Bank Of New York Mellon - Speculating A Triple Over Several Years [View article]
Thanks for your insightful comments. I agree that BK was different before the 2007 merger with Mellon. That's most easily seen, I think, in the key banking metric Return on Average Total Assets - before 2007 it was often in the 1.2% to 1.5% range. Currently it's still a good 1.09% [State Street, which you mention, is at 0.97%] but I expect it to stabilize just below 1%.
However, BK has never had EPS even approaching $3 a share whereas it looks like it will be well over that figure in a few years to the $3.25 area. Also, I know from experience that it takes several years, at least, for a major merger to be fully digested. In 2011 they will be about $2.18 which is the highest ever for BK [reached $2.03 in 2005, pre-merger]. So while different, in terms of EPS it looks like BK is now a more profitable bank than it ever has been before.
The S&P right now is at just 12.0 times estimated $105 EPS, so even if BK just gets back to the market average, 12 x $3.25 = $39 a share - roughly a double from where it is now. Because it's a global bank the Euro zone is having a huge perception impact, but I think BK has very limited downside, but very substantial upside. Time will tell, right?
Bank Of New York Mellon - Speculating A Triple Over Several Years [View article]
Readers - My apologies! I just noticed that in the publication process last night the table below paragraph 4 got dropped. I'll try to get it fixed. It shows BK's loans as a % of assets as 14.47% which is low, and BK's Return on Total Assets as 1.09%, which is high.
Covered Call Options: Generating Income From Owning Gold [View article]
Zptdo - Thanks for the feedback. However, I have to disagree that "the expected profit from any strategy is negative over a period of 3+ years" or that "a large up...movement in the underlying will wipe out all your profits." If you are selling a call on a company you like and own anyway, and the strike price is above your cost, if it goes up and gets called away at that price, how can that lose you money?
Covered Call Options: Generating Income From Owning Gold [View article]
Helge - You're exactly right. Fundamentally, you should only buy something you want to own long term, with the calls simply as extra income. Same goes for selling puts on stocks you'd like to own at a lower price, because you might actually have to end up buying them. I usually use Jan calls, mainly because I have a number of them and if I rolled them every 30 days or so - which admittedly might produce an incremental return - management of the portfolio would just get too complex, and simplicity has its own virtues.
SeaDrill: Q3 Results Continue To Impress, Still Likely To Beat Estimates [View article]
A note of caution: In my opinion, one should be careful of an investment in a company controlled by John Frederiksen [Chairman & President]. Research his background and record carefully.
Daimler? They resumed their dividend 6/2011 and now yield about 6%, and @ $39 the stock has long term legitimate 3x price potential to $125 based on 2016 cash flow. While a bit speculative with the price impacted by the Eurozone crisis, Daimler {DDAIF} is the world's largest manufacturer of commercial vehicles.
16 U.S. Based Royalty Trusts For Income Investors [View article]
I like royalty trusts, and have owned a couple for many years. However, the issue of diminishing oil reserves and return of capital v return on capital makes analysis difficult. Last time I looked, two major trusts both listed 10 years in their SEC filings as their remaining life, so if my 'return' includes 10% a year of getting my own money back, where does that leave the investor? Finally, some, like Prudhoe Bay, have their own peculiar issues such as the pipeline needing a minimum amount of oil to even operate.
Covered Call Options: Generating Income From Owning Gold [View article]
Note too that GLD has certified ownership of 40.2 million ounces of physical gold in vaults in London [CNBC visited the vaults on a show]. If you multiply the price per ounce by 10 [GLD equals 1/10 of an ounce] and then by the number of GLD shares outstanding, you get almost exactly the market cap of GLD. So overall, in my opinion GLD is a very practical substitute for the problems of actually personally owning physical gold.
Covered Call Options: Generating Income From Owning Gold [View article]
GLD, in my opinion, is a very good alternative to the problems - and lack of income - of actually taking possession of physical gold. The GLD actually has 40.2 million ounces of physical gold, certified, in vaults in London and if you multiply the price per ounce by 10 - GLD is 1/10 of an ounce - and then by the number of GLD shares outstanding you get almost exactly the market cap of GLD.
Covered Call Options: Generating Income From Owning Gold [View article]
Neal - Note that with the GLD price at 167 at the time, we were selling the 205 call so while we do give up the unlimited upside potential we would - if called away - capture a 22.7% price gain [not counting the income], or 38 points.
Covered Call Options: Generating Income From Owning Gold [View article]
You're absolutely correct; they're not the same thing. However, despite being somewhat less than perfect - for example, the price movements don't precisely correlate - GLD for the majority of investors is a practical substitute, in my opinion.
Retire In Half The Time With Dividend Growth Investing [View article]
This is an interesting article with an intriguing headline, but misses the mark on 'double compounding' on a couple of points. Most important is to assume that the stock price will NOT go up - in fact it might go down - but the dividends WILL increase over time! In fact, if you hold a stock forever, the return simply becomes: [Current Yield + the Growth Rate of the Dividend]. Buying quality businesses with solid and increasing dividends, and reinvesting while holding them until the income is needed, is the key. A lesser point the article omits is the tax impact if held in a taxable account.
You Need To Pay Higher Taxes So We Don't Become Greece Or Italy [View article]
I recently added up all the taxes I pay in California, and it came to well over 50% of my paycheck! 35% federal, 10% State, payroll tax, social security tax, etc, etc. And, coming soon, a 3.8% additional Medicare tax, and the possible end to the Bush/Obama 'tax cuts'. Plus overall, 5% of the people are paying as much total income tax as the other 95% combined, and 1/2 don't pay any income taxes at all! Instead of the government helping me succeed, I feel like Big Gov is the biggest single obstacle to success!
So, I did the logical thing...I simply retired. Why do all that work, take all the risks of running a business and creating jobs, when I get to keep well under 1/2 of what I earn?
Retirement Income: Annuity Vs. Dividend Portfolio [View article]
I completely agree with the superiority of a stream of dividend and interest payments over an annuity. Importantly, at the end of the day we all die, and whereas at that point [or a number of payments later] an annuity's principal is gone, the investment portfolio and it's income stream can be bequeathed and the basis steps up to the date of death which can be a huge tax advantage to one's heirs.
Bank Of New York Mellon - Speculating A Triple Over Several Years [View article]
However, BK has never had EPS even approaching $3 a share whereas it looks like it will be well over that figure in a few years to the $3.25 area. Also, I know from experience that it takes several years, at least, for a major merger to be fully digested. In 2011 they will be about $2.18 which is the highest ever for BK [reached $2.03 in 2005, pre-merger]. So while different, in terms of EPS it looks like BK is now a more profitable bank than it ever has been before.
The S&P right now is at just 12.0 times estimated $105 EPS, so even if BK just gets back to the market average, 12 x $3.25 = $39 a share - roughly a double from where it is now. Because it's a global bank the Euro zone is having a huge perception impact, but I think BK has very limited downside, but very substantial upside. Time will tell, right?
Bank Of New York Mellon - Speculating A Triple Over Several Years [View article]
Covered Call Options: Generating Income From Owning Gold [View article]
Covered Call Options: Generating Income From Owning Gold [View article]
SeaDrill: Q3 Results Continue To Impress, Still Likely To Beat Estimates [View article]
5 High-Yield Eurozone Stocks [View article]
16 U.S. Based Royalty Trusts For Income Investors [View article]
Covered Call Options: Generating Income From Owning Gold [View article]
Covered Call Options: Generating Income From Owning Gold [View article]
Covered Call Options: Generating Income From Owning Gold [View article]
Covered Call Options: Generating Income From Owning Gold [View article]
Covered Call Options: Generating Income From Owning Gold [View article]
Retire In Half The Time With Dividend Growth Investing [View article]
You Need To Pay Higher Taxes So We Don't Become Greece Or Italy [View article]
So, I did the logical thing...I simply retired. Why do all that work, take all the risks of running a business and creating jobs, when I get to keep well under 1/2 of what I earn?
Retirement Income: Annuity Vs. Dividend Portfolio [View article]