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  • Deeply Undervalued Gold Stocks' Young Upleg Remains Intact [View article]
    This article reads like a sales pitch.
    What exactly are the "fundamentally-righteous levels relative to the metal that drives their [gold miners'] profits"?
    "Over the next several years, GDX would more than quadruple with a 307% gain"! Agreed, it could. Could it also post a 308% gain? Or 400%? Or -100%? Yes, it could!
    What makes you believe the GDX/GLD ratio is mean reverting? Gold miners have relatively fixed cost, and are thus a leveraged play. The average production cost is relatively close to the current gold price, with many miners operating at a loss. If anything, shouldn't rather the ratio of GDX/(GLD - [production cost]) be constant? This would show a fundamentally different picture of the risks and rewards of gold miners, than your assumption does.
    Sep 22 02:24 PM | Likes Like |Link to Comment
  • Alternative Approaches For Managing Emerging-Market Equity Portfolios [View article]
    I would stay away from Wasatch Emerging Markets Small CAP (WAEMX). With an expense ratio of ca. 2% annually plus soft costs, and 41% turnover, it is extremely likely to underperform in the long run. Moreover, it is tilted towards the "Small Growth" segment, which statistically underperforms "Value" portfolios by several percentage points yearly over long time periods, according to common factor investing models. While the fund outperformed, the history is very short, and past outperformance has little to nothing to do with future results in the mutual funds world. Expense ratio has been proven to be the most relilable predictor of future returns.
    Sep 22 01:35 PM | Likes Like |Link to Comment
  • Finding Value In China A-Shares [View article]
    How does a historic outcome prove a valuation thesis... why is the current price justified... what is the expected return on equity... is there a positive or negative correlation between economic growth of an economy and shareholder returns? I still don't see any conclusive rationale other than "I think/wish it should go up because it has lagged".
    Sep 19 01:40 PM | Likes Like |Link to Comment
  • Finding Value In China A-Shares [View article]
    P/E values is just one component of most valuation techniques, and "fair" and historic P/E values vary greatly between countries around the globe. Can you offer a rational theory, valuation framework, or conclusive support, to underpin your thesis? Or is it just a "what went down, must/should go up [I wishfully hope]" approach?
    Sep 18 08:34 PM | Likes Like |Link to Comment
  • Foreign Withholding Taxes In International Equity ETFs [View article]
    In all honesty, I'm not sure why anybody in the world would invest in a vehicle that has a 15% additional drag on any and all future distributions. It's like throwing 15% of your hard earned assets away (DCF method).
    Do you know if the U.S. also withholds from capital gains distributions from international holdings of U.S. funds to international investors? Why would any international investor use U.S. funds...
    Sep 16 08:10 PM | Likes Like |Link to Comment
  • Replicating a Dimensional Funds Portfolio [View article]
    EVAL, JPGE, TILT, TLTE, FEMS, and many more. I doubt the estimated outperformance of DFA funds will be higher than their outrageous "advisor" fees, when you build your own small/value tilted portfolio using a combination of all those ETFs, with similar total size and value tilt.
    Sep 12 02:58 AM | Likes Like |Link to Comment
  • Danieli: Ultra-Cheap, Ultra-Solid, 40% Upside (At Least) [View article]
    Thanks, early retiree. Even if the likelihood is small, I personally would be interested in knowing the legal framework, and/or quantify the extent of possible devaluation in takeover scenarios, to be able to quantify the risk. Although mispricings do exist in the investment world, if risk-free arbitrage seems too obvious, I get suspicious. Who in the world would buy ordinary shares if one can buy preferreds with higher guaranteed dividend at significant discount, and even with higher liquidity. I'm afraid this goes beyond the scope of this article though...
    Sep 5 01:53 AM | Likes Like |Link to Comment
  • Danieli: Ultra-Cheap, Ultra-Solid, 40% Upside (At Least) [View article]
    I read article 7 of the company charter. I don't understand what are the potential financial disadvantages of holding preferred shares ("savings shares") vs. ordinary shares. It appears that savings shares are entitled to a higher dividend rate than ordinary shares in perpetuity, and to preferred treatment in case of liquidation. In light of this, having no voting rights is not a financial disadvantage, is it? Am I missing something? Can you please explain what could potentially happen in case of a takeover?
    Sep 4 05:00 PM | Likes Like |Link to Comment
  • Finding Value In China A-Shares [View article]
    What is the sector-adjusted valuation of the CSI 300 vs. H shares?
    How does the profitability of CSI 300 stocks compare to Hong Kong listed companies?
    The mainland Chinese stock market has underperformed for several decades, returning little to foreign shareholders, despite the booming and emerging economy, while most other developed and emerging markets have multiplied shareholder wealth.
    In light of this, I'm wondering how meaningful the undervaluation of P/E 10 vs. 12.9 is.
    Sep 3 06:35 PM | Likes Like |Link to Comment
  • Thornburg On Understanding Your Real Real Returns [View article]
    The chart "Tax-Deferred Account vs. Taxable Account: Real Returns" (for equities) is misleading and does not make sense. Thornburg does not accurately describe all assumptions in their paper; but they correctly state on p. 9 "In tax-deferred accounts, income and capital gains are allowed to compound without taxation, having a potentially profound cumulative effect." - When comparing apples to apples, the return using the tax-deferred account cannot be lower than with the taxable account. If Thornburg subtracted the tax due at time of distribution from the tax-deferred account in the tax-deferred scenario, they should have also subtracted the tax paid when the salary was received before it was put into the taxable account in the taxable scenario; the two would then be a wash, and because of geometric (exponential) compounding at higher rates in the tax-deferred account, the tax-deferred scenario always wins when looking at the whole picture. The chart is highly misleading.
    Aug 30 02:30 AM | 2 Likes Like |Link to Comment
  • The S&P 500 Is Overvalued According To The CAPE Ratio, Let's Look At The Global Picture [View article]
    India, Indonesia, and the Philippines have among the highest CAPE ratios in the table. However, does the CAPE ratio compare apples to apples? Wouldn't fast growing countries, whose economies "emerged" during the last ten years, naturally have a higher CAPE ratio, if the (lower average) earnings of the last ten years show up in the denominator of the ratio? Does the CAPE ratio therefore really have predictive value for expected future returns between countries?
    Aug 28 04:41 PM | Likes Like |Link to Comment
  • A Simple - Almost Risk Free - Long Term Play - Arbitrage Opportunity On MECHEL  [View instapost]
    Which U.S. broker allows me to purchase Russian ordinary shares?
    Aug 28 05:49 AM | Likes Like |Link to Comment
  • The Super Investors Of Graham And Doddsville [View article]
    I'm not able to reconcile your data (high value loads) with the data of SEQUX from the Morningstar web site, which indicates it's an extremely large+growth oriented fund. The valuation ratios are above average for P/E and P/CF, and below average for P/B and P/S.
    Aug 22 07:56 AM | Likes Like |Link to Comment
  • CSD: Taking Advantage Of Spin-Offs' Extraordinary Returns [View article]
    - Looking at the graph, it appears that almost all of the excess return was produced between mid 2012 and end of 2013. That's not very convincing to me as strong evidence of systematic outperformance.
    - MLPs had a huge boom over the last few years. If CSD is overweight in MLP, and maybe other sectors, has the computation of excess return been adjusted for industry industry weightings? I see no evidence.
    - What is the rationale behind your selection of risk factors? Bond market risk for an equity CEF? You said the index is overweight in small caps. Small caps outperformed in the last few years. Have you compensated for small cap beta risk? Why not take the often used 3- or 4-factor risk model for equities?
    Aug 21 12:05 AM | Likes Like |Link to Comment
  • Deutsche Multi-Market Income: Wide Discount Provides A Good Entry Point [View article]
    Point well taken; but to be honest, I question the benefit of complicated derivatives other than adding transaction cost or possibly hidden fees, or giving the illusion to be a more "fancy" and sophisticated product, maybe trying to justify the fees. History has proved time and again that simply buying and holding assets generates the highest risk-adjusted returns in the long run. A portfolio equivalent to the underlying assets in this CEF could be easily replicated, or held via an index ETF at negligible expense ratio. In aggregate, you cannot create wealth by trying to generate "nice looking" distributions yields (without comparing risk-adjusted returns and leverage ratios), nor by creating complex financial products like derivatives on top of real assets. There must always be a counterparty, and when one wins, the other loses.
    Aug 20 09:21 PM | Likes Like |Link to Comment