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Kevin McElroy  

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  • Why REITs Could Be The Most Dangerous Income Investment [View article]
    The good news it that it looks like the market wants to punish Reits of every stripe on any kind of rate-hike rumor, real or imagined.

    That's good for you folks who want to add to your Reit positions. The whole sector gets clobbered for no good reason. Don't shoot the messenger: take advantage.
    Aug 6, 2013. 11:08 AM | Likes Like |Link to Comment
  • Why REITs Could Be The Most Dangerous Income Investment [View article]
    Sorry everyone, I was unaware that SA grabbed this editorial and just noticed the wave of comments. I do understand the difference between MReits and other Reits - but it's clear that there's inherent market risk across the sector, which you may note in the Dow Jones index.
    I appreciate the criticism of this piece - which for the sake of brevity and a (perhaps too broad) conclusion didn't go into detail about any specific Reits - or the different types out there.
    Moreover, my larger thesis is still intact - that bond risk isn't limited to bonds.
    Jul 1, 2013. 11:22 AM | Likes Like |Link to Comment
  • A Vital Update On The World's Most Important Commodity [View article]
    Well. That one didn't work. But that's the nature of this strategy. You have to be prepared for losers. And you have to stick to your rules. Over the long term, a strategy with a better than 80% chance of success will work. That's why position sizing is key.
    May 2, 2012. 04:38 PM | Likes Like |Link to Comment
  • A Vital Update On The World's Most Important Commodity [View article]
    No, this is a weekly options contract - the May weekly - and it expires tomorrow at the market close.

    And we're not anticipating anything really. Really, we're just taking advantage of the statistical likelihood (as measured by delta) that the stock will remain ABOVE the $39 strike by expiration. The implied volatility makes this credit strategy attractive now thanks to the perceived expectation of a potential big move for GMCR following earnings - as has been the case in the past.
    We're selling high volatility and creating a trade that limits our downside. As for why we went bull put instead of some other credit spread, that's just a general belief that GMCR will move higher rather than lower.
    But we know due to high volatility that we have a significant margin of error wherein we'll still be in the black.
    May 2, 2012. 03:13 PM | Likes Like |Link to Comment
  • A Vital Update On The World's Most Important Commodity [View article]
    Yes to your first question.

    Your max loss for the second question, would be $157 per contract. That seems high, but think of it this way: you're risking $1.57 to make a profit of 43 cents. That's a 27% gain in about a week with over an 85% likelihood of success. Pretty good risk-reward.

    The problem is, these kinds of trades (by pure statistical likelihood) fail 15% of the time. So if you're NOT managing your position sizing, and you're NOT trading with some regularity, you're likely to get blown up. It's a long term strategy, and it's easy to get shaken out when things go against you.
    May 1, 2012. 10:26 AM | Likes Like |Link to Comment
  • A Vital Update On The World's Most Important Commodity [View article]
    We don't care what happens to the options - assuming that GMCR stays above $39. We want everything to expire worthless, just pocketing the up front premium.
    May 1, 2012. 10:14 AM | Likes Like |Link to Comment
  • A Big Mea Culpa About Seadrill's Dividend [View article]
    Thanks for all of the kind words, but I'd honestly sooner have not made the mistake.

    As for the continued implication that I was short this stock, I really hope that my accusers (who I will not name) will think long and hard about what they're saying. In this business, it only takes one phone call to the SEC to make things unpleasant for any journalist or analyst. People have gone to jail for front-running - so I do not take these accusations lightly - nor should anyone.

    There's a real witch-hunt going on for any kind of malfeasance in the aftermath of the Madoff debacle, so don't make the mistake of thinking that your snide accusations are cute or funny. The SEC doesn't find them funny, nor do I.

    Regardless of my guilt or innocence, being investigated by the SEC is unpleasant. So either knock off the jokes, or by all means drop a dime and waste taxpayer's money and my time. These kinds of accusations have no place in this discussion in either event.
    Apr 10, 2012. 11:42 AM | 2 Likes Like |Link to Comment
  • Are We Witnessing A Global Asset Sell-Off? [View article]
    Double digits? I have between 5 and 10% of my savings in gold and silver. I'd like a little more.
    Apr 5, 2012. 02:11 PM | Likes Like |Link to Comment
  • Are We Witnessing A Global Asset Sell-Off? [View article]
    I'd say that most investors fall into the camp of owning ZERO gold or not enough gold. Very few people have a significant portion of their portfolio in gold. Probably less than 1%.
    Apr 5, 2012. 11:32 AM | 1 Like Like |Link to Comment
  • Seadrill: Don't Fall For The Dividend Trap [View article]
    Everyone - thanks for the comments. I've written a "mea culpa" about this Seadrill article, and I hope it adequately addresses my errors. I make no excuse for such sloppy work - and I humbly apologize for my mistakes.

    You can read it here:

    I doubt it will satisfy the SERIOUS accusations that I'm secretly pounding this stock down so I can buy it in my own account. Or that I'm shorting the stock. That would be illegal, and punishable by prison time.

    If anyone seriously suspects me or any other author of breaking securities law, I strongly encourage you to cease the saber rattling here in the comments and to immediately contact the SEC.

    For the record I have no ownership in Seadrill, nor am I shorting it. Nor do I plan on owning it anytime soon.
    Apr 5, 2012. 10:37 AM | 3 Likes Like |Link to Comment
  • Iron's Boring, But Labrador's Ready To Take Off [View article]
    China is slowing, of course. They've revised their growth downward on a percentage basis - but say their growth slows 75%. They will still require huge amounts of iron. So unless you think China will go into a depression sometime soon, it doesn't make much sense to too much about slowed growth. After all, on a nominal consumption basis, China is growing as fast as ever.

    The other thing with companies like Labrador is that they're on schedule to double their production. Unless we see a huge slaughter in iron ore prices, this company should have great upside. But do your own homework, of course.
    Mar 14, 2012. 03:10 PM | Likes Like |Link to Comment
  • Iron's Boring, But Labrador's Ready To Take Off [View article]
    If you're not prepared to do your own digging, I wish you the best of luck. You'll need it.
    Mar 14, 2012. 03:03 PM | Likes Like |Link to Comment
  • Bold Enough To Call A Top? A Look At The Major Indices [View article]
    Why use a leveraged ETF when you can get better leverage, more favorable probability of success and up-front premium using an options strategy?
    Feb 19, 2012. 09:53 AM | Likes Like |Link to Comment
  • Cautious Optimism For Commodities [View article]
    Well, you want to own physical to protect yourself from currency devaluation. You want to own miners for huge capital gains potential. So, you have to ask yourself some questions about how much physical you want to hold, and how much investment capital you want to skew towards a somewhat more speculative venture like a gold miner - and then you can drill down even further to decide how much of your capital you want in a big "safe" miner like any of the companies in the Amex Gold Bugs Index, and how much you want to put to work in the high risk, high reward jr miner space.

    So for me, it's not an either or. It's the difference between deciding how much cash I want in the bank, and how much of my capital I'm willing to bring to the casino.
    Feb 12, 2012. 09:24 AM | Likes Like |Link to Comment
  • Silver Opportunity Begins Anew [View article]
    Yeah, my disclosure is pretty clear in the body of the article. Sorry for any confusion. It's true that I currently own no miners or ETFs besides a small position in PPLT. I do own physical silver and gold.

    Honestly though, you should always the assume the worst. The disclosure policy anywhere on the internet, and indeed, just about anywhere is not exactly rigorous. Never believe anything you read unless you can verify it independently.

    The SEC can't stop you from being fleeced. They can only prosecute someone after the fact, and that's certainly not a guarantee, nor is it a solace.

    If you don't do your homework, then you should look in the mirror for someone to blame.
    Feb 3, 2012. 02:36 AM | Likes Like |Link to Comment