Another Thousand Words’s market heat map… wow.



FYI- S&P500 closed below the November low and the most recent low on the 23rd of this month. I cannot say where this market goes but recall my last S&P500 matrix that this can go much lower– or higher. And that’s just the thing when you enter the fat tails of the distribution (whatever it may truly be), you just don’t know.


Nope, this is not a depression…

… unless you happen to be one of the newly poor or homeless. Once middle-class, now on the streets. wow.

I read this article on Bloomberg today (article here) about the newly poor overwhelming social safety nets in Contra Costa Country. For those not familiar with the SF Bay area, this is ‘the burbs’ (east of San Francisco across the Bay Bridge.) Only now, things are getting very difficult for many.

How quickly our world has changed. How much more change is yet to come?

Just when the sun comes out…

We have been getting a lot of rain here in San Francisco. This is the rainy time of year. But yesterday we had sunshine and it was great and I quickly forgot the rain — until this morning.

I have been thinking about alternative energy and specifically solar power and was curious about its revenue growth. I put together a trailing 12 month revenue chart for the following companies:

Figure 1. Selected Alternative Energy Technology Companies


I looked at total revenue for the firms and found a great revenue growth track record over the last 8 quarters.


Source: Companies and Chris Montaño, CFA. Data courtesy of Gridstone Research

While this is all fine, it is a bit uncertain what the next 8 quarters are going to look like. Key questions I have include:

  • does credit constrict growth?
  • how quickly will the stimulus’ alternative energy initiatives impact the industry?
  • will homeowners postpone solar installations?
  • what about the pendulum swing of polysilicon under-supply swinging to over-supply?
  • wildcard: thin films
  • what the heck is up with Nanosolar’s $1b valuation?

In spite of an outlook that is murky, a couple things are certain. The sun will keep shining on (even when there are clouds) and we will increasingly need energy. Gotta watch these stocks.

Equations don’t kill markets…

… apparently, bankers with equations kill markets (see article here.)

Amazing story of one equation that took on a life of its own. Why did this happen when the mathematician turned investment banker himself did not intend its broad, reckless use? May I suggest it is due to the enormous compensation incentives to create transactions – ostensibly enabled by this equation (that old compensation scheme problem again… sigh).

I think it’s amazing that we found a “butterfly’s wings” that gave rise to (at least a good part of) this storm.

Thanks to Paul Kedrosky of Infectious Greed for the links… the scope of his blog is a whirlwind of fascinating stuff…

Hey guys- keep your eyes on your own paper.

Nice op-ed piece by a former prosecutor, Queen’s Counsel, human rights advocate (and apparently a knight in the fullest sense of the word) in the TimesOnline this morning. (click here for article.)

In it, the knight/counsel cites the fact that if you mug someone on the street you are most likely headed to prison. However, steal their pension and you may get to buy a yacht. He cites the injustice of this. While I missed the yacht idea (even though I can see them every day outside my window), I think I did mention this very same concept in my Madoff piece entitled, “Grounded! Well sort of…”

Sir Kennedy does make some strong arguments regarding how we may wish to revise laws that seems to favor elites and their institutions of power- namely the financiers. Right about now, I am wishing we could have done that long ago. I bow to the good knight.

Too Big to Fail?

The words “too big to fail” almost sound like a vanity license plate. Unfortunately, we have come to find that it has been the risk management philosophy of many of our largest banks. Bummer for us.

The last week or so, there has been a lot of dialog in the financial news that we are about to nationalize the banks. I just read this and thought it was a pretty interesting op-ed piece in the WSJ (Nice article on the joys of taking over a bank.)

Apparently, taking over a bank is not nearly as much fun as it sounds. In fact it sounds like a lot of hard work.

I guess this would suggest that the banking system may not so much be “too big to fail”, but even more sobering, “too big to save”. IF that is true (and I am not convinced) that is indeed a big bummer for us.