Seeking Alpha

Bob Wilson

View as an RSS Feed
View Bob Wilson's Comments BY TICKER:
Latest comments  |  Highest rated
  • Own These World's Leading Brands And Never Fear A Recession Again [View article]
    There are a couple of opinions of JAK's that bear closer scrutiny. I'm certainly not a devil's advocate here, but recommending mutual funds and/or ETFs instead of stock picking is going to be favored by a majority of investors. That was my experience in over 22 years with Merrill and UBS. This "silent majority" constitutes a much larger cohort than those of us who actively participate in SA and are accustomed to picking our stocks. They are relatively less sophisticated in markets and lack the time and/or interest for picking stocks. They relate to the diversification found with funds/ETFs. They understand they could still suffer a large loss but they feel their odds are better of avoiding this. Many of them use third-party money managers who pick the stocks.

    JAK seems to be talking about such folks, whereas Chuck is talking about you and me, "SA people" who usually prefer to pick stocks.
    To me, this is once again a case of no one approach ruling out another.

    Another of JAK's opinions has at least some evidentiary support. If I'm understanding him, JAK said most investors should focus on their asset allocation, not stock picking. Well, stock picking can give us cash dividends and if we're clever enough with our cherry picking, better performance than most equity funds/ETFs, but it's asset allocation that determines 94% of a portfolio's variability in performance (volatility). This was the finding in an obscure paper, "Determinants of Portfolio Performance", by Brinson, Hood & Beebower, that appeared in the Financial Analysts Journal in 1986. Subsequent criticisms occurred (see W.W. Jahnke, "The Asset Allocation Hoax", Journal of Financial Planning, 2004). But at least there are two sides to that coin, so JAK could be right if he's addressing investor concerns about volatility.

    Disagreements so often become polarized. I like Chuck's article but I don't like JAK's language, so Chuck is a good guy and JAK is a jerk. That's what happens so often. It's hard to look at a guy's position when we don't respect his attitude. But JAK isn't completely wrong any more than Chuck is 100% correct. I might favor using a sell discipline, you might say no, it's buy and hold for you. But most of us do have core positions we'd add to or keep on weakness, then also more speculative positions with which we might have a ready finger on the sell discipline trigger.

    I'll end with the words of Phillip A. Fisher: "Even in those earlier times, finding the really outstanding companies and staying with them through all the fluctuations of a gyrating market proved far more profitable to far more people than did the more colorful practice of trying to buy them cheap and sell them dear." I think this is what Chuck's article is advocating. It's a time-tested, long-term strategy and it's good advice for most of us, JAK's criticisms notwithstanding.

    Jun 7 10:34 PM | 8 Likes Like |Link to Comment
  • Reinvest Growing Dividends: Don't Fall For Big Yields [View article]
    Well, there are other factors that will influence one's decision to DRIP or not, but time horizon can be less important than overall financial status. Plenty of retirees don't need their dividend income, for example. Thanks for the compliment, Jerry.

    Drcarl, those are good points. Still, I'd not advise Louise to alter her DRIP strategy in a down market, the main reason being that her risk tolerance with her "CONS" probably allows for this.

    Richjoy, I agree that might offer an advantage, but it would introduce another level of decision making where you could be making both advantageous and disadvantageous choices. You might be pretty good at this, but I'm guessing most people would not be. Thanks for your kind comments.
    Jun 2 01:27 PM | 4 Likes Like |Link to Comment
  • How Patient Should An Investor Be With Dividend Stocks? [View article]
    Recently I read a comment from somebody who'd held COP for 38 years, from pre-Phillips merger. Trying to sell at fair value puts undue faith in how fair value is calculated, plus it's a moving target. Over several years price targets tend to be constantly raised so I discount those for the same reason. Buffet once said his favorite holding period was forever. The math shows that "double compounding" (reinvesting growing dividends) eventually creates a portfolio whose market value is increasingly due to reinvested dividends, not capital gains. Patience in strong management is a virtue.
    May 30 12:18 PM | 4 Likes Like |Link to Comment
  • 3 Good-Yielding Stocks With Low Price To Free Cash Flow And Low Payout Ratio [View article]
    I'd hold off on NSU until it breaks out up through resistance and has a successful retest. Arie doesn't say where in Africa NSU has properties, but this could be important given various unstable areas there. Still, this might be a pretty good speculation. (Minor point: the text probably refers to chalcopyrite, the most common copper ore mineral, not "pyrite" which is fool's gold, iron sulfide--6th Highlight)
    I'm not enthused about the property-casualty business in FL. The hurricane risk could be serious. Then too, very long term, rising sea levels will increasingly pressure coastal weather and property values.
    Of these three stocks, PDLI looks like the best bet to me.
    Aug 31 10:58 AM | 2 Likes Like |Link to Comment
  • Do You Know How To Handle A Bear Market? My Answer: With Faith [View article]
    Yes, I agree about courage, although I wasn't talking about religious faith. I recall having dinner in Edgartown with the Hon. Paul Nitze several years ago (our spouses were old friends). I asked him in his experience (he had been Sec. of the Navy and had advised several US Presidents) what was a man's most important personal asset. He looked me in the eye and with no hesitation answered in one word: "courage".
    Jun 28 10:20 PM | 2 Likes Like |Link to Comment
  • BP: Another Week Of Accelerating Business Economic Loss Claims [View article]
    This article tries to point out risks to BP, but it strikes me as too superficial to be taken seriously. How does BP's situation contrast and compare with the Exxon-Valdez problem? Are the claims of states based on lost tax income, actual or projected?

    If this author has an understanding of issues facing BP that is better than the market's, why doesn't he at least outline the general nature of this understanding? Is he a corporate attorney who has worked on liability settlements? Commenting on the daily changes in claims seems similar to watching daily stock prices in that both suggest lack of a broad perspective and inadequate discriminatory judgments. The author might have a valid position, but this article doesn't establish it, in my opinion.
    Jun 25 12:16 PM | 2 Likes Like |Link to Comment
  • The Oil Spill Settlement Could Bring BP To Its Knees [View article]
    BP's legal situation is not straightforward. Potential damages are difficult to estimate. Kboyd78 is correct, I think, about the market having priced in these damages or rather how much they will reduce earnings.
    While I admire the author for taking on a difficult subject, I'd personally advise against shorting BP. That would have worked within a few hours of the news breaking on CNN. The odds now are probably better on a long position paying off eventually, as relatively few investors would take this contrarian risk with new money.
    Jun 11 11:11 AM | 2 Likes Like |Link to Comment
  • Dr. Doom Has Gold Going Below $1,000: Why His Thesis Is Spot On [View article]
    To me, gold presents a possible opportunity now that it has sold off. The contrarian in me gets interested when I read that hedge funds and a few billionaires have sold most of their gold, maybe futures more than physical. I believe gold and miners offer pretty good value now (I wrote that gold and NEM were buys in a recent SA article).
    That impression I base on charts, primarily. Frankly, I find it tricky to judge the macro arguments in favor of gold. Gold is like any other investment in that the track record is time-frame sensitive. Since 1975 gold has had a CAGR of 7.2%, slightly behind the DJIA at 8.4%. Then over the past 12-13 years, gold killed the market.
    I'm a long term believer in stocks, but I've owned some gold for several years now and I could see buying a little more. Gold never goes Chapter 11 and as a really long term hold it's got a pretty respectable track record. I don't expect to see gold much lower, but if it falls below the miners' all-in cost and most of them cut production, the constant huge demand in China & India could support or push the price back up. This would be my reason for thinking gold's downside is pretty limited below $1,300/oz.
    Jun 5 02:38 PM | 2 Likes Like |Link to Comment
  • ConocoPhillips: A Dividend And Total Return Stalwart [View article]
    I don't know which of you to praise more, Albert for the excellent article or Oldokie for the very helpful comments. Considered together, you two make a very convincing case for COP. This is the best article on an O&G stock I've seen on SA.
    May 26 02:18 PM | 2 Likes Like |Link to Comment
  • Newmont Plunges Along With Gold [View article]
    Some juniors could go bust or be bought. But when we hear about big losses and shabby looking financials, these are anecdotal indications of being near a bottom on gold. A quote I've always liked is, "You pay an emotional price when buying a stock nobody seems to want, but you'll pay a serious financial price when buying a stock the market says will make you rich." Gold and miners are starting to look pretty good to contrarians. They are both reasonable buys now:
    May 2 09:30 PM | 2 Likes Like |Link to Comment
  • On Gold As An Inflation Hedge [View article]
    The history on gold is that its upside price is driven by fear & distrust on the retail side. On the institutional side we're now seeing the gold price supported by some central & large banks, reversing an earlier trend when they were seeing little return on gold. They'd been constrained in selling gold by a European bank agreement, so as to avoid huge sell orders. If we see continuing or greater confusion over currencies, international event-risk and growing national debts (especially ours), then some percentage of assets in gold is defensible. It's a question of asset allocation and our confidence in the probability of an asset's price increase compared with other choices.
    We can debate gold a long time. Many stocks, meantime, continue to grow revenues, earnings and dividends. I've long believed that good investments start with the perception of the few and end with the conviction of the many. Right now I'm guessing typical Americans are wary of stocks, are more interested in bond income and see gold as some sort of financial safety net. To me, this makes stocks a good contrary choice. But gold is something of a contrary choice, too. If we look at assets least likely to lose money, we have to have to admit gold has a, to me, minor role. Cash and dividend stocks look better. Bonds with interest rate risk are, to me, the least preferable, which also holds for stocks whose dividends are quite high, e.g. 4% or more. Still, I admit I still can't see the Fed inclined to raise rates yet.
    Apr 14 01:42 PM | 2 Likes Like |Link to Comment
  • Newmont Mining: Yielding Just Over 3% And Worth A Look As Things Start To Improve [View article]
    It seems, Heather, you were unaware of NEM's dividend being tied to the price of gold (London). There isn't IMO any need to be overly cautious about NEM. It's the largest USA gold miner (only one in the S&P 500), so should be able to ride out current weakness in gold. But make no mistake, gold will ride again. Nobody knows what the driver will be, but when big names and banks are backing off the paper gold market, after a huge decline, it's a good bet they're wrong (again?). Physical is still pretty strong in Asia and Central Europe. Reduced production will eventually support the price. We might not see a parabolic takeoff, but we should see decent growth in gold's price. It's not if, just when.
    Aug 19 06:39 PM | 1 Like Like |Link to Comment
  • Chimera: Billionaires Are Invested In This Sub $3 Stock With A 12% Yield [View article]
    I'm with Special-Sit. Dividend yields in the mid-teens reflect a healthy correction in share price that often is the tip of the iceberg. These big REIT payouts are another form of junk. If you're thinking you'll be well paid while waiting for the share price to recover, well, maybe, but you could also be waiting to have your head handed to you. Big yields tempt lots of naive investors. Quality REITs with much lower yields usually have long term records of growing share prices. That's where most people will be better off.
    Jul 9 08:33 AM | 1 Like Like |Link to Comment
  • Ganging Up On Gold [View article]
    It's hard to imagine a much more negative deviation in MACD than we have now. Normally I'd agree with the article's estimated time frame for a bottom, but gold's pricing seems not to enter consolidations much, if at all. The cash price in Shanghai has dropped 11 days in a row now. Conversely, Central Europeans are buying all the physical gold they have cash for (according to a knowledgable observer in Austria). The rupee has just hit an historic low, just after India puts in a levy against gold imports.

    Gold's trend is still bearish, but there is also still retail demand in the background. I agree that unanimity of opinion among banks is a good thing to bet against. JPM was the only smart bank with the early perception that gold was heading down (you'll recall their call to short gold in early April). I will not turn bullish again until I see a dead cat bounce and successful retest (higher low).
    Jun 26 01:04 PM | 1 Like Like |Link to Comment
  • Norfolk Southern Corp. Looks Like A Solid Investment [View article]
    This is a well presented article, but it's hard for me to see the driver for a turnaround in coal. I don't have the data showing the number of coal fired power plants that utilities have switched or are switching to NG, but this could be a long term trend. NSC has a strong record of dividend growth, but it could stay undervalued for some time. Some railroads are starting to haul oil now. This is more expensive than pipelines, but refineries can get what they want quicker and with almost no environmental/political opposition. My bias is to invest in dividend payers with solid earnings growth. I'm all in favor of sometimes buying turnarounds, but I just don't see the earnings leverage for NSC.
    Jun 25 11:16 AM | 1 Like Like |Link to Comment