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Craig Lehman  

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  • If History Means Anything, Aflac Stock Is Quite Cheap [View article]
    As I understand it, beta is the fluctuation of the stock, relative to the fluctuation of the market. If the stock is up or down 1% on days when the market (that is, the US market) is up or down 1%, its beta is one.

    Now, this is only a guess, but my hunch is that AFL tends not to fluctuate so much with the (domestic) market, as with events in the Japanese or European markets (at least lately.) Those events are not necessarily in synch with fluctuations in the US market. So because it shows larger divergences with the US market, its beta is larger.

    JUST a guess.
    Jul 27, 2013. 05:55 PM | Likes Like |Link to Comment
  • If History Means Anything, Aflac Stock Is Quite Cheap [View article]

    Thanks for your response (and RichJoy also.) I am currently thinking about an article on the theme of how much attention Dividend Growth investors (I consider myself one) should pay to capital appreciation (and by the same token, depreciation.) The view you express here pretty clearly reflects one end of the spectrum of possible views. I think it also illustrates that, at least on one common understanding of the concept of risk, Dividend Growth investing is not *necessarily* quite the low-risk strategy that its advocates sometimes advertise.

    Anyway, I admit it -- I am not one of those who is "unaffected by price declines" (or appreciation.) I'll be in touch about permission to quote...

    Jul 1, 2013. 07:46 PM | 2 Likes Like |Link to Comment
  • If History Means Anything, Aflac Stock Is Quite Cheap [View article]
    AFLAC is an interesting case study in how the concept of risk is defined. E.g., it may well be true that "earnings per share figures could catch a nice tailwind if the yen strengthens against the dollar in the next three to five years", but... the express policy of the Japanese government is to weaken, not strengthen, the yen. I'm not sure I want to be betting on the outcome of that battle. Again, "derisking" may have reduced AFLAC's European exposure by 50%, and around 96% of the portfolio may be "investment grade", but I'd still want to know more about that remaining 50% of European exposure, and whether "investment grade" there is like "investment grade" in the US in 2008.

    If AFLAC is currently trading at a much lower premium to book value than it was a few years ago, that tells me that a lot of people are worried about *something*, the positive spin of this article notwithstanding. You can find a lot of stocks with the same or better dividend growth rate: past results are not necessarily indicative of future performance. This is not to say that I would stay completely away from AFLAC (I had a small position on which a call option was exercised earlier this year), but I am not just itching to get back into it. In short, on a definition of risk which seems plausible to me -- the known possibility of events which would severely affect the stock price to the downside -- I remain skeptical on AFLAC.
    Jul 1, 2013. 02:35 PM | 3 Likes Like |Link to Comment
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