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Brendan O'Boyle  

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  • Why Beating The S&P 500 Is So Hard, And Why Even Protecting Against A 10-15% Correction Matters [View article]
    I just wonder how much of RSP's outperformance relative to SPY is simply due to the fact that it is more concentrated in mid-cap stocks. These have overall outperformed large-caps.

    RSP has a weighted average market cap of $40B vs. $137B for SPY.

    You might get the same result mixing in VO (Vanguard's mid-cap ETF) with SPY.
    Jul 5, 2015. 01:14 PM | 3 Likes Like |Link to Comment
  • Is Realty Income Cheap Enough Yet? [View article]
    8-10% is total return, about half and half from the dividend and probable price appreciation.

    I wrote an article a while back to this effect. I'm probably lowballing a bit at 8-10%. The numbers say 11% over 5 Yrs at $45/share.

    http://bit.ly/1HzKlQD
    Jul 2, 2015. 12:37 PM | Likes Like |Link to Comment
  • Is Realty Income Cheap Enough Yet? [View article]
    Both short and long-term rates generally move in the same direction.

    Another misconception that investors have is expecting historically normal Treasury rates any time in the near future. It's going to be a long time before the ten year yields 4-5%.

    Furthermore, since 1995 the average yield of O has been 5.6%, while the average yield of a 10-Year has been 4.3%. The spread is so much wider than the historical average it would lead one to believe that O is massively underpriced.

    Being bearish on O because of rates simply makes no sense.
    Jul 2, 2015. 11:57 AM | 3 Likes Like |Link to Comment
  • Is Realty Income Cheap Enough Yet? [View article]
    The idea that REITs go down as short-term rates go up is a misnomer that has been repeated so many times that everyone is convinced that its true.

    The WSJ did an article on exactly this and found that REITs perform better during periods of rising rates than falling rates.

    Add to that we will never see short-term rates that are competitive with O's present yield (and that neglects growth anyway). The whole game surrounding a rate hike never ceases to amaze, REITs have been preposterously volatile for the last 2 years. It makes very little sense as the Fed has stayed consistent in its timeline, yet investors feel the need to bid O up to 55 and back to 40 again and again.

    $44-45 is fairly valued and a 5 Yr investment will probably garner an 8-10% CAGR.
    Jul 2, 2015. 09:50 AM | 7 Likes Like |Link to Comment
  • Biogen Sells Off On Short-Term Worries, But It's The Pipeline That Will Reward Long-Term Investors [View article]
    A Scifinder search of "Beta Amyloid Hypothesis" generates about 1350 references.

    The company has multiple drugs in development because they know the odds of any one being successful are low. However, Biogen is not putting a drug into phase 3 if they don't think it is a good bet.

    So yes aducanumab may prove to be unsuccessful only time will tell. But the reason that it will be a $10B drug if successful is because having a successful Alzheimer's drug is very difficult.
    May 7, 2015. 04:57 PM | Likes Like |Link to Comment
  • Biogen Sells Off On Short-Term Worries, But It's The Pipeline That Will Reward Long-Term Investors [View article]
    I had not realized that. Thanks for bringing it to my attention, I submitted edits to fix the typo.
    May 1, 2015. 12:52 PM | 3 Likes Like |Link to Comment
  • Biogen Sells Off On Short-Term Worries, But It's The Pipeline That Will Reward Long-Term Investors [View article]
    Bear in mind the IBB has fallen 12% from its 52-week high, so BIIB has underperformed its benchmark by about 10%. Most of that has come since the last quarterly report (4/24 when the stock was at $430), so I have to think the market is upset that Biogen didn't surpass growth expectations with its existing product lines.

    I will concede that BIIB couldn't hold onto gains following its phase 1B aducanumab study, and that is probably due to the concerns that you mentioned. Given the terrible effects of Alzheimer's and reading the results from the phase 1B study, it seems to me that aducanumab is an amazing drug candidate. It is the only drug candidate for Alzheimer's ever profiled that has been shown to reduce the size of amyloid plaques, IMO the market should have bid BIIB higher.
    Apr 30, 2015. 08:27 PM | 5 Likes Like |Link to Comment
  • At $49 Per Share, Realty Income Is Priced For Good, But Not Great Returns [View article]
    At very long timeframes the return on a dividend stock is simply the dividend plus the growth of the dividend.

    Historically, O has grown at 4.3%. So over 20 years I would expect 4.3% + 4.7% or approximately 9%.

    Of course there are two major unknowns. First, will the valuation investors pay be the same in 20 years? Second, will Realty Income grow slower or faster? These could push that 9% up or down even on a 20 year time horizon.
    Apr 29, 2015. 02:24 PM | Likes Like |Link to Comment
  • At $49 Per Share, Realty Income Is Priced For Good, But Not Great Returns [View article]
    It's hard to say, but I think fears of a rate increase are overblown.

    It is possible that REITs will rally on a rate increase, much like Gundlach is predicting bonds may rally on a rate hike. Remember we're talking about 0.05% to 0.25% or 0.50%, these are still very low rates. Bernanke has stated we won't see a 4% fed funds rate again in his lifetime (http://bit.ly/1xfER9b).

    The whole fixation on rates doesn't seem to be accurately predicting moves in the sector. Take today, with a GDP miss shouldn't REITs be rallying because a rate hike may be further away? Instead OHI, O and HCP are down 3%.
    Apr 29, 2015. 01:11 PM | 2 Likes Like |Link to Comment
  • At $49 Per Share, Realty Income Is Priced For Good, But Not Great Returns [View article]
    To Josh: It depends what return you are satisfied with. An 8% return on a low-beta stock is a good investment IMHO.

    Of course a 10+% return at $45 is better, but the trouble is you don't know how long it will be.

    At $45/share the stock would have to pullback 20% from the yearly high, these pullbacks do not occur very often for O. I count 4 20% corrections since 1994 (so one every 5 years or so). Waiting for a one in five year event to save 10% doesn't make sense when the opportunity cost is 8% a year.

    But remember there are other stocks to buy, so you might just avoid O for now thinking that there are better returns elsewhere.

    So the short answer is: if you want to own O I would go for it, just be realistic about the return that you expect and have a price target to sell if it goes too high.
    Apr 28, 2015. 04:37 PM | 5 Likes Like |Link to Comment
  • If The Future Resembles The Past, Exxon Shareholders Have A Lot To Look Forward To [View article]
    Plenty of declining industries have been excellent investments.

    Cigarette consumption in the U.S. has been in decline for decades, how has an investment in MO done?

    Even if your thesis that fossil fuel demand have peaked is correct, it does not follow that investments in XOM, CVX or COP are not sound ones.
    Apr 25, 2015. 12:03 AM | 9 Likes Like |Link to Comment
  • Deere Has Been Stuck In Neutral, But The Seeds For Future Returns Have Been Sown [View article]
    I believe forward price/earnings is not a good method to predict the returns from a cyclical company. Stocks do not trade based on forward earnings, they trade based on results relative to expectations. Earnings have gone down and analysts expect them to stay down, yet in every cycle since 1980 earnings have bounced back.

    This time may be different, but if earnings do bounce back investors will hit the buy button and the stock will take off. I think DE and AGCO are good bets right now (although I purchased both below where they are trading now). Incidentally, AGCO may be an even better investment, I expect a double in 5 years, but I like Deere for stability, brand and the dividend.

    We'll revisit in 3-5 years...
    Feb 25, 2015. 11:49 AM | 1 Like Like |Link to Comment
  • Warren Buffett Is Right: The Fed Will Have A Tough Time Raising Rates In 2015 [View article]
    I think central banks are buying stocks for the same reason that everyone else is:

    It's a search for yield when bonds yield less than stocks.

    http://bloom.bg/1D4V40B
    Feb 6, 2015. 08:09 AM | 1 Like Like |Link to Comment
  • Philip Morris: Big Warning Signs [View article]
    I don't agree with your response.

    You can be a long-term investor in a stock and choose to view currency fluctuations as too difficult to predict. Remember other investors are doing the same thing. What you are really trying to predict is what other investors response to unknowable future currency moves will be. You can see why some might view this as simply unknowable short-term volatility.

    That is why a stock can rally even when the news is bad. It could just come in as not as bad as the market was expecting.
    Feb 5, 2015. 02:45 PM | 9 Likes Like |Link to Comment
  • Consider This Before You Sell On Fears Of A Strong Dollar [View article]
    The market was surprised Yellen didn't push rising rates back.

    It's no matter for investors. Today the market panics because maybe rates go from 0.1% to 1%, tomorrow the market remembers the Fed is only considering raising rates because the economy is ok.

    I would say the exact opposite in a falling rate cycle. It's interesting that the top of the 2007 bull market coincided almost exactly with the Fed's first rate cut. Investors have it all wrong, you should be afraid of the Fed cutting interest rates not raising them...

    http://cnnmon.ie/1CAuxbj
    Jan 28, 2015. 08:39 PM | Likes Like |Link to Comment
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