James Byrne

James Byrne
Contributor since: 2009
Company: Grand Street Advisors, LLC
Congratulations on your success. When the Treasury and Federal Reserve publicly backstopped the largest financial institutions they basically gave the green light to purchase these securities all at deep discounts. At the time we purchased most of these IB preferreds they yielded between 12%-16% with five years of call protection. So, the opportunity was the yield with capital appreciation potential of 50-100%.
Again, congratulations on your investment.
Good morning. I believe you are correct regarding regarding purchasing the debt instruments and the upgrades coming. The shares of AIG should be capped until the government parts with its shares. Due to the stewardship of Ben Benmosche AIG is regaining its stride and the confidence of institutional buyers. I think we'll see these institutional buyers step up to buy the shares and so there won't need to be a deeply discounted offering. So, I believe you are correct here also, investors can be patient establishing new positions but in the end can own the.
Of course before making any decisions do your own due diligence.
I wish you success in all your investments. .
Congratulation on your purchase. Many exchange traded bonds and preferred took a big hit during the near market seizure. Those brave enough to deploy capital while others were hoarding cash did extremely well. Others, unfortunately moved to safe havens, cash, CD's etc. and never re-engaged the markets missing the opportunity to recoup a good amount of their savings.
I wish you the best with all your investing.
I don't usually follow up articles I write with responses to questions or commentary as they are meant to spur discussion and or new ideas. However, I'll follow on this time. My reasoning for purchasing this CEF is closer to your point. The anticipated appreciation in the NAV over the course of the year, much like last, should at a minimum keep the price slightly positive to neutral thus leaving the return of close to 12%, on basically a tax free basis very attractive when comparing to taxable alternatives, such as the S&P or DOW. I am not a believer this should be a buy and hold (forget) however in a bull market (which is how I'm currently biased) this investment works very well for investors, especially those in elevated tax brackets. If and when I become more market neutral or bearish I will be taking this position off.
I appreciate all of your comments and wish you the best in all of your investments.
It would be a catastrophe. Taking aside the ripple effect felt around the world and primary dealer network, the impact on bank capital would potentially cripple the global economy. Obviously I don't anticipate any failed auction. It was really a worst case scenario "what if".
I wish you the best with all your investing.
I can appreciate your views, however Senator Levin's report dated February 2,2009, noted the 2005 tax holiday resulted in $312 billion in repatriated dollars. His view however was one of lost tax revenue since those monies were only taxed at 5.25% instead of 35%. You could view it as 35% of $0.00 would have been $0.00 also without the tax holiday.
It is only one example and we cannot say another tax holiday would generate more or less, but typically when you attempt to incent a certain behavior, a carrot if you will, you catch a few rabbits.
Thanks for your points, all well taken.
Good luck navigating this very challenging market.
I respectfully restate and add that banks taking back their reserves may make more loans and will reinvest some of those monies into AAA investment securities such as US Treasuries and MBS. The latter would drive down long term rates and borrowing costs for home buyers, auto purchases, small business owners and also allow existing mortgage holders to refinance. While mortgage rates are a generational lows, there is no reason to believe spreads cannot be compressed further resulting in lower borrowing costs.
I'm suggesting the Fed has other options rather than simply another round of QE at its disposal and should explore those options before they ramp up the printing presses once again.
I wish you the best.
My view on the US economy, Fed strategy and Euro are not so much the US has returned to the growth engine fueling the global economy, clearly not. Put bluntly, we, the US are in less shabby shape than many members of EU and our trading partners. Yes, it is true, I see our economy building momentum and am perhaps more optimistic on the prospect for domestic growth. The looming question remains sustainability, which most likely will be answered in 2011. We've got many obsticles to overcome, a stubbornly high unemployment (which should remain so for the next few years), higer taxes coming, new restrictions on lending (way overdue, but restrictive), balooning federal, state and local budget deficits, social programs that are fiscally unstable and most likely unsustainable in the current form, and a legislative body unwilling to make the painful decision to cut spending. We also have a flexible workforce, a resilient improving economy that should help fill the budget gaps to a degree. Corporate America is still flush with cash and as confidence in the recovery grows, that cash hoard should be deployed in the form of higher dividend yields share buybacks, increased M&A activity, business plans being executed and new hires. All the while the quality and costs of our goods has increased our export and continues to help lift our economy out of the doldrums.
The jury is still out on the Bernanke experiment and it will be years before we can see how effective it actually is/was. As of today, it appears to have been effective in halting the deflationary spiral we were sucked into. Did he merely kick the can down the road? Will he effectively remove this excess cash sloshing in the system? Is a bout of hyper inflation right around the corner? Is the economy addicted to this "free" money and will it curl up in a corner once the needed "fix" is no longer available? Questions that need to be answered. Answered by time and hopefully somewhere off in the future. As for the ECB, at a time where inter bank lending is becoming more costly, to continue to squirrel away Euro's seems almost irresponsible. And you are correct the EU members must deal with their overly generous and unsustainable social programs and balooning budget deficits and spending. This is perhaps on of the most important crisis of the EU. Much like any markets, equity or credit, without the confidence of the markets and lenders, failure is a disticnt possibilty. Being proactive to head off a potential crisis of confidence is imperative. The market sensed another case of "wait and see" from the ECB and reacted aggressively.
Again, I'm not suggesting the all's clear hear in the US, we still have much work to do. However, when looking outside the US borders, I'm fairly happy looking from this perch.
Good luck with your investments.
I own a few and would like to learn some about the one you are baiting me with.
I look forward to hearing from you.
The dividend may be considered a return of principal up until you've recouped your original investment then it becomes taxable. So, if your original investment was 100 share and $1000.00 in most cases you would receive favorable tax treatment on your dividend payouts up until you've received $1000.00 in dividends. You'll want to speak to your tax consultant for clarification on your specific situation.
I hope this helps some.
Good investing.
Thanks for your comment, I understood the payout increases were quarterly, which is incredibly impressive and points to the terrific execution of management.
I'm originally from NY so I've been waiting for the awakening of Big East basketball for some time. Go Orange, G-town, might even see UCONN make some noise before getting bounced in the tourney.If not I can live with KU basketball while I wait.
I continue to note the data supportive of a recovering economy and consumer in previous articles Tony. Leading Economic Indicators in the US for one have a terrific predictive record of future growth/contraction. Positive reporting of Purchasing Managers Index reflecting an expanding economy both domestically here in the US and China and India. A pick up in consumption in the emerging markets which plays right to the continued improvement in US exports. There are a number of other data points I've already made note of in previous articles.
I remain aware this recovery is in the early stages and quite fragile and could run out of steam. We need to make continued progress on job losses, the dollar needs to find its equilibrium, the US government needs to get out of corporate board rooms, the Federal Reserve needs to elaborate on/execute an exit strategy. However this liquidity based rally, I believe is turning into something more and will be substantiated by the current earnings season.
Lastly, I too am not sure how much more is left on the upside. If earnings come in much stronger than anticipated, we may experience a blow off rally that stretches us to much loftier levels than justified, I too will be pulling some chips off the table. For now, I stay fully invested and monitor data closely.
I wish you success with all your investments.
I would agree with your comment about the rather rapid depreciation of the dollar. I use the term orderly in the context of the market generally accepting the drop fairly well. I believe the administration is using this weak dollar in hopes of jump starting domestic manufacturing, helping to export our way out of the recession we are exiting. Encouraging signs from the domestic consumption numbers coming out of China recently points to help on the way. As I pointed out in the past (which you mention also) the importance of the US consumer can't be overlooked. His own personal balance sheet is continuing a de-levering and cannot be expected to do the heavy lifting alone. Back on point, certainly a complete breakdown would quite worrisome and unwelcome.
HI Albert. I find myself somewhat skeptical, with what appears to be the "massaging" of some economic releases. While some releases seem to defy what appears to be going on in the streets. I can say from personal experiences, the current environment is 1000 times better than it was back in November and certainly March. We've still got some tough sledding to go, and you are correct, rose colored glasses won't cut it. Tough decisions will need to be made on main street, Wall Street and Pennsylvania Avenue. Regulation and enforcement, fiscal discipline along with personal responsibility will all be necessary if we are to steer through this and allow future generations a fighting chance. Returning to a pay/go system would be a step in the right direction. If Clinton could get us on a path toward fiscal discipline and some can point to policies of Reagon-omics as a way towards boosting our economic output, let's put our heads together and figure out the path of least resistance and move.
That last part was my best effort in a bipartisan approach. I am truly agnostic when it comes to politics. A good idea can be generated from the least likely side of the isle, Let's hope our elected are able to identify it when one appears and have the fortitude to buck party lines if necessary for the good of us all..
I agree with many comments. As talk has shifted towards the exit strategy for the Federal Reserve, I believe it is way to early. We are, I believe in a stabilizing mode with regard to the economy. The resumption to growth may be seen in 3rd quarter GDP, but there are areas of the economy that still have much work to do. Also in question is the sustainability of any recovery. So at this point in time any talk of pulling back the punch bowl, I would suggest is premature. We currently have an unemployment rate at 9.7% and likely rising above 10% before all is said and done. I believe the opportunity for the Fed to begin a change in policy may not come until the middle of 2010 at best when we should have clear evidence if the recovery is on stable footing or not.
Good points all. Good luck investing.
Again, I agree. Changes have been at the SEC. Chris Cox is gone. Although a public flogging would have been nice, at the least he's gone. We are finally seeing some constructive actions being taken. Enforcement of rules, "naked short sale", and a return in some form of the "uptick" rule are signs of clear change. But, it must and will go much further. Investors look to these regulatory bodies as the gate keeper, or watchdog looking out for the little guy. When they sit idly by, as Chis Cox did while the entire market was on the verge of collapse, well you get to the point we are at right now. Trying to restore trust and confidence to the retail investor that there is a new sherrif in town.
I believe changing chairman at this point in time would be a set back. The complexity of the Fed programs already implemented along with the necessary exit strategy begs for continuity at the helm. The actions taken by the Fed are, arguably working, and equally important, are restoring confidence to the markets. Removing the current Chairman would damage that confidence and the progress made in restoring the the flow of capital.
The car analogy in the current environment of, what feels like perpetually falling real estate values, does actually fit. But, I understand your point.
On Aug 13 09:35 PM User 471372 wrote:
> The car analogy is all wrong. A car is a depreciating asset that
> over time becomes worthless. Real Estate is an investment that over
> time appreciates in value.
Amending the Mark to Market rules was a necessary band aid at that point in time and should have been done earlier. However, simply because we apply a band aid, doesn't hide the fact there is a wound undeneath. The valuations that were being attatched to the "legacy" assets were in most cases not derived from an efficient, normally functioning market. Natural buyers of these securities, were either hording cash in anticipation of investor redemption requests or some simply became vulture investors. Why unnecessarily pay up for something you needn't? Banks capital was being decimated and they need to raise cash. At the time, the lone buyers were showing, "throw away" bids. Meaning, terrific if I buy them at a severly depressed price, and if you don't sell it to me, if I'm patient enough some other bank in need of cash will. That was the environment back then. Again, the problem didn't vanish, we just kicked that can down the road.
Caterpillar made the point I was getting at just the other day. That we are seeing early signs of progress in the economic recovery. Since companies have cut headcount, slashed inventories and capital expenditures when the recovery does come, earnings have the potential to increase exponentially. The CEO,summarize, stated, we've made progress and have further to go. Should the recovery take hold, for 2012 he looks for earnings in the $8-$10 share range, from the $2.50 expected this year.
Again, I agree it is early in this recovery, and I'm quite confident we'll see some setbacks along the way, but I'm optimistic we'll get out of this sooner than most have anticipated.
Good luck on your investing.
I'll have to disagree with the "sucker rally" term. Earnings are real. Market valuations are reasonable. What we will need to see at some point, and sooner rather than later, is top line growth. What we are currently witnessing, is an economy in transition. From one exiting a virtual free fall contraction, to one of stabilization. This phase of the recovery will result in a jobless one. One positive result of stabilizing the economy, should be a calming effect and positive response in consumer confidence. Domestic job creation will eventually come, but perhaps not meaningfully until mid 2010. However, as I've wrote about in previous posts, the US consumer is no longer the lone driving force in today's global economy. It won't be easy getting out of this mess we've created, but we will, and investors sitting in cash will have endured the pain on the downside and missed a chance to recoup a good portion of those losses. Worse yet, once inflation starts to rear its' ugly head, the negative real returns for those who sit parked in money market funds will feel the other side of that double edge sword cutting into their retirement savings. Good luck with your views and all your investments.
The current evolving recovery story leaves many good companies and their share prices on the cusp of breakout. With the Feds current attempt to force money our of safe havens, with 0-.25% policy for an extended period of time. I believe yield hungry investors will return to higher yielding vehicles, among the many, Limited Partnerships that come tax advantaged as well. Also not mentioned, NRGY has projects in progress due for completion in 2010 that should add meaningfully to the bottom line. Adding to earnings as well as the possibility of increased payouts. That's not taking into account any further acquisitions which, if history is any precursor, should have the same impact. The recovery underway is uncovering many opportunities as well as identifying who the winners and losers will be. I believe NRGY will be one for the win column. Best of luck .
I agree. Ford's CEO lined up credit, sold off non-core brands and streamlined costs. GM on the other hand, continued business as usual cranking out outsized gas guzzlers, held onto Hummer way too long to recognize any value and seemed quite taken by surprise why all those annoying bankruptcy lawyers kept calling?
Ford is attracting buyers once again as they've introduced cars consumers actually have an interest in purchasing. The new cars are cost competitive and have comparable fuel efficiency ratings to market leaders, Toyota and Honda.
I don't disagree with the point of rising oil prices posing a stealth tax on consumers. I would point to factors leading to the doubling of the price of oil off 2009 lows was more a reflection of hot money once again. As we've witnessed over the last 2 week correction in oil, after the "watchful eye of the CFTC" noticed the sharp spike, and decided to take a look into any speculative froth. Long positions, and hot money in anticipation of any backlash, have been liquidating positions. So, in the face of an incrementally improving domestic economy, along with a healing of the global economy, oil sells off. In my opinion the current supply demand equation does not support prices above $60 and lower prices are on the horizon. However, even if we've simply entered into a sort of "stabilization phase" of the economic recovery, the market can certainly move higher.
I understand and agree, it would be an obsticle to overcome. Given the unsatisfactory manor with which the Nextel integration was handled, it certainly does not instill confidence. However, the need to expand the footprint of T-Mobile and upgrade the network may make this potential marriage more intriguing. Sprint, has stumbled through their growth history. If memory serve me, their ION offeing (phone internet, tv) was far ahead of their competitors, after investing over $1 billion, decided to scrap the plan (sounds like GM original electric car development plans). But, they've got new management, are streamlining costs and rolling out new products. The major initiative is the national WIMAX buildout. My point being, both companies are embarking on major buildouts and upgrades to their networks and the expenses would be better shared by the combined entities along with major costs savings achieved in a buyout/merger.
I appreciate your comments. Have a prosperous day.