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  • Why Oil Is So High When The World Economy Is So Low [View article]
    Another factor to consider is that an increasingly large percentage of the world's total oil production will be coming from unconventional sources (such as deepwater and shale oil) going forward. These methods of producing oil are significantly more expensive than the conventional sources that made up most of the production in the past.
    Aug 17 08:44 AM | 6 Likes Like |Link to Comment
  • Why Frontline's a 10-Bagger [View article]
    Excellent article Clemens. You really highlighted the benefits of JF's investment style. Focusing on dividends and returning profits to shareholders is an excellent way to build wealth. I just wish that more companies did it.

    Do you think that now is the time to buy Frontline or would you wait a few years? Even Fredriksen himself has stated in interviews that he believes that the tanker market will be weak for another few years.
    Jul 25 01:19 PM | 6 Likes Like |Link to Comment
  • What's been witnessed over the past days is a farce, writes Daniel Hannan. The EU/IMF knows Greece can't possibly raise €50B with privatizations and can't grow without devaluation. Once banks unload their exposure to Greek debt onto governments, Athens will default.  [View news story]
    Unloading debts onto governments? Didn't this exact same thing happen in the USA not long ago?
    Jun 30 12:20 PM | 6 Likes Like |Link to Comment
  • Jim Grant says the U.S. needs to get off the credit card and get on a debit card - the gold standard - if it ever hopes to climb out of its $14.3T sinkhole: “No other reform would accomplish so much to hasten the return both of growth and fiscal balance."  [View news story]
    This has about as much chance of happening as a big, fat guy coming down my chimney in December with a brand-new Maserati.
    Jun 28 06:41 PM | 6 Likes Like |Link to Comment
  • If the U.S. falls off the list of 20 countries enjoying AAA status (a one in three chance, says S&P), it will join Japan - a country notable for its AA- rating, massive debts, and the lowest bond yields on the planet. The Japanese 10-year note sits at 1.26%.  [View news story]
    Japan also had the benefit of a nation of savers to keep their interest rates low. The USA has no such benefit. I don't think the U.S. will be as successful at keeping rates down if it loses AAA status.
    Apr 18 12:44 PM | 6 Likes Like |Link to Comment
  • Why I Am Buying Marine Harvest [View article]

    It isn't just the Oslo Bors exchange that is shareholder friendly. Norwegian (Swedish too) companies tend to be among the most shareholder friendly that I have seen anywhere in the world. The management tends to be very honest with investors too. They don't sugarcoat things or "stretch the truth" like many companies do.
    Apr 15 10:54 AM | 6 Likes Like |Link to Comment
  • Amid worries that $110 oil will prove the tipping point for widespread pain in the U.S. economy, some analysts don't just think the U.S. markets will weather the storm, BofA Merrill Lynch actually sees a "net positive." Oil is “less than 40%” of U.S. energy consumption; natural gas and coal are bigger, and their prices are way down from 2008 levels.  [View news story]
    I should also point out that these cars run on lithium-ion batteries. Not only is there nowhere close to enough lithium in the world to build enough batteries to replace even a fraction of our national car fleet with plug-in hybrids but what little there is is almost entirely found in South America.

    I fail to see how buying lithium from Bolivia and Chile will be better for our domestic security than buying oil from Canada (the US actually buys comparatively little oil from the Middle East).
    Mar 7 08:52 PM | 6 Likes Like |Link to Comment
  • President Obama will propose an overall budget freeze and a ban of earmarks in tonight's State of the Union address, ABC reports. The freeze would be far broader than his proposal last year to hold steady non-security discretionary spending. (Corrected: a five-year freeze on non-security discretionary spending)  [View news story]
    Of course, the freeze probably won't affect "emergency" legislation and spending, which all bills will be designated going forward. Likewise, the freeze won't affect mandatory spending, which will absolutely increase.
    Jan 25 12:44 PM | 6 Likes Like |Link to Comment
  • How Long Can Microsoft's Burning Millions Continue? [View article]
    When I first saw the title of the article, I thought that you were implying that Microsoft was losing money - something that it most certainly is not.

    Google loses money on certain aspects of its business too. The article implies that it is okay for Google to lose money on one part of its business but not for Microsoft to do the same thing?

    Microsoft is not using this money losing division to pay its dividend.
    Jan 14 01:51 PM | 6 Likes Like |Link to Comment
  • Computer trading, dark pools and ETFs are dominating market action on a daily basis, rendering buy-and-hold an old-school relic. Zack Miller's bigger worry: the "bifurcation of the markets: one for pros and one for the rest of us" - everyone should be concerned about the "unleveling of the playing field."  [View news story]
    Oh please... just how does this kill the buy and hold philosophy? This makes it more difficult for the average person to make money day trading, but this is not a problem for buy and hold people.

    Stock prices are always volatile. The key to long-term value investing hasn't changed a bit. Buy a company when it's underpriced, sell if it gets substantially overpriced.
    Jan 4 05:49 PM | 6 Likes Like |Link to Comment
  • The deficit and the debt are simply "residuals" of government tax and spending policies, Bruce Bartlett argues, and having a separate debate on the debt limit is "dangerous because it allows members of Congress to try and compensate for being fiscally irresponsible... by casting a vote against the debt limit." The prospect of default resulting from such reckless action is "not theoretical; it is real."  [View news story]
    He says that many of the "newly elected representatives have no knowledge of economics and finance." Could anyone explain how that's different from the representatives that they are replacing?
    Jan 3 02:50 PM | 6 Likes Like |Link to Comment
  • Despite cries that letting the Bush tax cuts die would kill any recovery, few dare utter an uncomfortable reality, according to Gregg Easterbrook: Taxes should rise for everyone, not just for the rich. Americans think they're clobbered by onerous taxes, but U.S. taxes are relatively low compared to the rest of the world, and federal income taxes have fallen dramatically.  [View news story]
    He never balanced the budget. That was an accounting trick that was done by counting social security and Medicare revenues as tax revenues, which they aren't because they're future expenses.
    Jul 29 11:32 PM | 6 Likes Like |Link to Comment
  • Seadrill's Financials Speak Of A Very Risky Enterprise [View article]
    Seadrill's total cash flow from its operating rigs was $533 million in the third quarter. This is $1.13 per share. In other words, the company's operations did throw off enough cash in this quarter to cover the increased dividend.

    The author is correct that Seadrill had a negative FCF in the quarter, but that's also typical for the company. It's basically financing its phenomenal growth with debt and paying out a good portion of its cash from operations to investors in the form of dividends. It's an aggressive strategy and it's one that has paid off handsomely for investors.

    With that, I'll agree with him that the company is riskier than its peers. With its high debt load, a downturn in the industry would affect it much more so than its peers.
    Dec 8 07:52 PM | 5 Likes Like |Link to Comment
  • Seadrill Reports Best Quarter Ever But Is Just Getting Warmed Up [View article]
    You can look at the information saratogahawk posted in his comment above. Utilization is staying strong and dayrates are increasing across the board.

    Every rig being built this year is in use. By most projections I've seen, there aren't enough rigs under construction to meet demand.
    Sep 16 11:59 AM | 5 Likes Like |Link to Comment
  • How SeaDrill Could Benefit From Seabras Spin-Off [View article]
    True, SeaDrill won't get any EPS boost from this. Seabras still contributes to SeaDrill's bottom line in that Seabras still earns money. It won't increase the profits though but it won't decrease them either (as it would if it were no longer contributing to the bottom line). I apologize if that wasn't clear. They may actually take a slight hit to EPS as some of the dividend paid to Seabras will be going to its shareholders and not to SeaDrill itself.

    That could also depend on whether or not Seabras is able to be more dynamic and adapt to the Brazilian market better than SeaDrill can. If so, that could mean that they would be able to earn more money in the market than SeaDrill can. That's an if, though.

    I saw some speculation over at the IV boards that SeaDrill could be doing this to isolate those assets from the rest of the company, essentially forming a hedge against the Brazilian government. Any thoughts?

    I haven't seen any information about what yield that Seabras will have but a news report out of Oslo said that it will be the three deepwater rigs that are currently operating in Brazil that will be transferred to Seabras.
    Dec 15 12:20 PM | 5 Likes Like |Link to Comment