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  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    Thanks, Drumerboy. I do hope that my thoughts end up being helpful! Lumber up today; all eyes on the Fed.
    Mar 18, 2015. 12:13 PM | 1 Like Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    I'm planning one. No time right now, tho.
    Mar 18, 2015. 12:04 PM | Likes Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    Critical, thanks for reading and your appreciation of the article.

    You ask a great question. I was watching CAT from a neutral position in 2014 when it not only bounced off of the support I mentioned in the low $80s but soared. I was scratching my head at the time.

    You and I can only guess at the thinking of the people and algos that thought this was a winner. My guess is that CAT popped up on some screens as not too expensive and poised to win the future, based on a more optimistic view of the Chinese economy and its "satellites," an even stronger economic year in the US, etc. Perhaps I could have emphasized it even more than I did in the article, but my guess is that an awful lot of investing decisions turned on the China trade. Meanwhile, their economy has decelerated further, or so it seems. Whether the boom in their stock market is going to predict a turnaround there is to be seen. If so, that will be good for what is now my largest stockholding, AAPL.
    Mar 18, 2015. 08:02 AM | Likes Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    Stewart, you're welcome. Thanks in return for reading and commenting.

    I just don't see big infrastructure spending increases by governments in the US or in many places worldwide any time soon. Where are the additional resources coming from? Medicare or Medicaid? Social Security? Suspension of repayment of interest on the debt.

    Re the good point you make about CAT having outperformed the SPY on a 10-15 yr timeframe, I wish I had pointed that out. I use it to support my bearish case. It has plenty of underperformance to go if my core theses are correct, to revert to a sort of mean.

    Again, as I tried to say in the article, this for me is a baby step in the bearish direction. The SPY remains in an uptrend, challenged though it might be, and that's why I didn't choose a dicier stock to own puts in.
    Mar 18, 2015. 07:57 AM | Likes Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    Mike, thanks!

    Yes.

    I'm actually a little wary of the extent of REGN's move here. I was not impressed with the NEJM article about alirocumab.
    Mar 18, 2015. 07:51 AM | 1 Like Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    fuzzy, thanks for reading and commenting. Agreed on the charts.

    One of the decisions involved in writing for SA (or, really, writing in general) is how much detail to put in the article. Sorry for any confusing aspects to the charting or elsewhere.

    I also agree about certainty, or lack of such. That's why I framed matters as my thesis, POV, etc. The patterns are always changing. But I think that silver dropping from the high $40s in 2011 to $15 is a bust.

    All the best.
    Mar 18, 2015. 07:50 AM | 1 Like Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    Michael, great comment, thanks for adding and for the kind words. While our POV is not too popular, it doesn't appear to be a material worry unless it's consensus and pushed too far.

    All eyes on the Fed today.

    This is getting interesting.
    Mar 18, 2015. 07:47 AM | Likes Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    Windy and JM above,

    There's no doubt that other, weaker companies will fall farther if the bottom falls out than CAT. But if one shorts them and is wrong, they could crush the shorts on the upside. So I thought, and continue to think, that CAT is a reasonable way of propounding my thoughts on what right now looks like a two-way market for the first time in a long time. Long the great co's with positive sales and earning momentum (and preferably reasonable valuations), short small amounts of the stuff that's falling out of favor.

    The article was so long, I didn't know how many people would actually read it through, so I didn't want to get into a discussion of other related and more volatile shorts.

    Thanks for your readership and comment here.
    Mar 17, 2015. 10:06 PM | Likes Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    Thanks, Chris, for reading and taking the time to provide a generous comment.

    Doc
    Mar 17, 2015. 09:54 PM | Likes Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    J Mintzmeyer, as a fellow SA contributor, thanks for you praise about the quality of the writing. This one did take a while - I'm glad it showed. If you're not a contributor, you may not quite realize the time it takes to put together a long article that reads well - all the while living one's life...

    Re CAT, I guess where I have a different opinion is that I don't think its moat is all so wide. I think it can be jumped, or that a long board can be tossed across it to let the invaders in. But mostly I see the rot in the developing world continuing the string of negative surprises.

    Let's see what happens when they report Q1 and guide forward.

    Of course, the Fed speaks tomorrow, and if they go easy, CAT should rocket upward, at least for a couple of days...

    I definitely agree w you about CAT's staying power, and also completely agree about the comparison with XOM. In fact, in the next-to-final draft, I had a paragraph and chart of XOM in - but the article was too long to keep it. The differences between the companies are not that great, but I think XOM is even more iconic than CAT and so I just wouldn't short that one.
    Mar 17, 2015. 08:57 PM | Likes Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    Jim, thanks for your incisive article. Glad you found the discussion interesting - I actually learned a lot about CAT and the structure of the economy by looking into matters more deeply. I agree on the need to hold CEOs - and boards of directors - accountable for careless use of shareholder money.

    Maybe if you count trees in the forest, that will help you sleep! :-)
    Mar 17, 2015. 08:51 PM | 1 Like Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    montrachet, thanks for reading and appreciating the article! GLTU!
    Mar 17, 2015. 08:49 PM | Likes Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    peace, thanks for your comment. I concur with your points. FCF is not sufficient.
    Mar 17, 2015. 08:49 PM | Likes Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    Deshy, in the Great Recession, CAT got to a low of $32 in 2008 and sales that year were $85/share. In 2009, it dropped to $21.7 or so, and sales per share were $52. There's your 0.4X for each year.

    But as a Dow stock, it's not easy to push it down that far. OTOH, Terex (TEX), which is an operationally good company but is much smaller, has much worse financial strength and half the operating margins of CAT, is doomed to have a much lower P:S ratio than CAT in good times and bad IMHO.

    Thanks for adding your thoughts to this thread.
    Mar 17, 2015. 05:31 PM | 2 Likes Like |Link to Comment
  • Cat-astrophe? No, But There Is A Good Case Against Caterpillar Shares [View article]
    sliman, thanks as always for reading and commenting. I value your thoughts.

    I have not, but now will, look at HEDJ. Will email you about it.

    Doc
    Mar 17, 2015. 05:25 PM | Likes Like |Link to Comment
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