BOND's 10% Annual Return Without Any Increased Risk: Will The Good Times Last? [View article]
th3decider: Your belief that being able to hold a bond to maturity and recover the par value gives you some security, and therefore that bond funds are riskier than bonds is completely illusory (http://bit.ly/TVoNkx). It's hard to imagine how you could be right without creating huge arbitrage opportunities for someone.
BOND's 10% Annual Return Without Any Increased Risk: Will The Good Times Last? [View article]
BOND is smaller and newer and Bill Gross knows what he's doing which makes him exceptionally agile at picking up nickels in front of bulldozers. But that doesn't change the economic fundamentals. I own some BOND, but sold half of it recently because I don't think the return is worth the risk a this point.
Analysis Of Exxon's Dividend Potential [View article]
Ok, you know how to use excel. But over the last 10 years you while you were earning a 10.8% annual return with XOM, you could have been earning 13.2% with COP and 14.7% with CVX.
Why I'm Buying Multiband Hand Over Fist [View article]
IM: Always interesting to know what people are doing hand over fist. I wish I'd seen your article sooner and bought! But, I probably wouldn't have anyway. Too small and speculative. I did take a quick look back at some of your earlier recommendations in an article dated June 2012. Of the three companies you wrote about, LMLP was snapped up for a 90% gain, but the other two (MEA and ASTC) are down around 40% and 30% respectively. The average return of 20% is ok but not outstanding (SPY is up 27% over the period), especially on a risk adjusted basis. I'm just talking about my situation, you understand. I can see you might win big, but you'd have to enjoy the thrill of the hunt. I hope things work out for you.
Intel Is Undergoing A Revolution; Don't Miss It [View article]
Ashraf: Credible and informative as usual, thanks. However, some SA readers have argued these things are all pretty marginal for a company the size of Intel, which therefore can't grow much faster than the PC market. Any thoughts from a business standpoint of what this all means for Intel's bottom line? From your standpoint, what is an optimal share for Intel in a stock portfolio (maybe a technology sector portfolio)?
The Good News, The Bad News And What's Very Ugly [View article]
Paul Wagner: It’s explicit in your responses to AnnieA that Jamie Dimon’s compensation must be fair because it’s approved by the board which represents shareholder interests. Dimon is also chairman of the board which therefore cannot be regarded as providing independent oversight of JP Morgan’s policies or compensation (the board appoints the compensation committee).
It’s implicit that there’s nothing wrong with a TBTF financial institution that has $2.3 trillion in assets and takes risks with taxpayers’ money even it can’t understand or manage.
The Short Side Of Major Integrated Oil And Gas [View article]
The argument that it's a useful alert you may have missed something still implicitly assumes sellers are more attentive to market currents or learn faster than buyers. I’m not convinced.
A two minute literature search on the internet suggests there’s weak evidence that short sales have predictive power for price declines, but small enough that you won't recover your transactions costs. A typical efficient markets result. Any profits may be due to mean reversion since short sales target companies that have outperformed. (I tried to include the links but I couldn't as there are some funky characters, but you can find them yourself.)
That suggests to me that the two companies you mention (XOM, BP) which haven’t outperformed and are in a sector that has lagged aren’t particularly good candidates for short selling, so I guess I'll hold on to my XOM and go ahead with CVX. But, thanks for the article anyway, I've learned something.
The Short Side Of Major Integrated Oil And Gas [View article]
I have a small position in XOM and have been thinking of adding CVX, so thanks for a timely article. But, I’m not sure I get the point.
A short sale is simply a bet between a buyer and a seller about how the price will change before the settlement date. Regardless of who wins, there’s no net impact on market demand. So, if you read something into the volume of short sales (and I guess you do) implicitly you believe the sellers are smarter or better informed than the buyers. Or alternatively that (some) people who don’t own the stock are better informed than people who do since otherwise short sales would be no more worth reporting than any other sales. Any time the market is open, willing buyers and sellers are making trades. So, quick question: Is there any evidence that large short sales predict price declines?
Structural Change In The Mobile Processor Marketplace: Intel Wins; ARM, AMD Lose [View article]
Arnold: I hope you're right, I own quite a bit of it. But, translate from technical to financial if you would. One argument is that these chips will be a small part of Intel's total sales, hence won't have much impact on the bottom line. Also, what about the return on investment when you factor in development costs?
I'm Not Gonna Brag, But I Did Recommend STAG [View article]
Brad: Don't worry about conflicts since you don't avoid them by not owning securities you write about anyway. E.g. does it mean you don't write about the best stuff that you want to own yourself, implying that your readers aren't getting your best advice? Besides, there's no conflict unless you move the market.
I've just done some minimal due diligence (looked at a couple of articles from 2011) to check on the picks that you didn't brag about and they've generally done well. None of them were down and in most cases they were up 25% or more with healthy dividends. Safe to say they've outperformed the market. How much of that do you think is cyclical?
The Bernanke Agenda - It Isn't What You Think It Is [View article]
Joseph: On a second reading, I’m not sure whether you have a wrong point or no point at all. Your note confounds US and global economic interests, short term and long term policy objectives, and fixed and flexible exchange rate regimes, then gift wraps the package in some sort of Ben Bernanke plot to turn the world’s policymakers into zombies. Night of the living Fed? None of it makes sense to me.
For the moment, we’re far from the situation you envisage where the US is unable to supply global demand for reserves. That may happen at some time in the future as the US’ share of global GDP and trade shrinks, but the solution is more likely to be the renminbi than the SDR, just as the dollar displaced sterling. Meanwhile, the short term priority is preventing deflation – too little demand, not too little supply. That’s what excess reserves represent: supply > demand. There are good arguments for reforming the global monetary system, but it’s not the cause of misaligned exchange rates and global macro imbalances and reforming it won’t inherently address the underlying problems. Besides, the SDR is nothing but a basket of currencies supplied by member states of the IMF, including the US. Just shifting from dollars to SDRs won’t solve the (imagined) problem of a dollar shortage. Moreover, why would the US get behind some institutional change that would raise its borrowing costs?
Two final points: (1) Your Bernanke quotes are about governance and regulation in the US financial sector which is what got us into trouble in 2008, not international macro policy coordination. (2) The IMF has a dog in this race as you point out yourself, since it would like to be asked to manage the world’s non-sovereign reserve currency. Read those IMF publications more as career builders within the organization than as serious policy proposals. (Ocampo is probably hoping to replace Christine Lagarde as IMF MD when her term is up. He wouldn’t be a bad choice.)
The Good News, The Bad News And What's Very Ugly [View article]
I agree, it’s hard to see why it would be more difficult to dispose of the truly indigestible bits than to assemble the stuff in the first place, but I’m only going on the information you and Lawrence provided. Yes, Tony Pow, they have them in Europe too – down and out in Paris and London, so to speak. I suppose when the day comes I’ll have to start feeling guilty again.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
The only thing that doesn’t make sense about the scenario you map out is that it won’t resolve or even address the current crop of problem which stem from global imbalances, excessive debt and inconsistent macro policies. Indeed it would set current misaligned exchange rates in stone at the very time when the evolving global economy (the rise of emerging markets) will demand flexibility. You’re proposing a euro on steroids. Conditions aren't remotely right for a currency union and even if they were it would require much closer integration which the US will never agree to.
Here’s a simpler explanation of what Bernanke is doing: flooding the market with liquidity to keep long term rates as low as possible. A desperate measure perhaps, but it's all he’s got to keep the whole thing from going down the spout. In any case, since those excess reserves are earning negative real interest so far they’ve been a tax on the financial system that got us into this mess in the first place. Nothing original about this analysis, it’s pretty well what he’s said all along that he’s doing. Nor have you got the relationship between monetary and fiscal policy right. Fiscal policy is totally paralyzed by a dysfunctional Congress at a time we need more of it, so monetary policy is the only game in town, even if it’s the wrong one.
The Good News, The Bad News And What's Very Ugly [View article]
I agree about McDonald’s food-like substances, but the toilets are very useful when you’re traveling. I’m always vaguely embarrassed about using them, reaping where I haven’t sown so to speak, but now you’ve made me realize the valuable service I'm providing to income distribution. It will be a while longer before they have machines that clean toilets.
I don't think in principle you need to worry about the rest of it. Labor is the ultimate constraint. There's no shortage of social need though our institutions will have to evolve further.
BOND's 10% Annual Return Without Any Increased Risk: Will The Good Times Last? [View article]
BOND's 10% Annual Return Without Any Increased Risk: Will The Good Times Last? [View article]
Analysis Of Exxon's Dividend Potential [View article]
Why I'm Buying Multiband Hand Over Fist [View article]
Intel Is Undergoing A Revolution; Don't Miss It [View article]
The Good News, The Bad News And What's Very Ugly [View article]
It’s implicit that there’s nothing wrong with a TBTF financial institution that has $2.3 trillion in assets and takes risks with taxpayers’ money even it can’t understand or manage.
Both suggest a woeful complacence.
The Good News, The Bad News And What's Very Ugly [View article]
The Short Side Of Major Integrated Oil And Gas [View article]
A two minute literature search on the internet suggests there’s weak evidence that short sales have predictive power for price declines, but small enough that you won't recover your transactions costs. A typical efficient markets result. Any profits may be due to mean reversion since short sales target companies that have outperformed. (I tried to include the links but I couldn't as there are some funky characters, but you can find them yourself.)
That suggests to me that the two companies you mention (XOM, BP) which haven’t outperformed and are in a sector that has lagged aren’t particularly good candidates for short selling, so I guess I'll hold on to my XOM and go ahead with CVX. But, thanks for the article anyway, I've learned something.
The Short Side Of Major Integrated Oil And Gas [View article]
A short sale is simply a bet between a buyer and a seller about how the price will change before the settlement date. Regardless of who wins, there’s no net impact on market demand. So, if you read something into the volume of short sales (and I guess you do) implicitly you believe the sellers are smarter or better informed than the buyers. Or alternatively that (some) people who don’t own the stock are better informed than people who do since otherwise short sales would be no more worth reporting than any other sales. Any time the market is open, willing buyers and sellers are making trades. So, quick question: Is there any evidence that large short sales predict price declines?
Structural Change In The Mobile Processor Marketplace: Intel Wins; ARM, AMD Lose [View article]
I'm Not Gonna Brag, But I Did Recommend STAG [View article]
I've just done some minimal due diligence (looked at a couple of articles from 2011) to check on the picks that you didn't brag about and they've generally done well. None of them were down and in most cases they were up 25% or more with healthy dividends. Safe to say they've outperformed the market. How much of that do you think is cyclical?
The Bernanke Agenda - It Isn't What You Think It Is [View article]
For the moment, we’re far from the situation you envisage where the US is unable to supply global demand for reserves. That may happen at some time in the future as the US’ share of global GDP and trade shrinks, but the solution is more likely to be the renminbi than the SDR, just as the dollar displaced sterling. Meanwhile, the short term priority is preventing deflation – too little demand, not too little supply. That’s what excess reserves represent: supply > demand. There are good arguments for reforming the global monetary system, but it’s not the cause of misaligned exchange rates and global macro imbalances and reforming it won’t inherently address the underlying problems. Besides, the SDR is nothing but a basket of currencies supplied by member states of the IMF, including the US. Just shifting from dollars to SDRs won’t solve the (imagined) problem of a dollar shortage. Moreover, why would the US get behind some institutional change that would raise its borrowing costs?
Two final points: (1) Your Bernanke quotes are about governance and regulation in the US financial sector which is what got us into trouble in 2008, not international macro policy coordination. (2) The IMF has a dog in this race as you point out yourself, since it would like to be asked to manage the world’s non-sovereign reserve currency. Read those IMF publications more as career builders within the organization than as serious policy proposals. (Ocampo is probably hoping to replace Christine Lagarde as IMF MD when her term is up. He wouldn’t be a bad choice.)
The Good News, The Bad News And What's Very Ugly [View article]
The Bernanke Agenda - It Isn't What You Think It Is [View article]
Here’s a simpler explanation of what Bernanke is doing: flooding the market with liquidity to keep long term rates as low as possible. A desperate measure perhaps, but it's all he’s got to keep the whole thing from going down the spout. In any case, since those excess reserves are earning negative real interest so far they’ve been a tax on the financial system that got us into this mess in the first place. Nothing original about this analysis, it’s pretty well what he’s said all along that he’s doing. Nor have you got the relationship between monetary and fiscal policy right. Fiscal policy is totally paralyzed by a dysfunctional Congress at a time we need more of it, so monetary policy is the only game in town, even if it’s the wrong one.
The Good News, The Bad News And What's Very Ugly [View article]
I don't think in principle you need to worry about the rest of it. Labor is the ultimate constraint. There's no shortage of social need though our institutions will have to evolve further.