S&P 500 Operating Earnings Are Inflated [View article]
Thanks for your comment!
I think you're right that financial turmoil will have a strong chance of spurring reporting changes/adjustments. My personal opinion is that it's always up to the individual investor to examine reporting measures for applicability, and that goes double for non-gaap figures.
The Fed Is Not Pushing Stock Prices Higher [View article]
I don't think Japan is pursing "deflationary monetary policy". No sane central bank would actively pursue a policy like that. It encourages indefinitely deferred consumption (perpetually lower growth in other words). Japan is printing money at a faster pace than any other developed nation. There is nothing deflationary about that. The fact that they are experiencing deflation in spite of their best efforts is a testament to how little control they now have over their economy.
The Fed Is Not Pushing Stock Prices Higher [View article]
I have to agree with Lawrence. There are two sides to any transaction. The entire premise of QE is that the Fed uses newly created money to purchase existing securities. This means that as the Fed makes their monthly MBS purchases, someone is selling to the Fed and receiving cash in return. This money has to go somewhere.
QE also has the effect of driving the prices of these securities higher and their yields down, making them less attractive to new investors who might otherwise purchase them. These investors must now look elsewhere for securities to fund their risk/return requirements.
So now the Fed has created two groups of investors who will search for alternate investments. Some of this money invariably ends up in the stock market.
Is This Bull Market Fundamentally Driven? A Look At P/E Expansion [View article]
Thanks for posting this Doug. That's a very interesting way of applying the Schiller PE. The negative correlation between the strength of the fundamental underpinnings during a rally and the ensuing losses are very telling.
S&P 500 Operating Earnings Are Inflated [View article]
I disagree. Earnings always matter. Central bank liquidity does not justify a long-term valuation premium on equities. All it does is create a temporary wealth effect via PE expansion
Canadian Oil Sands: Analyzing And Valuing The Oil Sands Operator - Part II [View article]
Thanks for the feedback!
Operational risks will always exist of course, but like you said they are certainly manageable and will lessen over time. Case in point, Syncrude recently strung together record run-times between maintenance for a couple of their upgrading units.
Environmental risk and associated CapEx will probably continue to be an issue. COS seems like they're ahead of the curve in terms meeting the requirements of potential new legislation though, which should help control costs and risks to some extent.
Canadian Oil Sands: Analyzing And Valuing The Oil Sands Operator - Part II [View article]
Thanks for a well-detailed comment!
Inland North American crude oil supply will certainly be an issue moving forward, and it's probably reasonable to expect Brent-WTI spreads to continue to widen through the coming years as a result.
As you pointed out, environmental pressures and potential expenses are going to be an issue over the long run, which will be a big question-mark for companies like COS.
A commodity like oil, which has numerous applications and very broad-based usage is difficult to price/forecast with so many moving parts. More so than higher MPG vehicles and so forth, I'd be worried about a substantial lifestyle/social shift away from driving in general
Canadian Oil Sands: Analyzing And Valuing The Oil Sands Operator - Part II [View article]
Thanks for the information! I remember reading about the sale of Conoco's share. It's certainly encouraging to see such a high valuation applied to a piece of the Syncrude project. I couldn't help but wonder whether Sinopec overpaid for their stake a bit though...I'd have been curious to know what COS's bid was.
I'm glad to hear that COS has worked out well for you over the years. I agree that their management team has done a good job over the years. From the perspective of an investor, I particularly like their propensity and willingness to make large dividend payouts.
Canadian Oil Sands: Analyzing And Valuing The Oil Sands Operator - Part II [View article]
Hi Chancer:
I do think pipeline issues will have an effect on earnings moving forward. It's entirely possible that we see SCO trade at a discount to WTI for the next several years. My best guess would be somewhere in the neighborhood of ~5 dollars a barrel, give or take a couple bucks. That said, pipeline capacity is a known issue. Unless the issues prove persistent or more severe than anticipated, I think these factors are already priced into the majority of oil sands shares, including COS.
Profit Margins: How They Got Here And Where They Are Going, Part II [View article]
Thanks for your input, bartpr!
I couldn't agree more regarding the knowledge level of most of the people you see on financial news networks, and especially in congress. Congress in particular because you get a bunch of people who have trained their whole lives to be politicians, first and foremost - not finance or tax experts. And yet, they're required to make major decisions in these areas.
The US tax system is quite esoteric, as you said. I feel like this is one of the primary reasons why a growing number of pundits are pushing for a complete overhaul of the system. Given your background, you'd know more on the subject than I would though.
S&P 500 Operating Earnings Are Inflated [View article]
I think you're right that financial turmoil will have a strong chance of spurring reporting changes/adjustments. My personal opinion is that it's always up to the individual investor to examine reporting measures for applicability, and that goes double for non-gaap figures.
The Fed Is Not Pushing Stock Prices Higher [View article]
The Fed Is Not Pushing Stock Prices Higher [View article]
QE also has the effect of driving the prices of these securities higher and their yields down, making them less attractive to new investors who might otherwise purchase them. These investors must now look elsewhere for securities to fund their risk/return requirements.
So now the Fed has created two groups of investors who will search for alternate investments. Some of this money invariably ends up in the stock market.
Is This Bull Market Fundamentally Driven? A Look At P/E Expansion [View article]
S&P 500 Operating Earnings Are Inflated [View article]
Canadian Oil Sands: Analyzing And Valuing The Oil Sands Operator - Part II [View article]
Operational risks will always exist of course, but like you said they are certainly manageable and will lessen over time. Case in point, Syncrude recently strung together record run-times between maintenance for a couple of their upgrading units.
Environmental risk and associated CapEx will probably continue to be an issue. COS seems like they're ahead of the curve in terms meeting the requirements of potential new legislation though, which should help control costs and risks to some extent.
Canadian Oil Sands: Analyzing And Valuing The Oil Sands Operator - Part II [View article]
Inland North American crude oil supply will certainly be an issue moving forward, and it's probably reasonable to expect Brent-WTI spreads to continue to widen through the coming years as a result.
As you pointed out, environmental pressures and potential expenses are going to be an issue over the long run, which will be a big question-mark for companies like COS.
A commodity like oil, which has numerous applications and very broad-based usage is difficult to price/forecast with so many moving parts. More so than higher MPG vehicles and so forth, I'd be worried about a substantial lifestyle/social shift away from driving in general
Canadian Oil Sands: Analyzing And Valuing The Oil Sands Operator - Part II [View article]
I'm glad to hear that COS has worked out well for you over the years. I agree that their management team has done a good job over the years. From the perspective of an investor, I particularly like their propensity and willingness to make large dividend payouts.
Canadian Oil Sands: Analyzing And Valuing The Oil Sands Operator - Part II [View article]
I do think pipeline issues will have an effect on earnings moving forward. It's entirely possible that we see SCO trade at a discount to WTI for the next several years. My best guess would be somewhere in the neighborhood of ~5 dollars a barrel, give or take a couple bucks. That said, pipeline capacity is a known issue. Unless the issues prove persistent or more severe than anticipated, I think these factors are already priced into the majority of oil sands shares, including COS.
Profit Margins: How They Got Here And Where They Are Going, Part II [View article]
I couldn't agree more regarding the knowledge level of most of the people you see on financial news networks, and especially in congress. Congress in particular because you get a bunch of people who have trained their whole lives to be politicians, first and foremost - not finance or tax experts. And yet, they're required to make major decisions in these areas.
The US tax system is quite esoteric, as you said. I feel like this is one of the primary reasons why a growing number of pundits are pushing for a complete overhaul of the system. Given your background, you'd know more on the subject than I would though.