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dancing diva

dancing diva
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  • Are Lower Oil Prices Really A Problem? [View article]
    Interesting view. Thanks for your response.
    Jul 26, 2015. 05:15 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: What Is The Message Of The Market? [View article]
    Jeff - I don't believe the market is always right. And buying the index fund has its disadvantages since the dividend on the spy is exempt - ie, you pay your ordinary income rate.

    My point - which I didn't make well based upon your response - is what's the hurry? It's not as if stocks are particularly cheap nor is mid-summer a generally great seasonal time to wade in. Even if there is no recession the market could easily drop 10-15%.

    Barry Ritholtz did a great piece years ago showing the benefits of waiting if a stock is technically in a downtrend (which many of the value names are that I'm more inclined to buy). Even if one managed to buy close to the bottom, bottoms are rarely v-shaped and you have plenty of time to get in at a later date without suffering through the angst. And while I don't view myself as a technician, I have learned over the years to pay some attention to the charts.

    I've harvested quite a few gains during the past couple months and purchased index puts early last week since they were cheap, but will maintain ownership of the remainder of my portfolio while patiently sitting on the cash. What partially prompted the liquidation was the work of "Jesse Livermore" in his Philosophical Economics website. This piece from December is particularly interesting.

    http://bit.ly/1mCO53W

    Putting in the most recent stock ownership data suggests around a 4% average annual return for the next ten years. While still better than the ten year treasury, the margin for safety is much smaller than in the past, and what are the odds there is no recession in the next 2-4 years that more than wipes out the gains? In other words, while I will miss out on future gains if the market continues higher, the risk/reward doesn't appear all that favorable to me at the present time. I figure I may as well enjoy the summer and come back with a fresh perspective in October.
    Jul 26, 2015. 04:53 PM | 2 Likes Like |Link to Comment
  • Are Lower Oil Prices Really A Problem? [View article]
    David - while I agree with everything you wrote, the major issue is whether the negatives to those sectors outweighs the positives from the majority of those now spending less on energy.
    Jul 26, 2015. 02:23 PM | 2 Likes Like |Link to Comment
  • Weighing The Week Ahead: What Is The Message Of The Market? [View article]
    93450374
    ??? My comment wasn't intended for you.
    Jul 26, 2015. 12:22 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: What Is The Message Of The Market? [View article]
    "...the economic data are far more positive than the apparent message of the market. A strong approach to investing is to make your investment choices on fundamental grounds and take advantage of errors by "Mr. Market."

    Let me play devil's advocate here.
    Isn't it true the data are subject to negative backward revisions?
    Isn't it true that a stock market sell off typically starts to occur long before recessionary data ever hits?
    Isn't it true the only non-US regions posting positive data are Japan and the
    Eurozone - where their currencies are taking business away from US companies?
    Isn't it true the strong US$ has been a problem and shows no signs of weakening? And as long as that continues forward earnings estimates look high?

    I started the year feeling fairly positive, believing the combination of lower commodity prices, accommodative central banks and low global interest rates were positive for world growth. Yet the data for the most part hasn't been good with estimates declining.

    There is no question that Mr. Market has been more wrong than right throughout history. But at turning points he is usually far ahead of the data. The trillion dollar question is whether this is one of those times.
    Jul 26, 2015. 11:30 AM | 3 Likes Like |Link to Comment
  • Sub-$2/Gas This Winter? [View article]
    Please don't remind me gas prices are cheap in the rest of the country. I live in California and paid $4.36/gal for regular unleaded Wednesday.

    My only consolation is when you're shoveling out from the last snow storm next winter I'll be enjoying 60+ degree weather.
    Jul 24, 2015. 09:18 AM | 3 Likes Like |Link to Comment
  • Apple's (AAPL) CEO Tim Cook on Q3 2015 Results - Earnings Call Transcript [View article]
    The guidance was in the press release and is less than expectations.. Apple is saying revenue will be $49-51 billion in the next quarter; expectations were for just over $51 billion.
    Jul 21, 2015. 11:04 PM | 5 Likes Like |Link to Comment
  • Wall Street Breakfast: Commodities Under Pressure - Gold, Precious Metals, Oil [View article]
    andrewbaker -
    "At current prices, gold won't get dug out of the ground, so what's already above ground will be the only finite supply. That means there will be short supply, and that means prices will rise."

    That's what they said years ago when gold was $500 on its way down to $300.

    If you want to be a hero and pick a bottom use gld options instead. At least there you can't lose any more than the calls cost.
    Jul 21, 2015. 09:17 AM | 1 Like Like |Link to Comment
  • 10 Scary Charts: July 16, 2015 Update [View article]
    Robert - I don't think you're correct that stocks as a percent of investable as assets are matching 2000 all time highs.

    The website "Philosophical Economics" did a study in late 2013 showing that level had the best correlation long term returns.

    The study and the proxy he used for determining the level of stock length are in the following two links. Note as of the end of Q1 2015 stock length was near the 2007 high of 42.5% - well off the 2000 peak of 52.6%. But at 42.5% the average annual return should be around 4%. Not great, but still positive in the long term and versus the 10 year treasury.

    http://bit.ly/1mCO53W
    http://bit.ly/1RHDglN
    Jul 19, 2015. 03:18 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Verdict Still Pending On Earnings [View article]
    I recently viewed a presentation made by Jim Bianco in late April; the first part was on earnings that you may find interesting. He looked at the percent of S&P companies that beat the last median estimate (using Bloomberg stats). The highlights:
    Regarding S&P 500 earnings vs. Expectations:
    -Since Q1 2009 on average 71% of companies beat after half of S&P 500 reported; 69% after all reported.
    -The lowest beat rate since Reg FD enacted in 2002 was 58% in Q3 2008; the highest in Q2 2007 at 82%. In the past couple years the median beat rate has been in the high 60's, with the early beat rate generally better than those companies reporting later. It's interesting that prior to Reg FD the earnings beat rates were lower, often showing less than 50% of the companies beating the estimates.

    Regarding S&P 500 Revenues vs. Expectations:
    -Since Q1 2009 48% of companies beat revenues on average, but there was a wide dispersion around that figure. For Q3 2012 only 30% beat revenues; the highest level was 64% in Q2 2011.

    When I studied the data further there didn't seem to be much correlation between the revenue and earnings beats. Nor did there seem to be a correlation between better and lower than median earnings beats and the overall level how the index traded during earnings season.

    The bottom line is earnings beats near 70% are standard, aggregate earnings appeared to have no immediate discernible impact to the overall level of the S&P index during earnings season, and the focus on near term earnings is - to borrow a phrase from Shakespeare - much ado about nothing.

    My guess is the reason earnings season has no discernible impact on the overall level of the S&P index in the short term is that money just gets shifted around to the better reporting companies from the worst and the pluses and minuses cancel each other out. Think of how much money was shifted Friday to Google and FB from everything else. Despite Google's spectacular rise, the S&P finished just slightly up with the advance/decline actually falling since more stocks finished negative than positive.
    Jul 19, 2015. 01:10 PM | 3 Likes Like |Link to Comment
  • The Party Isn't Over Yet: Why The Market Should Return 15% By Year-End [View article]
    What an absurd model. It's perfectly understandable that lower interest rates are positive for p/e's. But it makes absolutely no sense the a lower div yield should raise p/e's.
    Jul 12, 2015. 09:25 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Will Falling Earnings Sink The Stock Market? [View article]
    James:

    A brief synopsis: Of all the advisors Hulbert follows only two have predicted the tops/bottoms two out of three times (none have gotten it right every time). Those two advisors, Jim Stack and Kelly Wright, were now bullish, but for different reasons. In either case their preferred longs were the biggest companies (cvx, xom, slb) or the xle where those three stocks comprise the largest holdings. Hulbert specifically mentioned, however, that Wright, whose undervaluation call was based on dividend yields, emphasized "his approach is not for short-term traders, since it sometimes can take several years for the rest of the market to fully price today's undervalued situations".

    I didn't find the article particularly bullish, but that's just one persons opinion.
    Jul 12, 2015. 02:17 PM | Likes Like |Link to Comment
  • Warren Buffett's Berkshire Hathaway At ½ Price [View article]
    Chris - I have no problems selling long dated puts as long as the implied volatility makes it worth my while. The Jan 2017 BRKB put is at roughly at a 19% implied volatility. IMO that's too low given what could happen during the course of the next 19 months. If there's a recession brkb book value would fall and there's no guarantee Buffett would buy his own stock back, perhaps preferring to use his cash to make another purchase instead.

    Personally I'd rather go short the JNJ Jan 2017 80 puts - roughly the same discount as brkb is at $115. The implied vol is roughly the same but I'd potentially be getting long JNJ above a 4% div yield. BRKB has no yield support.

    BTW, I am long BRKB, but every time I look at at its puts, I find the vol unattractive. I'm not yet short JNJ 2017 puts, but will consider selling those on further weakness in the stock as long as vol doesn't decline.
    Jun 23, 2015. 04:58 PM | 2 Likes Like |Link to Comment
  • Johnson & Johnson: Quiz Of The Day [View article]
    dunnhaupt - don't be so shortsighted. JNJ made a tremendous move between mid 2012 and mid/late 2014. It's resting now. I can point to numerous examples of stocks that go up, move sideways for a year or two before moving up again. You've just caught it in a period of basing.
    May 31, 2015. 11:27 AM | Likes Like |Link to Comment
  • Analysis Which Is Not Market Friendly [View article]
    "Currently, the market is either ignoring the economy, or believing the economic situation is transitory, as it has been many times previously."

    Steve - there is a third explanation. That while the economy looks on the weak side and may stay that way, it doesn't look recessionary. And given the lack of alternatives to stocks participants see no reason to relinquish ownership that is paying more than cash or bonds.
    May 30, 2015. 03:45 PM | 5 Likes Like |Link to Comment
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