ArtfulDodger's Comments

All Signs Point to Recovery in China

Tue, 10 Nov 2009 09:38:15 -0500

MC:

Thank you very much for this positive article. You have to go deep into the soil to find one around here.

For months China has been improving and climbing out of the 2008 Crash, but no matter, when they report it you're going to get, It's only temporary. Or, They're fudging the stats.

The Shanghai is up over 100% during that time, and quite frankly many of those stocks are still not expensive, especially in relation to their growth potential.

And then, if you write that China is on the rise, you're going to get, Yes, but they have slave labor and pollution problems.

And too, if you say anything positive about China, you're a "China-lover and American-hater."

It's really visceral—not logical.

But folks, whether we like it or not, China is doing many things right for its economy, and in my view the US is doing many things wrong for its economy.

So, where do you invest your money?

Long NTES, PWRD, VISN, HNP, YZC, CHL, CSFG.

Also long HIMX that should profit from China's rise.

See my take on China Versus the US here:
seekingalpha.com/user/...

What's Wrong with the Gaming Industry?

Mon, 09 Nov 2009 08:50:48 -0500

Netease (NTES) and Power World (PWRD) are doing quite well.

Dispelling Myths About the Stock Market and Precious Metals

Sun, 08 Nov 2009 22:18:17 -0500

I keep telling all the sages who claim to be able to pick the direction of markets over the short term to open a futures trading account. They can make more than Buffett ever dreamed of having---if they can actually pick market direction accurately.

No one so far has done so. But still, everyday another article telling us the direction of markets over the next month, week, or even the next day.

I mean I wouldn't give you two cents for volume, the Vix, the average price or anything of the type.

Find me a good company with good management, good products, good margins, with growth potential---and I'll give it a chance with my little investment.

To hell with trying to figure the machinations of market direction; it's a worthless endeavor, as far as I'm concerned.

Thursday Outlook: Commodities, Global Markets

Thu, 05 Nov 2009 07:48:39 -0500

I love charts and hate well-reasoned, clear sentences!

'China Up / U.S. Down' Theme Checkup

Mon, 02 Nov 2009 11:26:43 -0500

Excellent article, RS. Good points all the way around—from carrying out continued research and not listening to the parrots of the trade industry to actually doing it.

Why China Will Continue Rising and the US Will Continue Demising
seekingalpha.com/user/...

Recent Weakness in Equities, Commodities Is a Buying Opportunity

Mon, 02 Nov 2009 09:17:27 -0500

Good article. Good points, TM, especially about the wrath you'll receive around here for a positive article.

There must be 10,000 articles written in the last 10 months on this site alone stating with absolute certainty that the DOW, S&P, and China are all in---what else?---bubble territory!

And after the current corrective wave you can expect another 10,000---keying on what word, one obviously learned well in the last few years: bubble!

Well surely, one of these days they're going to be right.

After years of predicting doom, Panzer, Roubini, Grantham, Faber, Prechter, and even old Granville stuck his head up a couple of times to yell fire, in 2008 they were finally proven, well, "right." What else?

And when the DOW was around 6500 they called for 2500, 3000, or 3500; and now that it's up 3000 points every tiny pull back is another bursting bubble, another crash on its way.

Hell, if they were to be right, who could trust their predictions but the ever-ultra, perma-cynic?

I advise young folks who are new to investing not to listen to predictions of doom or bloom, but to find worthwhile companies, with strong balance sheets, essential products, proven management, with strong future earnings potential, that will have a better than average chance of surviving the doom and taking advantage of the bloom.

That is how you get ahead investing in stocks---not concerning yourself with predictions of either doom or gloom.

America, The Nanny State

Mon, 02 Nov 2009 08:45:08 -0500

Just gimme my healthcare and my drugs! I don't give a damn who pays for it! Gen X & Gen Y.

12 Cheap Growth Companies

Wed, 28 Oct 2009 08:51:02 -0400

Damned good comment, TE.

No doubt, it's a loss of freedom and can potentially break the nation, but I think that's what the Marxist in charge of the nation want.

This is a non-violent (so far at least) revolution being carried out right before our eyes.

If this brood manages to take over both the healthcare and the power industry, they'll control the most powerful industry sectors in the world. And they'll have us by the hanging ones.

On Oct 26 02:10 PM TeresaE wrote:

> Telling people to buy insurers, who currently operate on an average
> 4-5% profit and soon will be hit with across the board "windfall"
> taxes AND forced by gunpoint customers (of which half, or more, will
> be instant users - not pay but don't use), doesn't seem to be prudent
> until we can read and analyze how the destruction in WDC will play
> out.
>
> Then you tell people that pharmaceuticals are not going to go anywhere,
> yet the industry is being gifted a green light from Obama, mandatory
> & government paid vaccine revenue AND 25 million new customers.
> Care to explain the "blip" of their substantial profit & sales
> increases after Congress "helped" seniors a couple years ago?

>
> Pharms stand to be the ONLY winners (other than the paid-for-life
> employees in FIFTY-THREE new government departments) in the health
> care fiasco.
>
> Especially when you realize that 50% of the adult population is on
> a daily medication.
>
> 12.5 million, new customers paying with taxpayers and insurance companies
> money - not their own earnings - and you don't think that is going
> to impact pharm's future revenues in any material way?
>
> This is why "reform" is going to destroy us. No one realizes reality
> and the costs that will rain down upon us.

12 Cheap Growth Companies

Wed, 28 Oct 2009 08:41:15 -0400

PP:
That is what I call carrying out the proper research (DD) to find excellent stocks to buy.

Good work. Your clients should get their money's worth. Thank you.

On Oct 25 01:02 PM Peter Mycroft Psaras wrote:

> Nice Job, but I would not classify the list as growth plays but rather
> value plays. I say this because, though they have very attractive
> Price to Free Cash Flow (seekingalpha.com/symbo...) numbers,
> their Free Cash Flow Return on Invested Capital (seekingalpha.com/symbo...)
> is about average. I would only classify LMT as a growth play as it
> has a FROIC of 34.54%.
>
> When investing I look for PFCF below 15 times and FROIC above 20%+.
> When you are lucky enough to find a combination of the two you find
> a perfect balance of growth + value and you get capital appreciation
> through capital preservation.
>
> For those who don't know;
>
> PFCF =Market Price/ (Cash flow per share-Capital Spending per share)
>
>
> FROIC = FCF per share/ (long term debt per share + shareholders equity
> per share)
>
> FROIC basically tells you how much return in free cash flow a company
> generate for every dollar of Total Capital they employ.
>
> I consider FROIC the primary determining factor in identifying growth
> companies as you can compare every company (except financial's) on
> an equal basis. The question I ask every company I analyze is = how
> much return (in percent) in FCF are you going to give me for every
> dollar of total capital you invest.
>
> As you will see I have analyzed your list from a FROIC point of view
> below;
>
> HUMANA INC (seekingalpha.com/symbo...)
>
> FCF PS = $5.75
> TCAP PS = $47.35
> FROIC = 12.14%
> PRICE TO FCF = 6.53
>
> CAL DIVE INTL (seekingalpha.com/symbo...)
>
> FCF PS = $0.90
> TCAP PS = $9.56
> FROIC = 9.40%
> PRICE TO FCF = 11.18
>
> UNITEDHEALTH (seekingalpha.com/symbo...)
>
> FCF PS = $3.75
> TCAP PS = $33.54
> FROIC = 11.18%
> PRICE TO FCF = 6.89
>
> WELLPOINT INC. (seekingalpha.com/symbo...)
>
> FCF PS = $6.70
> TCAP PS = $72.98
> FROIC = 10.89
> PRICE TO FCF = 6.87
>
> LOCKHEED MARTIN (seekingalpha.com/symbo...)
>
> FCF PS = $8.00
> TCAP PS = $23.16
> FROIC = 34.54%
> PRICE TO FCF = 9.02
>
> AETNA INC. NEW (seekingalpha.com/symbo...)
>
> FCF PS = $3.35
> TCAP PS = $30.69
> FROIC = 10.91%
> PRICE TO FCF = 7.78
>
> L-3 COMM HLDGS (seekingalpha.com/symbo...)
>
> FCF PS = $8.40
> TCAP PS = $90.00
> FROIC = 9.33%
> PRICE TO FCF = 8.86
>
> RAYTHEON CO (seekingalpha.com/symbo...)
>
> FCF PS = $5.45
> TCAP PS = $33.33
> FROIC = 16.35%
> PRICE TO FCF = 8.52
>
> ASSURANT INC (seekingalpha.com/symbo...)
>
> FCF PS = NA
> TCAP PS = NA
> FROIC = NA
> PRICE TO FCF = NA
>
> STANCORP FINCL (seekingalpha.com/symbo...)
>
> FCF PS = NA
> TCAP PS = NA
> FROIC = NA
> PRICE TO FCF = NA
>
> Endo Pharmaceuticals (seekingalpha.com/symbo...)
>
> FCF PS = $2.25
> TCAP PS = $17.06
> FROIC = 13.18%
> PRICE TO FCF = 10.34
>
> OMNICARE INC (seekingalpha.com/symbo...)
>
> FCF PS = $3.50
> TCAP PS = $50.42
> FROIC = 6.94%
> PRICE TO FCF = 6.50
>
> FROIC gives me a real return on Main Street and if I can get a 20%+
> return on Main Street and at the same time buy a stock that is selling
> for less than 15 times its FCF then there is a very high probability
> that it should be very successful investment.
>
> By choosing 20%+ as my minimum FROIC I have built a portfolio of
> 29 holdings for my clients that has a combined portfolio FROIC of
> 32% and sells as a group for 12.35 PFCF.
>
> As for PFCF I came up with the 15 or less number as being Ideal after
> performing a 58 backtest. To view the backtest just click the link
> below.
>
> mycroftresearch.com/up...
>
>
> Disclosure Long LMT No Position in the others
>
> The Fine Print: As Registered Investment Advisors, we see it as our
> responsibility to advise the following: We do not know your personal
> financial situation, so the information contained in this communiqué
> represents the opinions of Peter "Mycroft" Psaras, and should not
> be construed as personalized investment advice.
> It should not be assumed that investing in any securities we are
> investing in will always be profitable. We take our research seriously,
> we do our best to get it right, and we “eat our own cooking,” but
> we could be wrong, hence our full disclosure as to whether we own
> or are buying the investments we write about.

Is Now the Time to Sell Your Dividend Stocks?

Mon, 26 Oct 2009 12:21:12 -0400

Very good article. Good comments all the way down. One other point:

I fully understand long-term investing, but with rates at 1/4%, I think it would be prudent to consider making some moves when the Fed starts its upward move.

Perhaps not selling core holdings, but at least consider some stocks that tend not to do as well in a higher rate atmosphere.

U.S. Empire In Decline, Makes Way for China

Mon, 26 Oct 2009 04:44:20 -0400

You are dead right, Dave. It looks to me China is doing everything right, and we're doing everything wrong.

Good comment. My same conclusion I wrote here: seekingalpha.com/user/...

On Oct 25 07:21 AM Dave Wrixon wrote:

> Niall grossly underestimates how quickly things are developing. It
> won't take more than a decade. Look how the Hilter changed the face
> of Europe in less than a decade starting from zero. Look how quickly
> the British Empire caved in. How quickly communism rose and how quickly
> it imploded? How long did it take for the Japanese Miracle to collapse.
> These things don't take generations.

U.S. Empire In Decline, Makes Way for China

Mon, 26 Oct 2009 04:27:05 -0400

Very, very well said, Alpha.

My conclusion exactly, as I wrote here: seekingalpha.com/user/...

On Oct 25 10:16 AM Alphameister wrote:

> When I hear comments today to the effect that it is a mistake to
> underestimate American ingenuity in getting past this country's huge
> problems, my reaction is, "Don't mistake the America of today with
> the America of earlier generations. I appreciate the patriotism of
> such comments, but not the analytical perspicacity. The "flower children"
> have taken control in the nation's capital, the nation as a whole
> has become all about instant gratification, and the work ethic (and
> arguably ethics in general) has suffered a serious decline across
> several generations.
>
> I wish my country well and hope it will get back on the right track,
> but all my analytical investment skills tell me that China especially
> and emerging markets generally provide much better odds of investment
> success.

Financial Czar Actions and Reform Regressions

Sat, 24 Oct 2009 12:25:59 -0400

"U.S. Consumer Financial Protection Agency"

I'll surely sleep better tonight knowing there's another federal regulatory agency watching over the nation's finances.

Nouriel Roubini, One on One: More Doom and Gloom

Sat, 24 Oct 2009 12:18:04 -0400

JS:

Your best comment ever. No more need be said, in my view. Thank you very much!

On Oct 23 10:38 AM Joseph L. Shaefer wrote:

> The Economists' Rule to avoid ever 'fessing up to being wrong is:
> "Tell 'em what or tell 'em when, but never tell 'em both."
>
> Dr. Roubini has built a fine business following this rule, as have
> Robert Prechter, Mark Skousen, Howard Ruff, and scores of others
> in the past. "What's going to happen?" "There will be a terrible
> decline." "When?" "Sometime in the future." "How do you protect yourself?
> Gold, commodities, equities, debt?" "No. None of those will work?"
> "What then?" "Stay liquid."
>
> It happens that Dr. Roubini and I agree that this thing has come
> too far, too fast. Where we differ is that I refuse to cower in a
> hole somewhere eating trail mix and muttering, "I told you so," so
> I will allocate to the assets and purchase the sectors I've been
> writing about, all the time enjoying the party, but taking some profits
> along the way so I don't have a lot of baggage as I quietly edge
> toward the exits.
>
> In the real world, I need to make a reasonable return for my clients
> and myself no matter what I THINK the markets or the economy are
> going to do. Being rich, or at least protecting assets and making
> a reasonable return in all types of markets, is more important to
> those of us in the real world than being right!

Can China Sustain 8% Growth?

Sat, 24 Oct 2009 11:53:55 -0400

I think the time to start exiting Chinese investments will be when the Chinese start to change either fiscal or monetary policies.

Right now their policies are business favorable. If and when they change (or announce such) grab your running shoes.

Brazil Chokes Off Foreign Investment

Wed, 21 Oct 2009 12:49:47 -0400

Long VALE & SBS and staying that way.

Who runs Wall St., Surf? Have you looked at the donations from the big NY Houses? About 2-1 goes to the Devilrats!

So What if China Builds Coal Plants?

Tue, 20 Oct 2009 21:35:29 -0400

Exactly right, LA. Another leftist eco-maniac inserting politics on a business blog when they don't fit the context.

On Oct 20 07:05 PM La Marque wrote:

> Ryan:
>
> You are losing credibility by claiming that 'Much of the Republican
> base believes that the president was born in Kenya.' This should
> have been left out; it is just political BS on your part.

So What if China Builds Coal Plants?

Tue, 20 Oct 2009 21:33:27 -0400

Another good comment, Tack. Good point!

On Oct 20 09:20 PM Tack wrote:

> They CAN control how much CO2 humans exhale. They can eliminate them
> --in the name of saving the planet, of course-- like so many previous
> totalitarian regimes, which were accompanied by their own sick creeds.
>

So What if China Builds Coal Plants?

Tue, 20 Oct 2009 21:21:44 -0400

Very good points, Jimbo!

Btw, I have no idea where the man was born, but it looks to me that it would be easy to settle the whole thing by making his birth certificate from HA public. Would that be unreasonable?

The truth is, though, it doesn't matter if he were from Mars, he's going to be the president for at least four years, most likely eight.

Could you imagine what the streets of this nation would look like if he were removed?

So what's the big deal? Right?

On Oct 20 03:43 PM Jimbo wrote:

> My understanding is that when Mount Pinatubo erupted in the Phillipines
> a few years ago, the sulphur dioxide supposedly cooled down the atmosphere
> somewhat. I talked to some astronomers several years ago who told
> me they believed that the orbit and inclination of the Earth, together
> with solar output, was the main driver of Earth climate. Recent extremes
> of weather have been sized upon as due to AGW but we have had these
> extremes in the past. The Anasazi Indians in the West suffered what
> amounted to a thousand year drought before Columbus ever sailed anywhere.
> For the record, I do not believe President Hope and Change was born
> in Kenya. But I do believe we are being rolled by the elite who want
> to put us on a Socialist Reservation, kind of like the one in Brave
> New World. The Western Societies seem to have a Death Wish.

So What if China Builds Coal Plants?

Tue, 20 Oct 2009 21:12:14 -0400

Almost everyone I know under forty believes that CO2 is Hemlock, Al Gore is a saint, and his type of Ecomania is the bible.

Almost everyone I know over fifty believes that CO2 is mandatory for life, Al Gore is a con artist trying to create bigger government by selling fear, and his type of Ecomania is anathema to sanity.

Which group do you think an objective oddsmaker would make a heavy favorite?

Think Twice: How People Are Fooled by Irrelevant Data

Sun, 18 Oct 2009 17:27:52 -0400

DM, forward data do often seem to be far off the mark.

On Oct 18 05:11 PM Dialectical Materialist wrote:

> "When do catastrophic events occur and why?"
>
>

My Take on China Versus the US

Sun, 18 Oct 2009 15:35:34 -0400

AB, you are right. China certainly has its flaws, but they are working toward fixing most of them.

The beheading? I addressed on other blogs everything but this. However, I must say beheading could cause ethical standards to rise rather quickly.

Thank you for reading and commenting on the piece.

Large Caps Could Lead the Market Much Higher

Sun, 18 Oct 2009 11:14:46 -0400

Dear AB, a good, well-written and thinking article.
Thank you for it.

Since we last communicated I've bought only one US stock, NE, and that's because it finally got so out-of-favor cheap that I thought about the only other thing they could do is give it away; and I knew that wasn't going to happen.

I'm still long my China and Brazil stocks and plan on remaining so until there is either serious monetary or fiscal policy change.

I still don't like US stocks, as a rule, because I fear this Ad. and Congress. Every day they float a new anti-business tax or piece of legislation, and sooner or later they're going to start passing them. Why fight these anti-business creeps?

Liquidity driven or not, these people could derail any sector at any time with their leftist policies. Don't you think?

I have an article on the Instablog comparing China and the US. I would appreciate your reading it and making a comment, if you have time.

Regarding the comments, I can only say I hope things are as simple and easy as Tom Armistead seems to think they're going to be.

Thanks again for your work. I'm going to look over the large caps you mentioned.

Think Twice: How People Are Fooled by Irrelevant Data

Sun, 18 Oct 2009 10:45:25 -0400

David M.:

Thank you for the article. I enjoyed it.

Regarding your thoughts on laziness, I used to think the same thing about people, and it is often true.

But I discovered this back in the 1970s when I used to bet sports: people love to be touted so they don't have to take responsibility for the consequences of their actions.

Through several tests I have used on fellow-investors, I have found this same thing to be true in investing.

Most people want someone tell them what to do with their money rather than make the decision themselves so they can blame the tout if things go wrong.

That's a point you might add to your thinking on this subject.

Despite Global Downturn, China's Market Share Continues to Grow

Thu, 15 Oct 2009 11:35:32 -0400

Say what you will negative about the Chinese; they are not stupid people.

Mao preached socialism to the whole world, and it answered the calling, while he hardly socialized China. E.g., they still don't have the ever-burdening socialized medicine as much of the rest of the world does, and as the US is dying to enact.

Today the Chinese protect their own industries, while the US throws theirs to the hungriest hyenas. They practice hard-boiled, tough-nutted business; they US goes out of its way to make other nations grow. They buy a lot of products that they need, but they don’t overpay, and they utilize what they have. The US refuses to use its own resources and buys them often at a premium from other nations.

It will take years for China to catch up with their economy fourfold behind the US’s, but as Jim Rogers says, They’re more capitalist than America; they’re more willing to work; and they take care of their own.

That is a winning recipe, in my view. They may never catch up in our lifetime, but they’ll grow much faster.

A China bubble? Everything is a bubble nowadays. The word has become ubiquitous to any price increase anywhere in anything, and therefore it is mostly worthless.

Why Everyone Is Wrong About the Inflation/Deflation Debate

Thu, 15 Oct 2009 11:13:58 -0400

JB, a theoretical but thinking article for sure. Some good advice here and there. Complicated but good.

I fear stagflation more than anything.

Our problem is one thing and one thing only, and it's not going to change: the issuing of paper money backed by nothing but bovine scatology.

Although most other nations are doing the same thing, the US is outdoing them all, and that can lead to nothing but disaster.

Thank you for your work.

Extraordinary Popular Delusions and the Madness of Crowds

Thu, 15 Oct 2009 10:35:29 -0400

Dear JS, the first six paragraphs are an excellent start to a somewhat crowded article with an awkard transition from there out.

However, I do agree with the concept you've been pounding home for quite a while of picking good, solid companies in specific sectors.

Your most informative sentence is perhaps this one, which I surely agree with: "I’ll enjoy the good times as much as everyone else -- I’m just making sure that while I party, I do so near the fire exits…"

No doubt, when the Fed begins gleaning its spillings, we better get our running shoes on.

A lot of stocks for investors to research.

Thank you for them and for your work.

4 Companies Whose Businesses and Dividends Keep Growing

Wed, 14 Oct 2009 21:40:11 -0400

Good finds. Am familiar with Apogee & Tidewater, but will do further reseach on the others.

Good finds. Thanks.

Dow and Then: 1999 vs. 2009

Wed, 14 Oct 2009 21:21:25 -0400

I suppose you could take an optimistic view and say this comparison means the DOW is undervalued today.

So there is about as much value in this comparison as comparing the Crash last year with the Crash in 1929. Two different countries; two different economies.

China Restricts Online Gaming Industry

Wed, 14 Oct 2009 15:43:05 -0400

ZS, I am long NTES & PWRD and for now plan on staying my positions.

It looks to me in another vein that this new regulation will place a protective fence around these companies and will actually help them by shutting out competition.

Any thoughts on that view?

Thank you for the article.