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Marc Gerstein

 
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  • Hedging the Triple Play Income Strategy [View article]
    I have not tried testing with a 4% annual withdrawal, but if such a strategy were to be pursued, it would be vital to constantly adjust the hedge position. You don't want to cash in income stocks only and leave the short ETF position untouched. That could get ugly.
    Aug 7 08:31 AM | Likes Like |Link to Comment
  • Hedging the Triple Play Income Strategy [View article]
    I want to expand on this because it is so important. If you want to hold a hedge, you MUST, MUST, MUST, MUST, MUST, MUST re-balance regularly (i do it once per month). If you are not constantly averaging your purchase price for something like TZA, you are courting disaster.

    In my low-priced stocks account, I've had a TZA hedge since 7/15/10.

    The Yahoo! Finance stand-alone price data would show a 52% loss on the position, based on general market action and the nature of the day-to-day path. But because I kept re-balancing the position, often averaging down during periods of big-time strength for the Russell, my brokerage account shows, as of this morning, a loss of only 5.12% on the position, which has gone a long way toward blunting larger losses I now show on many other stocks.

    The re-balancing is critical. If you just buy a TZA position and let it sit, you almost inevitably will show big losses and that will be apparent much more quickly than a year.
    Aug 7 08:29 AM | Likes Like |Link to Comment
  • Hedging the Triple Play Income Strategy [View article]
    Holding in perpetuity would be an invitation to disaster. But holding in perpetuity means a fixed position; buy a certain number of shares and hold. When you're constantly re-balancing, you are constantly trading in or out of portions of your position raising or lowering your average purchase price, so you really are not holding in perpetuity. Remember, too, that the purpose of a hedge is not necessarily to make money on the leveraged ETF. If you do, that's certainly better than lot making money. But ultimately, the goal is to reduce overall portfolio volatility. I've been running a 10% hedge (using TZA) with my low-priced stocks portfolio (price below 3) and it has done exactly that, over more than a year now.

    Perhaps the best way to wrap your arms around it is to do it with a paper portfolio until you get the feel for what's happening.
    Aug 6 10:24 PM | Likes Like |Link to Comment
  • Hedging the Triple Play Income Strategy [View article]
    The hedge in the first chart is only 10%. There's just so much that can do. It can reduce a decline a bit, but not turn it into a gain. At 20%, the decline is less but still not eliminated.
    Aug 6 10:19 PM | Likes Like |Link to Comment
  • ETFs for Contemporary Crises [View article]
    I think when people criticize the newer products, they drastically overestimate hoe effectively the typical investor handles conventional products. Is it hard to know when to sell FOL? Of course it is. Is it hard to know when to sell AAPL? Of course it is. Nothing in the stock market is easy.

    Leveraged daily returns do add a new wrinkle. But these are no longer new. Investors collectively have had several years now to learn how these function. Use of these products have been huge, and by now, most of the angst seems to be coming from gurus rather than investors who actually use the products.

    Ultimately, one will succeed or fail with these products based upon the accuracy of the macro judgments the investor faces. For example, FSE has been a huge loser of late. But that's not because of a flaw in the product. It's because those who bought a few weeks ago badly misjudged the market. That's life. That's the market.

    What these products accomplish is that they give investors new areas in which they can exercise judgment. Is it harder or easier to judge (i) whether gold will outperform stocks, or (ii) whether GOOG will beat or miss its next earnings guidance? Different investors will answer differently. Now, at least, those who'd rather not make company-specific judgements have other choices.
    Aug 5 09:55 AM | Likes Like |Link to Comment
  • Teavana Needs to Penetrate Urban Areas to Become a Buy [View article]
    "And Marc, Santa Monica, at least from a walkable/proximity to retail standpoint, is actually quite similar to Manhattan. Just not quite as dense obviously. :-) "

    That, actually, explains a lot. Shopping streets, walk-ability, urban cores . . . that's all well and good for a few select areas such as Manhattan, Santa Monica and similar sections of other cities. But it's not representative of the US as a whole. I think you're getting way too hung up on a 1970s notion of what shopping malls are. Today, the label mall applies to an incredible variety of locations many of which precisely fulfill the functions of what you label urban core. Take Boca Raton FL for instance. It's a highly affluent community (one which is definitely ripe for TEA) but there is no downtown Boca Raton core per se. What you think of as an urban core core would be likely fulfilled by Mizner Park and/or Town Center and TEA is in Town Center, which is probably the better choice because foot traffic there is likely to be a lot heavier. There is a Whole Foods nearby in a good-quality "strip mall" on Glades Road, but TEA can't be there because they are too specialized for the level of square footage available (there are no small shops). Note: Although you and some Manhattan folks can walk to Whole Foods, most others drive to strip malls (nice strip malls, nicer than the stereotype, but strip malls nonetheless)!

    Let's take Long Island. I could see TEA on Stewart Ave in Garden City, and they may eventually get there. But any customer they can get on Stewart Ave they can also get in Roosevelt Field, which is where they are, and at Roosevelt Field, they get a lot more, including my wife, who never go to Stewart Ave. And if they are planning a second Long Island location, I'd much prefer to see them go to Walt Whitman Mall rather than Stewart Ave or, say, Middle Neck Road in Great Neck (another upscale boutique area). Again, the malls would give them all of the Stewart Ave or Midden Neck Road shoppers plus a whole heck of a lot more.

    I could do similar analysis for other areas I know about where TEA is located, and I suspect others could do likewise for areas with which they are familiar.

    If you lived in Manhattan, I'd strongly suggest you rent a car, drive across a bridge, and look at the rest of the world. You may not actually be in Manhattan, but being in a Pacific equivalent, you are talking a lot like a Manhattan-ite, which is all well and good as a matter of personal preference, but it is leading to some serious distortions in your assessment of TEA's locations. I strongly suggest you get past you Whole Foods location thing. For most of the US, it doesn't work.
    Jul 28 03:04 PM | Likes Like |Link to Comment
  • Teavana Needs to Penetrate Urban Areas to Become a Buy [View article]
    "While Teavana locates in shopping malls on the outskirts of town, it is not part of the streetscape -- in outdoor, traditional walkable shopping environments -- in places like Manhattan, San Francisco, Santa Monica (where Whole Foods, for instance, has three stores within 1.5 miles of my house) and even in smaller, but still trendy neighborhoods like Portland, Oregon's Pearl District or Burlington, Vermont's Church Street."

    I'm not sure what you're envisioning when you speak of "shopping malls on the outskirts of town" but I suspect it's something of an urbane New york Seinfeld-ish thing (even though you mention you're from Santa Monica). I looked at the TEA store locator and frankly, have no problem at all with what I see. the company is still very small and accordingly, is going to be absent from a huge number of places where one might think they could or should be.

    It seems to me that you are operating from a perspective that there is some sort of urban (big or small) center where the big spenders go with Joe Six-pack shopping on the outskirts. That may have been the case a generation ago (the old Seinfeld show assumed it was so), but that is not the reality in the 21st Century USA.

    I can't speak for every location in TEA's list but in the areas I know, TEA has done just fine. In the NYC area, for instance, Roosevelt Field is a great choice accessible to huge numbers of people in the Queens-Nassau area. there are average folks, and upper end folks, enough of the latter to keep that store packed with people often having to mill about just to even squeeze inside the store, where buying is brisk.

    I'm reasonably familiar with South Florida as well and nobody there would dismiss Town Center (Boca Raton), Sawgrass Mills (Sunrise) and The Gardens Mall (Palm Beach Gardens) as being on the outskirts. (By the way, Palm Beach Gardens isn't listed on the web page to which you link, but it is in the zip-code based store locator.) Those venues are core destinations for people who live nearby. As to Boston and Chicago, what's wrong with Boylston (Prudential Center) and Michigan Avenue (Miracle Mile!) respectively? Meanwhile, King of Prussia PA is a HUGE destination, not just for locals but for people who drive quite a distance.

    There are many places where I think they could do well where they have no store (City Place in West Palm Beach, downtown Delray Beach, FL, SOHO in NYC, etc, etc, etc, etc), but that's because the chain is still so tiny. But nothing in the language you quote from the S-1 ("high traffic locations within malls, lifestyle centers and other high-sales-volume retail venues") excludes any of these areas.

    I have no opinion on the IPO; actually, I tend to hate IPOs, especially in well-known, heavily-hyped names, and feel investors usually do better taking it slow and picking their spots in the secondary market. But I don't think it's reasonable to object to TEA based on their location profile.
    Jul 28 10:02 AM | Likes Like |Link to Comment
  • ETF Pullback Choices: 1 Year With the ETF Pullback Model [View article]
    1. I express Sharpe ratio as a decimal

    2. 1-year

    3. It's a weight and as such, is expressed as 0.70

    4. I use Thursday; no special reason except that my first article was on a Thursday and I stuck to a 1-week re-balancing interval.
    Jul 25 09:26 AM | Likes Like |Link to Comment
  • China and Fuwei Films: Seeking Sanity [View article]
    That's what's so intriguing about the increasing virulence of the arguments. One way or another, half the parties are going to get very badly embarrassed in the not-too-distant future. I've often been accused of being a bit long-winded (or a lot long-winded), but sometimes, even blabber-mouths like me need a sense of when its better to set up camp in the wonderful world of shut-the-heck-up. :-)
    Jul 11 11:18 AM | Likes Like |Link to Comment
  • China and Fuwei Films: Seeking Sanity [View article]
    "it was sheer dumb luck that we got out when we did."

    Spotting fraud or comparable problems really is incredibly difficult, and sometimes, it is better to be lucky than good.

    I suppose one useful framework would be to look for companies whose operations seem typical. I love creativity, but that's in the arts and I suppose in technology. When it comes to CEOs and COOs, I prefer people who are boring. When you do see "innovation," ask if it flows naturally from what had gone before. Also, in the quest for that which is above average (we all want that), there's a matter of how far and how much. I, for example, a home-builder would have continued to grow revenues and profits in 2008, 2009 and 2010, we'd have had to wonder. Maybe there is a good reason why a company can be especially outstanding, but we would have to really look hard.

    Even so, we can never be 100% sure of anything. Hence my preference for broad diversification and my disdain for so-called "focus investing."
    Jul 11 11:12 AM | Likes Like |Link to Comment
  • China and Fuwei Films: Seeking Sanity [View article]
    Bear in mind NYSE came public via RTO. Bear in mind too that FFHL is not an RTO. I think too much attention is being given to issues that are of no relevance.

    Separately, if you are focusing on ADRs, I hope you're checking the 20-F and 6-K reports. I've become sufficiently concerned lately about the quality of ADR data handling by the major data providers, particularly for European companies many of which report semi-annually rather than quarterly (a practice I regard as absolutely unacceptable in this day and age), I now include in most models a filter that simply bars ADRs.
    Jul 11 11:00 AM | Likes Like |Link to Comment
  • China and Fuwei Films: Seeking Sanity [View article]
    There are questions of what kind of BOPET film a particular company makes and how broad their distribution reach is. As noted, FFHL is not counting on the market alone to pull them upward. Hence its efforts to sell in a broader range of countries and to move into upper-end BOPET applications.

    Anyway, to you and king707, it's gratifying to see people argue business/valuation merits re: one of these stocks!
    Jul 11 10:55 AM | Likes Like |Link to Comment
  • China and Fuwei Films: Seeking Sanity [View article]
    Really! When did auditors become celebrities, like baseball players? Do you have any idea how many U.S. firms use auditors most of us (who are not accounting professionals) never heard of?

    And since when does use of a Big 8 accounting firm assure honesty. Oh wait a minute . . . it's not the big 8 any more because some of the leading firms imploded due to fraud (remember the Enron/WorldCom days).
    Jul 11 09:56 AM | Likes Like |Link to Comment
  • China and Fuwei Films: Seeking Sanity [View article]
    Yes, I'm aware Citron claims the takeout offer is fake. And like I said, at some point, we're all going to know one way or the other.
    Jul 8 02:21 PM | Likes Like |Link to Comment
  • ETF Pullback Choices: Is There a Silver Lining for Europe? [View article]
    ETF Pause Trading on Folio is my personal account. All personal accounts offer graphs like this allowing the customer to examine performance. I put a screen shot from my own account into the article.
    Jun 29 05:20 PM | Likes Like |Link to Comment
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