It's Time for the Longs to Cross the Rubicon [View article]
Good article. I believe that the selloff from the mid 20's to its present price of 15 is due to the fact that they will begin accruing federal income tax this quarter. This will cause effective tax rates to rise from around 7% to about 40%. I believe this information is now completely priced into RBCN, and share price will rise for the rest of the year. Thanks for the article and information on the competitive climate.
Debating Financial Speculation With Speculators [View article]
Very Interesting discussion. As someone who is engaged in speculation everyday, I have come to see this activity as slightly parasitic to the world; however, I think it is necessary to a point. For example, modern portfolio theory may suggest a long term investment in the SPY. But to make that SPY fairly priced, parasites have to be arbitraging all of the positions within that index. An arbitrage strategy may only require that speculator to hold her position for a few seconds, minutes or days, so in this example the speculator is definately serving a purpose to society. On the other hand, there are some fabulously gifted minds being drawn to finance that would better serve society elsewhere. For some reason, finance is a more rewarding field to enter than something that would be more productive (e.g. Physician). Does anyone have any thoughts on why there is this apparent market failure leading to an extreme misallocation of human capital to finance instead of other fields?
My sincerest apologies for lack of skin on the game. In my experience, it has been helpful to have a list of attractive companies with attractive entry prices. I had no idea it was offensive to engage is such an activity. August 20 Strike Put currently $.26. I think that put's price may increase if RIMM makes another move down, then possibly I will take the advice and short that put. Thanks for the thoughts.
Is Cornerstone Progressive Return Fund an Investment Ruse? [View article]
I just came across this article and think it's great. I have been shorting CFP off-and-on for about a year now, and think what they are doing to investors is horrible. Thanks for shedding some light on it.
A Buy-Write Strategy for Microsoft, Intel and Nokia [View article]
Thanks for the comment. I guess in an effort to sell my argument, I conveniently ignored the financial crisis price for MSFTin the teens. To be fair, I should have also ignored the few times it popped into the 30's. I still believe there is good value in owning MSFT in the $23-24 area, but if there is another economic downturn, I don't think it will stay above 23. Predicting Macro trends is not a skill at which I am particularly adept, so I try to stay market neutral in my positions (i.e. beta close to 0).
A Buy-Write Strategy for Microsoft, Intel and Nokia [View article]
I am not a big fan of the skype acquisition either, and your point about the war on the telcos is an angle I haven't expolored much with respect to nokia's WP7 sales and will definately look into it further. Thanks for the different perspective.
A Buy-Write Strategy for Microsoft, Intel and Nokia [View article]
Thanks for the comment Reelken. In general, I agree with you that giving up big upside moves for a few percentage points is not always a great idea; however, in this particular case, the market is in a downtrend which I have no idea when it will end. I think these particular stocks have limited downside, their implied volatilities are elevated, and they are not going to explode higher. Given these assumptions, I feel this strategy provides investable risk/reward.
Citi and Bank of America: Is It Time to Buy Big Banks? [View article]
Thanks for the comment. I am perfectly open to the possibility that I can be wrong since I am merely making educated (or uneducated) guesses about the future, and I am aware that I have a lot to learn. But, nowhere in the article did I suggest buying these stocks based on their nominal prices.
Citi and Bank of America: Is It Time to Buy Big Banks? [View article]
Thanks for the interesting article. I have to agree in some sense that the deferred tax assets should not be counted as capital, but I also think the entire method that Basel uses to calculate capital is flawed. I don't think the hybrid securities should count as capital and I think the entire risk-weighting schemes for mortgages and sovereign distorts the true risk/reward dynamics of holding these securities. Unfortunately, these are the rules by which banks must abide, and hopefully Basel III will make more sense than II. All of these issues points to the opaque financial statements to which I alluded in my article, and I can perfectly understand why these issues prevent investors from owning these stocks. For me, I am just keeping my exposure to the sector pretty small
Citi and Bank of America: Is It Time to Buy Big Banks? [View article]
I plan on building a position in both C and BAC, it's just that BAC hit my price first. But I can see your confusion in the way I presented the information. Thanks.
Nokia: Why It's Not as Bad as the Market Thinks [View article]
Sorry, I didn't read the details of the rumor, but either way- if they were selling the whole company or just D&S for $19B, it did not seem like positive news for the stock to me. I think most analysts dismiss Navteq and Siemens because they don't really make a lot of profit. I agree that these patents and technology are worth something, but in a distressed situation (which I don't believe NOK is in) Intangible assets tend to not get a very high price. Do you have any thoughts on the profitability of Navteq if it were a standalone company? I can't quite figure out how much synergies exist between Navteq and Device and Services.
Thanks for the thoughtful comments. I have some thoughts. Yes, I agree that 10 year notes have a higher yield now than at the start of QE2; however, I am not sure if it is because investors anticipate higher inflation or growth. TIPS breakevens were pointing to higher expected inflation, but higher expected inflation would disincentivize savings and increase consumption which would theoretically add to growth. One question I have to anyone is: If QE2 were successful, would it lead to higher or lower long term interest rates? The point of the program is to increase long-term growth, therefore the increased anticipated growth should more than offset the decrease in rates associated with the purchases of long term treasuries. I am not saying the program was a success or a failure (above my paygrade), I am just wondering on what metrics we should evaluate the program. With respect to the tax, I can see it acting as a tax to the extent the interest on 2 Trillion is not going to the private sector, but in theory that reduction in interest expense should be passed on to the taxpayer through lower taxes. In practice, it's not going to happen.
Case for Going Long Petrobras and Short Exxon Mobil [View article]
Just to further clarify my logic or lack therof: I tried to come up with a price for both of these stocks if oil were trading at $70, $100, or $130 in 6 months. Each scenario I feel is equally likely, and I feel in all three scenarios, PBR will outperform XOM. XOM could not get much over $92 when oil spiked in 2008, and I feel it will fall commensurately with oil if oil falls. PBR, I feel, will rise if oil rises, and stay flat if oil has a modest decline. If the global economy completely collapses, I think XOM will outperform, but I think that is unlikely. I'd love to hear others' thoughts on these scenarios.
It's Time for the Longs to Cross the Rubicon [View article]
Debating Financial Speculation With Speculators [View article]
On the other hand, there are some fabulously gifted minds being drawn to finance that would better serve society elsewhere. For some reason, finance is a more rewarding field to enter than something that would be more productive (e.g. Physician).
Does anyone have any thoughts on why there is this apparent market failure leading to an extreme misallocation of human capital to finance instead of other fields?
When Is Research In Motion a Buy? [View article]
August 20 Strike Put currently $.26. I think that put's price may increase if RIMM makes another move down, then possibly I will take the advice and short that put. Thanks for the thoughts.
Is Cornerstone Progressive Return Fund an Investment Ruse? [View article]
A Buy-Write Strategy for Microsoft, Intel and Nokia [View article]
I still believe there is good value in owning MSFT in the $23-24 area, but if there is another economic downturn, I don't think it will stay above 23.
Predicting Macro trends is not a skill at which I am particularly adept, so I try to stay market neutral in my positions (i.e. beta close to 0).
A Buy-Write Strategy for Microsoft, Intel and Nokia [View article]
A Buy-Write Strategy for Microsoft, Intel and Nokia [View article]
Given these assumptions, I feel this strategy provides investable risk/reward.
Citi and Bank of America: Is It Time to Buy Big Banks? [View article]
Citi and Bank of America: Is It Time to Buy Big Banks? [View article]
Unfortunately, these are the rules by which banks must abide, and hopefully Basel III will make more sense than II. All of these issues points to the opaque financial statements to which I alluded in my article, and I can perfectly understand why these issues prevent investors from owning these stocks. For me, I am just keeping my exposure to the sector pretty small
Citi and Bank of America: Is It Time to Buy Big Banks? [View article]
Nokia: Why It's Not as Bad as the Market Thinks [View article]
I think most analysts dismiss Navteq and Siemens because they don't really make a lot of profit. I agree that these patents and technology are worth something, but in a distressed situation (which I don't believe NOK is in) Intangible assets tend to not get a very high price.
Do you have any thoughts on the profitability of Navteq if it were a standalone company? I can't quite figure out how much synergies exist between Navteq and Device and Services.
Why QE3 Will Not Sail [View article]
One question I have to anyone is: If QE2 were successful, would it lead to higher or lower long term interest rates? The point of the program is to increase long-term growth, therefore the increased anticipated growth should more than offset the decrease in rates associated with the purchases of long term treasuries. I am not saying the program was a success or a failure (above my paygrade), I am just wondering on what metrics we should evaluate the program.
With respect to the tax, I can see it acting as a tax to the extent the interest on 2 Trillion is not going to the private sector, but in theory that reduction in interest expense should be passed on to the taxpayer through lower taxes. In practice, it's not going to happen.
Case for Going Long Petrobras and Short Exxon Mobil [View article]
I'd love to hear others' thoughts on these scenarios.
Why Nomura's Earnings and Share Price Should Grow This Year [View article]
Molycorp Has Some Downside in 2011 [View article]
40,000 Metric Tons in 2013. Plus the acquisitions' production.