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Tom Armistead

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  • What Exactly Is Risk? [View article]
    Or you could say, more of a monologue than a discussion.
    Apr 17 08:43 AM | 8 Likes Like |Link to Comment
  • What Exactly Is Risk? [View article]
    Risk is when you lose a lot of money you should have paid more attention.
    Apr 17 07:59 AM | 3 Likes Like |Link to Comment
  • IBM Finally Breaks Out: The Earnings Update. [View article]
    The $8 drop seems like an over-reaction: 1) management called for a tough quarter, 2) analysts projected $2.54 EPS, exactly what occurred, and 3) less revenue vs. more margin?

    Of course the $7 run-up ahead of earnings was in anticipation of a beat, which did not occur.

    I added to my position at a price below $175 and then took it back to normal size when it got up over $190. As long as prices remain low, buybacks will reliably create value, and in the meantime I can trade around the position...
    Apr 17 07:31 AM | 2 Likes Like |Link to Comment
  • Intel: My Take On The Earnings Report [View article]
    Good analysis, the legacy businesses are doing better than many expected, and when combined are still growing. As for the other stuff, I saw the word "ramp" or variants 5 times in the transcript, I really like businesses that ramp.
    Apr 16 02:46 PM | 4 Likes Like |Link to Comment
  • Great Graphic - Case Study: San Jose Hiked Minimum Wage [View article]
    WMARKW, there is ample academic research demonstrating that businesses pass the extra cost of minimum wages through to customers.

    I did an article on MCD, where I did the math on that company, and linked the relevant research as far as passing it through. This has been going on for over 40 years and there is historical evidence about how it works.

    Increasing the minimum wage from $7.25 to $10.10 over the course of 3 years amounts to 11.7% per year. The cost of labor is about 25% at most fast food places, and management and supervisory personnel are paid in excess of the minimum in any event. So the price of the hamburger goes up 4%.

    Unfortunately, any mention of minimum wage attracts discussion by those who refuse to be distracted by facts.
    Apr 15 08:08 AM | 4 Likes Like |Link to Comment
  • Great Graphic - Case Study: San Jose Hiked Minimum Wage [View article]
    Prices don't rise 40%. Materials and ingredients don't go up as much. Plus those at the extremes of high compensation don't get the 40% increase.

    Just so you know how it works: CT where I live just raised the minimum wage from $8.25 to $10.10, over three years. That amounts to 5% per year, don't spend it all in one place. The effect on the cost of a hamburger will be about 1%.

    This raise in the minimum wage needs to be coupled with a decrease in the obscene compensation given to upper management, which would work its way down the line of middle management etc. That's the answer, how do we pay for raising the minimum wage.
    Apr 15 05:56 AM | 4 Likes Like |Link to Comment
  • The Global Banking Game Is Rigged, And The FDIC Is Suing [View article]
    Just by way of an example of what Ellen is talking about:

    "When Jefferson County, Alabama, borrowed $3.2 billion in 2003 to refinance its sewer system, the county commissioners relied on advice from JP Morgan Securities to arrange the funding without competitive bidding. The county set up a complex funding scheme of variable-rate bonds and interest-rate swaps that were lucrative for J.P. Morgan and other banks, but greatly increased the county's debt when the recession hit. Sewer bills in the county quadrupled.

    In 2009, the former president of the county commission was convicted of taking bribes to steer business to J.P. Morgan. The federal Securities and Exchange Commission charged the bank with making illegal payments to consultants connected to the commissioners. In November 2009, the SEC ordered J.P. Morgan to cease its practices and pay $25 million in penalties and $50 million to Jefferson County."

    There's more of this kind of stuff, you can bank on it.
    Apr 14 07:40 PM | 6 Likes Like |Link to Comment
  • The Global Banking Game Is Rigged, And The FDIC Is Suing [View article]
    Great stuff. We all know what credit default swaps did to the economy and financial system, now we learn what interest rate swaps have been doing.

    The common element is that both are derivatives, and a form of insurance. Insurance is stringently regulated in the public interest.

    Similar to credit default swaps, if interest rate swaps were limited to their function of insurance, and regulated as to equitable terms and conditions, and then required to be backed by adequate capital, the whole problem would be greatly diminished.

    In the meantime, fraud gives the victims the right to rescind.
    Apr 14 07:10 PM | 3 Likes Like |Link to Comment
  • Great Graphic - Case Study: San Jose Hiked Minimum Wage [View article]
    Yes.
    Apr 14 06:52 PM | Likes Like |Link to Comment
  • Great Graphic - Case Study: San Jose Hiked Minimum Wage [View article]
    Great, everybody does better.
    Apr 14 06:37 PM | 1 Like Like |Link to Comment
  • Buy Bank Of America: A Safe Turnaround Story [View article]
    rogerayoung,

    Excellent analysis of the chart. Now all we need is an analysis of the culture.

    By way of a hint, billions of dollars in fines and restitution have not elicited an apology, an admission of guilt, or any evidence of a desire for change. I carefully studied the banks strategy while they responded to requests, demands, and finally litigation aimed at making them honor their contractual commitments under representations and warranties. Their strategy was, to stonewall all the way, spend massive sums on dilatory and obstructive legal tactics, and generally attempt to defer payment until the plaintiffs went bankrupt. It didn't work.

    Now ask yourself whether you want to be trusting these people to honor their obligations to you as a shareholder. Those who were holding BAC prior to the financial crisis are unlikely ever to be made whole.
    Apr 14 05:58 PM | 3 Likes Like |Link to Comment
  • Great Graphic - Case Study: San Jose Hiked Minimum Wage [View article]
    Good information, in point of fact the minimum wage has been raised numerous times in various jurisdictions, and as a general rule the cost is passed through and there is no harm to employers. Now we find there is likely little cost to overall employment levels...

    Which leaves us with the benefits of reduced poverty, increased tax collections, and higher GDP, plus reduced danger of deflation.
    Apr 14 04:14 PM | 3 Likes Like |Link to Comment
  • Why ConocoPhillips Is Holding Up Well Despite The Carnage In The Market [View article]
    Another thing about COP, since the spin-off they have managed to increase reserves by 3% per year, primarily by improved drilling techniques applied to the higher quality assets that they retained while selling off the non-core over the past several years.

    While the market is now favoring high quality dividend payers, COP is also a good long term play.
    Apr 13 02:52 PM | 6 Likes Like |Link to Comment
  • Buy Bank Of America: A Safe Turnaround Story [View article]
    Before declaring BAC "safe," I would take a very long look at a 10 year chart. From there, I would look at the culture that created that ugly pattern - one that is replicated at all the big banks, with the exception of WFC.

    The point is, that both management and employees are looking out for number one: first, last and foremost. Shareholders may come in a little ahead of the general public, but not enough to make this a viable long-term investment. It's not a question of if, only a question of when shareholders get shafted yet once more, without the Fed to do another bailout.
    Apr 13 10:46 AM | 1 Like Like |Link to Comment
  • Dividend Growth Portfolio: Spring Checkup And Semi-Annual Review [View article]
    Dave, I can see why you dropped INTC, it just doesn't fit the dividend growth investment style.

    I really like it as a speculative play: the market is treating the massive R&D and Capex as a waste of money, and if those investments earn anything like the company's normal ROIC the stock will have quite a bit of pop.
    Apr 8 11:15 AM | 1 Like Like |Link to Comment
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