Monthly Archives: February 2009

Not Diluting NMT but Moving On For Now

I’m kinda burned out from posting about neural nets, AI, and Rapidminer because of real life commitments.  Recently I’ve made a few blog posts topics not related to the focus of this blog.  Looking back at it, its probably not a good idea to do this if I want to maintain the integrity of this site.

So I’ve decided to post my other ramblings at www.thomasott.net until I feel inspired to write more about neural nets, AI, and Rapidminer again.

All the best,

Tom

Phil Donahue Interviews Ayn Rand

Ayn’s philosophy of Objectivism is pretty tough to swallow if you’ve never been exposed to it, but its the only thing that cuts through the BS today. She’s a follower of Aristotle and reason, and boy do we need more of that today!

I watched the entire 5 part series, and I suggest you do as well!

Where’s the Market Bottom?

I’m coming to a painful realization that I might have to eat my words regarding my S&P500 market bottom call.  I say this because of my recent observations in the bank owned/foreclosure market.  There seems to be too much “optimism” and inventory on the part of the banks!

My wife and I started trolling around the foreclosure markets again and found a potential property.  Its’a 2 bedroom, 1 bath cottage overlooking a lake in a decent neighborhood. It’s run down and needs a new septic system, new roof, and lots of inside work to bring it up to date.  The bank foreclosed on the property over a year ago with the judgement amount of $125,000.  That means the the bank was owed $125,000 on their loan when the bank took back the property.

Instead of putting the house back on the market at $125,000 or even $130,000 in “as-is” condition, the bank in their wisdom listed it with a realtor for $225,000!  Based on our calculations, you’d need to pump in at least $100,000 to fix up the place into something that people what to rent or even own.  In this market, there is no way someone would pay list price and then pump in an additional $100k to live in a 2 bedroom, 1 bath cottage overlooking a garbage dump.  As one might expect, they’ve had no offers and the property remains vacant.  

I highlight this property because its one example of the multitude of properties we’ve come across in similar condition and cirucumstance.   Compounding this problem is the daily influx of newly bank owned properties to the already excessive inventory.  It doesn’t take a rocket scientist, or neural net model, to tell you that something’s gotta give and my guess is equity prices.

Barry’s Economic Stimulus Plan

Dear Mr. President, I know it’s really easy to spend other people’s money but let’s face a reality here.  No matter how much money you’re going to throw at the banking and credit system, it just won’t work.  The banks are, for lack of better word, bankrupt.  They went bankrupt because they were built on a shoddy financial foundation and took excessive risks.  Now you want to continue to use MY TAXPAYER MONEY to keep feeding these pigs?  Heck, you don’t even know HOW MUCH MORE MONEY it will take to solve the problem! Emphasis mine. 

“We don’t know yet whether we’re going to need additional money or how much additional money we’ll need until we’ve seen how successful we are at restoring a sense of confidence in the marketplace,” Obama said in a news conference last night in Washington. 

The president’s remarks indicate he acknowledges the assessment of many economists that the $350 billion remaining in the Treasury’s Troubled Asset Relief Program is insufficient to revive credit markets. The International Monetary Fund forecasts financial companies will need to write down over $1 trillion more of their U.S. mortgage debt. [by Rebecca Christie and Julianna Goldman]

What ever you and Mr. Giethner are planning to  do to help revive our economy is bound to be atrocious in nature and will NOT solve the underlying problems.  Mr President, if you truly want to rebuild our economy into a powerful wealth engine again, I suggest you do the following: 

  1. Let the bankrupt banks die
  2. Abolish the Federal Reserve
  3. Reinstate the Gold Standard
  4. Abolish fractional banking

Oh, silly me.  I forgot, this will dethrone hurt the new ruling class, elite nobles, the bankers and will never happen until the people rise up and beat them to a bloody pulp in the streets.

“Atlas Shrugged” – The Guide Book for Today’s Economy

Many readers know that I’m a big fan of Ayn Rand, objectivism, and of course capitalism.  I was thrilled to find this well written WSJ article a few weeks ago and it seems appropriate to share it with you now, given the current Obama economic bailout plan.  

In the book, these relentless wealth redistributionists and their programs are disparaged as “the looters and their laws.” Every new act of government futility and stupidity carries with it a benevolent-sounding title. These include the “Anti-Greed Act” to redistribute income (sounds like Charlie Rangel’s promises soak-the-rich tax bill) and the “Equalization of Opportunity Act” to prevent people from starting more than one business (to give other people a chance). My personal favorite, the “Anti Dog-Eat-Dog Act,” aims to restrict cut-throat competition between firms and thus slow the wave of business bankruptcies. Why didn’t Hank Paulson think of that? 

The current economic strategy is right out of “Atlas Shrugged”: The more incompetent you are in business, the more handouts the politicians will bestow on you. That’s the justification for the $2 trillion of subsidies doled out already to keep afloat distressed insurance companies, banks, Wall Street investment houses, and auto companies — while standing next in line for their share of the booty are real-estate developers, the steel industry, chemical companies, airlines, ethanol producers, construction firms and even catfish farmers. With each successive bailout to “calm the markets,” another trillion of national wealth is subsequently lost. Yet, as “Atlas” grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate “windfalls.” [by Stephen Moore]

Do you not see the similarities between the failed policies over the last 20 years, including the one that is about to unleashed on us, and how it plays right into the plot of “Atlas Shrugged?”  You’ll have to read the book to find out what happens in the end! 

AAII Stock Screens

I decided to sign up for AAII a few months ago and only recently started poking around in there.  I have to say that I’m pretty impressed with the quantity and types of stock screens they have and I’ve been getting a lot of great ideas from there.   The most popular ones I like are the ADR, Piotroski, and O’Neils CAN SLIM screens.