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Cliff Wachtel  

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  • Yields heading south, but nobody wants REITs [View news story]
    big question here is this:
    with low/negative bond rates in EU, Japan, is there enough foreign money coming in to support REITS and other equities that are serving as bond equivalents. If so, REITS stay high, waiting for better price will require patience and accepting only minor dips.
    Feb 25, 2015. 11:18 AM | Likes Like |Link to Comment
  • Yields heading south, but nobody wants REITs [View news story]
    @cpalamara13
    there is demand, only question is at what price. Most good ones near all time highs, enough threats out there for investors to suspect dip w/in coming year. Heck, if only missing a ~4% yield, not a huge opportunity cost for the chance to pick up at 5-15% cheaper via a limit order.
    Feb 25, 2015. 11:13 AM | Likes Like |Link to Comment
  • Yields heading south, but nobody wants REITs [View news story]
    I'd amend that to say no MATERIAL rate rise.
    Fed still likely to at least want appearance of returning to normal and make token 25-50 bps / year if for no other reason than to give themselves some ammo in case economy tanks.

    Even symbolic raise w/b big change in expectations, so might produce short term drop in the above equities.
    Feb 25, 2015. 11:10 AM | 1 Like Like |Link to Comment
  • EuroGroup - Money For Nothing And Your Debt For Free? [View article]
    I knew author was one of best on EU mess from past articles
    Now I know he's creative too - that title is truly inspired, one of best I've seen since Inflation Trader's "Shock And Awwww".

    Great Dire Straits Ref.
    Feb 25, 2015. 08:31 AM | 6 Likes Like |Link to Comment
  • Johnson & Johnson: Down 10% Since Earnings, This Slow-And-Steady Dividend Gem Is A Steal [View article]
    Good long term hold but entry still hardly attractive. Valuation is never that great with such a high-visibility consensus conservative/defensive widows and orphans investment (especially as these are so in fashion now).

    Divvy low, so this is more of capital gains play with enough income to at least cover your opportunity cost vs. t-notes or other instruments. As long as all central banks keeping rates low (I include Fed, hikes likely to be token 25-50 bps per year at most, not even sure we'll see that w/out some counter - easing measures)

    Technical picture also does not suggest a bottoming yet.

    Note that since July '14 virtually all above average volume days were on down days ie volume suggests smart money sellers ,dumb money buyers. Remember, price confirms volume, volume confirms price. Consistently higher volume on down days >> those days are more representative, as the double top & 2 slides below 200 day moving avg confirm.

    That said, low central bank rates are VERY supportive of conservative, defensive stocks that offer at least SOME income, so don't see huge downside barring big negative surprise like EU contagion or big Fed hike.

    Still, if you want a defensive health care or consumer play, can do much better for income and div growth w/ certain health care REITS or other defensive consumer products stocks.

    Doesn't take a genius to be long JNJ, trick is not to chase it. 4- month downtrend + above signs of weakness suggest better entry pts ahead for the patient.
    Feb 23, 2015. 01:16 PM | 4 Likes Like |Link to Comment
  • Medallion Financial Delivers Record Earnings With Zero Taxi Loan Losses [View article]
    from fundamental perspective,
    -- feared performance slowdown has yet to hit, which makes sense given that minor medallion price fluctuations should have little effect on motivation of borrowers give their large down payment on medallions. As noted in recent articles by Meyers and Steier, evidence from the field also suggest no material threat from Uber et al yet, much of price decline due to expansion of medallion supply.
    --no reason that expanded medallion supply & lower price shouldn't increase medallion loan demand, which could negate lost revenue from greater loan size or even improve revenues due to greater # of loans.
    --the above earnings solid, also note most of growth from non-medallion loans

    from Technical side, thus far we have a screaming breakout, over 3 resistance levels
    --50 day moving avg
    --round # price level of 10
    --downtrend line smashed

    will need a few days to confirm this breakout and see if it's more than just short-covering. Let's watch

    --volume on up days vs. down days, if volume on up days exceeds volume on down days
    --the above resistance (now turned into support) holds and we survive a test down to ~10, then we'll know we've got room to run.

    Note that yesterday had an almost 6% spike on ~DOUBLE average volume, so the move was real, so looks like price and volume are on course to confirm a preliminary breakout. No real resistance before the 11-11.30 area (have 11 price level and 200 day EMA

    thus far, as of midday Feb 18th, further confirmation of breakout. Price tested almost back to 10 but quickly bounced back, recovering nearly all losses on the day, and is doing so on at best average volume. That's what we want to see, high volume up days, low volume down days, higher highs, higher lows. Need at least a few more days to see if the move is likely to stick. So far, so good.

    As author notes, no real fundamental case against TAXI per actual facts.

    Remember, this one is down on unsubstantiated fears of uber, not any actual performance data - so TAXI could be ready for a bullish shift in sentiment - a rare high yield with fundamentals to match.

    Not sure how any interest rate hike might hit it, though in any case any hikes coming will likely be token ones, Fed looks determined to keep ST rates low, but don't know how much that effects LT rates, especially w/ so many other central banks cutting rates and driving overseas funds into US stocks.
    Feb 18, 2015. 01:23 PM | 4 Likes Like |Link to Comment
  • Medallion Financial higher after earnings beat [View news story]
    from fundamental perspective,
    --the latest earnings reports again show that feared performance slowdown has yet to hit, which makes sense given that minor medallion price fluctuations should have little effect on motivation of borrowers give their large down payment on medallions. As noted in recent articles by Meyers and Steier, evidence from the field also suggest no material threat from Uber et al yet, much of price decline due to expansion of medallion supply.
    --the above earnings solid, also note most of growth from non-medallion loans

    from Technical side, thus far we have a screaming breakout, over 3 resistance levels
    --50 day moving avg
    --round # price level of 10
    --downtrend line smashed

    will need a few days to confirm this breakout and see if it's more than just short-covering. Let's watch

    --volume on up days vs. down days, if volume on up days exceeds volume on down days
    --the above resistance (now turned into support) holds and we survive a test down to 10, then we'll know we've got room to run.

    Note that only a little over an hour into the day up 8% AND have nearly reached avg daily volume so looks like price and volume are on course to confirm a preliminary breakout. No real resistance before the 11-11.30 area (have 11 price level and 200 day EMA

    Remember, this one is down on unsubstantiated fears of uber, not any actual performance data - so TAXI could be ready for a bullish shift in sentiment - a rare high yield with fundamentals to match.

    Not sure how any interest rate hike might hit it, though in any case any hikes coming will likely be token ones, Fed looks determined to keep ST rates low, but don't know how much that effects LT rates, especially w/ so many other central banks cutting rates and driving overseas funds into US stocks.
    Feb 17, 2015. 10:56 AM | 3 Likes Like |Link to Comment
  • HCP Inc. Slides On Woes Related To Its Top Tenant [View article]
    Saw RBC report on it, rated underperform when was at $45 had target $42, downside to $35, sees both near term and longer term challenges to lease coverage ratio. Have a bit, not chasing it unless hits near lower target.

    BTW, MOST healthcare REITS have pulled back hard. Anyone know why. Some just went ex dividend, at least one was downgraded recently, so maybe combined effects sparked a gen'l selloff? Anyone know?

    Side note, Greece situation has contagion risk w/ Syriza in charge, not chasing ANYTHING rt now until that situation clears, tho markets remain sanguine, getting harder to see how EU pulls out another extend & pretend with more debt issues and money printing, now that Greece has newly elected gov that promised NOT to continue with that route & demand haircuts from borrowers.

    EU meanwhile can't give much because Spain and Italy will want same deal, so Greece may be ready to risk contagion if EU prepared to let it go. Keeping some cash on the side if we get some real fear induced selloff (like we saw in 2012 when last Greek haircuts sparked fears of same for much of EU sovereign debt and sent their rates soaring, along with default/liquidity fears)

    If contagion risk can be contained, then all this helps continue sending foreign funds fleeing into US market, a gen'l positive IF contagion avoided. Defensive income stocks like HCP could be beneficiary, especially with Fed keeping rates low for long time (token hikes aside, US rates not rising much if at all).
    Feb 11, 2015. 03:27 PM | Likes Like |Link to Comment
  • Go figure - Mortgage REITs rally as rates soar [View news story]
    only explanation I've heard for WHY rates rose. if so the move is just daily noise and mReits still far from out of danger as still no sign of halt to closing gap btwn st and lt rates
    Feb 3, 2015. 04:42 PM | Likes Like |Link to Comment
  • Go figure - Mortgage REITs rally as rates soar [View news story]
    only explanation I've heard for WHY rates rose. if so the move is just daily noise and mReits still far from out of danger as still no sign of halt to closing gap btwn st and lt rates
    Feb 3, 2015. 04:42 PM | 3 Likes Like |Link to Comment
  • Go figure - Mortgage REITs rally as rates soar [View news story]
    "Go figure"??? No, rather clear, actually.

    big worry w/ mReits like NLY was closing of gap btwn short term and long term rates. mReits borrow at lower short term rates and lend at longer term rates, they need a healthy gap between short and long term rates. Long term rates have been falling while short term rates are expected to rise w/in coming year as Fed slowly raises short term benchmark rate

    so the movement upward of longer term rates gives hope that gap between short term and long term rates will grown and give mReits better profits.

    please correct me if I'm wrong, but in sum:
    it seems that rising 10 year rates would boost hope for rising long term rates and thus rising profit prospects for mReits
    Feb 3, 2015. 04:08 PM | 20 Likes Like |Link to Comment
  • The Next Stock I Would Build A Retirement Portfolio Upon At Any Age [View article]
    Can anyone provide link to article in which author explained how he decided how much $ to allocate to each holding. A quick look at the portfolio suggests he allocated more $ to the (relatively) higher yielders, but was wondering if he used some kind of formula. Didn't see any mentioned in the first article on the FMBP.

    Love the concept, though personally a bit uncomfortable with sub-4% yields for an income portfolio unless you either a. have large enough investment to live on that kind of return and can live with potential risk of an inflation catching up and outpacing your yield, or b. div growth rate so high you can anticipate being north of 4% w/in a few years.

    Would prefer a some more diversification out of USD over long term (into income with AUD, CAD exposure, CHF too if can actually find a real CHF denominated income play) , though granted USD rally has room to run as long as EU and Japan troubles loom large. Again, this portfolio is mostly a long term hold, so my long term theme of USD diversification and hedging via stocks w/ hard asset exposure applies. See my book for details on that.

    A perfectly great combined growth income portfolio, though.

    Would add some KMI, EPD at least, especially because is long term hold portfolio so investor would not sweat if further price drops from possible lower infrastructure demand or sheer market fear. Longer term core holdings for both income and USD hedging
    Jan 16, 2015. 04:05 AM | 1 Like Like |Link to Comment
  • Telus To Blaze Past Competitors In 2015 [View article]
    thoughts on oil price decline as a general headwind for Canadian stocks in general?
    Jan 6, 2015. 12:30 PM | Likes Like |Link to Comment
  • Retirement Strategy: My Exclusive 2015 Portfolio For Seeking Alpha Is Ready Right Now [View article]
    Brilliant article concept, will be following this series. Well chosen for SA's large contingent of aspiring retirees, many of us trying to do the same thing, build reliable income stream in an era of financial repression in which we savers have been tossed under the bus for the greater good (?). Welcome author's input and perspective.

    Would love to hear other's thoughts and portfolio constructs toward this goal.
    Dec 22, 2014. 10:25 AM | 1 Like Like |Link to Comment
  • Annaly Capital: The Old Squeeze Play Could Hurt This Stock [View article]
    Excellent article, alerting us to a widely ignored threat to mREITs. Too many of us (me too) have been to focused on Fed's intent to keep rates low and/or rising slowly (great for mReits), thinking the only concern was whether Fed, aided by ECB BoJ, and other central banks, could cool speculation of rising rates (so far, yes).

    If you just focus on the above, mReits look like a reasonable risk for such high yields.

    Spread definitely something else to watch.

    Some outstanding comments too.
    Josh B has key point about an often neglected aspect here, the currency component.

    USD bottoming and reversal of decade-plus downtrend appears to be underway. Note that currency trends tend to be very persistent (vs. stocks) for many reasons (discussed in prior articles and in my book), most importantly because it takes a lot longer to reverse fundamentals of an entire country than of a single company, and longer still to for the RELATIVE fundamentals of 2 countries to change (currencies trade in pairs, so a trend reversal requires relative improvement in fundamentals of one economy over the other).

    a prolonged USD bull should help keep rates low (though not necessarily affect the 2 yr/10yr spread as it keeps t bill/note demand up.

    Looking forward to updates on the yield spread from the author.

    bonus link: see link below from telegraph on additional implications of USD bull mkt.


    http://bit.ly/1wPi4Nj
    Dec 18, 2014. 10:05 AM | 2 Likes Like |Link to Comment
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