stlplace

Category: Investing

  • Fannie Freddie and the market

    Reading Time: < 1 minute

    Fannie/Freddie
    Short term I think it’s a deal for fed. But long term (it seems nobody is caring about long term these days), why should China continue to buy the Fannie/Freddie debt, for some premium over the US treasuries with substantial mortgage market risk (liquidity). I agree the US treasuries and Fannie/Freddie debt are co-related. It seems the greenback will continue to be a large part of China foreign exchange holdings.

    But think a minute, if the United States can not sort out this mortage thing, why should China/Japan mess with it? I think the implication of this mortage crisis will be much greater than many peoeple (convention wisdom) think. The house will NOT always go up. The housing sector and homeownership are good thing, but sometimes too much of a good thing could be a bad thing. I think the people in China state investment Cos. should seriously think about their strategy.

    The Market

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  • A wipe out story from mitbbs

    Reading Time: 2 minutes

    Original link here. Some discussions at trader1688. I don’t know even if Warren can come back from this one. Just like in soccer, when you are 0:10 and have 10 minutes left, basically even Maradona (wiki: Diego Maradona) can not help. That’s why we don’t want to “all in” (in this case, use margin) when we speculate. As Buffett and Munger did in the past, always keep some cash at hand.

    发信人: failed (Failed), 信区: Stock
    标 题: 紧急求救：FNM损失已经12万了，我该怎么办？谢谢您了！！！！！
    发信站: BBS 未名空间站 (Tue Aug 19 12:35:30 2008), 转信

    I understand investment is a personal choice and I deserve whatever I have.

    However, during this critical moment,
    your any comments are sincerely appreciated.

    Thank you so much!!!

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  • MO tax holiday, CHK hedge backfires

    Reading Time: < 1 minute

    It’s the holiday season again, this weekend is the MO tax holiday for back-to-school season. Quote the MO state gov web site:

    Section 144.049, RSMo, establishes a sales tax holiday during a three-day period beginning at 12:01 a.m. on the first Friday in August and ending at midnight on the Sunday following. Certain back-to-school purchases, such as clothing, school supplies, computers, and other items as defined by the statute, are exempt from sales tax for this time period only.

    Cheseapeke Energy Hedging backfires
    Last night CHK reported its 2Q 2008 earning, it incurred a big loss because of in 2Q the natural gas price went up much higher than the bets CHK put together. Here is another analysis by bullishbankers for CHK. Like many things else in life, you get the upside, and you can get the downside too. Hedging is a perfect example. One interesting thing I noticed from the earning report is in cash flow statement, CHK has one million dollars at the end of 1Q, and zero cash at the end of 2Q. They raised cash since then (again, read the bullishbankers analysis, and CHK own press release).

    BTW, to my readers, always apply your independent thinking when reading other bloggers’ (including yours truely) work.

  • Olympics buzz at work place

    Reading Time: 2 minutes

    Olympics buzz at work place
    As the Beijing 2008 only 8 days away, I am hearing quite a bit Olympics query from coworkers lately, mostly from curiosity and good will (wish Beijing and China will do well). As a Chinese living in America, I certain also hope things also work out well, amid all the security challenges, air quality, traffic, etc. One interesting story I read yesterday (Chinese) is some Beijing Si He Yuan (wiki: tradional Beijing house) are opening to foreign visitors. They call it 奥运家庭旅馆 Olympics Family Hotel. This is real neat, and I think it’s a better experience than staying at 3 star hotels.

    At the same time, I sincerely hope my goverment can improve the living for ordinary people. I know those migrant worker worked on the BirdNest may not have oppertunities to watch the game. This is ok, as long as they get paid fairly, their kids education get taken care of, they get affordable/good health insurance, and last but not least, they don’t have to wait in lines for days to get a train ticket to go home in the Chinese New Year.

    Marathon Oil
    Marathon Oil logo pic

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  • Cummings CMI and my energy play

    Reading Time: 2 minutes

    My 2 cents on Cummins CMI (a while ago)
    I have watched CMI for a few months now, have not pulled the trigger yet. There was a brief chance around March 17. I dare not to buy it after it went above 50. Like commodity, short term CMI has some selling pressure because:

    1) It’s an infrustructure/transportation play, with US/global economy slow down, its business should also slow;
    2) At Micro level, I know Dodge Ram trucks use CMI diesel engine. Chrysler just announced the Ram production cut, so…

    But I still like it because their diesel engines are very very good. I know very few manufacturers can make their quality diesel engines. A related thing, is the bio-diesel, if this becomes a reality, diesel engine will be more popular.

    Today CMI got a huge lift after reported strong earning (seekingalpha: cummins engine chugs along nicely).

    My energy plays
    Oil, natural gas and oil services. I have Marathon Oil (intergrated oil), Chepeseake Energy (NG), Devon Ennergy (NG). And yesterday I added Smith International (oil service).

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  • Weekend review w/e 071908

    Reading Time: 2 minutes


    (What a week, Yahoo Tech-ticker, link)

    China’s role in the Fannie/Freddie mess
    As Fannie/Freddie crisis deepens, people find China in akward postion because China is the largest holder of 2F’s bonds: total $376.3 billion. I don’t know exactly how China got into this mess, but I think one reason is decision maker in China must think 2F bonds are safe because of US goverment implicit gurantee. At least the market thinks so because the rating agency S&P, Moody and Fitch all gave Fannie/Freddie top rating. But wait a minute, didn’t those rating agency give a pass to those toxic MBS and CDOs? One thing I am sure is the China 2F buyers’ job are still safe, because at least they did better than the guys bought Blackstone at IPO, bought Morgan Stanley at $50s couple months ago.

    Financial companies using lots of oil?

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  • Why Fazoli is so crowded?

    Reading Time: < 1 minute

    (Update July 17) I went to Fazoli this evening to take some food home. Surprisingly there are many people again. Another sign average people are feeling the pinch in this recession.

    (Original) Fazoli has been my favorite lunch places for a while. Recently it got more and more crowded during lunch time. This seems strange because in current economy recession, one would think people would bring their own lunches more and eat less outside. So, what’s the reason?

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  • Six years ago

    Reading Time: < 1 minute

    Recent market turmoil reminds me 6 years ago: Enron, WorldCom and Tyco scandals are all in the news. Even blue chip names like GE and Xerox have some corporate governance problems. GE gave excessive benifits to retired chairman Jack Welch, the benifits including Manhantan condo, free corporate jets, season tickets to Yankee baseball games etc. Xerox had to re-state its financial statements (I remember got this news from Chinese newspaper when I was in Shanghai, summer 2002). It seems the corporate bean counters can not get the numbers right. That’s when I started to invest in the US stock market (sharebuilder), although in very small amount.

    Shortly after we got Sabane Oxly Act, which targets the corporate internal control and financial reporting (GAPP). I remember in dot com days all the internet companies used “pro formula” (non GAPP) to tell the fairy tales to the investors. April 2003, US invaded Iraq. The US stock market bottomed there, and took off until the recent sub prime debacle.

    When will the current bear market bottom? I don’t know. But one thing I know is the market go down, and goes up…all the time, as said by famous fund manager Peter Lynch (Lynch’s take on market, mp3, 5 mins)

  • Bottom fishing time?

    Reading Time: 2 minutes

    Yesterday was another brutal day in the Wall Street, or the Bay Street (Toronto), or SSE (Shanghai Securities Exchange). According to the number, the Dow is now officially in bear territory. General Motor (NYSE:GM), a Dow component and an American icon, hit 53 years low. It closed at $11.43. So, should we go bottom fishing?

    I am not a market timer, nor do I like to predict the market trend. But I noticed another interesting article from my friend Wang Jianshuo’s blog: Stock Market Big Drop. Note Jianshuo is not into stock market, a rare type in Shanghai. In other words, when people like Jianshuo started to pay attention to the market, things are either really good or bad (noteworthy). So, the 1 million dollar question: should we go bottom fishing? My answer is be careful, because if we don’t we will catch some falling knives instead 🙁

    Some ideas for bottom fishing

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  • Asset management in China: I

    Reading Time: 2 minutes

    When I say a mutual fund manager, what kind of personality (impression) appears in your mind? A guy or a lady in his/her 40s, with financial education, 10 years or more experience in investment field…

    This is not the case in China. Due to the boom of China stock market in recent years, and the boom of the hedge fund, many experienced guys (like Danbin, more about Danbin later) started or joined hedge fund so that they could make more money. Here is a Chinese article titled “rookie fund managers in charge of trillons of Yuan, only 7 fund managers have more than 7 years experience in China mutual funds”. The following Chinese video below tells the same problem.

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