Trying to Explain

March 30, 2010

A good friend from the UK follows our markets and even our politics pretty closely, so when he recently asked why we spend 2.5 times as much (purchasing power adjusted) on health care as the OECD average, I had to stop and think about it.

After all, we don’t even cover (unless you count emergency rooms) roughly 10% of our citizens.  We don’t live as long, and we have a higher infant death rate.

Plainly a lot of our problem is our diet.  Some might say being the center of the video game world and having 200 channels of TV adds to the problem.

Read the rest of this entry »

The Beat(ing) Goes On

March 30, 2010

Some traders that I respect have exited the amREIT group, and I know they’re sleeping better as a result.  The expected widening of spreads from the Fed ending quantitative easing seems to have been offset by Fannie and Freddie accelerating paydowns through loan buyouts, and by the fact that their regulator has permitted them to resume buying for portfolio.

In short, there are cross-currents and rip tides, and only the strongest and smartest swimmers should be in the water.

Having said that, even a strong job creation number this Friday is unlikely to move the Fed to tighten short rates any time soon.

Read the rest of this entry »

Strangling IOC Again

March 29, 2010

Just a quick note to say that I’ve put on the May 60/70 put/call strangle, netting around $12.  It can be done at the bid prices simultaneously for $11 net proceeds.

If you don’t understand the first sentence, then you probably shouldn’t follow this strategy.

What it means, by the way, is that I sold $60 puts and $70 calls for $12 proceeds.  If the stock closes third week in May between $60 and $70, I keep all the money.  To lose money, it has to close below $48 or above $82.

Such a Deal!

March 28, 2010

Imagine that you ran a big company and that you wanted to hold down payroll costs.

One way you would do that is to offer nice benefits.  AT&T, John Deere and Caterpillar did exactly that decades ago when they offered to pay for retiree prescription drugs.

Since none of those companies was ever a charitable organization, I have to assume they got wage concessions in exchange for the benefit, and that they were satisfied with the contracts they entered.

In 2003, along came Medicare Part D.

Read the rest of this entry »

Value Trap Snaps Shut

March 26, 2010

I know how those flies feel now.  You know, the ones that smell the honey scent from Venus flytrap plants.

I’m not just full on amREITs, I’m stuffed.

Having already gone overweight, imagine my distress (or maybe you just have to check your own emotional state) as the group took a pounding,, with the cheapest ones getting pounded the most.

Read the rest of this entry »

Color Me Stunned

March 24, 2010

I was an interested observer of the short selling wars that went on from about 2003 until the meltdown in 2008.

When the appetite of the short sellers was no longer satisfied by destroying small financial companies and hi-tech or pharmaceutical startups, they turned on Wall Street itself.  At that point, even legal short selling was halted.

There have to be limits after all.

Read the rest of this entry »

Help, I’ve Fallen

March 23, 2010

I know, the personal alarm company crew has registered those words (can you really own exclusive rights to a normal English phrase?)….

I’ve fallen into a value trap and I can’t help buying more.

Several stocks were called away through covered calls again last Saturday, an event I hope continues to happen every month.  It left me starting this week with more than 15% cash in the IRA’s.

Read the rest of this entry »