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Michael Nau

 
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  • Sell BofI Holdings Before Earnings [View article]
    Richwrite, you may be right, I'm not bashing the company, just worried about valuation. It is problematic if people sell without doing their own analysis, I'm just giving my opinion. I'm OK if left behind by BOFI, but the valuation makes me nervous given fundamentals. Let us see what happens......
    Oct 31 10:56 PM | Likes Like |Link to Comment
  • Emerging Competition Threatens Apple In 2014 [View article]
    Michael, you are my favorite AAPL bear, I always enjoy reading your articles. I think you've laid out the bear case pretty clearly, but I think you are a bit too pessimistic. Here's my rebuttals:

    1.) I don't put a whole lot of stock in market share or revenues, I'm more interested in earnings and free cash flow. Otherwise, I'd buy AMZN. EPS has declined somewhat in the last year, but FCF is highest ever for a September quarter. It seems clear to me that while growth might be slowing down, AAPL is a cash machine.

    2.) The zero growth on tablets figure isn't entirely fair considering the product cycle. I'd expect growth with the next product refresh.

    3.) You are right to be skeptical about AAPL coming up with the "next big thing". That is quite difficult to do. But it is clear that the company might. I'd say that such an option on future products is worth a non-trivial amount, but that the current market is giving this optionality $0 value considering its cash and slow-growth existing businesses.

    4.) AAPL is able to fund its capital return program almost entirely out of FCF. This will leave most of the cash pile intact yet will reduce the float by 20%-25% in the next year and a half. AAPL will be able to drive EPS growth out of buybacks without having to mortgage much more of its fortress balance sheet.

    So I've concluded for now that the glass is half full, but it is good to hear an opposing point of view.
    Oct 31 06:06 PM | 7 Likes Like |Link to Comment
  • Reality Check For Peter Schiff [View article]
    Yes, especially Minsky. Dalio seems to take the perspective of most economists by blaming "human psychology" or "human nature", but Minsky has a more sophisticated model that looks at changes in norms. In a nutshell, he argues that deleveragings lead to financial conservatism and re-regulation, but these institutional safeguards fade during a period of extended stability. Stability breeds instability, and instability breeds stability. Sounds like an accurate characterization of the long-term debt cycle to me.
    Oct 31 03:40 PM | 5 Likes Like |Link to Comment
  • Reality Check For Peter Schiff [View article]
    Excellent article. It isn't necessary to adopt an Austrian perspective to be attuned to the effects of credit on the economy. In academia, Minsky arguably "called" the inevitability of deleveraging in the 1980s. In the investment world, Ray Dalio offers a much more realistic and less damaging set of policy options for dealing with a deleveraging that "cleanses" the economy of prior credit excesses without a depression:

    http://bit.ly/18mNWgR
    Oct 31 11:31 AM | 5 Likes Like |Link to Comment
  • There's Nothing 'Regular' About The Business Cycle [View article]
    Excellent article. I do this this "expansion" will be long and slow because credit has been slow to expand and some sectors are still deleveraging.
    Oct 31 09:14 AM | Likes Like |Link to Comment
  • Sell BofI Holdings Before Earnings [View article]
    Whoa, I didn't realize the company had become optionable, very interesting....
    Oct 31 09:03 AM | Likes Like |Link to Comment
  • 4 ETFs That Have Haunted Investors All Year [View article]
    VXX is not a good long-term investment vehicle because it is not the same as the VIX. From Jan 1, the VIX really hasn't changed all that much, the big reason for VXX's poor return is contango from VIX futures.

    I caution casual investors against using VXX as a hedge against a market correction- it won't behave how this article seems to suggest.
    Oct 30 04:04 PM | 4 Likes Like |Link to Comment
  • Sell BofI Holdings Before Earnings [View article]
    Well said.
    Oct 30 02:21 PM | Likes Like |Link to Comment
  • Sell BofI Holdings Before Earnings [View article]
    Norburton, I'm flattered that you think I'm so powerful, but I'm not. If you're a BOFI bull, you should take advantage of this excellent buying opportunity.
    Oct 30 12:15 PM | Likes Like |Link to Comment
  • Sell BofI Holdings Before Earnings [View article]
    Albert, look, this is just my opinion. I sold my shares recently, so I put my money where my mouth is. But whether or not you sell is up to you. I'm just some guy on the internet.
    Oct 30 12:11 PM | 4 Likes Like |Link to Comment
  • Sell BofI Holdings Before Earnings [View article]
    racchole & eduso: we shall know soon if I was right, good luck to both of you. I do tend to be conservative and skeptical, especially with small cap growth stocks, yet I also am a buy and hold sort of guy. When I was reviewing my holdings going into earnings season, I really, really did not want to sell BOFI, but I had to conclude that the risks seem to outweigh the benefits right now.

    After the dust settles, I'm planning on revisiting BOFI and INBK to see where to go from here- I'd like to own at least BOFI for the long run.
    Oct 30 08:36 AM | Likes Like |Link to Comment
  • Sell BofI Holdings Before Earnings [View article]
    Marek, I agree, thanks Marek and sonetirot for commenting. While BOFI was not as dependent upon mortgage banking fees as INBK, it is much more dependent upon them than WFC. Additionally, BOFI's portfolio is already very high quality, so there is not a whole lot of room for improvement in that area to compensate. And unlike WFC, BOFI is valued for rapid growth.

    Think of it this way: even if BOFI's mortgage income posts zero growth in this tough environment (which would be quite impressive), this will weight down overall growth. I'm not worried too much about year-on-year EPS decline, but that is not required for multiple compression.
    Oct 30 08:24 AM | Likes Like |Link to Comment
  • Is Inflation Of 2% Enough For You? [View article]
    2% seems like an arbitrary rule-of-thumb. Given that we're still in the middle of a massive household de-leveraging, I'd like to see inflation at 3%-4% to speed up the process. Savers will get hosed, but workers have gotten hosed for decades.....
    Oct 28 10:28 PM | Likes Like |Link to Comment
  • I Concede Defeat In Amazon.com [View article]
    Stephen, as a publicly traded company, AMZN's responsibility to shareholders is to maximize value, not popularity. If those two things go hand in hand, so be it, if not, then forget popularity.

    If Bezos wants to take the company private and run the company like a non-profit wikipedia of retail, more power to him. He has enough money already. But if he's asking members of the public like myself to finance his enterprise by buying shares, he's knocking on the wrong door.
    Oct 25 02:14 PM | 2 Likes Like |Link to Comment
  • Will The U.S. Suffer Japanese Lost Decades? [View article]
    Also agreed. Its bizarre how politicized history and economics have become. Isn't it possible to adopt a Keynesian perspective without being a fan of Stalin?
    Oct 25 12:25 PM | 10 Likes Like |Link to Comment
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