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jstratt

jstratt
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  • Swiss Franc And Credibility [View article]
    I cant complain about my Nestle, Roche or UBS shares.

    Not sure I understand the full rationale yet. My guess is

    - the EU wanted a weaker Euro
    - definitely strengthens the Swiss currency for the Swiss banks
    - why keep ties to a troubled Euro currency
    - Lots of money has probably been moving to CHF from Russia and Europe stressing the rate fix

    I will let others cry over Hedge fund losses.
    Jan 15, 2015. 05:21 PM | 2 Likes Like |Link to Comment
  • Bank of America's (BAC) CEO Brian Moynihan on Q4 2014 Results - Earnings Call Transcript [View article]
    BAC is at a good long term shareholder entry point.

    People are a little nervous about banking with rates dropping along with Oil and Mineral values. Fundamentally however BAC is doing well in its businesses and continuing to reduce costs. It has the litigation behind it and is well capitalized.

    If you invest when banks have a huge NIM and higher rates you will find shares much higher. I find BAC refreshingly clean without major problems and valued at about an expected 10.5 PE on 2015 earnings.
    Jan 15, 2015. 05:00 PM | 4 Likes Like |Link to Comment
  • Barron's Makes The Case For Active Management [View article]
    I enjoy active investing but it takes discipline to be your own boss.

    If you want to take an S&P level risk it was hard to beat the S&P performance in 2014. Typically if the market doesnt fall more than 10% in a year, investors are not going to beat the market return without taking even larger risk.

    a few thoughts...

    As an investor nearing retirement age the appropriate risk decreases if your assets are under $2MM

    A goal of staying at least 80% invested at all times can eliminate a lot of underperformance.

    If most of your stock is in companies with declining revenue the odds are against success.

    If you are doing a lot of trading you are providing computerized trading systems most of the profits.

    As I entered 2015 I was overweight healthcare with JNJ and GILD a couple of the holdings.

    Oil/Mineral holds promise in 2015. Let it play out before investing. Oil stocks are still high for the price of Oil (ie at end of 2014 COP shares down 1% and Oil down 46% for the year). Be fashionably late instead of leading with your chin. Oil historically drops much farther and stays down longer than anyone can imagine.

    Make sure the bottom is in and some companies have exploded before investing in Oil. Right now everybody thinks they can continue to explore and pump more Oil. Cant imagine being long before March earnings are reported and possibly much later.

    Hope you find something of value in this comment.

    PS Delaying SS until 70 is a wonderful inflation protected 8% guaranteed annual gain. If married 10 years to an ex spouse who is at full retirement age consider drawing on their SS and let yours continue to grow.
    Jan 15, 2015. 02:49 PM | Likes Like |Link to Comment
  • Why IBM's Stock Will Face Turmoil In 2015 [View article]
    I am past writing negative comments on IBM as piling on does not add value.

    The CEO and the BOD needs to be changed and the fundamental strategy has been a disaster. Bring back Palmisano as a temporary CEO while a search takes place. Develop a BOD strategy that is more than borrow to buy back shares faster than the business decline.

    IBM will turn and be a great investment again one day. It can come rather quickly but not with the current leadership and vision. Unfortunately also not without significant pain.

    I will be quite disappointed for IBM if the gang that cant shoot straight is allowed to restructure and run the company.
    Jan 15, 2015. 11:42 AM | 3 Likes Like |Link to Comment
  • Express Scripts is Biotech's Grinch [View news story]
    What I think people are missing with Express Scripts actions is the following.

    - The largest quantity of US Hep C population is within 2 years of reaching medicare and the huge cost of Hep C passing to the government. ESRX by creating indecision is maximizing profits and pushing Hep C patients to wait for a better alternative at government cost.

    - The risk to PBMs and insurance IMO is a stampede for a cure from low fibrosis patients at high prices. Forcing an inferior alternative does at least as much for ESRX cost containment than the pricing that was negotiated.
    Jan 15, 2015. 10:32 AM | Likes Like |Link to Comment
  • India patent office slaps Gilead in the face [View news story]
    I greatly enjoy reading your opinion as well as DoctorRx.

    In this case lets suggest someone somewhere is allowed to manufacture and sell a drug for $200 that sells elsewhere for $60,000. No man made law or legal effort can prevent a black market with those profits.

    That is especially true when a suitcase could hold several million in product.
    Jan 15, 2015. 10:10 AM | 1 Like Like |Link to Comment
  • Maybe You Should Be In 100% Cash [View article]
    Excellent Article!

    I am an investor, always have been and always will be. That said many could benefit by considering the thesis of this article.

    Delaying SS until age 70 to maximize guaranteed income. Moving from $15k annually est @ age 62 to $30k est @ age 70 can eliminate a lot of downside risk. Apparently only 1-2% of people have figured this out.

    Note: Those who were married 10 years and divorced may be able to collect on the ex spouses SS for several years without affecting their own SS. An extra $18k income for one person I know while waiting until 70 for their own SS. That is a government guaranteed inflation protected 8% return for those calculating.

    Then consider the gap between base income needed vs guaranteed income from SS, pensions etc. If you can live a couple years on liquid assets without having to sell investments you have a strong foundation.

    I will alway be an investor, but every house needs a strong foundation.
    Jan 14, 2015. 01:39 PM | 1 Like Like |Link to Comment
  • Why I Like General Electric [View article]
    Scoots

    Thanks I should clarify that!

    I got carried away and used my own assessment. The reality is that GE carries huge debt, debt/ebitda of 8.95 vs Ind Avg of 4.16 according to Morningstar (ie over 2 times the average company debt to cash flow).

    What rating would you give to a company that had a debt to equity of 260%?

    In fairness GE has a diverse set of long term businesses and I am not predicting demise. Still I think anyone using basic business sense would find the actual AA- rating I saw laughable.

    Question to be considered although I dont attach any significance to GE status. What rating did Penn Central RR have the day before it declared bankruptcy?

    The only reason I write these comments on GE is because huge quantities of positive articles are published by non shareholders. On financial news like CNBC or others most refrain from mentioning GE other than to quote management as if they are restricted.

    PS I am not planning to trade GE
    Jan 14, 2015. 12:59 PM | Likes Like |Link to Comment
  • Dimon: "Banks are under assault" [View news story]
    Just adding a few thoughts

    - JPM is a fair value to buy today. It is down reasonably because of earnings shortfall and also lack of a spread in interest rates with a 2.4% 30 yr Treasury.

    - JPM needs to be restrained as they took huge risk at taxpayer expense during the crisis. They will stop complaining about regulation only if they steam roll over regulators.

    - I prefer BAC to JPM but that could change tomorrow. I just dont see bad loans rising to injure banks and fee businesses should be good.
    Jan 14, 2015. 11:42 AM | Likes Like |Link to Comment
  • Why I Like General Electric [View article]
    I will add a few thoughts...

    Starting with why an investment mind would write an article suggesting a 40% one year gain in GE and yet not own any shares? The overwhelming number of articles like this from non stock owners likely suggests GE compensation in one form or another.

    GE will make a good return for investors when

    a) a new competent CEO is selected
    b) GE is broken up into about 4 or more companies.
    c) a successful business plan emerges that doesnt attempt to deceive investors
    d) Return on Assets grows significantly beyond the current 1% range
    e) Current Debt to Equity of 260% is more sustainable and reasonable equity actually exists
    f) Cash currently at $10.6 bil is more supportive of a $374 billion debt level
    g) GE can actually grow revenue without buying revenue just to break even
    h) GE begins to actually invest in reasonable risk businesses other than Oil
    i) Net tangible assets are significantly higher than 11% of debt
    j) Credit status improves from BBB to at least A. (AAA which most investors think GE is, is likely gone forever and AA at least a decade away)

    On the other hand some people who arent very financially literate like to invest in stocks that are more junk bonds with a 3.8% yield.

    Full disclosure- I own some GE shares after selling boatloads in 2013-14. It is fairly valued and could rise in 2015. In a negative market this BBB company could also drop significantly. I think they should have acted more decisively in the past 7 years instead of continuing to act like a TBTF conglomerate.
    Jan 14, 2015. 12:48 AM | 4 Likes Like |Link to Comment
  • A Crude Oil Bottom: Where To Look For Clues [View article]
    Shane

    I would be interested in any info on hedging. My experience with the Oil business was everything was hedged at the big companies. So I was surprised when it was pointed out that they no longer hedge.

    COP as an example stated emphatically in the past 2 10Ks that they dont believe in hedging Oil prices. I am not an expert and do wonder if they dont have another method of reducing risk.

    Anyway thanks for the response.
    Jan 13, 2015. 09:27 AM | 1 Like Like |Link to Comment
  • A Crude Oil Bottom: Where To Look For Clues [View article]
    I just read the 10K issued by the company! COP in this case and also others.

    You should try research sometime instead of displaying ignorance.
    Jan 12, 2015. 08:06 PM | 4 Likes Like |Link to Comment
  • Why Is Anyone Buying Long-Term Treasuries? [View article]
    I will add a few thoughts with the caveat that in history few have been as consistently wrong about anything as I have with bonds.

    This will be the 33rd year in a row that I have been wrong about bonds should I continue my streak. I have always thought bond yields would rise since 1982 when I remember telling my father that he was wrong to buy a 2 yr CD at 18% interest rate.

    Who buys Treasuries of all durations? World Governments including the US Government and Federal Reserve. Some for currency stabilization and risk reduction.

    Why would anyone else buy them? If you think deflation is ahead you would buy treasuries. Gary Shilling is famous for having been correct on treasuries for that 32 years with huge returns.

    Interesting thought: Why would the US Government blow out its budget deficit by raising the rate of Treasuries?

    Personally if I were to buy Treasury securities it would be Swiss Francs or German Bunds of short duration to lessen my risk profile. So far I have a higher allocation to cash than to buy a bond for more risk than return.
    Jan 12, 2015. 08:01 PM | 1 Like Like |Link to Comment
  • ConocoPhillips Valuation For Different Oil Prices [View article]
    I just wanted to note that I enjoyed the article.

    I came to a similar conclusion in late December as COP was down 1% for the year while Oil was down 46%. Its down another 20% since then.

    I like COP but think it is highly overvalued. COP still trades at a price where it was back when Oil was $100+ and expected to grow. My estimate of value while much less rigorous suggests COP shares should trade around $52 given a future $70 barrel price expectation.

    Historically Oil has dropped and stayed down much longer than anyone thinks is possible. I remember in 1981 as a new grad working in the Oil Tool business people fell down laughing at the suggestion that an Oil glut could exist. Six months later the company was at 40 employees down from 450. Several years later in 1988 I could buy dozens of Oil companies for less than $5 a share.

    I will suggest that it is a fools exercise to try and pick a bottom in Oil. Especially when nobody thinks they need to cut exploration, cut the dividend, borrow money or issue stock. Oil hasnt even caused any real fear yet. I am fairly sure companies will begin to go out of business and exploration will be cut to try to stay in business before we can entertain an upturn.

    Back to COP

    $21.19 bil seems like a lot of debt
    COP proudly states they dont hedge Oil prices
    negative earnings dont support much of a $14 bil capital exp budget
    That $3.6 bil dividend could be riskier than many think
    $5.78 bil cash which is flowing out doesnt seem like a lot

    My guess is until Oil rises to $70 COP needs to do a combination of

    - sell assets
    - cut dividend
    - borrow money
    - lay off extensively
    - slash exploration
    - issue shares

    Possibly all of those and anything else that will conserve cash. The Jan 29 earnings call will be very interesting.
    Jan 12, 2015. 03:20 PM | 1 Like Like |Link to Comment
  • Bristol-Myers Squibb Has A Real Shot At A Home Run In Hepatitis C [View article]
    Excellent article!

    I am a little late in commenting on this article due to vacation but I thought I would add my view on Hep C.

    - My view is that prices for Hep C will continue to fall long term but still be a hugely profitable market. GILD has skimmed the cream off of the top on pricing.

    - The combination of GILDs first to market, high cure rate (SVR), ease of use 1 pill a day, lack of side effects, new products late in pipeline and financial muscle suggest a difficult mountain for BMY to climb in Hep C.

    - The profits in Hep C are the huge volume of patients to be treated as the world strives for a goal of curing the disease in 30 years. Multiply 350MM patients by any price you want. Just recognize that the high priced cure of high fibrosis or cirrhotic patients is well under way vs the elective cure those with the virus but little current health impact.
    Jan 12, 2015. 12:17 PM | Likes Like |Link to Comment
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