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Ron Myers

 
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  • Marchers in more than 400 cities across 52 countries took part in protests against Monsanto (MON) today, calling attention to what they say are dangers posed by genetically modified foods. Monsanto is "poisoning our children, poisoning our planet," claims one of the organizers. The company says its seeds help farmers produce more from their land while conserving resources such as water and energy. [View news story]
    To tell the truth I don't have any proof either way that MON food is safe or not. My guess is that it's probably no worse for you than non-GMO versions as long as the herbicides used are fully removed, but I don't really know.

    Unfortunately since the chief regulator who decides whether their food is safe worked at MON I can give the FDA no credibility on this issue. Just from the Baynesian standpoint, it's tough to get one of your "people" into a position of power like that, so they probably have at least something to hide. In addition their business practices are despicable.
    May 25 11:53 PM | 5 Likes Like |Link to Comment
  • Retail Stock Investors: We Won't Get Fooled Again [View article]
    So it looks like retail is doing terribly again as always, missing out on the bull market and rolling into bonds just as they are at all time high valuations. Stocks aren't as exciting as maybe they were a couple of years ago but it still appears there's room to run in this rally. Once the flows do finally come in, then it will be time to sell.

    In the end disciplined long-term holding periods (10+ years), diversification across stock categories and countries, and laser focus on reducing costs, fees, and tax management is the only way to play this game for all but the most connected investors. Unfortunately almost everyone fails at this.
    May 25 03:23 PM | 1 Like Like |Link to Comment
  • Overdue student loans reached an all-time high of 11% during Q3 of last year, according to the DOE. The news comes just as the House approved a Republican-led proposal to allow interest rates on student loans to float. Still up for debate is whether or not a two-year extension of the 3.4% rate for subsidized Stafford loans will be legislated. Sector watch: APEI, APOL, CECO, COCO, ESI, STRA, LINC, LOPE, BPI, DV, CPLA, EDMC, NAUH[View news story]
    On one side we have massive QE to push rates down to the bone, explicitly to pump up housing and the stock market - which almost solely benefits the rich. On the other we are raising rates on liabilities which are almost 100% held by the poor and lower middle class.

    I don't even understand the need to do this from an economic standpoint. As QE has proven the cost of funds is ~0 for the government and they certainly face no interest rate and almost no credit risk. The way I see it, they collect 3.4% in carry, fund it at 1% (say average duration of 7 years), servicing costs maybe 0.5%, almost no losses (they will garnish your wages for life), and they can leverage these up at least 15 times from a "basel III" standpoint. That's an over 30% ROE...is there really a need to double the rate to make an 80+% ROE on the backs of the most struggling generation since the 1930's? These are higher returns than even the subprime and pawn shop lenders so hated these days.
    May 23 01:36 PM | 1 Like Like |Link to Comment
  • ADA-ES: Turning Coal Into Cash [View article]
    I think cutting down on wine, chocolate, and maple syrup supplies will make for a great down payment on fighting the obesity epidemic. Lower mercury emissions and reduced obesity; two birds with one stone.
    May 17 11:06 AM | 1 Like Like |Link to Comment
  • Yahoo (YHOO) is in "serious talks" to buy social blogging service Tumblr for as much as $1B, multiple sources tell AdWeek. Kara Swisher also reports talks are happening, but is more circumspect, stating they could result in a partnership, investment, acquisition, or nothing at all. Tumblr, which claims 100M+ blogs and (as of Nov.) ~170M monthly visitors (up over 3x from Jan.), would give Yahoo a big source of user-generated content to integrate and monetize, and would strengthen its mobile presence. It would also (as Swisher notes) mesh with Yahoo's efforts to win back younger Web users. [View news story]
    This sounds awful. Glad I don't own the stock.
    May 17 01:07 AM | Likes Like |Link to Comment
  • ADA-ES: Turning Coal Into Cash [View article]
    To me I think your rate of facility monetization is a little aggressive and the possibility of some of the RC facilities going unmonetized should be factored in. With that said I think there might be more upside in some of the other lines of business than you have here and I came up with a very similar valuation.

    Long since December, obviously love how the stock has been doing and hope management keeps up the positive work. Now if my other coal play BTU could turn things around.
    May 16 04:36 PM | Likes Like |Link to Comment
  • For the first time since April of 2009, the yen (FXY) fell through the 100-level against the dollar, helping the Nikkei rally nearly 3% on the session and almost 7% on the week. Japanese equities (EWJ) are now trading at levels last seen in January of 2008. Japanese capital flows data finally showed what many had been waiting for since BOJ Governor Kuroda's shot across the bow at deflation: an outflow, as Japanese investors became net buyers of foreign bonds. [View news story]
    Actually it is although it's called Super Sentai over there. All the action scenes in the US Power Rangers came from the Japanese show and they got Americans to do the non-action parts.
    May 10 08:58 AM | 1 Like Like |Link to Comment
  • Apparently behind the mid-afternoon drop in the S&P 500 (SPY) (a not insignificant 10 points), the soaring dollar (UUP), and sinking commodities (GLD, USO) was the rumor of a Jon Hilsenrath article set to hit the WSJ claiming "tapering" of asset purchases is coming sooner rather than later. Thus far, nothing is up. [View news story]
    I think most people agree that QE has pushed down rates materially in the long end - fundamentally it should because given the amount of flow the Fed is a very large buyer at these maturities - and that these rates almost have to come back up at least slightly when purchases taper off. And if the tapering is combined with further real improvement in the economy which would send rates up anyway - as the Fed says they will do - then rates could really move.

    While the money probably hasn't flowed directly from POMO into stocks like the Zero Hedge doomers say, what has changed is the relative attractiveness of stocks and HY debt to income-seeking investors. Not just individual investors but pension funds and institutions who have most of the "real money" and really move fundamental valuations in the market.

    The easy thing to believe is that "markets are efficient" as "this is smart money at large funds who will realize when high quality div stocks / HY bonds are overvalued" but even if this is true it isn't relevant. The way things work at a lot of these funds is that they are given a target to meet and then set allocations try to minimize risk around the target. High quality non-risk assets do not help meet these targets any longer. Instead investors are pushing into the next best thing - HY and high quality income stocks as they are the (modeled as, often based on historical vol which has indeed been super low) lowest risk / highest sharpe ratio alternatives to meet their required returns. Rest assured these funds will push right back into lower risk assets if yields rise - giving the fed a bit of a buffer to taper off purchases.

    To me the case for a barbell portfolio of cyclical stocks and cash has never been greater. Investor preference for cyclical stocks is still low and valuations are reasonable here; in addition many of the companies have used the low rate environment to delever and/or refinance on very attractive terms. If rates rise you will be glad you didn't take on the added rate risk, you will do well on your cash, and your cyclical stocks will probably do great since the economy probably improved materially. If rates grind down to 0 and we keep the QE status quo as Japan did (possible) you'll miss out on some carry and roll vs cash in what would have been your HY/Div portfolio, but it's likely cyclicals will do fine anyway even in that scenario and so you won't lose much. And in a doomsday scenario your cyclicals will do poorly but your cash will greatly outperform HY / div stocks.
    May 9 08:19 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: New Leadership For Stocks? [View article]
    Thanks for another great article; I always look forward to reading this each week.

    I'm an avid Zero Hedge reader and still greatly enjoy the site although not as much as I did two years ago. Unfortunately nowadays the content has shifted from what used to be legitimate analysis of the markets by some super-sharp authors to a high percentage of scare mongering / gold bug / anti-Bernanke pieces. I guess they have to keep serving up red meat to the base.

    All that said, if one has a good understanding of how to interpret the content and its presentation - always bearish - ZH is still a more valuable source for information on the markets than 95% of financial blogs and all mainstream media. Note that I did not say "better", just "more valuable".

    For example, no matter whether the jobs report is good or bad, Zero Hedge is going to post every single time that it is BS, the numbers are actually really bad, everything is collapsing, etc. They have picked apart the monthly report as well as weekly claims in every possible way and the several Tylers behind the analysis are not dumb even if there are flaws from time to time. The great thing about this is that there are 100 other sources that will almost always describe why the report was good unless it was truly terrible in which case it is obvious anyway and doesn't matter where you go. So all you have to do is check one of those to get the "good", check ZH for the "bad", and then you can balance which argument sounds better to you based on your personal experience to make an investment decision. The same can be said for nearly all other economic data and other news items; ZH will absolutely have its own take to be used against whatever the bull perspective is.
    May 6 08:06 PM | 1 Like Like |Link to Comment
  • Why Analysts Are So Wrong When Evaluating High-Growth Stocks [View article]
    Stop giving away good advice like this that I always think is obvious to everyone until I talk to people long many of the stocks you mention here.

    I still don't know about AMZN. My sense is that they could raise prices, stop investment in new businesses and end up at a PE of like 15-25 but I haven't modeled this out and I don't think it would be a great "margin of safety" short or long either way; so it's a no position for me.
    May 6 07:36 PM | 2 Likes Like |Link to Comment
  • Yahoo (YHOO) takes a page from Facebook's very successful Sponsored Stories and launches Stream Ads, ads that are inserted within Yahoo's recently-launched home page news feed and (like news feed articles) are personalized based on a user's activity. Yahoo is also revamping its home page billboards (the giant, costly ads that can appear near the top of the home page) to "deliver richer content interactions," and promises additional new ad formats are on the way. Given the way the company's display ad sales have been trending, some experimentation can't hurt. [View news story]
    So basically the new ads are going to be incredibly awful and pop up to be clicked on accidentally just as you were clicking on another link ala ESPN.
    Apr 29 06:56 PM | Likes Like |Link to Comment
  • Microsoft Office: Better To Switch Than Fight? [View article]
    Great article and I love the title.

    OO was used at my old university. I ended up buying office with my own money (and I was very poor at the time!) as OO was terrible, although to be fair it has probably improved since then. In the end it shouldn't be that hard to come up with decent word processing and spreadsheet software and at the very least MSFT may have to make some margin concessions at the low end, as they probably have already.

    My view of MSFT management is that they are very good at decisions like this one - that is, pricing, margin, IP and "moat protection" strategy - and mediocre to bad at everything else. So I have faith in whatever they choose here. Long MSFT.
    Apr 29 04:36 PM | 1 Like Like |Link to Comment
  • California may face its biggest regional power shortages since the days of Enron this summer, as the state grid will be operating without Edison's (EIX) San Onofre nuclear power plant and two natural gas-fired units, while hydroelectric output will be at a three-year low. Even bigger shortages may await in the next decade as state environmental regulations force more plants to shut down. [View news story]
    This is what happens when you crush coal. Don't feel bad for them at all.
    Apr 20 01:22 PM | 6 Likes Like |Link to Comment
  • Bill Gross takes advantage of the recent selloff in TIPS (TIP) to add to his holdings, noting the break-even rate for longer-dated paper has fallen to 2.35% (if inflation comes in above this number, TIPS outperform Treasurys). Yesterday's Treasury auction of TIPS was a mess, with one trader calling the action a "get me out" trade. Gross is getting in. [View news story]
    Well the problem with TIPS is that the number that determines how much interest the bonds pay is determined by the people who pay the interest on the bonds. How anyone could ever buy such a security is beyond me.
    Apr 19 12:51 PM | 5 Likes Like |Link to Comment
  • Bill Gross says he has changed his mind on Treasury bonds maturing in 10-years or less thanks to Japan's epic monetary easing. The premise: yields that look meager to U.S. investors look rich to the Japanese. "They [Treasurys] yield 125 basis points more" than what investors are getting on a 10-year JGB. (Previously: JGB yields plummet)  [View news story]
    Looks to me like real yields have normalized now. Inflation probably going to be in the low ones in Japan even with all the easing and 2-3% here. So -100 bps or so regardless of what you buy. In this case there is a compelling reason that the carry trade will hold up in the short term, long term yields must rise on JGBs or inflation must increase. Seems very dangerous to me.

    My view is that both are terrible but if your job is to sell bonds, maybe you cant say that. If you can't stomach the risk of stocks best to stick in cash or even gold IMO.
    Apr 9 03:55 PM | 2 Likes Like |Link to Comment
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