I believe this market to have no soul. It is a Titan, a Night Rider, a Lord Humongous, a Hannibal, it wants to ruin the status-quo. Not because it ,itself, is evil, but because it is run and manipulated by evil people, who, like those throughout history are able to come to power through manipulation. Let me ask you something, as a sane person, does a volatility ETF sound like an ethical idea to you? What the fuck is volatility really? And, why options? Maybe because options, with their large spreads and high volume, are easily to manipulate? Think about all the ways to manipulate earnings that are recognized here, they may not be GAAP, but when some “Pro/Expert” gets up there and explains it on CNBC, they always take it for truth. ZNGA, GRPN, ORCL, etc it doesn’t stop, it’s all about profits, think about this, there’s a ton of “good ” companies trading at 10-20x earnings, I mean fuck, YELP is a great company (even though I lost money in it), and it had -$0.43 earnings, yet is trading at $25. So what is that, like 30x earnings if you take into account the negative EPS? Shouldn’t earnings multiples be discounted future cash flows? So if there is negative EPS currently, and the company doesn’t even really know how to produce future cash flows, why trade at this premium? At the same time, if some company has positive EPS, because of government regulations that it relies on for its business, has a legitimate forward looking multiple of 8x earnings, yet trades at less than half of its, than, NAV, where is the discount priced in?
How about Corzine and Dimon? How much money did they lose, not only for shareholders, but also stakeholders? Who are sometimes even more important, because they have no voting power, yet rely on the business of the aforementioned. When I saw Howard Marks speak, he said basically the same as previously stated, and added that the reason was because the finance industry was institutionalized like academia and had not evolved, especially the banking/VC side. Seriously, mortgage backed securities? Who the fuck thought that would be a good idea? Did you not take any Econ classes? Supply and demand, and the ability for the consumer to be able to reach equilibrium? So you jack the supply curve way up by over-building, thus, jacking the demand curve up, then you have to meet demand right ? No, actually you have to meet supply because you over-blew demand with fake economic conditions and over exaggerated forward looking metrics, based mostly upon the lessened financial regulations during the Clinton era. Then, post 9/11, with growth needed, even when problems were evident, they were allowed to keep going in order to avoid a possible recession, to remain insulated from the pending problems in Europe, the already developing economic disaster in Japan, and China’s new found strength. Back fire much?
The fractional reserve banking system is amazing in theory. However, like many great ideas, is not executed properly and/or responsibly. NO ONE, I REPEAT, NO ONE, should be able to draw more credit than 20% of their net current assets. That is truly, “risk free capital,” right there folks, and will deliver sustainable and realistic growth. We are too used to the rapid growth of the 19th and 20th centuries, especially after major world conflicts, hopefully we never see such devastating conflicts again. 9/11 was harrowing enough, and it has nothing on: the fire-bombing of Dresden, the nuking of Nagasaki, the bombardment of London, or the events of Pearl Harbor. We will have to deal with natural disasters from now until the Sun burns out. We need to save our reserves to grow in these situations, and in the interim, we need to sustain responsible levels of growth, without being too levered.
Here I sit, with my personal account, fully invested long in AABVF, HDSN, and INFU, and short ZSTN. 3 great North American companies, still living the “American Dream,” and a “Chinese Burrito,” going to zero.