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John Lounsbury

 
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  • Natural Gas & Wind Power - The Pickens Plan [View article]
    Good comments for the most part.

    A few notes:
    (1) Pickens has said his plan is a 10-20 year stop gap until additional new energy technolgies are developed.
    (2) One of the individual wind plays not mentioned in the article is Vestas Wind Systems AS (VWDRY.PK) which I own.
    (3) A key element for electricity generation by variable sources such as wind and solar is electrical energy storage. Batteries and capacitors are an area that need a lot of R&D work. This area is also critical for the eventual ubiquitousness of plug-in electric cars.
    (4) As mentioned in the article and by several comments, energy is the largest economic challenge facing the U.S., larger than the size of the credit crisis, national debt and unfunded liabilities for Social Security/Medicare/Medi... combined.
    (5) New energy is also the great economic opportunity of the 21st century. It can have an impact equal to (or greater than) the railroad/industrial revolution of the 19th century and the internal combustion engine/petroleum driver of the 20th century.
    Aug 15 09:26 AM | Likes Like |Link to Comment
  • Solar ETFs Will Follow the Sun [View article]
    Some good pieces of information but why the title? Is the sun rising or setting? I like the dawn of a new day but what if the sun is fading into the western horizon?
    Aug 15 08:53 AM | Likes Like |Link to Comment
  • The Great Consumer Crash of 2009 [View article]
    An outstanding article and exceptionally good (for the most part) comments. I liken our recent history to musical chairs. In the current situation, though, when the music stopped (for the last time?) we have discovered that many chairs have been removed, not the usual one chair. Continuing the analogy, many will have to stand for a while but they will not die. They will stand, do their best and perhaps be wiser when they find chairs again in the future.
    Aug 14 05:30 PM | Likes Like |Link to Comment
  • How Low Can Oil Go? [View article]
    Perhaps the 500 years of oil assumes a much lower consumption rate as energy produced by nuclear, clean coal, solar, wind, tidal and geothermal take over most of the energy needs.

    Otherwise, guys, you have a leg that is much longer than this morning.
    Aug 13 03:19 PM | Likes Like |Link to Comment
  • LDK Solar: A Spark of Light [View article]
    I have been long LDK for almost 1 year and have made a bundle with short hedge positions against the box (2 shares short for every share owned) on several occasions. I most recently closed a short position on Aug. 6 @ 33 for a $2.47 profit per share and remain long only as of today. My long position was acquired with an average cost of just under $33 per share so my potential long term gain is on $6 and change as of today. However, my short positions have produced total returns of more than $72 per share and I have twice written covered calls for a total return of $21.50 per share.

    Needless to say, I love this stock because of the spectacular trading profits. However, I calcuate fair value today between $35 and $58 per share, depending on the estimated five year earnings growth used in the calculation and on the assumed value for Beta going forward (it's very high right now). This is very attractive compared to the very over-valued prices currently on most solar stocks. Ultimately, I expect more long term gains from LDK than short term trading returns.

    Using the high end of my fair value range, the fair value price for LDK in five years is approximately $260.
    Aug 13 02:42 PM | Likes Like |Link to Comment
  • Bull or Bear? Let History Be the Guide [View article]
    Craig74 - - -

    Great comments. I agree that opportunity abounds PROVIDED that the U.S. economy responds properly to the challenges. First among these is an energy revolution which dwarfs all other economic issues. I wrote a previous article discussing this.

    The rising consumer class in Asia may or may not produce significant benefit to the U.S. market. Yes, multinationals such as McDonalds, for example, may participate. However, Asian firms may get much more of the growth than U.S. corporations. The BRIC markets may far outperform the U.S. stock market.

    I am reminded that in the 1980's Japan was deemed destined to rule the world, just as China is now. The difference now is that the demographics of China are much different than those of Japan and a similar fate for the Chinese economy (compared to Japan of the past 20 years) is not likely.

    Going back to the 1900-1950 era, that was a period of dramatic manufacturing (and research and development) growth, led by the U.S. With the exception of opportunity in the coming energy revolution, the U.S. does not have the same scenario available for the first half of the 21st century. If there is to be a similar economic performance, it will be led by China and India.

    Finally, one recipe for having U.S. stock markets in the first half of the 21st century revert to a form similar to the first half of the 20th century is: (1) keep buying energy from abroad; (2) keep trying to get rich by buying and selling houses to each other; (3) depend on financial services to be a growth engine to the exclusion of production of goods; (4) allow medical services to continue at a level of 16% of GDP (I believe that is where it is now).

    Others might add some more ingredients to the recipe, but my list is a decent start.
    Aug 13 02:18 PM | 3 Likes Like |Link to Comment
  • Is Value Dead? [View article]
    One serious problem with value investing right now is that there is little visibility to future earnings, not only just for financials but for all economically sensitive companies. My definition of value is based on expected future growth of earnings. Not knowing what financial firms have on their balance sheets and not knowing if there is going to be (or already is) a global recession makes it very difficult to do value calculations.

    If you simply invest in low PE as value, you have been burned in the past year and will continue to get burned until the credit crisis is nearer to resolution and it becomes clearer where the world is in the current economic cycle.

    The bottom line is that value outperforms growth in the long term. However, there are times (like now) where value underperforms for a while. Value is based on fundamentals and right now fundamentals have too many unknowns.
    Aug 12 09:16 AM | Likes Like |Link to Comment
  • Dollar's Up, Oil Is Down: But Why? [View article]
    Strange as it may sound, I agree with both Jack Miller and Balderdash. The question is only the order of events. There are so many possible scenarios that I don't want to try give one or even a few. I will venture a guess that we will not go through one big cycle but probably have many violent ups and downs in commodities, the dollar and stocks. Balderdash's estimate of 20 years for the entire yo-yo sequence to play out may not be too far off.
    Aug 11 09:10 AM | Likes Like |Link to Comment
  • Will the Bear Market Rear Its Head This Week? [View article]
    Are we bursting a stock bubble? Maybe. I will have an article in SA later this week to discuss that possibility.
    Aug 11 09:00 AM | Likes Like |Link to Comment
  • The Electric Car Battery Battle [View article]
    In all this discussion of the compressed air car, nobody mentions the cost to buy the compressed air per mile of car operation. The cost is probably one figure if the compressor is powered by gasoline at approx. $4 per gallon, and another figure if electrically powered (or LNG or something else). At any rate, a 40 mpg petrol car costs $.10 a mile for fuel at $4 per gallon.

    What is the potential range of cost per mile using compressed air?
    Aug 9 11:14 PM | Likes Like |Link to Comment
  • Don't Just Do Something, Stand There [View article]
    Kunst - - -

    I agree with your good observation on the purchasing value of the dollar. A week ago I published an article in SA which showed the decline in the inflation adjusted price of industrial commodities over the past 60 years. The article discussed the prospects for a commodity bubble and whether the long term price decline for commodities could be ending.
    Aug 9 10:34 PM | Likes Like |Link to Comment
  • Is Poor Stock Market Performance a Positive Long-Term Indicator? [View article]
    Central tendency (reversion to the mean) is a powerful concept. I don't think the concept is weakened by the existence of only two "samples" because it actually is only operative over long time cycles (decades). I am working on an analysis of how reversion to the mean concepts might apply to the current market and will publish it on SA when finished.
    Aug 7 09:52 AM | Likes Like |Link to Comment
  • The Obama/McCain Energy Charade: Nothing But Empty Ideas [View article]
    Good article and discussion.

    I don't think a presidential candidate can be elected telling the truth about energy. Will either of the current candidates tell the truth after election? I certainly hope the winner does. Ostrich behavior will not solve our energy problem.

    I think McCain's battery prize is aimed at the primary problem to making a long-range plug-in electric (which could be hybrid with an on-board generator).

    I think Obama's $150B in incentives for new energy over ten years is a step in the right direction.

    If you put together what both candidates propose combined, though, it still comes up short of making significant progress in 10 years. Will Washington face the truth after the election that it is afraid to face while campaigning? I hope so, because this may be an energy crisis but it is also the economic opportunity of the 21st century. If government is supportive of the energy revolution process, significant progress can be made in ten years. Unfortunately, based on history, maybe Washington can not find a way to be supportive and may not even be able to get out of the way of needed change.

    "Lead, follow or get out of the way." This has not been the Washington of the past. Can it be that way in the future?
    Aug 6 10:28 AM | Likes Like |Link to Comment
  • What the Fed's Latest Decision Means for Investors [View article]
    Inflation in food, energy and industrial commodities. Deflation in stocks, real estate, US$ and, possibly, bonds. Which will win out?
    Aug 6 09:30 AM | Likes Like |Link to Comment
  • On Short-Sellers and Dishonest Executives [View article]
    This is a repeated comment from your article "Short Selling Revisited"

    Good article. I like to "short against the box" in volatile markets for downside protection of long-term capital gains (and sometimes profit). Since I am shorting companies I already own, this is a good example of shorting that does not have the objective of "bringing down the company". In many cases, shorting against the box is a much more cost effective way to hedge than buying put options. The more volatile a stock, the larger the time value in the premium. Writing calls as a hedge provides limited protection, whereas, whereas selling short provides unlimited value protection. Finally, selling short has no expiration date.
    Aug 5 09:25 AM | Likes Like |Link to Comment
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