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Richard Shaw  

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  • How Much Is Gold Worth? [View article]
    Debt is part of what creates the ratio of GDP to currency. If there were not debt the turnover would probably be lower.
    Jan 23, 2011. 07:25 PM | 3 Likes Like |Link to Comment
  • Setting Stop Loss Levels [View article]
    First, we are not traders, so not sure how valuable our view may be on your problem.

    Second, we believe that taxation of gains should generally be secondary to questions of price direction. Clearly, prices bounce around and to avoid whipsaws and "premature" taxes in stages, it makes sense to hold, but when direction is down, it can be tax-wise and profit-foolish to void taxes that are less than price declines that my develop. Right now the GE price is up not down.

    Only you can select the time frame and price variation level that you consider significant enough to close positions.

    You are right that the common belief is that gaps are subsequently closed, but when is not certain, and it does not always happen.

    If your rules try to predict reversals, then maybe the gap is a signal to you. If your rules follow reversals, then maybe it is premature to close.

    The key for traders is to have rules that have proven themselves to work profitably over a span of time and trades, that fit your personality and emotion (because emotional control is key), and then to follow your rules. If your rules say close the position when it goes above certain indicators, then that is probably what you should do.

    Somebody else, maybe you, might be using a different system, that just raises the stop level as it trails the price rise.

    If you include fundamentals in your trading, then you need to understand and judge why the price make the gap. If there is a real reset for value based on some important change, then maybe the gap will hold. If not, it may give back.

    Long-term investors, instead of traders, would probably just say "thank you" and do nothing.
    Jan 23, 2011. 07:22 PM | Likes Like |Link to Comment
  • Which Emerging Markets ETF Choice Is for You? [View article]
    Thanks for that note. We called TD Ameritrade the day of the article, and may have misunderstood the response, or the rep may have given the wrong answer. We called again today, and you are correct. However, it is commission-free at Fidelity. Note that we are not promoting commission-free. In fact, because we are not involved in dollar-cost-averaging programs, we find the conditions placed on comsission-free trades at Fidelity to be a problem, not a beneift for our process. According to TD Ameritrade, they do not impose the kind of conditions that Fidelity imposes, and merely charge a commission for the initial purchase at the time of sale, if the position is sold within X days.

    Thank you for the correction.
    Jan 23, 2011. 03:58 PM | Likes Like |Link to Comment
  • Which Emerging Markets ETF Choice Is for You? [View article]
    Not the two that are the subject of this article.
    Jan 23, 2011. 03:46 PM | Likes Like |Link to Comment
  • Which Emerging Markets ETF Choice Is for You? [View article]
    Well sir, it makes more than a "gnats worth of difference" to us on expense ratio with some our of positions which are in the millions., and the liquidity issue on stop loss orders is relevant for much smaller sizes. Your comment is not reasoned. Why would people care whether their broker charges $100 or $50 or$ 25 or $10 or $8 or $0 for a trade, and at the same time be unconcerned that on a $10,000 position (hardly institutional in size) in an emerging markets index costs them $42 per year more in one ETF versus the other. You obviously don't care about the differences, but many people do.
    Jan 23, 2011. 07:25 AM | 4 Likes Like |Link to Comment
  • Appealing Stocks With Notably High FCF Yields [View article]
    Goldman likes SSCC, and they may well be attractive -- we don't know, but what we do know is that an important fact is missing from the discussion. Smurfit-Stone Container emerged from bankruptcy reorganization On June 30, 2010. That material fact should be included in any discussion of reduced costs and free cash flow. Cost reduction in a company that relieves itself in reorganization is not the same as cost reduction in a company that did so without Chapter 11 reorganization. While they may or may not be attractive post-reorganization, the fact that they essentially failed financially as a company and have been out of bankruptcy for only a few months is a material fact that should be included in any discussion of their appeal as an investment.
    Jan 22, 2011. 09:34 AM | Likes Like |Link to Comment
  • S&P 500 Is Expensive Using Normalized Earnings [View article]
    Dibber, forward analysis is also important, but analysts tend to extend trends (whether up or down) too far. As a group, they are noted for changing their growth views late, and often for relying too much on optimistic management projections, and to focus on operating earnings projections without giving enough recognition to a history of "unusual" or "non-recurring" items that are also so important.
    Jan 20, 2011. 12:47 PM | 2 Likes Like |Link to Comment
  • S&P 500 Is Expensive Using Normalized Earnings [View article]
    Dibber, you point would be right on IF we had said, or if any one sugested that any single analytic tool should be used in isolation. However, to discredit individual tools because they do not work or make good sense in every circumstance will leave you with no tools whatsoever. In the end, judgement is required, but without data of various sorts, judgement is not possible -- just guessing. One needs to be aware of an use multiple tools -- some work and some do not -- this article does not assert that the method discussed or any other method is always right or always suitable.
    Jan 20, 2011. 11:19 AM | 1 Like Like |Link to Comment
  • S&P 500 Is Expensive Using Normalized Earnings [View article]
    Tom, I agree with your comments generally, but I like to see as much history as I can, just in case it shows me something useful -- looking at data never hurts -- how you use it matters. I would never presume in advance that I should not look at available data because I presume it would not be useful. Once it's all out there we can all pick over it and be guided by part or all as we chose. You can be sure that if I had done a study since 1987, someone would have said that I excluded key data before that point for this or that reason, so best to show it all and let people decide which parts, if any are of interest or use.
    Jan 19, 2011. 10:43 PM | 1 Like Like |Link to Comment
  • S&P 500 Is Expensive Using Normalized Earnings [View article]
    Simple question. If 130 years from 1881 is dumb, and 55 years from WW II is dumb, and 30 years from peak interest rates is dumb, and 10 year normalization is dumb (even though Warren Buffet as well as Robert Shiller think Ben Graham had a good idea there), what do you think is the right number of years, months, weeks, days, minutes, or seconds to use as an evaluation period?
    Jan 19, 2011. 08:48 AM | 6 Likes Like |Link to Comment
  • S&P 500 Has Only Moderate Downside Based on Operating Earnings Multiples [View article]
    While this method does not and cannot address that question, for which you have no time frame, it is certainly possible to get back there someday for some reason, but not if conditions in 2011 resemble conditions in 2010, where the world economy is slowly recovering. However, a solid punch in the gut with a major sovereign debt crisis, a war in a economically strategic location, a major terror attack in NYC, and other event risks could put us back there. We think the probabilities of that are low, but protect ourselves at all time with stop loss orders.
    Jan 19, 2011. 08:39 AM | 2 Likes Like |Link to Comment
  • S&P 500 Has Only Moderate Downside Based on Operating Earnings Multiples [View article]
    That's simple enough to explain. This is not an article attempting to cover all ground. It is part of a series articles that each examine a single valuation approach to see what each suggests. Your particular question is not addressed by this method. P/E expansion and compression is an interesting topic, but not within the purpose of this article.
    Jan 19, 2011. 08:35 AM | 1 Like Like |Link to Comment
  • S&P 500 Has Only Moderate Downside Based on Operating Earnings Multiples [View article]
    It is only obvious if you already knew what the operating earnings estimates are for 2010 and 2011, and if you had a clear idea of what various common multiples of those numbers meant in terms of index price, and if you already knew what the current price is in terms of the operating earnings estimates. Since you already know those things, it is obvious, but not to everybody. Of course, there is a range of outcomes, but we did not know what that range of price outcomes was until we explored the range of multiples. This is just one of many different metrics that investors might want to examine periodically to gauge where things are in terms of a scale of some sort. It was useful to use, sorry it was not useful to you.
    Jan 19, 2011. 08:31 AM | 3 Likes Like |Link to Comment
  • Telecoms' Dividend Yields [View article]
    Today is a good example of buy the rumor sell the news:

    T, VZ and AAPL all down on the announcement day for the Verizon iPhone.

    Still like the telecoms, but enjoyed observing the very short-term truism of buy the rumor, sell the new working in this instance.
    Jan 11, 2011. 02:57 PM | 3 Likes Like |Link to Comment
  • Persistent, Consistent Dividend Payers [View article]
    Concerning Aristocrats, S&P has talked about difficulties since 2008 meeting their 50 company plan.

    Concerning per minute trading, I disagree of course because that is my position. We have some positions in the millions. It is not reasonable for example, to buy $3 million of a stock that trades $4,000 per minute, for example. That would take 750 minutes, or about 2 days, if the investor were the only seller, in the event of a need or desire to exit. That would be inappropriate in our philosophy.

    The example is extreme for effect, but we wish to be able to enter and exit both quickly and cleanly, without being a disturbance to the market,

    We disagree that per minute trading means nothing -- it is an important part of our security selection, but differences in view are what make a market.
    Dec 22, 2010. 08:08 AM | 5 Likes Like |Link to Comment