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  • 3 Keys To Watch In The Week Ahead [View article]
    Excellent article all around!

    Many thanks for sorting out some trees from the forest.
    Aug 3 09:46 AM | 1 Like Like |Link to Comment
  • AT&T: Potential To Unlock Huge Value By Creating REIT [View article]
    Don't forget the tax impact of "qualified dividends." My understanding is that REIT dividends are generally not eligible for "qualified dividend" treatment, but I could be wrong.
    Jul 29 03:47 PM | Likes Like |Link to Comment
  • Growth phase starts for E-cigarettes [View news story]
    "Not so fast, Rodriguez"... goes the punch line to a joke.

    Current data is showing that "vaping" using VTM (vaping tanks/mods) devices is taking share from the eCig categories. Here is a quote from a recent CSP Dailey News article :

    "A new survey of convenience store retailers shows almost 92% of respondents believe vaping products and tanks are overwhelmingly taking share from electronic cigarettes. The Wells Fargo Securities LLC survey of tobacco retailers and wholesalers representing more than 30,000 convenience stores in the United States concludes that convenience retailers are excited about VTMs (vapor/tanks/mods)."

    Convenience store retailers are reporting that vaping devices are "hot" sellers, and are becoming more popular than eCigs.

    Reynolds is rolling out its Vuse product nationally next week. Here's a video all about this and the Vuse product
    Jun 18 08:32 AM | Likes Like |Link to Comment
  • What Does The VIX Now Say About The Stock Market? [View article]
    If you really want to get a sense of what is coming, and also "storm test" what your stocks may face, go to and create a chart that shows the price action for each stock for the period July 1, 2007, through January 1, 2009. Be sure to click the "price" indicator. Clear the other overlays and indicators.

    This will give you an idea how a given stock held up starting in 2007 when the you-know-what hit the fan.

    I think Mark Twain is credited with saying that history doesn't always repeat itself, but does tend to rhyme.
    Jun 11 02:40 PM | 1 Like Like |Link to Comment
  • Timing Is Everything [View article]
    Eric, excellent comments. Particularly your statement that "And this outcome has come to pass at the expense of those that acted responsibly by favoring savings over debt, focused on disciplined investment over rife speculation, and prioritized prudence over recklessness."

    Fed policy drove down interest rates to levels that forced many people into the equity markets. Chasing yield became a necessity for many who had previously relied upon interest on their savings and CD's for income. There was no place else to go.

    Authors, like yourself, are doing a public service to highlight the downside risk. The downturn will catch many off guard, and it will culminate with a sudden and deep savagery that will produce outrageous losses for many. To quote John Hussman, "it strikes me that the repeated belief that a crowd can exit through a mouse hole is really one of the wonders of human psychology."

    Thank you for your thoughtful insight.
    Jun 6 08:51 AM | 8 Likes Like |Link to Comment
  • How Will The Federal Reserve Raise Interest Rates? [View article]
    "The beatings will continue until morale improves."

    I don't know who said that originally, but in my view the sluggishness in our economy will continue until Øbama, Pelosi, Reid, and their ilk are long gone. Businesses are gasping for breath, yet they continue to smother them with more and more regulations.

    The impact on capitalism and the economy are obvious. There is little demand for loans when no one wants to start a new business. Why? Because the government regulatory "moat" is too wide, the tax burden is too high, and having to deal with labor is too problematic. All of this combines to discourage investment.

    The negative psychology of having to cope with the "leviathan" that the political elite have created for us insures our continued decline. Expect the sluggishness to continue, and rates to remain at historic lows... unless and until we have a fundamental change in the political class.
    May 30 11:53 AM | 6 Likes Like |Link to Comment
  • Analysis: Big Tobacco to dominate e-cig business [View news story]
    E-cig sales have been declining over the past few months. LO's 10Q notes the decline. But in convenience stores, where most sales are occurring, Lo's blu e-cig still leads in dollar sales and unit volume over other brands in the category. Query whether this will remain the case with RAI rolling out its Vuse product.

    In addition, across the nacent industry sales have declined. In the 4 week timeframe ending May 10, 2014, dollar sales volume declined 10.4%. Net pricing declined 13.9%. In response, unit sales grew 4.1%, but were not enough to offset the losses in dollar sales.

    There seems to be an increasing sales volume trend in the vapors-tanks-mods category sold mostly in tobacco stores and vape shops. This could put a dent in e-cig sales.
    May 30 09:59 AM | 1 Like Like |Link to Comment
  • Why I Said Goodbye To Lorillard, Inc. [View article]
    "MZ: “Here are the facts. Every single day over 3000 kids nationally light up a cigarette for the first time. Every single day over 700 kids progress to becoming regular smokers. Those numbers are unacceptable. And when you combine that with reports from the CDC that in one year, from 2011 to 2012, ecigarette use among middle schoolers and high schoolers doubled, we have an ongoing problem that we have to address.”"

    These comments were made by Mitch Zeller in the context of electronic cigarettes and the regulation thereof by the FDA. See

    If menthol plays a role in the initiation of smoking, or its continuation, as suggested by the FDA and other studies, it is difficult to believe that the FDA is not going to act on this subject.

    Ban all other flavored tobacco products, but leave menthol standing? That strains credulity, IMHO.
    May 27 09:32 AM | Likes Like |Link to Comment
  • Lorillard Is A Smoking Good Deal: High Yield As A Bond Alternative [View article]
    Taxation aimed at e-Cigs is spreading.

    A New Jersey Senate Committee has voted 5 to 2 to support a bill imposing a 75% tax on manufacturers of electronic cigarette products. This cost, if it becomes law in N.J., would be passed on to consumers. In addition, the excise tax on other tobacco products would double from 30% to 60%.

    Whether this legislation will make it through the N.J. Assembly remains to be seen. But the handwriting on the wall is pretty clear: As with traditional tobacco, States see a "tax cow" in the e-Cigs category.

    Expect a tsunami of similar legislation.
    May 21 02:06 PM | Likes Like |Link to Comment
  • Where There's Smoke, There May Not Be Fire: E-Cigs [View article]
    Presently, it appears that a hurdle that could stymie the growth of the eCig industry is private prohibition on NDD's (nicotine delivery devices), as well as prohibition by local governments.

    An article in the Pittsburgh Post-Gazette brings this to the forefront by pointing out the ban of eCigs by private businesses. State and local governments are getting into the act with laws and regulations of their own. See

    If the FDA determines that NDD's confer a health benefit over traditional cigarettes, these bans may fall by the wayside. As Mitch Zeller of the FDA stated: "If we could get all of those people to switch all of their cigarettes to these products, that would be good for public health... ."

    Ironically, FDA regulations approving NDD's as a way to assist smokers in quitting may prove to be just the boost the eCig business needs.
    May 18 12:04 PM | Likes Like |Link to Comment
  • This Is Still The Graph That Scares Me [View article]
    Put Øbama to work on it. He's done such a fabulous job since 2009 when he took office.

    Let's see... tax increases on people, refusal to re-patriate profits being held by companies abroad, passage and cram down of Obamacare, increased capital gains taxes to discourage capital investment, more governmental regulations to smother businesses, refusal to permit the Keystone pipeline, probable increases in the minimum wage, amnesty for illegals.

    Sounds like a sure fire program to encourage job growth.
    May 12 10:45 AM | 6 Likes Like |Link to Comment
  • Lorillard Is A Smoking Good Deal: High Yield As A Bond Alternative [View article]
    A study has come forth from the Rutgers School of Public Health that contains some interesting data concerning youth smoking and menthol.

    The data comes from the National Young Adult Health Survey undertaken in 2011. 23.8% of respondents in this study were current smokers, and of these, nearly half (40.3%) smoked menthol cigarettes. Menthol use was significantly higher among 18 to 24 year old smokers (51%), and extremely high among Blacks (82%).

    Here is one really interesting data point: 65.7% of menthol smokers said they would quit tobacco all together if the sale of menthol cigarettes were banned. Breaking this down further into groups, 79.3% of Black menthol smokers said they would quit smoking.

    The authors concluded: "A majority of young adult menthol smokers stated they would quit smoking if menthol cigarettes were no longer sold, which builds on research finding public support for such a policy and on work modeling the public health impact such a ban could have."

    The point is that data is being assembled to the effect that menthol affects the initiation and continuation of smoking in youthful smokers, and that banning menthol would have an impact on cessation among youth and racial minorities.

    The scientific power of studies like this can be criticized as being weak, because no one really knows what people will do when push comes to shove. Prospective studies could be designed to test what menthol smokers will really do when their menthol is taken away from them, and these may be underway.

    It seems apparent, however, that as the data against menthol begins to pile up, the FDA will take action.

    This particular study can be seen at
    May 9 01:48 PM | Likes Like |Link to Comment
  • Lorillard Is A Smoking Good Deal: High Yield As A Bond Alternative [View article]
    The market seems to be placing great emphasis on e-Cigs as a profit driver for LO, MO, RAI and others.

    Unfortuately, the political class has been working furiously to impose severe limitations on where e-Cigs can be used. In addition, they are working on confiscatory taxes to inhibit or destroy the market for this product. Cities, towns, and counties have gotten into the act with prohibitory ordinances. States will soon be waking up to the "tax potential" of e-Cigs.

    Minnesota is the only state at present that taxes e-Cigs. It imposes a tax rate of 95% of the wholesale cost. Yes, you read that right. 95% of the wholesale cost is collected by the State of Minnesota and added to the price consumers must pay. This brings the cost of a typical e-Cig product to $16 to $18. I think someone once said, "The power to tax is the power to destroy."

    Tax bills are pending in several other states. New York is pushing for a 75% tax, Rhode Island 80%, and Vermont 92%. While 39 states do not yet have an e-Cig tax on the books, they no doubt will, and the consumer will pay dearly for that nicotine fix. The Feds have not yet gotten in on this tax target, but give them time.

    Back to Econ 101, folks, to figure out whether price to the consumer will affect demand, demand will affect sales, and sales will affect earnings. :>)
    May 8 01:35 PM | 1 Like Like |Link to Comment
  • Lorillard Is A Smoking Good Deal: High Yield As A Bond Alternative [View article]
    I have to agree with mgladden2 concerning the risk that the FDA will eventually ban menthol in tobacco products, especially cigarettes, and probably e-Cigs, as well. I wrote an article about this some time ago,

    If you take the time to read the articles and studies on the impact of mentholated tobacco products, you will discern that menthol plays a significant role in smoking initiation and continuation. The tone of the FDA's preliminary scientific report demonstrates a decided bias towards the elimination of menthol in cigarettes.

    Here is a statement from the FDA's report that should be a real an eyebrow raiser, in my opinion: "[A]dequate data suggest that menthol use is likely associated with increased smoking initiation by youth and young adults. Further, the data indicate that menthol in cigarettes is likely associated with greater addiction. Menthol smokers show greater signs of nicotine dependence and are less likely to successfully quit smoking. These findings, combined with the evidence indicating that menthol's cooling and anesthetic properties can reduce the harshness of cigarette smoke and the evidence indicating that menthol cigarettes are marketed as a smoother alternative to nonmenthol cigarettes, make it likely that menthol cigarettes pose a public health risk above that seen with nonmenthol cigarettes."

    One should also take into account that the Family Smoking Prevention and Tobacco Control Act itself statutorily banned every natural and artificial flavoring from tobacco products, except menthol. Menthol was left hanging for FDA action. No doubt a political decision. The FDA's desire to get their ducks in a row on regulatory action affecting menthol is understandable in view of probable court challenges that will be mounted by Lorillard. The FDA has been down this road before, and knows what will stick and what won't. In my opinion, the courts will not befriend Lorillard if the declared purposes of the Act are to be achieved.

    I am an investor, not a politician. I am not an anti-smoking advocate. I believe in personal choice and liberty. But the political winds are seemingly no longer blowing in favor of personal liberty and freedom of choice.

    Read the preamble and findings to the Family Smoking Prevention and Tobacco Control Act. If the politicians really meant what they said in drafting this legislation, and if the Surgeon General's report on tobacco and smoking is true, it is hard to conclude that menthol will not be banned from tobacco products and from e-Cigs, as well.
    May 6 10:46 AM | Likes Like |Link to Comment
  • Why I Said Goodbye To Lorillard, Inc. [View article]
    As previously stated in another post, the FDA is not free to do anything that it wants to do.

    The Act specifically prohibits the FDA from banning cigarettes and certain other tobacco products: "Because of the importance of a decision of the Secretary to issue a regulation—
    (a) banning all cigarettes, all smokeless tobacco products, all little cigars, all cigars other than little cigars, all pipe tobacco, or all roll-your-own tobacco products; or
    (b) requiring the reduction of nicotine yields of a tobacco product to zero,
    the Secretary is prohibited from taking such actions under this Act."

    So, the FDA cannot ban Marlboro cigarettes per se. But it can regulate what additives, if any, are permitted to be put into Marlboro cigarettes by Altria.

    Note that all other flavorings, spices, etc., were specifically prohibited by the Act, except menthol, and even as to menthol, the Act makes clear that it could be regulated ("Beginning 3 months after the date of enactment of the Family Smoking Prevention and Tobacco Control Act, a cigarette or any of its component parts (including the tobacco, filter, or paper) shall not contain, as a constituent (including a smoke constituent) or additive, an artificial or natural flavor (other than tobacco or menthol) or an herb or spice, including strawberry, grape, orange, clove, cinnamon, pine- apple, vanilla, coconut, licorice, cocoa, chocolate, cherry, or coffee, that is a characterizing flavor of the tobacco product or tobacco smoke. Nothing in this subparagraph shall be construed to limit the Secretary’s authority to take action under this section or other sections of this Act applicable to menthol or any artificial or natural flavor, herb, or spice not specified in this subparagraph.").

    Regarding your comment that "no regulatory body has ever been able to operate with such tyrannical freedom," have you had any dealings with the EPA since 2009?

    As for any requirement that the FDA show or prove "disproportionate harm," there is no such legal requirement, to my knowledge. In any event, the FDA in its PSE signaled that the presence of menthol posed the likelihood of "a public health risk above that seen with nonmenthol cigarettes."
    Feb 20 04:41 PM | Likes Like |Link to Comment