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Daniel R Moore

 
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  • SandRidge Permian Trust- Q4'13 Results Show Risk And Reward [View article]
    The 10.3% return is a straight discounted cash flow of the expected distributions to unit holders. There is no compounding of re-invested dividends built into the measure in order to come up with the current fair value estimate.

    Drilling completion is accounted for in the estimate as the production curve shows a steep drop off in 2015 in line with many of the comments made by readers. The primary risk in this regard is whether the production curve, which is based on the last published PV-10 minus any production, properly reflects the future. The upcoming PV-10 update is important for reassessing the proven reserves held by the Trust.
    Feb 8, 2014. 10:51 AM | 3 Likes Like |Link to Comment
  • SandRidge Permian Trust- Q4'13 Results Show Risk And Reward [View article]
    The lower production curve has been accounted for, but to date has not been nearly as severe as experienced in CHKR, SDT and SDR. The Permian Basin for oil production seems to be a more stable play than the other fixed term Trusts I follow and provide updates on.
    Feb 8, 2014. 10:35 AM | 2 Likes Like |Link to Comment
  • SandRidge Permian Trust- Q4'13 Results Show Risk And Reward [View article]
    I did not like the continued deterioration in production announced, but feel the market probably has the price right at this point. I am going to wait until the updated PV-10 is published before writing an article.
    Feb 8, 2014. 10:31 AM | 2 Likes Like |Link to Comment
  • Is Your Portfolio Positioned For The 2014 Stock Market Pull-Back Game? [View article]
    Hi Tony,

    I fully agree with you that "true" market crashes are usually easy to detect. The current market data is pointing to continued, but slowing upward momentum, and remaining long stocks until the market reaches the break-point is mathematically the best strategy, and then moving to the 2 year Treasury when the market tilts. I have a Financial Relativity Index on my web-site which gives a barometer of the current risk, and it is only showing slight caution moving into 2014. But, what is interesting is why the barometer is growing more cautious.

    The most recent market crashes, reaching all the way back to 1981 and even the 1970s had completely different market forces being exhibited than today. Not many investors in the U.S. market are old enough to have experienced a true deflation driven market correction; and additionally, the market has never gone through a scenario in which the Fed has been as active as it currently is in the market.

    In a deflation driven market, debt, as long as it is higher credit quality or even high quality dividend payers, will be the superior play. That is the gist of what I see as the portfolio re-balancing move at the present time - if investors see good opportunities. I am not ready to sound the alarm to head for cover. If the alarm bell truly sounds loudly, the signals to move to cash will get much louder than they are presently.

    Thanks for your comment.
    Jan 20, 2014. 10:23 AM | Likes Like |Link to Comment
  • Is Your Portfolio Positioned For The 2014 Stock Market Pull-Back Game? [View article]
    Your comment about bank reserves is a critical insight that many, if not most investors have missed. Economic growth in the U.S. is usually driven by lending. Currently there are $2.4T in excess reserves in the banking system, the mirror image of the Fed bond buying activity. The "two big to fail" banks are hesitant to lend the reserves - and there are many reasons I have read for this phenomenon. But the only one that really makes sense to me is regulation. Currently the bank stress test bar has been raised to the point where the banks must be able to absorb a 50% decline in the stock market. In order to pass the test, the banks have to hold more U.S. Treasuries or park the money at the Fed and collect the 25 basis points. Great for managing the price of the U.S. debt, but not so great for economic activity. If this course is maintained, then the U.S. debt remains a deflationary burden on the U.S. economy.

    The "what if" scenario you propose in which credit creation begins to take off while Fed buying slows counter intuitively creating inflation is one to remain vigilant about. The data I have analyzed indicate the inflation scenario requires increased lending (as you point out most likely by the shadow lending market), combined with higher government taxing and spending, rather than borrowing and spending. I believe the outcome requires a change in political dynamic, but I do believe it eventually will happen. This outcome, counter-intuitively, may be a better outcome for stocks, which seem currently perched upon a pedestal which could be clipped because the Fed has reached the end of its rope.

    I was reminded by a comment in a recent post that this was exactly what happened in Japan about 20 years ago when they stopped QE. The U.S. as a reserve world currency is in a slightly different position than Japan, but the financial market pressure cooker is exhibiting the same tendencies.

    Thanks for you great insight!
    Jan 20, 2014. 09:44 AM | 2 Likes Like |Link to Comment
  • Is Your Portfolio Positioned For The 2014 Stock Market Pull-Back Game? [View article]
    The reason I did not address gold was that there was too much information for one article - see my very recent post:

    Gold, What are Investors Afraid of Now - http://seekingalpha.co...

    I am pro gold as a potential re-balancing avenue, but prefer the energy sector for portfolio protection as the two sectors tend to be highly correlated through time, but most oil investments provide better on-going cash flow and the two markets are in synch from a relative price standpoint at the present time..
    Jan 19, 2014. 03:51 PM | 1 Like Like |Link to Comment
  • Dogs Barking In The Dow, Value Or Warning Signals? [View article]
    I do not see XOM as a value opportunity currently either. Not sure what Warren Buffett is seeing, but he attracted alot of attention when his position was announced in the press.
    Jan 10, 2014. 03:36 PM | Likes Like |Link to Comment
  • Credit Markets Signal Stock Market Party To Continue In 2014 [View article]
    I will work it into my next article on equities.
    Dec 22, 2013. 07:17 PM | 1 Like Like |Link to Comment
  • Credit Markets Signal Stock Market Party To Continue In 2014 [View article]
    Everything you have stated is correct, except that I would say a steep upward sloping yield curve is set by the Fed to induce faster economic growth and the stock market jumps up in value in anticipation of the growth; however, the market in the scenarios when the Fed is raising rates typically still goes up unless inflation is rampant like the 1970s, but usually at a decelerating pace. What stock investors need is an indicator to tell them when the upward move in stocks holds too much risk, and that is where my research shows the long duration credit market is a good indicator. I think the Fed likes the 10 / 2 spread as a leading indicator, but I don't know how that one is going to work this time around with the Fed pegging short-term rates.

    As long as money continues to flow out of bonds and into riskier assets, the outlook for stocks relative to alternatives is almost always good, and the yield curve flattens. What stock investors don't unusually want to see is the opposite occurring, like the 2008 scenario when the Fed was actually selling Treasuries from its balance sheet as investors were running from stocks. This is most typical of an impending deep correction. The current flattening of the yield curve on the intermediate to long end of the curve is pro stocks, and if it continues briskly, then it may cause issues for the Fed plan to keep rates low on the short end of the curve without even higher levels of asset purchases.
    Dec 22, 2013. 05:26 PM | 1 Like Like |Link to Comment
  • Credit Markets Signal Stock Market Party To Continue In 2014 [View article]
    I don't know the exact symbol - I track it on the following website:

    http://1.usa.gov/IN0WMj

    You can find the BAA1 rate information in a downloadable excel spreadsheet format near the bottom of the webpage. The data goes well back in history, and is also available in weekly and monthly average formats.

    The business day index is published on about a couple of day delay.
    Dec 22, 2013. 04:15 PM | 1 Like Like |Link to Comment
  • Chesapeake Granite Wash Trust - The Good, Bad, And Ugly News In Q1 Results [View article]
    My last article valued the Trust at about $11-12 after the 3rd quarter results. I haven't seen anything to change my view of the valuation. The present beaten down market appears to be driven by a lot of tax loss selling, combined with a fair amount of paranoia.
    Dec 20, 2013. 08:09 PM | Likes Like |Link to Comment
  • SandRidge Permian Trust: Third Quarter Results Show Solid Performance [View article]
    These units are most likely being driven down by tax loss selling.
    Dec 17, 2013. 10:04 AM | 1 Like Like |Link to Comment
  • Is The Gold Market Manipulated? Part 2: From De-Pegging To De-Monetization [View article]
    Gold is the currency most used by the Middle East, and in particular countries aligned with Iran in the 1970s. Gold continues to be driven to a large degree by these forces. The abandonment of the gold standard for international trade exchange under the Bretton Woods Accord left a huge exposure to deflation of the value of oil traded in dollars as the U.S. rapidly grew its money supply to pay for Great Society programs and the Vietnam War. The Kissinger led DOHA Agreement aligned the Saudis with the U.S. by making certain that oil would be priced in USD in exchange for military protection of Saudi Arabian oil fields. If you check the world gold reserves, you will find the official Saudi total held gold reserves at zero, a very odd figure; but you will also find a country with huge holdings of U.S. Treasury debt...

    I cover this and other details about the history of gold in my recent book - Theory of Financial Relativity. Gold is an integral, unspoken competitor with the the objectives of the U.S. government to maintain control over the world economy. The biggest reason, and one that I didn't see much mention of in this article, is that gold is so highly correlated with the price of oil through time, and more importantly, with whether the Iranian faction is either strong or weak in the game. In the 1970s the correlation of oil and gold was almost 1:1, at a time when the price of oil in the U.S. was under price controls and the Shah of Iran was screaming that the U.S. should pay 10 times more for oil - which it eventually did in 1980. I don't know if the U.S. or other industrialized powers in Japan and Europe truly attempt to manipulate the price of gold, but I am certain that, as much as the both Bernanke and Janet Yellen recently played dumb on the topic in Senate Banking hearings, they are very much are aware of how their policies impact the world price of oil and gold historically, and how the same risk tail risk is always present if their monetary policy behavior gets out of control.
    Dec 11, 2013. 10:47 PM | 11 Likes Like |Link to Comment
  • S&P 500 Up 20% In 2014? Re-Live The Bubbling 1990s [View article]
    The free e-book offer will end today - Friday, December 6. The requests over the past several days have been high. I greatly appreciate the interest in the book.
    Dec 6, 2013. 09:39 AM | Likes Like |Link to Comment
  • S&P 500 Up 20% In 2014? Re-Live The Bubbling 1990s [View article]
    Thanks for your thought provoking comment. My view is that each time period has strikingly similar characteristics, the biggest one being that the market went up in each time period, and then experienced, sometimes severe, corrections...the combination of events that cause the next correction will on the surface appear different, but in reality my research shows relative order will eventually be maintained for the same reasons.
    Dec 6, 2013. 09:19 AM | Likes Like |Link to Comment
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