Apple Trading At 2.56x 2016 Cash Flow [View article]
Cute story, but $335 billion on the balance sheet in 2016 isn't worth $335 billion today, nor is $60 billion in cash flow to be received at the end of 2016 worth $60 billion today.
S&P lowers its sovereign credit rating for the U.S. from AAA to AA+. "The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics." [View news story]
This ratings downgrade has nothing to do with actual credit quality and everything to do with the impasse in Congress. Futhermore, S & P assumes that the Bush tax cuts, which were a bad idea to begin with and a worse idea to renew, will be extended again. At some point, the anti-tax crowd is going to have to yield to economic reality, and a bipartisan agreement to allow the tax cuts to expire will go a long way to restoring our rating.
Rayonier Offers Steady, Almost Boring Long Term Growth [View article]
Excellent article. I have always been a fan of Rayonier, and I should also point out that timberland is widely believed to offer some protection from inflation.
"10. Federal taxes now take about 30% of our economy."
How did you work that out? In 2007, the last year we have data for, federal taxes were 18.8% of GDP. 2008 was projected to have 17.6% and 2009, 18%. I don't see how 2010 could produce a 30% ratio; that's an effective tax hike of about 66% from 2009, and I think we all would have noticed Congress passing that one.
Determining the Intrinsic Value of Gold [View article]
My long-term savings are invested in vehicles where both inflation expectations and a real return are built into the required return of the vehicle. The same is true of pretty much every other prudent long-term investor.
If you keep all your money in a shoebox under the bed for 100 years, then yes, you'd have to worry about erosion of purchasing power.
Apple Trading At 2.56x 2016 Cash Flow [View article]
So pick a discount rate and do the math. If you use a historical 10%, then over five years the difference is 61.05%. Are you telling me that 61% is not material?
Has Paul Krugman Gone Too Far This Time? [View article]
"The 'Bush tax cuts' resulted in dramatically increased Federal tax receipts, eliminating the recession he inherited..."
On an inflation-adjusted basis, it took until 2006 for tax receipts to equal what they were in 2000, and by then the real estate bubble was in full swing anyway.
Restricting it to income taxes, tax receipts have never exceeded those in 2000 on an inflation-adjusted basis.
The WSJ reports Treasury is considering eliminating some taxes on overseas profits of U.S. multinationals as part of a broader re-write of the corporate tax code also expected to include a significant reduction in the 35% tax rate and closing of some loopholes. However, with election season about to heat up, don't hold your breath waiting for enactment anytime soon. [View news story]
That is roughly the system we have now; the IRS allows a tax credit equal to any foreign income taxes paid up to what the taxes would be under US law. However, under existing law the IRS is unable to collect taxes on the income of a foreign subsidiary until it is distributed to the US company that owns it. The result is that companies just leave all their money overseas and then lobby for a one-time repatriation tax holiday. Of course, such a tax break gives companies that move their operations overseas a huge advantage over companies that leave them in this country.
S&P lowers its sovereign credit rating for the U.S. from AAA to AA+. "The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics." [View news story]
Actually, Abraham Lincoln gave us the first income tax in 1861. Unlike some other Republicans, he had more sense than to get us into a war without seeing the need to pay for it.
Consolidated Communications: A Strong Candidate for Dividend Investors [View article]
As I have said, excess depreciation and amortization is a noncash charge against earnings, and is therefore a source of free cash flow. The payout ratio is therefore 81% based on 2010's earnings, so the dividend is covered at least for now. Taking into account the excess cash and my estimated value of future tax benefits, the company offers a free cash flow yield of 12.75%, and about 11.6% taking only one of the two into account.
There may be better free cash flow yields out there, but hardly any better dividends that are this well-covered and sustainable.
Eliminating the mortgage interest deduction would probably have mitigated much of the subprime crisis, as it incentivizes investing money into residential real estate, which is at its core an unproductive asset. I agree with nmelendez that it would be unfair to eliminate the deduction as to existing mortgages, and if it is eliminated it would probably be best to phase in the elimination in steps over a long period, possibly a decade or longer, in order to minimize disruption to housing prices.
Determining the Intrinsic Value of Gold [View article]
"
Isn't that the same as a zero-coupon bond? The investor is banking on the probability of the issuer redeeming/buying back the bond at a higher price, or selling it to someone else in the future at a higher price. The difference is, the zero-coupon bond is expected to go up in price as it reaches maturity, but the principle is still the same. The investor takes a directional view on the bond price increasing. "
The cash flow from a zero coupon bond is contractually determined; there is no speculation on what the figure might be. Nothing determines the price of gold when you decide to sell except the market levels. That is the difference, in Klarman's eyes and Saj's eyes, between investment and speculation.
" Also over most horizons, Gold has outperformed every other equity/bond/currency index."
Only very recently has that been the case, and a lot of that is caused by the current massive leap in the price of gold. If you start counting in 1971, stocks have still beaten gold by almost a full percent despite the recent run-up.
And if you take an even longer view, in 1776 the price of gold was 3 pounds, 17 shillings, and 10.5 pence according to Adam Smith. The current price of gold in England is 814 pounds and change. That is a return on investment of 2.31%..
Apple Trading At 2.56x 2016 Cash Flow [View article]
Discounting to present value is Finance 101.
S&P lowers its sovereign credit rating for the U.S. from AAA to AA+. "The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics." [View news story]
Rayonier Offers Steady, Almost Boring Long Term Growth [View article]
Will We Have Inflation in America? [View article]
How did you work that out? In 2007, the last year we have data for, federal taxes were 18.8% of GDP. 2008 was projected to have 17.6% and 2009, 18%. I don't see how 2010 could produce a 30% ratio; that's an effective tax hike of about 66% from 2009, and I think we all would have noticed Congress passing that one.
www.gpoaccess.gov/eop/...
Determining the Intrinsic Value of Gold [View article]
If you keep all your money in a shoebox under the bed for 100 years, then yes, you'd have to worry about erosion of purchasing power.
The Housing Collapse Intensifies [View article]
Good. That's what they are.
Apple Trading At 2.56x 2016 Cash Flow [View article]
Has Paul Krugman Gone Too Far This Time? [View article]
On an inflation-adjusted basis, it took until 2006 for tax receipts to equal what they were in 2000, and by then the real estate bubble was in full swing anyway.
Restricting it to income taxes, tax receipts have never exceeded those in 2000 on an inflation-adjusted basis.
A Simple Formula For The Fair Price Of Gold [View article]
Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]
The WSJ reports Treasury is considering eliminating some taxes on overseas profits of U.S. multinationals as part of a broader re-write of the corporate tax code also expected to include a significant reduction in the 35% tax rate and closing of some loopholes. However, with election season about to heat up, don't hold your breath waiting for enactment anytime soon. [View news story]
S&P lowers its sovereign credit rating for the U.S. from AAA to AA+. "The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics." [View news story]
Consolidated Communications: A Strong Candidate for Dividend Investors [View article]
There may be better free cash flow yields out there, but hardly any better dividends that are this well-covered and sustainable.
Bad Deficit Reduction Ideas [View article]
Determining the Intrinsic Value of Gold [View article]
Isn't that the same as a zero-coupon bond? The investor is banking on the probability of the issuer redeeming/buying back the bond at a higher price, or selling it to someone else in the future at a higher price. The difference is, the zero-coupon bond is expected to go up in price as it reaches maturity, but the principle is still the same. The investor takes a directional view on the bond price increasing. "
The cash flow from a zero coupon bond is contractually determined; there is no speculation on what the figure might be. Nothing determines the price of gold when you decide to sell except the market levels. That is the difference, in Klarman's eyes and Saj's eyes, between investment and speculation.
" Also over most horizons, Gold has outperformed every other equity/bond/currency index."
Only very recently has that been the case, and a lot of that is caused by the current massive leap in the price of gold. If you start counting in 1971, stocks have still beaten gold by almost a full percent despite the recent run-up.
And if you take an even longer view, in 1776 the price of gold was 3 pounds, 17 shillings, and 10.5 pence according to Adam Smith. The current price of gold in England is 814 pounds and change. That is a return on investment of 2.31%..