GE: Can You Hit This Fastball, Mr. Immelt? [View article]
Interesting article! I think it underestimates GEs value. I will stick with my Feb 17 assessment which was as follows ---
In Oct 2007 I owned about 1200 sh of GE and concluded that GE was a financial company and we were entering a financial crisis. I sold off over 50% of my position.
Last March 2008 I believe it was when Immelt stated that earnings would be good then 2 weeks later announced bad earnings. I did some research and located the GECS 10k. From memory I recall 40 billion in RE purchased in the past 2 years and 50 billion in SIV assets. They also pointed out that their large consumer debt was non US and mostly UK and the rest of the world. I sold the rest of my shares above $30.
In December 2008 I concluded that GE will likely not fail and began watching it. In the past few days I purchased a small amount of GE. It is not a time to be greedy. Buy a long term position about 1/10th at a time. Perhaps even start buying some each month for a year.
GE will survive. Much of the dividend and Immelt will not. I will not suggest GEs future low or high but I suspect it will go lower and then rise for many years. Purchases in this era will do well over time do to GEs diversified business mix and some level of financial acumen. This is however my only allocation of high risk capital.
Regarding average family income I suspect it will drop significantly do several factors.
1) Huge drop in banking, financial and real estate earnings 2) Layoffs 3) Small business earnings drop off 4) Huge Hedge Fund earnings by a few would affect a mean average greatly
I add this but I am not necessarily arguing for a longer or deeper housing fall than the authors excellent analysis.
As GM Goes, So Goes the Nation (Part 2) [View article]
Outstanding Article!
It is unfortunate that bankruptcy is viewed as an end. Bankruptcy in this case is a chance at a new beginning.
Failure will be to avoid bankruptcy and act like stopping pension payments is a solution. (ie just shift this cost back to the taxpayers)
Success will be a reasonable bankruptcy cutting bondholders and labor costs among others along with a major restructuring.
My greatest fear is that the status quo will continue and taxpayers end up losing 500 billion or more. My guess is we are already committed to over 100 billion.
Grim Outlook for Preliminary GDP of -5% [View article]
-5% GDP sounds bad!
I just want to add that bad news feeds on itself in a recession. However a point comes when things sound so bad that everyone concludes the market can only go further down.
At that time the market starts a long upward trend. I am not saying that is going to happen tomorrow. I will say that we are not in danger of being overly optimistic.
On one hand we seem to be in a historic drop that may continue for years. However in the 1980s we had a worse recession in my opinion. In middle America we had 20% unemployment and 20% inflation in my area. In one of the 10 largest metropolitan areas the help wanted section of the major newspaper was 1.5 pages of mostly classified ads for secretaries.
Looking ahead I see some positives and negatives. On the positive side the leading economic indicators are positive. The quantity of massive layoffs in Feb seems smaller than in January. Gasoline usage is rising which is an indicator of more activity.
My point is we had a lot more market risk when the Dow was above 14000 than we have with a DOW 7188.
The Coming Depression: See It Clearly Through Historical Eyes [View article]
Good Article with many interesting viewpoints.
However lets just for argument sake consider the possibility that we have had our 50% drop in equity values and 70% drops in many commodities.
What if the worst of the declines are what is being reported now from late 2008. Maybe the 90% of citizens who are current on or out of debt completely and saving money will start to find values?
Further lets consider an interconnected world with multinational companies and their worldwide sales. Perhaps their stocks are at good value. Maybe stocks like PG, CSCO, JNJ, HON, MMM, KO among others.
You may be correct about this being the beginning of the end. It is important to consider such a possibility. At the same time things are never as bad as they look when your dropping or as good as during a raging bull.
Since the end of the world only comes once and the outcome isnt good I think I will put some chips on a different alternative as well.
The US auto industry is one huge destroyer of taxpayer wealth, and its all because they want to feed off the taxpayer. The sales are so low that I will be shocked if they only lose 4.5 billion this quarter. In Barrons their January sales appeared to be about 30% of peak.
Dont get me wrong, I want GM to survive. I have just lost faith in our government to help them. So far it looks like the solution is to stop making payments to the pension funds owed to workers and access to the US Treasury.
I dont blame the workers, management or the unions for wanting taxpayers to fund their life. It is easier to beg from politicians than to restructure into a viable business entity.
Losses to taxpayers will easily exceed 100 billion before it is over. The car czar is likely just a farce to gain political cover.
Commercial Real Estate: Is the Other Shoe About to Drop? [View article]
Commercial Real Estate definitely had a bubble. I read the article looking for facts to help define the scope of issues coming. When I drive to work I see the effect of a huge overbuilding of hotels and lodging.
It is hard to imagine retail not taking a sizable hit. Just way too much space built. Not only that my eyes see such massive scale in businesses built over the past decade. When I look at Cabelas, Borders, Michaels, Discount Golf outfits, Clothing stores... I dont see stores that utilize space effectively or efficiently. In strong times excesses are overlooked but in weak times they strangle you.
Office space is also overbuilt. It is harder to get an eyeball perspective however. I need occupancy rate facts and rates of decline to get a true understanding about offices.
If we have anything like the 1990s correction which is at least possible, it will be a great investor opportunity. I know of several buildings that have increased 4-5 times in value from the purchase in early 1990s to now.
Finally I dont think Commercial RE had the level of fraud that Residential RE did. That said the money was easily available for anyone who could project fast rising rents in their analysis. None of those analyses projected losing anchor tenants in this economy.
Why I Bought AT&T Despite Less than Stellar Earnings [View article]
Thank you for your analysis
I happen to agree with you that T is an excellent buy. In this market a stock that has a financial strength rating of A and a 7%+ dividend is attractive. Further S&P gives T a 5 star buy rating.
I would point out that the ATT enjoyed by your father was a different company. However this T has a stable business franchise that seems to do well even in times when other companies are facing a severe retrenchment.
Over the last 10 years I have bought T when it drops, held some and sold some when it commands a dear price. As I plan my retirement income about 10 years out I am accumulating more T to hold. As it stands holding enough T to provide $3000 in income per year in retirement is part of my plan.
Like many other stocks T should never be this cheap. The difference from the others is it has a 50%+ return potential without the level of risk most other stocks contain.
In Oct 2007 I owned about 1200 sh of GE and concluded that GE was a financial company and we were entering a financial crisis. I sold off over 50% of my position.
Last March 2008 I believe it was when Immelt stated that earnings would be good then 2 weeks later announced bad earnings. I did some research and located the GECS 10k. From memory I recall 40 billion in RE purchased in the past 2 years and 50 billion in SIV assets. They also pointed out that their large consumer debt was non US and mostly UK and the rest of the world. I sold the rest of my shares above $30.
In December 2008 I concluded that GE will likely not fail and began watching it. In the past few days I purchased a small amount of GE. It is not a time to be greedy. Buy a long term position about 1/10th at a time. Perhaps even start buying some each month for a year.
GE will survive. Much of the dividend and Immelt will not. I will not suggest GEs future low or high but I suspect it will go lower and then rise for many years. Purchases in this era will do well over time do to GEs diversified business mix and some level of financial acumen. This is however my only allocation of high risk capital.
One of GM's (GM) viability plans - due Tuesday - include assimilating all of its viable assets into a new company, and selling the undesirables under the protection of bankruptcy court. Alternatively, GM could ask for more aid. (WSJ) [View news story]
The news may really turn negative when the auto makers announce results this week. The domestic sales have fallen off a cliff to something less than 50% of peak sales. I believe one report had it at 35% for January. There is not a company alive that can earn money with that kind of a fall off in demand.
The right thing to do for the country will be to save as many jobs as possible and scale the automakers to fit normal demand which will return. That isnt a process that is going to make anyone happy in the short term. I hope congress is up to the task.
How High Will the U.S. Personal Savings Rate Go? [View article]
Thank you for an excellent and timely article. The savings rate per year was interesting.
It is my opinion that consumers will save for a while but saving will not go back above 3%. I say that because the government will encourage spending.
It should be added that business today uses personal psychological data to expose areas of potential to a much greater extent than ever before. It is a much tougher world for consumers today.
Things will change in an all out depression. However long term patterns will not change with anything short a depression. Without a depression people will return to their previous long term habits.
A good piece of data supporting that came out today with retail sales which rose in January. Who could have guessed that?
Netflix's Broadband Shift Ripens Worry for Cable [View article]
Go NFLX!
That said just remember the customer will go to a cable or telco to get internet sevice first. Those companies will pick off customers with video offers.
I see little chance of NFLX replacing cable or telcos. However there is room for all to be fantastically successful. The loser is more likely local TV stations as the WSJ suggested in an article today.
Based on your article if you arent on NFLX payroll you should be.
The Benefits of This Recession [View article]
I feel sorry for young folk today. They not only didnt experience a recession but dont have an idea that you can live without huge debt.
Young or old we are in a time where money will be separated from those who dont manage it wisely. I wish everyone luck and the skill to manage debt.
GE: Can You Hit This Fastball, Mr. Immelt? [View article]
---
In Oct 2007 I owned about 1200 sh of GE and concluded that GE was a financial company and we were entering a financial crisis. I sold off over 50% of my position.
Last March 2008 I believe it was when Immelt stated that earnings would be good then 2 weeks later announced bad earnings. I did some research and located the GECS 10k. From memory I recall 40 billion in RE purchased in the past 2 years and 50 billion in SIV assets. They also pointed out that their large consumer debt was non US and mostly UK and the rest of the world. I sold the rest of my shares above $30.
In December 2008 I concluded that GE will likely not fail and began watching it. In the past few days I purchased a small amount of GE. It is not a time to be greedy. Buy a long term position about 1/10th at a time. Perhaps even start buying some each month for a year.
GE will survive. Much of the dividend and Immelt will not. I will not suggest GEs future low or high but I suspect it will go lower and then rise for many years. Purchases in this era will do well over time do to GEs diversified business mix and some level of financial acumen. This is however my only allocation of high risk capital.
Housing: Where Is the Bottom? [View article]
Regarding average family income I suspect it will drop significantly do several factors.
1) Huge drop in banking, financial and real estate earnings
2) Layoffs
3) Small business earnings drop off
4) Huge Hedge Fund earnings by a few would affect a mean average greatly
I add this but I am not necessarily arguing for a longer or deeper housing fall than the authors excellent analysis.
100 Years of Earnings Cycles [View article]
As GM Goes, So Goes the Nation (Part 2) [View article]
It is unfortunate that bankruptcy is viewed as an end. Bankruptcy in this case is a chance at a new beginning.
Failure will be to avoid bankruptcy and act like stopping pension payments is a solution. (ie just shift this cost back to the taxpayers)
Success will be a reasonable bankruptcy cutting bondholders and labor costs among others along with a major restructuring.
My greatest fear is that the status quo will continue and taxpayers end up losing 500 billion or more. My guess is we are already committed to over 100 billion.
7 Signs of an Economic Bottom [View article]
Note however that I say activity and not prices. Prices could still drop and probably will in housing and commercial RE
Grim Outlook for Preliminary GDP of -5% [View article]
I just want to add that bad news feeds on itself in a recession. However a point comes when things sound so bad that everyone concludes the market can only go further down.
At that time the market starts a long upward trend. I am not saying that is going to happen tomorrow. I will say that we are not in danger of being overly optimistic.
On one hand we seem to be in a historic drop that may continue for years. However in the 1980s we had a worse recession in my opinion. In middle America we had 20% unemployment and 20% inflation in my area. In one of the 10 largest metropolitan areas the help wanted section of the major newspaper was 1.5 pages of mostly classified ads for secretaries.
Looking ahead I see some positives and negatives. On the positive side the leading economic indicators are positive. The quantity of massive layoffs in Feb seems smaller than in January. Gasoline usage is rising which is an indicator of more activity.
My point is we had a lot more market risk when the Dow was above 14000 than we have with a DOW 7188.
The Coming Depression: See It Clearly Through Historical Eyes [View article]
However lets just for argument sake consider the possibility that we have had our 50% drop in equity values and 70% drops in many commodities.
What if the worst of the declines are what is being reported now from late 2008. Maybe the 90% of citizens who are current on or out of debt completely and saving money will start to find values?
Further lets consider an interconnected world with multinational companies and their worldwide sales. Perhaps their stocks are at good value. Maybe stocks like PG, CSCO, JNJ, HON, MMM, KO among others.
You may be correct about this being the beginning of the end. It is important to consider such a possibility. At the same time things are never as bad as they look when your dropping or as good as during a raging bull.
Since the end of the world only comes once and the outcome isnt good I think I will put some chips on a different alternative as well.
Earnings Preview: General Motors [View article]
Dont get me wrong, I want GM to survive. I have just lost faith in our government to help them. So far it looks like the solution is to stop making payments to the pension funds owed to workers and access to the US Treasury.
I dont blame the workers, management or the unions for wanting taxpayers to fund their life. It is easier to beg from politicians than to restructure into a viable business entity.
Losses to taxpayers will easily exceed 100 billion before it is over. The car czar is likely just a farce to gain political cover.
Commercial Real Estate: Is the Other Shoe About to Drop? [View article]
Commercial Real Estate definitely had a bubble. I read the article looking for facts to help define the scope of issues coming. When I drive to work I see the effect of a huge overbuilding of hotels and lodging.
It is hard to imagine retail not taking a sizable hit. Just way too much space built. Not only that my eyes see such massive scale in businesses built over the past decade. When I look at Cabelas, Borders, Michaels, Discount Golf outfits, Clothing stores... I dont see stores that utilize space effectively or efficiently. In strong times excesses are overlooked but in weak times they strangle you.
Office space is also overbuilt. It is harder to get an eyeball perspective however. I need occupancy rate facts and rates of decline to get a true understanding about offices.
If we have anything like the 1990s correction which is at least possible, it will be a great investor opportunity. I know of several buildings that have increased 4-5 times in value from the purchase in early 1990s to now.
Finally I dont think Commercial RE had the level of fraud that Residential RE did. That said the money was easily available for anyone who could project fast rising rents in their analysis. None of those analyses projected losing anchor tenants in this economy.
Why I Bought AT&T Despite Less than Stellar Earnings [View article]
I happen to agree with you that T is an excellent buy. In this market a stock that has a financial strength rating of A and a 7%+ dividend is attractive. Further S&P gives T a 5 star buy rating.
I would point out that the ATT enjoyed by your father was a different company. However this T has a stable business franchise that seems to do well even in times when other companies are facing a severe retrenchment.
Over the last 10 years I have bought T when it drops, held some and sold some when it commands a dear price. As I plan my retirement income about 10 years out I am accumulating more T to hold. As it stands holding enough T to provide $3000 in income per year in retirement is part of my plan.
Like many other stocks T should never be this cheap. The difference from the others is it has a 50%+ return potential without the level of risk most other stocks contain.
How GE Compares to Other Banks [View article]
Last March 2008 I believe it was when Immelt stated that earnings would be good then 2 weeks later announced bad earnings. I did some research and located the GECS 10k. From memory I recall 40 billion in RE purchased in the past 2 years and 50 billion in SIV assets. They also pointed out that their large consumer debt was non US and mostly UK and the rest of the world. I sold the rest of my shares above $30.
In December 2008 I concluded that GE will likely not fail and began watching it. In the past few days I purchased a small amount of GE. It is not a time to be greedy. Buy a long term position about 1/10th at a time. Perhaps even start buying some each month for a year.
GE will survive. Much of the dividend and Immelt will not. I will not suggest GEs future low or high but I suspect it will go lower and then rise for many years. Purchases in this era will do well over time do to GEs diversified business mix and some level of financial acumen. This is however my only allocation of high risk capital.
One of GM's (GM) viability plans - due Tuesday - include assimilating all of its viable assets into a new company, and selling the undesirables under the protection of bankruptcy court. Alternatively, GM could ask for more aid. (WSJ) [View news story]
The right thing to do for the country will be to save as many jobs as possible and scale the automakers to fit normal demand which will return. That isnt a process that is going to make anyone happy in the short term. I hope congress is up to the task.
How High Will the U.S. Personal Savings Rate Go? [View article]
It is my opinion that consumers will save for a while but saving will not go back above 3%. I say that because the government will encourage spending.
It should be added that business today uses personal psychological data to expose areas of potential to a much greater extent than ever before. It is a much tougher world for consumers today.
Things will change in an all out depression. However long term patterns will not change with anything short a depression. Without a depression people will return to their previous long term habits.
A good piece of data supporting that came out today with retail sales which rose in January. Who could have guessed that?
Netflix's Broadband Shift Ripens Worry for Cable [View article]
That said just remember the customer will go to a cable or telco to get internet sevice first. Those companies will pick off customers with video offers.
I see little chance of NFLX replacing cable or telcos. However there is room for all to be fantastically successful. The loser is more likely local TV stations as the WSJ suggested in an article today.
Based on your article if you arent on NFLX payroll you should be.