Evaluating David Einhorn's Proposal To Apple [View article]
Why I am against David Einhorn's proposal!
Having high quality investment alternatives is important to me. I need and want to be able to invest effectively for retirement.
So if being public means that a company is subject to harassment from a myriad of different groups with varying goals why remain public? Einhorn is reaching for a way to threaten AAPL which doesnt seem to have much merit. It does a good job of creating the debate however which was more likely his true goal.
This week Dell going private is in the news. Other than to fleece people a la Facebook IPO why would companies want to be public in the future?
It used to be that alternatives were limited but that isnt true anymore.
Robert Shiller: Don't Invest In Housing [View article]
Shiller makes many good points in that housing is a much poorer investment than many people think over the long term.
He is wrong in that it is an investment. I would present as evidence hedge funds buying housing in large quantities.
Many Seeking Alpha readers have considered buying a home on the court house steps or at auction. A recent investment of $15k has a renter paying $800 a month and I consider that an investment.
Where Shiller is right, is that buying a home to live in has a poor usually negative return. After the taxman, maintenance, utilities and wife's stylistic additions you wont come out ahead. You will have a roof over your head if you can afford all that.
My suspicions are that the author is correct in his thesis and I really dont like takeunders.
On the other hand markets may not appreciate companies such as Dell where the market that they are known for is under attack. Dell is inextricably linked to the PC in shareholder minds.
One could guess that Dell with PE help will carve up and separate the company in a manner that eliminates the risk of one business creating liabilities for all of the other businesses. Publicly it can be hard to reengineer a company.
Investors Are Sleeping Too Well At Night [View article]
This article is written like it's author is largely in cash. So it isnt surprising that the portfolios listed are largely in cash.
How does one earn a reasonable return sitting in cash? Unfortunately the market often continues rising until the cash crowd gives in and reinvests. Then when unsurprisingly every last dollar is in the market... it drops leaving you with no gains just losses!
General Electric: Expanding And Riding The Economic Improvement [View article]
I look for GE to hit $25 by the end of the year for a 12%+ price appreciation plus the dividend puts it in the 16% range.
Regarding the revenue I wouldn't get to concerned about that. GE sold off Universal and some GE Capital businesses they shouldnt have been in, in the first place. GE is trying to figure out what to do with all the cash. They have a long term history of revising their business for the future.
I also expect GE to rise at a similar rate for the next 3 years so buy and hold.
How The Herbalife Short Squeeze Would Work [View article]
I just want to address the comment regarding Ackman's motive for this trade.
Ackman had poor performance going into the end of the year. By trashing HLF at year end he was able to raise the 2012 return on his hedge fund significantly. His investors then owed him much more in fees.
This action in my opinion was nothing more than looting other investors and would not have been allowed by the SEC in the past.
Ackman is no dummy and regardless of his statements I would not bet on him still having his position intact.
The risk of this is that next year others will try the same thing if Ackman gets away with it. The SEC should be investigating Ackman and force him to disgorge any profits.
Toni Sacconaghi Expects Dow Dog Hewlett-Packard To Nearly Double [View article]
Whereas I think of HPQ as a disease and its leaders as a stain on capitalism, a much more open minded investor probably has room to buy into HPQ and profit.
I would recommend you not take your eye off of it however. They have an amazing ability to screw up and they are both good and consistent in their methods. They rarely let an opportunity pass them by.
Market Rally: Why You Should Be Worried [View article]
Once upon a time when I was just out of business school I sold out of the market in a deficit scare. It was around 1980-82 and unemployment was worse 15%, deficits were very bad and I sold out after listening to the news day after day.
I was incredulous when the stock market went up because everyone could see all the problems. A year into a great bull market I got back in.
I dont intend to make light of our deficit status. At the same time the average stock that you are talking about has been raising it's earnings, buying back shares and is holding more cash than ever.
Not only that the average stock called in old 4%-5% bonds and issued new bonds, some of which had lengths of 50 years or more and paid perhaps 2% interest annually.
So if earnings per share are higher, productivity is improved, cost of capital is down and cash is high why shouldn't the stock price be higher?
Of course nothing rises continuously, but with the money flowing into the market I wouldnt bet against it either just now.
Incidently the same S&P500 that is trading at 1500 was trading at about 100 back then. That is a capital appreciation of 15 times over 30 years.
I wonder what those people who keep selling out of the market tell themselves!
After years of investing in banks I will give an alternate perspective.
When banks are well capitalized as they are now, they tend to do well. With most of the Mortgage litigation resolved the shares have moved up nicely.
An investor should at least have a normal weighting of banks in their portfolio. Also instead of selling because they go up a little bit try selling when real troubles emerge.
As an example I sold BAC and C back in Aug 2007 for $50+ and bought back in 2009 for next to nothing (below $5). The logic is simple if a crisis is being reported as in 2007 sell banks as they will crash in a true crisis.
After a crisis banks usually rise much more rapidly than the market for a decade. I have a 5 year price target on BAC of $26 and C of $100. Also like RF with a 5 year target of $19. PS Who in their right mind would think that a recapitalized BAC with light at the end of the litigation tunnel would still trade in the single digits as they did a few weeks ago?
The Beauty Of Holding These 3 Dividend Kings For Long Periods [View article]
Agreed all of those are great companies. However most of the gains were a long time ago. I have owned all 3 for a long time. Lets examine some strengths and pitfalls to your strategy.
First I will grant that an elderly retired investor can take lower risk and earn in excess of some other safe alternatives going forward. Certainly bonds are not the low risk of historic times. Although a 30 year bond purchased 30 years ago would compare to the return on a fund composed of the above.
This investor more than doubled the returns by getting rid of most JNJ and PG during their recent periods of poor leadership.
In 2012 JNJ replaced a horrible CEO after most of their products failed. As a review body implants failed, medications had poor quality control and bits of metal were found in other products people were ingesting.
JNJ wasnt the same company you remembered buying 40 years ago. After the terrible CEO left in 2012 I bought back into JNJ and with their cash flow believe they are a good long term play once again.
PG still has an incompetent idiot as the CEO but Hedge Funds have bought into PG and are essentially threatening to get rid of him or to break up PG. Meanwhile I have gotten a much better return from NSRGY. I did start buying back into PG in late 2012 expecting improvement finally but I am still suspicious about the CEO.
My point is leadership makes a difference. If I were you I would also consider total return and add IBM into your mix. The return would be much higher with low risk. While the dividend would be lower in the beginning, total return would be higher and in a few years the dividend growth would let it exceed KO, JNJ and PG.
Apple's Earnings Fall Is Completely Unjustified [View article]
It is tempting to buy some AAPL at the current after hours price. I do want to understand the forward guidance clearly before buying however.
I am normally a long term investor but would be taking a short term opportunity in AAPL. A concern is that in the next year we will have a better reading on whether AAPL can function going forward without detailed plans from Steve Jobs.
Reading comments on AAPL it seems a lot of investors would do better to not fall in love with a stock. The pain and anguish expressed over a simple investment is extraordinary.
Evaluating David Einhorn's Proposal To Apple [View article]
Having high quality investment alternatives is important to me. I need and want to be able to invest effectively for retirement.
So if being public means that a company is subject to harassment from a myriad of different groups with varying goals why remain public? Einhorn is reaching for a way to threaten AAPL which doesnt seem to have much merit. It does a good job of creating the debate however which was more likely his true goal.
This week Dell going private is in the news. Other than to fleece people a la Facebook IPO why would companies want to be public in the future?
It used to be that alternatives were limited but that isnt true anymore.
Robert Shiller: Don't Invest In Housing [View article]
He is wrong in that it is an investment. I would present as evidence hedge funds buying housing in large quantities.
Many Seeking Alpha readers have considered buying a home on the court house steps or at auction. A recent investment of $15k has a renter paying $800 a month and I consider that an investment.
Where Shiller is right, is that buying a home to live in has a poor usually negative return. After the taxman, maintenance, utilities and wife's stylistic additions you wont come out ahead. You will have a roof over your head if you can afford all that.
Dell: The Art Of The Steal [View article]
My suspicions are that the author is correct in his thesis and I really dont like takeunders.
On the other hand markets may not appreciate companies such as Dell where the market that they are known for is under attack. Dell is inextricably linked to the PC in shareholder minds.
One could guess that Dell with PE help will carve up and separate the company in a manner that eliminates the risk of one business creating liabilities for all of the other businesses. Publicly it can be hard to reengineer a company.
Investors Are Sleeping Too Well At Night [View article]
How does one earn a reasonable return sitting in cash? Unfortunately the market often continues rising until the cash crowd gives in and reinvests. Then when unsurprisingly every last dollar is in the market... it drops leaving you with no gains just losses!
What Should Apple Investors Really Expect Over The Next 3 Years? [View article]
Volatility!
Dow 14,000: Are You The Sucker? [View article]
As an investor you should always enjoy owning quality securities!
GE: A Fundamentally Sound Time To Add It To Your Portfolio [View article]
Enjoyed the analysis
General Electric: Expanding And Riding The Economic Improvement [View article]
Regarding the revenue I wouldn't get to concerned about that. GE sold off Universal and some GE Capital businesses they shouldnt have been in, in the first place. GE is trying to figure out what to do with all the cash. They have a long term history of revising their business for the future.
I also expect GE to rise at a similar rate for the next 3 years so buy and hold.
How The Herbalife Short Squeeze Would Work [View article]
Ackman had poor performance going into the end of the year. By trashing HLF at year end he was able to raise the 2012 return on his hedge fund significantly. His investors then owed him much more in fees.
This action in my opinion was nothing more than looting other investors and would not have been allowed by the SEC in the past.
Ackman is no dummy and regardless of his statements I would not bet on him still having his position intact.
The risk of this is that next year others will try the same thing if Ackman gets away with it. The SEC should be investigating Ackman and force him to disgorge any profits.
Toni Sacconaghi Expects Dow Dog Hewlett-Packard To Nearly Double [View article]
I would recommend you not take your eye off of it however. They have an amazing ability to screw up and they are both good and consistent in their methods. They rarely let an opportunity pass them by.
Market Rally: Why You Should Be Worried [View article]
I was incredulous when the stock market went up because everyone could see all the problems. A year into a great bull market I got back in.
I dont intend to make light of our deficit status. At the same time the average stock that you are talking about has been raising it's earnings, buying back shares and is holding more cash than ever.
Not only that the average stock called in old 4%-5% bonds and issued new bonds, some of which had lengths of 50 years or more and paid perhaps 2% interest annually.
So if earnings per share are higher, productivity is improved, cost of capital is down and cash is high why shouldn't the stock price be higher?
Of course nothing rises continuously, but with the money flowing into the market I wouldnt bet against it either just now.
Incidently the same S&P500 that is trading at 1500 was trading at about 100 back then. That is a capital appreciation of 15 times over 30 years.
I wonder what those people who keep selling out of the market tell themselves!
A Storm Is Brewing For Financials [View article]
When banks are well capitalized as they are now, they tend to do well. With most of the Mortgage litigation resolved the shares have moved up nicely.
An investor should at least have a normal weighting of banks in their portfolio. Also instead of selling because they go up a little bit try selling when real troubles emerge.
As an example I sold BAC and C back in Aug 2007 for $50+ and bought back in 2009 for next to nothing (below $5). The logic is simple if a crisis is being reported as in 2007 sell banks as they will crash in a true crisis.
After a crisis banks usually rise much more rapidly than the market for a decade. I have a 5 year price target on BAC of $26 and C of $100. Also like RF with a 5 year target of $19.
PS Who in their right mind would think that a recapitalized BAC with light at the end of the litigation tunnel would still trade in the single digits as they did a few weeks ago?
The Beauty Of Holding These 3 Dividend Kings For Long Periods [View article]
First I will grant that an elderly retired investor can take lower risk and earn in excess of some other safe alternatives going forward. Certainly bonds are not the low risk of historic times. Although a 30 year bond purchased 30 years ago would compare to the return on a fund composed of the above.
This investor more than doubled the returns by getting rid of most JNJ and PG during their recent periods of poor leadership.
In 2012 JNJ replaced a horrible CEO after most of their products failed. As a review body implants failed, medications had poor quality control and bits of metal were found in other products people were ingesting.
JNJ wasnt the same company you remembered buying 40 years ago. After the terrible CEO left in 2012 I bought back into JNJ and with their cash flow believe they are a good long term play once again.
PG still has an incompetent idiot as the CEO but Hedge Funds have bought into PG and are essentially threatening to get rid of him or to break up PG. Meanwhile I have gotten a much better return from NSRGY. I did start buying back into PG in late 2012 expecting improvement finally but I am still suspicious about the CEO.
My point is leadership makes a difference. If I were you I would also consider total return and add IBM into your mix. The return would be much higher with low risk. While the dividend would be lower in the beginning, total return would be higher and in a few years the dividend growth would let it exceed KO, JNJ and PG.
I have remained partial to KO over the years.
Bank Of America: Still Too Big To Fail? [View article]
Apple's Earnings Fall Is Completely Unjustified [View article]
I am normally a long term investor but would be taking a short term opportunity in AAPL. A concern is that in the next year we will have a better reading on whether AAPL can function going forward without detailed plans from Steve Jobs.
Reading comments on AAPL it seems a lot of investors would do better to not fall in love with a stock. The pain and anguish expressed over a simple investment is extraordinary.