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Charles Lewis Sizemore, CFA  

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  • Gold: A Bad Investment and Getting Worse Part I [View article]

    You bet. I plan on it!

    Jan 18, 2011. 10:51 PM | 4 Likes Like |Link to Comment
  • Gold: A Bad Investment and Getting Worse Part I [View article]

    Feel free to drop one in the mail ;)

    Jan 18, 2011. 09:30 PM | 2 Likes Like |Link to Comment
  • Gold: A Bad Investment and Getting Worse Part I [View article]

    I've read stats like that before, and they can be very seductive. But be careful with this line of thinking. Remember, the world economy has grown exponentially in the past 30 years. Markets that scarcely existed 30 years ago--China, India, etc.--now sport large, successful companies. Established markets too have grown by leaps and bounds, the current debt crisis notwithstanding. Over time, as earnings grow, global equities should GROW relative to gold. As gold bugs are eager to point out, gold is a commodity with limited supply. Meanwhile, the global capitalist economy--which populist goldbugs appear to hate--continues to march forward and grow.

    20 years from now, a share of, say, Wal-Mart, will be a piece of a much bigger company paying a much bigger dividend. A piece of gold will still be a piece of shiny yellow metal. I'd rather have a slice of Wal-Mart. But then, I don't "get" it.

    Jan 18, 2011. 03:38 PM | 7 Likes Like |Link to Comment
  • Gold: A Bad Investment and Getting Worse Part I [View article]
    I had a very pleasant Romeo y Julieta on Saturday and smoked it while sipping a decent scotch. Oh, did you mean that as a rhetorical question? :)
    Jan 18, 2011. 03:26 PM | 5 Likes Like |Link to Comment
  • Gold: A Bad Investment and Getting Worse Part I [View article]

    Again, I take issue with one point: "I know that every dollar tied up in gold is one you can't take a cut from and that really must bug you."

    Of COURSE I could take a cut from it. I could join the bandwagon and buy GLD in my managed accounts, earning a fee on it like I would any other investment. I choose not to because I can't get comfortable with gold at current prices and with the fundamentals as I described.

    The idea that gold is "anti-Wall Street" is anachronistic. Wall Street tinkering in the metal--via GLD and the plethora of other commodity-related funds on the market--is a a major reason for the price spikes.

    Gold isn't an investment for deviant contrarians anymore; it is very much mainstream. And frankly, that's one of the reasons I think it's a lousy investment at the moment.

    Jan 18, 2011. 01:01 PM | 4 Likes Like |Link to Comment
  • Gold: A Bad Investment and Getting Worse Part I [View article]

    I have to take issue with one of your statements: "That's because the financial industry, in general, would have you forget about gold as an asset class."

    That might have been true in the 1980s and 1990s, but it is patently false today. Wall Street is making a fortune via gold ETFs and mutual funds. In fact, retail interest in these new products is one of the major factors supporting the price rise (the same is true of many other commodities with recent ETFs; gold is not unique in this respect.)

    Pick up a Wall Street Journal, Barron's, or Financial Times. I promise you, you will find prominent ads for gold-related products. This should be a major contrarian sign that the gold bull has run its course or is in the final stages.

    Jan 18, 2011. 12:28 PM | 6 Likes Like |Link to Comment
  • Gold: A Bad Investment and Getting Worse Part I [View article]

    Full disclosure: In the Sizemore Investment Letter, I first recommended that my readers avoid gold (though not short it) when gold was around $1,200. So, you could argue that there was opportunity cost lost if any reader opted to not purchase based on my rec, though the performance of competing asset classes (such as stocks) make that largely a moot point.

    In the accounts that I manage directly, I initiated a short position in gold in early 2010 and had to cover the short when gold rallied. The total impact on the portfolio was a loss of 2.5%. For full details, my quarterly client letters are available to the public:

    Jan 18, 2011. 12:21 PM | 6 Likes Like |Link to Comment
  • Are J&J Recalls Turning Off Consumers? [View article]
    J&J's quality control problems are an absolute embarassment. But it reminds me of a Warren Buffett quote, albeit in reverse:

    "When a management team with a reputation for brilliance joins a business with poor fundamental economics, it is the reputation of the business that remains intact."

    In J&J's case, the mirror image is true. A business with great fundamentals (strong brands, solid balance sheet, global presence, etc.) is run by a terrible management team with no control over these operational issues.

    J&J's problems are fixable. In the meantime, if the stock continues to languish, we can enjoy a great dividend while we wait for management to either get fired or get its act together.


    Disclosure: Currentlly JNJ is an open recommendation in the Sizemore Investment Letter.
    Jan 18, 2011. 12:14 PM | 1 Like Like |Link to Comment
  • Gold: A Bad Investment and Getting Worse Part I [View article]

    Thanks for the comment. I actually agree with you about the parabolic top; most bubbles do finish that way. That said, in the case of gold, we have very few real examples to consider other than the 1980 blow-off top. Interestingly, then as now, gold demand for "investment" purposes briefly surged ahead of gold demand for jewelry.

    A nimble trader can try to navigate a volatile top. But investors holding the metal though mutual funds or--worse--coins or bars are at real risk of getting slaughtered if the market turned quickly.

    Rather than attempt to short at this point, the most prudent thing to do is probably to sit on your hands and watch it play out from a distance.

    We'll see how it all shakes out. But with buying increasingly dominated by novice retail investors (here and abroad) and its traditional uses in sharp decline, gold looks like an investment whose fundamentals are rotting from within.

    Jan 18, 2011. 12:00 PM | 7 Likes Like |Link to Comment
  • Three 'Backdoor' Ways to Play Emerging Markets in 2011 [View article]
    Vocuer, there is an ETF based on the Mergent list. I consider it a good "fishing pond" to look for potential investments. You can check it out here: www.invescopowershares...
    Jan 3, 2011. 08:16 AM | Likes Like |Link to Comment
  • Three 'Backdoor' Ways to Play Emerging Markets in 2011 [View article]

    I haven't checked the sites you mentioned, but I bet I know why there is a discrepancy. I bet that the sites are basing their stats on the dividend translated into dollars. Currency moves can distort the picture with ADR dividends, so you have to look at the stock in its home market. In the Mergent Dividend Achievers Index, they base membership on the company's dividend declared and paid in its reporting currency.

    Hope this helps!
    Dec 30, 2010. 10:27 PM | Likes Like |Link to Comment
  • Three 'Backdoor' Ways to Play Emerging Markets in 2011 [View article]
    Goodplan, good to hear. If you like those two, you might also like Nestle (NSRGY).

    Dec 27, 2010. 11:26 PM | Likes Like |Link to Comment
  • Three 'Backdoor' Ways to Play Emerging Markets in 2011 [View article]
    Jarco, Econdoc:

    I like ECON because it is a direct play on the emerging market consumer. Over a relatively short period of time--and particularly a time like today when virtually everything is rising together--the correlations will be fairly tight. But over time, the differences in the ETFs will become more apparent. VWO, VSS, and EEM are all diversified emerging market plays, whereas ECON is a targeted play on the consumer sector. It's not that ECON is "better," per se, but it has exactly the targeted exposure that I want. I wrote a longer article explaining my rationale:

    Dec 27, 2010. 11:24 PM | Likes Like |Link to Comment
  • Why Inflation Isn't Affecting Gold Prices [View article]
    Here is a random sampling of hate-filled bile from user Art65 from this article alone. There are plenty more where these came from:

    “The author is a LIAR just as the CPI is a LIE.”

    “Gold is not only a hedge against inflation (which is not the same thing as PRICE inflation you insidious idiot)”

    “You are not simply liars. You are EVIL”

    “Bankers are a disease we must cure ourselves from.”

    “Isn't that better than LOSING purchasing power in an inflationary environment in which only the bankers can thrive, insidious creature?”

    “…you bankers want to avoid at all cost because it threatens your very existence. Parasites”

    “Money is a means to an end. It is an end in itself only for the filthy bankers.”

    "Filthy" bankers? A "disease" we must cure ourselves from? Wow. Substitute "Jew" for "banker," and it reads like a chapter from Mein Kampf.

    There is no room for this kind of language in a civilized forum for discussion. This man should be removed from the site. At the very least, you should stop responding to his posts.

    I almost feel sorry for the guy. Life is too short to be that full of hate.

    Nov 27, 2010. 08:44 PM | 2 Likes Like |Link to Comment
  • Air Traffic Rises Above Pre-Recession Levels [View article]

    This is good stuff; thanks for publishing this. In the original press release, I found this to be most interesting:

    "North American airlines posted a 12.4% demand increase over October 2009. October represented the fastest growth rate for the year. With a capacity increase of 11.9%, the load factor for North American airlines was pushed to 82.5%, the highest among all regions. Compared to pre-recession levels of early 2008, the region’s airlines are carrying 2% more traffic."

    For all of the wailing and gnashing of teeth about the U.S. economy, the anecdotal evidence really is pointing to recovery, even if it is a slow one at first. Lines are longer at the malls these days. Sales are a little less generous. People are spending money again, even if not quite at the free-wheeling levels of 2007.

    Bears who insist that the world is ending will miss out on great opportunities in the years ahead. The same happened after the recession of the early 1990s. I think it has something to do with having a democrat in office; there is a certain segment of the population that can't separate their political passions from their investment decisions. The best advice is to ignore the man in the White House and look for value where you can find it.

    Have a good Thanksgiving,
    Nov 25, 2010. 12:44 PM | 3 Likes Like |Link to Comment