Thursday, May 20, 2010

Korea Kills Market

There is a lot of speculation around, blaming EU problems for the current state of stock market. Some people also blame coming US financial regulation.

Wrong! Both these themes are yesterday news. Yesterday news don't move market.

I think the news which sunk market today was from Korea. Situation there is really bad. Seoul is under constant threat from North Korean artillery, that's why South is usually very careful in everything they say and do. But now situation is crystal clear: Northen sub entered waters of South Korea and sunk a warship. Act of war, loud and clear. South has to respond. Question is: how? And US is under obligation to help South in case of war.

The main problem is Government if North Korea, if this gang of murderers can be called government. I have the impression that they are completely crazy. OK, they have maybe 5 nukes, they can kill millions even if one hits Seoul. But they will be wiped out from the face of the Earth in such case! Probably they don't know any other way than to bully and present themselves as fearless machos.

I hope that this situation doesn't lead to war. But hope is not an investment vehicle. That's why market sold out. I don't expect significant improvement until this situation resolved one way or another.

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Wednesday, May 19, 2010

New Position: Banco Santander

Forgot to mention it before: I opened a new position last Friday, May 14: Banco Santander (STD). I think it was hit too hard and deserves better.

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Monday, May 17, 2010

Buying More PGF

Today I added to my position in PowerShares Financial Preferred Portfolio ETF (PGF).
Financials are getting priced for another Armageddon. Some predict complete breakdown of Euro zone, some even think that end of EU is nigh. Ain't gonna happen.EU and Euro zone will be here tomorrow, a month later and a year later. With all problems, with all trade unions pressure and riots and other problems, majority of population in EU countries understand that without EU their countries are in much worse shape. They will keep it whole.
I'm holding PGF as a way of cash management. With 8% yield, paid monthly, it's a great tool to hold your cash. Price of PGF shares in normal times is close to $25, which is a usual buyout price of preferred shares of banks. So when I have some extra cash and have no idea what to do with it, I buy PGF or something similar.

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Monday, May 10, 2010

Back From Vacation

Just returned from vacation. Been to London, UK, completely unaware what was happening here. The only news in UK last week was election and a little bit of Greece events. It appears I missed a lot of action. Well, you can't win them all.

I'm going to watch action for couple of days before making any decisions. To my taste, prices are still pretty good on some buy candidates.

Europe is awake, at last. Stupid, stupid, stupid! ECB has controlling inflation as task #1. As if Euro doesn't need a lender of last resort. Yeah, right. Situation could've been solved couple of weeks ago for about 100 billion dollars. Now it's trillion euros. Price of the delay: order of magnitude. The funniest thing, of course, is that most of this money will be simply printed. By ECB. I hope Trichet survives this experience and learns from it.

Deflation is not over yet. It can reappear at any moment. Repeat after me: printing press doesn't solve deflation if money moves from press into mattress.

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