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Owen

Owen
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  • 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
  • Prepare For Blastoff: New Research On NQ Mobile [View article]
    "Based on data from 97 software companies spanning 700 years"

    Wow, I didn't even know we had software companies 700 years ago. Is it related to the e-Tulip bubble of the 1630s?
    Mar 27 10:21 AM | 17 Likes Like |Link to Comment
  • Paul Ryan: Ideas for reducing poverty [View news story]
    What a bunch of demagogy. Most of those 47 million Americans live in conditions that 50 years ago would have been described as "affluent". They eat 2000 calories of food a day - often food prepared by others, be it McDonald's or the cooked food section at their supermarket. They own a TV and two or three telephones per household. They buy toys, not rice, for Christmas.

    The poverty threshold has been moved several dozen times since Lyndon B. Johnson's days. It is calculated based on the overall distribution of income, not based on absolute poverty definitions. If you raised that threshold high enough, we'd all be defined as "poor".

    The number of American starving or without a place to sleep today is smaller than it was 50 years ago. Anyone who doesn't start his review of wealth in America by acknowledging this fact is selling you something.
    Jan 26 10:58 AM | 17 Likes Like |Link to Comment
  • Seeking Alpha fires a shot at Bloomberg, StreetAccount [View news story]
    I like the bullet format, but please bring back the ticker.

    More importantly, give users a way to disable the auto-refresh. It's aggravating to read down to the third or fourth screenful, and have the page suddenly refresh and jump up to the top on us.

    Please let us read in peace!
    Jul 29 07:49 AM | 17 Likes Like |Link to Comment
  • Arkansas Best: Want A Trucking Company For Free? [View article]
    Ah, the wonders of GAAP.

    Generally Accepted Accounting Principles allows a company to account for its assets based on a simple depreciation formula, rather than price its assets based on a realistic market price. A ten year old truck bought for $200k could sit on the books valued at $120k, even though you wouldn't be able to find a buyer for it if you asked for $50k. A warehouse you purchased for $5 million in 1999 when the market was hot would show as a $4M asset, despite the fact that you can buy an identical property next door for under $1M.

    But the fun doesn't end there. The value of those tangible assets is only meaningful if they could be separated and sold, unencumbered. Alas, that is not the case. Labour agreements with the unions forces the transferral of those costly obligations to whoever buys the assets as part of an operating company. The value of those liabilities, which might very well exceed the value of the assets, doesn't have to appear on the company's balance sheet, but certainly affects the valuation potential buyers attach to the entire company.

    I'm not saying that Arkansas Best is not a good investment, just that going by book value--tangible or not--is not a useful tool in valuing this type of company as a going concern.
    Sep 22 05:26 PM | 15 Likes Like |Link to Comment
  • The Pursuit Of Mediocrity - Fallacy Of Dollar Cost Averaging And The Abuse Of Indexing [View article]
    Good article!

    I think the problem with randomly-timed purchases versus dollar cost averaging is that most investors tend to pick the worst time to purchase stocks - during market euphoria, usually near the local peak of the price curve.

    Much of the current literature promoting dollar cost averaging uses the assumption that without such a tactic, the investor's money sits in cash until the opportunity to invest presents itself. With such an absurd assumption, the conclusion is foregone.
    Jan 19 08:44 AM | 10 Likes Like |Link to Comment
  • Berkshire Hathaway: Shooting Dead Fish In A Drained Barrel [View article]
    "Warren Buffet couldn't pick a stock to dsave his life."

    You should offer your help to him.
    Jan 17 01:10 PM | 9 Likes Like |Link to Comment
  • Is The Current Market Overvalued? [View article]
    > If you think that the cost of capital for the market is about 9%

    Why 9%? I've seen this number used elsewhere, but never explained. Your entire model seems to hinge on this one key number, which you provide without explanation.

    Triple-B long-term corporate paper is now yielding under 5%. This means that any reasonably healthy company can now borrow money for 20 years at a 5% interest rate - and the inflation is already priced in.

    Using the current 5% cost of capital, rather than the historical 9%, flips the entire picture around. Based on your model, current market valuation implies negative growth. Even a stagnant or slowly contracting market would reward investors for taking the equity risk.
    Feb 14 07:59 AM | 9 Likes Like |Link to Comment
  • Sears Holdings Real Estate: A Gold Mine In Antarctica [View article]
    "Alternatively, the stock will plummet immediately or shortly after the release of 2013 Q4."

    So...either it will go up following the Q4 is released, or it will go down. Fascinating.

    I guess you could still make money by buying an options collar, if not for the fact that your bold prediction is already priced into the options.
    Feb 27 08:45 AM | 8 Likes Like |Link to Comment
  • Arkansas Best: Want A Trucking Company For Free? [View article]
    > We are supposed to buy a company that just degraded to it's all time low?

    Not at all! Wait until the stock doubles in price, and then buy it. I mean, why pay $7.40 for a stock when you can pay $15? Who wants to buy stocks when they're cheap anyway, right?

    Also, in 1997, the stock traded under $5, so based on your system, it's still OK to buy it now, and then stop buying when it gets too cheap to buy.
    Sep 23 09:16 AM | 7 Likes Like |Link to Comment
  • Crisis on. S&P 500 futures -1% and the euro -1.2% as Brussels "faced with a drowning member state, instead of throwing the Cypriot people a lifebuoy, (throws) a millstone around its neck." EU leaders risk triggering bank runs in Cyprus (and elsewhere?) by going after bank depositors to fund the country's bank bailout. [View news story]
    It takes decades to build trust in a regime's respect for property rights, and one stroke of a legislator's pen to destroy it. Cyprus just made sure it will be years before any investor--domestic or foreign--trusts their capital markets enough to put his money there.

    Any bailout is a waste of money. If the Cypriot leaders are determined to scuttle the ship, even Germany is powerless to stop them, and would be a fool to try.
    Mar 17 08:08 PM | 6 Likes Like |Link to Comment
  • Did The Brazilian Courts Just Shoot The Country's Oil Industry In Both Feet? [View article]
    A fine of $3 million for every barrel of oil spilled, or $71,000 for each gallon of oil - this is a bit reminiscent of the arbitrary tax grabs that chased some companies out of Russia.

    Brazil is usually seen as a rule-of-law nation, but this story makes me seriously doubt that perception.
    Sep 24 04:43 PM | 6 Likes Like |Link to Comment
  • Fair Value for the S&P: It's Not 440 [View article]
    Good article. The coat store example is brilliant!

    Multiplying the trailing GAAP earnings by 15 implies an expectation that those one-time impairment charges of 25-80% of the original value of holdings will recur each and every year indefinitely. Regardless of market valuations, such a scenario is an arithmetical impossibility.
    Feb 13 03:25 PM | 6 Likes Like |Link to Comment
  • Risk Parity: A Bullet-Proof Investment Strategy? [View article]
    The theory behind beta-weighted portfolio composition has been around for decades. While there is some merit in controlling the beta of the overall portfolio, it is important to remember that volatility and risk are not the same thing. The two terms are often used interchangeably, but some of the least volatile instruments carry the most risk.

    For example, even if we assume all US treasuries will be paid off in full, if inflation starts soaring in the latter half of this decade, the real, inflation-adjusted value of a 10-year note upon maturity would be a fraction of what you pay for it now. A "risky", highly-volatile common stock, on the other hand, is more likely to retain its value in the face of inflation.

    Optimizing one's portfolio for optimum expected return divided by volatility is an interesting exercise, but not necessarily a very useful strategy for maximizing profits. And it is certainly not "bullet-proof" in any sense of the phrase.
    Sep 14 04:51 PM | 5 Likes Like |Link to Comment
  • Unable to beat Chevron in U.S. court, Ecuador villagers seek favorable venue [View news story]
    "Can Chevron take this corrupt Law Firm to court in order to recover damages over the false accusations brought by one of their employed plaintiff attorney's?"

    To what end, exactly? Chevron already took legal action against the corrupt lawyer, but how much damages do you think they can extract out of this guy? Five million? Ten million? They spend more than that each month on this ongoing litigation.

    Chevron is in the business of making money, not exacting pointless and expensive revenge.
    Mar 8 10:00 AM | 4 Likes Like |Link to Comment
COMMENTS STATS
463 Comments
416 Likes