Tom Armistead

Is Verizon on your horizon?

Jim, I am basically a value investor and not drawn that much to momentum strategies. But VZ looks good to me, I have been adding to my position and thinking it will be able to make 40 before the end of next year.

The company did a good job building out FiOS and that is now going to enable expense reductions. They have the best wireless network and will be early on LTE.

The talk about the iPhone is a rumor, can't be substantiated, but the LTE is going to be good and VZ has the Droid.

The Destruction of the Dollar: It's Nearly Inevitable

This article has a lot of rhetorical questions and very little factual data. Not useful.

Why Is Goldman Sachs Vilified While JPMorgan Is Shielded?

It doesn't matter whether its populism or anit-semitism: it's an ism.

As a practical matter, GS prospered while 95% of this country suffered huge losses. There is a point where being too smart leads to breaking and bending the rules in ways that avoid detection or criticism. Or simply avoiding the constraints imposed by normal ethics and fair play. That's Wall St., JPM is better at it than GS.

The anger manifesting in populism a/o anti-semitism would be better directed to energizing a drive for genuine reform of the regulatory system, to include regulating CDS as insurance products with a requirement of insurable interest and adequate capital, the resurrection of the SEC as a law enforcement agency, and re-inventing capitalism as an anti-dote to financialism. More isms....

Time to Make Saving and Investing Fashionable Again

Part of the problem is that saving and investing are not safe activities in the US economy as it now functions.

Savings recieve negligible interest and are exposed to an uncompensated risk of inflation. Investments are undertaken in a predatory environment where fraud, abuse and manipulation continue unabated and unregulated.

Borrow and spend to prosperity economics has been carried to its logical conclusion, an impasse of low interest rates and balloonian debt that no longer provides the juice to jumpstart more consumption.

I continue to invest because the negatives listed above have at times driven prices down to a point where even a muddle through or more of the same scenario yields potential profits. But it would be so much nicer to have a stable ecnomic and financial system, one with enforceable rules and regulations, where investment is a test of analytical skills and not a battle of wits between thieves.

Pirate Economics: 'The Invisible Hook' by Peter T. Leeson

This could be very useful in understanding modern markets, especially hedge funds and investment banks.

The iPhone's Next Carrier Is Likely T-Mobile, Not Verizon

Macgal, it might be a good idea if you would encourage your relative who works at ATT and is so well informed about Verizon to read Verizon's conference calls and presentations available on their website.

VZ is going with LTE. Ericsson is one of their vendors and has the transition from CDMA to LTE already in the bag, its in their latest annual filing with the SEC.

MOT recently went live with a test handpiece running LTE.

AAPL is not going to use second best technology over the second best network indefinitely, unless they want to let Motorola back into the game.

On Leverage

John, almost two years ago I conducted an interview with a well kinown academic on this very subject...

www.investorplaceblogs...

Some of the allusions are dated but the rest of it is still applicable

Capital Spending Has Yet to Get Off the Ground

The lack of capex is a serious problem, as you have noted that is one of the main reasons we can look for a slow recovery with weak employment. I could add to your guesses about what the money has been used for:

Share buybacks at inflated prices. Many companies have borrowed money to buy back their own shares at inflated prices, meanwhile neglecting to keep plant and equipment up to date. Depreciation, which is measured in last year's dollars, doesn't say anything about the cost of new and state of the art facilities.

Acquisitions at peak prices, buying a lot of obsolete equipment from weak competitors and booking the overpayment as goodwill, much of which was written off in the kitchen sink 4th quarter last year, both the goodwill and the plants that were closed.

Investors seem to prefer very low capex, FCF is the preferred metric, don't waste money keeping up to date, just run everything into the ground.

Meanwhile, much investment stimulus is tax concessions or cheap and forgivable loans given out by state and local governments to try to attract any business they can in order to create jobs. The states vie with one another, and skillful negotiators can play them off against each other. Somewhere in there the overall direction of developing the kind of jobs we need gets lost, it's about stealing the other state's existing jobs.

That leaves out the capital that has been chasing returns in CDS manipulatin and supporting short-selling by hedge funds - neither activity creates real jobs in the real economy.

Nucor Corporation: Fantastic Stock at an Attractive Price

US Steel I am neutral, based on an impression the company is too big, slow-moving. It makes sense based on historical earnings but there is the high short interest and debt as a % of capitalization is a little higher than I prefer.

I have some HAYN and CRS, small positions and I am watching them develop. CRS I did very well on the last time through the cycle and I am hoping to repeat....


On Nov 25 09:48 AM Jacob Wolinsky wrote:

> Thank you.
>
> I also own GE and am overweight in the metals sector. They have been
> some of my most fantastic performers over the past year. Any thoughts
> on US Steel? It was at 190 two years ago and is now at 42. I got
> in earlier at 40 and bought again at 20.

Nucor Corporation: Fantastic Stock at an Attractive Price

Good article, NUE is a quality company. 5 year average EPS is the right metric for a cyclical, a P/E of 10 on that basis is attractive.

gaspains, many good stocks look unattractive at low points in the cycle. That would include IBM, which could be bought in November last year for 77, now trading at 128: or GE, which could be bought under 7 in March and now trades above 16.

I have been buying some industrials to include steel, positioning for a potential economic recovery.

Cramer's Mad Money - Amazon Is Wal-Mart's Giant Twin Sister (11/23/09)

AMZN - I could swear Jim Cramer wrote in one of his books not to pay higher than a P/E of 36 for anything, and what I heard last night was him talking about a forward P/E (2011) of 39.

TTM P/E is 78.

I haven't been able to locate the rule about the 36 multiple, but it makes sense to me, maybe I made it up.

Time to Bail on Shale?

Good analysis, appreciate the work you did reading (or listening to) all those conference calls.

Until recently I was long BJS/BHI on the theory that rig counts would have to increase as supply dwindled. Now with the lateral drilling technlogy getting better and the shale producers hedging and continuing to pump, plus storage is so high, it looks like natural gas is not going to spike the way it has in the past. The producers that borrowed in order to finance shale production are going to keep on pumping in order to service their debt.

The Retiree's Conundrum

The retiree's cunundrum differs from the prisoner's dilemma in that the retiree can see what everyone else is doing - they're going for bonds, settling for 1% in the name of safety.

The strongest and best of the dividend payers, the likes of JNJ, PG, XOM, are far and away a better buy than bonds, and they will do much better in an inflationary environment than bonds will. The sale of out of the money covered calls on such a portfolio would provide some additional income.

That's my personal opinion, as a baby boomer, retiree, and investor.

Valero's Major Announcement a Telling Economic Indicator

Valero is a poorly run company, excessive debt incurred to buy back shares at inflated prices. Meanwhile they had operational problems with the Delaware refinery during the past year, indicative of poor maintenance.

To cap it off, they made a dilutive offering to buy a heavy/sour refinery in Europe, again this year. So now they shut down Delaware.

What I see is poor capital deployment, buying back shares instead of maintaining Delaware. Capex if neglected long enough leaves properties that are of low value due to deferred maintenance and upgrades.

Heavy/Sour refining will go on, and will provide value to shareholders of better managed companies, Tesoro (TSO) comes to mind.

Two Takes on the Financial Crisis: 'Too Big to Fail' by Andrew Ross Sorkin and 'How Markets Fail' by John Cassidy

Like Kint, I have not read either book, although I will be adding them to my collection.

What I see in the article is an accurate discussion of the shortcomings of Keynesian economics when used as a basis for expansive fiscal and monetary policy. It works - it worked when Kennedy did it, it worked when Reagan did it, it worked when Bush did it.

But in its wake there is inflation, whether it manifests itself in higher gas prices or asset bubbles. In the absence of firm regulation, all kinds of excess appear in the financial system. At the end, interest rates are so low that further reduction is logically impossible, while the government is too deeply indebted to engage in another round of stimulation, and a stalemate ensues.

Keynesian economics needs to be re-examined: it has serious short-comings as a basis for public policy. It's a hell of a way to run a country.