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Stock Market Mike

 
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  • S&P 2,000: Speed Bump Or Top? [View article]
    I don't think the demographics are on your side anymore. 7% growth is something you'll only see in the rear view mirror. Even China only gets 7.5% growth with a 50% investment 50% organic mix, so real organic growth is more like 3.5%... if that. If the loans and money stop flowing, they stop growing. We've got 2% growth in an environment where people simply couldn't get loans, corporations were cutting costs and jobs left right and center, and yet still the economy trudged upward slowly. A heck of a lot of that 2% was healthy organic growth.

    I've spoken with a few analysts and fund managers that figure 2008/2009 would've dipped far further if the banks and auto companies had not been bailed out. We might have hit 250 on the S&P 500 if nothing was done. We'd probably have some phenomenal growth from a low that deep. But instead the fed intervened and we sidestepped (put off) a great depression.

    I draw parallels to BRK.B. Their return is pretty anemic since 2008 compared to many other hedgefunds... but then, they didn't fall as far as they should've during the crash, and today they have the 'buffet will die eventually' discount hanging around their necks, keeping a lid on the stock price.

    -Mike
    Sep 14 05:12 PM | Likes Like |Link to Comment
  • Retirement Strategy: How Will Rising Interest Rates Affect Dividend Growth Investors? [View article]
    5% on the 10yr? The mREIT will likely get smashed and cut its dividend again, unless it's a very slow and stable rise - not the spikes upward that we've actually been getting.

    Even an eREIT would be a better choice.

    -Mike
    Sep 14 04:56 PM | Likes Like |Link to Comment
  • Retirement Strategy: How Will Rising Interest Rates Affect Dividend Growth Investors? [View article]
    NLY reduced their hedging just before this recent spike. If it continues further, reduce mREIT exposure post haste! Could be another 2013 type hit to their book value if 3% on the 10yr approaches?

    http://cnb.cx/YGDn7O

    -Mike
    Sep 14 04:28 PM | Likes Like |Link to Comment
  • Retirement Strategy: How Will Rising Interest Rates Affect Dividend Growth Investors? [View article]
    How is that interesting? Rates have been falling since the start of the year. If they adjust every 90 days, they've had to adjust downward several times. Now things seem to be moving back up, so they'll rapidly adjust upward?

    Seems like they're better positioned for the current direction in rates?

    -Mike
    Sep 14 04:23 PM | Likes Like |Link to Comment
  • Mr. Market Provides Some Early Fall Color For REIT Investors [View article]
    "It takes NO years of dividends to cover unrealized losses. And if the price of O drops to that level, I will buy more, thus increasing my income even MORE. "

    But less than if you had waited a few years to buy in - or *gasp* shorted and then covered and bought in.

    "Mike, with REITs obligated to pay out 90% of taxable income, it is very difficult, IMO, to maintain a 15% growth rate over the longer term."

    They have depreciation to hide a lot of their earnings... most have 80-100% payout ratios, but they don't *have* to pay out that much. OHI pays out under 70%, hence more retained funds and higher growth. Another strategy is to choose tiny REITs like DOC which have a huge runway of growth ahead of them. Look into EXR as well - they're in a sector that is quite cheap to expand into, hence low capital costs. Yet it's difficult to operate in without a brand, and since they're performing well in this new internet driven century, the stock is performing very well.

    -Mike
    Sep 14 02:33 PM | Likes Like |Link to Comment
  • Mr. Market Provides Some Early Fall Color For REIT Investors [View article]
    A 50% rise in interest rates necessitates nearly a 50% increase in dividends to hold the same yield spread and share price.

    You won't get that from 3% growth. You will from ~15-20% growth, after a few years. As such, high growth REITs like OHI and EXR strike me as being safer from rising rates than slow and steady ones like VTR and HTA. VTR has not surpassed its 2013 high, while OHI briefly did by roughly 8%, and EXR overshot it so much that even this interest-spike induced beating hasn't brought it close to 2013 levels.

    Food for thought.

    -Mike
    Sep 14 02:26 PM | 1 Like Like |Link to Comment
  • Mr. Market Provides Some Early Fall Color For REIT Investors [View article]
    maybenot: I wouldn't be surprised if it was significantly higher than 90% on down days like that.

    -Mike
    Sep 14 12:55 PM | Likes Like |Link to Comment
  • Microsoft's Acquisition Of Minecraft Developer Mojang Could Turn Out To Be A Colossal Deal If Managed Properly [View article]
    Just because you haven't heard of it doesn't mean we're all living in holes.

    I mean, no offense intended - but as a computer tech, I've had 80+ year old Grandmas ask me specifically about Minecraft because their grandkids wouldn't stop talking about it. As soon as someone found out I knew how to mod it, I had two dozen parents phoning my number within weeks to set up tutoring sessions... more than I could fit in. It's ridiculously popular - probably the most played videogame in existence next to something casual like CandyCrush, but Minecraft costs nearly $30 per copy.

    Kids love it. Parents everywhere know about it. I have to assume you're between those age brackets (no young kids/grandkids) to have somehow missed it. It's got more players than Farmville... have you heard of that one?

    -Mike
    Sep 14 12:07 PM | 2 Likes Like |Link to Comment
  • Omega Healthcare Investors Continues To Impress - I Am Adding To My Pile [View article]
    Track 10yr treasuries here:
    http://cnb.cx/YGDn7O

    -Mike
    Sep 13 02:34 PM | Likes Like |Link to Comment
  • HCP Is Climbing Back Up, Should I Get Back In The Game? [View article]
    Track them here:
    http://cnb.cx/YGDn7O

    -Mike
    Sep 13 02:28 PM | Likes Like |Link to Comment
  • Mr. Market Provides Some Early Fall Color For REIT Investors [View article]
    I'm a SDRL long, so I share your pain. Luckily I followed Bret Jensen's advice and lightened up on REITs, miners, and most stocks affected by commodity pricing... but still, it stings!

    -Mike
    Sep 13 02:18 PM | Likes Like |Link to Comment
  • Mr. Market Provides Some Early Fall Color For REIT Investors [View article]
    You're talking with people, but you're trading with robots, and the robots think that higher interest rates affect REIT cost of capital and relative appeal compared to super safe stuff... no, they *know* it, so they sell and short until it gets within the correct valuation range according to their calculations.

    Robots like technical indicators, but they also like more complex DCF models than you'd care to utilize. They can cross-check a billion things per second, after all...

    -Mike

    P.S. You might find this video conceptually interesting:
    http://bit.ly/Zirvsw

    As a young person with a background in computers and programming, I see what's coming in the decades ahead...
    Sep 13 02:14 PM | 4 Likes Like |Link to Comment
  • Mr. Market Provides Some Early Fall Color For REIT Investors [View article]
    NC Investor: 3% is not a good growth rate. My only REIT holdings have growth rates closer to 15%... if interest rates rise 1%, HCP's yield will rise at least that much... probably more due to REITs depending on debt, so it's a double edged increase.

    Lets say it also overshoots because of fear in the market, so you see the nice round yield of 7%. That's a share price of $31.40 - around a 25% paper loss. It will take you 5 years of dividends to cover that, and we might have a significant bear market within that time frame, halving the price of literally everything.

    Honestly, that 3% Tangerine CD is looking pretty appealing. Paid out monthly, calculated daily.

    http://bit.ly/YGzvUn

    I expect other commenters here are correct, and there will be another steep and sharp exodus from REITs if interest rates proceed further.

    -Mike
    Sep 13 02:07 PM | Likes Like |Link to Comment
  • Mr. Market Provides Some Early Fall Color For REIT Investors [View article]
    goldenbear65: It's funny that you should mention a 5% CD...

    http://bit.ly/YGzvUn

    Tangerine (Canadian ING) has a continual barrage of promotional interest rates, varying from 2.5-3%... they have them on for 3 months at a time.

    "No, you have to evaluate the company on its ability to generate profits and pay the distributions. And yes, when the market irrationally discounts that, you should BUY. "

    That has already been done by excellent authors such as Brad. I really appreciate his work.

    But if 10yr treasuries spike to 3.5-4%, I'll be able to buy almost twice as many O shares if I sell now. ;) (Figuratively - O was never cheap enough for me to actually buy in.)

    If rising rates are really here, then O's multi-year chart might resemble RIG's in a couple years - a very slow and painful downtrend, leaving it eventually yielding 8%+, and having significant capital impairment.

    -Mike
    Sep 13 01:57 PM | 1 Like Like |Link to Comment
  • Realty Income: This REIT Should Be Part Of Every Dividend Investor's Portfolio [View article]
    Percent?

    I see people saying "pissent" all over the place, and I've been wondering if there's some implied connotation or double meaning to it?

    -Mike
    Sep 13 01:21 PM | 2 Likes Like |Link to Comment
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