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  • Dow 16,000 Versus Its 2007 Peak [View article]
    Thanks Pweller - when you are only getting paid 1.35% over the next five years on that Treasury, it makes the equity market look more attractive, which is why we have seen equity multiples expand so rapidly in 2013. The question going forward given that earnings growth is slowing is whether the market continues to attribute a larger multiple to current earnings. Of course, rising interest rates will also eat into that earnings yield premium.
    Nov 25, 2013. 07:36 PM | 3 Likes Like |Link to Comment
  • Update To My 50 Predictions For 2013 [View article]
    Thanks for reading everybody. I found this to be a good exercise to frame my expectations for the coming year, and am looking forward to writing another version here in five months.
    Aug 4, 2013. 09:03 AM | 3 Likes Like |Link to Comment
  • Buying Buybacks III [View article]
    Cash - BRK does not buy back shares as a defense against hedge fund shorts, the company buys back shares when they think that the market is pricing the firm below its intrinsic value - remember Buffett just searched high and low for someone to come and publicly take a contrarian view on the company at the shareholder meeting - only 0.07% of the BRK.A is currently short; this is a public company that discloses information on its holdings quarterly and is far from a dark pool

    If buybacks are an effective use of corporate capital, how do you explain the long-run outperformance of these constituents. Buybacks, like dividends, return money to the owners of the company, who have a comparatively larger stake in the company after shares are retired.

    Please elaborate on your arguments. I enjoy a view that runs counter to what I have authored, but I believe you are off base with your statements.
    Jul 26, 2013. 04:19 PM | 3 Likes Like |Link to Comment
  • Fixed Income Momentum - June 2013 [View article]
    True Diego - although with the expansion of ETFs into the fixed income universe, I wouldn't be surprised if we saw funds based on ratings cohorts. Of course, a fund with on demand liquidity holding a replicating portfolio of less liquid portfolios would either need to charge high fees for transaction costs, or potentially increase the liquidity of less liquid bonds. While I don't expect investors to be able to replicate this strategy, I do think that the alpha-generative nature far outweighs the transaction costs. There would not have been a trade needed for the last seven months as CCCs outpaced BBs. I think that this idea is valuable for investors wondering how they should lean their bond portfolio. This is my original idea - I believe it is quite powerful - and I am happy readers are getting it for free with monthly updates on performance. If you disagree with the efficacy, that is what makes markets. Thanks for reading and commenting.
    Jun 2, 2013. 02:09 PM | 3 Likes Like |Link to Comment
  • The S&P 500 Today Versus The 2007 Peak [View article]
    Good point erbaer- I erred here - per capita income is 2% lower according to the World Bank - the point I was trying to make is that despite the deep recession and prolonged high employment, the average American is earning as much in real terms as they were in 200(6) (not 2007) - wealth certainly took a big down leg given housing valuations and stock prices - the latter have almost fully recovered with the former beginning to post modest year-over-year gains
    Sep 21, 2012. 06:27 PM | 3 Likes Like |Link to Comment
  • Tips From TIPS: Implications For Bond Investors [View article]
    The government can only monetize their debt in this form if lenders (Treasury bond investors) are willing to accept returns lower than the prevailing inflation rate. Currently, yields on Treasury bonds are artificially low due to monetary policy intervention and the "flight to quality bid" from investors concerned about potential for global economic crises. What I attempted to get across in this article is that it does not make sense for Treasury bond investors to continue to get paid negative real returns. Yields must rise, and government bond prices must fall.
    Apr 20, 2012. 11:48 AM | 3 Likes Like |Link to Comment
  • Is The U.S. Bankrupt? [View article]
    Dec 20, 2013. 04:36 PM | 2 Likes Like |Link to Comment
  • Bond Market Review Q3 2013 [View article]
    Thanks Plasmo - some of the pressure on tax exempt municipals has been driven by the White House's desire to limit the income tax exemption given that it disproportionately benefits high income households. The tax exemption on municipal bonds is 100 years old this year, and I do not expect it to change anytime soon. I am more concerned that the top marginal tax rate will continue to creep higher as taxing the wealthy has been a populist way to decrease our structural budget deficit. If the tax exemption sticks around, but the marginal tax rate is higher, we are going to like our tax exempt muni portfolios even more.
    Oct 13, 2013. 10:42 AM | 2 Likes Like |Link to Comment
  • 10 Companies Cheap By My Favorite Valuation Metric [View article]
    Cumulative returns for the ten stocks in this article in 2013 - equal weighting would have yielded 52% average return

    2013 Returns
    GME 74.9%
    BBY 151.6%
    HUM 32.1%
    WLP 44.4%
    FRX 23.9%
    DELL 29.9%
    PBI 42.8%
    ABC 37.8%
    BMC 15.5%
    WDC 66.5%
    Average 51.9%
    S&P 500 27%
    Jul 22, 2013. 09:00 PM | 2 Likes Like |Link to Comment
  • Buying Buybacks [View article]
    Good catch - yes, ADT is the worst performer and not ANF - my apologies - the numbers on the chart are correct through close of trading Thursday, July 18th
    Jul 21, 2013. 08:26 PM | 2 Likes Like |Link to Comment
  • Fixed Income Momentum - June 2013 [View article]
    Thanks jbzw - I like your strategy of earning higher returns through going down in credit quality in short duration bonds. Default rates are likely to stay low, and you are less exposed to rising rates which we saw generate poor performance in long duration assets.
    Jun 2, 2013. 04:37 PM | 2 Likes Like |Link to Comment
  • Revisiting The SuperDividend ETF And Its 7.3% Yield [View article]
    No K-1 like an MLP, but high non-qualified dividends given the high level of foreign corporations - this fund, like most high dividend funds, would be best in a tax deferred account
    May 29, 2013. 08:26 PM | 2 Likes Like |Link to Comment
  • Dow Today Versus Its 2007 Peak [View article]
    Thanks for the interesting dialogue so far everyone
    Mar 6, 2013. 06:27 PM | 2 Likes Like |Link to Comment
  • Dow Today Versus Its 2007 Peak [View article]
    A little dated now, but I tackled this in September.
    I will put another version together.
    Mar 6, 2013. 06:24 PM | 2 Likes Like |Link to Comment
  • Dividend Aristocrat Investing 2013 [View article]
    Rising rates are traditionally correlated with strong economic growth which lifts higher beta stocks disproportionately. I would certainly rather own the equity of these DA's than lend them money at today's interest rates, so I favor them over fixed income alternatives.
    Feb 25, 2013. 07:24 PM | 2 Likes Like |Link to Comment