Two Dualing Gurus Cramer and Jimmy Rogers

http://jimrogers-investments.blogspot.com/2013/10/artificial-sea-of-liquidity.html 

The eternal dilemma, whom to follow.  Cramer has been spectacularly successful with his model portfolio, which is not that easy to replicate, even with low or non-existent commissions/transaction costs.  

Cramer's Best

The very best presentation by Jim Cramer, Monday.  A tour-de-force as to why financial engineering has destroyed the retail investor.

http://video.cnbc.com/gallery/?video=3000091443 

Cramer Describes the Day He Caused the Bottom in 1988

I remember this. He and I were emailing, or at least I was reading everything he wrote. Or maybe that came later. I'm not sure. But in any event he cancelled all his sell orders ehen he learned that Greenspan was calling an emergency Fed meeting.
http://www.madmoneyrecap.com/madmoney_nightlyrecap_041709_1.htm

Shiller and Summers

Summers had it right back then:

http://www.nytimes.com/2009/03/29/business/economy/29view.html?scp=1&sq=shiller%20summers&st=cse

Friedman -- Now! Dammit!

What Friedman says is what I have felt for a year. We have wasted time, and not a little substance, by the Bush administration keeping deregulation still on the front burner. We must not waste another week or day.

Op-Ed Columnist
We Found the W.M.D.
comments
new_york_times:http://www.nytimes.com/2008/11/23/opinion/23friedman.html

By THOMAS L. FRIEDMAN
Published: November 22, 2008
So, I have a confession and a suggestion. The confession: I go into restaurants these days, look around at the tables often still crowded with young people, and I have this urge to go from table to table and say: “You don’t know me, but I have to tell you that you shouldn’t be here. You should be saving your money. You should be home eating tuna fish. This financial crisis is so far from over. We are just at the end of the beginning. Please, wrap up that steak in a doggy bag and go home.”
Times Topics: Credit Crisis - Bailout Plan
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Now you know why I don’t get invited out for dinner much these days. If I had my druthers right now we would convene a special session of Congress, amend the Constitution and move up the inauguration from Jan. 20 to Thanksgiving Day. Forget the inaugural balls; we can’t afford them. Forget the grandstands; we don’t need them. Just get me a Supreme Court justice and a Bible, and let’s swear in Barack Obama right now — by choice — with the same haste we did — by necessity — with L.B.J. in the back of Air Force One.
Unfortunately, it would take too long for a majority of states to ratify such an amendment. What we can do now, though, said the Congressional scholar Norman Ornstein, co-author of “The Broken Branch,” is “ask President Bush to appoint Tim Geithner, Barack Obama’s proposed Treasury secretary, immediately.” Make him a Bush appointment and let him take over next week. This is not a knock on Hank Paulson. It’s simply that we can’t afford two months of transition where the markets don’t know who is in charge or where we’re going. At the same time, Congress should remain in permanent session to pass any needed legislation.
This is the real “Code Red.” As one banker remarked to me: “We finally found the W.M.D.” They were buried in our own backyard — subprime mortgages and all the derivatives attached to them.
Yet, it is obvious that President Bush can’t mobilize the tools to defuse them — a massive stimulus program to improve infrastructure and create jobs, a broad-based homeowner initiative to limit foreclosures and stabilize housing prices, and therefore mortgage assets, more capital for bank balance sheets and, most importantly, a huge injection of optimism and confidence that we can and will pull out of this with a new economic team at the helm.
The last point is something only a new President Obama can inject. What ails us right now is as much a loss of confidence — in our financial system and our leadership — as anything else. I have no illusions that Obama’s arrival on the scene will be a magic wand, but it would help.
Right now there is something deeply dysfunctional, bordering on scandalously irresponsible, in the fractious way our political elite are behaving — with business as usual in the most unusual economic moment of our lifetimes. They don’t seem to understand: Our financial system is imperiled.
“The unity seems to be gone. The emergency looks to be a little less pressing,” Bill Frenzel, the former 10-term Republican congressman who is now with the Brookings Institution, was quoted by CNBC.com on Friday.
I don’t want to see Detroit’s auto industry wiped out, but what are we supposed to do with auto executives who fly to Washington in three separate private jets, ask for a taxpayer bailout and offer no detailed plan for their own transformation?
The stock and credit markets haven’t been fooled. They have started to price financial stocks at Great Depression levels, not just recession levels. With $5, you can now buy one share of Citigroup and have enough left over for a bite at McDonalds.
As a result, Barack Obama is possibly going to have to make the biggest call of his presidency — before it even starts.
“A great judgment has to be made now as to just how big and bad the situation is,” says Jeffrey Garten, the Yale School of Management professor of international finance. “This is a crucial judgment. Do we think that a couple of hundred billion more and couple of bad quarters will take care of this problem, or do we think that despite everything that we have done so far — despite the $700 billion fund to rescue banks, the lowering of interest rates and the way the Fed has stepped in directly to shore up certain markets — the bottom is nowhere in sight and we are staring at a deep hole that the entire world could fall into?”
If it’s the latter, then we need a huge catalyst of confidence and capital to turn this thing around. Only the new president and his team, synchronizing with the world’s other big economies, can provide it.
“The biggest mistake Obama could make,” added Garten, “is thinking this problem is smaller than it is. On the other hand, there is far less danger in overestimating what will be necessary to solve it.”
Conventional wisdom says it’s good for a new president to start at the bottom. The only way to go is up. That’s true — unless the bottom falls out before he starts.

Paulson

So we enter this crucial weekend with our fate with Paulson and the G-7. And with the inkling that maybe he didn't really know what he was doing, but he has authority under the bailout plan to do the right thing anyway.

And apparantly a lot of bad will follow if Morgan Stanley or another bank goes under this weekend, as could happen. The Japanese Mitsubishi is supposed to contribute $9 billion for 21% of the company Tuesday but it is believed they would be crazy to do so. MS's market capitalization stands at $11 billion as of the close Friday, after the horrendous selloff of the week.

James Cramer laid it all out last night (Friday night), including the scenerio of the Great Depression, which he says is possible. It took until 1954 for the stock market to recover back to where it was in 1929.

If Paulson and the G-7 come out with good this weekend, we're back to the races on the upside. Their announcement so far isn't thrilling, but maybe there will be more before the market opens up again -- it is Monday, isn't it? Or is Monday a holiday from stock trading as well? I don't think so since nobody talked about it Friday on CNBC.

Soros on Bill Moyers was as usual excellent, if a little blurry. James Rodgers on CNBC hit some home runs and planted a seed with me that Paulson is playing catch-up without a playbook. And seeds of doubt about the bailout thus far. Rodgers sees the very big picture, from Singapore this time. He needs teeth whitening job. Too much beetle juice over there -- or is that only Vietnam?

It appears there was a monumental screw-up in letting "little" Lehman go bankrupt. Not too clear why, but I think because there were tens of billions of credit default swaps that left many other counterparties on the verge of going under themselves. But this screwup, if it was, lessens Paulson's credibility and lends credence that he's playing catch-up without a playbook.

Is it "only" 1987 or 1929? We'll know Monday.

You might click on my "Crash of 1987" blogs infra, as the lawyers say.

Overnight Notes During Crash

3:19 AM 10/10/2008
Watching foreign markets on cnbc
17 minutes into trading in europe
ftse 100 down 8.6%
volkswagen up 3.2%
3:25 AM 10/10/2008
treas and the fed are who the world looks to
talking about mark to market; analogy --10 houses in a row
suspension of mark to market suggested
bring all onto a transparent market
ftse 100 down 7.6%

There's Something Out There

And CNBC isn't telling us. Cramer will only hint at it, but cannot recommend short sales, nor does he want to cause a crash.

My guess: some foreign bank. Some huge foreign bank.

Do I have any information? No.

The fed left itself some gunpowder yesterday by doing nothing, but not much (firepower). It's now pretty much up to the world. Can all the countries work together? So far I believe they have.

New Fifth Third Preferred Issuance

Thursday, June 19, 2008 - 11:24 AM EDT
Fifth Third prices preferred stock offering
Business Courier of Cincinnati
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Fifth Third to raise capital, cut dividend; Kabat named chairman [Jacksonville]
Fifth Third to raise $2 billion, chop dividend [Columbus]
Fifth Third to raise capital, cut dividend [Charlotte]
Fifth Third Bancorp released pricing details Thursday on its public offering of depositary shares, which represent 40,000 shares of its convertible preferred stock.
The offering has a liquidation preference of $25,000 per share, or $100 per depositary share, with an aggregate liquid preference of $1 billion, Fifth Third said in a news release.
The convertible preferred stock will pay a quarterly cash dividend of 8.5 percent per year, subject to declaration by the bank's board of directors. The first dividend payout is scheduled for Sept. 30.
Each share of the preferred stock is convertible at any time into about 2,160 shares of common stock, or about 8.6 shares of common stock per depositary share. That's a conversion price of about $11.57 per share of common stock, the bank said.

Beware the BOLI

See my earlier blog on Fifth Third's law suit filed in U.S. District Court, Southern District of Ohio. Search the word "astounding" within this blog.



http://www.bloomberg.com/apps/news?pid=20601087&sid=ahyNQ.QWgD1Y&refer=home

Success Breeds Failure

new_york_times:http://www.nytimes.com/2008/05/05/opinion/05krugman.html

By PAUL KRUGMAN
Published: May 5, 2008
Cross your fingers, knock on wood: it’s possible, though by no means certain, that the worst of the financial crisis is over. That’s the good news.

The bad news is that as markets stabilize, chances for fundamental financial reform may be slipping away. As a result, the next crisis will probably be worse than this one.
Let’s look at the story so far.
After the financial crisis that ushered in the Great Depression, New Deal reformers regulated the banking system, with the goal of protecting the economy from future crises. The new system worked well for half a century.
Eventually, however, Wall Street did an end run around regulation, using complex financial arrangements to put most of the business of banking outside the regulators’ reach. Washington could have revised the rules to cover this new “shadow banking system” — but that would have run counter to the market-worshiping ideology of the times.
Instead, key officials, from Alan Greenspan on down, sang the praises of financial innovation and pooh-poohed warnings about the growing risks.
And then the crisis came. Last August, as investors began to realize the scope of the mortgage mess, confidence in the financial system collapsed.
I believe we’ve been lucky to have Ben Bernanke as Federal Reserve chairman during these trying times. He may lack Mr. Greenspan’s talent for impersonating the Wizard of Oz, but he’s an economist who has thought long and hard about both the Great Depression and Japan’s lost decade in the 1990s, and he understands what’s at stake.
Mr. Bernanke recognized, more quickly than others might have, that we were in a situation bearing a family resemblance to the great banking crisis of 1930-31. His first priority, overriding every other concern, had to be preventing a cascade of financial failures that would cripple the economy.
The Fed’s efforts these past nine months remind me of the old TV series “MacGyver,” whose ingenious hero would always get out of difficult situations by assembling clever devices out of household objects and duct tape.
Because the institutions in trouble weren’t called banks, the Fed’s usual tools for dealing with financial trouble, designed for a system centered on traditional banks, were largely useless. So the Fed has cobbled together makeshift arrangements to save the day. There was the TAF and the TSLF (don’t ask), there were credit lines to investment banks, and the whole thing culminated in March’s unprecedented, barely legal Bear Stearns rescue — a rescue not of Bear itself, but of its “counterparties,” those who were on the other side of its financial bets.
It’s still far from certain whether all this improvisation has resolved the crisis. But it was the right thing to do, and for the moment things seem to be calming down.
So two cheers for Mr. Bernanke. Unfortunately, his very success — if he has succeeded — poses another problem: it gives the financial industry a chance to block reform.
We now know that things that aren’t called banks can nonetheless generate banking crises, and that the Fed needs to carry out bank-type rescues on their behalf. It follows that hedge funds, special investment vehicles and so on need bank-type regulation. In particular, they need to be required to have adequate capital.
But while our out-of-control financial system has been bad for the country, it has been very good for wheeler-dealers, who collect huge fees when things seem to be going well, then get to walk away unscathed — indeed, often with large severance packages — when things go wrong. They don’t want regulations that would stabilize the economy but cramp their style.
And now that the financial clouds have lifted a bit, the pushback against sensible regulation is in full swing. Even the Fed’s very modest proposal to curb abusive mortgage lending with new standards is under fire, and there are worrying signs that the Fed may back down.
Maybe a Democratic sweep in November can revive the cause of financial reform, but right now it looks as if we’ll soon return to business as usual.
The parallel that worries me is what happened a decade ago, after the hedge fund Long-Term Capital Management failed, temporarily causing the whole financial system to freeze up.
Through luck and skill, that crisis was contained — but rather than serving as a warning, the episode nurtured the false belief that the Fed had all the tools it needed to deal with financial shocks. So nothing was done to remedy the vulnerabilities the L.T.C.M. crisis revealed — the same vulnerabilities that are at the heart of today’s much bigger crisis.
And if we don’t fix the system now, there’s every reason to believe that the next crisis will be bigger still — and that the Fed won’t have enough duct tape to hold things together.

There's a Reason Why We Have Banks...

Except for a few sectors like energy, you can forget about making money in the stock market for a few years:
http://www.nytimes.com/2008/04/22/business/22bank.html

Try This T Bill Chart

T Bills Last August -- And We Thought That Was Bad!

http://natgagu.blogspot.com/2007_08_01_archive.html

T Bills -- The Tell?

The Hell With 1987, Why Not 1929?

Krugman is, again, right on. As my friends and "sponsors" know, the key, over-used word in my vocabulary, is "deregulation," said derisively.

http://www.nytimes.com/2008/03/21/opinion/21krugman.html?_r=1&hp&oref=slogin

Good Bye White Plains, Hello New Trier

The world of commodities now trumps the world of New York

Chicago is King

With commodities taking off, Rick Santelli makes more and more sense than the Wall Street guys. A commodities-trader environment is much better in the current environment, as going short is just as easy as going long. So, Chicago, and Illinois, should prosper. And of course the Midwest too! (Farmers, etc.)

Just as Texas should continue to prosper.

The losers: New York City and New Jersey.

Crash of 1987 and Value of Diversification

[insert of March 14, 2008]
The first page is from a trust as of yesterday, managed by FifthThird.

The second page is perhaps the most important single piece of paper I have saved. I will be referring to it a lot as we go through the next two years.

.

There was a death in the family June 26, 1987, causing a valuation occasion of assets coming to be owned outright from a certain trust, shown above as the "Axxx" Trust. Then came the 1987 crash, which I was following on a minute-by-minute basis, not as a professional.

2667 shares of Procter was in this portfolio. At my urging -- yes, I felt the crash was coming -- shortly before the crash 500 shares of Procter was sold and Treasury Notes worth $50,000 were purchased with the proceeds. When the crash occurred all common stocks went down and the Treasury Notes went up 6%.

Back to 1987?

http://www.nytimes.com/2008/03/07/business/07credit.html?hp#