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  • Wide Moat Stocks?? 3 comments
    Jul 10, 2014 3:35 PM | about stocks: AA

    Warren Buffet is well known for choosing stocks that enjoy so called "wide moat" against competition. Everyone knows what stocks he picked, but I know that any competitor can build a Brooklyn bridge across it if he cares to. It is just that nobody is trying as if everybody is going out of his way to please Warren. Warren is not alone , of course. It is just that too many stocks is enjoying "make pretend" moat that stakeholders are so happy to hold.

    It makes me wonder about the real value of today's stock market as I can easily see so many undervalued ones as well as overvalued ones on an ongoing basis. You may ask why I never got rich, well, I can honestly tell you that I believe that there is delay tactics nearly everywhere but a few chosen ones. Here is a simple fact, money cannot chase every stock at same time so they rotate them but somewhat maintain so called the Darling 50 in a secular way.

    This is not really honest because the favored ones are feeding off the many other good ones . it is just money changing..

    Disclosure: The author is long AA.

    Additional disclosure: AA is a true wide moat stock but is being suppressed by Wall Street through global overproduction of aluminium and depressed prices.

    Stocks: AA
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  • LongRoser
    , contributor
    Comments (393) | Send Message
     
    If AA is downstream, would they benefit from cheap aluminum?
    17 Jun 2015, 11:53 PM Reply Like
  • Gumby
    , contributor
    Comments (3422) | Send Message
     
    Author’s reply » Alcoa had shuttered almost all of its downstream operations more than a decade ago due to low profitability and competition . now Alcoa is rebuilding its downstream operations slowly which can take decades unless its new technology called MicroMill and additive technologies (3D printing) can increase revenues for downstream operations at good clips going forward. For now, Alcoa is still at mercy of low aluminum prices for its dwindling upstream operations . Alcoa seems to be able to hold on bauxite and alumina mining/refining to a large degree but its smelters may be shut down so much that it will be a fraction of its past levels, possibly below 2mt annual down from 3mt currently. From there, Alcoa may rebuild new smelters later on but not as long as China keeps on adding smelting capacity endlessly. China has to stop someday, but I have to keep watch about sustainable demand way in the future. will the global demand stay that high at 60 million mts annually or fall down as more aluminum get recycled . I think Alcoa has recycling programs on shelves waiting to take off if it warrants so. Recycling may prove to be way cheaper than new smelter building if prices stay low for much longer than thought. The longer we wait for higher prices for aluminum, $2 a pound will prove to be uneconomical due to inflation and debt servicing still. Even today, power providers are actively helping out money losing smelters with cheaper rates for electricity as if to prolong the depressed prices.
    29 Jun 2015, 05:16 PM Reply Like
  • LongRoser
    , contributor
    Comments (393) | Send Message
     
    If there was a general bear market would AA go down to 5 dollars a share? If so then you can buy and sell at 50 dollars a share!?
    6 Sep 2015, 01:27 PM Reply Like
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