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Marc Gerstein

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  • The Achilles' Heel Of Apple Is Its Recalcitrant High-Margin Policy [View article]
    "I need everything to work smooth and without problems."

    Yes, agree 100%!

    "So far, Apple solves that."

    Here's where we part company.

    Besides consuming media, I use tablets for work that involves spreadsheet, word processing, pdf and powerpoint. I was getting by with my iPad but barely. But just recently, I bought a low-end $139 7" kindle fire HSD mainly to learn the accessibility features to see if it would work for my severely sight impaired mother (AAPL doesn't seem to care about these people). And while fiddling with it, I noticed how much smoother and quicker it was to transfer and manage work files than it was to do it with iPad. I'm also impressed, even for basic media consumption, how much easier it is to find books/music/etc. I've been using most recently with the kindle carousel (seeing it in stores, I figured it was just cosmetic junk; now that I use it, I see it's actually quite useful). When in the future I'll need to replace my iPad, it looks like I may switch to the 8.9" HDX Fire (or whatever else comes out by then) . . . subject to how I feel about W8 as i learn more about it and the 2-in-1 laptop/tablet devices.

    iPad is a beautiful piece of technological art and it works great for certain things. But as time passes, I'm seeing rivals doing equally well in iPad's basic strengths (media consumption) and running out ahead in a lot of basic work-oriented functionality. I don't care about more pixels and retina displays, and even more super-duper cameras. Just let me do my work smoothly and comfortably and without wasting time and energy on workarounds.

    "I trust Apple to solve it. I don't trust Android and PC to solve it at all. "

    For you, that's fine. For me, that's not the case; not even close. To each their own.
    Jan 7 11:24 PM | 1 Like Like |Link to Comment
  • Bill Ackman's Folly With Herbalife: 7 Assumptions That Led Him Astray [View article]
    "Perhaps because of the heavy regulations many RIA's, RR's and CIMA's prefer to participate in a discussion without the full disclosure of our identity and the accompanying required reporting to our parent firms. "

    First of all, Quoth the Raven isn't merely participating in discussion. Its views stem from articles it published on SA.

    Now SA does have an explicit policy authorizing anonymous authors for reasons similar to what you stated, that some authors may be constrained by employment requirements from publishing articles. I, for one, have a huge problem with that. If your employment does not permit you to publish, then here's an idea -- Don't publish!

    If, on the other hand, an RR feels a strong desire to publish notwithstanding reporting requirements of his or her firm, then here's another idea -- Comply with the reporting requirements!

    BTW, SA was well up and running long before they started paying authors. Many authors were professionals and published not so much for money but from promotion, exposure. So needless to say, they used real names (how else can one attract clients). I really fail to see any legitimate, ethical justification for anonymity. Should one be allowed to do one thing on behalf of clients but publish the opposite on SA? Hmmm, this sounds familiar . . . Henry something or other, Elliot Spitzer, early 2000s . .. Hey, at least the Wall Street folks used their real names. That puts them all a huge leg up on the anonymous things that are, unfortunately, allowed to publish on SA.

    If, on the other hand, one is going to uses anonymity to commit fraud on employers, clients, etc., then how could I trust that such an author wouldn't commit fraud on readers? I can't and won't. (FWIW, be awate that unlike Wall Street firms that require employees to have their brokers send copies of their trade statements directly to them, media outlets, including SA, do not independently verify the disclosures published on the site; the authors are on the honor system.)

    In fact, this article is one example of the important benefits of known authors. I researched Thompson beyond his SA profile and saw material from the past, pre Ackman-HLF, where he had publicly spoken out against MLM bad apples I had heard of. Because he revealed his identity, I was able to comfortably satisfy myself regarding the integrity of the opinions he expressed in this article. Had he published under a pseudonym, Quoth the Earthworm, for example, I'd have had no way to gain comfort with the legitimacy of his views. For reputable authors expressing reputable views, disclosure is a good thing.
    Dec 12 09:18 AM | 5 Likes Like |Link to Comment
  • Bill Ackman's Folly With Herbalife: 7 Assumptions That Led Him Astray [View article]
    How else could I refer to it? For all we know, Quoth the Raven could be Paris Hilton amusing herself.
    Dec 11 09:05 AM | 7 Likes Like |Link to Comment
  • Bill Ackman's Folly With Herbalife: 7 Assumptions That Led Him Astray [View article]
    I understand that in the on-line community, there is something of a bugaboo about "ad hominem attacks," where the speaker, rather than the opinion is put in the cross-hairs. I strongly disagree with this taboo in the context of a setting such as SA. When we deal with what are, essentially, dueling opinions, the nature, capabilities, and motivations of those expressing the opinions is not only relevant but may actually be the only thing on which readers can hand their hats.

    So here, on the one side, we have an experienced, noted MLM attorney (I checked on Thompson and he's not puffing; he's very much for real and is not and industry shill. He's been vocal for distributor interests and has spoken out vigorously against MLM bad apples.)

    On the other side, we have an unknown entity that refers to itself as Quoth the Raven and is a self-described "casual investor making casual observations for the purpose of discussion and open communication and analysis of companies and stocks." Although this entity uses the word "open" it conceals its identity and explains the decision in its profile by stating "There's always a group of people that give me the business about remaining anonymous, and the fact of the matter is in order to say exactly what's on my mind without being politically correct or diluting my thoughts with BS, I need to remain anonymous. The same way there's things you probably don't publicly broadcast on your personal Facebook. I have a family, I conduct business, and I need to make sure that those items are never in jeopardy based on how I feel and what I say about an investment."

    Speaking for myself, I have a family, I conduct business, and I set forth my thoughts without diluting them based on political correctness or BS, yet I have always used my real name and where applicable, my real picture (although I should update the one I use now which looks like #$%^). The author of this article likewise has a family and a legal practice and shares his thoughts without pc or BS. So, too, do many others on SA.

    Now, I haven't spent a gazillion hours digging into HLF. But I have read this article and the anonymous 7-reasons posed by Quoth the Raven (I assume a fan of Edgar Allen Poe), and find it hard to lean too far in one direction or the other based solely on the articles. But I do notice that the market in general including some other very big-time investors who are not easily fooled or scammed are in the Thompson camp. And while I fully understand the angst over the ad hominem thing, frankly, anyone who reads or views investment-related content without contemplating the credibility of the speaker is being reckless with his/her money (something I thought the world learned after the internet bubble and related Wall Street scandals, and something SA has partly learned by requiring ownership disclosures -- Quoth has an axe to grind, as we know through it's disclosed short in HLF -- but still allowing anonymity, which I find repellent when publishing content to readers who may invest on the basis thereon). Hence for me, this issue does turn on ad hominem considerations. And on that basis, I believe Thompson is the compelling choice.

    Father Time will eventually tell us once and for all which view is correct. But for now, if I were to commit money re: HLF (which I haven't and probably won't), the Thompson position is the only one I'd be able to explain to my wife without getting kicked out of the house. Also, as an attorney and an RIA, I believe that if I were to commit client money on the basis of the Quoth position and it were to go sour, I'd be a sitting duck if sued for negligence and compelled to explain my due diligence process.
    Dec 10 11:12 AM | 23 Likes Like |Link to Comment
  • Short Tesla: Intrinsic Value Of $36 Per Share, Is The Bubble Now Deflating? [View article]
    This article amply illustrates why DCF analysis belongs in the classroom but in the real world, is nonsense. It allows wild assumptions to be too easily buried. Often, in the past, such assumptions have been wild on the upside. This is the opposite.

    "Assuming a long-term FCFE growth rate of 5% "

    This, for a company that first reported revenue just five years ago and is only now starting to build any sort of volume and in terms of market share remains barely microscopic. 5%! That might actually be OK, but you can't set if for 2017; maybe 2027 or 2037, but 2017 -- absolutely positively out of the question unless you do some very serious and detailed explaining. And by the way, you also need to do some serious explaining regarding your FCF growth assumptions in 2014, 2015 and 2016.
    Nov 6 10:02 AM | 3 Likes Like |Link to Comment
  • Amazon And The 'Profitless Business Model' Fallacy [View article]
    "What if Amazon was a Chinese company?"

    ???

    Then Jeff Bezos would greet you by saying "Nee How" instead of "Hello."
    Oct 28 07:34 AM | Likes Like |Link to Comment
  • Amazon And The 'Profitless Business Model' Fallacy [View article]
    “Most armchair analysts love to dissect gross margin and net income because those are simpler to understand and easier to compute from public financial statements, but there are many problems with just looking at gross margin that any analyst worth their paycheck should understand.”

    And every analyst worth his/her paycheck (which means pretty much all analysts) does understand.

    “Is it that difficult to fathom that investing to try to be the largest retailer in the history of the world takes billions of dollars in investment?”

    Not at all! It’s an incredibly easy concept and one that is very well understood in the investment community.

    Eugene, I and many others very much appreciate this article. It’s important though that you understand who/what you’re arguing against. Short interest in AMZN stock (a percentage that reflects genuine bearishness re: AMZN) is presently about 1.5%, which, for analytic purposes, is largely indistinguishable from zero. And contrary to the views of many who have written or posted on Seeking Alpha, the market is quite aware of where AMZN trades and what its financials show. And it’s not a case of the market not caring about profits or any other childish nonsense like that. The investment community is quite capable of dissecting companies case by case and making judgments. Short interest for Tesla, for example, is pretty high, at 17.1%. We see short interest of 42.2% for SodaStream, 19.3% for OpenTable, 17.1% for Zillow, 16.3% for Barnes & Noble, 15.9% for Pandora, 12.7% for AOL, 12.2% for Trip Advisor, 10.7% for Netflix, etc.

    It’s important to understand that what you may read on Seeking Alpha (and on your Twitter feed) cannot be interpreted as a credible representation of what the investment community thinks.
    Oct 27 10:56 AM | 3 Likes Like |Link to Comment
  • The Mythology Of Tesla's Valuation [View article]
    Disclaimer: I have not looked at all into Tesla. It's so far out of my wheelhouse, I don't see the time needed for analysis as being worth my while. But like many, I have a curious streak when it comes to interesting stories so I clicked on this article out of curiosity. But . . .

    "As an investor, whenever I see that the market values a company several times more or less than my own assessment, I always ask two questions: What are the other investors missing? And, when are they going to realize that their expectations are wrong?"

    Oy vey! I stopped reading at that point.

    Speaking for myself, as an investor, whenever I see that the market values a company several times more or less than my own assessment, I always ask two questions: What might I be missing? And, am I sure my expectations are reasonable? Only after having done that would I move on to assessing/criticizing the expectations of others.
    Oct 16 03:29 PM | 6 Likes Like |Link to Comment
  • mREITs: An Opportunity To Be Greedy When Others Are Fearful [View article]
    "Dear Pomp,
    Your experience is good but it is not 1930's experience or Japan experience."

    In other words: This time it's different.

    Maybe it really is different. Who knows. But as one reads up on questions like this, it is important to consider who it is that is expressing the opinions and what their stakes are in the debate.

    Hoisnington Investments is, as stated on its home page, "a registered investment advisor specializing in fixed income portfolios for large institutional clients." In other words, they have a very important need to find a way to deliver a bullish opinion on fixed income. This does not automatically mean they're wrong, but it does mean you need to be extra careful in evaluating the case they present.

    As to Charles Hughes Smith, he's a blogger-novelist-general author who does not appear to be a serious source of financial expertise, although his non-fiction titles include such entries as "Why Things are Falling apart and What We Can Do About It,"Resistance, Revolution, Liberation," "An Unconventional Guide to Investing in Troubled Times," "Four Bidding for Love" . . . ooops, scratch the last one; that a novel he wrote and for which his site has a disclaimer: " sexy suggestiveness in adult situations (for mature audiences). I might actually check out the novel, but to tell you the truth, I think I'll look elsewhere for serious analysis of the bond-bubble question.

    I don't know Pompano Frong (and I really hate anonymity), but his background looks like he's someone who has genuine knowledge and his one seeking Alpha article to date supports that. So I suggest you not be so quick to dismiss what he says.

    And yes, this is an ad-hominem approach . . . it's the single most important thing a reader should do when evaluating opinions and the thing that had it been done by many individuals in the 1990s would have resulted ion their having held onto a sh**load more of their money than sadly turned out to have been the case.

    As to this author/article, I haven't yet had time to really look . . . it's just that your this-time-it-different dismissal of pomp jumped up at me during my initial scan.
    Aug 13 09:42 AM | 1 Like Like |Link to Comment
  • Finding Interesting Stock Ideas The Herd Isn't Seeing [View article]
    The fact that you made a point of discussing the need to figure out what stocks you should even bother analyzing was spot on. As you may or may not know, i think that's HUGE. If you get a good list, you're way ahead of the game even before you get into any company-specific due diligence.

    As to intrinsic value, you might want to check the residual income method. It works with assumptions that are a lot less tenuous than basic DCF, which is very dependent on the very iffy terminal value.
    Jul 9 09:51 AM | Likes Like |Link to Comment
  • Linn Energy: Many Ponzi-Like MLP Blow-Ups To Follow [View article]
    "I honestly never imagined that people would be this abusive."

    I absolutely positively do not believe that for a single moment.

    James, there is no way you, with your impressive professional resume, can possibly expect anyone to accept the idea that use of the word "Ponzi" in a headline and over and over again in an article would fail to inflame passions. When you were, as you describe, "Chief Global Strategist and Head of International Investments for a major investment bank," I presume you had people reporting to you. Have you never had occasion to caution any of them, or consider with regard to your own work, the implications of particular phrases in a document being prepared for public dissemination?

    Note, too, that I am completely unimpressed by your assertions that you are not accusing anyone of a Ponzi scheme but are instead speaking of a "Ponzi-like" scheme. It seems to me you are calling, here, on your Harvard Law School background to try to position a defense in case Linn sues you for defamation. Good luck.

    The SEC web site (http://1.usa.gov/11sWy4R) defines a Ponzi scheme as "an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors." So how is Linn doing anything even remotely Ponzi-like? IOW, how is it, or any MLP for that matter, doing anything remotely resembling the practice of making distributions to Person A from proceeds contributed by Person B? Unless you have evidence that there is no business operation -- that it's a hoax -- it would seem that LIN is taking money from Person A (the buyer of new equity or debt securities) putting it to work in its operation and using the proceeds of its operation to make the payment to Person B. That's not Ponzi-like. We call that doing business in a capitalist economy.

    I had not previously looked at LINN and clicked here only because of the word Ponzi in the headline (I assume you expected that and are happily counting the per-page-view fees) mainly because I started work on a novel -- one can't write about stocks all the time! -- about a Ponzi scheme and figured I check out another example (poor me, what a waste of time; this one doesn't do it). But from what I did see in LINN's SEC documents (you looked didn't you - I can't tell from the article), I see a business with Person B getting his distributions from the cash flows produced by the business. It may not be the best-managed business; it is clearly one that will need constant external capital if it is to grow the payout since MLPs, like REITs, must distribute cash flows rather than reinvest. Whether the external growth efforts here are wise or not does seem to be very much in question as do the techniques used by LINN to account for them. Maybe this causes a blow up. Maybe not. Either way, I see nothing here that is at all Ponzi-like. Unsustainable? Perhaps. Ponzi? Not a chance as you know. Ponzi-like? Sorry counselor, that clumsy spin doesn't work for me.
    Jul 7 02:55 PM | 21 Likes Like |Link to Comment
  • Linn Energy: Many Ponzi-Like MLP Blow-Ups To Follow [View article]
    Not really . . . when an article uses the word Ponzi in a headline, not to mention the phrase blow-ups, I'd expect the comment count to be much higher, as probably would have happened had it not come out on a holiday weekend. (And it may yet climb.)
    Jul 7 02:21 PM | 7 Likes Like |Link to Comment
  • If I Could Buy Just One Stock, It Would Be This One [View article]
    To those complaining about BRK not paying dividends:

    Are you aware that Seeking Alpha has a section labeled "Dividends & Income?" There are plenty of ideas there that should be of interest to you; lots of good stuff. So stop wasting time trolling a comment thread re: BRK, which is well-known to be a non-dividend stock.

    Life can be amazingly easy if one wishes!
    Jun 15 09:01 PM | 3 Likes Like |Link to Comment
  • Amazon, Netflix - Bullish Earnings Quality? [View article]
    Glad you did! Thank you.
    May 11 05:31 PM | 1 Like Like |Link to Comment
  • Amazon, Netflix - Bullish Earnings Quality? [View article]
    OK. Just make sure you aren't obsessing about margins to the point of ignoring what is reasonable for the business they are in and the balance between margin and turnover. Also, make sure you're comfortable with your assumptions about the extent to which margin has contracted because of the business as opposed to thoughtful choices AMZN made to "invest."

    This is not a margin analysis although i did one a while back. My only suggestion is that you do your own work and not take seriously the margin rhetoric you often see on Seeking Alpha, which often tends to be inept.
    May 11 05:31 PM | Likes Like |Link to Comment
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