Asquared

Will Ignoring Past Mistakes Result in a 20-Year Bear Market?

Thank you for articulating what that nagging pit of dispair has been in my stomach. Just a quick comment on the PE analysis. If you use 2007 as the peak PE, you've really missed the peak by 6 years. The peak for equities (at least in real terms) was 2001 when PE's were twice as high and much closer to the Japanese bubble of '89.

13 Consistent Dividend-Raising Companies Currently on Freeze

Not that this changes your conclusion, but companies that last raised dividends in 2007 (like JCI, HSY above) have ended their streak as it is now 2009 and thus, no increases throughout 2008.

3 Value Stock Ideas

ARII looks interesting. I'm no expert in this field either. It appears that the vast majority of the cash sitting on the balance sheet came from a bond offering the company did back in 2007. Perhaps that is a sign that this management saw a decline coming and go the cash while they could. The debt comes due in 2014 and is rated B3/BB- (junk category, but close to investment grade). The bond has traded as high as 104 near the origination date and got as low as 70 during this recession. It's now around 90 or 10% yield.

One analyst report I read said the last quarter saw 0 orders! In other words, their entire production came from backlog. They only have 2 quarters of backlog left. So, it is a race to see how fast the economy turns around and thus orders rise and how fast they'll eventually grind through cash if the turnaround doesn't happen soon. Presently, it doesn't appear to be burning through cash as the backlog orders were right around cash flow neutral.

Will look forward to reading what else you find on this one.

GLD Adds 9.6 Tonnes: Watch Out, Switzerland!

So it seems from what you say,

"As shown below, once they stopped adding tonnes to the trust, the gold price began to fall."

that GLD is the only game in town. If we look out into the future, what would happen if we started to get redemptions on the GLD fund. Who will they sell it to? Seems like the price of gold will fall faster than a sub-prime backed mortgage security.

How Will Radical Change in Gold Markets Affect Gold Prices?

As usual, a very thorough analysis Balaji. I’m going to just comment on a key word you use to see what yours or others thoughts are. You mention the word investment. Is it possible to “invest” in a commodity? I know it is semantics, but I’d say the more appropriate word is speculating. An investment to me means that the asset earns something and has appreciation potential. Gold has a negative earnings characteristic. You need to insure it and store it whether it is in a vault in some ETF or in your basement safe. The price change appreciation potential seems like it can only be based on a demand in the future that is greater than supply versus today’s conditions. The supply, unlike other commodities, never shrinks. Every ounce mined is still with us today. Clearly, if financial Armageddon is upon us, future demand could overwhelm supply. But, will we really be so uncreative as to try the gold standard again? Seems like much of the Great Depression (at least according to Bernanke) can be attributed to being ON the gold standard. Getting off of it allowed countries to come out of their economic funk. Why would be go back to a failed system w/ that knowledge? I mean, I guess I wouldn’t put it past our congress to try it again, but logically, we shouldn’t. Thus, “investing” in gold can only successfully be done if you believe in the greater fool theory, and you get out before everyone else realizes you’re a fool.

Verizon: A Great Buying Opportunity - Barron's

I agree w/ najdorf. The only caveat, for what it's worth, is that holding a lot of debt in a deflationary enviornment is a bad thing. Using cash to pay interest as cash becomes more and more valuable is not shareholder friendly. We aren't in a deflationary enviornment....yet. And the fed is doing its best to avoid it. I'm just pointing out a potential risk to the story.

Dividend Increases: 6 More Companies Buck the Trend

I think you'll find in your further research that MKC is a spice company, not a global technology company.

Some Smart Grid Straight Talk

I wonder, is there such a device that would capture energy from the grid during off hours to be used during peak hours, or is that technology just not feasible for the home?

ABB Poised to Benefit from Global Bailout Plans

Well written article w/ many good points. This does seem to be a great story stock in that they are in the sweet spot w/ all the global stimulus packages bantered about. Does anyone have a good feel for how much they will be losing in cancelled/postponed contracts versus how much they may pick up from the stimulus packages? I know there is a ton of backlog, but most semiconductor stocks usually have huge backlogs before the peak too. Just after the peak is usually not a good time to own semiconductor stocks. I wonder if there is some of the same dynamics going on here?

Dipping a Toe into the Tempting Black Stuff

I won't answer for Tom, but this is how I'd answer this question:

Buying DXO or ERX is like buying a big gulp when you only want a 12 ouncer, or cutting butter with a steak knife when a simple butter knife would suffice. Have we become a society that is so addicted to leverage that all speculative bets must now also risk the shirt on our backs? Isn't leverage the demon that got us into the mess that the US...no the world is facing right now? I don't think speculation means "all-knowing". There is still risk he's wrong and perhaps doesn't want to double down on a bet. Just a thought..


On Jan 26 04:14 AM paultaut wrote:

> If this is indeed a speculation on your part, why not go with DXO
> or ERX?