American Capital: When Will It Pay A Dividend? [View article]
Very useful article; I own a lot (for me) of ACAS and had been looking for a good analysis of bearish factors. Thanks.
My personal bottom line, FWIW: as long as the Fed continues to flood the economy with easy credit, marginally poorer credit quality is of no serious consequence. You don't know who's swimming naked until the tide goes out, as St. Warren says.
So the bull case remains intact for now: 25% discount to NAV; great cash flow driving up NAV due to no tax and no dividend; easy money to fund expansion of the biz.
IMO, those who are waiting for the div to be restored to buy in have it backwards. That won't happen until the NOL's and the discount to NAV are gone, and the stock is priced comparably to other BDC's. At that point the easy gains are gone too, and it's time to look for a new opportunity.
Yields Of 5.3%-23.2%: How Investors Can Turn Gold Into Even More Gold [View article]
Mike,
You wrote "Historically, gold and to a lesser extent silver and the gold miners have displayed a strong negative correlation with the rest of the market. "
I'm interested in what people mean when they write about correlation like this, not specifically just for gold but for anything where folks claim correlation or lack of it. Correlation is not a parameter-free notion, but people never include their parameters when they make claims of about it.
Can you be more precise (or provide a reference) to exactly what data series is being correlated with what? For instance, are you talking correlation between prices or between returns? Daily, monthly, or what? Using futures or spot prices or what?
What Does A Big Market Correction Actually Look Like? [View article]
Or maybe he really meant "mute" as in "dumb" (:-).
And while I am playing English teacher, on the original post, it is "wreak havoc" not "wreck". Wreck is what your portfolio is afterwards.
As to the merits of the original post, I still think Will Rogers explained it best: making money in the stock market is easy. Buy a stock and wait for it to go up. If it doesn't go up, don't buy it.
More Reasons To Call Off The Reinhart-Rogoff Witch Hunt [View article]
EK:
"All levels of debt are sustainable. The government can never go broke."
This is absurd on its face.
You, like all the other little Krugmans, arrive at that by using a tendentiously narrow definition of going broke ("Still able to print their own money"). That is an absurd definition.
The government of Zimbabwe, to cite one recent well-known case, reached a point where nobody would take their paper any more (even the Swiss firm that printed it for them stopped taking their orders, because the Z. gov't couldn't pay them for the job). That is BROKE, in every useful sense of the word.
A government like that of the US which can borrow extensively and cheaply in its own currency can travel a lot farther down the road before nobody will take their paper any more -- but they can get there too, if they abuse their finances long enough.
Your reply then turns to "what level of debt should be sustained."
Now my criticism is that you have nothing useful -- in fact, nothing at all -- to say about what that sustainable level is. You confirm that criticism in your reply, which again says nothing to that point, except to assert without argument that we're not there yet. That too is typical of Krugman and his acolytes: you've never seen a deficit big enough to suit you, or a debt level high enough to alarm you, and you have nothing to tell us about where, between here and Zimbabwe, you would draw the line.
More Reasons To Call Off The Reinhart-Rogoff Witch Hunt [View article]
Excellent article, Cynico.
One of the worst aspects of this debate -- not just the RR/HAP debate but the whole broad debate about debt, deficits and "austerity" -- is that it focuses everybody's attention on the wrong issues. The right issues are the things economists call "structural reform" and we'll never even get that discussed as long both sides continue to engage in all this bogus nitpicking and gotcha-games about debt levels.
Physical Gold Vs. Paper Gold: The Ultimate Disconnect [View article]
Mr Conrad,
Thanks for the article.
You said you see a buying opportunity, but you didn't address one critical question: whether to buy physical gold and take possession or whether to buy paper gold. For example one might argue:
Pro paper gold: speculators can manipulate the paper gold price for a long time but eventually the fundamentals that are better shown in the physical market must weigh, and pull paper gold up toward the physical price.
Pro physical: fraud theory: the paper gold markets are heading for a bust as soon as some major player fails in a way that makes everybody realize their paper might actually not be backed by anything. At which point the paper price will collapse completely while the physical will shoot up.
I think it is too facile to dismiss the notion that the market is manipulated by asserting that "there is no evidence." There was an enormous amount of gold dumped at once, in a fashion clearly intended to crush the price, not to get the seller out at the best possible price. That by itself is a kernel of fact. Regardless of all supposition about who did it and why, it was clearly manipulation: a classic bear raid.
Then you conclude, " even if one could prove that an individual, an institution, or a cabal had managed to affect the price of gold in some fashion, I do not think that it is sufficient to demonstrate a SIGNIFICANT level of manipulation." (Emphasis in original)
I suppose it depends on what one means by "significant", but I think that a price drop of 8% or more in just a few hours is significant. Especially if you are a leveraged long.
It's the old canard: the fact that I'm paranoid doesn't mean they aren't really trying to kill me. And just because there are so many raving conspiracy theorist gold bugs doesn't mean the market isn't being manipulated. There is clear evidence of that in the tape. The question is what to make of the evidence, without descending too far into supposition.
Hidden Cost Of Mutual Funds: Why Dividend Growth Investors Should Go It Alone [View article]
Another point not made so far, I think: many investors actually have no choice but must invest in mutual funds. My wife's 401(k) is like that. No ETF's, no individual stocks. Each MuFu trade is $75 unless you buy one of the very limited set of custom funds for the 401(k) or one of the manager's in-house funds.
The whole MuFu industry is a ripoff. ETF's are cherry-picking it, and good for them, because they are giving many investors better options. But not everyone has access to that.
Apropos your riff on dividends, I am reminded of the late Archie McAllester, long-time participant in the Barrons' Roundtable, at one of the last ones he attended. The participants were chaffing a bit and playing the game of "I remember back when..." and "I remember farther back than THAT, I remember when..."
Archie won the game, by mentioning a bank stock he had owned so long that its dividend was larger than his basis price.
Gold Is Behaving Like A Leveraged Long Bond [View article]
Good article. I agree with everything you said, especially the conclusion about how to hold gold: with one eye on interest rates and one finger on the SELL button.
But the article takes a purely US-centered view. If you say, "safe haven" buying, I say, "Safe from what?". And non-US players probably do not mostly reply, "From US CPI inflation."
For foreign private investors, I would guess they fear collapse of their own currencies most of all; then they have to decide whether to run to the dollar or to gold; some of them don't trust the dollar either that much, for various reasons, and buy gold.
For foreign central banks, there are many reports that they are buying gold again, after decades of liquidating their gold holdings as an obsolete relic. What do they fear? Perhaps currency wars, in which they cannot be sure what the US will do. That seems particularly so for the Chinese, who are allegedly buying huge amounts of gold (and ramping up their internal production too). They call it "diversifying their reserves" but their buy orders are the same whatever they call it.
Another way to look at it globally is to consider inflation and interest rates around the world. In Europe the outlook seems similar to the US, more deflationary than inflationary for now, despite hyperactive money-printing; in India inflation is a real problem; in China even more so. Overall the outlook is not entirely reassuring, and the Fed cannot do much about it directly.
I imagine these global factors will play out on a longer timescale. But just watching US interest rates is not enough. If there is a global scare about the dollar, or about all fiat currencies, the US would have to raise interest rates, but until the scare is over, I imagine gold would be likely to rise anyway.
Tronox: This 4.4% Dividend Yield Equity Trades At A Bargain 5x Earnings [View article]
I was thinking the same thing. The announcement that DuPont will be delaying new capacity has gotta be good for TROX but I've no idea if that is what moved the stock.
Tracking George Soros's Portfolio - Q1 2013 Update [View article]
When did he say that?
ty/jg
American Capital: When Will It Pay A Dividend? [View article]
My personal bottom line, FWIW: as long as the Fed continues to flood the economy with easy credit, marginally poorer credit quality is of no serious consequence. You don't know who's swimming naked until the tide goes out, as St. Warren says.
So the bull case remains intact for now: 25% discount to NAV; great cash flow driving up NAV due to no tax and no dividend; easy money to fund expansion of the biz.
IMO, those who are waiting for the div to be restored to buy in have it backwards. That won't happen until the NOL's and the discount to NAV are gone, and the stock is priced comparably to other BDC's. At that point the easy gains are gone too, and it's time to look for a new opportunity.
Contrary opinions welcome!
/jwg
Yields Of 5.3%-23.2%: How Investors Can Turn Gold Into Even More Gold [View article]
You wrote "Historically, gold and to a lesser extent silver and the gold miners have displayed a strong negative correlation with the rest of the market. "
I'm interested in what people mean when they write about correlation like this, not specifically just for gold but for anything where folks claim correlation or lack of it. Correlation is not a parameter-free notion, but people never include their parameters when they make claims of about it.
Can you be more precise (or provide a reference) to exactly what data series is being correlated with what? For instance, are you talking correlation between prices or between returns? Daily, monthly, or what? Using futures or spot prices or what?
tnx/jwg
What Does A Big Market Correction Actually Look Like? [View article]
And while I am playing English teacher, on the original post,
it is "wreak havoc" not "wreck". Wreck is what your portfolio
is afterwards.
As to the merits of the original post, I still think Will Rogers explained it best: making money in the stock market is easy. Buy a stock and wait for it to go up. If it doesn't go up, don't buy it.
More Reasons To Call Off The Reinhart-Rogoff Witch Hunt [View article]
"All levels of debt are sustainable. The government can never go broke."
This is absurd on its face.
You, like all the other little Krugmans, arrive at that by using a tendentiously narrow definition of going broke ("Still able to print their own money"). That is an absurd definition.
The government of Zimbabwe, to cite one recent well-known case, reached a point where nobody would take their paper any more (even the Swiss firm that printed it for them stopped taking their orders, because the Z. gov't couldn't pay them for the job). That is BROKE, in every useful sense of the word.
A government like that of the US which can borrow extensively and cheaply in its own currency can travel a lot farther down the road before nobody will take their paper any more -- but they can get there too, if they abuse their finances long enough.
Your reply then turns to "what level of debt should be sustained."
Now my criticism is that you have nothing useful -- in fact, nothing at all -- to say about what that sustainable level is. You confirm that criticism in your reply, which again says nothing to that point, except to assert without argument that we're not there yet. That too is typical of Krugman and his acolytes: you've never seen a deficit big enough to suit you, or a debt level high enough to alarm you, and you have nothing to tell us about where, between here and Zimbabwe, you would draw the line.
/jwg
More Reasons To Call Off The Reinhart-Rogoff Witch Hunt [View article]
More Reasons To Call Off The Reinhart-Rogoff Witch Hunt [View article]
One of the worst aspects of this debate -- not just the RR/HAP debate but the whole broad debate about debt, deficits and "austerity" -- is that it focuses everybody's attention on the wrong issues. The right issues are the things economists call "structural reform" and we'll never even get that discussed as long both sides continue to engage in all this bogus nitpicking and gotcha-games about debt levels.
/jwg
Physical Gold Vs. Paper Gold: The Ultimate Disconnect [View article]
Thanks for the article.
You said you see a buying opportunity, but you didn't address one critical question: whether to buy physical gold and take possession or whether to buy paper gold. For example one might argue:
Pro paper gold: speculators can manipulate the paper gold price for a long time but eventually the fundamentals that are better shown in the physical market must weigh, and pull paper gold up toward the physical price.
Pro physical: fraud theory: the paper gold markets are heading for a bust as soon as some major player fails in a way that makes everybody realize their paper might actually not be backed by anything. At which point the paper price will collapse completely while the physical will shoot up.
Any thoughts on that?
thanks/jwg
Gold: A Bright Shining Lie? [View article]
I think it is too facile to dismiss the notion that the market is manipulated by asserting that "there is no evidence." There was an enormous amount of gold dumped at once, in a fashion clearly intended to crush the price, not to get the seller out at the best possible price. That by itself is a kernel of fact. Regardless of all supposition about who did it and why, it was clearly manipulation: a classic bear raid.
Then you conclude, " even if one could prove that an individual, an institution, or a cabal had managed to affect the price of gold in some fashion, I do not think that it is sufficient to demonstrate a SIGNIFICANT level of manipulation." (Emphasis in original)
I suppose it depends on what one means by "significant", but I think that a price drop of 8% or more in just a few hours is significant. Especially if you are a leveraged long.
It's the old canard: the fact that I'm paranoid doesn't mean they aren't really trying to kill me. And just because there are so many raving conspiracy theorist gold bugs doesn't mean the market isn't being manipulated. There is clear evidence of that in the tape. The question is what to make of the evidence, without descending too far into supposition.
Thanks for writing,
jwg
Hidden Cost Of Mutual Funds: Why Dividend Growth Investors Should Go It Alone [View article]
The whole MuFu industry is a ripoff. ETF's are cherry-picking it, and good for them, because they are giving many investors better options. But not everyone has access to that.
/jwg
An Unconvincing Breakout [View article]
7 Investing Truths [View article]
Apropos your riff on dividends, I am reminded of the late Archie McAllester, long-time participant in the Barrons' Roundtable, at one of the last ones he attended. The participants were chaffing a bit and playing the game of "I remember back when..." and "I remember farther back than THAT, I remember when..."
Archie won the game, by mentioning a bank stock he had owned so long that its dividend was larger than his basis price.
/jwg
Gold Is Behaving Like A Leveraged Long Bond [View article]
But the article takes a purely US-centered view. If you say, "safe haven" buying, I say, "Safe from what?". And non-US players probably do not mostly reply, "From US CPI inflation."
For foreign private investors, I would guess they fear collapse of their own currencies most of all; then they have to decide whether to run to the dollar or to gold; some of them don't trust the dollar either that much, for various reasons, and buy gold.
For foreign central banks, there are many reports that they are buying gold again, after decades of liquidating their gold holdings as an obsolete relic. What do they fear? Perhaps currency wars, in which they cannot be sure what the US will do. That seems particularly so for the Chinese, who are allegedly buying huge amounts of gold (and ramping up their internal production too). They call it "diversifying their reserves" but their buy orders are the same whatever they call it.
Another way to look at it globally is to consider inflation and interest rates around the world. In Europe the outlook seems similar to the US, more deflationary than inflationary for now, despite hyperactive money-printing; in India inflation is a real problem; in China even more so. Overall the outlook is not entirely reassuring, and the Fed cannot do much about it directly.
I imagine these global factors will play out on a longer timescale. But just watching US interest rates is not enough. If there is a global scare about the dollar, or about all fiat currencies, the US would have to raise interest rates, but until the scare is over, I imagine gold would be likely to rise anyway.
/jwg
[Long GLD]
Cramer's Lightning Round - Tronox Is All About A Lawsuit (12/20/12) [View article]
tnx/jwg
Tronox: This 4.4% Dividend Yield Equity Trades At A Bargain 5x Earnings [View article]