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Kurtis Hemmerling  

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  • Apple: Probably Going To Remain Painful For The Average Investor [View article]
    I would love to hear your analysis of what would happen if Apple paid out 80% of its existing cash to shareholders (about 1/3 of current share price is cash) and paid an 80% payout ratio going forward after that on profit... even assuming that earnings growth was a big zero now and forever.

    This may not happen but it does give you a picture of valuation beyond a price chart which just shows investor sentiment and not value.
    Apr 8, 2013. 12:32 PM | 3 Likes Like |Link to Comment
  • My S&P 500 Market-Timing System [View article]
    I look at the portfolio every 4 weeks. The percent invested is the number of stocks held in the 'S&P 500 portfolio' dividend by 500. If all is well this can hold all 500 or the S&P 500 index or 1 in an extreme circumstance (it takes two to correlate)
    Apr 8, 2013. 10:08 AM | Likes Like |Link to Comment
  • How To Be Protected Before The Next Market Crash [View article]
    The last chart includes a 1.5% carry cost for shorting and 0.15% slippage for these S&P 500 stocks. With less than 1/2 the drawdown and much higher performance than the market... some would say its too expensive not to instead of the other way around.

    The thing about the PE ratio... its dependent on earnings and price. Earnings are not static and when the economy goes down so do earnings. Your bet is that the next drop the market will go up. Not all investors want to make that bet. In a bad economy your growth stocks won't be and your dividend companies can only pay what they are not earning for so long...

    A long/short portfolio is not dependent on the markets rising which is the point of this article. If the markets are sure to go up long-term - then yes, leverage to the hilt and make money. But you only have one life, and many are not willing to risk it based on a belief that the markets must always go up.
    Apr 7, 2013. 08:34 PM | 2 Likes Like |Link to Comment
  • How To Be Protected Before The Next Market Crash [View article]
    Thanks... I meant to talk about options but somehow neglected to. The issue I have with options is time decay when long puts. As well, options premiums vary based on the expected volatility so this form of hedging gets more expensive when a crash seems probable.

    I trade options but for the average investor to use these for a clear and simple hedging tool - I am not so sure.
    Apr 7, 2013. 11:23 AM | 2 Likes Like |Link to Comment
  • 4 Stocks To Buy On Upgraded Earnings Forecasts [View article]
    Good point and agreed. Its why I also consider valuation second, short interest third...

    But for a single driver on average - there is definitely game in current year and next years earnings EPS being bumped up by 5% or more. I'm not as bullish on reported earnings surprises as my experience is that these (in isolation) have far less price drift than a big forward looking forecast upgrade.
    Apr 4, 2013. 05:07 PM | Likes Like |Link to Comment
  • My S&P 500 Market-Timing System [View article]
    Interesting question. I am not sure how much this 'market-timing' system would change as regards beta since a beta of 1 is whatever the S&P 500 is doing... and that is our universe of stocks. So volatility might increase for the S&P 500 but the beta stays at 1 and the individual holdings (S&P 500) might stay in their relative betas while the correlations between stocks increase.
    Stock ABC might still move half the market but instead of being somewhat independent of the market it suddenly goes up on market up days and down on market down days.

    I'd have to think a bit more on this one and test that relationship since the stocks in question make up or standardized beta of 1. Anyone else want to chime in on this?
    Apr 2, 2013. 03:08 PM | Likes Like |Link to Comment
  • What Free Financial Stuff Can I Give You? [View instapost]
    Okay. I have 2 Piotroski portfolios running at the moment...

    1. One is through Portfoliocafe.com - which is a site managed by financial guru Tim Fortier http://bit.ly/YQpYWM

    2. The other is available to Portfolio123 members http://bit.ly/16jf7EZ

    I'll look into a version that doesn't compete with either of these.
    Apr 2, 2013. 11:31 AM | Likes Like |Link to Comment
  • My S&P 500 Market-Timing System [View article]
    Sorry for the confusion. You are not to hold 300 of 500 stocks... this is merely to calculate the % invested for the indicator. Like you suggest - the model recommends 60% invested and you can put this anywhere you like including the SPY,
    Apr 1, 2013. 05:29 PM | 2 Likes Like |Link to Comment
  • What Free Financial Stuff Can I Give You? [View instapost]
    Did you get this page? I have a new article that discusses how it is built and how to read it. Basically. the # of holdings dividend by 500 gives the % cash that should be invested right now.
    http://bit.ly/YrjhL3
    Apr 1, 2013. 04:46 PM | 1 Like Like |Link to Comment
  • My S&P 500 Market-Timing System [View article]
    Here are some stats:

    Year Model.....S&P 500
    2008.....-7.34..... - 38.49
    2009.....15.31..... 23.45
    2010.....9.27.....12.28
    2011.....0.78.....0
    Apr 1, 2013. 04:41 PM | Likes Like |Link to Comment
  • One Trick To Protect Against The Next Bear Market [View article]
    No, a minus and a plus do not equal zero. You can have 100 shares of Apple and then short 100 shares of Apple with a perfect negative correlation. But the two are not independent - you have a neutral and perfectly hedged portfolio which means no gains are possible. Much different than having 2 products with no correlation to each other.
    Mar 27, 2013. 11:47 AM | 1 Like Like |Link to Comment
  • One Trick To Protect Against The Next Bear Market [View article]
    Hi Gerald. Good point. Yes, in general you will see price correlation become higher when price goes down. When there is one massive event or catalyst that affects everything, we see high correlation. But no, I would not go so far to say that it is momentum - as if we are using some sort of trailing price out-performance data to tell us when to buy and sell. This is a very 'in-the-moment' statistic that is more similar to sentiment than it is price. It is a way of adjusting your exposure to the market based on diversification. If you have 100 stocks that trade with high price independence - you feel safer that any one stock dropping will not influence your portfolio greatly. But when all stocks are acting the same - you fear a drop because the whole portfolio crashes. So you eliminate the biggest offenders and keep your portfolio diversified. It is a byproduct that smaller focused portfolios will raise cash simply because there are no longer low correlation stocks to hold.
    Mar 27, 2013. 11:45 AM | Likes Like |Link to Comment
  • Domestically Funding International Growth: The Netflix Strategy [View article]
    You compare recent prices to old prices. Have you seen the monster plunge in tangible common equity ratio since 2008? Big share buybacks at high prices and then dilution and capital raising at basement prices? Destruction of value for shareholders makes it difficult to compare yester-years prices to todays.
    Mar 22, 2013. 01:34 PM | Likes Like |Link to Comment
  • One Trick To Protect Against The Next Bear Market [View article]
    I am not sure about eye-balling a chart. This is also done with a basket of stocks. You have 10 or 20 or 50 or however many stocks. The correlation is highly dependent on how similar these stocks are (sector, industry, exchange, index etc.).

    Take a 3-5 year sample period (or an certain market drop...1999 as an example) and determine using the correlation filters the preferred range for that group of stocks. A basket of electric utilities will be more highly correlated than choosing 3 stocks from each industry group (one for each market cap size) in the Russell 3000 or S&P 1500. Then forward test to see if the correlation filters continue to give some protection against a down market.
    Mar 22, 2013. 01:05 PM | Likes Like |Link to Comment
  • One Trick To Protect Against The Next Bear Market [View article]
    Ouch...you think this is easy?

    Fund managers have more regulations and restrictions around them. Open-ended mutual funds cannot sit on 70% cash just because the fund manager wants to.

    As for my strategies... if the lowest turnover is $150K and I invest up to 5% of the turnover and there are 15 stocks in this focused portfolio... that's $112,500 to invest if I equal-weight. If I have numerous strategies this results in a good 'personal fund'. But to a fund manager it is not even worth doing. There are so many more ways to make alpha with $50K than with $50 million and that's the struggle fund managers have.
    Mar 22, 2013. 11:59 AM | 2 Likes Like |Link to Comment
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