The Big Picture

Martin Wolf on Housing Prices & Bailouts

Saturday, May 03, 2008 | 03:30 AM

Podcast from the UK's Martin Wolf in the FT on Housing Bailouts, and government actions:

Fusion IQ Podcast

Monday, March 03, 2008 | 01:15 PM

in Podcast | Quantitative | Weblogs

I had a lot of fun discussing FusionIQ with Andy Horowitz of the Disciplined Investor. If you are looking for a broader explanation of what Fusion does, this is a good overview.

(click to play)

TDI Episode 46: The Premiere of FusionIQ [41:57m]:

Subscribe in itunes

Speechless on Core CPI

Friday, September 28, 2007 | 07:23 AM

I did a really crappy job last night responding to Jason Trennert's comments on inflation. Mostly because I was stunned that, at this point, anyone is seriously going to argue that inflation is benign.

I am paraphrasing, but Jason (an otherwise very nice guy) said words to the effect of "The Fed’s preferred inflation measure, Core PCE, showed little or no inflation (+1.4%)."

Meanwhile, Gold, Crude Oil, soft commodities and the CRB Index all rallied to new highs as the US Dollar $ declined to new lows. The front page of today's WSJ has an article: Historic Surge In Grain Prices Roils Markets . . . but there's no inflation.

I wonder what people will be saying when the September CPI comes out. It will be substantially higher due to soaring energy and food prices this month. Oh, wait, that's not in the core. (Nevermind).

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No Inflation here:

Gee, I wonder why the Fed prefers Core PCE as an inflation measure -- instead of what is occurring in the real world?

Ironically, while Wall Street pundits and economists lap up obviously defective government data, the rest of the country is having none of it: According to this recent Gallup poll, public trust in the Federal Government -- across the board, on nearly every issue -- is at or near all time lows.

The government now ranks lower than it did post-Watergate:

"A new Gallup poll reveals that, as the organization puts it, Americans now "express less trust in the federal government than at any point in the past decade, and trust in many federal government institutions is now lower than it was during the Watergate era, generally recognized as the low point in American history for trust in government."

Among the findings: Barely half trust the government to handle international problems, the lowest number ever. And less than half express faith in the government handling domestic issues, the lowest findings since 1976.

Faith in the executive branch has fallen to 43% -- only 3% higher than it was just before President Nixon's resignation in 1974. At the same time, trust in Congress, at 50%, is its lowest ever.

Gallup has asked about trust in government since 1972. It conducted this year's poll Sept. 14-16 and found the following:

-- Barely half of Americans, 51%, say they have a "great deal" or "fair amount" of trust in the federal government to handle international problems.

-- Less than half of Americans, 47%, now have at least a fair amount of trust in the federal government to handle domestic problems."

The apportionment of this can be debated. I put about 60% of it on the White House -- primarily Iraq, Katrina, and the bifurcated economy -- and 40% on the Congress.

When the GOP controlled the legislative branch, they were either spending taxpayer money like drunken sailors on shore leave, chasing interns, or having gay sex in airport bathrooms. You know, the business of the people.

Now that the Democrats control Congress, they appear to this Independent to be nearly as bumbling and incompetent as the executive branch.

It almost makes you think Mark Twain was right: "Why Vote? It only encourages them!"

Source:
GALLUP: Trust in Federal Government, On Nearly All Issues, Hits New Low
Even Less Than in Watergate Era
E&P, September 27, 2007 10:30 AM ET
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003647275

Low Trust in Federal Government Rivals Watergate Era Levels
Trust in state, local governments holding steady
Jeffrey M. Jones
GALLUP NEWS SERVICE, September 26, 2007
http://www.galluppoll.com/content/default.aspx?ci=28795

Historic Surge In Grain Prices Roils Markets
SCOTT KILMAN
WSJ, September 28, 2007; Page A1
http://online.wsj.com/article/SB119093856250042023.html

Wall St.net Podcast

Wednesday, August 29, 2007 | 10:56 AM

in Podcast | Web/Tech | Weblogs

Dennis Olson and I had a far ranging discussion about how I came to blog, and what else I read . . .

click for podcast . . .

http://www.wallst.net/mp3_podcasts/153.mp3

Disciplined Investor Podcast: The Stock Market In Disarray

Sunday, August 05, 2007 | 09:44 AM

in Economy | Financial Press | Media | Podcast

I did a long podcast with Andrew Horowitz of the Disciplined Investor and S&P's Howard Silverblatt on Friday. Its about 43 minutes long, and covers a wide range of subjects.

Here's the various download formats:

The Stock Market In Disarray [43:25m]: Play Now | Play in Popup | Download (144)

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Will XMSR Customer Complaints Kill its Stock?

Tuesday, April 25, 2006 | 06:52 AM

in Corporate Management | Finance | Music | Podcast

Over a year ago, I noted the decaying customer service quality in a few companies: In particular, Dell got named as a significant offender. (More recently, I complained about obnoxious Dell preinstalls).

I collected a ton of emails from readers about consumer complaints (mostly from January 2005).

I should have paid closer attention. Although I did not have a position in Dell, I missed the opportunity to short it.

Since that deluge of criticism in January 2005 the stock has underperformed dramatically, down 35% from over $41 to under $27. The stock was recently downgraded to a SELL at Citigroup -- see that red bar down towards the far right on big volume? That's the downgrade. The sell rating was due in part to customer service complaints.

Dell, January 2005 to present
click for larger chart

Next up: XMSR. I am not a subscriber, and get Sirius Radio via my DISH satellite TV -- but have a read of the litany of complaints after the jump from XM subscribers (via the Lefsetz Letter).

The XM chart shows that I am already late to this kvetch-fest -- it looks like XM may already have had their Dell moment -- the stock is down even more -- a 50% haircut from $40 to $20. Ouch!

XMSR January 2005 to present
click for larger chart

There's only so much any company can cut their "basic business concept" before they start causing a problem with their consumers. That obviously happened at Dell, via the degradation of their "vaunted customer service" and it appears to be going on at XMSR.

Quite bluntly, if your business model is based on a specific concept, you screw around with that at your own risk. For Dell, it was cheap and direct sales coupled with great customer service; Saving a few pennies by outsourcing/cutting back on support, and/or switching to cheaper components (as some readers have complained about with Dell) seems to be corporate suicide.

For XM, it may be that cutting the variety of their offerings will be their Waterloo. Their raison d'etre seems to be a broad and deep variety of eclectic channels. But as Chrissy Hyndes sang so long ago: But you mess with the goods doll, honey, you gotta pay. ^*

Here's the post that started the calvalcade of complaints:

"I keep getting e-mail from disgruntled XM subscribers. That their favorite channel, #51, Music Lab, has bitten the dust. I'll print one below.

This is totally fucked up. The promise of satellite radio was to go deep, to provide something for EVERYONE! But the new regime at XM, the Infinity assholes, are turning XM into the bullshit terrestrial radio that they came from. And this makes me CRAZY!

First came channel 49, Big Tracks. With the INANE tagline "Our Classic Rock". This is just the kind of b.s. unlistenable terrestrial classic rock stations use. And the station's got no DEPTH! Just the same fucking tracks over and over again. With no surprises.

But now it's worse. Music Lab was booted and what did we get? MORE HITS CHANNELS!!!

We've got XM 17, U.S. Country, Country Superstars of the 80s and 90s.

How about XM 26, Flight 26, Modern Hits 90s and Now.

Or XM 30. Hitlist. TODAY'S Hit Music.

Or 68, The Heat, RHYTHMIC HITS!

Or 91, Viva, Latin Pop Hits.

Oh, they brought back Liquid Metal, which had been banished before, but what we've now got is endless b.s. hits stations, replicating what is ALREADY AVAILABLE ON XM, their only saving grace being no commercials.

This is a big deal. This is like the death of free-format FM radio, but WORSE! The golden era is OVER!

And what about the people who subscribed to XM ONLY for Music Lab? People like Craig Anderton, the electronic music and instrument GURU! Who signed up for two years, EXPECTING he'd be able to listen to his kind of music. Which he could get nowhere else, which is why he subscribed to XM.

The lunatics have taken over the asylum. DO NOT SUBSCRIBE TO XM! They don't have Howard, and the people now running the place have their heads up their ass."

Reader responses follow . . .

^* Pretender's Tattooed Love Boys

UPDATE: May 23, 2006 8:21am

Nice mention of this post in Wes Phillips's Stereophile Column this week

All of XM's Trials
Wes Phillips
Stereophile, May 21, 2006
http://www.stereophile.com/news/052206xmtrials/

UPDATE: May 24, 2006 5:21pm

Geesh! The stock got shellacked today on a downgrade on subscriber expectations:

XM, the nation's largest satellite radio provider, lowered its subscriber forecast, citing unexpected weakness in demand for its satellite radio service as well as potential legal pitfalls from a recording industry lawsuit.

It now expects to reach 8.5 million subscribers by the end of 2006, lower than its previous guidance for nine million customers by year's end. The company had 6.5 million subscribers at the end of the first quarter.

Shares tumbled on the news, losing 11%, or $1.76, to $13.75 at 4 p.m. on the Nasdaq Stock Market.

Continue reading "Will XMSR Customer Complaints Kill its Stock?"

Radio Economics

Friday, September 02, 2005 | 11:00 AM

in Economy | Podcast

Radio Economics is a very cool site run by Dr. James Reese, an economics professor at the University of South Carolina Upstate.

The professor produces "Economics Podcasts via telephone with Economists worldwide."

We had a rambling discussion, downloadable as an MP3 for your podcasting pleasure, covering everything from why Wall Street economics tend to be less than useful to investors, to a day in the life of a market stategist. 40 minutes of my nasal, dulcet tones.

Prior interviews include Mark A. Thoma of the University of Oregon (I did a WSJ econoblog with Mark a in June) and Dr. Nouriel Roubini of Stern School of Business at New York University, who also runs the econ meta blog RGE Monitor.

You can see the full list of interviews here.

UPDATE May 25, 2005 11:22pm

I see the interview is no longer at ITMS -- so here it is in all its nasal glory:

Download barry_ritholtz_wall_street_group_think.mp3

UPDATE September 5, 2005 9:22pm
I download most of the interviews on Radio Economics, and then burned a disc of Dr. Nouriel Roubini of New York University and RGE Monitor, Dr. Mark A. Thoma of the University of Oregon and Economist's View, and Dr. James Hamilton, Economics Professor at University of California San Diego and EconBrowser.com.

It made for an informative and fascinating ride out to the Hamptons!

Source:
Radio Economics
Barry Ritholtz is chief market strategist for Maxim Group (MP3)
Dr. James Reese
University of South Carolina Upstate, Thursday, September 01, 2005
http://radioeconomics.com/2005/09/interview-barry-ritholtz-maxim-group.html

New Column up at Real Money (07/15/05)

Saturday, July 16, 2005 | 01:30 PM

in Economy | Investing | Markets | Podcast | Psychology/Sentiment

RealMoney

My latest Real Money column, "The Fundamentals Stink: Buy Stocks" is posted. It is loosely based on yesterday's discussion, Data Point Versus Data Series. It explains why even if the crowd is wrong about the economy (short term), they can and will move the market in the direction of their delusion.

The accompanying podcast is here:

And of course, the ubiquitous excerpt:

"Fundamentals don't matter.

Earnings are irrelevant.

Economic expansion is meaningless.
You may disagree with those statements, but consider this: How accurate are the average investors' perceptions of these issues? And how much does it really matter?

The short answer to both questions is "not very." But the longer answer is more interesting: It may not matter if the crowd is wrong -- at least, not in the short run -- because the crowd is the market. If the mass of investors believes something and acts upon it, traders shouldn't really care if the emperor has no clothes.

To be clear, there will come a time -- there always comes a time -- when the crowd's collective delusion gives way to an unpleasant reality. This often comes near market tops or bottoms, and the crowd, unfortunately, tends to realize this quite late."

Surprisingly, the hate mail on this one has been modest. My guess is its due to the Bullish bias of the piece. But a careful read suggests that when the crowd returns to reality, the payback will be a bitch.

I'm not usually so ornery, but I managed to slip this shot of vitriol into the drink:

"Let the exuberantly optimistic enjoy their happy talk. The Blodgets and Grubmans of the '90s -- those compromised fundamental analysts -- have been replaced by a new class of corrupted commentators. These are the reality-challenged economic cheerleaders, who like Candide look at everything as if we live in the best of all possible worlds.

Your job as investors is to first figure out what the economic reality is, despite the blatherings of the pom-pom crowd. But that's only the first step. The really tricky part is figuring out when the crowd will discover it as well.

That means being proactive about investing. Planning an exit strategy. Continually watching for signs of a major sentiment shift. If you do not have a capital preservation strategy in place, this can be a very expensive game to play.

However, if you manage this trade well, you may just catch a big move up on what I call false premises, and the subsequent denouement. That can be the most lucrative trade of this cyclical bull market."

It turns out I'm an optimist -- instead of sulking over the dishonest, politicized, misleading economic talking points -- I am willing to profit from them.

Just be ready to short this market when you see signs that the investing public is no longer deluding themselves. I'm not sure how the evidence will manifest itself -- but what we are looking for is the eoconmic equivalent of someone publicly stating "Pay no attention to the man behind the curtain."

My best guess is that willl be sometime around November . . .

Source:
The Fundamentals Stink: Buy Stocks
RealMoney.com
7/15/2005 11:56 AM EDT
http://www.thestreet.com/p/rmoney/barryritholtz/10232668.html>

MP3 File

Apprenticed Investor: Nothing Doing

Thursday, July 14, 2005 | 04:15 PM

in Podcast | Trading

The latest "Apprenticed Investor" column is up, and its titled (apropos of nothing in particular) Nothing Doing.

In it, we look at the problem of overtrading, and why many traders cannot simply do nothing. Its especially true for those thrill jockeys who trade less for investing and more for the buzz.

The accompanying podcast is here:

Here's an excerpt:

"Let's be blunt: There is something exhilarating, even thrilling, about trading. The adventure of putting a position on, the buzz of watching it rally -- it can be such a delight that it almost feels illicit.

Clearly there is a rush to trading, especially when the market is really hot. But if you are getting that excited by trading, then the odds are you have become far too emotionally involved in the trade.

This is a huge mistake.

Investing is serious business, with real dollars at stake. There are far cheaper, less dangerous ways to buy a thrill -- snorting cocaine or hang gliding comes to mind -- than trading and investing."

There's nothing wrong with having, say, 5% of your portfolio in a "mad money" account for more speculative trades or just to have "some skin in the game." But if you are trading to get your jollies, then you are not spending your money well.

So today, I'd like to talk about nothing; specifically, about doing nothing."
>

Sometimes, it pays to turn the old cliche on its head: Don't just do something, sit there!

Prior Apprenticed Investor columns can be found here.

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Podcast:

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Download: Nothing doing.mp3

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Source:
Apprenticed Investor: Nothing Doing
Real Money, 7/14/2005 10:22 AM EDT
http://www.thestreet.com/_rms/comment/barryritholtz/10232263.html

Macro Movers for 2H 2005

Wednesday, July 06, 2005 | 02:50 PM

in Commodities | Economy | Fixed Income/Interest Rates | Podcast

The Street.com asked for a "Macro Preview" for the second half of the year, and I obliged them with What to Watch: Macro Movers.

Its a "Big Picture" look at the second half of 2005, and what might be in store for investors froma macro-economic perspective.

I stake out the rather unremarkable position that, barring some unforeseen crisis, the same issues that have been driving the economy (as well as the financial markets) in the first half of the year are likely to continue doing so in second half of the year.

The big four are:

• Energy and Oil
• Inflation/Deflation
• Interest Rates
• Housing

I also look at 5 other problems percolating below the surface. Any of these have the ability to disrupt at some unknown time in the future -- whether its the 2nd half or sometime later I haven't a clue. These are all longer term issues with potentially serious consequences:

-Federal deficits
-Return of the long bond
-Employment
-Trade deficit
-The U.S. dollar

No excerpt -- the entire thing is available for free.

Podcast: 2 minute overview on the column:
Macro movers in 2h '05.mp3

Source:
What to Watch: Macro Movers
RealMoney.com, 7/6/2005 9:48 AM EDT
http://www.thestreet.com/comment/barryritholtz/10230921.html

Apprenticed Investor: Tracking Elephants, Part II

Friday, July 01, 2005 | 07:13 AM

in Investing | Podcast | Psychology/Sentiment | Technical Analysis

The latest "Apprentice Investor" column is up at TheStreet.com. Its called Tracking Elephants, Part II. The subhead is "The non Technicians Guide to Technical Analysis," and that's a pretty good description. Charts have something of value to add to even pure fundamentalists. In a way, its the opposite of the Wisdom of Crowds.

Starting this week, I'll also be adding a podcast, giving some additonal background and flavor to each column:

Of course, the ubiquitous excerpt:

"Here's an interesting question: If you could look at one and only one source before buying your next stock, which would you choose: a fundamental analyst's report (with no charts in it), or the chart of your choosing? While I like having access to both, I cannot ever imagine buying something without first looking at the chart.

And so we wade into the ongoing battle between technical and fundamental analysts. Frankly, it's one of the sillier debates in investing. But I've heard so many bad arguments and misleading theories about technical analysis that I decided to weigh in."

Before we wade too deeply into the controversy, ask yourself: "Why do I need to choose?" Why wouldn't you use any tool that can be shown to have value? You wouldn't build a house using only a hammer, but no drills or saws. Why limit yourself away from a tool that can assist you as an investor?

Here are some charts illustrating these points:

Apple Breaks its Uptrend
click for larger graph

GM Breaks Support
click for larger graph

eBay Risk/Reward entry points
click for larger graph

MP3 File

Apprenticed Investor: Tracking Elephants, Part I

Friday, June 24, 2005 | 02:20 PM

in Markets | Podcast | Technical Analysis

The latest "Apprentice Investor" column is up at TheStreet.com. Its called "Tracking Elephants, Part I."

Don't be fooled by the title to this piece: "Tracking the Elephants" could just have easily been named "The non Technicians Guide to Technical Analysis (in two parts)." The idea was to reveal to fundamentalists a few of the more significant ways they can use charts to improve their results.

Podcast:

Here's the ubiquitous excerpt:

"Here's an interesting question: If you could look at one and only one source before buying your next stock, which would you choose: a fundamental analyst's report (with no charts in it), or the chart of your choosing? While I like having access to both, I cannot ever imagine buying something without first looking at the chart.

And so we wade into the ongoing battle between technical and fundamental analysts. Frankly, it's one of the sillier debates in investing. But I've heard so many bad arguments and misleading theories about technical analysis that I decided to weigh in."

Before we wade too deeply into the controversy, ask yourself: "Why do I need to choose?" Why wouldn't you use any tool that can be shown to have value? You wouldn't build a house using only a hammer, but no drills or saws. Why limit yourself away from a tool that can assist you as an investor?

In the column, I used a chart of Ford -- but it could have been just about any company , from JDSU to Lucent to World Con or Enron.
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Ford's Downtrend
click for larger graph

Prior columns can be found here.

To keep the column a modest length, a discussion about Janus Funds selling of AOL Time Warner was edited out. For your reading pleasure, that section is here.

Podcast:

MP3 File

Continue reading "Apprenticed Investor: Tracking Elephants, Part I "