Seeking Alpha
View as an RSS Feed

David Klein  

View David Klein's Comments BY TICKER:
Latest  |  Highest rated
  • Level 3 Communications: A Long Idea Still Priced At An Attractive Discount To Fair Value [View article]
    Hi Tom, you asked about two years back and I didn't have a good answer but here's the link:

    I'll just add that with bandwidth growth growing stronger it's nice to have some empty conduits to take advantage of cheaper technology. Who knows with all the fear about hacking maybe some government agencies will find $$ to build there own secure system (probably never happen). Bottom line they are there ready for the next great idea, otherwise if never needed I think there is very little value but I suspect over time they will come in handy. When? Your guess is as good as mine. Also don't quote me on this since I could be wrong but didn't LVLT write off a few of these conduits a while back. Maybe someone else can add another perspective.
    Feb 8, 2015. 04:01 PM | 1 Like Like |Link to Comment
  • General Electric: Is GE Stock A Good Choice? [View article]
    Excellent article. After reading it is plainly obvious how much effort you put into your articles. Whether I agree or not with your valuation it's greatly appreciated you share your research. I also hold GE and have a similar valuation. Thanks for providing an independent check to my valuation :)
    Nov 18, 2014. 12:11 PM | 2 Likes Like |Link to Comment
  • A Unique Way To Use The Shiller PE As A Market Indicator [View article]
    Joe that's a great question and one I've been trying to get a handle on but in terms of both the inflation and 10 year treasury rates. I usually include these (and GDP growth) in the graphs above but left them out since they were not the focus of the article plus the graph would look cluttered. I wish SA would let me embed charts in the comments so I'll give a link to a visual regarding this. Although I should warn you as I look at more data my opinion my change but here is where I'm at today.

    If I look at a cumulative rate (Treasury + inflation) when it starts to spike above say 10% or 12% for a sustained period of time we see some dramatic downturns. This is an exception over a short time period 1988-1991 that didn't seem to have any affect although in 1988 maybe the economic forecasts looked bright, don't know or remember plus the PE was already below 17 at the time and recovering from a bottom of 7.4 in jan1982.

    We also see problems when there are wild swings from one extreme to another. When the cumulative rate turns negative we see similar results. In the range between 0 and 10% there doesn't seem to be much affect or correlation. Then again the rates may be more of a result of events than anything else.

    Anyway the link below shows two time periods 1916-1940 and 1971-1995. All the individual data is also charted so you can come to your own conclusions. Remember this is very preliminary research but it shows even with rising interests with low inflation won't have any dramatic affects outside the "grey" zone based on this limited research (what other macro disasters may be lurking out there is anyone's guess)
    Nov 17, 2014. 12:55 PM | Likes Like |Link to Comment
  • Level 3 Communications: A Long Idea At An Attractive Value [View article]
    Hi sbarbero and thank you.
    The competition table was constructed from the 10-K. As far as ATT and Verizon here is the verbage:
    Our key competitors for our IP and data services include Verizon, AT&T, …
    For transport services, our key competitors in North America are other facilities based communications companies including AT&T, Verizon, …
    For voice services our key competitors are other providers of communications services including AT&T, Verizon…
    For our colocation and datacenter services, our key competitors are other facilities based communications companies, and other colocation providers such as web hosting companies and third-party colocation companies. In North America, these companies include Equinix, Terremark (Verizon),…
    Nov 16, 2014. 11:02 AM | Likes Like |Link to Comment
  • A Unique Way To Use The Shiller PE As A Market Indicator [View article]
    Hi TheWiseOwl as far as your points:
    A- I never said it did. Actually I have no idea what Shillers thoughts would be on the role of technology.
    B- Basically the way I was thinking about it was that technology increased trading and demand. The increase in technology (internet) and demand also may have had a hand in much lower transaction costs. The more demand the higher the premium paid which increases the median PE over time although I'm referring to the rise in medians over time. Maybe I inferred to much with technology but when I go back to 1995 and look at the upper limit based on the analysis the article lays out, the upper limit median is above 20 every year and remains so today and the foreseeable future vs values of 12.3 before the 1929 crash, 19 in 1975, 17 in 1985 etc. Coincidence? Possibly but it corresponds to the growing influence of the internet. That said it is an opinion no more or less valuable than yours. Either way the model results are what they are.
    C-Not sure what you are inferring but again I never said Shiller made the index to predict tops. I have no idea what he was thinking. The only reason I use his name is because the index is named after him. Yes I say what it's not good for but that is my thinking/opinion. When you say "The Shiller P/E ratio is simply a more reasonable market valuation indicator than the P/E ratio because it eliminates fluctuation of the ratio caused by the variation of profit margins during business cycles.", I agree which is why I use it in the first place.

    Maybe I should have expounded more on this in the article but that was not the main focus of the article nor would it have affected the results.
    Nov 16, 2014. 10:52 AM | 1 Like Like |Link to Comment
  • A Unique Way To Use The Shiller PE As A Market Indicator [View article]
    Hi Kevin and thanks. If I were using averages the band would drop dramatically in various years going forward which is why I used medians, i.e., I could double the values of 1999-2001 and the median would not change. That said you are correct the upper band will fall if the numbers continue lower. Focusing on the 15 year interval if next year the number drops to 26 (1999 drops off) the change is less than 2%. Depending on the size of the drop the maximum change would be 6% ( assuming the other bands remain lower than the one in question).

    While I was building this model I was pondering the same things you noted which is why I used five bands (and medians vs averages) to get a better feel as to where things might fall. Focusing on the 20 or 25 year bands may be the right choice. Your point is a valid one since the upper band could gradually drop but it starts to get a little complicated since the 15 year band starts to move past 1999 the 25 year band moves closer dropping off some very low numbers so it could move up depending on what the next 10 years hold. I'm getting a headache just thinking about it.

    Maybe my choice of the word "normal" range was a poor choice of words. I didn't intend it to infer safety. The way I thought about it the closer we get to the upper band the market is starting to look pricey. I established extreme definitions because once we pass this point history states the market will fall but to borrow your words it "doesn't determine when prices will fall - only how far they have to fall before they hit the ground."
    Nov 14, 2014. 12:28 PM | Likes Like |Link to Comment
  • A Unique Way To Use The Shiller PE As A Market Indicator [View article]
    Thank you SimpleData and your approach sounds as reasonable as any. It will be interesting to see where this market takes us. Thanks for commenting.
    Nov 13, 2014. 08:05 PM | Likes Like |Link to Comment
  • A Unique Way To Use The Shiller PE As A Market Indicator [View article]
    Thank you DAG1996 I appreciate the comment. I've been trying to improve the model for a while and found these results interesting and thought I'd share them. Although interesting doesn't necessarily translate into right. (Also appreciate the re-tweet)
    Nov 13, 2014. 06:20 PM | 2 Likes Like |Link to Comment
  • A Unique Way To Use The Shiller PE As A Market Indicator [View article]
    No offense taken, obviously different methods produce different results. I've been developing this for some time and after looking at windows from 20 to 40 years settled on 25 based on results. From here I broke it down in equal increments or 5 years to measure medians from. The medians run from the start year shown to the present or end date in each case. That said anyone can put whatever they want in the interactive model linked in the article.

    The 25% to define "extreme" was based many runs since once the model was built it was easy to run multiple scenarios. Could it have been 24.5 or 26.5? Sure but the goal was to get something to best fit multiple past time periods. Yes it's not perfect but nothing is.

    Just curious what made you decide on 15 years?
    Nov 13, 2014. 04:22 PM | 1 Like Like |Link to Comment
  • A Unique Way To Use The Shiller PE As A Market Indicator [View article]
    Actually by this analysis it's still at the upper limit of a calculated normal zone at the time of the article. Is the 22% you quote just a number or is it tied to a specific calculation or model??

    The way I defined valuation was overvalued is just outside the normal (shaded area) zone. The 25% in the article was defined extreme. Based on today's market it has barely worked its way into the overvalued definition. The question is will it go to extremes as has happened in the past.
    Nov 13, 2014. 03:45 PM | 2 Likes Like |Link to Comment
  • Level 3 Communications: A Long Idea At An Attractive Value [View article]
    Thank you GRADPKS.
    Oct 31, 2014. 08:08 PM | Likes Like |Link to Comment
  • Retirees, Don't Count On Stocks To Deliver From Here [View article]
    For those interested there is an interactive shiller model where you can look at different points in time both yearly and monthly.
    It seems clear 2009 was a huge buying opportunity based on the data and today although a little pricey it is not crazy at this point and could continue higher or we could get a correction, i.e., the risk has increased since 2009 but isn't near the level we saw in 2000.

    I don't think you can use averages (or in the model's case medians) from say the 50's to measure over/under valuations today. The investing world and access to it is like comparing apples to oranges IMO when looking at today and times long past.
    Oct 1, 2014. 09:47 AM | Likes Like |Link to Comment
  • IIEX 3Q2014 Newsletter [View instapost]
    I agree. My biggest fear with ACI is that they burn through too much cash before a recovery and at this point I'm not sure which will come first. The payoff could be decent if buying in under $3 but it is very high risk & is a very small part of my portfolio.

    I like F but missed the opportunity to get in at $15 so I don't have a position but will keep an eye on it in the event it reaches my entry target.
    Sep 5, 2014. 06:09 PM | Likes Like |Link to Comment
  • IIEX 3Q2014 Newsletter [View instapost]
    Thanks toddro, it's appreciated
    Sep 5, 2014. 04:39 PM | Likes Like |Link to Comment
  • What Is The New Level 3 Communications Worth? [View article]
    I reviewed TWTC Q2 results and updated LVLT-TWTC pro-forma results and projections at links given in the article or below:
    pdf files:
    User interactive model:
    Jul 30, 2014. 09:42 PM | Likes Like |Link to Comment