Yaron Sadan | The Hard Trade

Uncertainty and risk

How do we assign probabilities and expected returns to fat tail events? Often, when people can't estimate the impact of certain events, the tendency is to guess wish it away, ignore it, or guess it doesn't exist.Viewing the remainder of this article requires a Subscription

Tags: fat tails, global warming, risk, risk models, uncertainty

Academic, Quant | | March 10, 2010 12:56 pm | Comments (0)

News, News, News – Ignore it all

The story is in the Treasuries. Equities, currencies, commodities, real estate...they are all secondary to bonds.Viewing the remainder of this article requires a Subscription

Tags: bonds, Montier, treasuries

General | | 12:25 pm | Comments (0)

Deadly discount rate

We're reading more and more about research being done in low to negative real interest rate environments.Viewing the remainder of this article requires a Subscription

Tags: dividend discount model, dividends, duration, equity duration, Financial Crisis, interest rate, PE, sensitivity, stocks

General, Quant, Strategy/Allocation | | March 9, 2010 11:54 pm | Comments (1)

Downsize to save Detroit?

We've spoken of this option often in our rants - there is an oversupply of housing, oftentimes concentrated in specific areas, that needs to be absorbed. Only 2 options: increase demand or decrease supply.Viewing the remainder of this article requires a Subscription

Tags: detroit, downsizing, immigration policy

General, Real Estate | | 11:32 pm | Comments (0)

Citi, banks, stress tests – I’m confused

So rumors are all over the place today and I'm confused. Citibank gained on news that the government is selling its stake.Viewing the remainder of this article requires a Subscription

Tags: banks, Barney Frank, C, citi, stress test

Company News, General, Politics | | 5:39 pm | Comments (0)

Cash on the sidelines? Not as much as before.

Equity mutual funds have one of the lowest cash reserve levels since the recent rally began and money markets have less cash than a year ago.Viewing the remainder of this article requires a Subscription

Tags: cash reserves, money market funds, money on sidelines, mutual funds

General, Strategy/Allocation | | 5:23 pm | Comments (1)

India Food Inflation

It's interesting what gets picked up in the mainstream news and niche publications. Often, stories like the government selling its Citi stake spread like wildfire and drive the stock up.Viewing the remainder of this article requires a Subscription

Currency, General, Strategy/Allocation | | 5:15 pm | Comments (0)

The Silver Lining to the Debt Crisis

Here's the by line from the article in Barron's: "Could a Japanese debt crisis help spur a rally? Perhaps, if it fuels the yen carry trade."

But rather than precipitating a panic, a decline in the overvalued yen would serve as a tonic in two ways. The most obvious would be to give a lift to Japanese exporters, which have been hampered by the yen's strength, not only against the dollar but even more so against other currencies.

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Tags: Currency, debt, deflation, Financial Crisis, inflation

Currency, General, Strategy/Allocation | | 12:39 pm | Comments (2)

The problem of quiet

Do you feel the tension in the air? Most of the people I've been speaking to the past few days are feeling more bored than tense. With the VIX hovering near 17, and markets creeping up despite everyone, there seems to be a sense of boredom making its rounds.Viewing the remainder of this article requires a Subscription

Tags: fat pitch investing, wait

General, Strategy/Allocation | | March 8, 2010 1:05 pm | Comments (0)

VIX has just been hanging out and declining

From our perspective, the VIX is reflecting a surprising complacency.Viewing the remainder of this article requires a Subscription

Tags: vix, vxx

General, Strategy/Allocation | | March 3, 2010 1:46 pm | Comments (0)

Paradox of Thrift, meet Paradox of Toil

Keynes has been rediscovered in the past 2 years - not that he was ever lost, nor ever ignored - with Krugman, Reich, the Obama spend-to-save-jobs team, and the myriad pundits exploiting his theories to pass various spend-to-save policies.Viewing the remainder of this article requires a Subscription

Tags: eggertson, paradox of thrift, paradox of toil, zero-bound interest rates

Academic, General | | March 2, 2010 3:53 pm | Comments (0)

Healthcare – This is important!!

I didn't write any posting yesterday - but I have a good reason.Viewing the remainder of this article requires a Subscription

Tags: cutting 21%, healthcare, medicare reimbursements

General, Politics | | 1:16 pm | Comments (0)

Chinese labor shortages?

Yesterday's article in the FT highlight an interesting point: what happens when Chinese labor is no longer cheap? The article highlighted that with a new manufacturing cycle starting, many firms are having difficulty finding the workers necessary to fill large orders.Viewing the remainder of this article requires a Subscription

Tags: China, deflation, inflation, wage pressure

General | | February 26, 2010 10:49 am | Comments (1)

Connecting the dots 2-25-2010

Or at least trying to keep track of everything... I want to first give you an insight into what I've been reading this morning, then we'll see where it leads us. As many of you know, I'm a believer that excess profits flow through to the real estate sector and have referred to Fred Harrison's book on the subject often (http://www.amazon.com/Boom-Bust-Prices-Banking-Depression/dp/0856832545/ref=sr_1_1?ie=UTF8&s=books&qid=1267115867&sr=8-1 - it's a must read).Viewing the remainder of this article requires a Subscription

Tags: California, China, healthcare, IMF, imf gold, Municipals, Real Estate, vudu, wmt

Commodities/Futures, Connect The Dots, Real Estate, Strategy/Allocation | | February 25, 2010 12:12 pm | Comments (0)

SEC limits short sales

Under-reported and under-reacted-to (is that even a term?), the SEC in a split vote decided to put limits on shorting.

SEC commissioners voted 3-to-2 to curb short sales of a stock after it falls 10% in one day, with the rule requiring short sellers to exceed the highest bid for the remainder of that trading day and the following in short sales of that security. For the full article, click here.

For those interested in efficient markets, price discovery, market mechanisms, etc.Viewing the remainder of this article requires a Subscription

Tags: short sales limits, shorting

General | | February 24, 2010 2:13 pm | Comments (0)

The Hard Trade

“The best lack all conviction, while the worst are full of passionate intensity.” — Yeats