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  • Still A Short Story: B Of I Holdings Acquires Deposits [View article]
    Indeed BOFI must offer a 'toaster' to their customers to continue to grow their business at the same fantastic rates that have pertained in the past. Their 'toaster' which their competitors cannot emulate, is higher interest rates on deposits, which they can afford because of the savings accruing from a lack of branches and the costs associated with them. The short case for BOFI rests on the assumption that the high interest rates they pay is a negative, whereas in fact it is a huge positive. It is like the way Walmart grew by operating efficiently on paper thin margins; critics could have said that the small margins were a negative factor, because they hurt profits, in fact it was a significant part of their business model that enabled them to become the world's largest retailer.

    I expect BOFI will become one of the largest banks in the US before their competitors wake up and try to copy their business model by eliminating all or most of their branches.
    Apr 13 03:07 AM | 3 Likes Like |Link to Comment
  • Two-person crews on trains carrying crude to be required in U.S. [View news story]
    Having read all the comments, I notice that no-one seems to be aware of what caused the accident in Canada. The train was left parked on a siding by the driver who then set the hand brakes on a few of the cars, fewer than the regulations called for. The siding was on a slope, and subsequently started to move. There was no-one on the train at that time.

    Obviously having two engineers instead of one would have made no difference in this case. Making regulations more stringent has no effect if regulations are ignored, which is what happened in this case.
    Apr 12 01:44 PM | Likes Like |Link to Comment
  • The risk of AIG's sale of its ILFC  unit to a Chinese group is no longer non-negligible, says Sandler O'Neill, but the insurer should still be in good shape even were that to happen. Markets and credit have improved since the deal was first announced, suggesting AIG could find another buyer (or IPO?). The main risk here is delay. The  analysts maintain their Buy with price target raised to $52 from $50, reflecting higher valuation for the broader insurance sector. [View news story]
    That makes AIG a screaming buy for anyone with a time horizon in excess of two weeks
    Jun 3 07:30 AM | 4 Likes Like |Link to Comment
  • LeapFrog: Help Needed [View article]
    If B&T Capital is indeed a longterm investor in Leapfrog he should be unconcerned about the short term fluctuations in price of the stock. Better guidance to analysts cannot effect the profits of the company, which will depend on the quality of the product and the execution of the management in terms of inventory, quality control, advertising and cost control.

    If in fact the stock is under-valued because of inaccurate guidance to analysts, an investor should be happy because it gives him a chance to acquire more stock at a low price.
    May 22 03:02 AM | 2 Likes Like |Link to Comment
  • AIG gains 1.2% premarket after Barclays upgrades to Buy - more details as we get them. The stock has pulled back about $1.50 over the last few days following a big move higher. [View news story]
    This stock has been undervalued by the market for a long time. Even after the recent run up it is trading at about 65% - 70% of book value. Now admittedly some of the assets on the book may be over-valued, but nevertheless the discrepancy is too large.

    The market price after rising after a splendid quarterly report was knocked down by an illogical down-grade by Goldman Sacks. The downgrade made no sense as it was based ostensibly on the supposition that AIG, due to regulatory constraints, would not immediately be able to either buy back stock or issue a dividend. In the first place issuing a dividend has no effect on shareholder value, because the dividend must necessarily reduce book value. Secondly it seems highly likely that AIG will return capital to shareholders within a few more months, either by a stock repurchase or dividend. It is their clearly stated intention to do so.

    In fact downgrades and upgrades should be ignored by investors, and treated as noise that has no long term effect.

    AIG is probably worth something like $55 - $65, and is a strong buy at current prices, regardless of what self serving brokers say.
    May 13 02:13 PM | Likes Like |Link to Comment
  • The insurance sector is broadly higher following the MetLife dividend hike. Worth remembering - Met (MET) is a special case, until recently under the Fed's regulatory thumb due to its banking operations (now divested). PRU +2.8%, HIG +2.4%. Maybe most interesting is AIG +4.1% as investors ponder the capital return possibilities. [View news story]
    I'd rather see them repurchase stock unless the stock rises to $50
    Apr 24 02:30 AM | Likes Like |Link to Comment
  • Is This The Week For Westport Innovations And Clean Energy Fuels? [View article]
    Both Westport and Clean Energy are companies that are investing now for future profits. In the case of Westport, the investment is in intelectual property, patents and know-how. These investments are probably not even capitalized, so naturally the GAAP earnings are negative, but then no doubt Microsofts GAAP results were negative in their early years when they were an unknown upstart.

    These are not stocks to form a foundation of your investment portfolio, but a few shares bought now could pay off ten-fold in a few years; or they could become worthless
    Aug 27 04:28 AM | 3 Likes Like |Link to Comment
  • Inflation Likely: Bullish For Gold And Silver [View article]
    I'm already short gold (GLD), but long the goldminers (GDX). On balance I'm short gold. I think gold should drop to about 1000 to 1500, but guessing when a bubble is going to deflate or burst is .. well just a guess.
    Oct 29 03:06 PM | Likes Like |Link to Comment
  • Inflation Likely: Bullish For Gold And Silver [View article]
    A slowing economy causes deflation not inflation, so gold should go down if deflation becomes rampant. In fact governments will print money to prevent deflation. If they do it right then gold should stay flat. The only case in which one could expect gold to rise is run-away inflation which could happen if governments or central banks misjudge the situation. This is possible, but unlikely.

    As no-one really knows what the price of gold should be, and buying it via precious metal ETF's is so convenient, and transaction costs are low, it satisfies all the conditions for bubble creation.

    In my opinion, gold is already in bubble mode, and is overdue for a severe correction
    Oct 27 03:44 PM | Likes Like |Link to Comment
  • Is Gold In A Bubble? [View article]
    Noon provides a persuasive explanation for the increase in the price of gold, but every bubble is triggered by a logical reason; it only develops into a bubble when people start buying because the price is increasing, and the price increases because people are buying .....

    The accelerating rate at which gold prices have increased makes me believe that it's in bubble mode.

    Another point to keep in mind is that creation of the ETF GLD has allowed everyone and his brother to speculate in gold. This is another condition that makes it possible for a bubble to form.
    Aug 28 11:28 PM | 1 Like Like |Link to Comment
  • Is Gold In A Bubble? [View article]
    Every bubble that has ever occurred has had a logical foundation. Noon argues persuasively that there is a logical basis for the rise in the price of gold. However, the rise is far in excess of any perceived inflation, or even anticipated inflation, so the question arises why has the increase in the price of gold continued and even accelerated in recent months. The only factor that has changed significantly in that period is the collapse of the Euro, but that can hardly account for an increase of such a magnitude in the Dollar price of gold.

    The alternative explanation, that there is a gold bubble is more convincing.
    Aug 28 11:28 PM | 1 Like Like |Link to Comment