BA Forum Topics
- All Comments on BA
- General Discussion on BA
- Options Trader: Friday Outlook [view article]
- How Will Rising Fuel Prices Impact Demand for Aircraft? -- Boeing Comments [view article]
- Dow 30 Performance Since 7/15 [view article]
- 5 Key Quotes from US Airways on the Airline Industry [view article]
- Investing in Dividend Paying Companies [view article]
- Options Trader: Wednesday Outlook [view article]
- This Week's Key Earnings Reports [view article]
- Boeing: Ready for Take-off [view article]
- Wall Street Breakfast: Must-Know News [view article]
- Aircraft Suppliers to Benefit from Airline Fuel Woes [view article]
- Boeing Reaps Huge Rewards as Supplier to Emerging Markets [view article]
loading ...Recent BA Articles
- Options Trader: Friday Outlook
- How Will Rising Fuel Prices Impact Demand for Aircraft? -- Boeing Comments
- Dow 30 Performance Since 7/15
- 5 Key Quotes from US Airways on the Airline Industry
- Options Trader: Wednesday Outlook
- Earnings Preview: Boeing
- Boeing: Ready for Take-off
- This Week's Key Earnings Reports
- Boeing Reaps Huge Rewards as Supplier to Emerging Markets
- Market Headwinds Affecting Aerospace Stocks
- Full List of Articles »
bystander
Industries to Avoid, Industries to Buy [view article]
Good discussion, minus the rants and insults. Personally, I agree with most of what the author has to say, but there's one issue that has been left out: The oil industry has HUGE barriers to entry! Can anyone name a new player in the refining/oil discovery/ gas retail business? No, there are none. So there goes your free markets. Those who control oil are labeled cartels, rightly so, as pricing behavior is now tantamount to that of a monopoly controlled industry.The fact that there are record profits during record prices bears this out. If anyone could enter the market to get a piece of the action, they certainly would. Instead consumers are left to fend for themselves.
The person who wrote that cars are not necessary items is simply deluding himself. I, like many, live 10 miles from the nearest bus stop or food store. How am I supposed to get to work or feed my family without a vehicle? Or has food and a salary become optional in today's society? (And no, biodiesal is not an option. We just don't eat that many french fries in my house.)
So, we have a necessary commodity being sold by a monopolyish industry where prices are spiraling out of control. Yes, the markets will eventually deliver us fusion energy and electric cars, but there's a lot of people out there who could lose their homes and families before that happens.
Those who say the government is useless -- that makes sense to you except in Iraq, right? I spent 11 years in the Air Force, and I know that there are some things the government does really well, and some where it needs to stay clear. The FCC has a pretty good track record for breaking up monopolies (yes they're not perfect). The government should be acting now to provide some defense for the now gas-addicted public until the market sorts things out.
There've been few decent ideas IMO. The gas tax holiday is preposterous. A windfall profit tax, in and of itself, will not be helpful. The government can and should develop an energy policy (it really has none, now) that includes a system of taxes, credits, and perhaps some regulation to reward behaviour that stimulates alternative energy. There's more need for carrot than stick. Those of us that are paying nearly $4 a gallon are already getting the stick.
One area in which I would look at direct regulation would be the energy futures markets. These markets were sold to the public on the basis that they would stabilize prices in the long run by allowing large users to hedge their costs. That no longer happens -- look at the airlines, nearly all of whom are minimally hedged, because their pricing models don't anticipate the kind of behaviour we currently see in these markets. Yes, those managements are partly to blame in not realizing that the models have broken down, but a manager should not be required to be clearvoyant to run their business (at least not all the time). The futures markets have become corrupted by the codependant relationship they enjoy with the retailers of energy, and the consumer is left holding the bag. It's not a free market. It's not fair. And it's not in the best interest of our country or economy. Just my 2 (okay 3) cents worth.
Reply
Industries to Avoid, Industries to Buy [view article]
You are right you are not a liberal but instead a socialist. The oil companies ARE doing their job. Back in the early 1970s the gov controled the oil price and there was no oil to be had. Keep the gov out. ReplyAlternative
Industries to Avoid, Industries to Buy [view article]
Entrepreneurial activity will blossom beyond any libertarian's dreams if only this country somehow manages to establish single-payer health insurance. ReplyIndustries to Avoid, Industries to Buy [view article]
Response to Simple Simon: Very well said! You get it Simon. And yes, for some reason I seemed to have made some people upset. All I was trying to do is relate some big picture trends to investment themes. ReplyIndustries to Avoid, Industries to Buy [view article]
A few thoughts:-Quit the tiresome left-right finger-pointing. Mike is obviously neither a Rebublicrat or a Democan. Anyone who thinks either party can fix things is seriously deluded. Ironically the real problem isn't a monopoly by Big Oil -- it's a monopoly by the Big Parties in Washington. I would quote the Constitution, but I think America is more interested in American Idol.
-Government regulation of Big Oil would be a completely unnecessary, harmful, knee-jerk reaction. The market is already fixing the problem. Hybrids are the short-term fix. Electric cars will be the long-term fix. Even GM finally woke up and is working on the Chevy Volt. Look at Tesla Motors. The free market fixes stuff, but you can't expect it to happen overnight. We've had $3 gas for less than a year! Sheesh, give it a little time. Doesn't anyone think past the next 3 months anymore?
-No one is forcing you to buy gas. Buy a diesel car and convert it to run on bulk vegetable oil from Costco. Or, and I know this is just *crazy talk* - we could divert the money from Iraq into public urban transportation (or at least maintenance on bridges in places like Minnesota).
-One reason that healthcare is broken is because our legal system is broken. We need to stop trying to fix symptoms and start fixing core problems, like out-of-control litigation. The hospital has to charge $28 for aspirin in order to pay for its liability insurance.
Reply
merchant
Industries to Avoid, Industries to Buy [view article]
It obviously took a extremely well educated individual to generate such a simple article written thoughtfulness and depth of a mud puddle!Did someone take your lollipops away and make you angry?
Oh wise sage - please provide more enlightenment as you see fit. Reply
Industries to Avoid, Industries to Buy [view article]
Brother, did you stir the pot! Let me complement you on a few things. The Big Three auto makers summary is accurate. "Disregard for the consumer" you mention on their part may go down in history as something pandemic among our "latter day" corporate mind set/conspicuous status conciousness...no need to belabor the golden parachute for execs who ran the company in the ditch. I'm pointing to what I would call the mind disease of this turn of the millenia. The American Indian had it right when they described the pale face as "Wasichu"-wh... means spider= busy spinning webs of deceipt for the purpose of capturing and sucking dry the hapless churl, the brand racists, and the body worshiping desperate hosuewives, drooling over 'the lives of the rich and famous'- and damn morality, full speed ahead. I wonder if anyone ever really took their "Business Ethics" class seriously.Today we watch with glazed eye as thousands of homes are systematically destroyed by fire, flood, earthquake, tornado, hurricane, and mortgage meltdown...and think it will not happen to us! A clue...it will keep happening, and even accelerate until we all fall back and rethink this whole thing. Is it really important to buy the Hummer, and the million and a quarter home, on lots "starting in the low $300,000"? Has anyone really evaluated why we are called "the great Satan"? Porn anyone? How about a trip to Vegas where nothing you do will ever come to light...a clue...every move you make in Vegas is recorded on video. And the whole world is tune in to be entertianed by our stumbling, wretched collapse. Reply
Industries to Avoid, Industries to Buy [view article]
There are so many things wrong with this article, I will not even begin to describe them. It's also interesting to read his responses to comments posted by readers. After reading his bio notes I will just say that his arrogance is typical of a Bear Stearns trader and his ignorance is typical of a Berkley grad. ReplyHelicopter Shortage: An Investment Opportunity? [view article]
In regard to Sikorsky and UTX-Sikorsky does provide a significant portion of the military's rotary-wing aircraft, and the Navy expects to have an all-Sikorsky fleet by 2010; but I think Sikorsky is only about 9% or 10% of UTX's overall revenue. Reply
Industries to Avoid, Industries to Buy [view article]
Response to Economics Teacher: Your last response was much preferred. Although I disagree, at least you explained your views. It is appreciated. However, let me first say this; I agree with you about the auto industry in the '80s, but only in the early '80s. By the late '80s it had to have been clear to management that foreign imports would only increase. So yes, they were fighting the unions. I apologize if I did not make that clear.As for trade, I certainly agree that it's good for all involved. However, the fact is that under our current economic system, America has entered a system of unfair trade with the rest of the world. As a result, the only beneficiaries are corporations and foreign workers. And we are seeing the results of this job transfer - no real wage growth since 1999, a weak dollar, and soaring inflation for basic necessities.
How can America expect to have fair trade with nations that manipulate their currency (China) with no ability to counteract (due to the control by WTO), nations whose corporations do not face the costs of EPA and OSHA standards, and whose governments cover the costs of the fastest growing expense in cororate America today - healthcare? U.S. companies simply cannot compete with this and that is precisely why millions of jobs have been sent overseas. As well, most large corporations have moved operations to Asia, taking jobs along with them.
Also note that America has been unintentionally transferring its innovation secrets to its trade partners. I won't go into the details here but as an example, India now produces F-16s under contract. This has catalyzed the growth of its own airline industry. You can check he Dallas Federal Reserve website for an excellent article on this topic.
And yes, I do fault the auto makers for jumping on the consumer finance bandwagon. In fact, I actually use that as a benchmark for companies that have achieved the limits of growth. When companies shift their focus from making cars to makig interest, I think that paints a dim picture for U.S. manufacturing. The fact that many large U.S. companies now have huge consumer finance divisions tells the story of the U.S. economy. And now we are seeing the effects of excess consumption.
Finally, I never claimed to be an "investment guru" and I'm certainly not perfect. I welcome all comments and criticisms. The only thing I ask is that people provide me with the same respect they deserve so we can all mutually exchange our ideas and viewpoints. Reply
Industries to Avoid, Industries to Buy [view article]
i want to give my "fair and balanced" view of the comments to the author's post.the principle objections focus on his belief in the need for regulation and his specific suggestion that oil company profit margins be regulated. for this he has been called...evil of evils...a liberal, a populist, a socialist and a communist. and ignorant ones at that.
i do agree in principle that in a market economy, direct regulation of company profits should be undertaken only under conditions of pure monopoly. other than that, regulation in a capitalistic system is not only reasonable but it is necessary..even if we don't always do the best job...and i'll explain why momentarily.
as for regulating oil company profit margins, never mind my idealological view....i just don't think it would make a nickel's worth of difference to the consumer. if it isn't effective, why bother? i don't give a damn about saving a nickel or dime on gasoline when i'm already paying $3.50 a gallon.
here's why i believe regulation is a necessary evil:
it is the nature of a free market capitaist to charge as much as he can and gives as little as possible of his product in exchange. competition is what keeps the predatory side of capitalism in check and it is why monopolies must be regulated.
but the system doesn't work perfectly. it doesn't always protect against fraud or even abuse. a scammer can scam the public before he or a regulator knows he's been scammed.
take, for example, the roots of the current credit crisis:
there was a time when most home loans were given by banks under federal or state charter. they had strict regulatory requirements as to capital, loan to capital ratios, etc....and the system worked fine for many years.
but things change. enter unregulated "mortgage companies" equipped with new financing vehicles like variable-rate loans, teaser interest rates, no money down, home equity loans, etc. etc., ad infinitum. then enter securitization, where these financial institutions sold the loans in packages to investment houses looking for better yields, made possible by rating agencies who slapped AAA credit ratings on instruments that they had never before rated.
the demand for housing exploded as new homeowners crowded into the market. prices escalated. some homeowners traded up...many tapped some of their equity to buy "stuff."
the music stopped when prices started to fall. and that's where we are today.
for those who say....tough....let it happen....that's what capitalism is all about....i'm with you. i could care less about the moron who bought a house he couldn't afford for no money down. but that's not what our government thinks.
ben bernacke has urged congress to bail homeowners out just as he bailed out bear stearns. (and yes he did bail out bear stearns...not to save bear stearns....but to save the counterparties who would have been decimated by a bear stearns bankruptcy.)
what would you rather have? bailout? or enough regulation to have prevented the problem in the first place. such regulation might have included:
1. minimum requirements of downpayment, e.g. 10%. can't afford it? tough...find an apartment.
2. restrictions on variable rate financing. allow them with higher downpayment, e.g. 20%....or permit them for a maximum term of 1 year to minimize the risk of getting buried because of a surge in interest rates.
3. limit home equity loans to require a minimum of 20% equity interest in the property.
4. eliminate tax deductibility of mortgage interest for second homes.
etc etc etc
anyone who doesn't like this should find a country that practices pure capitalism. trouble is it doesn't exist, so you'll have to start your own.
Reply
on
Industries to Avoid, Industries to Buy [view article]
Mike Stathis--THIS IS THE BEST SUMMARY OF THE MODERN AMERICAN CONDITION I have seen!Don't listen to the Purple Kool-Aid drinkers on this forum.
Most are part of the 18% "DEAD ENDERS"--people who support a DEAD and DYING regime.
They can only see to the end of their noses! If something doesn't affect them---THEY CANNOT SEE IT!
Plain and simple--these losers are STUCK IN THE 80'S.
The 80's were all about "ME".
Me. My family, My neighborhood. My religion. My friends. My political party. My church. My interest groups. My investments.
"Me, me, me". It's all about Me to "these people".
Their eyes are closed to all but the most hate-filled ideology that they have been brainwashed with for the past 27 years.
They put their interests, their political party's interests ahead of America's interests.
One example--the Constitution says THERE SHALL BE NO RELIGIOUS TEST OF A CANDIDATE.
Guess what?
They fall all over themselves trying to GIVE A RELIGIOUS TEST TO A POLITICAL CANDIDATE'S preacher.
We can all agree--a religious test for a political candidate is UN-AMERICAN.
That doesn't stop them. They put the interests of the Republican Party ahead of America.
According to Howard Dean, the Democrats are going to teach them a lesson this November:
THE INTERESTS OF AMERICA COME BEFORE THE INTERESTS OF THE REPUBLICAN PARTY.
And when it happens, I'll be laughing all the way to the bank!
Guess what?
Reply
Industries to Avoid, Industries to Buy [view article]
You're going to be busy, if you insist on trying to respond to everybody. You should just stop and take your lumps for writing a weak piece.
"Response to Economics Teacher: For you to make such a rash ascertain [sic] tells me you are of the school of traditional economic thought in America – the same school of thought that advocates the Federal Reserve’s destruction of our currency; the same school of thought that believes that a 2-decade plus period of overconsumption is somehow good for the U.S. economy; the same school of thought that promised free trade would bring better jobs to Americans."
Tell me, which school do you think this is? The Monetarists? Neo-Keynesians? Neo-Classicists? Chicago? Friedman? Galbraith? Mankiw?
"America is mortgaging off its wealth to foreign nations. And the weakness of the dollar is a reflection of this reality."
Actually, it's closer to the other way around; the weak dollar makes all US assets less expensive and more attractive, so capital flows into the US to take advantage of higher expected returns.
But so what? Can you tell me what's bad about foreign investment in the U.S.?
"Finally, my investment track record speaks for itself..."
And is irrelevant.
"Finally, if..."
Wait, you already had a "finally." How many "finally"s do you think you can have?
"...if economists really understand the things that enable one to provide valuable investment advice, why is it that I have never heard of an economist who has become wealthy from investing?"
How about Warren Buffett? MS in Econ from Columbia. And, as I recall seeing somewhere, he's done pretty well.
"With due respect..."
You might want to can the attitude - it will bring you nothing but grief. Just a throught. Reply
Industries to Avoid, Industries to Buy [view article]
Well, you're a bit touchy for someone who hopes to make their way in the public eye, but OK - it's a free country (unless there's something you're not telling us).I'll limit this to two items - trade and cars. First, trade is good. Period. Even the msot dyed-in-the-wool 'managed trade' economists now accept their reduced role of advocating for more, vice less, assistance to the very few who suffer from trade, such as workers (and capital) employed in dying industries. Even they acknowledge that countries that trade benefit the vast majority of their citizens. The freer the trade, the greater the benefit. Think about this: If trade is so bad, then "un-trade" must be good, right? We shouldn't just ban international trade, we should outlaw interstate trade! That way, EVERY state would have a thriving aerospace industry, car industry, textile industry, black and white tv industry and buggy-whip industry, with jobs galore for all. No?
Cars: US carmakers in the 80s made a lousy product, not because they spent all their time fighting labor - quite the opposite; because they appeased labor's wage and benefit demands too readily. Why did they do this? Well, they figured they could pass on the costs to consumers because...car makers had no competition, especially no FOREIGN competition (see 'trade' above). So the industry went to the brink. When they returned they began to make a slightly better product and eventually turned all their attention to large-margin vehicles (when you have a lot of overhead, you need to increase your unit margins). Cheap gas helped. Their mistake was believing that gas would remain cheap, and that's hurting them now. But their competitive position is drastically better today than it was 30 years ago. They make a much better product. It costs too much, true, but they're working on that as well. In your vitriol you neglected to mention the health-care benefit swaps the car-makers have been negotiatiing with their unions. It's innovative and makes a lot of sense - not at all the sort of thing car executives of 30 years ago would have imagined, seeing as they were protected so effectively from foreign competition, i.e. trade.
A last point, you can fault Detroit for making (some) bad cars; but it's laughable to criticize them for going into the financing business. I ask you, investment guru, if you owned a company that identified a fast-growing, highly-profitable business that complimented your core business perfectly and put your retained earnings to work at an above-market rate of return, would YOU be angry at management? I don't think I would, but then again, I'm not an investment advisor. Reply
Helicopter Shortage: An Investment Opportunity? [view article]
Michael, I wholeheartedly agree with you that it is important to figure out the extent of shortage and what % of total business comes from choppers. I mentioned that in the case of Finmeccanica, 22% of 2007 revenue was based on helicopter sales. I have to dig deeper into Kaman and Textron to get the numbers for them. This is the key reason I have not started positions in them yet.As Saul mentioned, there is a good chance I might explore one of these companies in detail in the next newsletter.
Thanks for your thoughts on Sikorsky Saul and the free plug for my website. :) Reply