If you got a K-1 from a LP or Publicly Traded Partnership (PTP) that you owned, the Tax Package Support website will help you account for things properly…

In case you’re interested…? Wisdom Tree has released a couple of new ETFs to track more currencies.

  • CYB – Chinese Renmibi
  • ICN – Indian Rupee
  • BZF – Brazilian Real
  • JYF – Japanese Yen
  • EU – Euro

Trading the Euro and Yen via ETFs are old hat (see FXE and FXY), but the others are useful, at least for those of us who don’t go directly to the foregin exchange markets…

Rumors of my demise have been greatly exaggerated. But I can say that starting a hedge fund from scratch is a petit morte of sorts. And dead mean tell no tales, right?

Well, I’m not even sure if I should be speaking about this as the powers that be declared on high that a hedge fund can only be marketed by word-of-mouth and, even then, to “qualified investors” only. But what constitutes word-of-mouth is fuzzy. Let’s all agree that a blog is wordy and mouthy enough.

Besides, all I’m really saying is that Lunaria Capital Management exists. And that the web site is here. (more…)

Interested in watching the housing situation in painstaking, constantly updating detail?

Look no farther than They have aggregated a fair amount of publicly available data for your train-wreck watching enjoyment.

Here is a chart of the affordability index for Raleigh:

And the inventory for Raleigh:

Raleigh is starting to be affected by the nation-wide slowdown, but has not been hit as hard as a lot of other places…

After a big move on Friday, it can be good to check in with the first markets to open on Monday…? That would be the Nikkei, Shanghai and Aussie exchanges…

Bloomberg’s website typically has good international coverage.? Outside of US trading hours, they typically feature prices from Japan or Europe…

Yahoo Finance has a decent page that lists all the exchanges for Asia, the Americas, and Europe.? Obviously, Asia opens before the US markets, and Europe continues to trade after the US markets close.

So, how are these markets doing right now?? Badly.? The Nikkei is down over 3% to start the day (it is 11:30 am in Tokyo).? Not too surprising considering the shellacking that the US markets took on Friday…? We could see a bumpy start to the new week if that’s any indication.

Here are some books that I consider pivotal in my financial education:

  • Fooled by Randomness by Nassim Nicholas Taleb – I’m also currently reading his new book, The Black Swan, that is somewhat a sequal to FbR and promises to be just as good.
  • Education of?A Speculator & Practical Speculation by Victor?Niederhoffer -?Not all teachers need to be successes.
  • Option Volatility & Pricing?by Sheldon Natenburg – The ultimate reference for options. It saddens me that his recent release is such crap fluff.
  • The Trading Game by Ryan Jones – While I finally concluded that the exact method of?position sizing?taught in this book is often not the best, it brought my attention to the importance and?complexities of position?sizing.?
  • The?Options Edge?by William Gallacher?- Forever changed the way I thought about options and helped me to think outside the box. Sends all the “greeks” home on the slow boat to Greece.
  • Evidence-Based Technical Analysis by David R. Aronson – A cold, slap in the face. Teaches you to apply the scientific method to any trading ideas you may have.
  • Running Money by Andrew Kessler – Reads like a novel and opens the mind. Worth it just for the thesis on the modern economy alone.
  • When Genius Failed by Roger Lowenstein – I can only hope and try not to repeat these mistakes. Are we doomed to?
  • All Your Worth by Elizabeth Warren & Amelia Warren Tyagi – You can’t forget personal finance. This is the clearest, most original & effective approach to personal finance and budgeting that I’ve come across. It does away with line-item budgets and instead focuses you on balancing your money. This way you always live well and live well within your means.
  • The 4-Hour Workweek by Timothy Ferriss – Work less, earn more and live anywhere. Yeah right! Live it, if you dare.
  • The rest of my influence comes from the world of academic journals. There are too many to mention but I generally recommend that you make a regular habit of scooping as many free research articles about finance off the web as you can.

From this list, you might think I’m an options trader but I’m not really. It just seems that some of the strongest writing and thinking about markets has come from options traders. And I know it’s a short list, but there is so much trash in financial writing that it makes sense to me that, at the end of the day, only a few gems would shine.

One of my holdings, Rosetta Resources (ROSE) took a bit of a tumble yesterday…? the shares closed near their lows of the day down 8.4%.

The interesting thing is that this happened on ?no news?.? About a month ago the price spiked upward on a Cramer recommendation when he called the stock ?criminally underpriced?.? Yet this wasn?t a Cramer-ism, the dip wasn’t because of something he said.? Rosetta is a natural gas producer, maybe it?s falling because of the short-term breakdown in the natural gas price?? Not really… all the gas producers, including Rosetta, were weak over the last few weeks and it doesn?t really explain the one day plunge.

The real story?? Calpine is suing Rosetta for $400 million.? For perspective, Rosetta?s market cap is $1.2 billion, so we?re talking about almost 33% of the market cap of the company.? Rosetta was originally spun off from Calpine, and now the parent company thinks they weren?t paid enough for that privilege (there are many sordid details, including the fact that Calpine is currently in bankruptcy and only realized the underpayment now that third parties are seeking to cover their debts).

While the soap opera will likely continue for a while (it?s a money grab, after all) the interesting point is that this news didn?t show up (and still hasn’t) on Yahoo Finance?s news for the company, nor in Google Finance nor Google News.? I only found the story when I logged into my Schwab account and reviewed the news listings that Schwab had for the company.

The lesson to take away from all of this is to make sure you have several places to go for your news…? especially if you expect to act based on news for a company or stock.? Also, Yahoo Finance and similar free services are great, except when they aren?t.?

A friend recently suggested a new book by Monish Pabrai called The Dhando Investor. The literal translation of the word Dhando is “endeavors that create wealth.”

Mr. Pabrai has an interesting reputation as an aggressive value investor (not to be confused with the Aggressive Conservative Investor Marty Whitman) and could be one of the next generation of Warren Buffet-like investors.

You can see his profile and stock holdings at StockPickr, or at least as much of his stock holdings as outsiders can discern from required regulatory filings.

One of the more interesting points is his compensation structure. Unlike the typical hedge fund “2 and 20” (2% of assets plus 20% of profits), Pabrai takes no fee on assets managed, nor any fee on the first 6% of profits. However, he takes 25% of profits above 6%. The higher portion of the profits don’t improve his portion of the profits (compared to 20% of all profit) until he nets 30% profits in a given year.

According to StockPicker, his hedge fund (with $300 m under management) has returned an annualized 26% since 1999. Not too shabby.

Could this be the next Margin of Safety? Pabrai’s previous book is out of print and goes for $225

Though doing comparisons like this is specious, it is amusing how the two line up…

Here is a picture of the Dow Jones pre-1987 crash and the Dow Jones today.


You may remember that I wrote about P/E compression a while back. Here’s a quick, updated view of the long-term P/E compression effect in the S&P 500 (brought to you by TickerSense):


While earnings have indeed been impressive, P/E ratios continue to grind lower. Even with earnings rising and prices going up, earnings have been rising faster than prices causing the ratio to fall. (more…)

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