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Jake Huneycutt

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  • Is Alternative Energy Dead? [View article]
    I don't think alternative energy is going away at all. I will say that I don't consider "ethanol" to be "alternative energy" at all; it's more or less a scam forced down the nation's throat by special interests in the Corn Belt.

    Aside from ethanol, however, there is still a lot of pressure on policymakers to create incentives to promote alternative energy. The downturn and the precipitious decline in gas prices has certainly dampened the outlook for some of these technologies, but I don't think they'll go away; especially with state mandates for alternative energy out there. However, I leave open the possibility that some of these technologies might get filtered out. Right now, I think geothermal power is being very underrated --- it's base-load and becoming more economically viable.

    I'm also not-so-sure that $35/barrel crude oil is sustainable long-term. Even if demand stays suppressed, the "cheap oil" available in the world is rapidly being used up. I think oil goes back up towards at least $50-60/barrel and probably more like $70 long-term even if we continue to have depressed demand. If we have another boom, who knows how high it can go. One way or another, there's a pretty good case for expanding alternative energy infrastructure and I don't think that will be lost on governments across the world in nations overly dependent on coal and gas.
    Feb 19 08:52 AM | 5 Likes Like |Link to Comment
  • Gold: The Only Remaining Bubble? [View article]
    This article totally misses the point. It's overly reliant on technical analysis and what-if scenarios that won't necessarily play out.

    Why will gold continue to go upwards? Supply and demand. It's that simple. You can talk about deflation until you're blue in the face, but you're missing the real reason why gold prices are going upwards --- there is an extremely limited supply of it worldwide and there is high demand.

    So why is there high demand if we're locked in a "deflationary spiral" as you suggest. Well, first off, I don't agree with your conclusion and think we'll start seeing inflation again in 2010, but let's say you're right --- so what? You're ignoring the fact that just because the US is in a "deflationary spiral", that does not mean every country in the world is in one. In fact, others are experiencing inflation right now and various currencies look extremely weak and vulnerable. This means there is high demand for gold in certain parts of the world --- particularly places like Russia and India.

    Do I think gold is going to $10,000/oz like some people? Not really. Gold is a safety investment; a store of value --- people will quit buying it so heavily once things settle down, but that could easily take a few years. By then, gold could pretty easily hit $1,200 and might even go as high as $2,000. From a production perspective, once you take into account all costs associated with gold extraction, average gold production costs are probably over $700/oz and they will rise if oil rises again and as the resource becomes more depleted - so prices aren't really that outlandish right now and not indicative of a boom phase yet.

    The problem with simply relying on technical analysis is that it fails to look at the actual fundamentals behind gold and the fundamentals are pretty good right now. You can't look at a chart and say "gold is in a bubble" without actually looking at what is going on in the marketplace. Whether deflation persists in the US or not, demand for gold is very strong right now and will continue to be strong until stability is returned to the global economic landscape.
    Feb 19 08:37 AM | 2 Likes Like |Link to Comment
  • Rating the Top 12 U.S. Banks - From Hidden Gems to Zombies [View article]
    Great article!

    Guess the only area I would challenge is the "hidden gems" and the investment perspective --- it's not that I necessarily disagree with the analysis of the banks; it's that most of the "hidden gem" banks haven't been greatly discounted by the market so they don't necessarily look appealing to me as investments. I'm of the opinion that banks (even the good ones) are going to continue to suffer for another year or so at least as delinquinces increase.

    I think there are definitely better sectors to invest in -- unless you can find the bargains. So the best investments here are the ones that have been substantially discounted by the market, but that should survive relatively in tact. To me, that makes STI and RF the best candidates; even if they have considerable risk. BBT is also looking increasingly appealing and probably relative safe compared to many others. WFC might also be a good investment candidate, but admittedly, I'd fear taking on a company with so much junk floating around on their books --- even if they appear to be in relatively good shape overall. Unless WFC gets discounted a bit more substantially, I'll just stay neutral on them.

    STT, BK, and USB have less junk on their books and look poised to survive, the market in general doesn't really seem to disagreement with that assessment --- hence, I see little value there. You could probably make equal or greater returns investing in an index fund over the next few years and you'll have less worries.
    Feb 18 11:40 PM | 2 Likes Like |Link to Comment
  • The Baltic Dry Index: What's Driving It Up? [View article]
    While the index is up, I think you might be reading too much into it. Historically speaking, it's still at highly depressed levels. It's not really a surprise that it's up as its dramatic collapse was overdone --- but that doesn't mean the near-term outlook for drybulk is good or that many of the shipping companies will suddenly surge back into the black.

    If you're buying into drybulk right now, you should be looking for value. There are different ways to price the companies but I wouldn't buy into any company selling above their net tangible assets right now and I'd only buy into companies that are selling significantly below net tangible assets. November and early December provided great long-term buying opportunities for drybulk stocks; I'm not so sure that's the case at the current price levels; though, I do like a few companies in the sector:

    TBSI looks like the best play to me right now. They don't have too much leverage and they looked to still be priced relatively cheap, even if they are up off their 52-week lows significantly. DSX might be a good long-term bet, but I wouldn't buy into them unless the price dips back down to the $10 range again. At $13, I don't necessarily believe the risk-reward trade-off is appealing.

    DRYS won't be worth much if they go bankrupt - and that's a distinct possibility. They are one of the worst managed outfits out there. As for a lot of the others, I wouldn't buy right now but if the sector experiences another significant dip, it might not be a horrible idea to set up a diversified portfolio of drybulk stocks so you end up protected against the companies that end up going under.
    Feb 18 03:03 PM | 4 Likes Like |Link to Comment
  • Finding Investment Opportunities when Government Intervenes in Markets [View article]
    Good article. Too many people ignore the fact that the market is affected to a significant degree by the preferences of policymakers; which are normally affected by who has significant lobbying power. This bubble was produced by the very high level of influences banks and financial institutions have on Washington; combined with the influence of realty organizations.

    Of course, most people also have misguided perceptions about who has influence in Washington and how these interactions are likely to affect the overall economy (the fact that people are buying up stem cell research companies right now might be testament to this). I'm not sure I buy into a long-term infrastructure bubble, but it's possible. Alternative energy, on the other hand, does get continual government support and that support will probably continue to grow - of course, it's still important to do due diligence and find which companies are realistically able to benefit and which ones are scams and failed businesses waiting to happen.
    Feb 18 02:11 PM | Likes Like |Link to Comment
  • S&P 500: Finally, Bottoming? [View article]
    Carl, I agree that people overly idolize Buffett, but I'd say he is right about selling off Wal-Mart right now. I don't think Wal-Mart really has much room for growth at this point and now that the rest of the market has plummetted, there are definitely better value stocks out there.
    Feb 18 01:59 PM | 2 Likes Like |Link to Comment
  • Today's housing rescue plan fails to recognize that there were two types of speculators during the housing bubble, Calculated Risk writes. "Flippers (they are excluded), and buyers who used excessive leverage hoping for further price appreciation." This plan rewards the latter. "I think this is a mistake."  [View news story]
    Almost all of Washington (both Democrats and Republicans) seem to be under the mistaken belief that the problem is the collapse of housing prices rather than the policies that led to the inflated housing prices to begin with. They believe that by pursuing policies that re-inflate the bubble, all of our troubles will be solved. Obama's homeowner bailout plan is merely the latest in a serious of poorly thought-out policy measures under the guise of "aiding homeowners."

    It's not that I don't sympathesize with some of the people who bought homes at inflated prices; but I don't think it's necessarily fair or prudent to reward them while punishing those who were more fiscally responsible and did not buy homes during this entire mess. Admittedly, this plan is not as horrible as some of the other proposals I've heard floated around, but I think it's a mistake to pursue these flawed policies in the first place.

    If anything, Washington needs to stop working for the National Association of Realtors and quit enacting policies that favor home ownership to begin with. There's really no reason why the government should promote home ownership over renting and normally renters are the ones who are less well-off to begin with.
    Feb 18 01:56 PM | 1 Like Like |Link to Comment
  • S&P 500: Finally, Bottoming? [View article]
    Good article.

    I tend not to rely on broad analysis of price/earnings ratios in the market and similiar measures - I normally just look at individual stocks and if a lot of them seem to be trading at very low levels when compared to asset values (with reasonable corrections) and earnings potential, then the market is underpriced.

    I'm not a market-timer; I've been buying in since October and will continue to buy in at this point, but if I had to take a wager, I think we will have our final capitulation moment in the next six weeks and probably by the end of February/early March. Right now, the major thing causing downward momentum is the uncertainty regarding the US's response to the problems with the banks. Once that uncertainty is removed, the market will show signs of recovery.

    This isn't to suggest that we're on the golden path to the next huge boom or that the economy will be in terrific shape in another year or two; it's merely to suggest that I believe the point of greatest fear and uncertainty - normally indicative of market bottoms - is near.
    Feb 18 08:59 AM | 4 Likes Like |Link to Comment
  • High-profile hedge fund manager Crispin Odey, who made money last year betting on falling bank share prices, says U.K. banks are now cheap. "The gov't has realized that nothing is solved by nationalizing them, and in the U.K.'s case, that there is everything to be gained from letting them live," he tells investors.  [View news story]
    He's probably right. There's a good possibility we're about to reach a final capitulation for the bank stocks. Maybe some will zero out, but in the aggregate, they're probably undervalued.

    I'd wager to guess that at least the US bank stocks will start to show signs of rebounding once something more definitive comes from the Treasury Department. Nothing drags the market down worse than uncertainty.
    Feb 17 12:44 PM | Likes Like |Link to Comment
  • How Sports Illustrated Nailed A-Rod, And Why It May Not Happen Again [View article]
    Unfortunately, I don't think "old-media" journalists are anywhere near as aggressive when it comes to political matters. Going after sports figures is easy and good entertainment. Going after political figures, on the other hand, can cause problems for the publications (hello Mr. Blagojevich) and a lot of pressure from ideological-based political groups.

    Let's face it - Watergate pales in comparison to what the Bush Administration got away with and the traditional media outlets cowered in a hole just like most of Congress during the past eight years.

    I'll be sad to see the old-media fall, but it's not the same as it was 40 years ago anyway. Other than the Washington Post, maybe the New York Times, and *possibly* a handful of others, most of the traditional media in America is fairly useless.
    Feb 12 06:20 AM | Likes Like |Link to Comment
  • Barron's Takes Down Cramer, Again [View article]
    It's interesting that CNBC says that Cramer makes "momentum play" picks. I totally agree with that, but that's why I think he's a poor guide for investors. Too much stock psychology - not enough fundamentals. He's not terribly consistent, either (of course, the "stock psychologist" crowd never is).

    That said, I would agree with some of the posters above that Cramer gets criticized too harshly. Sure, his stock picks probably wouldn't beat the market, but most of the analysts are just as bad, giving "Buy" recommendations near the top of a bubble.
    Feb 11 10:32 AM | Likes Like |Link to Comment
  • 15 Companies That Might Not Survive 2009 [View article]
    Chrysler was on the list. GM could've probably made it, as well, but I think the author identified a number of firms with even worser prospects than them. At least you can say GM produces something valuable, even if they've done a lousy job managing their business, finances, and product line.

    On Feb 10 12:57 PM connorport wrote:

    > Why aren't the automakers on this list with the exclusion of Ford?
    > Where's the airlines? Where's all of retail with maybe the exception
    > of Wal-Mart. HELLO!!!!! recession! These articles that pinpoint certain
    > companies with debt is rediculous. Its fair to say they have tanked
    > and now run an article saying OOOOPsie!!! Bad business models! Thats
    > rediculous considering you writers were pumping these stocks a mere
    > year and a half ago.
    > Here's my prediction. Many writers will have there jobs cut in 2009!
    > I think alot of bullfat could be cut from someones books.
    Feb 11 07:31 AM | Likes Like |Link to Comment
  • 15 Companies That Might Not Survive 2009 [View article]
    Great list.

    Rite-Aid looks like a bankrupt company. Not only in the balance sheet kind-of-way, but in the "poorly organized, overpriced goods from a store with no hint of having any sort of market niche" kind of way. I never-ever shop at Rite-Aid unless it's the only place around. It's been screaming out "BANKRUPTCY" since at least the mid-90s.

    I don't see how Krispy Kreme survives, either. On top of having one of the ugliest balance sheets out there, societal trends (health-consciousness) are moving against them.

    Blockbuster has always had a "bland corporate movie chain trying to screw you out of as much money as humanly possible" vibe to it. It's no surprise to me that Netflix came in and undermined their business model.

    I think Sirius will survive in some form; or at least satellite radio will survive (if not Sirius). Obviously, they have one of the ugliest balance sheets of them all and the stock is priced for bankruptcy right now, but on some level, I think satellite radio is an idea that is simply waiting to succeed. Maybe someone buys their assets or maybe they miraculously figure out a way to succeed - I don't know. But I'm not sure that I can convince myself that satellite radio (a good idea) will simply die off.
    Feb 11 07:29 AM | 1 Like Like |Link to Comment
  • Doug Kass comes to the defense of Cramer: "Individual investors are better served listening to Jim Cramer, both with regard to his recommendations and his methodology, than any other business commentator extant." (previously)  [View news story]
    Is there any stock commentator out there who is more inconsistent than Cramer? He's one of those investors who always thinks stocks and the overall market are going to go whichever way they have been going the past few weeks.

    If DRYS is up ... oh say ... 200% over the course of a month, that means it will continue to go up. If it's down 50%, that probably means it will continue to go down. I've never heard him provide any substantive commentary; it's all (poor) stock psychology.
    Feb 9 11:29 PM | Likes Like |Link to Comment
  • Index ETFs Have the Edge Over Actively Managed CEFs [View article]
    Just from glancing at historical prices (adjusted for dividends and splits) on Yahoo Finance, it would appear that FXI might be more volatile than CHN.

    From Oct 12, 2004 to Feb 6, 2009, I come up with this result:

    FXI = +67.4%
    CHN = +22.8%

    However, from January 3, 2007 to Feb 6, 2009, I come up with this result:

    FXI = -24.3%
    CHN = -13.3%

    Admittedly, I know virtually nothing about either FXI or CHN, but just from those figures, it would appear that they are structured much differently and that maybe the "apples to oranges" comments are accurate.
    Feb 8 10:43 AM | 1 Like Like |Link to Comment