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  • Words Of Warning! [View article]

    Not a remote chance that now is like the '70's. The world was severely capacity constrained then, and labor costs were in a runaway upward spiral. Now, the world is awash in excess capacity, so much so that even borrowing costs near zero can't provoke companies to invest in further capacity.

    All the constant fear and periodic elevated hysteria about inflation and interest rates, which causes market rate spasms, like we have just seen, will soon dissipate once again, and rates will level off or even decline, if demand growth remains modest.
    Jun 16, 2015. 05:20 PM | 1 Like Like |Link to Comment
  • Words Of Warning! [View article]

    You can see that the P/E rations were not far different than now:

    Also, note price/book:
    Jun 16, 2015. 04:13 PM | 1 Like Like |Link to Comment
  • Words Of Warning! [View article]
    But, is there a bubble, warnings or not?
    Jun 16, 2015. 02:04 PM | 1 Like Like |Link to Comment
  • Wall Street Breakfast: Investors Await Fed Amid Grexit Fears [View article]
    The mere discussion about repaying all sovereign debt simply demonstrates that people don't understand how the monetary system operates. The issuance of debt is how money is created in our Federal Reserve system (and most similar systems), and to extinguish all debt would be to destroy a similar amount of money. The impact would be unbelievable deflation, where the value of a dollar soared to the stratosphere and goods were relatively worthless. The end result would be a global depression that would make the '30's look like an afternoon tea party.
    Jun 16, 2015. 11:38 AM | 4 Likes Like |Link to Comment
  • Words Of Warning! [View article]
    From a low of 6.0% in July 1992, rising to 9.0% in March 2000, the SPX went from 417 to 1499, a gain of 259%.

    From a prime-rate low of 4.0% in June 2003 to a high of 8.25% in June 2006, the SPX went from 990 to 1270, a gain of 28%.

    The recent notion that the market operates inversely to rates has been conjured up out of whole cloth and is inconsistent with history. Markets only reverse when rates finally force an inversion of the yield curve, which is way down the trail from any initial increases.
    Jun 16, 2015. 09:02 AM | 2 Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #76 [View instapost]
    Finally home.

    Looking at BTU's balance sheet and cash flows from operations, the bonds appear interesting as a speculative play, but I just can't get an appetite for the coal sector, given the relentless political pursuits to drive the entire industry out of business. They could be buried by an Executive Order or other capricious new regulation at any time.
    Jun 15, 2015. 10:58 PM | 3 Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #76 [View instapost]
    On plane.... later
    Jun 15, 2015. 07:57 PM | Likes Like |Link to Comment
  • BDC Total Returns And Continued Bifurcation [View article]

    Simplified, the whole BDC sector has been a mess since the day well over a year ago that it was announced that they would be removed from indices. This occurred even as rates continued to fall, and now we have upward rate phobia, which is extending the negative sentiment.
    Jun 15, 2015. 11:12 AM | 1 Like Like |Link to Comment
  • Words Of Warning! [View article]

    The only caveat, and not an insignificant one, that I'd mention is the fact that it appears this nation may have reached a political tipping point, where politicians promoting an anti-business, anti-wealth message, and who promise unearned entitlements to ever more, now have a majority both in popular opinion and at the voter polls. If this proves true, we could see anti-business, anti-capitalistic measures rapidly accelerate. This could impair or even nullify the positives you iterate.

    I would note that, even now, the economy has been hampered by exactly these kinds of activities already. Since the 2008 events adversely affected so many, politicians, like Mr. Obama and others, have jumped to the fore to wage an ongoing populist war against banks, business and wealth in general. Given demographic and voter trends this could prove very dangerous to future national prosperity.

    Already, the lackluster growth rates since 2009 that people have incessantly bemoaned have really been the product of the extra costs and negative atmosphere created by the White House and Congress, much more than any actions by the Fed. The politicians, of course, have been elated to see the Fed take all the heat, when, in fact, the only thing the Fed can do is provide lots of liquidity. They can't make anyone use it. And, that's what we have seen, an unwillingness to make bold and longer-term investments, in favor of husbanding cash or making short-term moves and stock buybacks. This is the direct result of the hostile atmosphere created by the Administration, where business feels vulnerable to capricious attacks, added regulation and new mandates and taxation.

    It will be interesting to see how 2016 elections play out, but, presently, I see no signs of any rebuke to current policies, and I suspect the the class-warfare game could get even more amplified as things move forward. None of this would prove beneficial to the rel engine of prosperity, business investment.
    Jun 15, 2015. 01:01 AM | 1 Like Like |Link to Comment
  • Oxford Lane Capital Sell-Off Is Irrational [View article]

    You are correct. Etrade has the apparent yield overstated because the initial dividend includes more than a month period.

    That said, it means, perhaps, there's more possibility that ECC may be able to elevate their future common yield if they can employ the new proceeds successfully.
    Jun 14, 2015. 12:47 PM | Likes Like |Link to Comment
  • Oxford Lane Capital Sell-Off Is Irrational [View article]

    OXLC has preferred shares, too, $164MM, which comprises the 37% of leverage. That amplifies their returns per equity shares at slightly over 4:3, prior to ECC's just-issued preferred shares. That is equivalent to 15.57% ECC yield at comparative leverage ratios, prior to ECC's preferred issue. The difference between that and OXLC's yield isn't worth dissecting.

    Perhaps, ECC's recent preferred issue will result in them being able to increase their common-equity yields, although ECC's preferred is yielding over 11% versus OXLC's preferred at just over 8%.
    Jun 13, 2015. 06:58 PM | Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #76 [View instapost]
    I can only explain what's rational, not what Ms. Yellen and her crew might do. Unless we see a decided increase in inflationary pressure, not just a better economy, then rate increases are uncalled for, despite whatever cacophony arises from the peanut gallery. It doesn't matter if the yield curve steepens, as long rates get pushed up; in fact, it's salutary.

    IMO, most of the upward rate pressure has been knee-jerk reaction to Germany and apprehension about the Fed, rather than any sensible assessment of fundamentals. Unless we see the economy get perkier, I doubt the upward moves can be sustained.
    Jun 12, 2015. 05:29 PM | 1 Like Like |Link to Comment
  • Oxford Lane Capital Sell-Off Is Irrational [View article]

    OXLC's yield is higher than the CLO because they exercise 37% structural leverage. ECC has no leverage. That explains why ECC"s yield is 11.68% and OXLC's is 16.05%.
    Jun 12, 2015. 05:23 PM | 1 Like Like |Link to Comment
  • Why My Nose Is Bleeding [View article]

    Again, you make it sound as though interest rates rise independently of other forces, as if they act entirely capriciously on their own. They can't get to 4+% without other positive economic forces at work.

    And, you really believe if such an environment ensues that the markets will suddenly crater? We've had robust upward-trending markets with rates at 9%. Now, 4% is fatal?

    The reality is that rates and growth are related, and the likelihood of 4+% rates while growth is at 2% is rather low. It's especially so in a world swimming in supply.
    Jun 11, 2015. 11:13 PM | 2 Likes Like |Link to Comment
  • Bears Overtake The Bulls [View article]
    The more cautious and worried sentiment becomes, the less the likelihood of an implosion. Really excellent news, actually.

    Implosions occur when investors were all going to quit their days jobs and become instant millionaires while daytrading, as in the late '90's, or when they borrowed to the max against their principal residences to buy flippers that were going to double in six months. There wasn't a whisper of negative sentiment then, and that's precidsely when one does have to be most cautious.
    Jun 11, 2015. 07:34 PM | 3 Likes Like |Link to Comment