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Geoff Considine  

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  • Covered Calls To Boost Income From Utility Positions [View article]
    Jack:

    I was at Langley and interned in a wind tunnel way back as an undergrad.

    With regard to early exercise of options, that does happen by people attempting to capture the dividend but the time value that they give up and you get to pocket often makes this still look good. I have been surprised by how often this happen.
    Dec 4, 2013. 07:50 PM | 1 Like Like |Link to Comment
  • Covered Calls To Boost Income From Utility Positions [View article]
    Sofos:

    Implied volatility, as a forward-looking estimate of volatility is often higher than trailing volatility when options traders want downside protection after a long market risk. This was the case in 2007 as well.
    Dec 4, 2013. 07:48 PM | Likes Like |Link to Comment
  • Individual Utilities Vs. Utility ETFs For Income Investors [View article]
    Robert:

    Okay, this analysis is using portfolio theory though not strictly MPT. As I said, general relationships should be present. To demonstrate this, I have generated a table showing all of the statistics for the model portfolio and JXI. I tried to past the table in here but it was hard to read and this is an interesting issue, so I wrote an instablog post that addresses this and has the table in a nice format:

    http://seekingalpha.co...

    With regard to your additional question on exchange rate risk, this is already priced into the volatility for JXI or the individual utility ADRs since both are denominated in USD.
    Dec 3, 2013. 10:37 PM | Likes Like |Link to Comment
  • Individual Utilities Vs. Utility ETFs For Income Investors [View article]
    DUK is a great firm. I owned it for years and I may still own a bit somewhere. The problem is that everyone agrees that it is a great firm today, so the prices are way up. I have focused on the higher risk end of the utility spectrum here.
    Dec 3, 2013. 09:52 AM | 1 Like Like |Link to Comment
  • Individual Utilities Vs. Utility ETFs For Income Investors [View article]
    Hi Robert:

    I am not trying to present my entire thesis on this approach and all of the evidence in 600 words or less--not possible even if I wanted to. I have published a lot on this approach over a number of years now, if you are interested.

    Correlations do change with time as I note. So, you can stress test with different periods. General relationships should prevail.
    Dec 3, 2013. 09:46 AM | 1 Like Like |Link to Comment
  • Individual Utilities Vs. Utility ETFs For Income Investors [View article]
    Your main point seems to be that you prefer companies with a higher dividend growth rate and that you are willing to accept higher exposure to rising rates in exchange for lower yield. Fair enough--this is probably not your cup of tea.

    Your are correct that this type of analysis tends to select stocks that behave more like junk bonds and, in fact, junk bonds have been an attractive asset class under this analysis for quite some time. Over that period, they have performed exactly as an income investor would hope: high yield, moderate volatility, and low default rates.
    Dec 3, 2013. 09:43 AM | 1 Like Like |Link to Comment
  • Individual Utilities Vs. Utility ETFs For Income Investors [View article]
    First off, quite a few of these are markedly riskier than the utility indexes. This is true. It is also true that a number of these have substantially under-performed in recent years in terms of total returns--this is largely why they have higher yields. My analysis suggests that there are some of these funds that have been overlooked. Another thing, though, is that analysts tend to be judged on the total return rather than the income, so they will favor stocks with positive momentum. The yield/risk measure focuses entirely on the income side and will often favor deep value--depending on risk levels.
    Dec 2, 2013. 04:08 PM | 1 Like Like |Link to Comment
  • Individual Utilities Vs. Utility ETFs For Income Investors [View article]
    Jim:

    Thanks--the ticker is right, the listed name is wrong--dang it. ETR is Entergy, Con Ed is ED.
    Dec 2, 2013. 04:05 PM | 1 Like Like |Link to Comment
  • Income Asset Classes And The 'Taper Tantrum' [View article]
    Hi Richjoy:

    I will cheerfully acknowledge that I am not cautious with regard to how I break out asset classes vs. sub-asset classes vs. sectors. To me, its largely semantics.

    Yes, you are correct of course that telecoms and utilities and other capital intensive industries which have large amounts of fixed assets tend to have more debt and this should be more sensitive to interest rates. That is something we all agree on. What I am suggesting, however, is that the magnitude of the response has a lot to do with the massive run-up in recent years. The interest rate fears were a catalyst.
    Dec 1, 2013. 10:21 PM | Likes Like |Link to Comment
  • Income Asset Classes And The 'Taper Tantrum' [View article]
    Hi S@m: You are correct that my analyses used to support very high allocations to utilities. Back in 2006 here on Seeking Alpha, I suggested that a portfolio that was massively overweight utilities should out-perform the S&P500 with less risk:

    http://seekingalpha.co...

    Today, 9 years later, this has indeed been the case. IDU has a trailing 10-year return of 9.2% per year:

    http://bit.ly/IzFvVX

    The 10-year annualized return for the S&P500 is 7.7% with annualized volatility of 14.7%. The volatility for IDU for that period is 13%.

    The point is, however, that precisely because utilities have so substantially out-performed, they now offer a relative unattractive income level for their risk. Note again that I am talking about the asset class as a whole and not ruling out individual utilities.
    Dec 1, 2013. 10:16 PM | Likes Like |Link to Comment
  • Dividend Stocks Not Handling Interest Rates As Well As Low/No Dividend Stocks [View article]
    Hi Richard:

    Nice post. In general, higher-dividend sectors have historically tended to be more sensitive to interest rate increases. Utilities and telecoms being classic examples. When rates are rising, a fairly high dividend looks less attractive because fixed income assets become more attractive, etc. Also, people become worried that slower-growing firms are less likely to have the pricing power to keep up with rising rates.
    Sep 3, 2013. 04:54 PM | Likes Like |Link to Comment
  • Dow 14,000: Are You The Sucker? [View article]
    Colin:

    Thank you for the thoughtful analysis. I don't agree with everything here, but you have made a nice summary for the 'bearish' position.
    Feb 6, 2013. 12:45 PM | Likes Like |Link to Comment
  • 'Swensen Portfolio' Updated [View article]
    Hi Lowell:

    Nice article. The allocation to long-term Treasuries helps a lot from a diversification standpoint, even as yields have fallen. The beta and correlation to equities are exceedingly low. On one hand, I hate the idea of long Treasuries at current yields. On the other hand, the powerful diversification benefit makes sense--its hard to imagine a world in which long Treasuries will decline unless risk asset classes continue to rise.

    Keep up the good work!
    Jan 30, 2013. 12:37 PM | Likes Like |Link to Comment
  • The Power Of Effective Diversification [View instapost]
    Hi Rob and David:

    Thanks for your comments. I have remained active in writing, just not at SA. I write monthly as a columnist at Advisor Perspectives and I also contribute frequently to Folio Investing's corporate blog, portfolioist.com. Time allowing, I am going to try to do some instablog pieces here at SA.

    Regards,

    Geoff
    Aug 15, 2012. 06:12 PM | Likes Like |Link to Comment
  • There's No Reason Why Stocks Are Down Today [View article]
    Dear SeekingAlpha readers:

    Please continue selling. I want to buy future earnings at the lowest price possible.

    Regards,

    Geoff

    :)
    Sep 22, 2011. 04:35 PM | 2 Likes Like |Link to Comment
COMMENTS STATS
419 Comments
120 Likes