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Tom Au, CFA  

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  • Busting the Myth About Oil Company Profits [View article]
    Oil companies don't have as high returns on capital (a usual measure of profitability) as tech companies like Apple.

    The reason they are so profitable is because of all the capital they have accumulated over the years.

    Going back to John D. Rockefeller in the nineteenth century. (Few companies in other industries have been around that long.)
    May 2, 2011. 03:41 PM | 11 Likes Like |Link to Comment
  • The Street's 10 Dividend Stocks Challenged by Seeking Alpha Readers [View article]
    Another example of the collective wisdom of the (seeking alpha) crowd.
    Apr 26, 2011. 10:34 AM | 11 Likes Like |Link to Comment
  • Seeking Alpha as a Predictor of Stock Movements and Earnings Surprises [View article]
    This goes to the theory of "smart mobs."

    A farmer once offered a prize at a fair to the person who could best guess the weight of a his prized pig, (about 1100 pounds).

    Guesses ranged from about 100 pounds to 4000 pounds, but the average of several hundred guesses came surprisingly close (within 4 pounds) of the actual weight.

    Throw out the outliers, and the "crowd" can get surprisingly close to the truth.
    Apr 14, 2011. 09:59 AM | 11 Likes Like |Link to Comment
  • The One Sector You Must Own for the Next 10 Years [View article]
    This period is like the 1970s, with Middle East scares that will lift oil prices and stocks, and depress the value of many other things.
    Feb 27, 2011. 01:25 PM | 11 Likes Like |Link to Comment
  • 3 Dividend Paying Tech Stocks That Have Been Dead Money Since 2000 [View article]
    If these stocks continue to pay (and grow) their dividends, the stock prices will eventually follow suit.

    The reason they haven't up to now is because thestcok prices were too high (relative to dividends) ten years ago.
    Dec 13, 2010. 10:30 AM | 11 Likes Like |Link to Comment
  • Will High Dividend Stocks Help You Retire Comfortably? [View article]
    The case AGAINST looking for "the next Microsoft" is that while returns may be higher (if you succeed), those returns come in fits and starts, and are a lot more "lumpy" than those offered by dividend stocks.

    Dividend stocks don't necessarily offer higher returns, but the returns they offer are "smoother," because you get cash flows on a regular basis.

    That makes them slightly "safer" than the average total return vehicle--but only slightly.
    Nov 23, 2010. 10:56 AM | 11 Likes Like |Link to Comment
  • Home lenders (including the two biggest, BAC and WFC) have tightened standards for FHA loans beyond what the agency requires, putting homeownership out of reach of more folks and drawing fire from Realtors. Raising a minimum FICO rating to 640 from 620 weeds out about 6.3M people between those numbers.  [View news story]
    We need to tighten lending standards, not loosen them. Realtors notwithstanding.
    Nov 17, 2010. 02:20 PM | 11 Likes Like |Link to Comment
  • With the Right Dividend Stocks, How Much Money Would You Really Need to Retire? [View article]
    The best a retiree can safely hope for with a $1 million portfolio of stocks is a yield of about 4%, or $40,000. Hopefully that will grow faster than the rate of inflation, meaning that both your income and assets will grow in "real" terms over time.

    A strategy of higher yields also involves higher risks.

    But the best thing to do is to assemble that $1 million portfolio BEFORE you retire, reinvest the $40,000 of annual dividends, and enjoy the capital gains so that it will be more than $1 million when you do retire.
    Nov 17, 2010. 12:55 PM | 11 Likes Like |Link to Comment
  • Debunking the China Myth [View article]
    Right on. China (and Chinese people) will behave similarly to other countries at a similar historical stage of development, and thereby contribute to the world's progress, but it has no "magic bullet" for the world's problems.
    Nov 8, 2010. 11:11 AM | 11 Likes Like |Link to Comment
  • Meredith Whitney Finally Makes Some Sense [View article]
    Meredith Whitney has (almost) ALWAYS made sense. She was the first person to call into question the true value of banks' assets.
    Aug 4, 2010. 12:15 PM | 11 Likes Like |Link to Comment
  • Obama's "economic fish stories," claiming that the stimulus was several times more potent than his own chief economic adviser believes, are becoming embarrassing. The numbers so lack credibility, they might as well have been pulled out of a hat.  [View news story]
    Obama was always a fish story.

    The problem was, most people that this was also true of the other team.

    A choice of "not-goods."
    Jul 21, 2010. 07:14 PM | 11 Likes Like |Link to Comment
  • Will Krugman Call on Bernanke to Create a New Housing Bubble? [View article]
    Krugman never met a bubble he didn't like. As pure a Keynesian as they come.
    Jul 19, 2010. 01:25 PM | 11 Likes Like |Link to Comment
  • The world suffers from a leadership vacuum which will be all too evident at this weekend's G-20, William Pesek writes. "There’s a sense that the world’s problems are too formidable to fix... What we need is an adult or two in the room to make sure leaders tackle the big challenges of our day. Good luck finding any."  [View news story]
    The last time around, the "adult" was Winston Churchill. We should be so lucky this time.
    Jun 25, 2010. 06:46 PM | 11 Likes Like |Link to Comment
  • Rich countries borrowed from the future, paying the bill will be difficult, and so will living in a thriftier world, The Economist says. Debt is a powerful drug, and the withdrawal - as annual income is forced to exceed annual expenditure - may well cause misery.  [View news story]
    Charles Dickens said it first in Great Expectations. "Annual income, 20 pounds, annual outgo, 19 pounds 10 shillings happiness. Annual income, 20 pounds, annual outgo, 20 pounds 10 shillings misery."
    Jun 24, 2010. 06:32 PM | 11 Likes Like |Link to Comment
  • Meredith Whitney: Housing Double Dip Is Certain [View article]
    People who spend their money on "gizmos" will end up in thrall to people who spend their money on "permanent" assets.
    Jun 22, 2010. 04:32 PM | 11 Likes Like |Link to Comment