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rffrydr
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 Posted: Sun Jan 17, 2010 9:23 am Post subject: TIME |
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"Present Future Value" business 101. If only it could be that simple.
The clock heralded the industrial age: trains cannot run on the rise and fall of the sun and an assembly line doesn't break for sleep or season. Rationalization rules the day; yet Time itself remains stubbornly untamed, why?:
http://www.economist.com/sciencetechnology/displayStory.cfm?story_id=15311296
But is a mystery for manufacturing a self-evident truth for distribution? Mirroring the orb of life itself, the round clock is evenly divisible and those divisions easily divisible and distributable themselves. That any part can be halved, means any part, even that which is only a concept, can be shared.
And what is ownership? A share. A share of stuff, yes. But what they teach in school is really a share of time.
What is supposed to be the summation of all future cashflow discounted and adjusted for debt is in practice a grand speculation of relative maturities that form and fold across business cycles--all with a nice population-based growth kicker at the end. The mismatch of these maturities is Wall St.'s adrenalin and why markets tend to move in much greater amplitudes than the economies they're based on. There are some aspects of this that the market can't get it's head around: if there is a demand for old-growth forests for example the market can't supply it. More prosaically, if there is a demand for war the market shouldn't supply it. It's not even sure the market can supply a road. In short, time can be too long. How we know that is in part how we measure that. 
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rffrydr
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| Posted: Wed Feb 01, 2012 11:22 am Post subject: |
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One of the unintended bonuses (to my way of thinking) of the hard asset mania is forcing investors to look past the next bend and on to the horizon. Aside from the obvious, Exxon, these big miners are very big CapEx contributors. And those expenditures will take a long long long time to pay.
Here's a note on this theme re BHP today from Alphaville:
| Quote: | We believe that one of BHPB’s key
challenges in 2012 is convincing
shareholders that investing in capitalintensive
projects over an extended
period will deliver “acceptable” returns.
The differing timeframes of investors and
a capex-intensive company such as BHPB
are highlighted by four “Mega projects”
that will require some US$120bn of capex
(over 50% of group capex) over the next
15 years. All projects should beat BHPB’s
cost of capital, but it is only from FY23
that they should augment returns (ROA of
19%). Nevertheless, we would Buy on
valuation |
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rffrydr
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| Posted: Fri Dec 23, 2011 11:34 am Post subject: |
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And so this pestilence of a recession (A.K.A. Depression) has blown-up my broker, my blog, and nearly myself. As in '08 we live in the moment and are limited to binary actions. Everything has become compressed.
I have substantially missed this second "dip" into a recession that never really left (ie US incomes substantially worse two years out of recession than during it). The irony is that I have consistently and never not referred to this cycle as "The Best of All Possible Depressions"! I don't think you hear "The Great Recession" much anymore on CNBC. But that luck too, faded (not, "ran out) this year.
I knew europe would be sticky, ugly and long but pretty much sounded the all-clear after a galvanizing World Cup). Indeed, I missed the biggest tell of all, Summer's retirement, and the general perception following him, that things could only get better. Hubris! The Administration has now learned from bitter experience the old adage that markets can stay illiquid longer than you can stay around. But the truth is, NOT.
States stay... period. States defy economic cycles because they outlast them. It's the time/space continuum. There is simply nowhere else to go!
"Time heals all Wounds" is one the great truths to my way of thinking so I am predisposed to lean against all the "kicking the can down the road" arguments brought up on, say, europe. No doubt there is a phase where this is true. And liquidation has served many good ends. But no-one can expect to come out of a cycle unchanged. It would be equally foolish to presume they even could. And europe, of all forces resistant to change, has proven a doosie! In that nebulous circle of command, that fog where the connection between cause and effect can be endlessly spun and forgotten ,change is easily resisted. It's always a "process," a negotiation into oblivion Well, oblivion finally circled back so no matter where you got on the merry-go-round it was there staring you straight in the face. Goverments have fallen, budgets broken, populace dispaired (yes, maybe a state cast out)...and heroes made. As their own good book says, "to everything a season." --Or, if you prefer, "turned the world upside down."
So...on the heals of that, what do we make of this?:
| Quote: | It is on the volatility that traders may be feeling most mournful, with many having been badly burned by both rising and falling prices. Again, the truth is that 2011 was really not a special year. US equity 30-day volatility peaked at the same level as in 2002.
Daily price swings in shares were not terribly big. Those investors – and there are many – who imagine this summer was much like the 1930s are fooling themselves.
In 1932 the US market swung more than 3 per cent on 94 trading days. This year it has made such daily moves only 12 times, fewer than in 2002 and well below 2008. European, UK, emerging market and Chinese shares did not stand out either. |
--John Authors, ft.com
Ah...but it was the 1930's wasn't it? In economic terms, Mocando was our "dustbowl"....winter '10, arab uprisings gas-spike, europe disintegration and china lockdown...were our misfortune. And then the fat, red cherry on top, a petty fight in Congress, bringing to bare that giant gun, that metaphor of europe's suicide cannon turn'd round on us... Missed all that! But 1937 was a spike--spikes can kill but whatever they are going to do they have to do fast. The tape-bombs came fast and furious. And they came in the dark of night. The whiff of terror and marginal market again went to 20/80 bid-asks. But in my good book, "What does not kill us makes us stronger."
So, no, it's not that we had it lucky as Authors intimates--it's that we had it so bad! The volatility was measured in hours...minutes, seconds....milliseconds! Assets converged to a simple paradigm: Risk-on/Risk-off. And in an irony that should be called destiny, one asset shined like no other: gold. As timeless and unchanging; as pure as only an asset that has no practical use can be, gold became the go-to asset.
When life and death is measured in seconds, we grope for the eternal. And in that instant the circle is closed once again. Once again we can start the clock and envision a future, a horizon. And that, in our own little world, we call an investment.
Bully 2012.
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rffrydr
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rffrydr
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| Posted: Wed Nov 30, 2011 5:14 pm Post subject: |
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Leave it to Berkshire to underscore what's wrong in our current "mark-to-now-market" world of finance. Hedge funds have no business in the re-insurance buisness:
http://www.bloomberg.com/news/2011-11-30/berkshire-faults-wall-street-private-equity-for-disposable-reinsurers-.html
| Quote: | | “The investment term is obviously out of sync with the duration of the liabilities,” Montross, chief executive officer of Berkshire’s General Reinsurance Corp., said in a statement on the unit’s website and dated this month. “This mismatch is unlikely to play out well 10 or 20 years down the road.” |
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rffrydr
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| Posted: Fri Mar 18, 2011 9:31 am Post subject: |
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While I'm fading the "Chernobyl effect" I don't not embrace the devil-may-care attitude of still snorting bulls. It seems almost an executive requirement that we "look to the future" and "look through the past." If I had a dime for every article dismissing the 40yr old technology in Fukushima as "out of date" I'd be able to balance the state budget by now.
Yes, in a market economy, there is always a prejudice towards the new and improved. And I have no doubt that current technology based on no moving parts is an improvement (indeed, going forward by going backward here) in safety--at least when it comes to the big stuff. But to embrace nuclear power with its radioactive detritus measured in centuries while, at the same time dismissing your power source of a few decades past as obsolete as bell-bottom pants is hypocrisy at its finest.
The fact is: this business class just can't conceive of investments over this scale. Not even the maker, GE. And this goes a long way to explaining the complete lack of investment in this area (last US nuke broke ground in 1973). In other words, a market failure. In still other words, the definition of a proper industrial policy. Markets need to shut up sometimes.
Bullish Netflix and Apple.
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rffrydr
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| Posted: Thu Jan 20, 2011 10:11 am Post subject: |
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| Quote: | | One of my good friends once said to me years ago, “Interesting style that Konrad has. He'll buy a stock. He'll then take like two years of grief from clients owning it. Then the next day, there's a takeover and he makes all his money.” Same friend also said: “I should wait for you to buy a stock… wait a couple of years, and then I'll buy it.” |
This is no time to be beating yourself up for deep value strategies. The last three years of chasing momentum with trailing stops, here, and especially in, say, china. Why should investors be embarrassed operating in the same time-frames of their barons-of-industry heroes.
Time is one, perhaps THE one, advantage the small investors have.
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