No, I doubt the CEO's do market analysis, but I am sure they have people do it for them. The data you and I have access to is all free. Coal company insiders have access to millions of dollars of budget to buy better data with. I am sure that they are monitoring key developments better than anyone else - they have to to plan their production accurately. And if they are not, and your interpretation is correct, then one of them should hire you to be a market analyst at a high salary.
I think it is much easier to forecast commodity price futures than to forecast the fortunes of a tech company, regarding the Steve Jobs issue. I wish you well in your approach and I enjoy reading your articles, but I don't think it's a very smart bet for you to make aggressive coal bets on margin on the strength of your free data when coal company insiders with reams of paid data are not making such bets. JRCC would be having an amazing year to make 80 million dollars, but if one of their officers bet just $10,000 of his own money *aggressively on margin* for 8000X gains, he would equal the annual profits of the company on the strength of his 10 grand bet. And yet, the insiders do not seem to be doing this. If they will not risk such a comparatively small sum to obtain such an outsized gain, why are you so confident? Then again, maybe if everyone gets REALLY excited about JRCC, it will go to $10,000 a share, and you will kick yourself for having sold at a mere $60. :-p
I'm sure you would want these companies to rip themselves off by buying back their own shares at the top to make you even more money so that you can sell at the very top. XD. But the companies aren't in this business so you can realize 8000X gains by buying their shares aggressively on margin. They are in this business to make money. Don't you think they would seize this opportunity to buy back their own shares if they foresaw a huge increase in their stock price, to capture those huge profits for themselves? That's just human nature. Where is the individual insider buying at ANR and JRCC for that matter? Those CEO's know their businesses better than anyone else. A lack of insider buying kind of shoots your coal thesis in the foot, unless you consider that the industry executives are holding off from buying just so that you can purchase more shares to be rewarded more in the long term.
If JRCC and ANR are so great, why aren't these guys buying back their own shares? I mean, ANR supposedly has a lot of liquidity, so why not buy their own dirt cheap shares back in preparation for the "super bull coal cycle"? If their shares are going to multiply 10 times in price they could make far more money doing that than selling coal, lol. Don't you think that the coal companies have put even more effort into forecasting their future than any of us? I certainly hope so. And the only coal company I've seen doing share repurchases is BTU.
Chasing after 8000X gains in the stock market over the course of 1 year is silly. JRCC is not a $60 stock, not even if they get $4 EPS in 2013. If by some chance JRCC gets up to $60 then that's setting up an incredible short opportunity.
Well, properly applied Keynesianism involves deficit spending during busts and recessions but cutting back and cooling the economy down during booms, to favor steady growth - from what I understand. The thing is, it's wildly unpopular to be an adult, so governments perennially fail at cutting back during the booms. The idea to me is not really that hard to understand. It's analogous to having a credit card you only use in emergencies and paying it off as soon as the emergency is over. That's responsibility.
Well PM's Rock, the country has gotten itself into a bad bind. Lenders lent unsustainably and borrowers borrowed what they could not afford to pay back. I believe that we need tighter controls on lending and other financial activities in the future, but I believe that now we need to dig the country out from debt. The only way to really do this very quickly is inflation. Otherwise under Austrian economics we are talking 10, 20 years of pain, because Austrian economics says the bigger the credit boom the longer and more painful the bust. Because the debt is that big and at that high of an interest rate. That's unacceptable for our economy and for our country.
I consider myself a saver. I try to save a pretty decent amount. The thing is, I took a look at the fact that I couldn't get interest on my money in a bank and that inflation was going to eat whatever I had, and I decided to invest in equities. Since then I have educated myself quite a bit about the process. I think that is the part of the point behind all of this QE. If you get people to either spend or invest their cash instead of hoarding it, then the country will be better off. There are a lot of boring and undervalued stocks that pay a small dividend and are a good substitute for holding cash. Investment grade corporate bonds are also nice and liquid, although of course much less useful as a hedge against dangerous levels of inflation.
So basically, I don't see inflation or QE as destroying purchasing power. I was a cash saver too before I woke up and noticed all the QE stuff, from the low interest rates to the possibility of lots of inflation. Maybe it inconveniences you (or me) as a saver to have pressure to find something else to park your assets in other than the dollar, but it's less of a moral hazard to do that than to let millions of workers' skills atrophy and the whole economy struggle to stay afloat because a bunch of fools borrowed what they could never pay back, and another bunch of fools lent it to them, and another bunch of fools passed a set of tax laws that redistributed wealth from our strong middle class to a few in the upper class. It's a moral hazard for young Americans to have to look for years to even have a chance of finding a job, which has subpar pay and benefits compared to the same thing a few years ago. Mind you this is at no fault of their own, but because of those three groups of fools I mentioned. I am not in debt, but a very great number of my peers are. They bought into what society told them, that they should work hard and go to college and study hard. They fulfilled their part of the bargain, and then suddenly the jobs were all gone. Meanwhile they are now left with crippling student loan debt they have no hope of paying off. Their lives are ruined. What do you think America's future will look like if we let the great majority young people be crushed like this for working hard and following the rules? This is not their fault, but it is their future.
I dunno that I would say there isn't a level playing field. I feel like there are a fair number of bargains out there for the long term investor. You just have to be willing to hold until the stock you buy is fairly valued or overvalued again. The pendulum swings back towards fair valuation eventually. I'm not so sure that people don't make $$$ off precious metals. Look at how many shady ads are plastered all over the internet pumping them. I don't see anything like that for stocks, except maybe penny stocks.
I think gold is worth whatever you can sell it for. Demand is high now. The dollar is always worth less every year because of inflation, but if gold just went according to inflation it would be $400-500 an ounce now.
I am confident in certain companies. I own certain companies, which I have done due diligence on and believe to be profitable, American leaders in their industry. I feel that I got a bargain on them when I bought. The dollar could be hyperinflated, the stock market could crash to 100, or any number of things could happen and I will still own a small fraction of these companies mineral rights, equipment, and liquid assets. That is how I think about these things.
We couldn't afford the war in Iraq, and I was loudly telling everyone so before we went in. Funny how no one listens to a college kid about these things. :-p I understand that it is important to live within one's means. You won't see me advocating that an individual or a government do anything but this in the long term.
As an obvious example of malinvestment, PM's rock, consider the utility of high frequency trading. To allocate capital efficiently, you need accurate information about what a company is doing or what results it is getting, or at the very least where the macro trend is going. Information costs something to obtain, and it isn't the kind of thing that changes 1000 times a second. It might be possible to obtain substantive new information that costs less to obtain than the allocation benefit it offers several times a day for a given midcap company, but I fail to see how it could be possible to obtain new accurate information about underlying economic fundamentals every second. Can you?
I don't believe that running up more credit lines is smart. In fact I think that consumer credit that is extended for over a month or two is very detrimental to the economy in the long run, because it ends up transferring money from people who would spend it to people who hoard it. Less money being spent = fewer jobs. It's as simple as that.
As far as being devoid of personal responsibility, what makes you think that saving is something that should be rewarded? Savings is only useful if you need to provide a safety net for yourself. And too much saving is bad for the economy. Spending is what drives the economy and creates jobs. So, it's very difficult at a time of massive unemployment to see savers as having some kind of moral advantage over spenders.
It makes sense that some people will have more wealth and more income than others. But we need a society that gets as many people as possible to do productive work, and get paid fairly in proportion to how useful and productive they are. You are right that we need sound fiscal policy and to reward sound investment. But right now, the most highly compensated individuals in our society are those who direct and engineer and exploit massive malinvestment. Huge stock bubbles get pumped up entirely out of proportion to the underlying profitability of the issuing company, and then burst, for one thing. What is more is that these people are able to structure their income to be taxed at the 15% capital gains rate, and can pay lower taxes than an industrious and productive person like an engineer or doctor or lawyer or scientist, despite making far more money. We've had a broken tax system for a long time, that has helped concentrate wealth in the hands of the few who hoard it, or invest in developing countries for the higher returns offered by forced labor. Meanwhile, the middle class, which has been shrinking ever since I can remember, has been propped up a bit on the back of easy credit. Well eventually the credit bubble burst and now the chickens of tax and other legal issues that fail to reward people fairly according to their real economic productivity with an eye towards a sustainable economy, they have come home to roost. When wealth ends up in someone's hands because that person was smart enough to game the system and not because the person really contributed anything to society, that is a good sign the system is broken and needs to be fixed.
Financial workers have an important role in the economy. They should be directing capital to where it can have the highest returns on the market. The lawyers and politicians should set up the laws such that the highest returns can be achieved only by companies that contribute the most to the overall good of the country. And the scientists and engineers should be driving innovation, and discovering and designing things, while everyone who is willing to work is employed at a living wage to get something useful done. That's what a good country needs to function well. And if any part of this system is broken, it is ultimately up to the people, via the institution of government, to fix it. And right now at least 3 of those parts are broken.
Personal responsibility is absolutely important. But it's hard to imagine that most people will want to participate in a rigged game and be "responsible". Don't you think so?
The Cyclical Battle: Chinese Demand Versus Speculation Junkies [View article]
That will set up an excellent short opportunity for GLNG if he does that. And then an excellent long opportunity if Romney is elected and reverses the policy.
The Cyclical Battle: Chinese Demand Versus Speculation Junkies [View article]
I read that as well, lostalloncoal. Some of the dry bulk shippers may become great buys as their future truly starts to look solid. Eventually the supply glut in that market will abate and those stocks will command huge valuations again - at least the ones that survive. The real trick will be timing that market right, but it seems like there are huge potential profits to be had.
We will see. The ratio of gold price to GE+JPM+IBM+PM stock right now is 1756 /( 22+41.19+207.15+90.69) = 4.86. I think this ratio will be a much smaller number in 5 years. If it is, I will probably feel that my reasoning was correct, and if it isn't I will probably feel that my reasoning was wrong. Perhaps this investment thesis will prove fruitful even in 2 years time. We will see.
The Cyclical Battle: Chinese Demand Versus Speculation Junkies [View article]
I dunno what the fair price of CLF is, but here is how I think about investing in stocks. I buy the stocks I think will make the most money relative to the price over the next 10 years, and continuing on. If a stock can make enough earnings per share to pay back the purchase price of a share in 10 years, I think that is a pretty decent deal. I personally think that CLF at recent prices is quite capable of this. They seem pretty conservative about ramping up their ore production, but they are doing it. $500 million in profit per year for CLF can be delivered if they can make just $17 a ton or so profit on their iron ore. They can do this if iron ore stays at an average of $95-$100 a ton over the next 10 years, assuming they are sharp about timing freight contracts or maybe getting ahold of their own dry bulk fleet while ships are cheap. I think they will be able to get another $300-400 million in profit a year from their chromite project and others over the long haul. This suggests an average of about $6 EPS over the next 10 years. And 10 years from now, India may be acting like China, but with an even bigger population base. The world's population is growing exponentially, and technology is increasing real wealth, enabling people to have more and more possessions. As long as the world's exponential population growth continues, and economic improvement occurs in the places where it is growing the most, iron ore producers will do well. Seaborne Iron ore is a situation where if the producers are smart they will enjoy oligopolistic profits for 10 years to come and onwards. This is several tens of billions of dollars a year in profit pie (that's just profits, not counting increasing investment costs, fat ceo and even worker salaries, and the like). A thug will shoot you on the street for your wallet in a heartbeat, so I don't know how anyone would not expect that a multi ten-billion dollar a year profit pie would not be viciously fought over by legal and probably extralegal means too. But it's the size of Chinese demand that creates the size of the pie, so...
The Cyclical Battle: Chinese Demand Versus Speculation Junkies [View article]
These stocks were rallying powerfully even before the QE3 boost, due to expectations of infrastructure stimulus in China. The steel market demand in China has not gotten better yet as it will take time for private demand and infrastructure spending to kick in. However, the lower prices have caused about 60% of Chinese domestic production to shut down from what I have seen. The iron ore price was up to $102-105/ton today. Unless there is truly a lasting sea change in Chinese demand, the price should go back up over $120/ton between increased buying and supply cuts. Between that and money being pushed into equities from QE3, I see no reason why respectable increases should not be obtained in the stock prices of the companies over the next several quarters. I also don't think that the Big 3 will overproduce to the point where they are making less of a profit on what they sell, and with hundreds of billions of dollars at stake, I am sure that they have multiple people looking at the situation from multiple angles to make sure that doesn't happen.
Worldwide, people are even poorer than we are here. They won't be able to afford Apple quality, but will make do with budget options. I think Apple will continue to make a lot of money for a long time, but I haven't seen an exponential rise in a stock price that isn't followed by a sharp and brutal fall for folks who bought and held near the top. Have you?
AAPL is approaching its peak; no exponential growth trend can last forever. Where that peak will be I cannot say, but when it passes over it I think it is likely to plunge way back down.
MSFT may or may not have kept even with inflation over the last 10 years. Keeping even with inflation is better than a loss, but it's not good as an investment.
I see no compelling reason to buy either of them, although at least Apple makes an effort to make quality products.
The Coal Stock Bottom Has Passed [View article]
I think it is much easier to forecast commodity price futures than to forecast the fortunes of a tech company, regarding the Steve Jobs issue. I wish you well in your approach and I enjoy reading your articles, but I don't think it's a very smart bet for you to make aggressive coal bets on margin on the strength of your free data when coal company insiders with reams of paid data are not making such bets. JRCC would be having an amazing year to make 80 million dollars, but if one of their officers bet just $10,000 of his own money *aggressively on margin* for 8000X gains, he would equal the annual profits of the company on the strength of his 10 grand bet. And yet, the insiders do not seem to be doing this. If they will not risk such a comparatively small sum to obtain such an outsized gain, why are you so confident? Then again, maybe if everyone gets REALLY excited about JRCC, it will go to $10,000 a share, and you will kick yourself for having sold at a mere $60. :-p
The Coal Stock Bottom Has Passed [View article]
The Coal Stock Bottom Has Passed [View article]
Chasing after 8000X gains in the stock market over the course of 1 year is silly. JRCC is not a $60 stock, not even if they get $4 EPS in 2013. If by some chance JRCC gets up to $60 then that's setting up an incredible short opportunity.
QE 3: Winners And Losers [View article]
Well PM's Rock, the country has gotten itself into a bad bind. Lenders lent unsustainably and borrowers borrowed what they could not afford to pay back. I believe that we need tighter controls on lending and other financial activities in the future, but I believe that now we need to dig the country out from debt. The only way to really do this very quickly is inflation. Otherwise under Austrian economics we are talking 10, 20 years of pain, because Austrian economics says the bigger the credit boom the longer and more painful the bust. Because the debt is that big and at that high of an interest rate. That's unacceptable for our economy and for our country.
I consider myself a saver. I try to save a pretty decent amount. The thing is, I took a look at the fact that I couldn't get interest on my money in a bank and that inflation was going to eat whatever I had, and I decided to invest in equities. Since then I have educated myself quite a bit about the process. I think that is the part of the point behind all of this QE. If you get people to either spend or invest their cash instead of hoarding it, then the country will be better off. There are a lot of boring and undervalued stocks that pay a small dividend and are a good substitute for holding cash. Investment grade corporate bonds are also nice and liquid, although of course much less useful as a hedge against dangerous levels of inflation.
So basically, I don't see inflation or QE as destroying purchasing power. I was a cash saver too before I woke up and noticed all the QE stuff, from the low interest rates to the possibility of lots of inflation. Maybe it inconveniences you (or me) as a saver to have pressure to find something else to park your assets in other than the dollar, but it's less of a moral hazard to do that than to let millions of workers' skills atrophy and the whole economy struggle to stay afloat because a bunch of fools borrowed what they could never pay back, and another bunch of fools lent it to them, and another bunch of fools passed a set of tax laws that redistributed wealth from our strong middle class to a few in the upper class. It's a moral hazard for young Americans to have to look for years to even have a chance of finding a job, which has subpar pay and benefits compared to the same thing a few years ago. Mind you this is at no fault of their own, but because of those three groups of fools I mentioned. I am not in debt, but a very great number of my peers are. They bought into what society told them, that they should work hard and go to college and study hard. They fulfilled their part of the bargain, and then suddenly the jobs were all gone. Meanwhile they are now left with crippling student loan debt they have no hope of paying off. Their lives are ruined. What do you think America's future will look like if we let the great majority young people be crushed like this for working hard and following the rules? This is not their fault, but it is their future.
QE 3: Winners And Losers [View article]
I think gold is worth whatever you can sell it for. Demand is high now. The dollar is always worth less every year because of inflation, but if gold just went according to inflation it would be $400-500 an ounce now.
I am confident in certain companies. I own certain companies, which I have done due diligence on and believe to be profitable, American leaders in their industry. I feel that I got a bargain on them when I bought. The dollar could be hyperinflated, the stock market could crash to 100, or any number of things could happen and I will still own a small fraction of these companies mineral rights, equipment, and liquid assets. That is how I think about these things.
We couldn't afford the war in Iraq, and I was loudly telling everyone so before we went in. Funny how no one listens to a college kid about these things. :-p I understand that it is important to live within one's means. You won't see me advocating that an individual or a government do anything but this in the long term.
QE 3: Winners And Losers [View article]
QE 3: Winners And Losers [View article]
I don't believe that running up more credit lines is smart. In fact I think that consumer credit that is extended for over a month or two is very detrimental to the economy in the long run, because it ends up transferring money from people who would spend it to people who hoard it. Less money being spent = fewer jobs. It's as simple as that.
As far as being devoid of personal responsibility, what makes you think that saving is something that should be rewarded? Savings is only useful if you need to provide a safety net for yourself. And too much saving is bad for the economy. Spending is what drives the economy and creates jobs. So, it's very difficult at a time of massive unemployment to see savers as having some kind of moral advantage over spenders.
It makes sense that some people will have more wealth and more income than others. But we need a society that gets as many people as possible to do productive work, and get paid fairly in proportion to how useful and productive they are. You are right that we need sound fiscal policy and to reward sound investment. But right now, the most highly compensated individuals in our society are those who direct and engineer and exploit massive malinvestment. Huge stock bubbles get pumped up entirely out of proportion to the underlying profitability of the issuing company, and then burst, for one thing. What is more is that these people are able to structure their income to be taxed at the 15% capital gains rate, and can pay lower taxes than an industrious and productive person like an engineer or doctor or lawyer or scientist, despite making far more money. We've had a broken tax system for a long time, that has helped concentrate wealth in the hands of the few who hoard it, or invest in developing countries for the higher returns offered by forced labor. Meanwhile, the middle class, which has been shrinking ever since I can remember, has been propped up a bit on the back of easy credit. Well eventually the credit bubble burst and now the chickens of tax and other legal issues that fail to reward people fairly according to their real economic productivity with an eye towards a sustainable economy, they have come home to roost. When wealth ends up in someone's hands because that person was smart enough to game the system and not because the person really contributed anything to society, that is a good sign the system is broken and needs to be fixed.
Financial workers have an important role in the economy. They should be directing capital to where it can have the highest returns on the market. The lawyers and politicians should set up the laws such that the highest returns can be achieved only by companies that contribute the most to the overall good of the country. And the scientists and engineers should be driving innovation, and discovering and designing things, while everyone who is willing to work is employed at a living wage to get something useful done. That's what a good country needs to function well. And if any part of this system is broken, it is ultimately up to the people, via the institution of government, to fix it. And right now at least 3 of those parts are broken.
Personal responsibility is absolutely important. But it's hard to imagine that most people will want to participate in a rigged game and be "responsible". Don't you think so?
The Cyclical Battle: Chinese Demand Versus Speculation Junkies [View article]
Iron ore and steel both up again today. About $15 more a ton to reach my rebound prediction. Go China go!
The Cyclical Battle: Chinese Demand Versus Speculation Junkies [View article]
The Cyclical Battle: Chinese Demand Versus Speculation Junkies [View article]
QE 3: Winners And Losers [View article]
The Cyclical Battle: Chinese Demand Versus Speculation Junkies [View article]
The Cyclical Battle: Chinese Demand Versus Speculation Junkies [View article]
Microsoft Still A Tentative Buy [View article]
Microsoft Still A Tentative Buy [View article]
MSFT may or may not have kept even with inflation over the last 10 years. Keeping even with inflation is better than a loss, but it's not good as an investment.
I see no compelling reason to buy either of them, although at least Apple makes an effort to make quality products.