Thursday, April 30, 2009

FAF-PJS/LB Would Rather Listen To Alex the Parrot rather than RB/

Nothing could be further from the true state of affairs here at the trading desk.  This is after all a democracy.  RB can vote on any decision made with the total number of votes given to it by LB, sort of like the same degree of power possessed by the Republicans in Congress now. Besides, it is like listening to a parrot when the debate starts on the number of shares to buy, with RB saying "Buy a 1000" of this or "Buy a 1000" of that.  Maybe if RB was an intelligent parrot like Alex whose brilliance was chronicled in the book "Alex and Me", LB would give RB more votes to cast in the decision-making democratic process here at HQ, though short of majority of course.   

In fact, LB was so impressed with Alex the Parrot that he suggested that the Harvard scientist train a new one to take over as CEO of Citigroup, since Alex is unfortunately unable to serve in that capacity after his unexpected I did mention that there might be other parrot candidates for our financial leaders who would be far less of a bird brain.  

I do not own common shares in the title insurance company First American (FAF), but I do have a 200 share position in PJS, a Trust Certificate containing one of its senior bonds. More discussion on Bonds: Purchases and Sell Decisions/BAC/AIG's International Lease Finance
First American beat the consensus earnings forecast by 12 cents. Earnings were 38 cents a share on a 17% decline in revenues year over year Yahoo! Finance   This is fine from my perspective as a bond holder.

The market has certainly made a huge move off its low. I look at the charts everyday provided by Doug Short, who has a Ph.D in English from Duke. Bear Markets Since 1950  The move from the low is now at 29.1% in the S & P 500 before today.  Based on charts of the prior bear markets, this does appear to be a decisive break in the downtrend.  LB says it is too early to call the end of the long term secular bear market that started, according to it, in 2000.  Some consideration is being given to putting on a hedge soon.   I do not know anything about Short other than I like his 

It looks like the bondholders of both Chrysler and GM are not going to rollover and be nice for Obama.  The bankruptcy proceedings could become contentious and longer than expected.  Chrysler filed for bankruptcy and the government will be providing up to 8 billion in financing to keep Chrysler afloat during the bankruptcy proceeding.  Without that aid, it would have to be a liquidation bankruptcy. 

RB is content today knowing that tomorrow it will be cut loose to invest the cash flow generated which has been accumulating due to what LB calls the "the S & P 500 815  exception to the exception allowing the investment of cash flow into common stocks in an unstable VIX pattern"  That rule criteria has a name, and it is not "stinking rule"

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