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- Industries to Avoid, Industries to Buy [view article]
- Glaxo's Cervarix Delayed by FDA [view article]
- Stay Clear of Traditional Asset Classes [view article]
- Bored with Yahoo's Board - Fast Money Recap (5/6/08) [view article]
- Merck Layoffs: Lower Drug Sales,Too Many Reps [view article]
- Former Merck CEO Prods Industry on Drug Pricing [view article]
- Wall Street Breakfast: Must-Know News [view article]
- Fixing Pfizer [view article]
- Merck, Schering-Plough Waste Money on Ineffective Allergy Drug [view article]
- Q & A on Merck's Newest Cardiovascular Drug [view article]
- Drug Problems Spark Contrarian Reactions for Genentech, Merck [view article]
- Much Ado about Yahoo, Fast Money Recap, (4/21/08) [view article]
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- Pharmecutical R&D Experiencing Fundamental Shift
- Focus Shifts Away from Financials
- Industries to Avoid, Industries to Buy
- Merck Scratches Natural Products Program
- Bored with Yahoo's Board - Fast Money Recap (5/6/08)
- Merck Layoffs: Lower Drug Sales,Too Many Reps
- Wall Street Breakfast: Must-Know News
- Merck, Schering-Plough Waste Money on Ineffective Allergy Drug
- Stay Clear of Traditional Asset Classes
- Fixing Pfizer
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Industries 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"-which 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. ReplyIndustries 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
Industries to Avoid, Industries to Buy [view article]
Wow, what a rant full of nonsense - I couldn't even get through it all. Just a few nuggets:"President Clinton signed NAFTA, which all but ensured the beginning of the end of American manufacturing."
Nonsense. NAFTA was enacted at the beginning of 1994. Between 1993 and 2007, U.S. motor vehicle and parts manufacturing output increased by 50%. For comparison, in the 14 years ending in 1993, motor vehicle and parts manufacturing increased 27%. Overall US manufacturing profits rose by 154% between '93 and '06, while from '77-'93 they rose only 46% (Economic Report of the President, Tables B-53 and B-92).
"Soon, styling and reliability combined with the toxic effects of unfair trade drew a larger market share."
Unfair trade? You mean how certain foreign manufacturers were able to produce cars much more efficiently than others? Or do you mean like the ridiculous import duties assessed on light trucks that punished consumers and protected the auto industry?
"...it's a poor consumer decision to buy a hybrid given the poultry benefit..."
I think your analysis of this is fowl.
"The MPG listed on U.S. autos has been proven to significantly underestimate the actual MPG for a variety of reasons. This has fooled consumers into thinking that their truck or SUV gets better gas mileage than in reality."
You make this sound like US cars were given a marketing advantage here. ALL car manufacturers have been overstating their mileage for years, which is why a new standard is coming out this year.
"How many of you drive only 12,000 miles per year? [T]he average annual mileage driven in the U.S. is about 25,000 miles..."
Nonsense - I know very few people who drive 68.5 miles per day, and know lots who drive much less; cite some sort of evidence. Here are a few that put it at much closer to 12k than 25k: www.eia.doe.gov/emeu/rtecs/chapter3.html , www.epa.gov/oms/climate/420f05004.htm#step3 , msl1.mit.edu/Mar2Lecture/Use_Safety3.htm .
"How is it possible that oil companies are recording record profits under record oil prices? The only way it's possible is if they're keeping the same profit margins amidst the oil crisis."
First: nonsense. It's certainly possible for profits to increase as margins decrease. Ever hear of Wal-Mart? But even so, how could they NOT have record profits in such a market? Those companies are in business to MAKE MONEY; this is called capitalism. If management is not maximizing returns for its owners (shareholders), management should be replaced.
"Since oil is absolutely needed for consumers and businesses, doesn't [it] seem as if during a crisis, oil companies should absorb some of the pain and reduce profit margins? Why should oil companies be permitted to earn record profits while the rest of the economy gets abused?"
"Permitted"? Seriously? Why stop at oil companies - what about grocery stores? What about drugstores? What about banks? Why not control ALL industries with a product that's "absolutely needed"?
"The distribution of basic necessities should be controlled by the government or at least highly regulated to minimize consumer exploitation."
Nonsense. The marketplace for such things should have the smallest degree of regulation necessary to foster efficiency and competition. This is a far cry from government control. Much as I hate it when folks throw this phrase around, yours is the socialist path, and it ALWAYS results in a less efficient, more expensive marketplace.
"We already saw what happened to the utilities industry when Washington let the free markets take control – Enron."
And we already saw what happened when the government broke up AT&T - WorldCom. Oh yeah, and that pesky Internet thing.
"If you permit for-profit companies control the distribution and sale of a basic necessity, should you allow these companies to hoard profits during the most severe oil crisis in the history of the U.S.?"
So just let me understand this - we need to add "petroleum distillates" to food, water, clothing, and shelter in the "basic necessities" category? Funny, in my history books, there seem to be a lot more years leading up to the internal combustion engine than following it. Are automobiles on the "basic necessities" list as well, so the government should be controlling that industry? It's a slippery slope, isn't it - where do you draw the line?
"In conclusion, America's oil industry resembles a monopoly."
Nonsense. The "oil industry" is quote varied, with many kinds of businesses from exploration to refining to transport to wholesale and retail. NONE of them behaves like a monopoly. Oligopolies, perhaps. But there is not a single segment of the industry with a single dominant player.
"Before government deregulation in the late '80s, there were over 200 U.S. airlines... That was at a time when you had a lot of competition."
Nonsense. If there had been "a lot of competition," there would not have been such a significant drop in airfares following deregulation. The one source I researched places the savings to customers due to deregulation at between 10-18% ( www.econlib.org/library/Enc/AirlineDereg... ).
"Friends, you won't find a person that embraces the free markets more than me."
Nonsense.
From what you've written here, I'd place you to the left of Obama and Clinton.
Do you get paid for this? How do I get one of these gigs? Reply
Industries to Avoid, Industries to Buy [view article]
"I'm actually surprised no one has created an Iraq-related ETF consisting of these and other companies."great idea. it could be called the "iraqi freedom fund." Reply
Industries to Avoid, Industries to Buy [view article]
Response to Bhakta: I agree – Washington is responsible for the current problems. I could also argue that our badly damaged free market system is responsible for many of our economic problems, but that does not mean that we should scrap it. Accountability is key, and right now very little exists. The government has a role in resolving many of the problems if voters demand it. They must be held accountable for their actions. But as it stands today, most Americans are kept in the dark with the help of the media so they really do not understand what is going on. All they see are higher prices and lower quality jobs. And when they listen to the radio or watch TV, they are told these problems are due to the democrats or republicans. In reality, the problems are due to both parties. Like it or not, the government will always be involved. We must accept this fact and focus on making sure their involvement is beneficial to Americans. That is their responsibility.Response to Cicero: If you think I am advocating socialism then you have misinterpreted my article. Government involvement does not necessarily imply socialism. It’s not about WHETHER the government is or should be involved because they are. What is more important is to define their role and make sure they do what they are supposed, no more, no less. I agree that corruption is part of human nature. But that does not mean we cannot strive to minimize it. Arguably, the level of corruption seen today is unprecedented in U.S. history.
For those of you who have concluded that I am a socialist or liberal, you are way off base. I can only conclude that those who would label me as such do not understand the complexity of the problems in America. Once again, my work experience celebrates capitalism at its highest reach. I am an entrepreneur at heart and I have always been compensated via merit-based performance, which is consistent with capitalism at it purest form. Capitalism is the best system, but only if it is functional. That said, I urge you to reconsider my views because they come from someone who supports capitalism as the only path for America. But it has many problems that must be fixed.
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Industries to Avoid, Industries to Buy [view article]
Response to keltorttruth: Actually, I am very far from being a liberal. All I want is for more equity in America. We have given the oil industry many chances to deliver. And all it has managed to do is deliver record profits. Meanwhile, OPEC nations now enjoy enormous trade surpluses due to oil export revenues. What are they doing with all of this cash lying around? They are buying up U.S. assets, mainly hard assets – real estate, factories, and banks. Combined with the effects of free trade, America is selling off its most vital assets in exchange for oil and consumer goods which used to be made in America. The current system isn’t getting the job done. There is a much better way. I am not so naïve as to think that blanket regulation would solve the problems. The government needs to be held more accountable. Clearly, we need to commit to a formidable alternative energy policy. Why is that you think Exxon refuses to invest a single penny into alternative energy? Because they have a monopoly. If you want to play the “liberal vs. republican” game that tells me you have let the media brainwash you. The fact is that both parties are essentially the same. America’s economic problems are not party-centric, they are Washington-centric. This is why Washington makes it extremely difficult for a third party candidate to run. They don't want anyone to spoil their party. It’s all about big money. And unless you are part of that boys club, you stand to suffer, along with the rest of us. ReplyIndustries to Avoid, Industries to Buy [view article]
"Buy oil and healthcare! Sell airlines and autos!" Bold calls! Tell us something we don't know from watching Jim Cramer Reply