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Jake Huneycutt  

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  • "The whole damn stock market’s down 50%. We’re down 75%, okay? We don’t like where we are but it’s not like anybody’s feeling the groove right now." GE CEO Jeffrey Immelt  [View news story]
    I hate how Immelt tries to imply that most of GE's fall simply has to do with the market. Certainly, the price of all equities has been falling, but GE's particular fall has more to do with the Capital Services arm of the company (GECS) that has been accounting for roughly 2/3 of their "profits" until recently.
    Mar 9, 2009. 01:45 PM | 2 Likes Like |Link to Comment
  • Promoting Long-Term Investment and a Solution to Shorting [View article]
    To be honest, I find both of your concerns to be highly exaggerated and both of you miss the point in the proposals. Check out capital gains rates during most of the 20th Century. We actually used to have a system that more closely resembled the one I'm proposing. Yet, the markets didn't die and wither away.

    My point is not that capital gains tax rates have led to the collapse of the market. My point is that our current system encourages speculation and does not encourage adding real, lasting economic value to the economy. You've got to create incentives to do that and currently, there are very few; many people can make more money speculating (which provides no real value to the economy).

    What both of you ignore is a realistic cost-benefit analysis. Certainly, under my proposal, hardly anyone is going to play something for less than a 2-week time frame. But no one is going to shy away from buying something at a deep discount even if they have a short-term timeframe. After all, I'd much rather take a huge profit and be taxed 50% on it, than take no profit at all. I've only proposed absurd tax rates on extremely short time frames. Anything over 3 months, I can see as semi-useful.

    To suggest that the markets would die is simply misguided. Equities have a long history and it's not as if people always had 2-week time-frames for their investments. When you are buying a stock, you are buying a business and so long as that business is turning out profits, there will be demand. This fact is lost on most investors nowadays.

    In fact, your concerns seem to be guided by a belief that there is no fundamental value to equity; which is precisely my issue right now. The speculative nature of the markets has essentially moved people into a psychological investment mode where they don't actually focus on the underlying business they are investing in. As such, how can you possibly expect businesses to operate with a long-term timeframe? It's all about NOW and not about the future.

    The end of the markets? Hardly. These proposals would force people to invest differently. While it would certainly make the market more illiquid, it's goofy to suggest that would destroy the price for securities. Yes, demand would go down --- but so would supply.
    Mar 9, 2009. 10:50 AM | 1 Like Like |Link to Comment
  • Winthrop Realty Trust: A Streetcar Named Value? [View article]

    Not sure what your agenda here is, but it's rather misleading to imply that loans makes up the majority of their balance sheet assets:

    Net Investments in RE = $242 million
    Cash & Equivalents = $59 million
    Restricted Cash = $14 million
    Loans Receivable = $23 million
    A/R = $14 million
    Available for Sale Securities = $37 million
    Preferred Equity = $51 million
    Equity Investments = $92 million
    Lease Intangibles = $26 million
    Other = approx $20 million
    TOTAL ASSETS = $578 million

    Their equity investments are a bigger concern than their loan activities. They've discounted their more troubled investments substantially. Given that I discounted their assets by an additional $120 million and still came up with a higher value than the stock is selling, I'm not sure I see this as a huge issue. The market is overreacting and I can't see much validity in your concerns unless you're willing provide more specifics as to why this is a big deal when application to FUR.
    Mar 9, 2009. 10:10 AM | 2 Likes Like |Link to Comment
  • Promoting Long-Term Investment and a Solution to Shorting [View article]

    I can't think of anything that would kill people's desire to invest in the market more than a 0% capital gains tax. You're absolutely correct; no one would ever want to invest in such an environment and no one would be willing to start a business with a guarantee that they would pay lesser taxes than they do now.



    As far as this article goes, I wish SA would quit re-titling everything. I have proposed no "solutions to shorting". I think short-selling is a good thing. In fact, after writing this, I've somewhat reverted on that one particular issue and believe that gains from short-sells should simply be taxed as regular income (so long as they meet a minimum time threshold).

    In particular, what leads me to this position is the work of some short sellers in snuffing out real scams. Citron Research's recent work on Apollo (APOL) is something that definitely should be encouraged.

    However, unlike the poster above, I see very little benefit in promoting market volatility. Make people invest for the long-haul so they are forced to evaluate their decisions. Rampant speculation provides no added value to the markets and the attempt to claim that wealth disparities are somehow cured by speculation is nearly absurd --- especially considering the fact that the two time periods in recent American history with the grossest disparities of wealth also JUST HAPPEN to be two of the worst periods for rampant speculation. Imagine that.
    Mar 8, 2009. 11:34 AM | 1 Like Like |Link to Comment
  • 2009 Depression Will Be Nothing Like 1929 [View article]
    Good article.

    Another thing people continually fail to point out about the '29 Depression is that stocks were priced using near-absurdist valuation techniques. In essence, the '29 Depression was like combining this crash, with the Tech Crash earlier this decade, but then valuing *ALL* stocks on the same absurdist lines as the tech stocks. Stocks prices were certainly bloated in '07, but I don't think things got nearly absurd as in the '29 Crash (outside the Housing market and a few select industries).

    Another thing to consider, the '29 Crash happened before the SEC Acts of 1933 and '34, which required publicly-traded companies to file financial statements with a statement of opinion from a public auditor available for public viewing. Many companies in 1929 were operating on the "Hey ... Trust Us!" system of financial reporting. Many hedge funds and private investment firms are still operating under that system (which is we end up with the Madoff scandal, amongst others), but publicly-traded companies are not.

    I think by any reasonable measure, the market is cheap right now. But it will keep getting dragged down further so long as there aren't enough buyers. And there won't be enough buyers until fear and uncertainty are eliminated.
    Mar 7, 2009. 01:52 PM | 5 Likes Like |Link to Comment
  • Time to Buy China, Copper, the Canadian Dollar and Oil [View article]
    Also, I think people should consider that you don't have to buy Chinese companies to make a China play. My only issue with investing in China is that there is less openness in their financial reporting there, which means higher risk than you'd like to have as an investor. In that sense, the author's recommendations of the ETFs might be good --- but I just hate investing in ETFs.

    Some ways to make a China play without investing in Chinese companies:

    ABB Ltd (ABB)
    Veolio (VE)
    Posco (PKX)
    Other steel stocks (X, MT, NUE, RS, etc) --- not sure if all of them have exposure to China, but even if they don't, they might benefit indirectly from increased demand that drives prices back up

    ... and of course ... Oil! If you believe demand for oil will continue to rise in China, prices will continue to rise.
    Mar 6, 2009. 09:48 AM | Likes Like |Link to Comment
  • Time to Buy China, Copper, the Canadian Dollar and Oil [View article]
    I'm in agreement with the author's investment hypothesis. I'd also add platinum and palladium to the list.

    The only area I'd disagree with the author might be how to make the China play. I don't like ETFs. They decay over time. Some companies in China to look at:

    Yanzhou Coal (YZC)
    LDK Solar (LDK)
    KHD Humboldt (KHD)
    Aluminum Corp of China (ACH)
    Harbin Electric (HRBN)

    I haven't examined the financials of all these companies in full, but they all look intriguing. Solar is scary right now, but LDK has a lot of power in the industry; despite a terrible recent performance, they will probably rebound *ASSUMING* solar itself survives.
    Mar 6, 2009. 09:43 AM | 1 Like Like |Link to Comment
  • Former AIG (AIG) chief Hank Greenberg sues AIG, saying "material misrepresentations and omissions" caused him to buy more shares at an "artificially inflated price" and to pay extra taxes. Greenberg says the sale of AIG's insurance units to repay the government was "a tragedy."  [View news story]

    That's all I have to say. Is this guy really in such a pinch that he needs this money that badly? Kinda gives you some insight into how greed is just engrained in the attitudes of many of the people that got us into this mess.
    Mar 3, 2009. 08:00 AM | 1 Like Like |Link to Comment
  • Problem Banks in 2008 Are Nowhere Close to 1990-91 [View article]
    How can there only be $200 billion in "problem bank assets" when TARP pledged about $700 billion towards the problem and is generally acknowledged to have been too small --- most estimates now seem to suggest $2-4 trillion total for the taxpayers. Methings the data behind these charts might be misleading and that the government is not defining banks with tons of toxic sludge on their books as "problem banks".
    Mar 3, 2009. 05:19 AM | 5 Likes Like |Link to Comment
  • Three Value Stocks That Appear Ridiculously Cheap [View article]
    The analysis of Dell (DELL) ignores the fact that they have substantial liabilities on their Balance Sheet. In fact, the book value of the stock is only $2.14 per share, so to suggest you get the stock for $5 because they have $3.50 cash on hand overlooks the fact that they don't even technically *own* all of that $3.50.

    Even the $2.14 figure is being a bit generous. If you scratch out their Goodwill and "Purchased Intangibles", their adjusted book value becomes $0.85 per share.

    Their free cash flows still appear to be in alright shape, but notice the trend of the past four years has been decline. In what is starting to look like a depression, expect that to drop further as consumer PC purchases go down. Realistically speaking, you should brace yourself for a year with $1 or less per share in free cash flows and that might be considered a "good year" 3 years down the line.

    Even that wouldn't be all that bad if it weren't for the fact that Dell's business model is not what it used to be. Dell used to make a killing producing high quality computers for reasonable prices. They kept prices low by innovating in areas such as Just-In-Time (JIT) Manufacturing. Yet, their competitors have caught up at this point and the quality of Dell's own computers has suffered over the past few years. Additionally, they are being undercut by low-cost netbooks from companies like Asus.

    There's a reason Dell looks cheap. It's going downhill and its future prospects don't look nearly as bright as the past.
    Mar 3, 2009. 04:33 AM | Likes Like |Link to Comment
  • GE's Immelt Leads Insider Buying [View article]
    If I've learned anything about GE over the past year, it's that it's a horribly managed company with little direction or coherence. Yet, I do think the market might be overreacting a little bit. Sure, GE's debt load is heavy, but take a look at their free cash flows. Not so bad.

    If GE is basically a bank in disguise, they are a rather fortunate bank that also has a manufacturing arm that sells necessary goods. I think they'll probably survive and the stock will eventually climb back up to the $15 range, but it's definitely not because of Immelt's genius.

    All the same, I still think GE is a bad buy compared to other companies out there. if you want to buy "blue chip" large cap companies, ABB (ABB) and Veolia (VE) are safer bets that offer the possibility of greater returns than GE.
    Mar 3, 2009. 02:25 AM | 1 Like Like |Link to Comment
  • While the financial ordeal we're suffering doesn't match that inflicted by the Great Depression - not yet, anyway - it's far too ferocious to be dubbed with that anomalous term 'recession,' Barron's Alan Abelson writes. His solution: The Not-So-Great Depression.  [View news story]
    Great Depression 2.0?
    Mar 2, 2009. 09:16 PM | 2 Likes Like |Link to Comment
  • Five Stocks Traders Are Betting Against (With Good Reason) [View article]
    How do you conclude SNS has "a lot of debt"? Their LTD appears to be fairly low --- about 4.2% of their total equity. Their liability-to-value ratio is 46%, which is relatively low by restaurant standards and most of it is "obligations under leases." Current ratio and quick ratio are bad, but they had positive free cash flows their past quarter.

    Most of their assets are real things with value (property and equipment); very little Goodwill and Intangibles on their Balance Sheet. Even after subtracting those "fake assets" (as I call them), their book value is $9.23. Then, to top it off, they are the type of restaurant that you occasionally find people writing entire pieces about on how much they long for their food; so it's not like they are any old fast-food joint.

    I'm not saying the short-term outlook is good (for any restaurant), but I don't think your assessment of the fundamentals meshes with reality on this one. There are probably better short targets out there in the restaurant sphere.

    I do agree on LNG. They have an *UGLY* balance sheet and natural gas prices are not coming back up any time soon.
    Mar 2, 2009. 09:09 PM | 2 Likes Like |Link to Comment
  • The Future of Investing [View article]
    Actually, for that matter, two of the Great Depression crashes occurred with 10 years of one another and the Dow lost 50% or more of its value in both: the original 1929-32 bear market and then the crash of 1937.
    Mar 2, 2009. 01:21 PM | 3 Likes Like |Link to Comment
  • The Future of Investing [View article]
    "The market does that every few decades but never twice in a decade (that I am aware of)."

    Actually, it did happen twice in a 10-year period before. It basically lost half its value in the 1919-21 bear market and then, obviously the Great Depression crash began in 1929 (and the market lost half its value rather quickly in that one).

    The Great Depression crash was the most rapid one in history (that I'm aware of) and it occured with the memories of the early '20s recession (and hyperinflation in Weimar Germany) fresh on peoples' minds in 1929.
    Mar 2, 2009. 01:17 PM | 4 Likes Like |Link to Comment