Tom Armistead

Will General Electric's Wind Farm Be Worth the Taxpayers' Investment?

Fossil fuel costs do not reflect the risk of global warming. The costs of global warming are impossible to quantify accurately, so become the source of endless debate. Those who benefit from the burning of fossil fuels for energy are happy to disregard the imputed cost of global warming, since it is born by future generations.

Nuclear plants in the US do not yet reflect the cost of permanent storage of radioactive waste. However, this cost will be much easier to quantify than global warming.

There are solutions for the storage of energy generated from intermittent sources, compressed air or hydraulic come to mind, the compressed air is used in a gas turbine and is suitable for peaking.

As an accountant, I believe it is important that all activities that harm society should be charged with the costs they impose: that is the only way to make the market respond to the needs of society as a whole. I personally do not want my grandchildren living with the afermath of global warming, and I resist the idea that we can just pass this risk off to them when we have technology available to mitigate it.

Too Big to Fail? How About Too Small to Exist

GS, BAC, C, and JPM could be judiciously pruned, with the equivalent of a stump grinder.

On TARP's 'Leftovers'

The TARP money was invested, not spent. USG got preferred a/o common shares.

As the TARP beneficiaries repay, some with interest, the funds are indeed available to be spent for other purposes.

From a psychological point of view, any TARP funds that were not actually invested can very well be spent on tackling the problem of unemployment.

There is justice in that, the money that was not spent on the perpetrators can be spent on the victims.

Toll Brothers CEO Expects a 'Serious Good Time' While Dumping Stock

Tangible book value per share is 15.60. Over the years TOL has traded at an average 1.5 X this metric, so 22.50 would be a good target.

I am long TOL at 17.81 per share, I could sell Jan11 22.5 calls for 1.80, that works out to a 9% yield. The outfit has about 1.5 billion in cash and is preparing to gobble up land from its smaller competitors, many of whom have been foreclosed.

Toll Brothers is a high end homebuilder: this is America and the rich get richer and the poor get poorer. So the rich have to do something with their money, like build big houses in gated communities. At the end of the last quarter, orders were up and cancelations were down.

Bob Toll is always selling shares, maybe he needs the money, maybe he wants to diversify, who knows?

Too Big to Fail? How About Too Small to Exist

You have it exactly backwards.

How Buying a Home Is Gambling

My experience as an insurance agent exposed me to people who were overpaying for their houses back in the 1980's. The relevant metric for insuring a house is the replacement cost, and insurance companies provided "replacement cost estimators" that did a workable job of figuring out what it would cost to build a house new.

You could figure that the lot was worth 50,000 at the time, assuming it had city water and sewer and was on a paved road, that obviously would vary depending on the location and lot size but typically the house itself was worth more than the land.

Where you could see trouble brewing was when people were paying well beyond that, presumably some sort of scarcity was pushing prices. What happened was as soon a few more farms were subdivisioned and supply caught up with demand prices returned to a more normal level.

I would be talking about the purchase price in cash, as far as borrowing money if you count the interest over the years you will wind up paying a lot more than that. But there are rent vs. own calculators out there on the internet which include the tax considerations etc., so I don't see the interest as a problem provided the rent vs. own decision makes sense.


On Dec 11 12:47 PM optionsgirl wrote:

> Tom, I am requesting that you clarify your last comment: not to pay
> more than the replacement value. In my mind, that is not possible,
> for if one finances, one pays several hundred percent more than replacement
> value depending upon the interest rate, and if one does not finance,
> one is giving up the interest, dividend and growth value of another
> equities investment. So, what do you mean? Thank you.

Household Wealth: Still Above Normal

Another thought would be demographics, those of the baby boomers who did well have accumulated a lot of wealth, the generation before them missed many years of potential accumulation due to the Depression and WWII.

So it would not be that recent years are an aberration to the upside, it would be more about how hard it was for the previous generation.

How Buying a Home Is Gambling

I paid 34,000 for my house in 1972, and it is now paid off and worth substantially more.

I will not be paying any taxes on the increase, not even capital gains.

A house is a good investment.

The confusion comes up when people start paying more than the replacement cost of the house and finished lot.

Household Wealth: Still Above Normal

Rather than drawing horizontal boundires to a normal range, why not draw a trend line? It would slope upward, and the ratio would be below the trend.

Why go back as far as Eisenhower? Why not just go back to Reagan and use a trend line starting there?

I am extremely resistant to any line of thinking that says household wealth, presumably to include mine, "has" to decline in order to restore some concept of pattern and order, minimums and maximums.

Finally, who has all this "household wealth?" Is it the middle class, or the top 5% or the top 2%?

Hedge funds that viewed the safety of euro-zone sovereign debt with skepticism are starting to see their bets pay off, after a welter of warnings this week about government borrowings from Dubai to Greece and the U.K. rattled markets around the world. While such bets were costly over the past year, they're now proving prescient.

Wait until these same hedge funds start finding ways to make these same bets pay off even more.

There was a lot of money made buying CDS "protection" on US financial institutions and then engineering their demise.

When the same tactics are applied to nations the results will be a global crises. Those who are positioned to profit from loss will make very sure that losses occur.

Is Debt Inherently Bad?

Debt is useful as long as both parties can realistically expect that the loan will be repaid.

Many credit cards, home equity lines of credit, 2nd mortgages that were issued leading up to the credit crisis didn't meet this test. Where real estate was used as collateral, the parties agreed that as long as there was 110 cents in the dollar they would split the extra dime, if that didn't work out, see you in court and here are the keys.

For credit cards the sad fact is that many issuers don't care if they get principal back - the interest when combined with late fees and penalties gives them a semi-permanent claim on every paycheck the borrower receives. It's usury, immoral, unethical, and at one time illegal.

As a practical matter the consumer debtor who is sufficiently enmeshed in this scheme is no longer a consumer - his creditors have a claim on every cent he makes. So excess granting of credit stifles consumption.

Those of us who have the good fortune or good judgment to avoid personal entanglement in the debt morass are still victimized by the usurious practices of financiers because they create the boom/bust cycle that destroys value for everyone.

We had laws against usury, and regulatory procedures to enforce prudent lending. These laws and procedures can be reinstated so we don't have to go through any more of this bullshit. The problem is these people who figured out a way that there was 110 cents in the dollar have managed to get the extra dime out of the taxpayer's pocket.

Wells Fargo: Please Dilute Shareholders and Repay TARP Now!

Wells Fargo would do well to raise equity capital while it is possible. If they are so concerned about dilution they could do a rights offering and give existing shareholders a chance to step up to the plate.

A bank that continues to rely on TARP capital is gambling with taxpayer money, the bet being that it will be able to earn its way to capital adequacy.

Banks and other financial institutions need to demonstrate their access to capital markets in the most fundamental way, by selling stock.

Acme's Cyclical Issues Present an Opportunity for Profit

Good idea, the buybacks have been at levels that would create shareholder value. The most recent qrtr had difficult comps due to a large one shot or promotional order for back to school last year: it did not happen this year.

There is a presentation available here on S-A, worth reading. The company distributes through industrial suppliers but has also made some inroads into the big box retail. There is room for more of that.

The slowdown and inventoy reduction have about worked themselves out, I think this outfit can make 1 per share in recovery and at 12X that would be 12 per share. I took up a starter position today and hope to add to it if the stock tanks further.

Up 12.53% in 2010?

bbro makes a good point, just working with ratios of S&P 500 to GDP or for that matter NIPA Corporate Profits to S&P 500 something like 1,200 seems reasonable.

Various projections are calling for unemployment in the 10.5 area, not sure how you reconcile the two figures.

Marvell, Orbotech Benefiting from China

Corning (GLW) when they reported their 3rd quarter saw a 20% increase in LCD TV for 2010, that would be along the lines of the 22% the author sees, and would be bullish for ORBK.

Long ORBK