Tim Cook's Improbable Victory In Washington [View article]
Apple simply told the truth and it made the tax system look terrible. It's the senators who could change the tax system that look bad. They should scrap the Corporate Tax and if they want more revenue, switch to a consumption tax.
For Plum Creek, A Strong First Quarter And Dividend Hike Are Driving Shares Higher [View article]
Plum Creek is a tremendous asset play. They have been under-harvesting for years now and their timber assets 'grow' at a natural rate of 7% to 8% per year. As trees get older they get bigger and more valuable. They also have some higher value land that they sell periodically. Just looking at how much they have made in the past is not a good way to value the potential of this REIT.
Investing In Disruptive Business Models: SolarCity And Better Energy [View article]
I have a problem with this to consumer business model: the very high cost of sales. I worked with a solar energy company a long time ago when they were selling solar hot water systems. The cost of maintaining and paying a sales force is huge. Return for the purchaser is actually fairly small.
I think a better model would be to build solar farms and then sell partnerships so homeowners can offset their energy bills. Investors could also purchase shares even if they lived in a rental. Solar systems installed in farms are much cheaper as you could do megawatts at a time instead of a couple of kilowatts. On a solar farm you can move the panels to track the sun producing more electricity. How much does it cost to install a single system on a home. What if the roof is not angled optimally for the sun - lower efficiency).
Very nice article. Socialism will eventually fail when they run out of other people's money. Since they are now looking at stealing money from savers in Cyprus, European socialism is getting pretty close to running out of money. Where are they going to get the next fix for their stagnant economies so they can maintain their level of consumption?
The Sequester - Why No Wall Street Panic? [View article]
The sequester will reduce government stimulus but the effect on the economy is very much in debate. Economists who believe that all government stimulus will eventually generate enough economic growth to pay for itself have to take the position that the sequester will cripple the economy. Their views have been presented by the media over the last month. Obama talking about economic catastrophe for example.
Economists who feel that government spending has a very limited amount of economic stimulus generally see the benefits as being greater than the small amount of fiscal constraint. After all, the federal deficit is still very high and thus stimulative. Interesting that Obama has been backpedaling after he failed to get the sequester changed. His economics just don't work but its the only economics he has to support the creation of a social welfare state.
How the Fed Could Fix The Economy -- And Why It Hasn't [View article]
Reserves are building up in the banks because banks aren't lending. They aren't lending because credit worthy investors aren't seeking loans. If the government fixed the tax code (Bowles-Simpson type reform) we might get new investment, credit expansion, and a growing economy.
Anyone interested in starting a corporation in California? 35% federal corporate tax, 9% state corporate tax, 43% personal income tax, 13.9% state tax. I figure you are left with less than 25% of net profits after taxes. You have to earn a 20% per year net before taxes on the business from day 1 to beat the return on California Municipal Bonds.
20 Signs The U.S. Economy Is Heading For Big Trouble In The Months Ahead [View article]
The price of oil and gasoline seem to be having a cyclic effect on the economy. In the Fall gasoline switches to winter blend which contains more butane. This is cheaper than summer blend which has to use more crude oil to replace the butane.
In the fall gasoline prices fall due to winter blend and less driving. Lower gasoline prices raise the amount of money that can be spent on other consumer purchases.
In the spring, refineries will start producing summer blend which is more expensive plus summer driving season increases demand. It is a little early, which makes the run-up in gasoline prices pretty scary. The debasement of the dollar could be driving higher prices as a form of taxation.
Higher gasoline prices reduces other consumer purchases so we get a slowdown in the economy.
The government could mediate this effect by building the Keystone XL pipeline, relaxing gasoline blending mandates, passing the Natural Gas Act. I don't expect Obama to do any of these things as he seems to think higher fuel prices are good for the country as that helps him promote his renewable fuels initiative.
The Fall Of The Electric Car... And The Rise Of The NGV [View article]
Obama has done everything he can to inhibit the use of all fossil fuels. The Natural Gas Act would have accelerated the adoption rate for natural gas for transportation, resulting in a significant reduction in carbon emissions. The Natural Gas Act has been buried in Harry Reid's desk and can't get passed in the Senate now going on 5 years. Instead the government is funding companies like Solyndra and Fisker that are either bankrupt or questionable as a going concern.
A critical mass will eventually be reached in natural gas for transportation unless Obama can win another term and find a way to shut off natural gas production.
Nice article. I share your concerns that this is a risky stock, but has high reward potential.
I own Sea Drill for the following reasons:
1. Deep water drilling seems to be growing rapidly which will provide a great return on their investment.
2. I am looking for corporations that have reasonably priced debt on their balance sheet. This is a play on the debasing of the dollar by the FED. Over time Sea Drill's asset prices should rise as replacement costs rise which will increase their net worth to debt ratio with considerable leverage. Being able to monetize their asset values through rising lease rates is very important.
I have every confidence in Barack Obama being able to avoid an inflationary spiral. Obama will raise taxes and increase regulations on business so that there is little new investment. Banks won't be asked for loans so the supply of credit will not expand. This results in a stagnant economy with low inflation. Little the FED can really do.
Inflation Risks Are Rising: How To Invest In A Tricky Environment [View article]
The reason we are not seeing inflation is because banks are holding excess reserves and not lending them out. This holds back credit expansion, which would precede inflation. The FED is trying to counteract this by flooding the market with reserves. Banks aren't lending because federal tax and regulatory policy is keeping credit worthy borrowers from investing and seeking bank loans.
You should watch for bank credit expansion and an increase in monetary velocity as a signal inflation is about to increase.
The Stakes Get Higher In The Fracking Debate [View instapost]
Fracking usually brings up brine (salty water). In some states they dry it and sell the salt to the state to put on roads. This is not considered pollution even though the salt is released into the environment and can easily contaminate the water. If the same brine were ever released from a frac job, then it would be an environment disaster of un-measurable proportions.
Why QE3 Can't Work: Understanding The Liquidity Trap [View article]
Very nice article. I just wanted to add that the FED does not directly control long term interest rates. The market may view QE3 as stimulating inflation, which may cause investors to sell long term bonds. This would actually drive long term rates up, not down. The FED would have a very difficult time dealing with the money supply if inflation expectations were to rise.
Good Article. Debasing the currency won't help the middle class much, but will make asset values increase, which will help their wealthy owners. If the wealthy have leveraged their assets with low cost loans, then they will benefit by paying their tax deductible loans back with cheaper currency later. This is why the rich get richer and the poor get poorer.
Bank Of America Still Hurting From Interest Rates [View article]
BAC could be a very good investment if businesses decide to start investing because taxes are reduced, regulations are cut, and confidence in the market increases. If the Republicans take over then BAC may be a good stock to buy.
Tim Cook's Improbable Victory In Washington [View article]
For Plum Creek, A Strong First Quarter And Dividend Hike Are Driving Shares Higher [View article]
Investing In Disruptive Business Models: SolarCity And Better Energy [View article]
I think a better model would be to build solar farms and then sell partnerships so homeowners can offset their energy bills. Investors could also purchase shares even if they lived in a rental. Solar systems installed in farms are much cheaper as you could do megawatts at a time instead of a couple of kilowatts. On a solar farm you can move the panels to track the sun producing more electricity. How much does it cost to install a single system on a home. What if the roof is not angled optimally for the sun - lower efficiency).
Yes, Stealing Really Is That Bad [View article]
The Sequester - Why No Wall Street Panic? [View article]
Economists who feel that government spending has a very limited amount of economic stimulus generally see the benefits as being greater than the small amount of fiscal constraint. After all, the federal deficit is still very high and thus stimulative. Interesting that Obama has been backpedaling after he failed to get the sequester changed. His economics just don't work but its the only economics he has to support the creation of a social welfare state.
How the Fed Could Fix The Economy -- And Why It Hasn't [View article]
Anyone interested in starting a corporation in California? 35% federal corporate tax, 9% state corporate tax, 43% personal income tax, 13.9% state tax. I figure you are left with less than 25% of net profits after taxes. You have to earn a 20% per year net before taxes on the business from day 1 to beat the return on California Municipal Bonds.
20 Signs The U.S. Economy Is Heading For Big Trouble In The Months Ahead [View article]
In the fall gasoline prices fall due to winter blend and less driving. Lower gasoline prices raise the amount of money that can be spent on other consumer purchases.
In the spring, refineries will start producing summer blend which is more expensive plus summer driving season increases demand. It is a little early, which makes the run-up in gasoline prices pretty scary. The debasement of the dollar could be driving higher prices as a form of taxation.
Higher gasoline prices reduces other consumer purchases so we get a slowdown in the economy.
The government could mediate this effect by building the Keystone XL pipeline, relaxing gasoline blending mandates, passing the Natural Gas Act. I don't expect Obama to do any of these things as he seems to think higher fuel prices are good for the country as that helps him promote his renewable fuels initiative.
The Fall Of The Electric Car... And The Rise Of The NGV [View article]
A critical mass will eventually be reached in natural gas for transportation unless Obama can win another term and find a way to shut off natural gas production.
The Seadrill Conundrum [View article]
I own Sea Drill for the following reasons:
1. Deep water drilling seems to be growing rapidly which will provide a great return on their investment.
2. I am looking for corporations that have reasonably priced debt on their balance sheet. This is a play on the debasing of the dollar by the FED. Over time Sea Drill's asset prices should rise as replacement costs rise which will increase their net worth to debt ratio with considerable leverage. Being able to monetize their asset values through rising lease rates is very important.
3. Great dividend yield.
QE And Inflationary Expectations [View article]
Inflation Risks Are Rising: How To Invest In A Tricky Environment [View article]
You should watch for bank credit expansion and an increase in monetary velocity as a signal inflation is about to increase.
The Stakes Get Higher In The Fracking Debate [View instapost]
Why QE3 Can't Work: Understanding The Liquidity Trap [View article]
Why QE3 Will Not Happen [View article]
Bank Of America Still Hurting From Interest Rates [View article]