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Shishir Nigam  

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  • New 52-Week Highs Expanding Rapidly [View article]
    This could just as well be a contrarian indicator, the larger the % of total stocks hitting new highs, the more over-extended the rally is. Just as the last two troughs of -63% and -36% were indicators possible buying points.

    For more analysis, check out my blog: youngandinvested.com
    Oct 12, 2009. 10:55 AM | 1 Like Like |Link to Comment
  • Good News from S&P: Dividend Increases Now Exceedingly Rare [View article]
    Share buybacks nearly always results in a loss in value for the shareholders. Cash in the firm is utilized to purchase stocks, which may provide temporary capital appreciation instead of solid cash dividends that cannot be taken back from shareholders like capital appreciation can.

    Only time they can be useful is when the management is shrewd enough to know their stock is way under-valued and go into the market to use the opportunity to load up.

    For more analysis, check out my blog: youngandinvested.com
    Oct 12, 2009. 09:50 AM | 1 Like Like |Link to Comment
  • O Canada! (Part III): Black Gold, Natural Gas and Growing Dividends Too [View article]
    The value chain of the energy industry is VAST...starting from drilling for the oil/gas, storing it, transporting it to other provinces/states, distributing it to local municipalities, marketing it to individual households. Enbridge is the one player that participates in nearly all stages of the value chain because of which they're able to derive so much value/margins out of their operation. The vertical integration helps them ensure their market position never lost.

    As pointed out correctly, big chunks of business in these companies is regulated by provinces, which ensures some of the most stable income streams in any business model. Other good companies to look at include Enerplus Resources Fund, Pembina Pipeline Income Fund, ATCO, Transcanada.

    For more analysis, check out my blog: youngandinvested.com
    Oct 11, 2009. 11:59 AM | 4 Likes Like |Link to Comment
  • Rising U.S. Vacancies: Real Estate Is Headed Down [View article]
    CRE has been singled out as the next shoe to drop for a while now. Tack makes a very good point that the projected default numbers seem high in absolute but relative to previous instances, they're just normal. I think the important question to ask is how dependent the financial sector is on the CRE market? How big of a portion of bank balance sheets do CRE loans comprise?

    The crunch time for REIT's is sometime next year when A LOT of debt is coming due. The potential effects of that crunch have been alleviated a little during this market rally when the REIT's have taken the opportunity to get lots of new financing through both and equity, with help from the likes of Merrill.

    For more analysis, check out my blog: youngandinvested.com
    Oct 11, 2009. 11:41 AM | 1 Like Like |Link to Comment
  • Fed: Jawboning the Market? [View article]
    The Fed and Ben have been claiming for a long while that THIS TIME, they will tighten early enough to keep high inflation out of the question. THIS TIME, they'll be smart and cautious enough to know when the economy has turned up. It's not the same THIS TIME.

    "Welcome to the fight. THIS TIME, I *know* our side will win" - Casablanca.

    "The four most dangerous words in Investing: This time it's different" - Sir John Templeton

    For more analysis, check out my blog: youngandinvested.com
    Oct 11, 2009. 11:22 AM | Likes Like |Link to Comment
  • Dividend Boosts for 3 Big Names [View article]
    Some additional colour on the 3 companies that you've talked about:

    Reynolds - $0.90 provides a very impressive yield on a common stock. However, $0.90 dividend per quarter implies a dividend/share of $3.60 annually. Going by their latest financials, their LTM EPS was $2.13/share. That implies a 169% payout ratio. Even if I use the EPS for the year ended Dec 31, 2008 so as to leave out the bad quarters, it's a payout ratio of 79%. I hope they have some serious profits coming up in Q3 results to justify that dividend increase!

    ConocoPhillips - As for COP, they haven't had a full year of positive earnings in either the 12 months ending June 30, 09 or even 12 months ending in Dec 31, 08. Going by the latest quarter alone, a $0.50 payout implies a payout ratio of 58%. Though COP has a good amount of cash cushion on its balance sheet.

    RPM - RPM has an EPS of $0.958 for the year ending Aug 31, 09, implying a payout ratio of about 86%, again a pretty high payout.

    Increasing dividends can reflect confidence in the future but are just as likely the result of over-optimistic management projections.

    For more analysis, check out my blog: youngandinvested.com
    Oct 11, 2009. 01:04 AM | Likes Like |Link to Comment
  • Berkshire Hathaway Succession Concerns: WSJ Plays It Again [View article]
    The succession worry is more about whether the new decision makers would be as disciplined/shrewd/wise enough to run the company as opposed to who the successor might be. You make a good point that regardless of who takes over, he or she is likely to pale in comparison to Buffet.

    The issue is very similar to that of Steve Jobs and Apple and will be very similar eventually to that of Richard Branson and Virgin. Any company with an outstanding leader will face the same issues.

    For more analysis, check out my blog: youngandinvested.com
    Oct 11, 2009. 12:25 AM | Likes Like |Link to Comment
  • Why Exxon Should Significantly Increase its Dividend [View article]
    Investors looks for 3 things when making an investment - growth, income and stability.

    Right now, Exxon only provides one of those three - stability and that is by virtue of its strong balance sheet and huge presence in the market. However, it's hard to expect much growth from a company that is so dominant in its market and has one of the largest market cap in the world. At the same time with a measly dividend yield of around 2.4%, investors are hardly getting any return for their investment in real terms. Hence, the need to provide some sort of a "carrot" to attract investors by means of a higher dividend.

    For more analysis, check out my blog: youngandinvested.com
    Oct 11, 2009. 12:15 AM | Likes Like |Link to Comment
  • Fadel Gheit: Oil Prices to Remain Inflated but Don't Pass on Gas [View article]
    The CFTC is another "SEC" in the making - a regulatory body that is set up for the sake of having one, but which has no power against the major players in its area, in this case the commodities trading market. When the financial institutions can set aside billions of dollars for campaigning against any regulatory moves that may harm their revenue streams, then I see little chance for the CFTC to effect any change in the commodity markets.

    For more analysis, check out my blog: youngandinvested.com
    Oct 11, 2009. 12:01 AM | 1 Like Like |Link to Comment
  • 10 Dividend Stocks to Buy Now [View article]
    As I have commented on Dividend4Life's approach, I don't believe the approach to selecting dividend stocks should be merely to choose the ones with the longest history of dividend increases along with a conservative payout ratio.

    Over this cycle, we have seen so many big/stable companies cut their dividends that the selection methodology itself needs looking at. If you had come up with this list in Oct, 08...you would most likely have GE, Dow Chemicals, Textron, Motorola and Pfizer all on your list - they were most definitely at their 52 week low and had been providing stable/increasing dividends for years. As you might know, since then, each one of those companies has slashed their dividends.

    Doing some "stress testing" or just simple analysis of how a company's business model may fare under adverse conditions can shed some light on what was to come for these companies. Something along those lines needs to be incorporated into any sort of dividend stock analysis.

    For more analysis, check out my blog: youngandinvested.com
    Oct 10, 2009. 11:44 PM | 1 Like Like |Link to Comment
  • U.S Dollar: Chart Points to Major Reversal/Rally [View article]
    Here are some technicals for you: The C$-US$ just broke it's support and it's only a straight path to parity thereafter. While the US$ is oversold in the short-term, fundamentally, there are too many reasons for the dollar to fall.

    The biggest of those reasons: The US$ has now become the borrowing currency in the carry trade, thanks to the low interest rates. Unless there is another huge set back to the global economy/equity markets, money will continue to flow to markets abroad, tanking the dollar. People sell the US$ to invest in foreign currencies.

    For more analysis, check out my blog: youngandinvested.com
    Oct 10, 2009. 11:08 PM | Likes Like |Link to Comment
  • 8 Foreign ETFs with Attractive Year-End Distributions [View article]
    Looking at ETFs for a dividend payout is should be quite a small factor in evaluating an ETF. If an investor is looking for a stable dividend stream and has enough risk appetite to invest in an emerging market ETF, then there many other assets that have a better yield than the ETFs mentioned above. (Many stocks, unit trusts and even many bonds)

    The main motivation to purchase and emerging market ETF should be capital appreciation because if you're looking for dividends, there's many other better avenues.

    Your analysis is valid, I'm just not sure if it would affect investment decisions much with regards to ETFs.

    For more analysis, check out my blog: youngandinvested.com
    Oct 9, 2009. 01:56 PM | 2 Likes Like |Link to Comment
  • Liquidity: Toward a Proper Mechanism [View article]
    The chart showing historical inflation/deflation is very interesting. The pretty much continuous inflation since 1950 gives an indication as to how much the currency has been debased.

    As I read your recommendation, something came to me. Isn't the Fed's (or for that matter, any central bank) main role supposed to be to increase the money supply on a very conservative 1-2% a year, in line with the growth in GDP, so as to avoid excessive inflation? MV=PY? If Y decreases while M increases big time, price HAS to go up by a greater multiple? (granted that V is going down a little bit right now)

    Am I missing something? Did the people at the Fed not read their economics textbooks? Seems to me that their current actions are in direct violation of their other mandate - to maintain stable prices.

    For more analysis, check out my blog: youngandinvested.com
    Oct 8, 2009. 11:13 PM | Likes Like |Link to Comment
  • Alcoa Kicks Off Earnings: Some Numbers That Don't Add Up [View article]
    Interesting observation you make Karl, about the declining shipments at Alcoa. Revenue growth, seems to be the holy grail this earnings season, and for good reason. Q1 and Q2 earnings have resulted purely from "above expectations" cost-cutting measures...which are by definition, unsustainable in the long-run. To improve earnings from this point on, revenues will have to rise.

    To add another point to your analysis, a big chunk of Alcoa's rise in aluminum demand was attributed to the increased demand for cars, which of course got a one-time boost from cash-for-clunkers. Car sales since then have fallen 41% month-on-month, that's not very encouraging for Alcoa. Whether the other big blue chips can provide/show revenue growth next week, will determine whether the prices come crashing down along with the P/E ratios.

    For more analysis, check out my blog: youngandinvested.com
    Oct 8, 2009. 10:55 PM | 4 Likes Like |Link to Comment
  • S&P 500 Sector P/E Ratios Rise [View article]
    Alcoa (AA) has already provided the first glimpses of revenue growth, which seems to be the holy grail this earnings season, and for good reason. Q1 and Q2 earnings have resulted purely from "above expectations" cost-cutting measures...which are by definition, unsustainable in the long-run. To improve earnings from this point on, revenues will have to rise.

    However, a big chunk of Alcoa's rise in aluminum demand was attributed to the increased demand for cars, which of course got a one-time boost from cash-for-clunkers. Car sales since then have fallen 41% month-on-month, that's not very encouraging for Alcoa. Whether the other big blue chips can provide/show revenue growth next week, will determine whether the prices come crashing down along with the P/E ratios.

    For more analysis, check out my blog: youngandinvested.com
    Oct 8, 2009. 09:51 PM | 2 Likes Like |Link to Comment
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