The Power of $IYR

Things that make you go C'MON (as a bear)!!!

Performance of Real Estate ETF ($IYR)
Dec 22, 2009 to Feb 8, 2010:  47.75 down to 43.24 (down 9.5% on a volume of 557 billion)
Feb 9, 2010 to Mar 29, 2010:  43.24 up to 50.01 (up 15.7% on a volume of 402 billion)

IYR has never closed below its 50EWA (exponential weekly average) since July 27, 2009.
IYR has rarely closed below its 20EWA (exponential weekly average) since July 27, 2009.

IYR all-time high was 95 back in Feb 2007 and meltdown low was 21.
(95 + 21) / 2 = 58...isn't that the 52 week high?  hmmm...

Sorry for butchering the TA...I'm a macro guy...but this is crazy silly performance considering all the upheaval in the Commercial Real Estate industry and all the unresolved mortgage, inventory and financing issues.  Things are not 2005 all over again, which that last time IYR was trading in the 50's pre-meltdown.

Belgian Bailout T.B.A. ???

In May 2010, Greece got a 146 billion Euro bailout.

In July 2010, everyone remembers the overly-positive European Stress Test results.  Only 7 banks failed with a combined shortfall of 3.5 billion Euro.  Since then, the Euro strengthened and the Dollar weakened thanks to POMO.  The risk "on" trade continued as commodities and US stocks rose.  That is, until recently.

In November 2010, Ireland will get an 85 billion Euro bailout package:  67.5 billion euros from the European Union and International Monetary Fund and 17.5 billion euros from its own pension reserves.


I have maintained that Belgium is the Eurozone's black swan since everyone has focused on the PIIGS (Portugal, Ireland, Italy, Greece, Spain).  That's not to say that Italy and Spain are in the clear.  People have started talking about Belgium.  We all remember the botched bank bailout which caused the Belgian Govt to collapse.  And don't forget, Belgium has a 100% debt to GDP ratio, no Govt and a much bigger GDP than Ireland or Portugal.


Meanwhile, the iShares Belgium ETF ($EWK) has managed to stay above its post-Euro-stress levels of roughly $12.  The terrible performances (since the Euro-stress-test) of Bank of Ireland ($IRE), Allied Irish Bank ($AIB) and National Bank of Greece ($NBG) could give some indication of $EWK should there be a Belgian bailout.  Although, only 14% of $EWK is invested in the financial sector.  iShares Spain ETF ($EWP) is 46%. iShares Italy ETF ($EWI) is 36%.  The E.U. seems on shaky ground as there is a daily protest and/or riot in some European country.

Happy Thanksgiving

Happy Thanksgiving to all stock traders/investors  My stockgut will have lots of turkey inside it this holiday.  If I'm lucky, it'll have some Wild Turkey bourbon.

Fun Fact#1:  Ishares MSCI Turkey ETF ($TUR) has been gobbling up all the naysayers in the past 2 years with a 300% increase.  Holy gluttony.

Fun Fact#2:  Wild Turkey Bourbon, owned by Campari Group, was started operations in 1855.

Logitech and the Tablet Effect

I'm putting TA and Fundamental analysis to the side on this opinion (aka superficial market analysis).

The question I ask is:  How does the growing Tablet and Smartphone market effect Logitech?

Here's a small samples of Tablets:  Apple iPad, Amazon Kindle, Samsung Galaxy on Google Android, HP Slate, Barnes & Noble Nook, and on and on...  In the long-run, if all these Tablets gain any traction in the consumer electronics market, I believe Logitech, "an electronic accessory" company, will be negatively affected.  Most Tablets and Smartphones do not need a mouse, keyboard, remote control or speakers.  The webcam is starting to become obsolete with the new Apple iPhone4 and T-Mobile MyTouch4G.

Logitech does have Revue (linked to GoogleTV), which, pardon the pun, has had decent reviews.  The problem is that I don't think Logitech will have any sort of monopoly on the GoogleTV market, let alone control over Google.

I would stay away from Logitech (LOGI) - trading at 20.48.

$$$ Update (April 1, 2011) : Logitech stock drops and closes at 14.71.  Almost a 30% loss from my call 4 months ago. $$$

General Motors IPO

Ah, Government Motors IPO...Great road show.  Oldsmobile Gone.  Pontiac Gone.  Saturn Gone.  Hummer Gone.  Saab Gone.  Bankruptcy Over.  Media loves it.  Time to IPO at the peak of the market.  Sure.  Whatever.

GM declared Chapter 11 Reorganization on June 1, 2009 with $94.7B net debt.  With the wave of a magic wand, GM is back 17 months later and lighter than ever.

I'm not part of the "lucky" few who will get some free money at the taxpayer's expense.  The media reports that the IPO will be $33/share (Govt needed ~$44/share to break-even).  Translation:  Market Value of $50 billion.

YEAR       MARKET VALUE / REVENUES / PROFITS
2010     to be decided
2009     $2.2B / $149.0B / lost $30.9B
2008     $10.5B / $182.3B / lost $38.7B
2007     $18.1B / $207.3B / lost $2.0B
2006     $16.7B / $192.6B / lost $10.6B
2005     $16.0B / $193.5B / +$2.8B
1955-2005 (Fortune 500 archive for GM)
2001 = last time GM's Market Value was ~$50B.

I don't know enough about the prospectus, but I'm avoiding GM in the public after-market.  Purely on principles.  If a gun was put to my head, I would rather own Ford (trading at 16.68).  Without any bailout money, they are driving towards a net-debt-free balance sheet with profits.  Way down the road, I would rather own Tesla (trading at 29.49) - which is the biotech of the car industry.  If the electric car gains some traction, this is the stock to own.

Disclaimer:  I have no position in $F $TSLA $GMS.

Did the Great Recession Happen in Retail?

If you noticed, I've focused some my tweets (rants) on Commercial Real Estate ETF ($IYR).  Whereas I think CRE should not have participated in this rally (another blog for another day), I believe that the SPDR S&P Retail ETF ($XRT) is at a level that is beyond silly.  This ETF started trading in June 2006 (pre-financial-Armageddon) and recently hit an all-time high!!!  XRT is basically going up due to good same-store sales, good consumer confidence and decent retail numbers.  But let's put the respectable 13 P/E and nice headlines to the side.  Can you say:  V-Shaped Recovery???

Brace yourselves:  the consumer is not dead (?).  In fact, the consumer seemed to navigate through unemployment, salary cuts, foreclosures, the financial crisis and increased commodity prices.  Ok, fine, the consumer probably benefited from some retailer price cuts.  Black Friday will be veeeery interesting.

At first, I thought this ETF was 100% held in Amazon and Netflix.  That could be the only explanation for the 300% return since November 2008.  But I am usually wrong:  XRT has Gymboree, JC Penney, Carmax, Officemax, Group 1 Automative, Ann Taylor, Tiffany, Abercrombie+Fitch, Whole Foods and Best Buy as its top 10 holdings (18.5% as of 11/12/2010).  I'm sure these larger companies have managed their inventories/balance sheets and benefited from smaller players going out of business.

Do I think XRT should re-test 16?  No.  Do I think Retail was completely immune to the financial crisis?  I think not. I will be buying XRT puts and once there is volume, RETS (3x Bear Retail).

One caveat, this is more of a disbelief of the current price level relative to the broader market than any TA or macro analysis.  POMO is fine and well but the consumer is not alive and well.  Maybe I'm missing something.

A scientific currency

There has been much ballyhoo about the weakness of the US Dollar, doing away with paper currency and going back to the Gold Standard.  Since the financial crisis in 2008, Forex transactions have increased significantly.  More importantly, it appears we are in the 3rd inning of a global currency war.

Disclaimer:  I am not a Forex trader or currency expert and my imperfect idea will have unintended consequences.

What if (in my alternate universe) we used "measurements of energy" as a currency?  More specifically, what if we used "the joule" or "the calorie" as our currency.  Before you call me crazy, imagine buying food based on the number of calories in the food...or the number of joules required to create the food product.  It might avert obesity or creation of foods that require heavy extraction costs at minimal nutritional benefit to society.

A dollar is but trust and faith in a government.  Governments come and go in the long run.  To my knowledge, energy is constant.

I realize Forex trading would die unless you are able to manipulate the laws of physics.  Depending who you ask, this may be beneficial or terrible.  The obvious negative would be that people may not innovate new ideas that require higher energy cost.  These ideas may prevent future products or services from being to provide to society.  That said, is it that difference from pursuing projects that require large sums of money.  (Hello, NPV Analysis.)  There is nothing that stops us from doing things better (and cheaper).

Energy as Currency.  That's my monetary idea which scientists may love and I-bankers may hate.

Fun Fact: 'A Scientific Currency' written by William Howe Crane in 1910.

This is just a test

This is only a test.