THofler

Natural Gas: Worst Investment Ever?

Clearly UNG has been a train wreck, partly because the serious futures traders rob the fund blind on its three roll-over days per month.
(And the contango hurts greatly.)

However, if you had picked up the Chesapeake convertible preferred (CHK-D) in the 50's several months ago, you now have a 50% gain and have collected a few juicy dividends.

Buying Dividends: Next Week's Ex-Div Stocks

The author does have a point about a rising bull market having a positive impact on this technique, but...

Over most of 2007 I had played the monthly dividend payout for Canetic Resources, a high dividend CanRoy trust stock. But, I played it by SELLING ahead of the ex-div, and re-purchasing afterwards and profiting from an oversized drop. I had one miss, but several profitable hits. Why did this work? I don't know except to assume that too many fools were trying to "buy the dividend."

More recently, I notice that one of my high div. MLPs experienced a very large drop after the ex-div. date. I did a 4 year study of this stock looking at the 5 trading days ahead of ex-div. and 10 trading days after ex-div.

One month ago the share price drop was 7.6 times larger than the dividend amount. On a 4 year average, the share price drop was 3.8 times larger than the div. amount. The smallest drop was 1.26X. The three largest drops in the 4 year period were 11.9X, 9.5X, and 8.8X.

So... yes, anything is possible. But I believe dividend exclusion is generally a better bet than dividend capture. Both techniques rely on making two very good trades in a row, which is tough to do repeatably and consistently.

The Psychology of Economic Stimulus

I'm not so dense that I don't know who Barro is. And I do know that taxation is a transfer of capital from efficient hands to inefficient hands. Stimulus is simply the inefficient exercise of capital by those inefficient hands.

Why the inefficiency? Because we are talking about Friedman's 4th category of spending. Money earned by someone else (party #1) is spent (by party #2) for the benefit of party #3. Party #2 doesn't care as much about frugality or effectiveness as party #1, and the spending isn't targeted as well as party #3 would have accomplished because of insufficient information.

Why Give Ken Lewis a Break?

The huge & overlooked part of the BofA mess is that John Thain misrepresented the health of Merrill to BofA and thereby violated SarbOx. He should be prosecuted under SarbOx. Stop harping on Lewis and focus on the problem, namely Thain.

Banks Don't Intentionally Overcharge Credit Card Customers… Or Do They?

I won't add to the rant about bankers. I think the more interesting point here is the possibility (or likelihood) of frequent small dollar rip-offs.

Over a period of more than 6 months, my wife noticed that the local supermarket was overcharging on some items. The chain had a policy of "the item is free if we overcharge you." The clerks were not always pleasant or expeditious in price checking (my wife was always correct), and sometimes there was resistance to the no-charge promise.

I suspect we got 50 to 100 free items over time. I don't believe there was ever a case of an undercharge. The scam was that that items got marked down at the shelves in the morning, but the computers didn't get updated 'til later in the day. Eventually, the state of CA busted the company and imposed a big fine.

Will Windows 7 Resurrect IT Spending?

Thanks for article John.

Do you have any investment recommendations related to Win7? Microsoft has thrown some cold water on OS releases in the past by saying that most enterprises have OS subscriptions whose cash flows don't vary much with new releases. Any thoughts?

Choosing BofA's CEO

My guess is that Ken did a helluva lot of excellent "managing down" in his tenure. But hey, it's all about scapegoating and rewriting history now.

Abbott Records a 35% Reduction in Oil and Gas Usage

Jerry,
Yes, classic reversible heat engines can do A/C in one direction or generate mech./elec. power from waste heat in the reverse direction. But typical A/C units are non-reversible vapor compression systems.

Will FCC's 6 Principles Achieve True Net Neutrality?

Thanks for posting the 6 rules. I've read a couple articles that refer obliquely to the rules without listing them.

I was agreeing with your comments about the difficulty in interpreting the rules. Then I got to your point that the government should just run all of the internet. Huh??

So when you need to send a paper document across the country & it absolutely has to get there overnight (remember speed is good) do you rush to the U.S. Post Office?

Did it not occur to you that the evolution to which you refer is largely incompatible with government operation. Evolution of this sort depends crucially on businesses and ideas that are allowed to fail. I believe that the U.S government still funds the helium reserve, for zepplins that were the rage in 1924.

I think the correct compromise to the net neutrality issue is simple.
If you pay your ISP for X amount of bandwidth, then you should always (99% of the time?) get that bandwidth for any legal content.

This also means that if you pay for 3 Mbits of bandwidth (& you always get it) then Comcast should also be able to stream their own video content to you at 100 Mbits if they wish. Should they also be required to feed you super HD YouTube videos at 100 Mbits too? I don't think so. If you need 50 or 100 Mbits for everything, then pay-up pal. The virtue of this method is that the cost of the 3 Mbits subscription would be much lower than all the other alternatives.

Dell's New Laptop: Getting into the Innovation Game

The inductive charger is a way-cool idea that I've been waiting 6 years for someone to implement. It does require a non-metallic case. I haven't seen any details yet, though I'll bet it is difficult to do really well.

I don't really care what the charge rate is, as long as it fully recharges overnight and the battery life is at least 6 hours. I'd guess the batts won't last that long.

Why It's Time to Audit the Fed

I'm sympathetic to most of these views. But Milton Friedman recognized that history is the economist's laboratory.

A little history:
1807 - depression
1839 - depression. The longest & deepest in U.S. history.
1873 - panic & depression. The worst recorded by NBER.

Then there were 14 more recessions and panics before the Great Depression occuring with an average frequency of every 4 years.

The obvious conclusion is that human behaviour in combination with the simplest forms of free market capitalism is highly pro-cyclical and unstable. Right now, the Fed is the only significant counter-cyclical force in our economy. Now I'm sure that there are other hypothetical counter-cyclical systems that are superior to the current one. But this one, with all its warts, is a lot better than the previous era.

Besides, are you really proposing junking the Fed and turning the whole economy over to the tender mercies of Pelosi, Reid, Frank, Dodd, & Obama?

Brazil ETFs: Big Returns Come in Small Caps

I've owned EWZ for some time, adding more over the last 9 months. I considered the entire index to be a commodity play & so kept the position modest, since I own a fair amount of other energy stocks.

But I was interested in owning more Brazil, believing its future to be excellent. So I've added a position in CPFL Energia a utility with an large dividend, and just recently added a little BRF.

I agree with the author. BRF complements EWZ nicely. Should we get a dollar rally &/or a market decline I'm adding to BRF and possibly EWZ.

What Is McDonald's Thinking?

I presume the long term percentages in the first paragraph are annualized percentages? Please be clear!

The great Peter Lynch was/is a fan of PEG ratio style analysis, but he preferred to add the dividend yield to the annual EPS growth rate before dividing into the P/E value. I call it the LPEG in his honor.

Assuming a conservative 10% annual EPS growth rate I get an LPEG just under 1.1. Not dirt cheap but pretty good for what I consider to be one of the few genuine blue chips.

Why Stocks Scare Me Now

In answer to your question about how your California friends live in their homes with making mortgage payments: A couple of SA commenters explained that banks have two obvious choices, foreclose or not. The catch is that in foreclosure there is no recourse, but in the absence of foreclosure there IS recourse. Who knew?

The catch to the catch is that it may take years in court to pursue recourse & the outcome is not certain.

Systemic Risk and Regulation: Some Cans of Worms Are Better Left Unopened

I like the David Moss bits.

Warren Buffett had an excellent piece in his March 2009 Berkshire letter about the risk inherent in guaranteeing Muni bonds (a relatively new Berkshire business). He makes the point that the historical default rates look good, but historically many or most bonds were not insured. If going forward most bonds are insured by a deep pocketed Berkshire, what will the future default rates look like? He sounds like he now wishes he hadn't made the jump into bond insuring even though it is highly profitable right now.

Chopping down the size of banks would have minimal benefit & would place U.S. institutions at great disadvantage to Euro banks and others that are MUCH large than our current banks.

The problem with depending on super-regulators is finding regulators that really are as super as they will need to be.

The beauty of the post Great Depression regulations is that they were based on hard and fast rules. The rules may have been a bit crude or blunt but they worked.