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Elevator Music

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  • Analysts: Buffett likes Exxon, but that doesn't mean everyone should [View news story]
    I like the logic though. I would never follow it professionally but I like it. These people think if their investment doesn't perform well, then folk like Buffett are losing a million times as much. And with investments of this size retail investors automatically assume intense research and carefulness goes into every purchase.

    I'm not necessarily disputing that. But what if people like Buffett can be content with modest returns and gigantic quarterly dividend payments, or even market underperformance? What if at their level of capital they start becoming focused on safety, low beta and liquidity rather than exponential growth?

    These are real issues and obstacles to a retail investor who will need a lifetime to build a portfolio worth even one hundredth of what Buffett earns in a single quarter off his dividends.

    You can't blindly mimic Soros or Buffett. You don't have their capital. Actually, most people are playing with 5 figure portfolios they don't even actively manage; The average IRA account is worth a bit over $80k. In terms of portfolio wealth this is an obscurely minuscule amount.

    With such low portfolio values investors should do everything in their power to maximize their growth. It doesn't have to be diversion into riskier companies, but you shouldn't always pick the least risky option if your portfolio is practically worth nothing at the moment. Investors with bankrolls comparable to Buffett become more concerned with wealth management. Retail investors don't really have any mentionable wealth to manage; They are mostly people building assets for retirement. They're trying to *create* that wealth they might one day have to manage.

    Until that day comes, it seems absurd to follow blindly the investments of big ticket investors who already put their growth days behind them decades ago and just want some stable income without depreciation.
    Nov 16, 2013. 09:40 AM | 4 Likes Like |Link to Comment
  • It's A Stock Picker's Year [View article]
    There is no such analyst on the planet who could tell you precisely which stocks will rise over the next year. You can only make educated estimations and predictions.

    Invest in an equal weight index fund like the Guggenheim S&P500 fund which owns an equal portion of every single company in the index.
    You will generally earn much more than the average investor; You will get the same amount of return as the total market return for the year.

    This of course prevents topping average market gains, but still the 20-30% you'd be earning this year is way above what regular retail investors and actively managed funds earn annually.
    Nov 16, 2013. 09:03 AM | Likes Like |Link to Comment
  • McDonald's Is Bullish On 2014; Should You Be? [View article]
    Yes, I also struggle to find realistic alternatives to invest in the consumer fast food segment. Burger King and Wendys are very dependent on US business and do not have even nearly as much overseas exposure as McD.

    I will not even get started on Chipotle regardless of the fundamentals, because as you said it is priced at a ridiculous level just like Tesla and Netflix. The P/E is absolutely through the roof. It is impossible to make a rational investment into CMG at this point (besides perhaps taking a short position as you have done)
    Nov 16, 2013. 03:54 AM | 2 Likes Like |Link to Comment
  • FAB Universal: The Face of Piracy In China [View article]
    The subtitles had references to the pirate groups who encoded them into the movie. This is a common practice in pirated movies.

    They place their name or nickname in the beginning of the film. This proves the company uses pirated movies.
    Nov 15, 2013. 08:33 PM | 1 Like Like |Link to Comment
  • FAB Universal: The Face of Piracy In China [View article]
    I don't think you read the entire article.
    The movies have embedded subtitles by pirate groups, they begin showing them before the DVD version is even mastered by the studio (which means they are camrips and R5 lines from cinemas)

    They also change the aspect ratios of the movies to avoid algorithmic detection.

    There is nothing to discuss here really. There is no business model. It's a company that orders equipment which it doesn't pay it's contractors for, and then shows pirated content downloaded from the internet on these practically-stolen devices.

    Also, they don't even have paying customers. They interviewed the local franchisees who said they give away most membership cards for free. Some franchisees said the amount of customers per month can be counted in the dozens. You can count how much revenue that's going to generate at $0.12 per film.

    They don't even have their own physical stores, they sell the kiosks they never paid for in the first place, to unsuspecting franchisees for a high price, who then place it in malls and shops at their own expense.

    Nov 15, 2013. 03:06 AM | 1 Like Like |Link to Comment
  • You May Think That The Market Is Overvalued But These Dividend Champions Are Not: Part 1 [View article]
    Not to mention the crash happened in 2000 not 2002 due to overhyped tech stocks. The 2008 crash happened because of an inflated housing market.

    Overhyped tech companies and housing related junk bonds have nothing to do with high quality dividend champions or their profit margins.
    Nov 14, 2013. 08:38 PM | 9 Likes Like |Link to Comment
  • ModernGraham Valuation Of Johnson & Johnson [View article]
    I feel the same way about MCD. I own both JNJ and MCD, but see their current price as a bit rich. I won't sell off either one, but not tempted to buy more either.
    Nov 11, 2013. 06:44 PM | Likes Like |Link to Comment
  • Box, Seamless reportedly eying IPOs [View news story]
    I also don't understand why the media gloated over it's 70% rise in the first day.

    That didn't happen. The stock was first accessible at $45.10, and it closed at $44.90. Nobody got a chance to buy it at $26. So it in fact dropped in it's first day of trading, and sunk on it's second.
    Nov 9, 2013. 09:13 PM | 1 Like Like |Link to Comment
  • You Don't Need $2.5 Million To Retire [View article]
    Only problem is, it's very hard to reach this goal before your 50s unless you earn a lot to begin with.

    If it weren't for compound interest, stock splits and dividends I don't think I'd even have a remote shot at this. They do exist though, so I've grown to a bit over $105k with deposits totaling less than 40k. It has taken a long time though.
    Nov 9, 2013. 09:10 PM | 3 Likes Like |Link to Comment
  • What No One Wants To Say About Herbalife [View article]
    I find the US stock market to have three kinds of fanatics: Tesla, Herbalife & Apple stock holders. To some extent Netflix. They are religiously attached to the stock.
    They will not listen to reason or attempt to have civil discussion about the fundamentals of their messiah. To them, you're either against them or with them.

    I don't think these investors even care about fundamental analysis. They have bought into a story like a convert at a Southern baptist church suddenly speaking in tongues and feeling ecstacy. It's a special kind of crazy.

    (That being said, I do have to say at least Apple is running a decent business with realistic very-long-term growth prospects and a low stock P/E)
    Nov 7, 2013. 06:49 AM | 6 Likes Like |Link to Comment
  • McDonald's Peaking: A Retrospective [View article]
    I'll just play both sides of the card then. Buy McD as well as diabetes medicine / insulin manufacturers.
    Buy Philip Morris as well as lung cancer drug manufacturers.

    Regardless of "trends", people will not stop eating junk food or smoking, and people will not stop developing diabetes and lung cancer. The same things have been said since the 80's and they never materialize.

    (Smoking is on the low in western countries though, but the decline can be offset with price increases as well as growth in developing countries)
    Nov 5, 2013. 08:53 PM | Likes Like |Link to Comment
  • The Best Stock For Long-Term Investors [View article]
    You can buy the stock directly from the Paris Stock Exchange, where it has very large daily trading volumes. Most brokers will allow this by placing a phone order (i.e. you can't do it on your web trading platform)

    But you will incur some fees. A one time fee of 15-20€ (about $27) plus a 0,20% transaction tax.

    British stocks are even more expensive to buy: 20£ ($32) plus a 0,50% stamp tax per transaction, and your broker could charge something for placing a phone order (my broker takes a $10 commission). This means you have to buy in large quantities for it to be worthwhile.

    However if you routinely place 5-6 figure purchases, these fees become trivial.

    Some countries just don't like foreigners owning "their" companies. I would venture to say South Korea is the worst offender, good luck trying to buy Samsung stock directly as a private investor.
    Nov 5, 2013. 08:15 PM | 2 Likes Like |Link to Comment
  • Exxon Q3 earnings, revenues fall but beat expectations [View news story]
    Correct me if this info is outdated, but Exxon has the lowest payout ratio of all the oil giants currently in play. That means they have decades and decades to raise the dividend, which is good news for investors.
    Oct 31, 2013. 12:38 PM | Likes Like |Link to Comment
  • Default Risk Approaching New Lows For Financials [View article]
    Would you be willing to speculate as to why Wells Fargo is seen as the least risky of all the banks? Is it related to their income model which is heavily skewed towards extracting fixed fees from clients etc.?
    Oct 31, 2013. 08:36 AM | Likes Like |Link to Comment
  • Unilever Is Doing Interesting Things [View article]
    I own UL, PG, CL, KMB & JNJ. I see no conflict of interest, they are all excellent companies.
    Your exposure is basically the entire planet, as probably every single human being (except those tribes in rainforests and jungles) consumes products made by one or more of these companies daily.
    Oct 30, 2013. 01:15 PM | Likes Like |Link to Comment