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  • More on Sears Holdings' Q4 [View news story]
    Store count down another 704 y/y.

    Only 1725 more stores to go. They can then stop pretending they matter anymore.
    Feb 26, 2015. 09:16 AM | Likes Like |Link to Comment
  • Bullard: Ready to get started with rate hikes [View news story]
    "St. Louis Fed chief Jim Bullard is sure to have plenty of hawkish ones as he guest-hosts Squawk Box this morning."

    Is this what it has come to now? Federal officials wasting tax payer money co-hosting television programs? A program that reside on a network that has become completely irrelevant as a source for comprehensive no nonsense business news.

    Ignore this official. His job his to speculate and give people something to jaw bone about.

    If you are watching that tripe one of you should call in and ask him :

    "If the recession ended in 2009, why has no one, in any level of government used the words that are always used no more than 2 years once a recovery has taken hold-- "Economic Expansion" --to describe the great state of the economy?"

    Because there is none.
    Feb 26, 2015. 07:38 AM | 6 Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    Biobat:

    The problem is in what you are not understanding. Yes I agree they can keep growing.
    BUT

    You're rate of return keeps declining.

    Again to go from a market cap of 1 billion to 200 billion means 1000's of percent return.

    But the next 200 billion in market cap growth (which as I said can and probably will happen, that is not the issue) is only good for a 100% return from this market cap level not the 1000's of percent return that you received from the same previous market cap growth.

    The point of my original comment on this thread is as follows:

    Dear young, new investor:

    The returns you have been told about, returns from the "PAST" performance, are not going to be repeated on a percentage basis in the future. As the value of a company doubles and doubles it requires more and more public investment to keep doubling and doubling the market cap.
    As I showed in a previous example:
    1 to 11 is a 1000% return.
    The next 10 added is not going to be the same 1000% return. It is only one tenth of the previous return. That is declining rate of return. You would now need many times the previous level of investment to achieve the same 1000% return. And so on into the future.

    My goal was to illustrate some reality because a lot of what I read from people who have owned stocks like JNJ since 1980 is:

    "Past performance absolutely guarantees future results".
    Feb 25, 2015. 08:24 AM | Likes Like |Link to Comment
  • Yellen: Bullish on economy and inflation, decline in oil a boon [View news story]
    The 3 commentators above have it 100% correct.

    It is all BS. Where is "Economic Expansion"? You know the phrase that should have been used over 3 years ago if the recession really ended in 2009.

    For those of us are able to think beyond what sex Bruce Jenner thinks he is on any given day we know the truth.

    50% of all American wage earners do not even earn more than $30K/ year pre-tax. Most would call that poverty unless you live completely rural. You certainly cannot live a life on that unless you live so frugally you forget that life is about living, not sacrifice on a 24/7 basis.

    Ignore the FED. That pants wetting about going from 000001% to 000002% Fed Funds rates is comical.
    Feb 24, 2015. 11:04 AM | 7 Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    biobat:

    Thanks for the reply. I have no problem with difference of opinion and I appreciate your viewpoint.

    I hope we all end up making what we need to enjoy the short time we have on this planet.

    Best to you and continued success.
    Feb 24, 2015. 08:25 AM | Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    biobat:
    Thank you for your reply.

    "Using the fallacious law of large numbers argument in 1980, you would say XOM couldn't thousands of percent growth to investors over 35 years"

    As expected you reference the "past" and like most, make the assumption that "past performance guarantees future results". I get it. I do. It is great that since 1980 this is how the stock performed. But those days are behind us. The future is ahead.

    What I am saying is from today, going forward you cannot expect the same percentage returns because for every 100% return, the market cap must double.
    Yes in 1980 XOM's market cap was $35B.
    Adding another $35B was easy and that is a 100% return.
    Now XOM is worth $70B.
    Does adding another $35B equal the previous 100% return? No.
    Now you need $70B to get that same 100% return.

    Of course using 1980 as the starting point looks great.

    Here is XOM's returns in 5 year increments. Ending 2.23.15:
    Since 1980- 2500%
    1985-1500%
    1990-620%
    1995-490%
    2000-130%
    2005-80%
    2010-80%

    Why are the returns lower and lower? Declining rate of return because the market cap needs more and more public investment to keep doubling and doubling. For XOM to gain 100% from today it would need to add another $377B in market cap. As you pointed out in 1980 it only needed $35B for that 100% return. Now it needs almost 40 years of new investment money just for that 100% return.

    Why is the market cap doubling a problem? Because with markets of all types around the world, companies of all types being invested in, there is a finite amount of capital that finds it way to companies.

    There is only one way to know. Let's see what the future brings.

    Best to you.
    Feb 23, 2015. 08:48 AM | 2 Likes Like |Link to Comment
  • Inter Pipeline Delivers A 44% Total Return In 2014; Look For 25-30% In 2015 On Back Of Transport Mega Projects And Contango In Bulk Storage [View article]
    As always (I say this every few months to this author) thank you for once again highlighting some of the best current (and future) investments out there.

    Long $IPPLF since it became available for US investors.
    Long $PBA since 2003.
    Feb 22, 2015. 05:37 PM | 1 Like Like |Link to Comment
  • Ripping The Shorts' Faces Off! [View article]
    "Ripping The Shorts' Faces Off!"

    Wait. Am i on Seeking Alpha or Yahoo Finance?
    Feb 22, 2015. 05:34 PM | Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    Nicholas:
    Thank you for the response and I hope you did not think I was truly being critical of you in any way. I was not.

    I am jealous of course of your age and your insight at a young age, of which I had none.

    It was not until I was 31 years old before I became educated about investing thanks to a savvy brother in law who slapped me upside the head and told me to get with the program. While I enjoyed the tail end of the 1982-2000 bull market my life has been about playing catch up and trying to contain my jealousy of those much smarter and wiser than myself.

    Again I do not think anyone should be selling JNJ stock or avoid accumulating the stock. I simply was trying to paint a realistic picture for perhaps the younger crowd of investors who might truly believe that "past performance guarantees future results".

    I wish everyone continued success with all their investments.
    Feb 22, 2015. 05:27 PM | 1 Like Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    user:
    Thank you again for another reply.

    "Archman, you are saying that all you can imagine is that at most, JNJ could grow another $280 billion over 45 years"

    No. Just to be clear. That is not what I am saying. What I am saying is that as market caps of companies exponential expand, which is due to public investment, they require more and more public investment to keep the value of the company growing and growing. The problem is your rates of return keep declining.

    Let me ask you this: (hypothetical)

    I am going to offer you 2 investment choices. The outcomes are assured and you will make money in both, guaranteed. So you have to pick one.

    Assume that their dividends, dividend growth rates, buybacks, etc are both the same. That assures that they cancel each other out and you are focused only on stock price appreciation due to public investment in the company. (By public I mean institutional & general public (mom & pop investors). Which one do you invest in, over the next fixed 30 year time frame? (They start on the same year and both end at the end of the same 30 year time frame.)

    Ready?

    Company A : $10 Billion dollar market cap company grows into a $200 billion dollar market cap company over those 30 years.

    Company B: $200 Billion dollar market cap company grows into a $800 billion dollar market cap company over those 30 years.

    Which one offered you the greatest return?

    And for those young folks playing along at home...remember the market cap of a company is what a company is currently valued at and is 100% directly tied to the price of the underlying stock, every day, every week, every month, every year. If the stock goes up the market cap goes up, if the stock goes down the market cap goes down.

    Again User, continued success to you.
    Feb 22, 2015. 02:06 PM | Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    buyandhold:

    Congrats on your success.

    "Your forecast for the performance of Johnson & Johnson during the next 50 years is overly pessimistic.
    An investor's personality influences his outlook. Investors with a positive outlook generally perform better over the long term."

    You can't be serious to think that if "you", as an investor has a positive outlook that your stock investments are going to go up. I know i am taking what you said literally but your personality will have no bearing on the stocks in your investment portfolio.

    I appreciate your example and all you say is fantastic. The only problem is time moves forward not backwards. The past is gone. Any assumption of "past performance guarantees future results" is a silly one and not fair to pass off to young investors who are only now starting to invest for the future.
    BTW: In 1970 ABT's market cap was barely 2 billion. Still a very small market cap compared to today and in 1930 the market cap was probably only a 100 million. Plenty of room to exponentially expansion whether in 1930 or 1970. You are 100% correct that ABT has been a great performer. No question about it. But for anyone investing right now, today is the first day not yesterday.

    As I stated to others:
    I am not saying anyone should sell JNJ or not invest in JNJ. But new, younger investors cannot just blindly throw money at stocks and expect that the future will mimic the past. I think it will "rhyme" to some extent but the song will not be sung exactly the same.

    Continued success to you.
    Feb 22, 2015. 12:12 PM | 2 Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    User:
    Thanks for the reply.
    As i indicated to a few others:
    I do not think anyone should sell JNJ nor not buy JNJ. My comment was meant to just bring reality into the equation. Nothing more.

    "Ditto what Buyandhold 2012 said. I am not sure Archman is all that aware of companies that have had solid returns not just for the last 45 years, but for the last 100 years."

    That is great. No question about that.
    But last time I checked, time was moving forward not backwards. This notion of "past performance absolutely guarantees future results" is a very dangerous concept that younger investors must take with a grain of salt, especially when it is coming from investors who have owned these stocks for 20, 30, and 40 years and have reaped the past rewards. By the way congrats if you are in that group cause you won.

    I am simply advising realistic caution on statements that suggest that a company worth 280 billion dollars today, in 45 years from now is going to be worth hundreds of trillions of dollars based on some 10,000% return.

    It is mathematically not going to happen.

    Remember everyone: From today: JNJ's market cap needs to add another 280 billion dollars to equal a 100% return in the future. The same amount of money it took over the last 45 years to get it to this point. Yes dividends and compounding of dividends will add some money to the equation but most of that past performance came from the capital appreciation of the stock. All in all that is a 100% return from today 2.22.15, not a 10000% return from a stock that went from 2 billion in market cap to 280 billion in market cap over the past 45 years.

    I know people like to throw buybacks in as some other sort of shareholder wealth creating tool. Does reducing the shares outstanding boost EPS? Oh yes. Companies love to use that so they can "beat by a penny" and CNBC can scream about it.
    Do buybacks actually help the stock price itself? For a company of JNJ size, no they do not. JNJ buying back it's stock does not move its stock, institutions and the money they have to invest do.

    What's funny is that you would think the savvy, long time experienced shareholders would be upset the company is wasting their money on buybacks considering it is all a result all the stock splits the company did in the past. That is why they buy back shares. To reduce the float.

    Not that JNJ or any company of this size would do this (mostly because the media has everyone brainwashed it is a bad thing): If JNJ wants to really return money to shareholders they would do a reverse stock split and then increase the dividend or invest even more in R&D. If they want to soak up excess shares (which is all buybacks are really doing OTHER than making sure they can manipulate their EPS as necessary to keep Wall St, mom and pop investors happy) they would do a reverse stock split costing them absolutely nothing, then they would have more money to increase the dividend, etc. truly indicating to shareholders they are their first priority.

    Of course that is all my opinion and I know something like that would be very unpopular (though the right thing to do) for all the JNJ shareholders.

    Continued success to you.
    Feb 22, 2015. 11:55 AM | 2 Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    Ecoman:
    Thanks for the reply.

    The main thrust of my concern is that over 45 years JNJ is not going to return 10,000%. That is a pipe dream. Based on your analysis you proved my point.

    Do not get me wrong.
    I am NOT saying anyone should be selling, or not investing in JNJ, etc.

    I am trying to project a realistic outcome for the next 4 decades that goes beyond the typical thinking of "Past performance does in fact guarantee future results".

    Unfortunately as always when it comes to stocks like JNJ you have people that have owned JNJ for 30 years already and to them the past will always repeat itself in the future regardless of any other factors.

    BTW: CB's 100% return is essentially due to the past 5 years. The real question is: Will someone who invests in CB today receive that same return going forward or do they risk a 50% capital loss back to the stock break out at $50/ share? No way to know really. Select time frames are hard to analyze. CB returned nothing from 1998 to 2010. Now it has finally gone up 100%. If it were to drop back to $50 for some reason one could argue it again has returned nothing since 2010 and it will take a lot of dividends for years to come to make up for that capital loss. Just saying cause snap shots in time dont tell the whole story. BTW CB has returned 2500% since 1985 so the does show that over time it has been a great investment.

    Continued success to you.
    Feb 22, 2015. 11:18 AM | Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    Nathan:

    i understand however 80% of the world's population lives on less than $10 / day and that is really not changing much.

    Best to you.
    Feb 22, 2015. 11:11 AM | 1 Like Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    I want to thank the author for the article.

    However being so young the author is relying to much on "past performance guarantees future results" in his outlook.

    Here are the things I believe about JNJ stock & company:

    * They will always be in business, innovate and make money.
    * They will continue to pay and raise their dividend. For the income investor who owns JNJ in a diversified dividend paying portfolio where continued income is the main desired outcome, you will not be disappointed.

    I believe those items to be fact.

    Our young author wrote:
    "I'm happy to hold onto this company while I wait and see if the next 35 years can produce the same 10,000% return on investment (aided by the compounding effect of dividend re-investment) that the last have."

    Let me be blunt: That is never going to happen....ever.

    The laws of large numbers as they relate to stocks and declining rates of returns assure us of that outcome. You cannot get around it. It is mathematically impossible.

    You cannot take a company with 280 billion in market cap and think it is going to return 10,000%. It cannot regardless of dividend reinvestment.

    JNJ has returned something like 10,000% since the year 1970. Not bad for 45 years. The market cap was around 2 billion then. The market cap could double, double and double over and over as there was plenty of room for exponential expansion. That rate of return from that date is 10,000%. Fantastic. About 278 billion in market cap was added over that 45 years. That was a lot of institutional / public investment in the stock.

    So now what happens going forward?
    For current investors who perhaps have owned JNJ for years, heck this is all icing on the cake. Plus the dividend = great. Like I said: for those investors in JNJ who are income only investors you will keep receiving your dividend income and the dividend should keep rising. You will continue to win.

    What about a new, younger investor who notices that JNJ gave his or her uncle 10,000% return in 45 years and they too think that JNJ is a great investment and is going to make them wealthy as well.

    Well younger investor I hate to break it to you but it ain't gonna happen...ever.
    See lets say JNJ has the exact same success as a company over the next 45 years as it had over the past 45 years. These past 45 years were great, right?

    Even if by some miracle another 278 billion in market cap could be added to the 280 billion in market cap it has today....that would only be a 100% return. Not the 10,000% return we got by adding 278 billion in market cap from the previous 45 years.

    That my friends is the declining rate of return as the market cap exponentially expands.

    It happens to every stock out there. Sorry to disappoint everybody. It's just the law.
    It is as simply as a return from 1 to 11. Then adding the same 10 to that 11. Only the second 10 added, is one tenth the return of the first ten added. Can't get around it folks.

    Adding 278 billion in market cap is no easy feat as it is. It took JNJ 45 years of incredible innovation and selling of products etc. to accomplish that. Even if it managed the same great innovation and investment by institutions / public over the next 45 years, your return is only going to be 100%. That's it folks.

    There may be some that think that I am wrong and that there is or will be enough money in existence to support a 10,000% return in JNJ going forward. Well sure let just add 10000% to JNJ's current market cap and determine how much additional institutional / public investment would be necessary for such a move higher.
    I mean at minimum, the entire US bond market, worldwide currency markets, etc, etc. would have to be liquidated and invested in JNJ to see that 10000% future return. You get the picture.

    I appreciated the author's article and my kids are invested in JNJ but as income only investors and with a completely realistic goal for the stock. Like most mega cap stocks out there I think over the next 30 years you might perhaps see average annualized total returns of 3% over that time frame for most of these mega caps.
    Feb 22, 2015. 08:56 AM | 22 Likes Like |Link to Comment
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