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Owen

Owen
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  • Although the firm sees a "relatively strong business jet recovery," Goldman believes it will ultimately "be muted by the 2014-2015 transition at Bell [characterized by] broader military revenue decline." Given this, analyst Noah Poponak downgrades Textron (TXT) to Neutral from Buy but raises the price target on the shares to $32 from $31. [View news story]
    "[...] lowers the price target on the shares to $32 from $31. "

    Huh? The original article doesn't mention the word "lower".
    May 30 07:33 AM | Likes Like |Link to Comment
  • Is This The Start Of Another Banking Crisis? [View article]
    "how many people would have scooped up real estate in 2007 if they’d known that Goldman Sachs (GS) had a $13.9 billion bet (dubbed “the big short”) against subprime mortgage-related securities at the time? Not one!"

    Nonsense. People bet against highly publicised shorts all the time. Many see it as a point of pride to own something that the analysts or investment bankers are actively shorting, while others dismiss the experts' opinion summarily.

    How many people scooped up technology stocks in 1999-2000 after some notable hedge funds and investment bankers started shorting them? Pretty much everyone.

    Your theory about ignorance doesn't explain the systematic irrationality practiced by most market participants. It is not lack of information that leads us into trouble, but our insistence on throwing caution to the wind and relying on "gut feel" rather than fundamental analysis.

    I'm afraid Mark Twain had it right after all.
    May 29 08:40 AM | 1 Like Like |Link to Comment
  • An interesting exercise in the always dangerous practice of extrapolation: A look at this week's H.4.1 update shows the Fed holding $1.583T of outstanding 10-year equivalents or, a record 30.32%. By extension then, only 69.68% remains for the private sector. Currently, the figure is rising ~0.3% per week as Bernanke and company snap up Treasury bonds (TLT, TBT). Were that pace to continue until 2018, the Fed would be in possession of virtually the entire market. Food for thought from ZeroHedge and Stone & McCarthy. [View news story]
    "only 69.68% remains for the private sector."

    The Japanese and the Chinese governments each owns over $1 trillion of US Treasuries. Not all of it is in 10-year notes, of course, but I suspect the portion owned by the private sector is already less than half of the "69.68%" number quoted.

    At a yield of 1.7%, the only ones holding U.S. 10-year debt are those who can't replace it with another investment.
    May 24 03:48 AM | Likes Like |Link to Comment
  • Debunking Popular Bitcoin Myths For Goldbugs [View article]
    "I also wonder if an antagonistic government could harness enough computing power to take over the blockchain."

    Anyone, private or government, who had the computing power to crack a double SHA-256 hash would find far better uses for that ability than taking down Bitcoin.
    Apr 5 06:05 AM | Likes Like |Link to Comment
  • Debunking Popular Bitcoin Myths For Goldbugs [View article]
    "Bitcoin are about as difficult to recreate now as performing gold alchemy or stumbling on newly accessible mineral deposits for all intensive purposes."

    Is "for all intensive purposes" pidgin for "for all intents and purposes"?
    Apr 2 10:41 PM | 1 Like Like |Link to Comment
  • Get Bond-Like Returns From Uncommon Stocks [View article]
    "About 6 months ago Varan a regular commenter was attacking my article stating every retiree needs a large concentration of bonds (TLT) and cited the risk in income by not doing so. I decided to buy one share. That share is down -6.31% since I purchased it."

    So in your mind, Mr. Wells, the fact that an investment is down six percent in six months is enough to prove it was a poor choice?

    I'm not a fan of bonds either, but I base that on fundamental analysis, not just on fluctuations over the past six months.
    Mar 28 09:22 AM | Likes Like |Link to Comment
  • Get Bond-Like Returns From Uncommon Stocks [View article]
    Bob,

    I just did exactly that. I plugged in the numbers for GIS and for the S&P for the last three years into a spreadsheet, and calculated the Beta as per the standard formula. The result, not surprisingly, was 0.4305, or about 43%. By all means, please do so yourself to verify.

    The Yahoo Finance pages are riddled with inaccuracies and outright mistakes. I'm surprised that an analyst with your experience doesn't take one look at the chart and realize that a stock that mimics the market movements so closely shows up with a Beta of _negative_ 0.01, of all things. There are some numbers you don't have to calculate to four decimals to realize the quoted figure is bogus.

    Please, take the time to correct your article and provide data you either derived yourself or taken from a reliable, trustworthy source.
    Mar 26 01:32 PM | Likes Like |Link to Comment
  • There's Something Not Quite Right About InterOil [View article]
    The current borrowing rate charged for shorting IOC is 76% a year; this is not a typo. That means the stock has to drop to $18 within 12 months just to break even on the short.

    If your broker is willing to find shares to short and cover that fee for you, be sure to buy him a nice Christmas gift.
    Mar 26 11:15 AM | Likes Like |Link to Comment
  • What Is The Best Way To Hedge S&P 500 Exposure? [View article]
    > Owen, I think SPLV and VQT were meant as replacement not hedge.

    If you're looking to hedge your SPY exposure by replacing it, replace it with cash. That would give you a perfect hedge.

    This article clearly states it tries to find the best way to hedge S&P 500 exposure. Why speculate on what the author means when he says it so clearly?

    In the world of finance, "hedge" has a clear definition. Of the options listed, the SH ETF is the only true hedge, although the author fails to explain why shorting the index isn't a viable alternative.

    SPLV and VQT may very well be a great investment, but they have nothing to do with hedging one's S&P exposure.
    Mar 26 06:18 AM | Likes Like |Link to Comment
  • Get Bond-Like Returns From Uncommon Stocks [View article]
    The BETA figures look bogus. How can GIS have a BETA of -0.01, when it is so tightly correlated with the S&P-500?: http://tinyurl.com/cyj...
    Mar 26 05:41 AM | Likes Like |Link to Comment
  • The Bank of Japan says it will buy longer-dated government bonds in an effort to pressure yields and "beat deflation." Governor Haruhiko Kuroda said the BOJ, which currently buys three year government paper, will extend the maturity of the government bonds it buys to five years and will also consider "boosting purchases of riskier assets." Kuroda said he will "scrutinize what would be the most effective step, aiming to make full use of the BOJ's capacities."  [View news story]
    Japan? Inflation?

    If they want to achieve a 2% target inflation, should they be _selling_ government bonds?
    Mar 26 04:55 AM | Likes Like |Link to Comment
  • What Is The Best Way To Hedge S&P 500 Exposure? [View article]
    The first two options you list are no hedge at all. While SPLV and VQT aren't as volatile as the S&P, they move in the same direction as the index does. Adding them to your portfolio _increases_ your exposure to market movements, not reduces it. That's the opposite of a hedge.

    VXZ and AGG are, statistically speaking, a hedge, but a rather ineffectual one. The correlation between either of them to the S&P is negative, but far from minus one. For example, you'd need about $5m in AGG to hedge $1m in SPY. I don't know where you got those "99%/100%" figures you quote.

    The final one, SH, is a true hedge, but with a high frictional cost associated with such ETFs. I'm not sure what your particular situation is that prevents you from directly selling or shorting SPY, but the most efficient way to hedge the S&P is using the tool that was created specifically for that purpose in 1997, the E-mini S&P futures contract. With a tracking error of less than 0.1%, no management fees, huge liquidity around the clock, and commissions as low as $2.50 per $75k contract, no other method comes close. When institutional investors want to hedge the S&P, they use S&P futures.
    Mar 26 04:18 AM | 1 Like Like |Link to Comment
  • Will Warren Buffett snack on another company this year to go along with the mega-sized purchase of Heinz with partner 3G Capital? SA contributor John McCoy thinks J.M. Smucker (SJM), W.W. Grainger (GWW), and McCormick (MKC) all fit the Buffett profile with their wide moat and strong brands. A longer shot for a Berkshire Hathaway play could be Tiffany (TIF), right-sized for acquisition in a luxury sector Buffett has dabbled with in the past. [View news story]
    > Smuckers is also a multigenerational family business. The company is doing very well and has made good acquisitions.

    Yes, and with a solid balance sheet. That was true for 100 years--until 2008, when they over-leveraged themselves for the Folgers acquisition. Their balance sheet is much uglier now.
    Mar 25 05:23 PM | Likes Like |Link to Comment
  • Will Warren Buffett snack on another company this year to go along with the mega-sized purchase of Heinz with partner 3G Capital? SA contributor John McCoy thinks J.M. Smucker (SJM), W.W. Grainger (GWW), and McCormick (MKC) all fit the Buffett profile with their wide moat and strong brands. A longer shot for a Berkshire Hathaway play could be Tiffany (TIF), right-sized for acquisition in a luxury sector Buffett has dabbled with in the past. [View news story]
    The main appeal of the Heinz deal to Buffett were the 9% preferreds. He would have never bought the common at this valuation without having it effectively backed by an overall 6% yield on the whole deal (9% x $8/$12).

    If Smucker was willing to shell out this kind of preferred dividend, I'm sure Buffett would listen, but the common stock itself is too expensive for his usual taste. Furthermore, their recent overzealous acquisition of Folgers is sure to turn him off, the same way Kraft's acquisition of Cadbury did.

    I don't know about GWW, but MKC is obscenely overpriced. I don't think he'd even go for a 9% preferred on that one.
    Mar 25 10:05 AM | Likes Like |Link to Comment
  • Yes, Stealing Really Is That Bad [View article]
    "Now clearly this Russion Oligarch money was stolen, from the people of Russia, so it's up for grabs."

    The dilemma is what to do next. We know that 20% of the population smokes marijuana, an offence punishable by 5 years imprisonment, but finding out who smokes and who doesn't takes a lot of work. So, should we randomly pick 20% of the people and toss them in jail, or should we send every citizen, smoker or not, to jail for one year, spreading the pain more evenly? Clearly, _someone_ has to pay for all that weed smoking.
    Mar 19 07:33 AM | 23 Likes Like |Link to Comment
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