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  • Irresistible Force Meets Immovable Object [View article]
    If Greece leaves the EU, that will show that the EU is strong enough to enforce its laws and rules and that countries that are too weak and corrupt to enjoy or profit from membership in the EU.

    If Greece is allowed to stay in the EU without making the adjustments required to make up for years of corrupt government and tax fraud by its people, that will show a lack of leadership in the EU.
    Apr 20, 2015. 11:10 AM | 5 Likes Like |Link to Comment
  • How Caterpillar Can Quickly Improve Its Financial Situation [View article]
    CAT has quickly downsized its unprofitable and less profitable operations. It will ramp them up again as demand improves. All selling the resources operations would do is enrich whoever would buy them and the financial advisers and lawyers involved in a deal or deals.

    You have to look at CAT as a diversified manufacturer of materials moving and handling equipment that commands high prices for the equipment and maintenance services. CAT's customers pay high prices for its equipment and maintenance and parts services because they know that the total cost of ownership is lower at CAT and that they can make more money with CAT equipment and services.

    That has been CAT's strategy and story for 90 years. You can say the same about Boeing and GE. They have their ups and downs as markets and economies change, but they are industry leaders and extremely well managed. I'll hold on to my CAT and GE and collect the very nice dividends that they pay and will continue to pay. May buy some more.
    Mar 28, 2015. 06:05 PM | 2 Likes Like |Link to Comment
  • The Future Of Seeking Alpha, From One Contributor's Perspective [View article]
    I'm wondering:

    1. What percentage of SA's 4 million members visit daily, weekly, monthly?
    2. What percent set up portfolios?
    3. Barron's says 60% of its subscribers trade options. What is the percentage for SA?
    4. Do readers look at the charts SA publishes the most followed writers? Is that a way to filter quality?
    5. Could SA add some metrics to its portfolio tool such as fair value/intrinsic value estimates or add a fair value calculator as described in this week's Barron's? They might be able to license the data from M* or Valuentum.com, etc.
    Mar 28, 2015. 05:43 PM | 2 Likes Like |Link to Comment
  • GE Looking Attractive, Leaving Lending Business Behind [View article]
    When you see a GE and PG change strategy, you have to decide whether the changes are positive, or not. If positive, the stocks are a buy. Thus, I'm in GE and PG because I anticipate significant dividend increases along with price appreciation over the next three to five years.

    I'm assuming, of course, that the U.S. and world economies will grow. If they don't, all bets are off.
    Mar 20, 2015. 12:55 PM | 1 Like Like |Link to Comment
  • GE CEO Jeff Immelt Issues Letter To Shareowners [View article]
    GE is following the Caterpillar model.

    1. Continuous improvement and innovation that keeps customers coming back for more.

    2. Serve markets that spend big money for expensive equipment, maintenance contracts, quality and outstanding parts availability. Sell profitable equipment to customers who will use it to make money.

    3. Dominate the markets you serve as number one or two, which has been the strategies of GE and CAT for generations.

    4. Pay good dividends and maintain balance sheets that ensure dividend safety and growth.

    5. When markets change, cut your losses.

    6. Promote from within.

    7. Work for customers, employees, suppliers and shareholders.

    8. Communicate professionally and consistently. Not everyone will like what you say or even believe it, but do your best to be the best.

    I own GE and CAT.
    Mar 16, 2015. 03:58 PM | Likes Like |Link to Comment
  • Apple's Electric Vehicle Opportunity [View article]
    Going into retail, jolange, was just a change in Apple's distribution strategy. It was not a new product nor new technology. It make up for a huge problem at Apple, which couldn't find retailers who wanted to sell its products or knew how to get the job done.

    As for the iPod, iPhone and iPad, those were additions to Apple's consumer electronics offerings, not ventures into building smart homes, smart cars or smart tanks.

    Today's wsj.com has an excellent column about the reason Apple is leaking its interest in the auto industry. It's trying to protect its consumer electronics franchise just as Google is using its driverless car nonsense to protect and enhance its advertising empire.
    Mar 4, 2015. 05:19 PM | 1 Like Like |Link to Comment
  • Can The Departure Of Jeff Immelt Hasten GE's Recovery? [View article]
    Yes, I know about that GE retirement policy, which I consider unfortunate in some ways and smart in others. Immelt would have more fun if he retired early. And he might live longer.
    Mar 4, 2015. 05:03 PM | Likes Like |Link to Comment
  • As Altria Keeps Rising, So Does The Temptation To Sell [View article]
    I've owned MO for several years. Because it's in a bubble, trading significantly over Morningstar and Valuentum's estimated fair values and due for a 20% correction, I took profits on about 35% of my position.

    T and VZ don't look like good alternatives now that the FCC has turned them into utilities and technology is opening the doors to new competitors. Also, higher interest rates are coming. Valuentum puts T's dividend cushion well under what it considers a safe rating. According to Valuentum's past comments, it consider T's recent dividend hike "irresponsible."

    A recent Barron's article on its dividend picks for 2015 bluntly recommended against both companies.

    Where does that leave you? I'm in KMI, PG, PFE, CAT, ETP, and MSFT. They have more room for capital appreciation and smart dividend hikes over the next three to five years than MO, T or VZ, I think. And you can write covered calls on them, just as you can on MO, T and VZ.
    Mar 4, 2015. 04:59 PM | Likes Like |Link to Comment
  • Can The Departure Of Jeff Immelt Hasten GE's Recovery? [View article]
    Immelt is only 59. He could be around until he's in his late 70s or early 80s.

    CEO's have to manage the companies they inherit and the ones they create. Once a company is in an industry, events beyond a CEO's control determine the company's success.

    Immelt inherited a mess from Jack Welch.

    He has reshaped GE into what looked like a winner until oil prices crashed.

    Lots of companies are suffering because they didn't see the crash coming. So you can't fault Immelt for being as surprised as the CEOs of the energy industry and the companies that supply and service them.

    I fault Immelt for submitting to the corporate coercion imposed by the Obama Democrats. More than 10 years ago, he got sucked in by Al Gore and W. global warming and climate change alarmists and jumped into the "green energy" business.

    Meanwhile, GE is being forced out of the banking and consumer finance businesses by Dodd-Frank and changes in the major appliances markets that forced it to get out of those businesses.

    What I like about GE is that it is going the CAT route. It is focusing on serving customers who will pay for expensive, high quality products that are backed by strong and expensive product maintenance contracts. That is a profitable business strategy long-term.
    Mar 4, 2015. 04:42 PM | 7 Likes Like |Link to Comment
  • Warren Buffett's Berkshire Hathaway Portfolio: A Free Cash Flow Scorecard Analysis [View article]
    DE's market cap is just under $31 billion. Buffett may waiting to buy the whole company if grains fall and the stock price retreats. He can do that by buying the stock over time rather than trying to time the market.

    No doubt that weather will change in the corn and bean belts of the world. Sooner or later prices will recover and DE will be a great long term investment. It is a wonderful company that is trading just over its estimated fair value at Morningstar.com.

    The estimated fair value of DE at M* is $87, up from a three-month low of $84. Where did BRK.A buy the stock? M* says consider buying DE at about $60 and consider selling at about $114. What does that tell you?
    Feb 28, 2015. 06:57 PM | Likes Like |Link to Comment
  • Yet Another Reason To Like CORN: A Low Valuation Relative To Gold [View article]
    Good point. Currency markets affect commodity markets, but the bottom line is the supply and demand around the world. So in estimating supply and demand and trading in expectation of market changes, you have to look at how currencies are affecting the commodity markets.

    But ratios between metals and grains make little sense. Better ratios are corn/beef, corn/hogs, corn/ethanol, corn/oil, corn/DE and corn/companies that process corn like ADM/Corn and those that compete with corn such as corn/wheat, corn/soybeans, corn/soybean meal.

    You can run the same ratios for other grains.

    And you can trade spreads between corn/wheat, corn/beans, corn/cattle, corn/hogs, etc. Corn/gold would be a stretch, I think.
    Feb 28, 2015. 06:33 PM | Likes Like |Link to Comment
  • Apple's Electric Vehicle Opportunity [View article]
    When a company like AAPL diversifies away from its core competencies, shareholders lose. See conglomerates like GE (finance, consumer products), Microsoft (games, search), auto makers (vertical integration), banks (derivatives, commodities and other activities that drew the wrath of consumers, voters, shareholders and regulators) and Google (something new every day).

    AAPL's core competencies are operating systems and consumer electronics, not autos. It's one thing to develop and market $600 to $4,000 electronic devices. Something else to develop and market $50,000 cars.

    It's one thing to take over industries populated by small and clueless companies like those AAPL has destroyed with its products.

    When you're a first mover, you have a huge advantage.

    When you're a very late arrival, as AAPL would be in autos, you're up against companies who have seen you coming and have had years to foil your best plans and work around your patents and expertise by using those that they have and are developing to beat you.

    AAPL is betting it can beat Ford, GM, Toyota, Nissan, Mercedes, BMW?

    That's a huge bet with long odds against AAPL. I don't own the stock and I won't buy it now that instead of increasing its dividend and sticking to what is making it huge and profitable.

    Some arrogant companies signal their coming declines by building expensive new headquarters. Others diversify into fields they never will master.

    Apple seems to be doing both at the behest of global warming alarmists Al Gore (a director) and Tim Cook, the CEO.
    Feb 20, 2015. 02:30 PM | 32 Likes Like |Link to Comment
  • Warren Buffett Increases His Stake In Deere, Is It Time To Buy? [View article]
    1. Berkshire's time horizon is what? 20 years. 100 years?
    2. My time horizon is two to five years.
    3. So what Buffet does in the markets means little to me. My window is tiny. His is infinite, or so he says.
    4. Until another drought hits the U.S. or South American corn and bean belts, supplies exceed demand and will for some time, I don't care how many illegals cross our borders.
    5. Our only hope for higher prices near term is a return to lower yields due to changes in the weather, not the climate.
    6. You can't predict weather.
    7. Once weather does it's thing with the new crops, we'll be able to trade the weather news.
    8. Berkshire may be looking to do a Burlington Northern Santa Fe deal with Deere.
    9. If so, speculate to your heart's content.
    10. If you can't stand to be disappointed, don't play the game.
    Feb 17, 2015. 10:56 PM | 5 Likes Like |Link to Comment
  • Yet Another Reason To Like CORN: A Low Valuation Relative To Gold [View article]
    Corn and bean prices reflect pure supply and demand reports and projections, not gold or silver prices. Supply and demand data is widely distributed and discussed. The only inside information in the markets is which export and domestic processor customers are buying and how much they're buying or reselling at any given time.

    And then there is the weather. Cargill, ADM and other major players pay for the most sophisticated weather forecasts they can find. But we all know how reliable weather forecasts are.

    The gold/corn ratio may be interesting in markets where supply and demand information is hard to come by. But because gold doesn't influence but only reflects what's happening in the grain, money and currency markets, smart traders play the real markets, charts and projections, not ratios that mean little to what will happen in the markets.

    Right now, corn and beans are staging minor rallies. How long they will continue is hard to predict. Wish it was easy to make such predictions since I own a lot of corn and beans.
    Feb 17, 2015. 06:41 PM | 4 Likes Like |Link to Comment
  • Peering Through The KMI Dividend Crystal Ball [View article]
    Good piece. I have a similar spread sheet that also estimates covered call income and cumulative dividend and covered call income over the next six years.

    Assumptions are important. The current assumptions, mine included, are that KMI will grow its free cash flow fast enough to meet or exceed its dividend goals and that producers will grow fast enough to increase their demand for KMI's pipes at the rate projected by KMI.

    I've made my trades on those assumptions. And I've been disappointed before. That's why I never fall in love with politicians, priests or stocks. Sooner or later they disappoint you. As Peyton Manning said recently, if you can't handle the disappointments, don't play the game.
    Jan 24, 2015. 12:43 AM | 6 Likes Like |Link to Comment
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