Jonas Elmerraji

Why The Market's Set to Move Lower For the Rest of the Month

Just to be clear, this article is in no way advocating shorting the market right now. It's saying that we should expect the rally and slide cycles of the last few months to continue at the moment -- the current part being the slide...

In the longer term, the uptrend is still holding strong (see the chart above).

Wholesale Power: A Smart Alternative to Regulated Utilities

Hey guys, glad to see that the discussion's heating up... Just to clarify a few points:

Yes, NRG is highly leveraged. That's par for the course in the power generation industry, and at present the company's debt service is relatively secure through 2010.

NRG's book value less intangibles and goodwill is around $17 per share, but that assumes that the company's power generation assets are only worth book. Like the article mentions, though, that's unlikely the case. I'd estimate that with a more realistic valuation on those properties, we're looking at $39.70 per share with those same intangibles discounted.

Morningstar's Travis Miller puts NRG's sum-of-the-parts valuation at closer to $50 per share.

Because the company is such a strong buyout candidate, that real-world valuation carries a lot more weight than it would otherwise.

Not sure about the ConocoPhilips reference...

Those Calling for the Death of Value Investing Are Wrong

Eric - the idea that long term investing can't be judged on a one year basis is the part of the point I'm trying to make. Also, the S&P index is used as an example of the market as a whole, not as an example of a good value investment.

The point is that value investing has been misapplied over the last decade; now some are saying that value investing is deal as a result. That's just not true.

Staying Away from These 15 Dividend Decreasers

Hey guys, thanks for the comments -

David, I do agree with most of what you say, but the fact remains that whether or not attentive investors should have pared these positions, lots of people still own the stocks on this list (for a myriad of reasons). There are still lots of stocks out there that have decent payouts, but not these guys.

Oh, and thanks for the link to your article... it's a great read!

mdpath - Good catch. Thanks.

Has the Market Actually Bottomed?

"And AFTER that it could go either way.

You're entitled to your opinion but if you would deal with reality and and do some real research you would see that the future of the stock market over the next two decades is all but set in stone."

Fred, this is a technical piece; it takes a look at short-term trends (notice that we're looking at a 6 month chart) to take a look at where the market will be in weeks and months, not years.

If you think that it's out of the question to see a 20% swing in the next few months after the market jumped 23% in the last three weeks, that's your opinion, but it's one that I have some trouble resolving to.

The fact of the matter is that we're looking at a different kind of market; that's both scary and exciting. My subscribers - some of whom have been in the market since the 1960s - are saying the same thing. Still, it's an exciting market because there are myriad opportunities to make smart investments right now. Our track record is proof of that.

The fact is that the market has been irrationally exuberant for a long time doesn't mean that everything's ready to change now. To quote John Maynard Keynes, "...the market's ability to stay irrational often outlasts our ability to stay liquid."

Investor sentiment and economic fundamentals are changing on a daily basis, and right now, and that's going to dictate where the market goes much more directly than the P/E ratio of the S&P 500.

Maybe that'd be a good topic for a future article. Stay tuned.

Has the Market Actually Bottomed?

Exactly... but that is a big IF. If you want to take the technical trade, wait to see what happens after SPY hits that thick red resistance line. Until then, it could go either way (see the "bounces").

Has the Market Actually Bottomed?

schlumpf - You're right... it's the fact that everyone is long now that should make SA investors nervous. As great as March was, the chart in the article shows that we're still in an unquestionable downtrend.

If stocks break out above the trendline, we'll likely see the short-term uptrend continue in a sustained way, but from a technical perspective I think that the 200-day moving average (currently around 1000 for the S&P) is going to pose a serious ceiling for stock prices.

14 Dividend Increasers That Deserve a Second Look

PhilV - Good call... looks like the rest of the sentence got clipped somehow. Should say:

"Surprised? Well, in the past month dividend-payers on the S&P have underperformed non-payers by 4.71%; they’ve underperformed by 12.76% since January."

Textron's Selling Point? Dividends

Haha, Come on Chris, give me some credit - "I think it's certainly possible that Textron may cut its dividend in the short-term. But I also think that if you're looking at a company like Textron, you have to think long-term, and I don't see this company withholding dividends from shareholders over a longer timeframe. "

Overall, I think that the press release TXT put out today is favorable, especially when the market is fearing for the worst. The company may have cut dividends, but it didn't drop them. That's important. They also announced that their financial realignment of TFC is ahead of schedule.

Obviously I'd rather see them announce that they stuck gold underneath their corporate HQ, but if this is the earth-shattering news that the soothsayers have been proselytizing with, I'm fine with it.

Textron's Selling Point? Dividends

You're right – TXT is a value play... a big chunk of our positions since the second half of 2008 have been value because of the volume of opportunities out there.

I think that if you're looking at Textron as a going concern, dividends have to be included in the pot. TFC is the dark cloud that's lingering over the company right now, but if they can shed the division successfully in the next couple quarters they'll be in substantially better shape.

For now, liquidity is an issue for sure. Still, management has an aggressive liquidity plan in place that I'm betting will help the company hold out until they get their ducks in a row.

I'm sorry that you disagree with my rationale for holding Textron, but I do hope that the stock does well for you (for the obvious reasons).

Textron's Selling Point? Dividends

C. Fischer:
No. I guess I should have said don't judge an article by its title/a single paragraph/a single sentence. Before the word "dividend" is so much as mentioned there are around a thousand words breaking down why TXT is a bargain stock right now. This article came from a GARP investment letter, and the income was worth mentioning for subscribers who don't hear about it much.

Dividends ARE important for Textron, and they'll continue to be, but only in the context of value. It's the value that makes the yield that high, after all. The two are invariably connected.

To suggest that TXT is a buy based on dividends ALONE would be foolish, but I don't think it's accurate to say that's what's going on in the article. I also don't think it's reasonable to think that Textron will slash its dividends completely this year and never ever pay them again -- that's why dividends shouldn't be left out of the investment equation here.

Textron's Selling Point? Dividends

Just to be clear - the premise of the article is that Textron's core business segments are still going strong, not that Textron will NEVER EVER cut their dividends. There have been quite a few comments about the future of Textron's dividends, and I just wanted to clear up some misapprehensions...

Yes, TFC has created a slew of problems for the company. Yes, those problems do threaten Textron's ability to deliver a dividend in the short term. But I don't think that what the company is going through now (which is purely thanks to the credit crunch) will be its undoing. It's my assertion that once that becomes clear to Wall Street, Textron's owners will be rewarded. We've certainly been rewarded since taking the position (you can see total returns at rhinostocks.com/member... )

Textron does have quite a bit of pressure to keep their dividends in place. That doesn't mean that they will when faced with the economic challenges the next couple of quarters will bring. That said, I think that over the long-term, the stock will recover.

Just as you shouldn't judge a book by its cover, please don't judge an article by its title - SA authors don't write them. Editors do.

Is SDS a Way Around Market Volatility?

You're Kidding: Sorry to hear that you lost money last year. I'm happy to discuss the virtues (or detractors) of SDS, but is the name calling and profanity really necessary? We're all grown-ups here.

Best in breed means that of all the ultrashort funds out there, SDS is the least volatile. While that may seem hard to fathom after losing 33% in such a short time, just take a look at some of the other ultrashort ETFs (like SKF). Their distortion is wildly greater than SDS.

Like I said in the article, SDS isn't a set it and forget it stock pick... you have to watch this one, or at the very least place a stop loss.

My subscribers are up around 3% right now on the position in about a month while the S&P has dropped just over 1.5%.

Is SDS a Way Around Market Volatility?

Puts could be a good idea, but beyond the newsletter's limitations.

Is SDS a Way Around Market Volatility?

Oh, I see what you're getting at tunaman... a sort of ultra ETF arbitrage. While that would work great in a down market, like the one we're in, that method breaks down when things go up. Nice thinking though.