Random Idea

A Transaction Tax to Reduce Liquidity on U.S. Markets? Terrible Idea

you can't make the weak stronger by making the strong weaker....this has to rank up there as one of the single worst ideas I've ever heard of economically.

It would cause a net tax loss, as 1) transactions would plummet, 2) cost of capital would escalate, and 3) New York would no longer be even among the top 10 economic centers. What an idiot.

Fair Value for the S&P 500? Tell Me Lies, Sweet Little Lies

The idea of valuing stocks on any one year of earnings is ridiculous. If a company has one bad year is it worth zero? No (not unless it continues that trend). American companies (for which the S&P 500 is a proxy) should take a consistent share of GDP over time, and since GDP tends to grow over time we should expect earnings to grow over time.

Combine that with low long-term interest rates and you find a rather large risk premium currently built into stocks (i.e. they are undervalued). Who knows where stocks go over the next 6 months or a year, but over the next ten years, we may have the best returns (10-yr returns) since the early 90's.

My fair-value model puts the S&P around 1250. Even if 10-yr bonds rise to 6%, I think equities are currently worth 1125.

Tobin's Q Ratio Sends Modestly Bearish Long-Term Signal

I agree with logicalthought...profits and therefore value has moved away from asset-based returns. In other words, replacement value of assets is of less relevance to a Google than it would be a oil, railroad, or industrial company.

Stocks Will Fall 37% or Gold Will Rally 60%

bad analysis

If you are gonna run a comparison like this, you need to use total returns on the DJIA (S&P would actually be better) and total returns on Gold.

Actually, you are running actual returns on Gold (you receive no interest or dividend on gold) but you are ignoring roughly 1/3 of the return in stocks that comes from dividends.

Over time Gold should be consistent in its purchasing power (i.e. grow at the rate of inflation). Stocks, on the other hand have grown 5-6% faster than inflation (roughly 6% capital gains, 3% dividend). This ratio you talk about then will not be consistent over time but will be declining.

GMX Resources: Long Term Bull Market for Natural Gas

I agree with you that there is a lot of gas out there, but what price does the commodity need for folks to drill it? Rig count has come off very strongly. Combine that with the new wells (GMX is a great example) that decline more quickly suggests that underinvestment will result in strong prices in short order. That's not the problem currently (natgas inventories currently quite high).


On Apr 30 12:22 PM bindlepete wrote:

> Lots of gas around unquestionably and then the geopressured resources
> -- remember them? Exxon does but the real inhibitant is the open
> issue of the carboncredits.
>
> Until we get a decisionon these no one will establish/commit to
> base load combined cycle generation based on naturalmgas usage..
> The carbon savings from this sort of fuel abd the added efficiencies
> will do great things for the nation's carbon foorprint.
>
> Got to get Washington to make some decisions and know it the politico's
> are cowards and want pay offs for their behavior in one sense or
> another. Just look at how Barney Frank has been behaving with regard
> to leadership on financial reform. Do nothing until he gets the nod.
>
>
> Now any real leader in the utility industry - not known for leadership
> since Phil Sporn - would be banging on their PUC regulators to get
> on the stick and make some decisions so they could lead Washington
> into the paths of rightiousness . Sorry, they are not ready for this
> yet. Push the decision up the line and complain when it is made.

Why Stocks Are Currently Undervalued

Thanks for your comment. I did want to respond to the stock position issue as you raise a good point that I would like to address. As an active investor I typically invest in single equities (not ETF's), but use my view of the S&P 500 as an asset allocation tool. Hence, although I am not specifically invested in SPY right now I am long US equities.


On Feb 25 11:53 AM kelm wrote:

> 1100 on the S&P by 2011 is a completely meaningless prediction.
> The fact that you recommend investors go long SPY and yet claim no
> stock positions speaks volumes.
>
> TBT is a leveraged short designed to track the 20 year treasury on
> a daily basis. I am long TBT (and PST) but it is as yet unclear how
> they perform over longer durations due to the re-balancing that is
> done to them at the close each day. Recommending such a product should
> always come with a caveat. But of course you're not long TBT either,
> just recommending it.

Great Depression Not Imminent, But Inevitable

I would then recommend getting even more short (note that I'll be on the other side of the trade)

Despite Recent Loss, Jefferies is Bullish on Goodrich Petroleum

The loss due to derivatives is a function to accounting treatment (part of their derivatives did not fit under "hedge accounting", and hence flow through the income statement every quarter) not business fundamentals. This causes a lot of "noise" in the income statement, which is why many Wall Street analysts disregard it.