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  • Has The Size Of The U.S. Labor Force Reached Its Peak? [View article]
    Davewmart, thanks for reading the piece. With regards to your comment, I do refer to this as a possible beginning of a new trend. It will indeed take 10-15 years to see if it plays out. An initial analysis of the US and Japan population has been done which I illustrate in the graphs.

    As I illustrate in the article, the size of labor force generally grows parallel to working age population. For the US, labor force growth stopped in May of 2009 while the working age population continues to grow. If you look at the graph carefully, when the labor force peaked in Japan in the mid 1990's, the working age population growth line had not yet begin to flatten out as it is now. It looked similar to the US population growth line.

    Japan is actually getting a break now that there population growth has flatten out, if it did not there participation rates would be even lower.

    If the working age population in the US continues to grow this will actually make our situation "worse" over time because our labor force participation rates will be even lower because we will have a larger population with no growth in the size of the labor force.

    A few terms:
    Labor Force = employed + unemployed

    Working Age Population = Labor Force + Those Not in the Labor Force (This grows every month as people reach 15 or 16 depending on the country)

    Labor Force Participation Ratio = Labor Force / Working Age Population
    Employment to Population Ratio = employed / Working Age Population

    If anyone is interested in a more detailed article about what makes up the labor force size, participation rates etc. I'd be more than happy to publish an introductory piece.

    Thanks again Davewmart for your insights.
    Dec 3, 2011. 10:39 AM | 2 Likes Like |Link to Comment
  • 1.2 Million Americans Quit Seeking Work Since November 2010 [View article]
    Moon Kil Woong,
    I wrote an article about what you are speaking of entitled "Just how relevant is American Labor" back in December that shows the decline in the employment-to-population ratio. Once again, we are in agreement.

    The data I used for the article came from the government. The formula for calculating the ratio is well known and readily available. Let me be clear, I have not said once that the Govt. is a benevolent beast. Just that we will find whatever it is that we seek with application of some effort.
    Feb 5, 2011. 10:03 AM | 2 Likes Like |Link to Comment
  • 4 Stocks That Buffett Could Buy Now [View article]
    Adding this additional comment because I inadvertently hit reply before I was done and the software will not allow me to edit my original comment.

    Regarding estimating rates of growth: you must learn how to estimate the rate of growth in earnings, dividends, FCF, Residual Income or whatever it is you are discounting to find a firms value. The firms value is VERY sensitive to changes in both the required return and growth rate.
    Jan 24, 2011. 12:31 PM | 2 Likes Like |Link to Comment
  • 4 Stocks That Buffett Could Buy Now [View article]
    You are not discounting FCF correctly. Also make sure you understand the difference between FCFF and FCFE. Whether you use FCFF or FCFE you need to discount by either the WACC or cost of equity for the firm minus a projected growth rate. "WACC or Re - g"

    You need to research how to calculate a WACC (Weighted average cost of capital and the cost of equity) you also need to learn how to estimate the rate of growth in earnings / dividends.

    Because of your error you have a denominator that is clearly too small which is causing you to overvalue these firms by a HUGE amount! You have a ways to go in your journey to learn how to properly value equity using free cash flow valuation methods. Keep learning!
    Jan 24, 2011. 12:02 PM | 2 Likes Like |Link to Comment
  • Consumer Price Increases Being Absorbed by Retailers, For How Long? [View article]
    Logical Thought, great point! It appears that companies are maintaining profitability by not hiring and freezing existing wages rather than trying to pass on these costs.

    Thanks for reading the article.
    Jan 15, 2011. 08:39 AM | 2 Likes Like |Link to Comment
  • Cautious Optimism for 2011 [View article]
    Regarding Meredith Whitney and her predicted crises with states and municipalities:

    Of course you are right about what effect an economic upturn would have on a given states or municipalities income statement and thus operating leverage. However, I think Ms. Whitney is more concerned about financial leverage, due to the high level of borrowing that so many states and municipalities have engaged in during the extreme upturn and have generally continued to do since the downturn began.

    I have not studied the problem directly so I do not have any specific examples to use but what I am driving at here is, do you think that the difference between your forecast of a some defaults 2011 and her forecast of a full blown crises is simply that she is also looking at the high level of borrowing and relatively higher interest rates that must be paid by states in addition to operating activities?
    Jan 13, 2011. 09:53 PM | 2 Likes Like |Link to Comment
  • The Spin Behind the Pending Home Sales Report [View article]
    BennyProfane, great comment. There is a very strong link between housing and "domestic" employment. Corporations are hiring, just not in the US. As long as our employment to population ratio remains low, home sales and thus prices will remain low as well.

    I wrote an article about this relationship in the first week of December which illustrated this point. It is the third graph in the piece. It was also the first time I used the smaller illustration of the growth (or lack of) in the number of people employed.

    What I love about this work is taking the spin off the ball so investors can see what is really the case. Thanks for taking the time to read me.
    Dec 31, 2010. 12:04 PM | 2 Likes Like |Link to Comment
  • Initial Jobless Claims Take a Holiday Break [View article]
    Mr. Ingram, good observation, the number of people falling off the unemployment rolls is another thing that we will have to track on our own as we move forward since they will no longer be counted.

    I think it is pretty clear what is happening to the labor market if you look close enough. I wrote an article that I think addresses this issue a few weeks ago, here is a link.

    Thanks again for reading me.
    Dec 30, 2010. 01:33 PM | 2 Likes Like |Link to Comment
  • The Recent Correction Is Not Quite Deep Enough [View article]
    Thanks for putting in the work and taking the time to write this article. Good Work.

    This rally has extended well beyond my expectations. The spring rally lasted 51 days before the Greek crises started and acted as a catalyst to start the correction and flash crash a few days later sealed the deal.

    I guess the market a begun to develop callouses where Europe and domestic employment are concerned. We will see how long this peace can last.
    Dec 6, 2010. 03:51 PM | 2 Likes Like |Link to Comment
  • U.S. Jobs Report Likely to Be Robust [View article]
    Daniel, I agree. I think that after the holiday season passes we will see a spike in weekly claims and a rise in the monthly employment numbers.
    Dec 3, 2010. 07:41 AM | 2 Likes Like |Link to Comment
  • Oil-Dri Should Continue To Sop Up Profits (And Grow Its Dividend) [View article]
    You are welcome tweedn. I will keep following and reporting on them to make sure they keep doing a good job.
    Nov 11, 2010. 07:10 AM | 2 Likes Like |Link to Comment
  • Will the Markets Really Explode With Profits if Republicans Win? [View article]
    One Eyed Guide, thanks for taking the time to write the article.

    In 1994 America had a several "exploding" new technology industries, a Y2K bug that threatened to shut down every computer in earth (that's what the fear was anyway). This technological rebirth left no industry untouched. Productivity exploded due to an expansion in aggregate demand for almost everything.

    Today we have a housing market, which historically has lead us out of a recession that is, for all intents and purposes, dead until further notice, productivity gains which resulted from labor reductions and cost cutting, and finally, a new green industry which threatens to never get off the ground until there is but a single drop of oil left on the planet.

    If the republicans win there may be a "bump" . But the reality of the economic data will remind us that we have a long way to go, regardless of who is the majority in congress.
    Nov 2, 2010. 12:40 PM | 2 Likes Like |Link to Comment
  • Fertilizer Vs. Seed, Which One Gives Crop Producers The Most Economic Value? [View article]
    NL2, thanks for your comments. Don't cover irrigation companies although during the drought of 2012 I suspected that those farmers with irrigation systems were smiling all the way to the bank although they all remained mum when asked. :-)

    As for fertilizer, either prices or volumes will decline. We will have to wait and see how that plays out. Thanks again.
    Aug 22, 2014. 03:56 PM | 1 Like Like |Link to Comment
  • Plunging Corn Prices Encourage Livestock Producers To Fatten Up The Flock [View article]
    NL2, thanks for reading the article. Great comment as well.

    What's happening is a typical illustration of a how a business cycle affects different parts of a value chain. High crop prices benefited those upstream in the value chain like farmers as well as seed and fertilizer companies while firms downstream in the value chain closed plants and laid off workers to become more efficient. Now things are reversing as they will again and again.

    As I have written about extensively, fertilizer companies are seeing lower revenues and profits for the reasons you mentioned in my opinion. Seed companies, however, seem to be able to pass on prices increases despite the falling prices. Thanks for adding to the discussion.
    Aug 17, 2014. 01:50 PM | 1 Like Like |Link to Comment
  • Potash Corp. Continues Pricing Strategy And Enters Period Of Lower Growth [View article]
    Gregory, I wrote a report with my thoughts on a URALL & BPC reunion a month ago.

    The link is here.

    Thanks again for participating.
    Jul 16, 2014. 11:58 AM | 1 Like Like |Link to Comment