Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

With and Without Forex

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I was thinking today about how the FOREX has been pretty much the one and only reason the equity markets have been rallying since early July (specifically, the weakness of the US dollar). It occurred to me that the dollar was actually quite strong from December 2009 through April 2010, and the equity markets were pushing higher most of the time then.

In other words, equity markets were so strong in late 2009 and most of the first four months that they were able to overcome a strong dollar. Yet the recent strength – which is similar in intensity to what we saw in the aforementioned phase – has not had to fight a strong dollar, and it has had a weak dollar aiding it. If the FOREX market were otherwise flat, I think equity markets would be much weaker now.

Just for fun, I decided to think of a graph that might incorporate these two factors, and I came up with (SPY*FXE), which simply multiplies the S&P 500 ETF with the EUR/USD ETF. The resulting graph is, to me, pretty interesting:


Not-For-As-Much-Profit Education

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I did a post back on October 2nd about how tempting the for-profit education sector looked. This evening's announcement by APOL has sent the stock down over 12% after-hours, and similar stocks are falling in sympathy. I am happily short all of them.


In case you haven't been following the news, it turns out that these for-profit outfits, like University of Phoenix, Devry, and the like, are running into this kind of reality:

(1) Jethro Jobless is watching People's Court on TV, and he sees an ad for Devry which strongly suggests that a better "education" will improve his job prospects;

(2) Jethro undergoes the rigorous entrance examination – which consists of checking for a pulse – and secures federal loans to pay the exorbitant tuition (I read in the Times this weekend that one particular course runs $14,000, and an identical education could be had at a community college for under $500);

(3) Jethro gets his "degree" and enters the job market;

(4) Suppressing snickers at his diploma, hiring managers don't hire Jethro;

(5) J.J. is still unemployed – but now buried in student debt – so he blows off his student loans;

(6) You – the responsible taxpayer – have this debt added to the trillions already owed by the U.S., and J.J. resumes watching People's Court.

The Federal Government made noise about getting a little bit tough on the above, but since they have no backbone whatsoever, they delayed any concrete action until sometime next year (which means never).

These companies, however, are starting to get a little nervous, so they are getting more rigorous about enrollment (perhaps, besides a pulse, you also have to have an IQ greater than your shoe size). Thus enrollments – and profits – are dropping.

For once, I'm looking forward to the opening bell.

The Experts

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At the risk of seeming obsessed, I've got to vent a bit more about a certain well-known organization that makes a lot of money selling financial publications.

I used to run their ads here, but I decided a while ago I could not in good conscience run those ads anymore since the opinions emanating from the aforementioned house seemed – to put it kindly – unhelpful.

I happened to run across one of their missives from 14 months ago. It was stating that precious metals were about to plunge hard, and this sentiment has been repeated pretty much constantly ever since. Here's a quote from the August 2009 publication and a graph of the gold spot price to put things in context.


At the beginning of this year, there was a prominent headline in boldface type in the January issue of one of their principal publications. It was as follows, and a quote of the financial-based ETF symbol IYF is shown with it.


My point in this isn't to diss a firm that has made (countless) bad calls. Lord knows I've been off the mark a lot this year. My points are twofold: (a) I respect an organization or a person a lot more if they will, at least occasionally, prominently state how they have screwed up royally; (b) please don't put a lot of stock in "experts", no matter how popular or well-read they are.

After all, if a firm makes 500 predictions, and one of them comes true, you can milk that one good prediction in your advertisements for years to come. You don't have to tout the 499 misses that were printed alongside the one exception.

Slopers are collectively a trustworthy bunch. Learn from them. But as for the rest of the world – – – take it with a grain of salt.