 closing fee deducted by Countrywide! Net to client.

Fears (of the first-time "Notary Signing Agent") along the way to Mxxxx and how they were handled:

The fear that the forms would not be fully filled out.

Borrower: "I signed a lot of empty forms before."

Lesson: Just have them sign where indicated, whether it makes sense or not. You don't -- or do you? -- have to sit and wait while they understand what they are signing before filling things out. You don't -- or do you? -- yourself have to understand the myriad of papers being signed.

[Upon reflection, all of the above is pretty easy after one does the first closing.]

However, where they have to identify themselves, and the notary has to verify that, that has to be done right.

Borrower: "When more is needed after the closing they call the borrower and he then faxes the relevant page."

The "first" closing:
So I get to the borrower's house in Mxxxx.

Borrower: "where are the papers?"

Call to "home office." "Where are the papers?"

"Oh, you didn't download them?"

Home office tries to put the blame (for no papers) on the notary.

Borrower: "same thing happened before. Exactly." "Earlier Today!"

"And at the First Mortgage Closing Last November too."

"The last notary showed up and said 'Where are the papers?'"

Me: THEY E-MAIL ALL PAPERS TO THE NOTARY. 110 pages! So Countrywide, not even having the overhead of an Ohio office, doesn't even pay for the paper or printing ink!

Called my home/office. Mxx downloaded the 110 pages on my printer.

The wife worked as a waitress at Bxxxxxxhanas near Gxxxxxxx and so we had the closing at xxx xxxxxxx at 9:30 p.m. (They had suggested TGIF)

No copies go to the borrower -- I'm not paying for them! -- even the form which (on reflection) they should keep as it is the one where they can rescind within 3 days. Copies are sent to the borrower from the lender later.

Back to the early part of the story: So at the borrowers, with no papers, I call the lender on the cell phone. You know my temper. An argument ensued. The woman at the other end, "counseling" me: "Now we don't air our dirty linen in front of the client!"

(On Wall Street they are talking this week about when the borrower cannot pay he doesn't have anyone to call to renogotiate. His paper may be held by a Japanese bank.)

I probably spent 3 hours in all. But I enjoyed it! Met new people.
But, oh how the "law" or "non-law" has changed. Gone are the days of the lawyer's $500-1000 fee for "getting everything right because it is 'real estate.'"

Oh and I almost killed myself making a U-turn on Butler-Hamilton Road during rush hour when I missed my turn getting to the strange location.

Titles all across the country must be screwed up!

I had negotiated the $125 this way.

"Genny is not here. I'm a lawyer. All lawyers in Ohio are Notaries. I'll do it."
"We pay $90."
"I'll do it for $100 plus mileage."
"How much then?"
phony pause (to get "permission")

-----Original Message-----
From: Genevieve
Sent: Tuesday, August 07, 2007 10:16 PM
To: Eunice Abel
Subject: Re: this notary business

The notary signing agent book is in my room if dad wants to brush up on it.
Good for him for giving it a go: it's more than I ever did!

And Dying Ed Gramlich on Subprime Mortgages

Click on Title for NYT article.

Stat Arb Explanation in NYT -- What Happened 2nd Part

Let’s be honest here. You hear the words “quant fund meltdown,” and one firm comes to mind: Long-Term Capital Management.
Back in 1998, that now infamous quant fund really did melt down, not only liquidating, but shaking the entire global financial system. Long-Term used complex computer models that failed to anticipate some severe once-in-a-lifetime market events, and it was shockingly leveraged — it was using $100 of borrowed money for every dollar of its own capital — which magnified its losses. It was also run by some of the smartest people on Wall Street. “When Geniuses Fail” was the apt title to Roger Lowenstein’s fine book about that fiasco.
Ever since, whenever quant funds stumble, it’s “When Geniuses Fail Redux.” Wall Street wags begin to wonder if those losses will lead to something truly cataclysmic, while newspaper reporters take a certain undisguised glee in reporting on really smart people losing money. Even now, there’s enough Luddite schadenfreude in the air that rumors continue to circulate that AQR is continuing to absorb substantial losses — which is the exact opposite of the truth, Mr. Asness says.
What is scary in this case is not that the quant funds were the initial source of a ripple effect on the rest of the market; they weren’t. The quant funds were the recipients of a ripple that began in a corner of the market that they had little to do with —namely, the subprime mortgage crisis. It’s the way the subprime contagion shook the quants, whose subsequent downturn then added to the ripple effect, that’s what is nervous-making.

Stat Arb Explanation in NYT -- What Happened

Click on Title.

To oversimplify (sorry: you can’t explain this stuff without oversimplifying), AQR’s market neutral funds use computers to sort through a set of complex but common-sensical criteria to identify all sorts of assets — including stocks — that it believes are undervalued but gaining some momentum, which means that both price and fundamentals are improving. It buys, literally, thousands of those stocks. Then it seeks out stocks it believes are overvalued and starting to lose momentum. It shorts those stocks. What makes the fund “market neutral” is that it always tries to have the same amount long as short. Mr. Asness likes to say that it’s not really rocket science but intuitive investing; the computers mainly allow him to do it across thousands of stocks at the same time.
Mr. Asness does not suggest that he is going to be on the winning side of every trade. Not even close. Nor does Mr. Asness suggest that his strategy is risk-free. It’s not. “If you don’t take any risk, you won’t make any money,” he said. Even when things are going swimmingly, he’s going to have almost as many losing trades as winning ones. But over time the winning trades will add to better-than-average gains. In a down market, he hopes that his shorts will fall more than his longs, and in an up market, he wants the longs to rise more than the shorts.
As for risk, he adds leverage to bolster returns; indeed using borrowed money to calibrate risk is a major part of his strategy. But it’s not crazy stuff like Long-Term Capital Management, and it would be hard to argue with his results over time.
What happened in August is something that happens to every investor at times, even Warren E. Buffett: his strategy stopped working. So did Mr. Simons’s strategy and that of all the other quants. Mr. Asness’s trades weren’t just a little off — they were hugely off. The undervalued stocks he was buying were dropping steeply, but he wasn’t getting any help from the short side of his portfolio. Several “quants” I spoke to — market veterans who had been through the 1987 market crash and the 1998 Long-Term Capital disaster — told me they had never seen anything quite like it.
Why did it happen? In the immortal words of the market sage, James Grant, “On Wall Street, every good idea is driven into the ground like a tomato stake.” Quant investing, as practiced by the likes of Mr. Asness, Mr. Simons and others, has been enormously successful. And anything that’s successful on Wall Street is invariably going to be copied by others. That is exactly what’s happened in many cases at firms that did other things besides quant investing — like trading in derivatives built around subprime loans.
As these subprime instruments have cratered, investors have lost faith not just in them but in other credit derivatives. The holders of these securities had to meet margin calls and make other payments. So they had to start selling more liquid securities like, well, the kind of easily traded securities held in their quant equity portfolios, like Microsoft or I.B.M. or General Electric. And as they sold, other quant shops, like AQR, which held many of the same stocks, saw huge drops instead of small gains. Is it any wonder traders are calling this a contagion?
One line making the rounds on Wall Street is that the events of last week show that, just as with Long-Term Capital Management, the quants’ models didn’t work — that bloodless computers simply can’t anticipate events outside the norm. That line drives Mr. Asness bonkers. “In theory, what just happened is impossible, so if we stuck to the theory, we’d be dead,” he said. “We know this stuff happens.” Once they realized the magnitude, he and his partners quickly began a mild “deleveraging” to protect against even bigger losses. Eventually, AQR started buying cheap stock again — which had become even cheaper thanks to the short-term panic.
In the view of several big-time quants I spoke to, their big mistake was in not realizing that their little corner of Wall Street had become so crowded with imitators — and that when others were forced to sell, they were going to get hurt. Now they are all trying to figure out how to factor that into their thinking for the future — Mr. Asness very much included. “We have a new risk factor in our world,” he said.
So how should the rest of us feel about what just happened? Even though the worst seems to be over, I still think we should still be worried. But not because computer-driven quant funds took a tumble. That’s a symptom, not a cause. The larger issue is the contagion itself — the fact that something so out of left field, like subprime, could wind up hurting the quants.
Richard Bookstaber, a former quant manager, has recently written a book, called “A Demon of Our Own Design” (Wiley, 2007), which has become a small sensation on Wall Street. In it, he argues that the proliferation of complex financial products like derivatives, combined with use of leverage to bolster returns, will inevitably mean that there will be a regular stream of market contagions like the one we’re having now — one of which, someday, could be calamitous. To him, last week’s quant crisis is a classic case in point. “I think crises become inevitable when you have a financial structure like ours,” he said. “How deep or how frequent they are, I wouldn’t want to predict.” Well, who would?
So yes, it really is a scary world out there. But quants like Mr. Asness aren’t the reason.

Friday, August 17, 2007

A Lot of Natural Gas (Remember?) (II of III)

A Lot of Natural Gas (Remember?) (I of III)

From American Energy's excellent newsletter.

Cramer on October 8 1998 -- Around That Time III

Cramer on October 8 1998 -- Around That Time II

Cramer on October 8 1998 -- Around That Time I (of III)

Bernanke is the Jim Tressel of the Market

...before the Florida Game.

Cramer Yesterday -- One of His Best

On Mad Money, the key nugget: the fed will not act until a major actor -- Bank or Broker -- fails, or until a Big Deal like TXU falls down.

What Should be Next? Krugman Today

in the NYT. Click on title.

Thursday, August 16, 2007

What You Missed if You Were In Court Today

Goldman Sachs' Smart Marketing Move

From the LA Times:

Goldman Sachs acts to lure more investors to hedge fund
August 16, 2007
Goldman Sachs Group Inc. waived fees to draw investors to its Global Equity Opportunities hedge fund after stock-market losses wiped out $1.4 billion of assets this month, according to a person with direct knowledge of the terms.The new investors won't pay Goldman's annual management fee, which is 2% of assets, and Goldman will halve its share of the fund's profit, the source told Bloomberg News. Investors who already had holdings in the fund can get the new terms for any additional money they commit to investing by Friday.To get the new terms, however, investors must commit to keeping their money in the fund for six months. Global Equity's existing investors can withdraw their money monthly with 15 days' notice. "It's an astute pricing strategy," said Douglas Ciocca, who helps manage $950 million, including Goldman shares, at Renaissance Financial Corp. in Leawood, Kan. "It tells me they're looking for people that have the wherewithal and the confidence to commit for a longer period of time, and there should be a reward for that."Goldman and outside investors including billionaires Eli Broad of Los Angeles and Maurice "Hank" Greenberg agreed this week to put $3 billion into Global Equity. The New York-based securities firm, the second-largest hedge fund manager, sought capital for the fund after it lost 28% of its value this month as stock prices declined worldwide. Other so-called quant, or quantitative, funds suffered similar losses.In a report to clients this week, Goldman blamed its total of $3 billion in hedge fund losses this month on too many quant managers making the same trades and said it needed to develop new investing strategies."Longer term, successful quant managers will have to rely more on unique factors," the report says. "While we have developed a number of these factors over the last several years, in hindsight we did not put sufficient weight on these relative to more-popular quant factors."Goldman's quantitative funds all suffered "extreme negative returns" from July 30 through Aug. 10 in the U.S., Japan and Europe, according to the report.Current prices of securities don't appear to reflect what the assets are worth, Goldman said in the report. "If so, the current environment may represent a significant investment opportunity," the report says. But it adds that "substantial risks still accompany these opportunities."Hedge funds are largely unregistered pools of capital that cater to wealthy individuals and institutions.Goldman shares Wednesday fell $4.85, or 2.9%, to $164.90. They are down 17% this year.
Ex-colleague at UBS joins MoelisKenneth Moelis, who left UBS this year to launch a boutique investment bank in Los Angeles, has persuaded another former colleague to join him.Moelis & Co. hired Robert Crowley, who ran UBS' high-yield capital markets division, as a managing director and partner. Crowley, 35, will start this month and open the firm's Boston office, said Elizabeth Crain, Moelis' chief operating officer.Moelis resigned as president of UBS Investment Bank in March, frustrated with the Zurich-based lender's reluctance to finance leveraged buyouts. By June, when Moelis & Co. opened for business, UBS alumni such as Jeffrey Raich and Navid Mahmoodzadegan were working with their former boss.Crowley, an investment banker before moving to UBS' capital markets arm, will help Moelis try to win investment banking assignments from housing-material and home-building clients.From Times Wire Services

Cramer on Countrywide Financial Today

Compliments of

On Stop Trading:

On buying the financials today? ... JJC: I will tell you that the Countrywide Financial (CFC) statement shows me that they have funding through 2008. I would not longer be short CFC. I think, if they have funding through 2008, they can always sell themselves. It's a great mortgage originator. The bond guys are all betting against it... Look, I would buy the calls, stopped at 15. I would not buy the common stock. It's too dangerous. I'm not going to recommend a dangerous stock like that. But, when I read the statement... I know Moodys got a lot of negative things to say... I know there've been a lot of downgrades.... When I read the statements, it seems to me that they can shift their loans over to their bank, go to the discount window... I am saying that the financials are rallying and, if we ignore that tell - since they brought us down - we might as well go to the movies...

CNBC Today -- Kudlow Given a Real

endorsement by Cramer on Stop Trading, as the person who really does "know" the "ins and outs" of the Fed. I will watch him more carefully as we go forward, and give him more respect.

The CNBC team seems to know who is expert on what and permits each who has a particular expertise to just yell over those who are just pretending. All without sneering at the other. Very good, and under pressure too. I thought the Chicago guy (brain cramp on name for the moment) came out looking second best today. Rick Santori (?)

Sharon Epperson, reporting on oil & gas, seems almost irrelevant during the market crisis.

Paulson, speaking for the administration after a silence, indicates a signal of pulling out stops as hoped for by Wall Street. What did he do at Goldman Sachs? Maybe he should not be compared unfavorably to Rubin, one of my heroes.

Goldman Sachs Explains Quant Problems

From Floyd Norris blog yesterday:

August 15, 2007, 6:16 pm
The Quants Explain Disaster
A hedge fund manager sent me a copy of a report from Goldman Sachs entitled “The Quant Liquidity Crunch.” What follows are Goldman’s conclusion, and his dissection of that conclusion. (The manager prefers not to have his name used here. The people he mentions, if anyone needs to be told, are Warren Buffett and Charles Munger of Berkshire Hathaway.)
“All of the evidence suggests that the price dislocations experienced over this period were a result of deleveraging and limited market liquidity, as opposed to any fundamental news about the firms in our portfolios. Given this, we do not believe that current prices reflect fundamental values. If so, the current environment may represent a significant investment opportunity.
The speed in which the market reacted to the dislocation was unprecedented and it is not clear that there were any obvious early warning signs. With the benefit of hindsight, there were a few clues before last week that might have hinted at problems to come, including the dramatic rise in implied volatilities and the disruption in other markets and the related potential for contagion. No one, however, could possibly have forecast the extent of deleveraging or the magnitude of last week’s factor returns.
Risk management is based on historical precedent; but what the market experienced in recent days has been completely unprecedented. Nonetheless, it is crucial that we work hard to determine if there are indicators that can help us better assess the possibility of such an event in the future. In particular, we believe that going forward we need to develop better measures to assess the popularity of our factors and the related possibility of liquidity events such as last week’s affecting these factors.
A key lesson from this episode is that too many quant managers were using the same factors. Going forward, we believe that successful quant managers will have to rely more on unique factors. In fact, to protect our investors, we will need to make more of an effort to make sure that our proprietary factors remain proprietary. While we have developed a number of these factors over the last several years, in hindsight we did not put sufficient weight on these relative to more popular quant factors. We will need to develop even more of these proprietary factors going forward.
In the coming weeks, we will continue to analyze this extraordinary period. We will also re-evaluate and re-prioritize our research agenda in light of recent events. Stay tuned. As we continue to study these events, we hope to gain additional insights that will help us avoid similar problems in the future. In the meantime, however, we remain confident that stocks with better valuations, higher profitability, better earnings quality, shareholder-friendly management, strong momentum and improving analyst sentiment will outperform – that is, our process should continue to add value under normal market conditions.”
His commentary, with Goldman quotes in italics, follows. (Please note I have edited the manager a bit. He did not really use the word “baloney.”)
a) “we do not believe that current prices reflect fundamental values” — based on what? The very models that failed you last week?
b) “No one, however, could possibly have forecast the extent of deleveraging or the magnitude of last week’s factor returns.” Baloney. Buffett and Munger have been warning about the dangers of excessive leverage combined with crowded trades for quite some time.
c) “what the market experienced in recent days has been completely unprecedented” More baloney. 100-year storms happen every few years in financial markets. Always have, always will (though every storm’s a little bit different — maybe that’s what they mean). The only completely unprecedented thing was the LACK of any 100-year storms for the past few years.
d) “Going forward, we believe that successful quant managers will have to rely more on unique factors.” Given that you don’t seem to have come up with any, why should anyone believe that you will now? And given that every quant manager on the planet is trying to do the same thing, what makes you think that everyone else won’t come up with the same “more unique factors”?
e) “to protect our investors, we will need to make more of an effort to make sure that our proprietary factors remain proprietary” Yeah, that’s the problem: other quant managers stealing your highly proprietary factors of buying stocks with momentum or companies trading at low multiples of cash flow.
f) “In the coming weeks, we will continue to analyze this extraordinary period. We will also re-evaluate and re-prioritize our research agenda in light of recent events. Stay tuned. As we continue to study these events, we hope to gain additional insights that will help us avoid similar problems in the future.” Translation: we don’t know what happened to us or what we’re going to do about it, but we really, really, really don’t want to admit that the fundamental premise of our business is fatally flawed and shut down, so we’ll come up with something.
g) “we remain confident that stocks with better valuations, higher profitability, better earnings quality, shareholder-friendly management, strong momentum and improving analyst sentiment will outperform” I think they just about covered every single investing cliche here…
h) “our process should continue to add value under normal market conditions” Finally, in the last sentence, they perhaps inadvertently reveal the truth: their success depends on NORMAL MARKET CONDITIONS! In other words, what they do works 99% of the time, but the other 1% of the time they blow up — especially since they insist on using a ton of leverage because their brilliant models tell them that what happened last week was a 28-standard deviation event. Hint: IT WASN’T!
Comments (6)

Wednesday, August 15, 2007

T Bill vs. LIBOR

Click on title for a rather scholarly explanation.

CNBC -- Has The Greatest Lineup

Programming and personnel now is excellent. Less Kudlow. Wonderful discussion of the rise of the US T Bill as the thing everybody is rushing to, causing T Bill rates to diverge from LIBOR.

Cramer should be good tonight @ 6:00 pm.

Tuesday, August 14, 2007

I Knew Robert Rubin, and You (Paulson) Are No

Robert Rubin. See NYT Editorial today. Click on Title here.

Saturday, August 11, 2007

More Cramer

From the Harvard Law Bulletin. Click on Title.

More Cramer

Article by Cramer in New York Magazine (not new but recommended). Click on Title.

Implications for New York City Real Estate

For sure, it would seem, there will be no bonuses on Wall Street this Christmas. Therefore it would seem certain that real estate in the City has peaked.

Absence of Cramer Yesterday

I was disappointed in the absence of Cramer yesterday on CNBC. I watched 20 minutes of Mad Money before realizing that he was making no references to any of the exciting events of the day, and that it was a rerun, albeit a wonderful one on investing strategy.

Incidentally, did you notice that since the day of his "rant," which was caused by his friends at Goldman Slacks, etc. calling him, that he backed off attacking Bernanke and a few days later said Bernanke did it just right (this before the three infusions of capital Friday), and that he started to say it was to protect the homeowner.

Friday, August 10, 2007

GE Money Survey -- Attitude Change Among Home Buyers Since 1977

[comment of November 18, 2007: This post, in retrospect, is very valuable to a person trying to sell a home, as we are.]
Click on Title for full story today.

Thursday, August 9, 2007

Cramer's Analogy to Poker is Brilliant


'High Stakes'
The market... it's just a big game of poker...If you think of it as poker, then I think you'll understand... You've got to see the stocks as emotional looks on the players faces... But, just like in poker, where people's faces bluff all the time, stocks don't always represent reality in their ups and downs... It's the actual cards underneath... the way a company's actually doing... it's earnings. They often tell a different story... a different story from the way the stocks act. And sometimes you can read it from the players' faces...You see, not every stock has a great poker face. If you know how to play the game - how to read stocks like poker faces... how to anticipate if players are bluffing... how to ultimately discern what those cards they're holding are... the true state of the business... then you can make a killing.If Wall Street is a game of poker, then who are the players around the table?...First, you've got the individual stocks, and the people behind them... those are the managements of the companies... they obviously want their stocks to go higher, right?... These guys know the hand they've been dealt... they know the suit and the numbers on their cards. See, they've got a good look...Standing off to the side are the analysts... The analysts, at all times, are trying to figure out what those cards are that the company has... They want to read the faces of the managements that come to the table, in order to get the answers, because they're not allowed to see the cards... That's Regulation FD... They don't know the cards... And then there are the hedge funds... They're always trying to play the next move of the cards of these fellows... And there's the Fed...Now the Fed... they don't have any cards at all. They get to see everyone else's cards, and they get to make judgments about the game itself. And yes, the Fed can change the rules accordingly...You see, the Fed is the casino. They're the house...Bernanke, the (Fed) chairman... he's the pit boss... He can change anything. He can even remove the players. He can change the rules like that.And then there're the guys like you and me...We're trying to take it all in, trying to figure out what's really going on at the table, so we can make money at home...So, let me tell you how I approach Wall Street poker... I like to remember all the cards on the table, and before this hand... I like to remember all the past hands and how the players played them.I like to know who was telling the truth in the past, and who was bluffing... who's got a good poker face and who doesn't.Sometimes it's easy...The biggest gainer today that everyone was talking about... it was easy.For three weeks now. A guy who's never bluffed... A man who has played his hand straight every time, John Chambers , the CEO of Cisco (CSCO)... a stock we like very much on Mad Money... made it very clear not once, not twice, but three times that he had a fabulous hand!He gave an interview to the Financial Times that basically said it was the greatest time ever for the networking companies... And then, right before his quarter closed... the one he just announced last night... Chambers announced a huge buyback. Well, you don't really announce a buyback, right, just five days before the end of the quarter, unless you know it's really good. That was like a neon sign, saying I've got great cards...And then, as if to not say enough, how fabulous this man's hand was... he gave one more interview to the Wall Street journal just this week, saying that CSCO's business is exploding...Yet, the whole time, what did the stock do? The stock did nothing.You see, people thought he was bluffing... people thought Chambers didn't have the cards... Well, he turned out to have a full house. He showed them last night. He showed them again this morning... CSCO's not done going up. That was a great hand.
. . . . .
And then there's Under Armour (UA)...Now here's a company that had in the past been very self-promotional about its business. I mean, really, frankly, pretty much saying all the time that things were good, that they had real good cards... and then the cards were just okay...This time around, though, the guy played with a door face... I mean, you would have thought people stopped using his apparel... that was how quiet he was.Sure enough, this time UA had a straight flush... I didn't even think he realized he had it, coming right to the very end.
. . . . .
Then, there are the Cokes (KO) and the Pepsis (PEP)...Well, you know these guys right?...They play with their cards facing outwards. You always know where they stand...They have three-of-a-kinds, always... I love it.Now, remember, three-of-a-kind is not enough to win all of the time, but it surely is enough to keep their stocks flying toward 52-week highs... especially in a market where we're worried about the cards of so many other players... KO and PEP... We think they're fabulous on Mad Money...
. . . . .
And that brings us to the financials...Now, the financials... they really have got some crummy hands... I mean they have had just the crummiest hands. Just awful... just pulling nothing.They sit there every day and they just keep folding. They don't have anything to work with. They're not even bothering to bluff anymore.The financial stocks are so down about it, and their managements are so down, that the hedge funds, who are at the table, read their faces, notice their fears... They keep taking and deciding that these are layup guys to bet against... The hedge funds just press these bets every day, right? I mean, every day, for the last two weeks, you saw these stocks go down... the banks, the brokers, the homebuilders... stocks I've been telling you to steer clear of...They just keep getting these junk hands... and the big bet that they will fold keeps paying off...And then one day... yesterday... the Fed - which you'll remember can change the rules at will anytime - looked at the cards these financials had, and said, you know what? We've got to calm things. We've got to give people some confidence in these guys... We know these guys keep getting a lot of two and threes, with suicide kings and one-eyed jacks...Well, you know what?... Let's make twos kings, and one-eyed jacks wild! That's what the Fed did...Suddenly, the hedge funds, which were betting against the hedge funds like there's no tomorrow, and killing them almost every day, got fooled out of their shorts!The banks and the brokers are still playing the same shoe... they're still getting dealt twos and one-eyed jacks and suicide kings, except this time, it's the hedge funds that are committing suicide...Shorting the financials had been like shooting fish in a barrel, but so many hedge funds shorted them, that even the slightest bit of not-awful news from the Fed was enough to squeeze those shorts and send the financials higher...
. . . . .
So, what's my takeaway from the big poker game?...First, CSCO's got the hottest hand. And so will its brethren in tech.Remain 'all in'... The pin action in CSCO is good. It's enough to put a couple of bucks on (AMZN), Google (GOOG), eBay (EBAY)... a 52-week high there, because the web's exploding... and I'd put some money on Level 3 (LVLT) too, because streaming video is on fire. We learned that from CSCO, and they provide the bandwidth to get it...
. . . . .
How about the Cokes and Pepsis?... You can't bet against these guys. They're too consistent.They're great players with great cards, even though we know what their cards are...

. . . . .
Ahh... the financials.Soon, the shoe will run out for the financials again. The Fed won't keep those cards wild for long. These are bets now on whether the hedge funds will have short squeezes and go belly up, not the financials.The rally (in the financials) might be tempting... In might look like a bottom to you, but you have to know that it's probably not...I think the financials aren't good bets at this point... We don't know when the twos start being twos again, and the kings and jacks just become part of a hand that's hard to make a lot of money from...

. . . . .
Okay, now you know the rules, you know the game, you know the players... and you know how they behave.Welcome to the high-roller's table. Tech's got the good cards.PEP and KO always have fine cards.And the financials got lucky...
. . . . .
The bottom line!: Stick with hot hands like Cisco (CSCO) in tech, that are more than willing to telegraph their success... Stick with the solid secular growth names like Coca-Cola (KO) and Pepsi (PEP)... But, when it comes to the financials, remember... Kings, Jacks and Twos will not always be wild...
. . . . .