Euclidean Geometry

Tue, 2015/07/07 - 9:16am | Your editor

I place my hope in Euclidean geometry.

The likelihood of a deal on Greece appears to have increased thanks to an overwhelming victory for Syriza among the population, showing that any deal will have to be done with Alexis Tsipras or not at all, plus a change of finance ministers.

The new guy, Euclid Tsakalotos, fills one of my requirements, a link to the glory that was Greece when Plato invented philosophy and Euclid geometry. Helping Tsakalotos is his peculiar heritage. Being born in 1960 in The Netherlands gives him an inside track to the Dutch president of the Eurogroup who was the most negative on his predecessor, Jeroen Dijsselbloem (which Euclid knows is pronounced Yeroon Doyselbloom.) Euclid Tsakalotos is a classic economist, while Yanis Varoufakis specialized in game theory, not good diplomacy.

Euclid's father was an insurance executive and his uncle Thrasyvoulos a right-wing general who slaughtered Turks in the 1920s and invaders during World War II before turning the army's guns on lefties with zeal during the Greek civil war. But before he died Thrasyvoulos Tskakalotos shook the hand of Andreas Papandreou to show that patriotism topped political differences. Nephew Euclid studied philosophy, politics, and economics at Oxford (PPE, an elite degree) and then completed his PhD at Oxford. During his studies he also became friends with the current head of the Greek Central Bank, Yannis Stournakis, a bete-noire of the rest of the Syriza leadership. However he also joined the Oxford branch of the Greek Communist Party in Oxford.

So for all his lefty credentials this man is at least capable of respecting those from the other side. Let's hope he succeeds in Euclidean geometry.

But far bigger problems weigh on global markets than mere Greece. First, the Iranian nuclear talks are due to end today, and the odds are against a deal being approved by the Iranian president, to say nothing of the US Dept of State.

Then too Chinese markets today fell again despite the government program to support stock prices which involved a round-robin collection from brokerages to fund purchase,  lower interest rates, and a ban on new initial public offerings (which can lure investors into selling the prior ipo).

The Shanghai market duly managed a tiny rise Monday although more speculative Shenzhen continued downward. However, today the large cap Chinese Index fell 1.8% and the ChiNext index of small caps fell 5.1%. Since June 1 Chinese stock investors have lost the equivalent of 100 times the entire annual gross national product of Greece.

The consensus among pundits is that the Greek crisis can be solved if political grandstanding by both the austerity and the anti-austerity camps ends. The anti-austerity group does include some high-ranking Nobel prize economists and they point out that the debt refinance efforts really have not bailed out Greece so much as northern European bank lenders—and US hedge funds looking for a high-risk high-return bet.

Ironically enough, the governments of countries which survived austerity measures (not as severe as what was imposed on Greece, but certainly no picnic either) are keener to keep the Greeks from getting away with anything than even the supposedly fierce Germans, Finns, and Dutchmen. In Spain and Italy, Ireland and Portugal, there are left-wing Syriza-like parties in the wings ready to pounce on the governments which accepted pain to stay in the Euro and the EU. If Greece now gets away with it, they may lose power.

Over in the creditor camp, the contrary logic holds and also bodes ill for an accord. The right-wing opposition from around 2010 said to let Greece go and stop supporting these insufferable people who wanted to pay pensioners their pension and keep the country working. So if there is yet another trip to the vaults now to pay back the debts of these ungrateful Hellenes, they will say they were right to be right-wing, which will hurt the parties in power starting with the compromiser-in-chieftess, Angela Merkel and her hapless ally, François Hollande.

More for paid subscribers from Israel, The Netherlands, Luxembourg, India, Canada, China, Spain, Portugal, and Denmark today.

Read more »

Grexit 1 and Grexit 2

Mon, 2015/07/06 - 2:46pm | Your editor

There was a brief moment when we were in the London City Airport this morning embarking for the conference we will be speaking at Weds.-Fri. When the Euro fell to $1.01. It was about 6 am and the exchange office posted the figures—but was closed. By the time we arrived at Faro airport the Euro had jumped back nearly to Friday's level of $1.11, hitting $1.1081 as we struggled to find the Alamo car hire firm which turned out to be called by a local company which holds its franchise, Guerin.

Nobody bothered telling us that when we set things up. Guerin also attempted to sell me collision and damage insurance for euros 15,000 despite the fact that we had already bought a policy in the US worth $35,000. I don't need double insurance.

Anyway what boosted the Euro was the resignation of Yanis Varoufakis, the Finance Minister, who had already committed to resigning if the Greeks voted 'yes'. But they voted about 60% 'no' but still got no more motor-cycle jacket Varoufakis. They still have tie-less Prime Minister Alexis Tsipras, another young and inexperienced negotiator.

I will not predict the outcome of any future talks. But the Euro-bloc might well be better off without the Greeks. I am not sure that is good for US policy on Nato or the Balkan countries or Vlad (the Impaler) Putin. But we are not involved in the Greek debt drama except marginally, via the US share of the IMF loan that Greece failed to pay last week. Geopolitics is something else but nobody seems to be worrying about that yet.

Portugal, having gone through an austerity program of its own without protest, was in a similar position to Greece 3 years ago: a small, marginal country which joined the EU and the Euro without the right kind of modern economic and banking system required to make it work. Like Greece, it went into deep deficit from overspending. The Portuguese took their medicine are are now doing better although the banking system is still fragile.

Nobody in Portugal had a kind word to say about Greece today. Everyone involved in dealing with arrivals in the Algarve boasted that “we are not Greece” and our money is sound. They also showed a bit of schadenfreude about Islamic terrorism in a nearer competitor country with beach resorts, Tunisia.

The Portuguese are looking for more bookings this month and next as people make back up vacation plans.

More for paid subscribers from the Eurozone, Switzerland, Israel, The Netherlands, and Britain today.

Read more »

A Sunday File

Sun, 2015/07/05 - 3:50am | Your editor

Since in much of the world including US health insurance, last Friday was a normal working day, I am doing a quick rundown of developments for paid subscribers before heading for the uncertain global linkages of the Algarve, southern Portugal, tomorrow. I am delivering some talks at a conference called liveandinvestoverseas (read it carefully) at the Hotel Tivoli Almansor in Carvoeiro.

Portugal is now firmly in the pro-austerity camp, mainly because it seems to have survived the process imposed upon it by northern Europe. So I expect there will not be much sympathy for the pickle Greece is in. Curiously, a couple of years ago the prime minister of Portugal bore the family name of Socrates. Tellingly, there is no one with such a classically wire name among the current Hellenic leaders. The polls are too close to call, which in my experience means that people are unwilling to tell pollsters their real intentions. The probably means a yes will win, I guess.

More for paid subscribers follows to cover developments in the Mother Country while we were off feting our independence. Plus a wee note about Germany.

Read more »

Model Portfolios Updated

Sat, 2015/07/04 - 5:38pm | Your editor

I have just updated the model portfolios which can be viewed at\

Between July 4 and the movement of my account to Interactive Brokers the data are incomplete and the new listings may be in different currencies and markets than they were last week. I do not have access to my full record while on the road because my backup drive is proving inaccessible.


We are off at the crack of dawn Monday en route to the south of Portugal where we are participating in a conference called aimed at Americans but not only Americans. I will provide reports when I learn things.

In the interval I will take time Sunday to fill you all in on developments in market which were open on Friday, unlike Wall Street.

Happy Real Independence Day. We just were in Islington visiting friends and their neighbors who were not Americans had Old Glory flying outside their door and yankee music playing in the garden. No fireworks, however. It was a nice touch. I started trying to sing The Star-Spangled Banner but was quickly hushed when I missed the high notes. The only person who could sing it was Kate Smith. So I fell back on This Land is Your Land and the others joined in.

Read more »

Model Portfolios Updated

Sat, 2015/07/04 - 5:38pm | Your editor

I have just updated the model portfolios which can be viewed at\

Between July 4 and the movement of my account to Interactive Brokers the data are incomplete and the new listings may be in different currencies and markets than they were last week. I do not have access to my full record while on the road because my backup drive is proving inaccessible.


We are off at the crack of dawn Monday en route to the south of Portugal where we are participating in a conference called aimed at Americans but not only Americans. I will provide reports when I learn things.

In the interval I will take time Sunday to fill you all in on developments in market which were open on Friday, unlike Wall Street.

Happy Real Independence Day. We just were in Islington visiting friends and their neighbors who were not Americans had Old Glory flying outside their door and yankee music playing in the garden. No fireworks, however. It was a nice touch. I started trying to sing The Star-Spangled Banner but was quickly hushed when I missed the high notes. The only person who could sing it was Kate Smith. So I fell back on This Land is Your Land and the others joined in.

Read more »

Wonderland News

Thu, 2015/07/02 - 5:25pm | Your editor

Tomorrow is an important proxy for a holiday which falls on Saturday this year. Since I am in England now I am not referring to the Glorious 4th of July. Rather, I am thinking of Alice in Wonderland Day, marking the 150th anniversary of Lewis Carroll publishing the first edition of his tale. While the writer-mathematician's story was aimed at children like Alice, it is full of deep insights into how people think—or fail to think.

Every now and again some thoroughly weird addition or subtraction from main stock indexes leads me to write about “Alice in Indexland”. So in order to properly celebrate the first edition of the stories Carroll told Alice as they picnicked in the Oxford area or punted on the Isis River (which is what the Thames is called there), always suitably chaperoned by one of her parents who may have missed some of Carroll's reasons for palling up with this 11-year old, I am blogging today so I can take tea with the Red Queen or the Mad Hatter tomorrow without being interrupted by business.

I will start with one logical inconsistency that shocks me the most, the prevailing view among Chinese margin investors that the officially Communist government is supposed to make sure they don't lose money with their speculative Shanghai or Shenzhen stock purchases. To be sure Beijing tried to ease rules for bank lending and cut interest rates which could have helped refloat the speculators. But it did not go far enough to make them whole at the expense of the overall economy. How awful of the heirs of Chairman Mao!

There are plenty of logical inconsistencies in the news I report today from Britain, Denmark, China, Switzerland, Israel, and Dubai for paid subscribers which follow. Read on or think about what you are missing for not paying up for advise and amusement! The advice pays off for your portfolio. The amusement makes you a happier person and gives you fun stuff to talk about.

Read more »

The Oscillator Prognostication

Wed, 2015/07/01 - 11:18am | Your editor

My favorite USA quantitative analyst Tom McClellan wrote Monday in 'McClellan Market Report or

"Ahead should be the final push up into the top in August.. I'm changed back now to officially bullish for all 3 trading styles (ed: short, medium-term, and long term). I cannot say that I am wild about this as an entry point, but the market has no requirement to throw me exactly the pitches I want to hit. I should emphasize that those are not time horizons extending some specified distance out into the future. Rather, they refer to trading styles which a person might wish to align himself with.
"By jumping back to the bullish side on Friday, it is clear now that I jumped one day too early. My bet is that the oversold condition which was frustratingly missing but here now should start to work.
“Panic was certainly evident in the VIX, which had its biggest one-day rise since early 2013. When the VIX moves up or down by 10% in a single day, sometimes it means initiation of a powerful new move, but other times it marks the conclusion of a move. Detecting which interpretation is the right one is difficult in real time, but it is worth noting that a big VIX move is more likely to mark initiation if there is a move to initiate.
“The current [oscillator] reading is the most oversold since the Ebola Panic low last October. It has gone lower in the past; and there have been times when the most oversold reading did not mark the final price low. To help mark what I believe is the bottom for this selloff, QQQ traded its highest daily volume since the lows of early Jan. High volume readings in QQQ (and SPY) tend to mark exhaustion of short term sentiment and thus of selling pressure.
“The spot VIX has now risen up well above the near-month VIX futures contract, in this case the July contract which closed on Monday at 17.40. Normally the VIX futures trade above where the spot index is, because of the risk of adverse movement over the life of that contract, and because there is no way to arbitrage away the premium. So when the spot VIX goes above its own futures contracts, that is a sign of exhaustion and panic." (29-Jun-15)

To add my global two cents' worth, the odds are that there will be more foreign-origin acquisition bids for US companies over the summer and autumn, as money is cheap to borrow and there are far fewer opportunities for investment back home in markets like Europe and Japan. Some of this mergers and acquisition movement will be encouraged by the surprise fall in the Wall Street and the US dollar against foreign stocks and currencies in June. But the main impetus will be signs of growth in our country which are missing abroad.

Now for my first and last blog of July from the USA, there is news today from Israel, Spain, Canada, Cuba, Norway, Britain, Australia, Ireland, Spain, Belgium, Holland, Germany, Japan, India, Pakistan, and Portugal.

Read more »


Tue, 2015/06/30 - 2:46pm | Your editor

Just in time for my having to change money, the dollar declined so far this week. That shows you the value of the famous remark attributed to Yogi Berra: “Never predict, especially not about the future.”

Who would have ever thought that the likely breakup of the euro over a Greek exit would result in a strengthening of the euro against the US dollar? Who would guess that the unlikely prospect of a last-minute patch-up would weaken the euro today? Or that the stock market across the pond to suffer the most would be... London? And that gold, the ultimate refuge, would fall both yesterday and today?


The impact of the threat of Grexit was imperceptible, because of the long build-up, and, I suspect, because Greece represents a mere 3% of the Euro area's economic output. Alexis Tsipras stood on the top of the Acropolis shouting “prosaki” (Greek for “attention”) and nobody paid any heed. So today he went on national TV and said they wouldn't dare kick Greece out of the EU.


I leave tomorrow night for a flight to London en route to an irresistible conference about retirement and investment talking place in the Algarve, the sunny southern coast of Portugal. There my husband will speak about retirement, having practiced it for 5 years, and I will talk about global investing.


Apart from weird currency moves, thing are otherwise in good order. After nearly 9 weeks of dithering, my imminent depart from these shores got the brokerages involved in transferring my stocks and bonds from E*trade to Interactive Brokers to activate their hidden secret team of real human beings to make the process work.


It is an illusion fostered by technology experts to believe that one can automate transfers of securities and money; collecting proper fees for conversions, and dividends for ADRs; custodianship; back offices; market-making; and other bits of the securities business. In the end to get things done there had to be two people talking to each other at the brokerages along with plenty of nudging by the client whenever something went agly, which was often. Robots screw up terribly!


The worst problem so far was the Japanese custodian for E*trade allegedly giving instructions full of typos. Since Japanese stocks are identified with 4 numbers because there is no way to write stock names foreigners can read, producing a typo must have required real effort. This snafu arose for what my paid subscribers must have guessed was for Chris Loew's locally-listed ordinary shares without American Depositary Receipts. I name them below, for those who may hit the same problem.


The dumbing down of investment options continues, beyond the failure of Barron's to maintain its record on reporting data on closed-end funds and E*trades decision to shut down its global trading facility next month. The latest gap in knowledge is The Financial Times of today failing to report on largest trades, gains, and losses in each market. It is an illusion fostered by techies that people don't want to know this after a big market crisis day. In fact that is when they want and need data the most. I was thinking of installing a ticker tape machine in my office to fill the gap.


The Shanghai market is up 5.5% today after the week-end 0.25% rate cut failed to revive Chinese stock exchanges. To get the markets up, the “Communist” government in Beijing issued new rules allowing state pension plans to invest up to 30% of their money in stocks, which would create inflows of nearly $100 bn. Bloomberg said China was behaving like “a penny stock”.


*I will present to participants at the Live and Invest Overseas conference on July 10 at 11 am at the Tivoli Almansor hotel in Carvoeiro, Algarve, Portugal, in the Lagoa room. I will also tell people about bringing dogs to Portugal in the same room the day before, and my husband will speak at much greater length about Portugal as a retirement destination on Weds at 10:30 am.

More for paid subscribers on a slow news day, with updates on our shares from Japan, Spain, Finland, Kenya, India, South Africa, Britain, the UAE, Dubai, Saudi Arabia, France, Colombia, Greece, and Egypt.

Read more »

Hedges and Havens

Mon, 2015/06/29 - 1:40pm | Your editor

Our advertiser, Adrian Ash, writes from London today about the sinking euro and stock sell-offs in Europe in the wake of the Greek walkout, referendum, and bank holiday. I will spare your the details of the fast-moving markets but here is his conclusion:

     “If you're going to panic as your local banking and financial system tips towards failure, there are no prizes for waiting. responsibility...whatever the politicians appeal to, it will be penalized by the cold, hard fact of capital controls when your meagre savings are locked away for the 'common good'.

   “Self-interest, on the other hand, might actually enable you to help re-build your local people work and providing liquidity to the banks after catastrophe strikes...if you act early and often to protect a little of your own money while it is still yours to control.”


Adrian writes a daily note for which enables investors to buy and hold gold legally and relatively cheaply. A gold holding is one way to prepare for stock, bond, and currency crises. Another is hedges.


While it is not part of our advisory, I took profits of ~21% today on my UXVY hedge which tracks volatility, and which spiked today. I moved the money into XIV which is inverse using a proxy (put and call options on the S&P index) to track the VIX volatility index. XIV fell ~10.5%. Both are exchange-traded funds, and useful for patient people wanting to protect against macro market trends. GLD or bullionvault, both sponsored by the World Gold Council are easier ways to achieve that target.


China is now firmly in correction territory despite the weekend rush by the CB to lower interest rates by 0.25% and also increase market liquidity.


More for paid subscribers from Britain, South Africa, China, Hong Kong, France, Finland, Spain, India, Israel, Ireland (a trifecta!), Dubai, The Netherlands, and Brazil including one annual report.


I am writing a special report aimed at retirees overseas (initially in Portugal and in euros) telling them how to use a global investing portfolio to avoid the risks of limitations on how much money they can hold in their local currency under US FATCA rules. The idea is to use a US on-line brokerage account to keep funds for any emergencies which might violate the $50,000 limit on how much you may hold in a foreign bank account at year end, and the $75,000 limit on how much you may hold at any time during the year. The fact that exchange rates move means this can hit suddenly and having a brokerage account to which you can quickly transfer funds can help you avoid hitting the ceilings.

There are no bigger reporting requirements for a brokerage dollar check account or a link to a foreign bank account under IRS FATCA rules, which are not really aimed at small investors—but at fatcats.

There will be no blog July 2 as I will be traveling to London overnight. There will probably be a blog on Friday July 3 although US markets will be closed for Independence Day.


I will publish this special report once I have written it and it will be free to current subscribers but cost $49 for non-subscribers.

Read more »

Tables Posted

Sun, 2015/06/28 - 12:43pm | Your editor

Today I posted our tables for subscribers and pre-subscribers at

To view the spreadsheets, use the printer friendly button on your computer or mobile phone. Pre-subscribers may only view the closed positions table, but current subscribers get to see the whole 9 yards: stocks, and bonds, and closed-end and exchange traded funds.

The big news is first that Barron's has almost resumed publishing tables showing net-asset values for closed-end funds, with a few gaps still. The other big news is that my account  which was supposed to be moved on Friday to Interactive Brokers remains firmly lock up in E-trade Financial which will cease all non-US trading on July 9. I am now in week 9 of trying to move my account and the brokerage seems to be deliberately blocking the transfer by coming up with new excuses, the most recent saying that my margin account was in deficit. I do not have a margin account. The deficits incurred laterly totalling about $750 so far were the result of e-trade charging me "reorganization" fees for transferring many foreign holdings into pink sheet ADRs. Some however, remain stubbornly offshore because they have no ADRs, which means it will take longer than July 7 to move the whole account.

There is a general plot against retail investors buying anything except exchange-traded funds at work here, with the financial press conspiring with stock market intermediaries like brokerages.

As I am heading for Europe July 1 this is a menace to my wealth. I am hitting London because I want to breathe fresh air, and my building here in NYC is sheathed with scaffolding for the interminable brickwork. And then I am going to talk about Global Investing at an irresistably located conference, in the Algarve, the beach zone of southern Portugal. Somebody has to do this.

The brickwork has taken longer but even moving my brokerage account is something like the labors of Sisyphus or the negotiation of an Iranian nuclear deal--or perhaps just the talks about debt at the country where Sisyphus was invented, Greece. It is all supposed to be fully automated, and therein lies the rub. The last time I transferred accounts it took 72 hours. Now it is the 9th week with no end in sight.

There are two sales (actually takeovers) this week. One is at a modest discount of 18% from what we bought at, not too awful for a speculative stock in Ethiopian potash. It is Canadian, Allana Potash.The other is a disaster of the first order from of all places, Portugal, the very country whose beaches I will hit between lecturing next month. Or to quote our son the certified financial analyst, "Portugal is Africa's last colony in Europe."

What happened here to an NYSE-listed American Depositary Receipt is beyond belief. Our Lusitanian (the Roman name for Portugal) was sunk. The share was simply looted by all comers, starting with management which shipped its spare cash of about $1 bn to buy short-term commercial paper from a Luxembourg sub of the bank which underwrote Portugal Telecom's privatization, Banco Espirito Santo. The transfer was arranged by a member of the board representing the bank without the CEO knowing about it. The CEO, by the way, was himself African expat, born in Mozambique, Zainal Mohammed Bava, not exactly a member of the Portuguese ruling caste.

Six weeks later the BES sub in Luxembourg could not repay and filed for "protection against its creditors". The Portugese BES parent was nationalized in distress to save depositors and the central bank from the impact of this, which would have been worse that what now faces Greece.

Failing to realize this was a set-up, I tallied the valuation of BES's Luxembourg holdings which include hotels, agricultural land, a travel agency, a futbol stadium, newspapers and websites, a chain of hospitals, and lots of other stuff which was put on the market in Portugal and Brazil. I figured we might get the proceeds. Big mistake. The proceeds went to the Portuguese oligarchs. Nobody made an attempt to repay the telephone company. Nobody went to jail. Nobody had to give up his mansion or private jet.

Instead, another Luxembourg entity bought the phone company via an outfit with ticker OIBR in Brazil to which PT owed money it no longer had. Patrick Drahi's Altice paid Oi  well below the book value of the remaining Portuguese assets, ~$8 bn when last reported. Drahi is a Moroccan-born French expatriate citizen, another African. Oi refused to consider a counter-bid from the richest woman in Africa, Isabel dos Santos, daughter of the probably corrupt President of Angola, where PT had assets that were supposedly worth something.

Once Drahi got the deal PT had a name change, to Pharol. This opened the way to more Lusitanian looting, this time by the US brokerage and depositary community. A reorganization charge was imposed for the name change and another for the NYSE de-listing. Finally another charge was imposed to cash out the poor former holders of PT ADRs. The result was to cut the payout per share to below half the amount Mr. Drahi had paid for the assets, eaten up in fees to the depositary (Deutsche Bank) and the DTC, and of course E-trade which collected every time any of this crossed "Go."

Ironically enough, the hotel where my Portuguese conference will be held, the Tivoli Almansor in Carvoeiro, was one of the assets sold by the BES sub in Luxembourg, and the proceeds also disappeared. The buyer was one Ellwood Heinecke of Thailand's Minor Group, another expat, this time from the USA. His father was CIA station chief in Bangkok and young Ellwood learned enough Thai to apply for Thai citizenship and escape US taxes. However he now is looking for a better bolthole, in Portugal. The Almansor is not the top Tivoli in Mr. Heinecke's new portfolio: that is the one at the Edward VII Square in Lisbon where I have stayed in the past.

I did advise selling 25% of our stake in what was then still PT at a loss in January of this year, after I could not rouse a class-action lawyer to take on the Oi sale terms either here or in Lisbon. ADR owners were kept from voting by the depositary (Deutsche Bank) by the simple trick of not sending out the proxies until after the special shareholder meeting had already taken place. It's too bad Germans no longer understand Yiddish, because the fees hitting us on the remainder of our stakes are an example of outrageous chutzpah.

Other news. Deutsche Bank has form in charging fees for restructuring. I still own Infosys, the Indian IT firm, although it was sold from th model portfolio. INFY has an ADR on Nasdaq which just split its shares. But our dear German depositary charged the ADR owners for issuing the new shares under the split.

A final note. No I am not overstating our gains on Galapagos and Bavarian Nordic. We sold half but we doubled up on these biotech earlier so they are fully weighted in both the sold positions table and the current one.

Read more »