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Geoffrey Rocca  

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  • Determining the Intrinsic Value of Gold [View article]
    And my point is that the dollar doesn't actually need to maintain its purchasing power for longer than its holding period, which is usually pretty short.
    Sep 15, 2010. 08:54 PM | Likes Like |Link to Comment
  • Determining the Intrinsic Value of Gold [View article]
    "Conversely, in less than a century, the U.S. dollar has lost more than 95% of its purchasing power."

    Who earned a dollar a century ago and hasn't got round to spending or investing it yet? If you use a first in, first out calculation, most people's dollars are less than a year old.

    So what does it matter what the dollar was worth 100 years ago? For that matter, what does it matter what gold was worth then?
    Sep 15, 2010. 03:57 PM | 3 Likes Like |Link to Comment
  • Stone Energy: Don't Expect a Post-BP Rebound [View article]
    "So by the author's logic, every dollar spent in Capex should result in production growth that year? "

    No, my point was quite the opposite. Every dollar spent on maintenance or replacement capex should produce no production growth that year or any other year.
    Sep 15, 2010. 01:13 PM | Likes Like |Link to Comment
  • Good News: Expiration of Bush Tax Cuts Won't Kill Recovery [View article]
    Thank you. And you do have a point about the intro; I'm just kind of fed up with modern CEOs complaining about regulatory and economic uncertainty, as if they're the only generation of businesses that have had to deal with it. CEOs in the 40s had to worry about whether there would even be a Europe to sell to, and after the Iron Curtain it can't have been much easier in the 50s through the 80s.
    Sep 15, 2010. 01:10 PM | Likes Like |Link to Comment
  • The Budget Deficit Is Falling [View article]
    "Hardly an exhaustive analysis, you basically showed that you don't have enough information to form a statistically significant conclusion."

    No, I showed that the data I do have don't allow a statistically significant conclusion. It's impossible to prove a negative using regression analysis, but it is the people who claim that higher taxes always stifle growth who have the burden to prove it.
    Sep 15, 2010. 01:04 PM | 7 Likes Like |Link to Comment
  • The Budget Deficit Is Falling [View article]
    Well, I've examined the relationship between tax collections as a portion of GDP and GDP growth, to see how badly tax hikes historically have caused a slowing of growth. I've found absolutely no historical correlation between changes in effective tax rates and changes in GDP growth up or down.

    For my full analysis, see
    Sep 14, 2010. 09:01 PM | 5 Likes Like |Link to Comment
  • Stone Energy: Don't Expect a Post-BP Rebound [View article]
    I explained my calculations; what is deducted from revenues is depreciation, depletion, and amortization, and if that does not track capital expenditures then the result is free cash flow that runs below reported earnings. I'm not subtracting it twice; I'm subtracting it once and adding DD & A.

    As I explained, resource extraction companies have to make new capital expenditures to replace the reserves that they have consumed, so that what for normal firms would be a growth asset would in this case simply be replacing what is lost. But don't take my word for it; in the last four quarters the company has made $295 million in capital expenditures, which represents 20% of the current value of the firm's assets. In that time, production volumes have increased by less than 7% as compared to last year. Production volumes are still well under the 2007 peak, despite (or perhaps because of) the purchase of Bois d'Arc Energy when oil prices were over $110 a barrel.

    And I do know a fair bit about the oil and gas business. My investments in Linn Energy and Breitburn Energy Partners were highly satisfactory to me; the companies were more or less unscathed by the BP spill; and most importantly they do not suffer from the free cash flow problem that Stone does.

    There are better places to bet on a post-BP bounce than this company.
    Sep 14, 2010. 02:05 PM | Likes Like |Link to Comment
  • European Austerity Still Isn't Working [View article]
    A further trouble is that European austerity cuts global aggregate demand, and so any austerity measures on the part of the United States would further destroy any possibility of the global recovery. Basically, we in the States are underwriting their austerity.
    Sep 8, 2010. 03:41 PM | 4 Likes Like |Link to Comment
  • Good News: Expiration of Bush Tax Cuts Won't Kill Recovery [View article]
    I'm going to reply en masse rather than individually.

    DOGS THAT BARK: "I remember hearing same back when Bush tax cuts were introduced--and not good on graphs and charts but do remember the greatest tax revenue in history followed--not the doom and gloom projected by Krugman and others. "

    It took six years for that to happen, if you take inflation into account (five years without it), and by 2006 the real estate bubble was inflating anyway. In fact, by 2008 inflation-adjusted revenues were lower than 2000's despite a 17% increase in real GDP.

    Skinnyfrom Vinny : "First of all you should consider taxes that relate to businesses more heavily than personal, and then focus on ones that affect income, versus excise, sales, and related taxes. Second, you should use tax rates as opposed to tax collections."

    I thought about it, but tax rates don't often change much from one year to the next that often so there would be many GDP figures for a single tax rate figure, which really would overload a regression analysis. Besides, it's not the nominal rate of taxation, but the effective rate, that matters in my view, hence the use of percentage of GDP.

    "I would suggest a study aimed at correlating changes in some mix of business and personal income taxes (weighted toward business) with changes in income levels, as opposed to just raw income and tax numbers."

    I'm glad you asked. For corporate income taxes, the correlation between corporate tax revenues as a portion of GDP (which I used to broadly capture changes in income levels), as compared to GDP growth in the next three years, the r-squared was .003. For income taxes as a portion of GDP, the r-squared was .070. If I flatly combine the two, I get an r-squared of .0007, and if I double the contribution of corporate taxes, I get an r-squared of .0001.

    So the correlation still isn't there.

    Davidingeorgia: "The amount of taxes collected increasing or decreasing does NOT equal tax rates being raised or lowered, so you're not even testing what you claim to be testing here."

    If I were using dollar amounts, yes, but taxes as a portion of GDP reflect changes in the tax base and thus bring us closer to calculating the effective tax rates on the economy.

    "Everything that I've read on the subject indicates that lower tax *rates* lead to increased tax revenues which supports exactly the opposite of what you're claiming."

    I never made any claims about the effect of tax rates on tax revenue. I was talking about the effect of tax rates on GDP growth.

    Greg Sneddon: "I agree with davidingeorgia. You're not testing what you claim to be testing. You probably have come closer to proving that raising taxation rates has little or no effect on increasing revenue to the treasury."

    See above. I may have done so in the article you read, but not in the article I wrote.

    TBill "Lowering tax rates boosts the economy, works 100% of the time it is tried. How's that for correlation?"

    Based on statistical data, this is not the case, unless you have your own statistical analysis I haven't seen.

    "Since you are of the soak the rich mentality,"

    I never once mentioned the rich. My opinion of the rich has nothing to do with the conclusions of my analysis. I suppose that the CEO of Intel is rich, but I didn't mention him because of it.
    For those of you who didn't receive a reply, I either agree with what you said, or my reply would be duplicative, or I disagree but don't want to start a political debate in what is really a facts and figures discussion. I'm sure you'll know which category you fall under.

    Thank you all for your interest.
    Sep 6, 2010. 01:55 PM | 1 Like Like |Link to Comment
  • Entercom Still Undervalued Despite Recent Run-Up [View article]
    A good point. ETM's last renegotiated its interest in March of 2010, and their bank facility ultimately expires in June of 2012, when they will have been able to cut down their debt by only around $100 million if my projections hold.

    However, Entercom has a higher operating margin than Radio One, and less apparent financial distress. And it could be that the financial distress itself is to blame, as Radio One's advertisers are deserting them simply because they may not be around in a few years, and of course that informs their creditors when it comes time to set interest rates.

    If a similar development should occur at Entercom the company's current position would be imperiled. It is a significant risk you point out.
    Sep 6, 2010. 12:38 PM | Likes Like |Link to Comment
  • United Online Needs Some Traction [View article]
    They tried to spin it off in 2007, and had to withdraw the offer. I haven't heard anything about them trying again.
    Sep 2, 2010. 01:48 PM | 1 Like Like |Link to Comment
  • Is There an Austerity Trap? [View article]
    World War 2 is credited with getting the US out of the great depression.

    World War 2 is the least austere thing we could possibly have done.
    Aug 31, 2010. 12:34 PM | 1 Like Like |Link to Comment
  • Great News: Stocks Are Hated [View article]
    In my view, Japan has actually gone through stagdeflation. However, between stagflation and stagdeflation, it's hard to tell which is worse.
    Aug 30, 2010. 06:46 PM | Likes Like |Link to Comment
  • A Cheap Internet Stock With High Dividend Yield [View article]
    I do like the looks of United Online, and it is apparently cheap on a free cash flow basis, but I'm not sure that it's safe. They recently lost a post-sales marketing program that contributed greatly to their profit margins, and I don't know that recent earnings are as low as they're ever going to be in future.
    Jul 26, 2010. 01:19 PM | 3 Likes Like |Link to Comment
  • More Money Monday: Corporate America's $2 Trillion Pile of Cash [View article]
    It is refreshing to see a progressive voice on a financial site. I think the center of the article is the GNP effects of wages or unemployment benefits. It shouldn't be that controversial to conclude that people can't spend money they don't have. And the lower income spend a greater proportion of their income than the super-rich, so of course any stimulus centered on them would produce greater results.

    Good job Mr. Davis; don't be discouraged by the controversy.
    Jul 12, 2010. 12:23 PM | 8 Likes Like |Link to Comment