Black swans have flocked in
Triple crashes just arrived
Feed on each other
Triple crashes just arrived
Feed on each other
Showing posts with label black swan. Show all posts
Showing posts with label black swan. Show all posts
Monday, June 29, 2015
Sunday, March 02, 2014
The Limerick of Finance for 03/02/14
Shock conflict emerged overnight
Global markets are due for a fright
Gas supply is at stake
Leaders should step on brake
Suddenly our future's not so bright
Sunday, March 11, 2012
The Limerick of Finance for 03/11/12
The swap of Greek debt has just passed
Some hedge funds no doubt took a blast
Yet favorites remain
Are investors insane?
Their swap bets could unravel fast
Some hedge funds no doubt took a blast
Yet favorites remain
Are investors insane?
Their swap bets could unravel fast
Friday, September 09, 2011
Europe's Troubles Sink DJIA With Insiders Sitting It Out
Europe's debt troubles are so severe and intractable that the resignation of a senior ECB official was sufficient to cause a big drop in the Dow. This should indicate to even the uninformed casual observer that even the tiniest of black swans can now crash the West's stock markets.
Elite opinion is more inclined towards panic than the hints leaking out in that article. Recent declines in stock sales by insiders are deceptive. Insiders sold plenty of their holdings in 2009 with the market's head-fake recovery and continued to sell into a rising market in 2010. They're done selling because they've sold all they need to sell, not because they're suddenly bullish on America's prospects.
The developed West is in for a very hard time. This is 1932 all over again, but with digital communications shouting the latest HFT-driven swings to all corners of the world instantly. More crashes await the dirt-cheap value investor.
Elite opinion is more inclined towards panic than the hints leaking out in that article. Recent declines in stock sales by insiders are deceptive. Insiders sold plenty of their holdings in 2009 with the market's head-fake recovery and continued to sell into a rising market in 2010. They're done selling because they've sold all they need to sell, not because they're suddenly bullish on America's prospects.
The developed West is in for a very hard time. This is 1932 all over again, but with digital communications shouting the latest HFT-driven swings to all corners of the world instantly. More crashes await the dirt-cheap value investor.
Thursday, April 14, 2011
Geothermal Looking Good In 2011 (Maybe)
Industries always tout their health, but I pay attention to touting in an industry I like. The Geothermal Energy Association released its annual report featuring greenfield development in the Western U.S. It's hard to find a good way to invest in geothermal players. They're either big but underperfoming like Ormat Technologies (ORA) or small and risky like U.S. Geothermal (HTM) and Nevada Geothermal Power (NGLPF.OB). The sector bears watching but something extraordinary will have to happen to give it powerful growth. Black swans like a sharp rise in prices for coal or natural gas would make other baseload energy sources look great.
Full disclosure: No positions in companies mentioned above.
Full disclosure: No positions in companies mentioned above.
Saturday, December 25, 2010
Christmas Geese And Black Swans
Christmas has come but I'm not sure if the geese have gotten fat. The old nursery rhyme at that link is a comforting reminder of simpler times and timeless values. When the holiday ends, the real world returns. What surprises could be in store for us?
State and local finance troubles can sink the municipal bond market. This subject is getting beaten to death. A "bond market collapse" does not mean funding will be permanently unavailable to governments that need it. It does mean that interest rates will be much higher for solvent governments when bond investors freak out at municipal bankruptcies.
The PIIGS can still cause more trouble for Europe. The EU's critical constitutional weakness is its reliance upon the sovereign authority of its constituent nations to raise taxes. A truly continental budget would allow the EU to issue its own debt as raise taxes to fund things like debt bailouts. Lack of that mechanism means the EU will need outside help if Portugal and Spain can't pay bondholders. If the IMF can't help, China shows every willingness to step into the breach. This is a convenient window for China to diversify away from the U.S. dollar.
Real estate foreclosures could send the banking sector back into a tailspin. Mortgage-relief programs aren't working out very well for many participants. Healthy retail sales are helping commercial property owners collect rents right now, but it's hard to say how much of those sales are just future demand pulled forward. Try sustaining this spending splurge with structural unemployment staying high for the forseeable future.
The Sun could go supernova. Hey, you never know. Gotta cover all the bases.
The events mentioned above may not come to pass. Black swan disasters can have six-sigma probabilities, but they can still happen in an investor's lifetime. Risk management techniques abound. Muni bond risk can be hedged with credit default swaps (for large holdings from single issuers) or with options on a muni bond ETF. Risk of a euro collapse can be mitigated by holding multiple currencies. Real estate exposure is harder to hedge; REIT ETFs are optionable but the best tools are nonrecourse mortgages and free-and-clear ownership. I know of no hedges against supernovas, so perhaps one of my super-intelligent readers can invent a working starship affordable for the average family.
State and local finance troubles can sink the municipal bond market. This subject is getting beaten to death. A "bond market collapse" does not mean funding will be permanently unavailable to governments that need it. It does mean that interest rates will be much higher for solvent governments when bond investors freak out at municipal bankruptcies.
The PIIGS can still cause more trouble for Europe. The EU's critical constitutional weakness is its reliance upon the sovereign authority of its constituent nations to raise taxes. A truly continental budget would allow the EU to issue its own debt as raise taxes to fund things like debt bailouts. Lack of that mechanism means the EU will need outside help if Portugal and Spain can't pay bondholders. If the IMF can't help, China shows every willingness to step into the breach. This is a convenient window for China to diversify away from the U.S. dollar.
Real estate foreclosures could send the banking sector back into a tailspin. Mortgage-relief programs aren't working out very well for many participants. Healthy retail sales are helping commercial property owners collect rents right now, but it's hard to say how much of those sales are just future demand pulled forward. Try sustaining this spending splurge with structural unemployment staying high for the forseeable future.
The Sun could go supernova. Hey, you never know. Gotta cover all the bases.
The events mentioned above may not come to pass. Black swan disasters can have six-sigma probabilities, but they can still happen in an investor's lifetime. Risk management techniques abound. Muni bond risk can be hedged with credit default swaps (for large holdings from single issuers) or with options on a muni bond ETF. Risk of a euro collapse can be mitigated by holding multiple currencies. Real estate exposure is harder to hedge; REIT ETFs are optionable but the best tools are nonrecourse mortgages and free-and-clear ownership. I know of no hedges against supernovas, so perhaps one of my super-intelligent readers can invent a working starship affordable for the average family.
Friday, September 17, 2010
Possible Gray Swans
Here ya go Hondo:
US vs. China trade war.
Wave of municipal bankruptcies in US.
More supply shocks in Russia (grain or oil) force spikes in commodity prices.
Succession crisis in North Korea puts South Korea and Japan on war footing, sinking both their stock markets and sending CDS on their sovereign debt parabolic.
Pirate activity in Straits of Malacca interrupts one of the world's most important trade lanes, impacting shipping costs, major insurers, oil price, and the Christmas shopping season.
Nota bene: These are thought experiments, or flights of fancy if you will. None of the events mentioned are guaranteed to occur.
US vs. China trade war.
Wave of municipal bankruptcies in US.
More supply shocks in Russia (grain or oil) force spikes in commodity prices.
Succession crisis in North Korea puts South Korea and Japan on war footing, sinking both their stock markets and sending CDS on their sovereign debt parabolic.
Pirate activity in Straits of Malacca interrupts one of the world's most important trade lanes, impacting shipping costs, major insurers, oil price, and the Christmas shopping season.
Nota bene: These are thought experiments, or flights of fancy if you will. None of the events mentioned are guaranteed to occur.
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