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Baltbear on Finance

Open Letter to David Stockman: “No, It’s Just Foggy, not Sundown”

Someone gave me a link to David Stockman’s Opinion piece on the Sunday New Yoork Times, “Sundown in America.” I’ve always like Stockman in overview, ever since his “pigs at the trough” opinion of the “reforms” of the early Reagan years. I still can recall watching him through C-Span telling Congress to stop lying about unfunded liabilities, and getting fired for it.
But several things he gave as “givens” in this piece are as illusory as the Ryan budget.
Citing them by direct quote, here is some specific insight for the prudent speculator”
Here is the place where Greenspan, tho morally corrupt, was noetically sound:
” Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); ”
No. Not at all. By pretending that dollars are real, when he has just said they are not: ” an egregious flood of phony money” he can now go on and say whatever he wants to, since nobody is supposed to notice the big lie.
Let’s make this “real” : the price of the computational power in your i-phone has fallen in the last 14 years from roughly $40k to 1/2K–”therefore” you are 80 times worse off than in y2k, making this period the worst time in the gross economy simnce 11k bC when an asteroid exploded over the Canadian ice shield.
hmmmmmm.
Greenspan’s argument, early on, was that wages that went up as productivity went up are non-inflationary. Since money is nothing but a proxy for energy, the productivity of the goods and services is a natural multiplier for the “correct” amount of money for the economy.
“So the Main Street economy is failing while Washington is piling a soaring debt burden on our descendants”
OR: the federal government has added $10 trillion in debt, all of which was transferred from the “future” to the balance sheets of the top 0.05–5% of economic entities, “households.”
“But the flood of liquidity, instead of spurring banks to lend and corporations to spend, has stayed trapped in the canyons of Wall Street, where it is inflating yet another unsustainable bubble. ”
Yes. The tactical question then is “Who is preventing any other event?” and the answer is purely the Wall St contingent running the GOP. This is perhaps nowhere more clearly shown than in the impediments created to bring a more than a year delay in implementing the capital formation provisions on the 2012 “Jobs Act” which disintermediate Wall St from the actual “job creation” of starting new businesses, rather than leaving “small business” as low hanging fruit for the Bain Capitals of the financial world to rape.
“[p]ropping up old industries (agriculture, automobiles” Well, yes. So let’s stop agricultural subsidies, starting perhaps with such things as the tax subsidy given to the hedge fund that rolled up so much of the Michigan blueberry industry, extending to stopping subsidies for the fuel production being diverted to food growing, thence to the depreciation allowance of farm equipment that has been such a driver of unemployment in the past 50 years. In prudent speculation
you don’t get to pretend people can stop eating as a means of achieving fiscal order, or that the entire economy can work from home and ship on EBay.
“The state-wreck originated in 1933, when Franklin D. Roosevelt opted for fiat money (currency not fundamentally backed by gold)”–that is when FDR declared gold at $32, rather than the standing $20, and told those who didn’t like it to suck it, since those opposed were almost universally bankers trying to bail themselves out of the AIG like disaster of Credit Anstalt.
http://en.wikipedia.org/wiki/Hyperinflation#Austria
“Under the exigencies of World War II (which did far more to end the Depression than the New Deal did),”
Right, because wars always create so much more new wealth and life expectancy. Someone rational might note the tax rates of WWII and its debt retirement–rather than raping the future as Bush II did to pay for a larger war machine than it took for WWII–had something to do with stabilising the economy, as well as the billions in federal subsidies to heavy industry having a rational Keynesian effect on the 85%, at small cost to the 15%.
“Then came Lyndon B. Johnson’s “guns and butter” excesses, which were intensified over one perfidious weekend at Camp David, Md., in 1971, when Richard M. Nixon essentially defaulted on the nation’s debt obligations by finally ending the convertibility of gold to the dollar” for exactly the same reasons FDR had–gaming by European bankers. The difference is that Nixon imposed a “free market” solution to replace the “rigged market” plan favoured by Wall St types in London, Paris and Bonn.
It surprises me that Stockman glosses over, by dint of some emotional prejudice that creates self-denial that the real culprit was the 1967 changes to Federal book-keeping that put unfunded liability off-book (a felony for you, me or the current GE) allowing Viet Nam to be fought with a never ending series of new credit cards being used to make minimum payments on the old–exactly Stockman’s problem with Congress in the 80s.
“— arguably a sin graver than Watergate” Anything is “arguable” –or elsethe laughable sociopathy of a Paul Ryan would be a cause for his commitment to an institution other than Congress.
” as they did after the 1987 stock-market crash — was reinforced by the Fed’s unforgivable 1998 bailout of the hedge fund Long-Term Capital Management. ” The only thing “unforgivable” about that was Greenie’s simultaneous insistence that the games that created the LTC disaster could not be regulated, made transparent, or criminalised; since they suited the movement of wealth from actual producer–labour–to the self-entitling Ayn Rand master class of sociopaths. I have argued here previously that the unconstitutionality of ex-post facto law should be suspended until AG and Paulson are executed for this.
” Had President Bush and his Goldman Sachs adviser (a k a Treasury Secretary) Henry M. Paulson Jr. stood firm, the crisis would have burned out on its own and meted out to speculators the losses they so richly deserved.”
That’s a wonderful idea. A desirable outcome, and a complete denial of the economic reality showing those same speculators still feeding from the CDOs they invented then traded then leveraged from 2004-2008.
It’s a a marvelous idea, except for the economic reality that the public private pension systems across America would have been destroyed, rather than merely mortally wounded by the invented expected rates of return Wall St had sold its managers.
To conclude, while I have the highest respect for Stockman, sometimes he’s just wrong. The main place he has been wrong was letting himself be effectively muzzled when he was fired for telling Congress the truth about the real deficit while he thought he was serving Reagan, who had already defaulted on his duty to America by engaging in a massive Keynesian stimulus to the MIC, while efficiently pretending to be a Chicago style monetary hawk.

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Nokia–timing, trading into accumulation and gut checks

As readers may be aware, the last serious play I coached clients through was NOK. A few people followed along the story line, with differening attitudes. Their attitude, intelligence, courtesy and failure to be spoiled brat whiners caused at least one to achieve some decent results. For that, thanks. It’s appreciated. As noted somewhere (like in the about) this site is about how the game is actually played. Show me that you made your number, and that you’ve been at the table since Sputnik, and then I’ll give a rat’s rump that you disagree.
Here’s the end results, with some useful comments.
Entry: Way too soon, since the 16 hours of concentrated due diligence put par at 3 3/4. That’s where I set entry, for (probably) two reasons:
1. Still felt the sting of missing BRKB, where 65 started looking good, but the politico/economic surround (The idiocy of the GOP “debt ceiling” phony ideological crisis) suggested 62 1/2 might be doable.
Then Buffet totally cracked out of form with a buyback.
2. Bad measure of capital in/out flow by sector. That is, Apple mania and its propaganda led many to sell NOK to buy AAPL. Creating FUD around NOK thus became part of the strategy to pump the cult of Jobs.
Nonetheless, as Rumi said, it is what is is. Little about “what Nokia is” changed, only how it was being perceived. So, the bands for in/out trading moved from 3 3/4 - 5, to a more actually consistent with my long term strategy, to 2 3/4 — 4.
And gut checks. And double downs.
Those likewise had a fatigue point caused by the early entry. By 1 3/4 the fire power left was running low, and the purely voodoo decisions of the entrails of chickens named Bollinger, RSI, MACD,
SMA, EMA weren’t doing all that much for the net basis.
Until the turn.
Take away? If I had stuck to cold blooded thinking, a 3 3/4 par would have produced a buy signal of 3. That would have allowed lots of piling on in capitulation range of 1 3/4.
Each client had been told to have a fire power allowance of $60k. The peak was right close to that,
~$58.5. Of course some clients applied the same signals to smaller pots. One, having put more cred into my thinking than I had by the end of the cycle put in an extra $5k at 1 3/4, ignored the tradeout point, and also ignored the “Screw it, I’m done” signal sent by me as a function of overall tax policies of the GOP idiocy, walk the talk, and general, “No country for old men.” (Which is to say, since I want an end to the “special treatment” for the “special people” and want generic capitalism–you want it, you pay for it–to the MIC and welfare queens like Bain, I should prepare for it. That makes being done with NOK before 2013, 8 months instead of 9, a necessary response to avoiding moral hazard.
Next problem? All but the one client closed play @ 4 even, when a 1 day further wait would have gottten 4 3/16. I mind that less, as being the kind of pud-pulling of if dog; rabbit of game boys.
Next, the opportunity cost of the play? Missed the turn on FB totally. (I still put par ~6, but getting in/out started ~ 18 would have been a start.) Missed the turn on RIM, which is where 1/2 the NOK profits would have gone under a different timing.
Objectively? Clients were told to put up to $60k of dry powder into playing NOK. Adding in the $2k in divs that sweetened the pot on the early holdings, subtracting transaction costs, and applying the trade into accumulation algorithm driving the whole game, clients had a return of 20.6% annual; with 4,400 shares “left over” “0 basis.”

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Metrics that make butter

In a recent discussion concerning brk.b, someone noted that Schwab “gives” traders a report card on any given ticker, a through d, to “help” you to sell the losers and buy more winners. After all, there can;t possibly be a reason to look 9 months to 9 years or longer out to see what’s going on. The job of corporations is to post results that “beat the street”–not actually make anything. If you want manufacturing creating jobs that end up being housing demand, disposable income, improving quality of life then go to China. America is about “beating the street.”
So, the question can then become, does a prudent speculator look at ther street instead of the goals of waelth creation? Does the prudent speculator look at general or specific volatility?
Here’s a few thoughts using the concrete evidence of bac filings:
And during the third quarter bank of America reporting slightly reduced revenue as a result of lower investment and brokerage in “driven by suppressed 3Q 11 market levels lower transactional activity” for its Merill Lynch operations. Merrill Lynch customers generally have less than $250,000 under management. As a result of catering to the rich policies those with more are moved to what Merill is calling its “edge” accounts. Many readers will fondly recall Q3 is a time of great market volatility. Using the same simple I principle what was the source of the activity?
If you answered “churn” you are missing a detail. Merill specifically said it was not sure it’s accounts in reality Merill was working to increase assets held by clients by $1.5 trillion during the fourth quarter. Since it’s kind of silly to insist that $1.5 trillion was created during the fourth quarter in America given the state the economy, the obvious answer – –cash moving into equities– is probably not totally true. Counts moving from other houses, 401(k)s moving from corporate managers to new firewalls, and – savings on the hunt for higher return is the most likely group of sources.

Since Merill advisors are basically being told to run scared or quit, and hit the phones hard to bring in new assets (where asset is a guy with money to be managed) it isn’t likely that those advisors were calling clients convincing them to bleed their retirements by churning into Q3 volatility.

Once again the money that was moving was moving quickly in whatever direction it could find to move against some other money. None of the volatility had it’s driving source in “America.” None of it related to Dow theory. Much of it was bets on Greece versus Merkle versus Romney versus the British Prime Minister versus Iranian politics versus getting the cash to pay for the kids to private schools.

As noted by Gil Weinreich (who used to write the “ethical advisor” column for research magazine and is now its editor, “the feeling is that if we sell a product or service to a willing customer, it is inherently moral – we’re both realizing our declaration of independence-blessed pursuit of happiness. But that is no more acceptable than a doctor treating a patient with only the medicines or services proved either hospitals finance directors with better alternatives exist.”

If a financial advisor is trying to complete the sale for any other reason then the clients best interests the odds favor that advisor preventing the client from having fully informed consent. “Informed consent” is often the difference between a seduction and a rape.

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This post was written by admin on March 11, 2012

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as seen on the bottom line beats as seen on tv

The difference between building a company and pumping a stock can become more obvious by looking at how owners of the stock judge the company’s promotional activity.

Isco.OB undertook the Christmas marketing plan for its subsidiary line of skincare products. While the company was urging buyers to buy product thereby generating revenues for the company, improving its bottom line, and sending it closer to EBITDA, one of the retail holders of the stock complained on its Yahoo discussion board that the company should have the instead been trying to promote the fact that it’d been able to promote itself on Fox news. While some sellers of slice or dice your Gee whiz it does even more but wait operators are standing by now garbage retail products may in fact desire the famous “as seen on TV” to be the Mark of worth, in the world of business stockholders are better served when the CEO appears on television to explain how he will work to reduce the tax liabilities.

Isco.OB has been a dog for much of 2011. This does not change the fact that out of the three “pure plays” in the stem sector Isco remains the number one chance at achieving EBITDA. Gern may become an interesting turnaround play in 2012, since it has formally abandoned its position as a stem play. As a cancer play its present price may attract the prudent speculator.

Full disclosure: clients and Isco OB at under 15/16. Clients in gern overloaded at 1 13/32

When volume and momentum pickup on Isco.OB I expect to be recommending it again .

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This post was written by admin on December 20, 2011

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An open letter to Gil Weinreich

The Thanksgiving (November 2011) issue of research contains a thought and bile provoking editor’s letter. Research is quite often an excellent magazine. In particular Bill Miller: the closing bell offers a light weight but useful alternative perspective on the self-aggrandizement of financial advisors.

However, the “starvation” letter is built upon one of those big lies that often are critical in preventing honest and honorable discussion of financial solutions.

In the midst of the financial reporting world being so often dominated by clowns like Kramer in my simple point of view it would be easier to start with some truth telling.

Weinreich in his editor;s letter “the lessons of starvation economics” retells the beginnings of the Wall Street smash and grab that makes remarkably clear the issue of moral hazard.

He states, “in 1620, when our Pilgrim forefathers arrived in Plymouth, Massachusetts, per capita GDP was nearly 0.” In reality in 1620 GDP of North America was sufficient to ensure a standard of living higher than that obtained by the peasants of England. What did not show in the accounting was
the entire natural resource asset base of North America in the type of hyper M3 that is used for making long-term commodities calculations such as the combination of proven and unproven petroleum resources. The Native American culture lived within its means and established ownership of its resources through the eminent domain of possession for multiple thousands of years with no oligarchs capable of filing an enforceable claim against them–until the pilgrims.

The Native American version of home ownership savings and retirement plans was the store of provisions within their multiple dwelling places, and those endowments placed in graves.

Just as the Greenspan-Paulson period of American predation held that resources are the natural property of the predator class, the Puritans found “corn, and beans of various colors. These they brought away, intending to give them full satisfaction [repayment] when they should meet with any of
them, as about six months afterwards they did.
“… They thus had seed to plant corn the next year or they might have starved; for they had none, nor any likelihood of getting any, till too late for the planting season.”

In simple terms, the Puritans hedged their synthetic paper that hypothecated a claim to resources without proper audit, thereby inventing Bear Stearns and Lehman Brothers, and then misappropriated funds from accounts not under their control, thereby laying out the legal basis for MF Global, and giving bright ideas to Bernie Madoff.

Weinreich notes, “actually, just under half the population did die that first harsh winter. Socialist economic policies kept the Pilgrim starving for three years, and as today, The unemployment rate needlessly high: “The experience that was had… May well advance the vanity of that conceit of Plato’s and other ancients applauded by some of later times; that the taking away property and bringing in community into a Commonwealth would make them happy and flourishing; as if they were wiser than God. For this community open. So far as it was apparent it was found to breed much confusion and discontent and retard much employment that would’ve been to their benefit and comfort.”

Actually, getting closer to the procedural issues, in 1623 “the Governor (with the advice of the chiefest amongst them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves; in all other things to go on in the general way as before.” That is, work towards a republic, exactly as Plato had said, without a self-entitling oligarchy stealing the productive resources of the governed.

To get closer to the facts, the crack about “socialist economic policies” cannot be sustained without an examination of the synthetic instrument that caused the pilgrims to be in North America.
In reality, each person transported by the stockholders in England had a patent grant to 100 acres of tillable land, provided that such patent not impede riparian rights, which remained with the government back in England rather than within the eminent domain of the Pequot. Management was granted an additional 1500 acres for the sole purpose of public works–schools, hospitals. That “granting of small plots” was no more than slowing down the plutocratic rollup. In addition, of course, the pilgrims got a license to “forcibly expel” anyone who got in their way, thereby inventing rogo-signed foreclosures powered by MERS.

Weinreich notes that, just as is as did Lenin shortly after the Bolshevik Revolution, the management of the pilgrims corporate enterprise, “allotted private plots on which families could form for themselves”–except of course that the land was already theirs, if one gives credence to the Crown issued patent. It was never management’s to give, either way.

In reality, the failure of the pilgrims to abide by their patent created an entitled social class. In 1623, the actual incident that Weinrich calls “small plots” was “In 1623, the Pilgrims divided up their land. The people mentioned in the Division of Land came on the Mayflower (1620), the Fortune (1621), and the Anne (1623). A couple may have arrived on the Swan (1622) or the Little James (1623), but these were small ships carrying mostly cargo. The Division of Land is recorded in Volume XII of the “Records of the Colony of New Plymouth”, and reprinted in the “Mayflower Descendant”, 1:227-230. Each family was given one acre per family member.
http://www.histarch.uiuc.edu/plymouth/landdiv.html

All the “Mayflower Compact”, an effort to legitimise a warrant-less land grab actually said about private or public ownership of resources was “We, whose names are underwritten, the Loyal Subjects of our dread Sovereign Lord King James, by the Grace of God, of Great Britain, France, and Ireland, King, Defender of the Faith, &c. Having undertaken for the Glory of God, and Advancement of the Christian Faith, and the Honour of our King and Country, a Voyage to plant the first Colony in the northern Parts of Virginia; Do by these Presents, solemnly and mutually, in the Presence of God and
one another, covenant and combine ourselves together into a civil Body Politick, for our better Ordering and Preservation, and Furtherance of the Ends aforesaid: And by Virtue hereof do enact, constitute, and frame, such just and equal Laws, Ordinances, Acts, Constitutions, and Officers, from time to time, as shall be thought most meet and convenient for the general Good of the Colony;…”
All the rest of the “story” about “socialism” “welfare” and “capitalism” is later created excuses and justification.

Weinreich complains that, “the notion that American should accept increased taxes and ’shared sacrifice’ in time of need, but the experience of our Pilgrim forebears shows that people will literally starve rather than work for the ‘Commonwealth’ policies that discourage free enterprise…. Do we not see in today’s foodstamp economy rise in brazenness by able people? It seems like a week doesn’t go by without a flash mob army, endowed with expensive cell phones, looting a convenience store run by some hapless immigrant.”

By my experience and training someone seeking financial advice will be well served checking the sanity of potential advisors. I encourage anyone reading this to use what ever Bouleian search algorithm satisfies them to determine the actual incidence rate of “flash mob armies”, the ” looting of convenience stores”, “stores owned by immigrants.”

Weinreich concludes by stating, “our forebears came to America seeking religious freedom, and learned the necessity of economic freedom”. The reality is – ask any Pequot – that the Puritans foreclosed on a hypothecated mortgage registered in a MERS database confirmed by Robo signature performed by European oligarchs whose world view demanded that the worlds wealth was the natural property of certain wellborn, well-connected, self entitling aristocrats. The Puritans’ business plan execution, as Weinreich notes, lacked capital spending allowance, resource management, inventory control, proper paper trail, and regard for the rights of others. It was, as Weinreich notes, strong on child labor and disregard for the weakness, inability and unpreparedness of the assigned labor class.

It was backed purely by the firepower of English weapons.

The current American experiment holds instead that wealth creation comes from an environment that makes putting either monetary, intellectual or labor capital at risk as safe a bet for all parties on all sides of the table a naturally occurring event. That is the point of view inherent in the recent comments by Warren Buffet and others concerning rational tax policy.

I have been told by many people (some of them clients) that they “made their own money” or “created their own wealth.” My standard reply is to demand to see the iron ore-bearing dirt beneath their nails or signs of having built and worked a smelter from which could come the base metals of an industrial age. None of them can. I have asked a few to show me the solder burns on their fingers from wiring up the computational devices they use to plan and execute wealth creation strategies. The most honest of them then admit that they believe themselves too precious to be sacrificed to the common good, too self-involved to be aware of the social capital bestowed upon them.

During the financial meltdown of 2008 a notable percentage of the wealth generation capabilities of the United States was destroyed. I have seen no one asking the rich to make sacrifice: I hear many voices suggesting to those who profited from the system that they pay the money back or leave the country.

Does your RIA reject the social contract? That may explain what happened to your 401(k).

If “19th Century rationalism” is going to be invoked, then the American economy is an engine. Any engine that loses energy through internal force transference– through cams, gears, chains, poppets, belts–unnecessarily is about to be an abandoned engine. Economic engines transfer raw energy and material resource into capital stores of cash, social environment, education and safety. Efficient ones do not empower garbage such as the torquing of American history into one of Ayn Rand’s sociopathic fairy tales.

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This post was written by admin on November 25, 2011

401(k) transparency and the dummy

just in time to avoid a proper political consequence about 72 million people will open an envelope and see the true cost of their 401k plans laid out in a new $3 trillion americans have tied up in one part of the financial markets one tiny subparagraph of a subparagraph (erisa 404 (a)(5) will provide a cloudy detail or 3 about those “expenses” within a uniform standard.

amusingly enough it is not the sec which mandated this change, nor is it the irs which might wish to have an opinion about the prospects of tax deferment. nope, it’s the department of labor.

not too many pages away lurks section 408(b) (2) demands some light on the direct and indirect compensation providers receive, including fiduciary or ria services, recordkeeping and backroom activity involved in the choices within the plant; and of course a few other services for which indirect compensation is demand. The fun comes in with service providers are told to explicitly state that they are actually acting in a fiduciary capacity or is the glorified hucksters and fan supplied the bucket shops that are so laughingly called commission-based service providers.

naturally enough the rules actually don’t call for full fee disclosure, since the actual “investment costs” racked up to the participants –which is most of the money lost by the working person who’s been conned into the fancy names and flashing lights of financial market casinos– is not something the federal government in any shape way or form has the stones to demand be put down in plain english.

It’s been a selling point– which is to say a typical finance industry lie– that 401(k) plans have no packaging costs. aarp says that about three quarters of the people in 401(k) plans have no idea that there are fees at all:
about 5/8 no idea on which the fees are;
about a third feel they have some sense of them.

in the real world, which is to say the one where the sharks feed on tuna, houses build 401(k) plans to stuff people into specialized bundles including mutual funds. all you have to do is layer service fees on top of the so-called investment expenses to generate the vig.

the finance industry is figuring that a couple hundred $bb or more will be moved from one plan to another as a few households begin to wake up about how much they are doing to contribute to Wall Street’s self stimulus plan.
plain english? feeding frenzy in the “wealth mgt” “financial advice” wading pool.

wanna have some fun? ask your financial advisors for an early heads up on how all this breaks down and see how much they stammer and humhaw during the call.

amidst the pitter patter drops of sweat falling onto the advisor’s desk will be some garbage about how essential he and his services are and how his tiny slice off every scrap of fruit ends up with your fried pie big mostly grease and air pockets.

things to look for now look over what ever quarterly statements you might have for the term 12b-1.

In point of fact 401(k)s have failed on all fronts. the principal tool of the failure is in the financial industry skimming of a couple dozen points as compensation for walking 8 feet from a dart board and letting fly.

The efficient market theory is explained to americans is a joke. if it had any factual basis most 401(k) activity could be done through a dedicated account making spdr purchases.

your ria – if he is doing his job – can perform the services of a high-grade plumber who works on the hydra-headed piping that is finance, and be paid no more, be entitled to no more, than any plumber or electrician.

when america had the fundamental chance to keep on being a place where they make things this could have happened. but once again in the auction bridge that is wall st, the scum robed in tailored suits and double talk took the trick.

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This post was written by admin on November 18, 2011

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want wealth? do what wealth generators do.

a day or 4 ago, some mkt newbie suggested that blackrock’s ownership of a ticker was “institutional ownership.”
after a brief attempt to explain russell indexes fell on koolade plugged ears, while i was bemoaning the brk buybacks that made brkb unattractive to me, it occurred to me that perhaps a simple, 4th grade arithmetic lesson is again in order.
for the exercise, 2 proven profit generators, blackrock and berkshire hathaway, and a well constructed narrow field player specifically in the stem cell sector, cirm.
for the exercise, biotime, amex, btx. amex is selected.

no way in creation that buffet would ever own btx.
buffet was willing, at 2008 prices to put 12% of his dry powder into ge–as long as he was guaranteed 10% yield on that “weak” an outfit. buffet was recently willing to to put 12% of his dry powder into bac, under terms that get him 10%, unless bac bounces back to 1/3 of its 2 year high, in which case buffet makes more.
this gives the prudent speculator some tools for thought on what is worth going after, and under what terms.

blackrock does in fact “own” some biotime, since, as a result of some m&a activity, runs a pile of funds based on the russell and various baskets of “biotech.”

but this one can be clearly measured.
blackrock owns apx 1.5 million shares of biotime.
those shares price apx $7.5 million.
that sounds serious until you add one 4th grade fact:
blackrock has $3.7 >>trillion<< assets under management (aum).
so blackrock’s ownership of biotime is like 0.000000002% of its aum.

so, on a $100,000 port, how much biotime would somebody as smart as blackrock own?
2 mil. 2/10 of a penny. no more.

that leaves cirm, california’s own investment fund 100% in on “stem cells.”

as i noted 122209, cirm had 1.6% of its bets on biotime, in a rigged game which it cannot lose, since it will be taking a house edge at every level.

putting n the same $100k port, that’s $1600 in biotime, amex. on a $10k port, it’s $160.

as noted in that cirm analysis
http://baltbear-on-finance.com/uncategorized/dancing-with-w-stocks

if you make that move, you are working at 3x higher risk than cirm.

as derived from btx’s 10k, the “buffet price” for btx is no more than 2 1/4…if you believe the full btx sales pitch.

can the prudent speculator do that?

can someone buy 400 @ 4, sell 300 @ 6?

maybe.

the cronies and insiders have been doing it sall along to a basis well below 5/8.

bottom line? act like the smart institutions do regarding story stocks.
in the proven, measurable case of biotime, no more than 1.6% of your port, unless you feel you were born to lick the boots of the players.

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This post was written by admin on October 18, 2011

dylan grice ate too many gold bugs

one of the more well-followed of the whackjobs called “gold bugs”–dylan grice–today opined and was much quoted as saying that gold is “properly valued” at $10k an oz.
in order to further that irrelevant pomposity he makes any number of the usual suspect arguments.
to wit:

:”Yet free money does not, and cannot, exist”
Of course it does. It’s called “inherited wealth.”
Inherited wealth can be the road in front of the hospital, or the hospital itself, or the electric grid that supplies it, or the coal that powered the grid.
:”Since there can be no such thing as a government, or anyone else for that matter, raising revenue “at no cost” simple logic tells us that someone, somewhere has to pay.”
Since the statement is a tautology, it is irrelevant, except as the pose of some girley-boy poser puffing up about the fact that while “trading” is a 0 sum game, “life” isn’t.
:”But who? This is where the subtle dishonesty resides, because the answer is that no-one knows.”
this is where the massive stupidity resides, because the answer is “the future.” The future inherits the debt and the wealth simultaneously, returning the game to 0 sum.
This obvious fact is noted in the Preamble to the Constitution of the United States, “upon ourselves and our posterity.”
:”Isn’t asset price inflation (or bubbles as they are more commonly known) more distortionary and economically inefficient than product price inflation?”
No. Simply because “food and water” are “products” and oil and land are “assets,” asset price inflation automatically creates product inflation. Marx, not Adam Smith argued that this “double hit” meant that “means of production”–a catch-all term for “asset resources” needed owned by the state.
The actual distortion occurs through “measuring by comparative wealth” which is often miscalled “greed.”
:”We know that revenue cannot be raised for one person without costing someone else.”
Actually, nobody “knows that.” It’s just given as a rule when playing monopoly, the ultimate “comparative wealth” metaphor. Somebody striking a claim to a gold mine, and thereby turning acreage into revenue has cost nobody anything–except other gold mines–until “the future” lays claim on the increased supply.
:”the only correct thing to do is to create inflation to protect jobs.” is nonsense that requires addiction to goldbug bites to endure.
Forced demand (borrowing demand from the future) such as the Interstate Highway System, and forced supply to shut up the private money sources (tax cuts used to pay off personal debt). That is, until the private money sources have a new way to con the consumer, in which case the inflation is “growth.”
:”the drunk driving of macroeconomists is what led us to where we are today.”
Yes: Having this conversation via internet instead of horse carried quill scratchings on vellum.

“Gold” is no more real in any utilitarian sense than “faith and credit.”

Gold serves well in the same place as “inches.” There are lots of inches in a house, and measuring every transaction in terms of them is essential in building the house. But the house is not the inches.

when your financial advisor starts handing you tautologies and “we all know” and tries to peg your family’s vision for prosperity to the holding of some asset, rather than the building of enterprise, feel free to run.

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This post was written by admin on September 15, 2011

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isco out of the doghouse….

isco.ob has escaped the “e” doghouse with an amusingly accurate 10q.

some highlights featured below as a guidance towards where the prudent speculator will be gathering shares…

1. isco apparently needs to increase skin care gross by ruffly $3.8mm to hit ebitda….

call it 3x from here.
does anybody in their right mind not think that moving the marketing out from the idiot john mauldin to people who are professionals will almost automatically produce a triple???
isco is making the moves….

so… a “stem play” with ebitda….what’s that worth?

is now a great spot to get in?

“trade into accumulation” is any net point below ruffly 1 13/16…

can isco tells us anything about biotime??? ubetchya.
“On June 18, 2008, the Company entered into an agreement with BioTime, Inc. (“Bio Time”), where Bio Time paid an advance of $250,000 to Lifeline to produce, make, and distribute Joint Products. The $250,000 advance will be paid down with the first $250,000 of net revenues that otherwise would be allocated to Lifeline under the agreement. As of March 31, 2011,>>>>>>>>>>> no revenues have been realized from this agreement. >>>>>>>>>>>>>>>>>>
that is, btx $58k revs for 2010 from stems is unlikely to increase at any usable rate…

“Warrants issued to BioTime

During June 2008, the Company entered into an agreement with BioTime, Inc. (“Bio Time”), where Bio Time will pay an advance of $250,000 to produce, make, and distribute Joint Products. As part of the agreement, the Company issued warrants for Bio Time to purchase 30,000 shares of the Company’s common stock at $0.25 per share. These warrants expire 4 years from date of grant.”
so…2 years from now, mikey will be putting out mega press releases about “investment” in isco….or else ak/neal garfies will wait til isco breaks lose, then have some trading profits….

“Marketing expenses were $163,223 for the three months ended March 31, 2011, an increase of $29,805, or 22%, compared to $133,418, for the three months ended March 31, 2010. We continue to focus our marketing efforts and spend our marketing dollars on marketing consultants, trade shows and the cost of advertising. We have continued to develop our marketing and sales strategies as well as our marketing infrastructure to support our sales team and our sales goals.” i read that as “screw mauldin’s mailing list, let’s do bizness.”

“During the quarter ended March 31, 2011, the Company has issued 450,000 shares of common stock under the S-1 to Aspire Capital Group, which raised $576,480 and will be used to fund our operational activities.”

no real desperation for $$$, altho i would much, much prefer the strike there to be > 1 7/16…

options grantrted for gaming the stock struck (mostly) above 1 13/16…..accounting for the coxsucker collapse…

“a total of 150,000 shares of common stock issued for consideration of Investor Relations services. “
next pump is being set up…

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This post was written by admin on June 28, 2011

actc pricing past astronomical

actc stats

1.54 bb o/s.

rate of change in o/s, ruffly 7% per 1/4…..

requires $12mm more in revenue with no increase in shares or spending to get to $.00001 ebitda.

give them a break and say the dilution rate drops to 4%.

give an irrationally optimistic 2 years to fda approval.

2.1 bb shares actually only changes the required net increase in revenue above g&a, r&d, cog to be $56k.

thus, we’re still left with actc being required to increase gross revs by $12mm, with no increase in spending.

let’s pretend that actc can get something to mkt with a 50% margin. that means a $24mm increase in sales to achieve $0.00001 ebitda. giving actc an astronomically high par of 300 ebitda gives a stock price of ???

1/32.

in any world inhabited by real people, the trip from a handful of patients to an fda phase iii trial completion and acceptance is more than 2 years, and has a price tag–let’s call it $12-30mm.

raising the cash by selling stock is in the neighborhood of another 150mm shares more than “normal growth.” the odds on an fda approved procedure sending more than $10k a patient back to actc are small. the odds on more than 12k procedures smaller yet.

actc is this currently trading 6x higher than it will ever be able to achieve as anything except tickets to chickenpoop bingo.

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This post was written by admin on June 2, 2011