Jared Sleeper

Jared Sleeper
Contributor since: 2011
Company: MarketCapChart.org
Hi Jeff,
Thanks for the comment, it is spot on. The dry spell was under a different CEO, and Mr. Flynn has done a great job so far... he impresses me quite a bit which is one reason I am so confident in AUXO's potential. I also agree that it has reached a critical mass in terms of recognition and customer count.
Regarding the large equipment sellers becoming more aggressive, this is possible but the bottom line is that any large seller managing their own products will tend to inflate their own margins over time given the switching costs involved. All of Auxilio's current contracts have been won via RFPs against those companies, and I expect its success to continue though again, it is possible things become more difficult down the road.
On the working capital, I'm curious to see what happens to it going forward, but overall I don't think their is reason for alarm. The company's burn rate is falling, and it is projected to go cash flow positive this, which tells me that there is a good chance that its $1.3 million of cash and $1.4 million LOC will hold them over (that's $2.3 million total since they need to maintain 400k in a bank account per the covenants of the LOC). They burned just over $1 million in the first 9 months of 2012, and that's at a very rapid roll-out rate. I would expect that as the margins for the new accounts improve they stand a better chance at nabbing non-dilutive financing. It would be great to see the LOC increased or another transaction that doesn't dilute shareholders to fuel the growth, but either way they're financing for the right reason.
Again, spot on of the warrants/options. I had meant to mention this, and it does impact the long term somewhat though not really material against the potential growth.
Completely agreed on the lack of price response to sales growth... weary shareholders, low liquidity, etc. all contribute to the market largely ignoring the massive growth, but that doesn't make it any less real. I'm certainly not in the camp that the company should slow down its growth right now to build up profitability and get more attractive financing. EMR and the current sales momentum give them reason, IMO, to go for every last RFP they can... if that means the company needs additional financing to finance the growth that's okay with me, because they're building up a roster of contracts that will be profitable for a long, long time.
Regarding acquisition potential, I agree that that would be a nice exit and have heard others mention that as well.
Mr. Shapiro,
Let's boil this down. We both seem to agree (as the textbooks do) that Reading should buy back stock so long as the return to shareholders from that buyback is greater than or equal to the potential return from other means of investment. We also both agree that Reading is trading at a 50% discount to its sum of parts value (roughly $12 per share). By my reckoning, that means that any alternate form of investment must return 100% to be competitive with buybacks. You give one example of such an investment (theater upgrades) but I find it highly, highly unlikely that the company is truly earning a 100% return on these (or any other investments), even with economies of scale and operating leverage, which is precisely why I think it should be aggressively buying back stock. If you can provide more details on how RDI's current investments exceed that threshold I would be thankful, though if it is to much of a bother no worries.
Also, I will point out that my numbers indicate that during 2011 RDI's shares outstanding actually increased slightly (a record high, in fact),meaning the buybacks were less than enough to cover shares issued for compensation.
I'm in complete agreement that Reading has assets that are significantly undervalued, though the NAV gains are worthless if not realized in a timely manner, especially since property prices in many places are essentially flat over the past half decade. Despite these gains, the stock is flat since 2003, under-performing many other investments in that time. I fear that this will continue to be the case until RDI convinces investors that it is serious about monetizing its assets, many of which it has put up for sale (Burwood, the Manhattan properties, etc.) only to later retain, leaving substantial returns available to shareholders. That lack of buybacks is symptomatic of a management team that is more concerned about building a family business than providing a strong return to investors, which, in my opinion, is why RDI is fairly undervalued relative to its current asset value. At this point, it is really up to investors do decide how much they trust the Cotter's, with a history of (openly conducted, for what it is worth) related party transactions, failed attempts to sell prized assets like Burwood, and refusals to buy back stock despite an extremely attractive return relative to alternatives, etc. I think there are more attractive options out there given this, though should I see strong shareholder moves out of RDI management my mind could change on a dime. Thanks for your time, hopefully anyone reading will have learned something about Reading.
Best,
Jared
Mr. Shapiro,
Thanks again for the reply, it is much appreciated. I believe you that Union Square wasn't for sale, though I'm not sure why Capstone would describe it as such. Regarding posting negative things about a company in which you own shares, I would encourage you to reread my post. I said that Capstone, as a large shareholder, wouldn't publish negative comments for "no reason." Meaning I see no reason for them to fabricate the fact that the company was so negligent about replying to their correspondences ( aka why would they lie to try to make the management of a company they own look bad when the management controls the company and thus is essentially untouchable?) . That's all I was referring to, and I completely understand (and understood) that shareholders often post negative things about their companies in order to spur positive changes in them, as is the case with this Capstone note. Thanks again for taking the time to reply.
Best,
Jared
Mr. Shapiro,
Thanks for the reply, it is much appreciated, unlike the threat to derail my future employment prospects you send me in a private message, which was shameful.
1) We probably won't agree on this in the end, but I remain convinced that the Capstone situation reflects negatively on the company, which apparently ignored both certified mail and phone calls from Capstone for over a month. If this has the result of a HQ shift that changes things somewhat, but there is still no excuse for a company that claims to be selling property not taking the steps to make accommodations for interested buyers with its old address/info (mail/call forwarding, etc.). In addition, it seems from Capstone's letters that Reading had originally been open to selling property B (Union Square theater) but then changed its mind. Again, I am fine with rejecting the offer, but it's hard not to agree that it appears they were difficult to work with from Capstone's side. After all, they are a shareholder and have little incentive to post negative things about management for no reason.
2) The textbooks are there for a reason, because they tend to be right. I agree that it is complicated somewhat by timing, but the fact is at this current time Reading's shares are worth twice what they are trading for if liquidated. Now, it is possible that the NPV of those properties can be greater than 2X if they are well managed and developed in a timely way, but there's little evidence that they will be (it's been a long long while for many of these properties), and there is plenty of evidence that management has a preference for the long term route regardless of what is actually in the best interest of shareholders, given the fact that RDI is a family business and they draw substantial salaries from the company. No complaints there, that's their right and I'll defend it to the end, but it also opens up a scenario in which the return to shareholders could lag what one would expect based on the undervalued assets, or even the return that could be realized right now via a liquidation. All investors in RDI are essentially deciding based on their internal odds of that happening, which is why the price remains substantially below the company's value despite numerous articles and lots of attention from various funds. After reading the Capstone letter and the article I linked to above, from someone who I know to be impartial (i.e. he has no substantial position to justify and no reason to admit that he was wrong), my estimate of the odds of a market-beating return on this stock went down significantly. Good luck with your investment, though, there's definitely lots of room for profit here given the attractiveness of those assets. If RDI gets serious about monetizing them in a timely manner (via a concrete announcement not just statements) I'll happily take another look and reconsider.
All best,
Jared
Mr. Shapiro,
It is interesting that you accuse me of trying to provide clicks to my classmate (and him of click-mongering), when you are clearly attempting to draw attention to RDI's by publishing articles in its favor on even the most minor news items (this article, in particular, largely repeats previous analysis without any event-based justification). Everyone wants their stuff read, and he's no more guilty of that than you, especially since your articles rarely reference the bear case for the company that he provides.
What's amazing is that you're bringing political rhetoric like "flip-flopping" into an investment discussion. My classmate met the company's CFO in person for an interview, and was unimpressed. His complaints are valid, as Reading clearly is not managing its capital to benefit individual investors (share buybacks are clearly more attractive that any additional investments into operating businesses right now, given the undervaluation which we both agree with), no matter how much lip service the company pays to individual shareholders, and has no intention of fixing that anytime in the near future. THAT is what his "flip-flop" (read: investment decision based on additional information) is primarily based on. He's right. RDI certainly has tremendous value, but if takes a decade to unlock it the resulting return may indeed be subpar.
Also, your article addresses the reasons for rejecting the Capstone proposal, which on the surface sound reasonable. But it does not address the lengthy delays and many unreturned correspondences Capstone went through in its attempt to purchase the property. Rejecting a deal for business purposes, I can understand, but failing to respond to an interested party in a timely manner is a very grave thing indeed, no matter how up front and
open management is a meetings.
So, my questions would be:
1. Do you have any information/justification for the gigantic delays when Capstone was communicating (or trying to, rather) with RDI about the proposed deal?
2. Do you think the company is pursuing the appropriate capital management strategy? Specifically, given the extreme undervaluation, shouldn't it be buying back stock?
Look forward to continuing this discussion without any more inflammatory language, as I do think RDI is a very interesting company to research given its innate undervaluation. If evidence arises that it will be unlocked then it can be very compelling indeed, but there's little evidence of that so far.
Best,
Jared
Great article, here's the problem with Reading though:
http://bit.ly/S45Gqp
Exactly. I was a big believer in the "Microsoft is doomed" camp until I saw Surface and the Metro interface.
To clarify since there was plenty of confusion about this, I've edited the article to use "well" instead of perfectly.
I measure execution in results, not a temporary hardware issue that can occur at most product role-outs with beta software which MS had no control over. In terms of successfully introducing the Surface to the public, the role-out was perfect, and the freeze up was a side-story quickly buried by positive press about the keyboard. No one is talking about that now. Surface is now the most anticipated and talked about tablet since the iPad, bar none, and that is largely because of the perfectly executed release. Who knows why the tablet froze, but if MS hadn't done a stellar job on everything else that day it might have been the dominant story. It wasn't, and that tells you all you need to know.
Ricard,
I would look to KB Home and Toll Brothers as companies that have lines of business roughly similar to what Xinyuan might do here, but of course we really don't know what they're planning. I agree that it would be mostly beneficial for legitimacy's sake, but I think XIN might be able to craft a competitive advantage in the U.S. The market for luxury property in New York and L.A. is HOT right now, primarily because of Chinese buyers. I imagine that many Chinese buyers could be tempted by the idea of a development, built for, aimed at and largely populated by Chinese buyers (Chinatowns, on the whole, are not well suited for these types of luxury buyers), so maybe Xinyuan can break in well their by greasing the wheels for the growing demand for homes in the U.S. from Chinese families. Just thinking aloud here though.
I understood what you meant by "best case scenario," should have clarified that in my post. I agree about the land purchase, I've been trying to put myself in the company's shoes (assuming they are legit) to try to think of things they can do to demonstrate that fact to the public. Sensible dividends and share buybacks don't work, with the flaws that you've pointed out. Firing management wouldn't help, reporting stellar results in China doesn't carry much weight, etc. Taking capital to the U.S. makes sense, though my fear is that they will say something about Chinese capital export restrictions and then raise money some other way to fund the U.S. expansion... but surely they realize that no one will trust them if they do that. Regarding the REIT issue, I'm not sure your comparison is apt:
"To be a REIT, a company must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends."
If XIN did that its yield would be far in excess of 10%, but I don't think they have any intention of doing so now or in the near future.
Fair points!
1) XIN certainly isn't on the radar of the short sellers for now, as there are surely bigger fish to fry. Still, I think the Evergrande report is useful as it gives us an idea of what a Chinese Real-Estate take down would look like. I think I've made the case quite convincingly that if XIN is a fraud it doesn't seem to be an Evergrande-type fraud. Those patterns just aren't there, in fact in most cases it is the opposite.
2) I'm not sure that the rise from penny-stock status reflects short seller disinterest as you suggest. It could easily have been a result of many other factors. The stock going up, overall, is a positive omen for XIN's legitimacy. Could be very weakly positive, neutral at worst, but an increase in the PPS is not a fraud red flag, at least in my mind.
3) I think the "best case scenario" you give is a bit far fetched. Firstly, XIN's outlays are far more than just the dividends. They've paid down $60 million of long term debt, and their recent land purchases check out in every way I can do so (i.e. they mention that the land is adjacent to their existing projects and I can confirm that such adjacent land does exist and is empty). Most importantly, though, the model you're suggesting they're trying to follow with their fraud here simply won't work anymore. After the recent blow-ups, concern such as yours is commonplace. Were Xinyuan to abruptly cancel its dividend because investment is more attractive (after saying over and over again that they want it to be sustainable) or issue new shares or a new public debt offering or anything else like that, they would need to justify it against their massive cash hoard and highly profitable underlying financials, and they would almost certainly fail. Put another way: if they announced tomorrow that they were issuing 10 million new shares to finance a lucrative investing opportunity, the stock would collapse and they would pull in peanuts. If management is smart enough to run a fraud for over a decade (half of that under public scrutiny), then they ought to be smart enough to know that the jig is up... investors are on to the games these Chinese cos have played in the past.
Now, on a related note, the company has mentioned recently (repeatedly) that they are looking in to a development deal in the U.S. I'm curious (to see what the market would think independent on my own views) what you would think if XIN plopped down $100 million on a parcel of land or piece of property in the U.S. in an (obviously) verifiable way. If the company is legit as I suspect, I think this may be an ingenious move on the part of management to reassure investors, not to mention the potential benefits of a Chinese realtor selling U.S. property direct to Chinese citizens. Seems like a great way to dispel the idea that their cash isn't actually there. Thoughts?
Do you think his resignation would send the share price higher? You're horribly mistaken if you do. XIN needs to continue paying a dividend, performing well and issuing cleanly audited 20-Fs. That will unlock the value here. A resignation by the CFO would be a disaster for investors, no matter how checkered his past appears.
I've owned a stake in Xinyuan since well before the original article was published back in March, and added to it a little over a week ago. I reevaluated the position from the ground-up after the Evergrande report came out, that's scary for anyone owning Chinese Real Estate Cos, but the checks came back positive which is why I'm a buyer (up to my risk tolerance, of course) at these levels.
I agree that Republicans don't want big government, however my general feeling is that the American public is generally quite hawkish about China. Its hard not to look at China's economy, demographics and government system and feel at least a little threaten, and in the past those sorts of threats have often turned into arms races... you may be right, but I think that Mitt Romney's policy of building a 15 ship navy is a direct response to China, and that the public would likely support that move purely because of China's status as a rising power.
Thanks for the comment,
Jared
Depends on what you consider depressed, I guess. Compared to the rest of the world and the typical price from the last 10 years, I would say $4 is depressed. The point is $6-8 gas is likely a thing of the past until export capacity is created, which is a long term issue.
There is! Check out intrade.com
"the savings never went into the economy. They were mostly used for stock buy backs and dividends. And, of course, bonuses."
So stock buy backs, dividends and bonuses don't got back into the economy? I'm confused by that assertion... maybe it isn't the most efficient way but its hard to argue that they don't lead to spending. Also bear in mind this tax cut only goes to taxpayers with less than $200,000 per year in income... people who are more likely to spend their money than the rich. The fact is, tax cuts do end up in the economy, just like spending does... you can quibble about efficiency, but the sign of the effect is what is important. I am not saying Republicans are good for the economy. Read the article, it doesn't say that. It says tax cuts, ceteris paribus, are good for the economy in the short run. This is true, until the price we have to pay for debt gets high (its at a record low).
Okay I think we've just about wrapped this up. You are right that investors watch new regulations and generally adjust accordingly... just as investors do for every other part of the stock market. That doesn't detract from the point that the economy can be hurt in the short term, and it can be used against virtually any argument to buy any stock. The cost for widget A is of vital importance, and it will determine whether or not the regulation hurts the economy in the short run (until benefits accrue in due time) or not.
By arguing that one can still pick individual stocks, you are clearly moving away from one of the arguments I make in this article, which is that the economy as a whole can be harmed by regulations, even good regulations, in the short term. It doesn't matter if it is a good decision for society in the long run, this effect still exists. Sure, a smart investor can beat this with individual stocks... I just submitted an article that has a few... but that was not my point, I was talking about the economy as a whole (by talking about stocks as a whole), and now we are suddenly talking just two stocks!
Again, to be clear: I completely agree that there are winners and loser from regulations and that catching them early can lead to profit and good stock picks. However there was nothing in your last post that is opposed to the idea that the economy and stock market overall can be hurt in the short or medium term by the costs of a regulation that are not captured by the free market response (innovation, etc.) but rather by the long term benefits to society (health, etc.). Which is what, in my understanding, this entire argument was about. At any rate, I'm getting tired (wisdom teeth were removed today) and I really have other things to get to, so I'll give you the last word and say that, despite being called a few less than savory names I have really appreciated this argument and have learned some things. Thanks for the conversation and insights, and as usual I think (of course you may not agree) that we actually agree quite a bit. There will always be differences, but as long as they are discussed civilly and without vitriol that serves only to make the world and more interesting place the live.
All the best,
Jared
I think this really all comes down to a central disagreement, which is why you think I am misrepresenting your argument. I understand that you do not feel that regulation should be used solely to create jobs, yet you argue that it can be beneficial by creating new jobs in the short term. I am saying that I find that incorrect. You say that you do not mean it, but it follows from what you are saying.
What I don't understand is how you still won't admit that regulation does create a net economic loss in one sense, even if the social benefit is positive. You example of the company innovate the monitoring technology is an anecdote, and there is no evidence that the economy will be better off in the specific scenario you describe.You assume that the need must be equal to the cost of the regulation somehow, but there is no reason for this to be true. Say the mercury monitoring technology already exists, which it almost surely does (newer coal plants are not threatened by the regulation, as I understand it). In that case, the newly created industry will not be beneficial enough to offset the lost energy cost, and the entire economy will be worse off in the short and medium term as a result of the regulation.
I am sorry you think I am arguing against a straw-man version of your argument, I am honestly not trying to. If we strictly limit the argument to the one regulation you want to talk about, rather than broadening it to the wider issues as I usually like to do, then my point is that there is a net economic cost to regulating Hg right now. The benefit to the monitoring company and to other power producing technologies will not exceed the extra costs created by society using a more expense form of power. You seem to be creating a situation which (by your definitions and understandings) a regulation helps the economy in every time frame. This is not the point of most regulations, which is why many economists disagree with you, and I doubt highly that many regulations like the ideal you describe exist. In addition, you ignore the costs of compliance. Regulations like this make planning a business extremely complicated and time-consuming, stifling innovation even as they help it another way. The bottom line is, your argument seems to be (if not, you are welcome to explain if you'll humor me) based on the idea that regulating Hg will stimulate the economy because the monitoring companies will innovate and make the same amount of money that the overall economy is losing in efficiency from the higher cost of energy. I do not think this is true, and there is no valid reason why this equality must hold.
To go a little further, you say:
"this cost is money that's paid to the emerging business -- the innovators. It becomes their profit."
This is not the result of appropriate regulations. As I said before, there is no reason for this to happen and in fact it doesn't. The cost is (presuming it is a good regulation) more than outweighed by the social benefit others enjoy, but this does not have to be and often isn't the profit of another firm. In this case, it is presumably that less people will get brain damage. If you define "appropriate regulations" as a regulation in which all of the cost to one company is made up for by a gain to another company, leaving economic activity the same, I would suggest that this is an incredibly rare occurrence and that it is probably almost impossible to find actual examples of this... I highly doubt the regulation we are discussing would apply, but at any rate it is irresponsible to simply assume that this will occur without evidence.
Yes, it is based on that assumption, paired with the assumption that deficit spending can be stimulative in the short run, which is held by many economists. However, you are misunderstanding the main thrust of the article, which is that cutting corporate taxes and capital gains taxes should help the stock market. If consumption taxes are raised to pay for this, for example, that will only magnify the effect by providing people a further incentive to invest in stocks and bonds. Though I believe that ceteris paribus tax cuts will help the economy in the short run (when it needs it the most), the main point is that Romney will be changing incentives in a way that makes stocks more attractive investments. The right level of taxation is very difficult to set, but there is very little disagreement that a tax cut now would help the economy now, just like more spending. Could it be merely a mirage if it isn't paid for? Sure, but the short-run effect exists nonetheless. Regardless, that isn't central to my point... its the changing incentives and the substitution effect that will make Romney's tax reforms beneficial for stocks, not the income effect, which is more difficult to sort out. The incentive and substitution effects will exist regardless of how the tax decreases are paid for.
It doesn't, but that doesn't mean that the perception itself is hurting the economy. You are missing my point, because I am saying that the President isn't necessarily actually anti-business. Nonetheless, the feeling of many that he is anti-business can, IMHO, harm the economy even if it is false. Thus, Romney would help. Maybe the rich guys do have other motives... that isn't the point, and this was not a political article. The point is that many Americans, including business leaders, feel that Obama is anti-business, and, rightly or not, I think that influences their decisions to invest in America, so a Mitt presidency could have a positive effect in that avenue. You might disagree that business leader's thinking Obama is anti-business hurts business, but there aren't any flaws in that logic that I am aware of... if there are just let me know!
Again, we'll have to agree to disgree... the reason I talk about global warming is that mercury is only one example in my article, and picking this one in particular opens up lots of arguments that apply solely to coal.
"Almost everyone, including progressives, assume that regulation is bad for businesses -- that at best it's a necessary evil"
I wouldn't say this is a fair statement of the opposing position, but the fact that you admit that some progressives disagree with you on this is important. As far as the assumption that complying with a regulation is detrimental to the business being regulated being false, I have to disagree (lots of negatives there but I think you'll get what I mean). Why? Because economists generally assume (correctly, I think) that companies are doing a pretty good job of profit maximizing. Regulation can have a place when their actions have an effect that they don't have to factor into their decision to act. For example, an electric company producing extra mercury doesn't factor the social costs of that mercury into their decision to use coal, and a regulation is an inefficient but sometimes the most cost-effective way of making them internalize that effect on others. Back to the profit maximizing thing though... your argument seems to imply that the government should regulate sometimes because it knows better than companies what will be good for them. This notion is silly to me... sure, sometimes (like with CAFE standards) the government might be ahead of the curve, but very, very few people, from professional economists on up, actually think that government should be in the business of regulating solely to create jobs. Don't get me wrong, there is a purpose, as I described above, but there is a reason that economists treat it as a trade-off between the costs to the firm and the social benefit that can be derived... because businesses, in the vast majority of cases, know what is good for them better than the government does. So I guess, to modify your last statement, I would say that regulation has a place, and some right amount, and that done well regulation can increase the total social utility by correcting externalities, especially in the long term. The argument that any cost of regulation is just moving money from one industry to another is false. In energy, for example, I would argue that coal is far and away the cheapest form of energy. Banning coal (an extreme form of regulation) would indeed shift money to other industries, but it would make the economy as a whole worse off, because we would suddenly be paying more for all of the energy we use. Perhaps over time investment would lower that cost down to the ballpark of coal, but I am not convinced that regulation will increase innovation enough to cover that gap in a timely manner. So your claim that regulation's cost are only money flowing from one company is demonstrably false... it can and does make the entire country worse off from a purely economic perspective, until the benefits are factored in, hence the trade-off which you are denying.
First of all, as I've already commented (this thread of comments is getting unwieldy so no worries about missing it), I know Hg is not a contributor to global warning, however, regulating it still impacts energy costs, and various other regulations have been put in place that are designed to decrease carbon output.
As far as the stimulative effects of new regulations, you have some good points here but I am very, very skeptical. For one, some of your logic seems to indicate that you think that by "creating a need" the government can create economic growth. This is a common fallacy, but should the government mandate that all roads are built by hand instead of using heavy equipment, it will create a huge need for human labor, but our economy will get less efficient (read: poorer in total). Arguing that regulating coal will immediately create new industries is highly unlikely, but I guess what the coal argument (I notice you didn't respond to the tax arguments, but you may just not have had the time, as this most recent argument is very detailed and good), comes down to is this: do the benefits of spurring innovation in renewable energy and other alternative sources outweigh the costs of the regulations in the short run? (You could ask the same question in the long run, but it would take a very difficult calculus of health effects).
Your answer to this question is likely yes. Mine is likely no, and here's why: I don't think that technologies exist to replace coal in the way you described. You are correct that natural gas will benefit, but the reason natural gas isn't already dominant is that even at its current (very cheap) prices it is still far more expensive that coal. Simply put, if there was a cheaper option around, it would already be used, especially given the bad press coal gets. There isn't, and though the future looks bright, those techs (wind, solar, etc.) simply aren't cheap enough to switch to without increasing near term costs to most companies in the United States.
You are right, of course, that some industries would benefit from the regulations if they provide an alternative to coal. This element of my analysis, then, doesn't not effect all U.S. Stock equally. However, I remain convinced that the net effect on all stocks combined is negative, as our energy prices will be raised relative to the rest of the world. You seem to think that there is a wave of innovation ready to supplant coal if the price becomes right... personally, I am not convinced that this is the case, though I would like it if it were true. Overall, I guess we are destined to disagree on this point, but thank you for elevating the argument... it is always good to discuss issues like this civilly.
Here's why you analysis of the effects of a tax cut is wrong. You are right that business invest and hire when there is an acceptable ROI. By lowering the costs of hiring an employee (by cutting payroll taxes), or increasing the expected profit of an investment (by cutting corporate taxes) the expected ROI for a worker or project can become positive, increasing investment.
As far as everyone earning money, you're right, my original comment was an oversimplification. What I mean to say is that everyone is self-interested, meaning they do what makes them feel good, whether that be protesting or making money. Sorry for the ambiguity, but I think for the sake of investing its sometimes useful to assume that everyone is maximizing their earnings, especially in the business field where a large amount of (rightly or wrongly) are.
I had forgotten the "extremely," to be honest. There are no contradictions that I am aware of in the rest of the article. I'll avoid making similar mistakes in the future, but at this point (with readership rapidly dwindling) there isn't much to gain from an edit. I'm not sure what you mean to imply by the "really interesting" bit, unless you think I was trying to be deliberately deceptive... in which case you would be wrong. There's no point arguing that, though, because I'm the only one who can ever know the truth with certainty. Thank you for your constructive criticism, I really do enjoy this process and these discussions.
Context is useful... Romney was discussing taxes. All taxes are eventually paid by people, one way or another, so an increase in corporate tax rates increases the effective tax rate of individuals. Of course, their are legal differences, but companies are owned and run by people, and the idea that taxing them isn't a tax on people is flawed, which is what Mr. Romney was referring to.
. As I've already said, most of the regulations are meant to save long term costs at the expense of the short term (especially global warming based ones). This will impact the economy (and stock market) as a whole in the short term, with the benefits coming later (through the absence of global warming, for example) and not necessarily within the investment timeframe of most living investors today. So will the lower corporate tax rates, and the lower capital gains tax. I do have another article underway that discusses the effects on specific industries and sectors, but I still feel strongly that there is a tangible general effect to almost all businesses as well, especially from the tax provisions. If you still disagree with the analysis, that's fine, but are you really saying that policies that raise the price of energy in the short term affects only coal companies and not the profitability of other companies as well, for example? Not to mention the corporate tax cut and capital gains tax cut, which apply equally to most all companies. I'm sorry, but while I agree that some sectors stand to benefit more than others, the article takes pains to use factors that effect U.S. stocks as a group.
Except none of the policies I discussed give the rich more money through less taxes, except (maybe) the corporate tax cut, which would also benefit many other Americans. Are you familiar with Romney's proposed policies? His main tax cut (capital gains, interest and dividend income) is target at taxpayer's earning less than $200,000 per year. It is not a gross oversimplification to say that, ceteris paribus, cutting capital gains taxes will make investing in the stock market more attractive and help stock prices (as well as other asset classes). You can say that other factors will come into play, but we are analyzing a specific policy and its effect.
No, I am not. I am not a Republican or a Democrat, and I look at them all equally. I am sorry if you have the wrong impression, you should read my reply below if you feel this way as you may like it. Saying that a Republican presidency would be good for the economy and that the president has little to do with the economy is not inconsistent at all. Not one bit. Its all adjectives and semantics, but since it is possible for Republican president to be slightly beneficial to the economy (as I suggest here), then there is no inconsistency in expecting that to happen. Language and the magnitude of adjectives like "modestly," "extremely," can make it difficult to get this across since they depend on ungiven context, but please understand that my point in this article is that I expect the policies Mitt Romney supports to, if enacted, have a small positive effect on the economy and the stock market. There is no incoherence there, though you certainly may disagree if you feel differently. =)
The extremely was a bit of hyperbole, I admit it. And yes "A Romney presidency could not possibly have more than a small effect on stock market movement" does accurately represent my position. That small effect happens to be very important for investors looking to do there very best, though, and I do think it is large enough to matter for them. I am sorry for the use of extremely... you are correct that it doesn't fit with the tone of the rest of the article, and the article would be better off if it was omitted... that is completely my fault.
This is most patently biased post I have seen. Look, I'm not a big fan of Republicans or Democrats, but I do value looking at facts objectively. Was Obama's situation worse that Reagan's? That's debatable for sure, I would say probably yes, but Reagan inherited (yes, inherited) high inflation as well which is some Obama did not have to deal with.
More generally, its ridiculous to compare the economic results of a president's first few years and say that means anything about the president... the person above you made that same sort of claim, and I believe he is incorrect too. Your facts on the debt increase, however, are COMPLETELY disingenuous. Perhaps you aren't aware why that is, in which case no worries... people are prone to believing facts that fit their worldview without delving too deeply into their source. Here's why: The debt has increased massively since Reagan, which was largely his fault. By comparing as a percentage change, you ignoring the fact that the debt has grown tremendously. Obama has increased debt by over 40% of GDP in a few short years, nothing near what Bush or Reagan did in their first few years. Not even close. If as a percentage the figure looks better that is fine, but Reagan and Bush were both starting with far smaller debts, so the comparison is worthless.