DanK

http://www.vestopia.com

3 Comments

    • An Open Letter to All Airlines - Quit Whining and Hedge Your Fuel Costs [view article]
      Wow - what an onslaught of replies from all ends of the spectrum. First, I want to make it clear that my post was not as much an indictment on the airlines for not hedging their fuel costs (which in hindsight or foresight would be a wise business decision - oil prices have been volatile for years), but to chastise the industry for blaming "speculators"... for their ills and the recent run up in oil prices.

      Speculators are the "life blood" of any derivative market, providing liquidity, price discovery, and viability for hedgers. Sure, sometimes in markets speculators drive prices up, but other speculators come in, as I mentioned in the post, and sell to the buyers believing the fundamentals don't justify current prices. Remember, someone has been selling to the speculators all the way up - who will be crying for their heads when they make big profits when (if) oil prices decline?

      Again, the bogey man isn't functioning markets, with speculators and hedgers, it’s the underlying supply/demand fundamentals and myriad other economic dynamics that affect the price of oil (and all commodities). If I was to concede any restrictions to the marketplace, I would consider raising the margin requirements on contracts, to reduce some of the leverage involved, which we've seen to be the essence of the troubles in the housing market.

      I can't reply to all, but in general, I thank you for posting your replies and spurring discussion. Let's all hope for lower oil prices, and perhaps lower airline fares as well.
      Jul 14 09:00 PM
    • After Big Market Declines, Value Does Best [view article]
      Both Ford and TWX look attractive, at least on various measures of valuation, expectations, and growth. My models rank them both as strong buys. Micron, however, looks less appealing, since its earnings-based valuation and earnings growth look poor - I would hold off on it. Of course, my strategy is built upon portfolio construction, owning many stocks with attractive characteristics, and less on individual stock selection. Sorry for the belated reply. Jan 29 05:10 PM
    • Short Squeeze, Panicked Institutional Sellers Have Been Warping Valuations [view article]
      While it might seem that short squeezes have been behind some pops in the market, or at least select highly shorted stocks, in general, high short interest stocks have been consistent UNDERperformers YTD, and over time. The "long term" negative view, say 6 months, of these stocks pans out - they lag their peers. The poor fundamentals or other demerits of these stocks which lead to them being shorted tend to limit their upside over time, unless a short term squeeze lifts the price.

      Now remember, it is the poor fundamentals or overvaluation that leads one to decide that a stock is worth shorting, not that it already is heavily shorted. One big lesson everyone will take away from this current short squeeze trama is that a high short level carries an extra dimension of "squeeze risk", at least in the short term. Thus I think it should not be over-emphasized as a selection factor.       Aug 20 03:33 PM
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»