Bill Gross On Football As Investing, And Why Everyone Now Plays ...

Bill Gross' monthly letters are always a fresh source of jovial imagery, although the bond king may have outdone himself in his latest monthly letter which collapses the principles of investing onto the football field: "My point about pigskin offense and defense is the perfect metaphor for the world of investing as well. Offensively minded risk takers in the markets have historically been the ones who have dominated the headlines and won the hearts of that beautiful gal (or handsome guy).... Canton, however, has an approximately equal number of defensive in addition to offensively positioned inductees, so there must be a universally acknowledged role for both sides of the scrimmage line. What fan can forget Mean Joe Greene, Deion Sanders or Mike Ditka? The old, now politically incorrect showtune laments that ?you gotta be a football hero, to fall in love with a beautiful girl,? but football and any of life?s heroes can play on either side of the line, it seems." And it only gets better. While at its heart Gross' latest is merely yet another lamentation against the confines of the financially suppressive regime that arises from ZIRP and ends with what many expect is a whimper (when in reality they all forget to factor in the facility of hitting the CTRL+P keys as many times as necessary), the flourish of abandon this time around is palpable. We would not be surprised to soon see Gross hang up his offensive (and defensive) jersey, and sit back and enjoy the coming lunacy from a distance (but hopefully not before he allocates just a little to the Ron Paul SuperPAC).

In the meantime, in the context of football, he shares the PIMCO investing approach pre-ZIRP and post-ZIRP:

PIMCO Offensive Strategy 1981 ? 2011

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Ready, Set, Hut 1, Hut 2 ?

1. Recognize downward trend in interest rates and scale duration accordingly.

   A. Emphasize income and capital gains. PIMCO Total Return Strategy.
   B. Utilize prudent derivative structures that benefit from systemic leveraging ? financial futures,
   swaps (but no subprimes!)
   C. Combine A and B along with careful bottom-up security selection to seek consistent alpha.

PIMCO Defensive Strategy 2012 ? ?

Ready, Set, Hut, Hut, Hut ?

1. Recognize zero bound limits and systemic debt risk in global financial markets. Accept financial repression but avoid its impact when and where possible.
   
   A. Emphasize income we believe to be relatively reliable/safe.
   B. De-emphasize derivative structures that are fully valued and potentially volatile.
   C. Combine A and B along with security selection to seek consistent alpha with admittedly lower nominal returns than historical industry examples.

All this and much more below:

Defense (from Bill Gross)

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• Over the past 30 years, an offensively minded Federal Reserve and their global counterparts were printing money, lowering yields and bringing forward a false sense of monetary wealth.
• Successful investing in a deleveraging, low interest rate environment will require defensive in addition to offensive skills.
• The PIMCO defensive strategy playbook: Recognize zero bound limits and systemic debt risk in global financial markets. Accept financial repression but avoid its impact when and where possible. Emphasize income we believe to be relatively reliable/safe; seek consistent alpha.

They say defense wins Super Bowls, but the Mannings, Bradys and Montanas of gridiron history are testaments to the opposite. Putting points on the board, especially in the last two minutes, has won more games than goal line stands ever have, even if the scoring has been done by the field goal kickers, the names of whom have been confined to the dustbins of football history as opposed to the Hall of Fame in Canton, Ohio. Canton, however, has an approximately equal number of defensive in addition to offensively positioned inductees, so there must be a universally acknowledged role for both sides of the scrimmage line. What fan can forget Mean Joe Greene, Deion Sanders or Mike Ditka? The old, now politically incorrect showtune laments that ?you gotta be a football hero, to fall in love with a beautiful girl,? but football and any of life?s heroes can play on either side of the line, it seems.

My point about pigskin offense and defense is the perfect metaphor for the world of investing as well. Offensively minded risk takers in the markets have historically been the ones who have dominated the headlines and won the hearts of that beautiful gal (or handsome guy). Aside from the rare examples of Steve Jobs and Bill Gates, however, the secret to getting rich since the early 1980s has been to borrow someone else?s money, throw some Hail Mary passes and spike the ball in the end zone as if you had some particular genius that deserved monetary rewards 2¹⁰ times more than a Doctor, Lawyer or an Indian Chief. Nah, I take that back about the Indian Chief. The Chiefs, at least, have done pretty well with casinos these past few decades.

Still, the primary way to coin money over the past 30 years has been to use money to make money. Although the price of it started in 1981 at a rather exorbitantly high yield of 15% for long-term Treasuries, 20% for the prime, and real interest rates at an almost unbelievable 7-8%, the gradual decline of yields over the past three decades has allowed P/E ratios, real estate prices and bond fund NAVs to expand on a seemingly endless virtuous timeline. Books such as ?Stocks for the Long Run? or articles such as ?Dow 36,000? captured the public?s imagination much like a Montana to Jerry Rice pass that always seemed to clinch a 49ers victory. Yet an instant replay of these past few decades would have shown that accelerating asset prices weren?t due to any particular wisdom on the part of academia or the investment community but an offensively minded Federal Reserve and their global counterparts who were printing money, lowering yields and bringing forward a false sense of monetary wealth that was dependent on perpetual motion. ?Rinse, lather, repeat ? Rinse, lather, repeat? was in effect the singular mantra of central bankers ever since the departure of Paul Volcker, but there was no sense that the shampoo bottle filled with money would ever run dry. Well, it has. Interest rates have a mathematical bottom and when they get there, the washing of the financial market?s hair produces a lot less lather when it?s wet, and a lot less body after the blow dry. At the zero bound, not only are yields rendered impotent to elevate P/E ratios and lower real estate cap rates, but they begin to poison the financial well. Low yields, instead of fostering capital gains for investors via the magic of present value discounting and lower credit spreads, begin to reduce household incomes, lower corporate profit margins and wreak havoc on historical business models connected to banking, money market funds and the pension industry. The offensively oriented investment world that we have grown so used to over the past three decades is being stonewalled by a zero bound goal line stand. Investment defense is coming of age.

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This transition is not commonly observed, although it is relatively easy to prove statistically and even commonsensically. Take for instance the rather quizzical notion that lower yields must produce an equal number of winners and losers since there is a borrower for every lender and the net/net therefore should have no effect on the real economy or its financial markets. Chart 1 shows that since 1981, which marks the beginning of the secular decline of interest rates, personal interest income has rather gradually (and now somewhat suddenly) shrunk relative to household debt service payments.

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It is Main Street that has failed to keep up with Wall Street and corporate America in the race to see who can benefit more from lower yields. As the interest component of personal income gradually weakens, the ability of the consumer to keep up its frenetic spending is reduced. Metaphorically, it?s akin to a 4th quarter two minute Super Bowl drill, but one where the receivers haven?t been properly hydrated. They?re a half step slow, their legs are cramping, and it shows. Lower interest rates are having a negative impact on households because their water bottles are filled with 50 basis point CDs instead of Gatorade.

While Wall Street and levered investors have fared better than their Main Street counterparts, it?s not as if they?re in ?primetime Deion Sanders? shape either. Conceptualize the historical business model of any financially-oriented firm for the past 30 years and you will see what I mean. Insurance companies, for instance, whether they be life insurance with their long-term liabilities, or property/casualty insurance with more immediate potential payouts, have modeled their long-term profitability on the assumption of standard long-term real returns on investment. AFLAC, GEICO, Prudential or the Met ? take your pick ? have hired, staffed, advertised, priced and expensed based upon the assumption of using their cash flows to earn a positive real return on their investment. When those returns fall from 7% positive to an approximate 1% negative, then assumptions ? and practical realities ? begin to change. If these firms can?t cover inflation with historical real returns from their float, then they begin to downsize in order to stay profitable. The downsizing is just another way of describing a transition from offense to defense in a zero bound nominal interest rate world where almost any level of inflation produces negative real yields on investment.

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Not only insurance companies but banks suffer from this inability to maintain margins at the zero bound. In the process, they close retail branches that once were assumed to be the golden key to successful banking. Defense! And here?s one of the more interesting anecdotal observations on our current zero-based environment, one to which my investment paragon ? Warren Buffett ? would probably immediately admit. His business model ? and that of Berkshire Hathaway ? has long benefitted from what he has described as ?free float.? Those annual policy payments, whether for hurricane, life or automobile insurance, have long given him a competitive funding advantage over other business models that couldn?t borrow for ?free.? Today, however, almost any large business or wealthy individual can borrow or lever up with minimal interest expense. Buffett?s ?Omaha/West Coast? offense is being duplicated around the world thanks to central bank monetary policies, placing an increasing emphasis on stock and investment selection as opposed to business model liability funding. Buffett will succeed based upon his continued strong offensive play calling, but the rules of the game are changing.

The plight of Buffett of course is in some respects the plight of PIMCO or any investment/financially-oriented firm in this new age of the zero bound. And it seems to us at PIMCO that successful investing in a deleveraging, low interest rate environment will require defensive in addition to offensive skills. What does that mean? Well, let?s briefly describe PIMCO?s own historical investment offense for the past 30 years in order to provide a defensive contrast:

PIMCO Offensive Strategy 1981 ? 2011

?

Ready, Set, Hut 1, Hut 2 ?

1. Recognize downward trend in interest rates and scale duration accordingly.

   A. Emphasize income and capital gains. PIMCO Total Return Strategy.
   B. Utilize prudent derivative structures that benefit from systemic leveraging ? financial futures,
   swaps (but no subprimes!)
   C. Combine A and B along with careful bottom-up security selection to seek consistent alpha.

PIMCO Defensive Strategy 2012 ? ?

Ready, Set, Hut, Hut, Hut ?

1. Recognize zero bound limits and systemic debt risk in global financial markets. Accept financial repression but avoid its impact when and where possible.
   
   A. Emphasize income we believe to be relatively reliable/safe.
   B. De-emphasize derivative structures that are fully valued and potentially volatile.
   C. Combine A and B along with security selection to seek consistent alpha with admittedly lower nominal returns than historical industry examples.

So there you have it ? the PIMCO playbook. I suppose if I had any common sense I would hold up that clipboard to the front of my mouth like sideline coaches do during big games. Don?t want to chance any of the competition reading our lips to get a heads up on PIMCO?s next offensive play call. But then that?s never been my or Mohamed?s style, given the importance of informing you, our clients, of what we are thinking when it comes to investing your hard-earned capital. Go ahead competitors and read our lips, we?ll just pound that pigskin down the field anyway. Besides, as I?ve pointed out, the emphasis these days should be on the defensive coach. Leveraging has turned into deleveraging. 15% yields have turned into 0% money. The Super Bowls of the future will have their Mannings and Bradys, but the defensive line may record more sacks and make more headlines than ever before.

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Source: http://www.zerohedge.com/news/bill-gross-football-investing-and-why-everyone-now-plays-defense

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Casinos' anti-compulsive bet programs vary widely (AP)

[unable to retrieve full-text content]AP - As lost weekends go, this one was a doozy.

Source: http://us.rd.yahoo.com/dailynews/rss/us/*http%3A//news.yahoo.com/s/ap/20120226/ap_on_bi_ge/us_casinos_compulsive_gambling

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Rev. Peter Baldwin Panagore: Seeing the Dead

As the preacher-man got up to leave, the widow put her hand on his arm, saying, "Don't go, I got one more thing." The kitchen quieted. Her boy said, "Ma, don't tell him." The preacher-man said, "Don't tell me what?" Ma whispered, "Last night, 'bout midnight, I heard a noise in this here kitchen, and so I come in to take a look around. I flicked on the overhead light, and right there front of the sink, right there, standing looking right at me, big as life -- was my dead Stan, the love of my life. He always washed the dishes after supper. I know he's dead, but it was him. He was looking at me with those lovin' eyes, and smiling, like he was telling me he was OK. That's the warm feeling I got -- that he's OK. He's OK. Isn't he? Preacher? He was smiling so sweetly, and I felt loved and good. My kids think I was either dreaming or crazy. Sadness can make you crazy. I read that. I ain't never seen nothin' like that, preacher. Nothin'."

The preacher-man stilled himself and said, "No, you're not crazy, Mrs. Kolinsky. Can't tell you how many times I've heard similar stories on days like today, sitting around kitchen tables just like this, talking about death and funerals. What you saw happens to many people, all types of people, only people don't talk about their experiences publicly, except to folks like me, because it sounds crazy, but it's common. It's a gift, Mrs. Kolinsky. Stan was telling you he's OK. And so are you."

Mrs. Kolinsky is not her real name, but I was the preacher-man. The first time I heard whispers of the grieving seeing the dead was when I was a boy, and I have heard such stories a hundred times since, almost always whispered. My dad told me that when he was a boy of 12, he had a bedroom in the third floor attic of his family home. One night, in the middle of the night, suddenly he awoke to see his grandmother standing at the end of his bed. She was just standing there, smiling at him, and then she vanished, and he knew, deep down inside, that she was dead. My dad jumped out of bed, pulled on his pants and a shirt over his pajamas, and ran barefooted down the three flights, out the front door and down the concrete sidewalk. It was 1942. There were no cars on the street that late at night. He ran across the street, opened the unlocked front door of his aunt and grandmother's house, and rushed inside. The kitchen light was on. He found his aunt who said that her mother, his grandmother, had just died.

Over the years as a community pastor, like most pastors, I attended to death, funerals and grieving in my town. Over the years, many times, the grieving would pull me aside and say, "Preacher, I had this dream..." or "Maybe I'm going crazy, but I saw him standing there..." Sometimes when such a story was told in the company of other family members, someone's eyes would widen and he or she would say, "I saw her, too. She came to me, too." And everybody would cry, smile and believe, maybe for the first time, in the afterlife. Most often in such circumstances, there was direct communication from the dead to the grieving, with words spoken ("Mom, I'm OK."), or loving smiles, or soft eyes, or a warm feeling, all telling the living that the loved one, now dead, was all right and at peace.

True? Or crazy? I leave that for you to decide. Too many times I've seen the grieving find comfort, find solace, in such visions. Over the years, I've come to understand that the human soul is real, just like the rest of my body is real -- a reality of physics -- only the soul is somehow quantum, for lack of a more accurate word. I pray that someday science will measure the soul, see the soul, and understand what common people and mystics have known for centuries, across cultures that the dead are living, and sometimes they come to us to give us solace. Or maybe that's just crazy talk.

St. Paul wrote that we are imperishable, and will be transformed in the twinkling of an eye.

Sources: 1 Corinthians 15:50-56; Luke 24:39

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Follow Rev. Peter Baldwin Panagore on Twitter: www.twitter.com/pbpanagore

Source: http://www.huffingtonpost.com/rev-peter-baldwin-panagore/seeing-the-dead_b_1293650.html

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?A Better You? Your 7 days program to self-improvement ...

I really seem to lost count on how many times I?ve read through and heard of movie star marriages failing just about left and right. Not that I really care (and professionally I don?t), it seems unusual that we often view movie and TV famous actors as flawless consumers, living the fairytale life of riches plus glamour. I suppose you have to stop sticking all of our heads in bose companion 5 the atmosphere and face truth of the matter.

There are many ways to eliminate your sense of self-esteem in spite of how trivial it could actually get. But no matter what happens, we should all attempt not to lose our own feeling of self.

So what manages to do it take to be a lower above the rest? Here are some of the things you can think plus improve on that should be ample for a week.

Just one. Know your purpose
Will you be wandering through living with little route ? hoping you?ll find happiness, health and prosperity? Identify your life purpose or vision statement and you will have your personal unique compass that will cause you to your truth south every singer sewing machines time.

This may sound tricky at first you may notice yourself to be in a strong or even dead end. Very little always that little loophole to turn things around and you can make a significant difference to yourself.

Couple of. Know your values
What do you benefit most? Make a list of your respective top 5 values. Some situations are security, mobility, family, spiritual development, learning. As you establish your goals intended for 2005 ? look at the goals against an individual?s values. If the target doesn?t align utilizing any of your top five values ? you may want to reconsider it or up-date it.

The number should not discourage you, preferably it should motivate you to undertake more than you can ever carrera sunglasses imagined.

3. Know your requirements
Unmet needs can keep you from living authentically. Handle yourself. Do you have a really need to be acknowledged, to be perfect, to be in control, to remain loved? There are so many folks who lived their day-to-day lives without realizing their dreams and most of those end up being stressed and even depressed for that matter. Variety your top three needs and get these individuals met before it?s too late!

Several. Know your article topics
You know who you are plus what you truly get pleasure from in life. Obstacles just like doubt and lack of enthusiasm will only hinder you, but will not necessarily derail your chance for being the person you ought to be. Express yourself and merit the people who has encouraged you to become the incredibly person you wanted to remain.

5. Live internally
Increase your awareness of an individual?s inner wisdom simply by regularly reflecting alone. Commune with nature. Breathe deeply to quiet an individual?s distracted mind. For many of us city slickers it?s hard to be able to even find the peace and quiet we want even in our own home. In my case I really often just sit down in a dimly lit home and play several classical music. There?s sound, yes, nevertheless music does temporarily ease the savage beast.

Some. Honor your good points
What are your optimistic traits? What special talents do you have? Variety three ? when you get stuck, ask those closest to you to guide identify these. Will you be imaginative, witty, good with your hands? Uncover ways to express an individual?s authentic self via your strengths. You can grow your self-confidence when you can share what we know to other people.

7. Serve other people
When you live authentically, you may find that you acquire an interconnected feeling of being. When you are in keeping with who you are, living your goal and giving of your respective talents to the world near you, you give back in provider what you came to give others -your spirit : your essence. The particular rewards for expressing your gift utilizing those close to you is definitely rewarding, much more if it were to be the eyes on the stranger who can get pleasure from what you have done to them.

Self-improvement is indeed one type of work that is worth it. It shouldn?t always be within the confines of an office building, or maybe in the three corners of your own home. The difference lies inside ourselves and how a lot we want to change for that better.

Source: http://carwashsoaps.info/a-better-you-your-7-days-program-to-self-improvement.html

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Arctic Engineering: We Learn to Build Like the Inuit Do

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