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Brendan O'Boyle

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  • Approaching The Fiscal Cliff As A Nash Equilibrium [View article]
    I agree that for the longer term, taxes must go up and spending must go down. Whether to do this in the current economic climate is a still a question, because the economy is still so weak.

    Unfortunately, this is exactly why I believe the GOP should accept defeat here because they failed to make the debate about spending. Stonewalling over $80B for the top tax bracket is a good way to blow up your chances of winning any seats in the next election. Obama knows this, therefore he has no inclination to back down. When you see checkmate in a few moves you should resign and start planning the next game...
    Dec 30 10:17 AM | 9 Likes Like |Link to Comment
  • Recession Risk: The Threat Of Rising Interest Rates [View article]
    I agree with that, whenever you have a huge portfolio of debt you can rearrange it to mitigate interest rate changes.

    My only point is that the flexibility is much lower because the duration of average outstanding US debt is already so low. If the US were smart the duration on the debt should be made as long as possible right now while interest rates are low, then you would have much better flexibility later on.
    Dec 8 09:51 AM | 8 Likes Like |Link to Comment
  • U.S. Stock Market Complacency On Verge Of Collapse [View article]
    Which would only be known in retrospect. Every quarter bears have been calling for a peak in earnings. Every quarter they have been wrong.

    I see nothing new, nothing the market doesn't already know. Do you think Warren Buffett made a big investment in a cyclical company like GM because he is stupid? Or that Ken Fisher says he is very bullish on the market just as a bluff?

    Sure they could be wrong, but I wouldn't count on it...
    Jul 6 09:57 PM | 8 Likes Like |Link to Comment
  • Here Comes The Next Big Leg Down In Equities [View article]
    The chart isn't even presented correctly. A decline in T note yield is an INCREASE in price. The past several days BOTH treasuries and stocks have increased in price. How that makes stocks expensive relative to treasuries on a two week time frame is anyone's guess.

    This article isnt worth the time it took to read it.
    Jun 18 09:07 PM | 8 Likes Like |Link to Comment
  • Apple's Earnings Fall Is Completely Unjustified [View article]
    As someone who has some experience selling puts let me tell you something: do not sell puts on tech stocks!

    Selling a put gives unlimited downside and known upside. Tech is about growth and the bell curve distribution of returns for tech stocks have fat tails. They could go up a lot or they could go down a lot. When you cut off the positive side (large upside) you are left with the negative side (large downside). Thus selling a put (even on AAPL) for a tech stock is just a bad idea.

    I have watched these "supposed" genius option traders talk about selling HPQ and AAPL puts on Bloomberg and I literally yell at them that its a stupid trade. Picking up pennies in front of a steamroller. And buy the way I do think AAPL is a buy here.
    Jan 23 07:22 PM | 7 Likes Like |Link to Comment
  • New Rule: Buy Microsoft Under $30 [View article]
    Hmm, MSFT has more than quadrupled profits since 2000. I guess we have different definitions of 'doomed.'

    If you separate your feelings for MSFT as a company and just evaluate it by the money coming in the front door, it's a screaming buy. And that isn't even assuming that management is capable of doing anything right, if they actually execute the stock would go to 50, easy.
    Oct 7 04:03 PM | 7 Likes Like |Link to Comment
  • Footsteps Of Buffett Retirement Portfolio: Time For A Correction [View article]
    The SnP tends to rise by about 22% when in a bull-market, it must do so in order for the average of bull and bear markets to be 9.75%. During bear markets the index falls by 35% annualized on average.

    So actually, the 14.3% advance in 5 months is a fairly average bull market. At the moment everyone seems to be whipping themselves into a frenzy because interest rates have risen slightly. Dividend stocks and closed-end funds have sold off viciously as a result, but I wouldn't worry too much. Things will probably settle down soon.
    Jun 1 03:37 PM | 6 Likes Like |Link to Comment
  • The Downside Of Buying Stocks On Sale Through Selling Puts [View article]
    If you want to quibble over details and avoid your inaccurate claim that I am somehow misrepresenting an article written by you and titled: "Buy Stocks on Sale Using This Strategy" be my guest. How you can state that you did not advocate a strategy, which is championed in no uncertain terms in the title of the article is beyond me.

    Again, I fail to see how I mischaracterized your work. I used the specific strike prices you mentioned because you used those as paradigms for your strategy.

    There was no intent to maligne your analysis. I simply thought that readers should carefully consider the risk and rewards of such a strategy before implementing it.

    If you do not like being characterized as "advocating" a strategy, perhaps you should be a bit more subtle and not instruct readers to implement that strategy in the title of an article.

    This is equivalent to if I wrote and article titled: "Buy Johnson and Johnson." Then someone else referenced my article and pointed out the downside to buying JNJ. Then I state how "it was just an idea to consider" and act horribly offended that someone could characterize me as advocating a buy of JNJ. I didn't even say it was a bad strategy, I simply noted the downside.
    Apr 15 08:13 PM | 6 Likes Like |Link to Comment
  • The Selling In PIMCO's High Income Fund Continues [View article]
    I think most writers on this site are amateurs. However, most of the articles are quite good, better than the WSJ or Barron's IMHO.

    As for my own buy recommendations:

    July 25th: CVX closed at $99/share now at $107.82 (Inefficient Market Hypothesis).
    July 30th: ZMH closed at $58.85/share now at $67.26 (Zimmer Nears Buy Territory).

    More recent recommendations it's still too early to say (MSFT, CSCO, AAPL, KMP, DG and UHS), although I will admit that my batting average has been better when I stay away from tech. But it's been a rough few months in tech lately, didn't see that one coming.
    Dec 16 07:10 PM | 6 Likes Like |Link to Comment
  • Dead Cats Do Bounce, But Volatility Lies Ahead [View article]
    Colin - your advice always remains the same: long volatility (VXX I presume?) and short QQQ, SPY etc...

    You need to start logging these trades when you write your articles. No offense, but in the interest of fair disclosure it would be nice to know just how much money someone following your advice would have lost over the course of 2012.

    VXX is down 80% YTD, PSQ (inverse QQQ) is down 18% YTD, SH (inverse SPY) is down 15% YTD. If you don't like the price of the market the best alternative is cash. Traders don't usually stay short the market and it's not due to altruism. It is because they don't like to lose money.

    Long volatility is a horrible investment decision it makes it very hard to take you seriously when you recommend this to novice investors. If you are bearish, the best play IMHO is TLT.
    Nov 25 02:16 PM | 6 Likes Like |Link to Comment
  • Grand Bargain: Are Fiscal Spending Cuts And Revenue Increases Both Needed? Part 1 [View article]
    James, the question I want to ask is what is the source of increased government spending over the last several years?

    On the receipts side it's easy to see that lowered economic activity and tax cuts have pushed down the revenue of the federal government. But when I see that government spending has increased by ~25% relative to GDP since 2008 I am left wondering: what is the extra 25%?

    I certainly don't feel like I or anyone I know gets 25% more from the federal government now compared to 5 years ago. Where is this money going?
    Nov 9 08:27 PM | 6 Likes Like |Link to Comment
  • Dead Money Walking: Sell PC Players And Buy Apple Before It's Too Late [View article]
    I disagree, I don't know anyone who has completely abandoned the PC for tablets. While in poorer countries many only own a cell phone, I do not believe that we will enter a new paradigm of exclusive tablet or phone usage. Nearly everyone still owns a PC for work or personal computing, tablets are a welcome second addition, but I don't think they will be a transition. They are a great to meet you "walking around" computing needs, but having a mouse and keyboard is still an essential staple.

    The author is correct that AAPL is a great investment, but MSFT isn't too bad either. INTC will be fine as well. Both will probably underperform AAPL, but in a diversified portfolio both are still worth owning. I am more pessimistic about DELL and HPQ, the author may be correct that these are dead money.

    Please stop with the statements that a single revenue miss means the end of a business that has done fantastically well for 30 years. The hyperbole is really getting to be a bit much. Even AAPL's last earnings report was weak.
    Sep 9 01:56 PM | 6 Likes Like |Link to Comment
  • Are Dividend Growth Stocks In A Bubble? [View article]
    If you want to see some dividend stocks that are in a bubble look to utilities. Many are priced up in P/E to levels rarely seen, they have low growth and are net purchasers of shares (meaning they give in dividends and take away in dilution).

    Out of your list, I like JNJ and INTC. T was a buy a year ago and has been bid up to unreasonable levels by investors chasing dividend yield.

    So we're not in a dividend bubble, but some dividend paying stocks look pretty rich. Remember if you pay 15% too much collecting a 4.5% yield isn't going to work out very well.

    And I would also say that there are some pretty fantastic growth stocks that are being overlooked right now. GPN, BRCM and BIDU are considerably undervalued in my opinion. There are a lot of opportunities in tech right now because no one likes them for the lack of dividends.
    Jul 20 07:59 PM | 6 Likes Like |Link to Comment
  • Second Quarter 2012: The Beginning Of An Earnings Collapse [View article]
    You do realize we hit about 11 in 2009 right?

    I will also add: I think of the Shiller PE as a headwind or a tailwind. Imagine you are on a ship and you have a good tailwind, you will get further given a long amount of time. But having a tailwind is no guarantee a big storm won't hit. It's the same in the market, low PE markets are not safer (either normalized or 1 year trailing earnings), in terms of the risk for immediate loss. A big recession or liquidity crisis will cause huge immediate losses regardless of how cheap the market was at the start of the bear.

    The 1942 and 1937 bear markets started from relatively low 10 year trailing PE, but they still caused losses of 30-40%. During the 70's normalized P/E was low, but that didn't stop the 1974 bear market from happening or the bear market in the mid-1910s, which started from a Schiller P/E of 15.

    James thinks he can predict the market or at least only enter it when the odds are very much on his side (i.e. only buy when blood is in the streets). This strategy would have served him well in 2000-2012, whether it will do as well for 2012-2022 is an open question. During a cyclical bear market only getting in when things are very bad is a good strategy, however, once we turn the page and enter a new cyclical bull James is going to be left in the dust (as will all market timers).

    Personally, I am more of a value investor. I buy undervalued companies (bought APA, CMI, CAT, TEVA, TIF and RIO during this correction - still thinking about NKE I was really hoping it would get to the low 80s). And for the last year I have been steadily outperforming the market by buying low when the opportunity presents itself (during last years correction I bought VRTX, INTC, AAPL, GOOG). I don't wait for the market to hit a certain point, I buy a company when it trades near the bottom of it's value range and my margin of safety is good. Right now, many good stocks have gone down 20-30% even though the market has only traded down 10%.

    Personally, I prefer this strategy. It's lower on benchmark risk and once a stock has sold off so sharply the risk of further capital losses is slim (I mean come on how much risk is there buying GOOG for 500 or INTC for 20?). Of course if James is right and a big bear comes along I will lose money, but it all depends on how long you have to wait. The market is a pretty good discounter of widely known information. Everything James is saying is widely known, therefore, I would argue it's mostly priced in. It doesn't matter that Europe is bad, the question is do things get better ($$) or worse (-$$). I view this as a coin flip you aren't likely to come out on top trying to predict European politics. Same with the US economy. We all know it's weak, but does it get stronger ($$) or go back into recession (-$$). Again, it's a coin flip, if the ECRI can't predict the business cycle I sure as hell can't either.

    Every super-successful investor is a bottom up investor. They buy undervalued companies will good potential for growth. I don't know anyone who has made a fortune timing the market...
    Jul 4 11:08 AM | 6 Likes Like |Link to Comment
  • What Record Low Treasury Yields Tell Us [View article]
    CPI inflation is an average. Have you noticed price of gas at the pump falling? How about the price of consumer electronics?

    People always complain about the prices that go up and overlook the prices that go down. As a result they always think inflation is higher than it is. Saying inflation is astronomical is simply wrong.
    May 31 02:10 PM | 6 Likes Like |Link to Comment