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Richard Glenn

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  • Why China Can't Dump U.S. Treasuries [View article]
    It seems like the author has some fundamental misconceptions. First, China does not buy dollars to keep the Yuan strong (as the article states), but rather to keep it weak, so that it's exports look cheap to the rest of the world. The reason that China does not simply invest in some other asset is not because there isn't a deep and liquid enough market out there to put it to work in, but rather that once it spends it's dollars they are once again out in the international market where they push down the value of the dollar and in comparison make the yuan stronger, and this is exactly what China is trying to avoid in the first place.
    Feb 13, 2009. 03:31 PM | 16 Likes Like |Link to Comment
  • How MannKind Shows Depth Of The Diabetes Market [View article]
    I really wish SA had an ignore author button. This article is so. . . bad. Just click bait perhaps?
    Apr 3, 2014. 09:44 AM | 15 Likes Like |Link to Comment
  • Micron's 2014 Insider Trading: An Analysis [View article]
    RSA, Thanks again for all of your work in the trenches of the SEC filings. In answer to your question about why someone would exercise options early, how about this:
    Exercising options is a taxable event, even if you plan on just keeping the shares. If you were pretty sure that the stock was going to soar in the next couple of years, AND you planned on keeping your shares for the long term, then it would be better to exercise them now and pay a small tax bill rather than exercise them in a couple of years when the stock is at $60 and pay a massive tax bill. Of course, when you sold the shares way down the road you would owe the tax eventually, but until then you get to compound it free of charge.
    A little thin, I know, but I can't think of any other reason for it.
    Mar 30, 2014. 03:43 PM | 8 Likes Like |Link to Comment
  • MasterCard Inc.: Read The Fine Print [View article]
    Thank you for putting this together. I have been watching MC for quite a while and hoping for a pullback to buy in. It's an amazing business, and as you point out the two problems are that the stock is on the rich side, and that lots of folks would love to take a slice of their very fat profit margins. The most important number in your article however, is this : 20bp. 20 Basis points is all MC gets paid for it's network. The lion's share of the interchange fees go to the banks. So even if a competitor found a way to cut out MC, the best they could do is go to a merchant and offer a savings of 5 bp? 10? Heck, even if they were willing to work for free all they would save a merchant is 20 bp, and that is on a 150 - 400 bp bill. That sounds like a very tough sell to me, unless they can come up with some way of replicating the huge pool of card holders that MC has.
    Apr 30, 2014. 09:38 AM | 7 Likes Like |Link to Comment
  • The Apple of Warren Buffett's Eye? [View article]
    I love Apple, and I love Berkshire, but Buffett would not touch Apple with a 10 foot pole. Why? Not because he doesn't understand how they make their money, but rather because Apple has to keep designing fantastic new products or it will be toast. And even with a great track record like apple has, that is far from a sure thing. What will Coke be making it's money on ten years from now? The exact same thing it has for the past hundred years. That's why it could be run "by a ham sandwich". This is the crux of why Buffett does not invest in tech companies -- he understands them just fine, but has no idea what they will be selling 10 years from now to pay the bills. Neither does anyone else, which is why the tech space is littered with former high fliers that are now road kill.
    Mar 11, 2011. 10:52 AM | 7 Likes Like |Link to Comment
  • Microsoft: A New Breed Of Dividend King [View article]
    doc47 you are absolutely correct, and that underscores the need to buy even great companies at reasonable prices. 10 years ago Microsoft was trading with a p/e in the 40's. You can't buy there and expect long term success. Today with p/e at 11 is a different story, however. Good luck.
    Jun 28, 2012. 08:12 PM | 6 Likes Like |Link to Comment
  • The Ultimate Demise Of The Euro: When, Not If [View article]
    A good summary of where we stand now. But the $64k question is: What happens in the near term? How do you position for the next few weeks / months? What is your prescription for making / not losing money in the near future? Any market predictions you would care to make? I'm all ears.

    For my money, I think the Euro survives, the ECB prints, Germany gets some sort of central budget watchdog, and we are back here again after the less competitive members don't make good on their promises. But this will take a couple of years, so until then don't fight the fed (s).
    Dec 5, 2011. 07:01 PM | 6 Likes Like |Link to Comment
  • The No. 1 Reason Intel Is A Buy [View article]
    Thanks for all the comments. J.D. Welsh: I'm basing my numbers on Morningstar's database, but all you need is the annual reports to get the income statements, balance sheet, and cash flows. All that is public and available from a number of sources.
    Skwestorange: You are absolutely correct that most companies buy back shares at the worst possible time (when business is good and the price is high). That's why I only give them "credit" for the current value of the net shares that they retired. And even there, I apply a haircut to the current stock quote to account for the fact that if they were to re issue the shares they would pressure the market. This is actually a good check on management: How much did they spend to buy back shares, and how much value did they receive? In Intel's case they were quite close, indicating that management took advantage of the market's weakness in the last few years to buy stock.
    Jun 26, 2012. 09:59 PM | 5 Likes Like |Link to Comment
  • Apple Watch: Disruptive, Profitable, And Yes, The Next Big Thing [View article]
    The Apple watch demo was very cool, but at the end of the day huge new markets in consumer electronics just don't happen without a killer app, and I didn't see one at the demo today. I think the watch will be a big disappointment, lucky to sell even 25mm units in 2015 unless they can find a "must have" use for it. The iPhone 6 on the other hand will make life very hard for the Galaxy phone. I imagine that the main reason people bought the Galaxy in the past was for the extra large screen, and now that advantage is gone.

    The real game changer at this keynote, however, was not the phone or the watch, but the apple pay. That is a new killer app for the iPhone, and not only will it help drive record breaking sales, but once people feel the ease and security of paying with their phone, switching to a competing phone will be like going back to a horse and buggy. I think it will represent the biggest increase in "stickiness" for the apple ecosystem that we have seen in years, unless samsung can figure out a way to duplicate it.
    Sep 9, 2014. 07:54 PM | 4 Likes Like |Link to Comment
  • Micron: What Are They Hiding About Elpida, And Why? [View article]
    Great article, as usual. I don't think anyone should be surprised that MU execs would jump at the chance to create a "cookie jar" for future rainy days. Times are good now, but this industry has always had bipolar pricing, and it was not too long ago that most of the players were on the brink of bankruptcy. Finally, just think about which method of disclosure would produce more long lasting warm fuzzies among institutional investors: A large one time gain, never to be repeated or, a series of fat earnings beats lasting six quarters?
    I would also like to know what the real impact of this fire sale purchase of Elpida is, but for long term shareholders I think management is doing the best thing (not that management has shown any concern at all for shareholders, but even a blind squirrel occasionally finds a nut).
    Oct 17, 2013. 11:17 AM | 4 Likes Like |Link to Comment
  • Could This Strategy Be The Holy Grail Of Investing? [View article]
    As someone who has traded options for over ten years, let me second Daniel Moser's comments above. I think options are a wonderful investing tool, and I would encourage anyone who has the inclination to study them. That said, I think there is more simplistic / misleading information out there about options than any other asset class. Unfortunately this article is another example.
    As Daniel pointed out, in order to be fully hedged, you would have to buy many more at the money puts than the author stated. Even more problematic is the "sell short term options against the hedge to pay for it" part of the program. If the underlying makes a big move down, you will find your hedge gets eaten by the short puts, and if it goes up, you won't be able to sell the next month for almost anything as you try to "roll" your expiring short option.
    To put it another way; If this worked, why not just skip buying the stocks all together, buy a bunch of leap puts, and then sell the short term puts to pay for them? No risk! If the market goes up or sideways, you break even by selling short term puts, and if there is a decline you reap massive profits! Heads you win, tales you get your money back!
    Ok, sarcasm aside, I can tell you from experience that this sort of free lunch is a mirage.
    I am also very skeptical of any options backtesting claims. The reason is that unlike stocks, historical option prices are almost impossible to find (unless you are Goldman, or a huge hedge fund). This means the backtesting generally consists of making assumptions about what option prices might have been in the past given the price of the underlying at various points in time. The margin of error would be huge.
    Just something to keep in mind the next time someone comes along promoting a "Can't miss option strategy -- now with even MORE amazing backtesting!"
    Jun 6, 2013. 10:57 PM | 4 Likes Like |Link to Comment
  • Barron's' 'Miller Time' Completely Misses the Math - and the Mark [View article]
    Amen. This kind of shill reporting is just sad. Barron's used to be an OK publication. One more reason to avoid the MSM financial cheerleaders like the plague.
    Oct 19, 2009. 02:30 PM | 4 Likes Like |Link to Comment
  • Exxon Apostasy: A Closer Look at the Oil Giant's Real Valuation [View article]
    Thanks for a well thought out argument. The comments above are exhibit "A" for religious attitudes toward some stocks. XOM is indeed a very well run company, but even a good company can be overpriced. And what do you think will happen to the price of oil once someone develops a battery capable of easily powering a car? My guess is $5 / bbl, as the only place it will be used is jetfuel and chemical feedstock.
    Jan 5, 2009. 12:09 PM | 4 Likes Like |Link to Comment
  • What Are Intel's Next Disruptive Technologies? [View article]
    Thank you for this throughly researched article. It seems that Intel is responsible for the lion's share of technological advances that have allowed shrinks smaller than 90nm. How is it that all the other fabs are able to steal their IP in order to follow them down? Intel spends a massive amount on R&D compared to their competitors, yet those companies always seem to be able to keep INTC in sight, always behind a year or two, but close enough to be competitive -- or at least to still sell products. How is that possible again and again if they are not stealing Intel IP? And if they are, how do they get away with it? As you have pointed out, it's not like Intel is shy about filing patents. Anyone have an answer to this one? Thanks.
    Jul 10, 2014. 11:40 PM | 3 Likes Like |Link to Comment
  • Herbalife: Nailing Pyramids To A Tree [View article]
    But what about all the money that prospective supervisors spend on sales leads / dvd's for leads / sales seminars etc. ? Do those get reimbursed? From what I have seen the lion's share of losses that new people suffer trying to break into HLF is being convinced to buy "marketing leads" and "business services" not from buying the product itself. Even if every box of shake mix was eventually returned it would still be a great scam to sell $2 leads for $139, and $1 DVD's for $39. Can people get their dvd money back? How about the $1,000's some spend for leads?
    May 30, 2014. 09:40 PM | 3 Likes Like |Link to Comment