Seeking Alpha
View as an RSS Feed

Donald Johnson  

View Donald Johnson's Comments BY TICKER:
Latest  |  Highest rated
  • 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
  • Restructuring My Dividend Portfolio, Part 1: Using Options To Boost Income Flow [View article]
    The nice thing about doing covered calls on stocks with huge floats like GE is that options traders and market makers have a harder time manipulating the stocks when options expire to, say, make GE Jan 24.50s called instead of letting them expire. They almost pushed GE into callable territory. But they didn't get the job done on the Jan. 24 weekly KMI Jan. 43, which expired today.
    Jan 23, 2015. 04:59 PM | 1 Like Like |Link to Comment
  • Restructuring My Dividend Portfolio, Part 1: Using Options To Boost Income Flow [View article]
    Here is when it gets exciting.

    For those who sold GE Jan 15 24.50 covered calls 16 days ago, today was a nail biter if they didn't want their stock to be called away. The stock closed at 24.48 a few minutes ago, meaning the stock wasn't called. But if I had held that position, I would have paid 3 cents of my 11 to 12 cents premium to buy the calls back. Indeed, I would have bought the call back at a loss because my basis is near the current price. I wouldn't want to take a loss on the stock or even a small profit, given that M*'s estimated fair value is $30 and Valuentum's is $32. GE yields 3.76%, which is equal to 5.26% for taxable accounts for people who are trading in their IRAs and are in the 25% bracket (5.47% in the 35% bracket).

    My GE covered calls that expired today had strikes of 25 (15 days) and 25.5 (21 days) and yielded .58% (.14.2% annualized) and .96% (16.7% annualized), respectively. But I have GE Jan. 30 24.50 strike calls that expire next week. I'm hoping for a drop in GE next week. :)

    The problem for me now is that GE Feb 26 calls are only .02 bid and .03 asked. Feb. 25.5 are only .05 bid and .08 ask for a 25-day trade as of Monday.
    Jan 23, 2015. 04:17 PM | Likes Like |Link to Comment
  • Gilead Sciences: Buy On The Drop? [View article]
    In Barron's top 10 stocks for 2015 is GILD despite its complexities. That is a signal to buy, I'd say.
    Dec 29, 2014. 01:28 AM | Likes Like |Link to Comment
  • General Electric: The Stealth Index Fund With Twice The Yield [View article]
    To me, GE is an index fund that pays me a 3.6% dividend to own it rather than charging me a .8% to 1.2% mutual fund or ETF fee to manage my money.

    Better, GE offers opportunities to Covered Call income players to easily increase their annualized CC+ dividend yields to over 10%.
    Dec 29, 2014. 12:56 AM | 5 Likes Like |Link to Comment
  • Too Close To The Forest To See The Trees? [View article]
    I've reviewed Peters web site and am starting to understand his product and approach, which appeals to me. I'm now investing time in reading several of his articles to gain greater understanding of what he offers.

    I find that writing monthly covered calls helps shorten the time between decisions to act, take losses and take profits.
    Dec 25, 2014. 01:21 AM | Likes Like |Link to Comment
  • Gilead Sciences: Buy On The Drop? [View article]
    ABBV has shot itself in the foot with it's Express Script's deal. And it has sent investors in almost all other pharma stocks fleeing today. They're worried that insurers and buyers have pharmas on the run.

    I don't think so. Remember the revolt against HMOs in the 1990s? Consumers and politicians revolted against the HMOs' death panels, and the HMOs and their corporate clients caved. Consumers got their freedom to choose providers back.

    And they got higher premiums. Drugs are about 10% of health care costs.

    I'm looking for hepatitis victims, their families and the medical community to revolt against ABBV and Express Scripts as soon as they realize what the HMOs are doing to patients. Most drug companies will back GILD, not ABBV.

    Yesterday Morningstar's analyst posted a note saying that M* is holding its fair value estimates for GILD at $106 and ABBV at $61.

    On Friday, my ABBV was called because I had sold ABBV Dec 65 for $1.75. Today I bought back half as many shares for $65.19. At the moment ABBV is at $64.345. I should have sold calls on the trade immediately, but the stock was rallying. It collapsed while I was working in the basement.

    I have a 14% loss on GILD. As a result of selling covered calls, my effective loss at the moment is about 10%. I bought some more at $88.61. It's now at $88.62. I have twice as much money in GILD as in ABBV.

    BTW, GILD is a great covered call stock. The options volume in ABBV is mostly on the put side, showing the market's bearish view of the stock. ABBV's calls are close to illiquid for covered call writers, imo.
    Dec 23, 2014. 01:05 PM | 4 Likes Like |Link to Comment
  • What Would You Do With A Million Dollars? [View article]

    I put the list together with the idea that someone could live on $30k-$40k if necessary. It doesn't describe my lifestyle or life's experiences in total because I travel, own houses, contribute a little to charities and causes, and subscribe to cable and have Internet service. Just sold a car at a little over 100k miles and have been lucky to be married for decades and to be healthy. For lucky us, life is good. Thanks for the replies.
    Dec 15, 2014. 11:03 PM | 2 Likes Like |Link to Comment
  • What Would You Do With A Million Dollars? [View article]
    Don't contribute to anybody or any do good organization until you really are set for retirement and can afford to give money away.
    Dec 15, 2014. 10:57 PM | 1 Like Like |Link to Comment
  • Conducting A Robust Valuation Analysis On CBS [View article]
    Stock groupies never like disappointing assessments of the stocks they own.

    I try to invest in companies that value integrity and respect their customers. That is not CBS.
    Dec 9, 2014. 09:06 PM | Likes Like |Link to Comment
  • Kinder Morgan: Don't Throw Out The Baby With The Bathwater [View article]
    Fulfillment of KMI's dividend projections for the next five to six years depend on continuing growth in demand for its services. The market seems to be convinced that the growth rate will slow as indicated in the sharp drops in SLB, XES, etc. That doesn't bode so well for KMI, which I own.
    Dec 1, 2014. 09:59 AM | 1 Like Like |Link to Comment
  • Kinder Morgan: Don't Throw Out The Baby With The Bathwater [View article]
    I wonder why people who owe taxes on wonderful capital gains can sue the issuer? It makes no sense to me.
    Dec 1, 2014. 09:54 AM | 3 Likes Like |Link to Comment