Don't fight the Fed

Ignore the typos, get the point, and don't fight the Washington Whale.

Is it really just that simple? A lot of hedge funds aren't getting the macro picture right and losing billions? It's quite plausible.

Driven to be stupid

This is just unbelievably stupid: 

Harvard's Niall Ferguson Apologizes for Keynes Remarks.

The guy has been wrong so many times about debt, about Keynes, about austerity..., yet he is so driven by his ego that he just has to prove to the world that he is indeed very very sincerely stupid. 

Ferguson's Epic Fail.

Awesome Failure of Some Well-known Economists including Lucas, Fama, Taylor.

Why does this thing matter? Well, it's really about who you should completely ignore despite profound-sounding words and impressive credentials he may be giving you regarding macro and investment. And who you should pay close attention to.

Ignore Martin Feldstein if you can. Ignore Charles Plosser and Richard Fisher even if you cannot.

Win against the charging herd

Institutions have been selling AAPL shares like mad over the last six months. Fidelity's Contrafund is a prime example, along with many large hedge funds.

Danoff was hardly alone in trimming his Apple position. Some 870 institutional investors pared their Apple holdings in the most recent reporting period, while 419 sold off their entire positions, according to Thomson Reuters data. That compared with 254 investors initiating Apple positions and 1,185 adding to existing holdings.

The charging herd drove the shares all the way down to $385 on April 19. They always overshoot. And that's when it's a great time to average down. Looks like many smaller investors did just that. Not a bad way to win over the longer horizon than a couple of quarters.

Apple Inc., the Bank

Apple is now tapping the debt market, borrowing tens of billions of dollars, with very low yields to finance dividend payout and share repurchase.

Early chatter on the Apple (AAPL) debt offering has 3-year paper priced around 35 basis points over comparable-maturity Treasurys and 10-years priced 90-95 bps above (Microsoft priced at +70). The 3-year Treasury currently yields 0.31%. Borrowing at 0.66%, Apple can buy back shares yielding nearly 3% (with free cash flow yield far higher than that).

Capturing that yield differential and upside potential using borrowed funds with low funding costs is how banks make profits.

Additionally, with tens of millions of installed loyal users, Apple can do a lot more in electronic payments and financial services. Just like building out the retail stores, it's perhaps time for Apple to build a new kind of banking services in and out of the stores.

 

Oh, my GOLD!

On this tax day, everything seems to conspire against gold.

Panic !

But please, don't just blame it on some hedge funds. Everyday on the radio, you hear some nice sounding woman imploring the listeners to put money in gold, gold, gold, the surest asset of all assets. This has been several years in running.

It has been pure speculation on fear and explosive inflation. Perhaps this is the beginning of the end? Time will tell, just don't get near it.

Returning to greatness, leaving others competing for 2nd

Why Apple Inc like Tiger Woods will return to greatness.

(watch the video in the link)

or on YouTube

Interesting analogy between golf and high tech.

Ross Stores: honesty is appreciated

During the last conference call for Ross Stores (Rost), we had a taste of how honest the company is. When asked what went wrong in the Home segment in the fourth quarter, the CEO simply stated they've made some executional mistakes in their assortments. How often do you hear this type of frank acknowledgement of mistakes? Rarely.

See the Earnings Call Transcript.

Heather N. Balsky - Morgan Stanley, Research Division

This is actually Heather Balsky calling for Kimberly. We were just wondering how did home perform in the fourth quarter and how do you think that compares versus last year? And what are any strategies you have in place for home in 2013?

Michael Balmuth - Vice Chairman and Chief Executive Officer

Home trailed the company in the fourth quarter, and our strategies going forward are really to improve the executional mistakes we made. We've made some organizational adjustments, but we've made some executional mistakes within our assortments. So this is a year of getting back to basics in that business.

Heather N. Balsky - Morgan Stanley, Research Division

Do you have any examples of execution issues that you kind of are looking to improve?

Michael Balmuth - Vice Chairman and Chief Executive Officer

Just the assortments were substandard, and so we've adjusted those.