Wednesday, January 14, 2009

Who Do You Trust?

Bill Gross? Bill Miller? What about Warren Buffett?

We have not only been deceived by our government (the Treasury) and the Fed (Greenspan, Bernanke), but as I mentioned previously, by the whole Wall St. enchilada (401Ks, financial advisors, analysts, quants, and economists). Please look at some of the picks below from Barron's Roundtable for 2008.

Scott Black (whoever that is)-Elron Electronics -88%
Perhaps he thought it was Enron.

Abbey Joseph Cohen-Ibiden (Japanese stock) -75%

Mario Gabelli-picked 3 stocks that lost over 65%

Bill Gross (Bond Guru)-Ford and GM bonds both lost over 50%

Archie MacAllister-none of his picks lost less than 22%

The list was thoroughly ugly. In fairness, Marc Faber (AKA Dr. Doom), predicted a bunch of successful shorts including China, and Fred Hickey recommended shorting RIMM when it was over $100. But these are supposed to be the people who know best? They literally could not have done worse if they spent the same amount of time looking for companies they thought would go to zero. And yet magically, Barron's has invited most of them back to use their crystal balls to take what's left of your retirement accounts. Are you serious? If I lost my employer 40% of his revenue, I'm pretty sure I'd be fired, not cranked up to see if I could recoup his losses. Yet the media treats these guys with sympathy, like they had no chance last year.

Hedge Funds lost over $350 billion last year. That's half a TARP! And these guys are taking 20% of profits in a good year. Nice work Madoff and company, you are the biggest criminals the world has ever seen.

Corporate earnings have not been the panacea they were over the summer. We are expecting the worst and are being abysmally disappointed daily. Nortel, once a $200 billion market cap phonemaker, is bankrupt. The Chicago Tribune will now look more like the New York Post. Citi may yet be nationalized and HSBC may need another $30 billion to stay afloat. What's the point?

BAC did drop below $11 yesterday and USO nearly hit $30. Still no rush as things can always get worse, like tomorrow for example, when JPM pre-announces it's horrible quarter. Dimon already admitted that the first half of the quarter was a nightmare, so don't look for great news. The return of the VIX will be a boon to us as increased volatility should reinflate our put prices.


Tiger Coach said...

Rough day huh? I hope you take a moment to record the "recommendations" at There is no credibility left... and those yo-yos don't realize it yet...

We could well be witnessing a paradigm shift... where our fix-it and fix-it-now appetite could well be changed in for an attitude adjustment. Congress still is trying to make the quick fix... no one NO ONE... will come clean still.. I keep getting beat on my offers.... I have made a few "good until canceled orders".. with OBNOXIOUS prices.... with a bit of luck, they will get filled...BD

AX said...

Funny how about 10 minutes after I posted this BAC took a dump! Like I said, can always get worse. Let's hold off on this and focus on USO. Newspapers looking rough...