Seeking Alpha

Realist82

Realist82
Send Message
View as an RSS Feed
View Realist82's Comments BY TICKER:
Latest  |  Highest rated
  • Comparing DIA To DVY: Which Is Better For Investors? [View article]
    You were probably correct when you quoted 32 holdings... There was a short period there when one of the DOW companies was bought out (don't recall which one) and perhaps holdings of both companies were reflected. Cash, as we said, made for number 32.

    I do, however, believe that the market correlation represents correlation to the S+P and not the DOW. If you track prices, DIA has marched nearly perfectly with the DOW index.

    I appreciate the analysis in your article - I came to similar conclusions regarding the makeup of the DVY fund. It's heavy reliance on the utility sector comes at the expense of growth.

    As other commentors mention - reliance on a single sector can be an unmitigated disaster. Just look at the banking sector in 2008.

    Thanks for reaffirming my decision to lean toward DIA rather than DVY. Best of Luck!!
    Jun 10, 2013. 12:16 PM | Likes Like |Link to Comment
  • The 30 Year Treasury Bond Makes No Sense Compared To Dividend Stocks [View article]
    http://read.bi/10zihmC

    "Fundamentally, as employment improves the stock market should improve as well."

    Be sure to let the Japanese know that.
    Apr 4, 2013. 12:39 PM | Likes Like |Link to Comment
  • The 30 Year Treasury Bond Makes No Sense Compared To Dividend Stocks [View article]
    The case of Japan elucidates my point fairly well. They've had a 20+ year secular bear market and their long bonds would have been a prime investment despite extremely low interest rates.

    Again, earnings and employment are not necessarily well correlated, as we've seen the last couple years. It would be entirely possible for earnings to drop or remain stagnant while employment improves. Since the Fed uses employment to determine interest rate policy, rates could rise to stave off inflation while earnings again remain the same or don't expand markedly. This could cause the market to drop as the risk-free rate rises. All this would take is the returning of earnings and salaries to their historic norms.

    It's just a theory... None of us has a crystal ball, or we'd already be rich and doing better things than discussing this ;) Still, this is a possibility.

    With regard to the PE10, that was derived by a famous professor of finance, Dr Shiller. It's not perfect, but looking at the PE for TTM is even less valuable.
    Apr 1, 2013. 09:01 PM | Likes Like |Link to Comment
  • The 30 Year Treasury Bond Makes No Sense Compared To Dividend Stocks [View article]
    @ Pendragon

    Keep in mind that you're speaking only of P/E for TTM. There's a lot of evidence that the PE10 (Average earnings over last 10 years) is more mathematically significant. By this measure, stocks are over-priced compared to historical norms.

    IMHO the reason for this is the fact that corporate earnings as a percent of GDP are at historical highs, while salaries are at historical lows. That trend is unlikely to continue... and if it does continue, it may wreak havoc on the entire economy - no one knows exactly what could happen, since we haven't been in this situation before.

    Furthermore, the QE Infinity Fed policies are just inflating the stock market to unsustainable PE ratios and when employment picks up, we are likely to see rising interest rates and also falling stock prices.

    I tend to agree that LTGB's are overvalued, but the argument that stocks are fairly priced doesn't hold much water either.
    Apr 1, 2013. 03:14 PM | Likes Like |Link to Comment
  • The Fiscal Cliff... Of 1937 [View article]
    Absolutely - you can make the argument that a 90% tax rate is so ridiculously far off of the peak of a Laffer curve that any cut no matter how significant would improve tax receipts...

    Still, remember that federal tax receipts have NEVER been more than 21% of GDP - http://herit.ag/U0z9kS

    The theoretical peak of the Laffer curve sits between 40-50% so basically, there will be minimal if any gains from increasing tax rates.

    The ONLY answer is spending cuts if you're serious about balancing the budget - which no politician is, anyway. Sorry to say it...
    Nov 14, 2012. 08:14 PM | 1 Like Like |Link to Comment
  • The Fiscal Cliff... Of 1937 [View article]
    The marginal tax rate was 90% - of course only for the very very few people that it actually applied to - and even fewer still since most people just hid behind tax shelters... after all no one is stupid enough to bother declaring income in order to hand virtually all of it over to the government.

    Furthermore, when Reagan and Kennedy lowered marginal tax rates - tax receipts ROSE!! There's no incentive to produce so the government can give others handouts...

    So we're soaking the poor??? Do we live in the same country?? Because I can tell you that you definitely don't live in the same state I do. I have friends making +$50k/yr and are eligible for food stamps, WIC and heating aid. (I'm not exaggerating)
    Nov 14, 2012. 03:29 PM | 1 Like Like |Link to Comment
  • With the market set to record its biggest opening gap down in months, ukarlewitz looks at the last four 9:30 AM flushes. The market was higher shortly thereafter in each instance. Quantifiable Edges looks at occasions where the market gapped down 1% ahead of a Fed meeting - all of these turned positive over the next 2 days. [View news story]
    I doubt that the last drops involved as many earning misses as this one!!!
    Oct 23, 2012. 11:34 AM | Likes Like |Link to Comment
  • The Worst Bond Investing Advice I've Ever Read [View article]
    I'm going to play Devil's Advocate here:

    Japan has had a deflationary Funk for about 20 years along with ongoing falling stock prices. It's a nation that suffered first from a crash of the stock market from overexuberance... then by lowering interest rates there was a real estate bubble that formed... followed by a real estate crash... sound familiar? What followed was 20 straight years of deflationary and plumeting stock prices - the only investment that outperformed were long term bonds

    I certainly HOPE that doesn't happen here!! It would be an epic disaster, but it is far from impossible... I think that's what people are actually considering when they invest in TLT despite record low interest rates
    Jul 2, 2012. 09:17 PM | 2 Likes Like |Link to Comment
  • Why 'New York Times' Economist Paul Krugman Is Partly Right But Mostly Wrong [View article]
    Asbytec:
    Thanks for explaining this far better than I did!


    Matt -
    Your whole multiplier concept has to be based in actual FACT to hold any reasonable weight. If you "get folks working" by having the federal government spend via deficit spending and people choose to deleverage or save rather than spend, then when the government stops spending, the whole system collapses and your magical "7x" multiplier never exists.

    Assigning a number based upon estimations or previous history is about as effecting as guessing in what direction the stock market will go.


    Please keep in mind that Japan has run copius deficits and has had near zero interest rates for roughly 20 years!!!! The population lacks adequate confidence to spend and retains a high savings rate. They're still in the middle of a deflationary recession!

    This is what I mean by smoke and mirrors - if the country doesn't wish to consume and there's no demand, then the unemployment will remain high regardless of interest rates, government spending, etc!!
    May 5, 2012. 02:48 PM | 1 Like Like |Link to Comment
  • Why 'New York Times' Economist Paul Krugman Is Partly Right But Mostly Wrong [View article]
    This is nonsense because we have an entity called the "Federal Reserve." The larger debt load is the result of the government spending more money than it collects in tax revenue. Much of the "debt" is owned by the Federal Reserve which is just fabricated! The Federal reserve SIMPLY ACTS AS THOUGH IT BOUGHT THE BONDS! The money is simply fabricated out of thin air!

    Social Security is another magical entity. Supposedly, we all pay taxes and then the money is "saved" and invested for us and we will benefit from that money later, right?? That's what all the politicians told you, right??

    WRONG! The money you paid in social security taxes was "loaned" to the federal government in the form of the "social security trust fund" buying government bonds. This is important because it shuffles the money (think money laundering) over to the federal government, who then SPENT the money...

    The social security system is also, therefore, indirectly also supported by the Federal Reserve as well. The Social Security fund can sell the bonds and have the "federal reserve" buy them. Ultimately, the only way Social security can go bankrupt is INDIRECTLY, and through the inability of the government to print money fast enough to keep up with inflation - this would be a result of a lack of faith in our currency.
    May 4, 2012. 08:42 PM | 5 Likes Like |Link to Comment
  • Why 'New York Times' Economist Paul Krugman Is Partly Right But Mostly Wrong [View article]
    That is true as well, the value of the dollar will be degraded as soon as someone tries to spend it. Then again in a situation of vast deleveraging, that will be the least of our worries.

    No one wants to admit that much of economics is really based upon faith and confidence. Ironically, that means that much of it can manipulated by smoke and mirrors.

    Example: Reagan started growing the federal debt by unprecedented leaps and bounds. This should have been followed by the worst recession in history... instead it was followed by huge economic expansion and the greatest bull market ever witnessed...

    Why? it inspired confidence...
    May 4, 2012. 08:18 PM | 3 Likes Like |Link to Comment
  • Why 'New York Times' Economist Paul Krugman Is Partly Right But Mostly Wrong [View article]
    ITS NOT THAT SIMPLE!! People think we are leaving "debt" to our children. All that we've done is DEVALUE the dollar - there will be no effort to repay this money! NOT NOW, NOT EVER.

    The risk associated with this "debt" is future inflation and debasement of the currency since we have expanded it's supply.
    May 4, 2012. 11:19 AM | 14 Likes Like |Link to Comment
  • It's all about the debt, writes the crack team of Hoisington and Hunt, and the extent to which the U.S. accumulation of such has been put to use unproductively has them maintaining their bullish Treasury stance. Might the debt be inflated away? Not likely. "The increase in interest rates associated with higher inflation would be one for one ... To start down this road ... would be foolish, impractical, and improbable."  [View news story]
    Yes, exactly, the M3 was negative despite extremely easy monetary policy. It will be the fiscal policy of writing SS checks that may have more power to force the country out of a deflationary-type recession and more toward an inflation.

    This won't necessarily happen unless that money ends up chasing goods, i.e. people buy things. If the population continues to save and keep money in cash, then we certainly can head the direction of a japanese style deflationary collapse.
    Apr 19, 2012. 01:23 PM | Likes Like |Link to Comment
  • It's all about the debt, writes the crack team of Hoisington and Hunt, and the extent to which the U.S. accumulation of such has been put to use unproductively has them maintaining their bullish Treasury stance. Might the debt be inflated away? Not likely. "The increase in interest rates associated with higher inflation would be one for one ... To start down this road ... would be foolish, impractical, and improbable."  [View news story]
    OK - The government is in complete control of the interest rates on it's debt. That's why we have the FED!

    Inflation? It implies that the government would be able to print money. Keep in mind that the estimates of M3 money supply had been shrinking until very recently - and that's despite ultra-low interest rates and "stimulus" debt-spending.

    Still, with the future unfunded liabilities being outrageous, if the government wants to produce inflation by paying full social security and Medicare benefits to retirees with further debt-spending, then I bet we could avoid a Japan-style deflation pretty easily!

    We have to keep in mind that MUCH of the government's debt is owed to ITSELF in the form of promises to the Social Security Trust Fund. This is simply an accounting gimmick which falsely inflates the appearance of the Federal debt.

    It remains to be seen what will happen when the dollars are actually printed and signed over to the benficiaries.
    Apr 19, 2012. 09:18 AM | 1 Like Like |Link to Comment
  • Socially Responsible Index Investing: An Analysis Using The 5% Rule [View article]
    Phillip Morris doesn't cover-up facts regarding their product anymore or defraud anyone. Does anyone here not know that smoking causes cancer? And yet 10-20% of the population still chooses to smoke!

    Excessive alcohol intake causes liver failure among many other issues... yet I drink wine and beer socially a few times a week. Those who gamble will always lose money in the end - and yet they still choose to sit at the tables.

    We all know that CO2 emissions come from cars and fossil fuels - yet we still drive to work, buy cars, buy gasoline, and heat our homes... Although it is arguable to what extent elevated CO2 levels are responsible for climate change, the fact that at least some of this climate change is a result of human activity is well founded.

    Isn't it somewhat childish to chastise the companies for providing profitable services that people desire? Refusing to invest in them somehow makes you a moral ethical individual?

    When you start riding your bike to work, rather than driving, and educating citizens in the developing world about the harm of cigarettes, I'll be impressed. Until then, I'll regard the concept of "the 5% rule" as the machinations of a pompous narcissist.
    Mar 4, 2012. 12:49 PM | 3 Likes Like |Link to Comment
COMMENTS STATS
51 Comments
72 Likes