GreenestEgg

Cisco Valuation So 'Silly' It's Time to Buy - JMP

A P/E of 14 for a mature company like Cisco is not silly. In fact, it's a bit high, compared to GE trading at a P/E under 10 and NOK under 9 and CAT under 8.

Given the current valuations of its peers, why wouldn't it drop another 30%? And another thing...if you account for that 20% cash and give it back to the shareholders, the P/E is more like 17. What a bargain.

Cramer: Dow Could Drop Another 14%, Oil's Going to $50

Curbs-in,
We have seen this leverage game before. They called it the roaring twenties. The only difference was in the aftermath the Fed contracted the money supply by 1/3, whereas Ben is doing his best to flood the market with moolah. Real estate and commodity bubbles are sprinkled throughout history. Every generation gets one or two, which is why the old folks put it in bonds.

BofA, Lehman, AIG: The New Financial Realities

None of this is a surprise. Compare the trend of 'net income' vs. 'cash flow from operations' on any of these banks' balance sheets and you'll see that this was coming since 2006.

More cash going out than coming in is almost never a healthy way to run a mature business, especially one that doesn't need to retool factories. It all seems kind of obvious in hindsight.

$300/Barrel Oil Is Coming - Barron's Interview

It's pretty bold to predict a 300% increase coming on the heels of a 30% decrease. Time to recoup some of that loss, eh Eli?

Back in the late 1990's, it cost about $4/bbl to get oil out of Saudi Arabia. It's obviously more now, but this unlimited demand by SE Asia argument is insane. There is no way that countries with per capital incomes of less than $1000/year will consume the stuff at $300/bbl. 42 gallons = 1 bbl. I doubt if the average Chinese citizen would stake his yearly pay on the privilege of driving a car to work for six weeks.

Somehow, the humans on this planet survived for 10 million years (or 5000 years, depending on how literally you take the bible) without consuming a couple hundred barrels of per capita each per year. We're smart. I'm sure we'll figure something else out. My money is on the 1.21 Jigawatt flux capacitor from BTTF.

Has Whole Foods Lost Touch with Its Customers?

Whole Foods is going down the tubes. Overexpanded like Starbucks. Why in the world we need two Whole Foods stores in Ann Arbor (a town of 100,000) is beyond me. Grocery shopping as an 'experience' is overrated, especially if you've got kids.

I find it ironic that a company which is all about organic, eco-friendly, sustainability, etcetera is expanding like the white man into Indian Territory. When your core values contradict your corporate growth strategy, you've got a serious identity problem.

I'm with Jenny. When the economy goes south, I'll switch from organic to conventional foods. When it gets worse, I'll choose store-brand generics or shop at (gasp) Wal-Mart (WMT) or Target (TGT).

Yes, Financial Companies Can Be Analyzed

You don't need to read the minutia of financial statements to figure out that the emperor has no clothes.

If you're a bank, and you don't have any money to lend, and folks are not paying you back money that they owe you, then you will go out of business. It's that simple.

American Express Calls Investment Banks' Bluff

The banks still have a way to go before bottom. Let's say I bought a $10,000 plasma TV 4 years ago and only made minimum $10 payments and now the debt is up to $22,000. My house gets foreclosed, but I keep paying the $10 minimum each month.

In the meantime, the banks have claimed the $12,000 of interest as profits (seen in accounts receivable). But I'm not going to pay that back. AND I'm not going to pay back the $10,000 for the TV. That means the $12,000 of profit must now be converted to a $22,000 loss.

The banks keep delaying doomsday by allowing $10 minimum payments and increasing credit lines to prevent default. Once CC holders start defaulting, watch out.

It's hard to tell the truth in the banks' financial statements. Ideally, you'd want to compare the accounts receivable and cash flows to historic levels in the mid/late 1990s. With all of the off-the-books special entities, we really have no idea how bad their situation is.

This is a classic case of the emperor's new clothes and cheers to Chenault for not sugar-coating what he sees.

Fannie & Freddie: Affirmative Action for the Rich and Stupid

Great article! These artificially low interest rates have made real estate totally unaffordable for most of the country.

Higher interest rates may drop the home values and increase payment amounts, but at least the principal would go down to something that families could pay off with a few extra payments a year. The idea is to buy a house, not fund multi-million dollar salaries for wall street tycoons.

Guru Returns Show Just How Tough the Going Has Been Lately

In all fairness, a lot of these fund managers are tied to holding investments during market downturns. Holding portfolios of 30% cash and 50% commodities goes against the mission of what they promised there investors. Also, it isn't necessarily legal to dump 20% of the shares of a company in a single day.

That said, they could do a better job of diversifying their holdings so that folks didn't lose a third of their life savings in a year (e.g. Vanguard Windsor / Capitial Value, etc). But hey, they were 4 or 5 stars when you bought 'em, right? Thanks morningstar.

If you know there's going to be inflation, buy stock in mining companies. If you know there's going to be a food shortage, buy ADM & Monsanto. If you know oil is going to $130/bbl, get out of GM and into Toyota. If you know that the mortgage industry was a house of cards and that eventually you'd have huge defaults on loans and credit cards, don't hold stock in the financials. This isn't hindsight. It's due diligence when you're investing (not gambling) with peoples' retirement accounts.