9 High-Yield Mortgage REITs Now Trading Near Or Below Book Value [View article]
REIT's, whether of the mortgage variety (invested in paper mortgages), or of the equity variety (invested in rental buildings), must pay out 90% of taxable income each year as dividends. This leaves a limited amount of capital for investment in new assets, limiting internal growth.
Equity REIT's will try to arbitrage the difference in yield on the assets they buy and the dividend yield demanded by investors, by selling new shares to invest in new assets. The new shares issued will partially dilute growth in earnings. The best way to earn capital gains in equity REIT's is to buy when they are oversold in the stock market, which happens from time to time, e.g., during the financial panic in 2008. Indications of an equity REIT being oversold are A) abnormally high yields, and, B) large discounts to Net Asset Value (based on estimates put out by some of the large broker frms). (PS: Because of building appreciation, accounting depreciation, and leverage, Book Value can be meaningless for an equity REIT.)
Mortgage REIT's play the borrow short, invest long arbitrage game, using much higher leverage than equity REIT's. They attempt to hedge the risks of an inversion in the yield curve through the use of derivatives and by investment in adjustable rate mortgages. Sometimes this works, and sometimes not. If this risk would go away, mortgage REIT's could theoretically be bid up to higher prices and lower yields. Its not happening and yields on mortgage REIT's remain high -- an indicator of the inherent risk in mortgage REIT's.
Bank Of America Will Likely Bottom At $5 [View article]
Chart of BAC looks like it made a double bottom at around 5, 2 and a 1/2 weeks ago. Shortly after, the daily MACD turned positive and has indicated an uptrend since then. Americanbulls.com called an uptrend at 5.18, and BAC has gained 20% since that call. These are short to intermediate term indicators, but with the recent gains, some would say that BAC is unlikely to dip back to $5.
"""So stock buy backs, dividends and bonuses don't got back into the economy? I'm confused by that assertion... maybe it isn't the most efficient way but its hard to argue that they don't lead to spending. Also bear in mind this tax cut only goes to taxpayers with less than $200,000 per year in income... people who are more likely to spend their money than the rich."""
Wrong. If corporations save on taxes, and put it into buybacks, dividends and bonuses, then the tax savings goes to the top 1%, who earn over $200,000. After all, the major holders of corporate common stock are people in the upper brackets. These people use much less of their income for consumption than those at the bottom of the income scale, who spend practically 100%. Those at the top "save" by putting their excess income into hedge funds that "invest" in foreign currencies, commodity derivatives, and other quick return items that benefit neither man nor beast.
""1. If you account for inflation, Republicans have outperformed Democrats stock-market-wise.""
Can you show us a link for your conclusion. Here is a link that shows just the opposite: http://tinyurl.com/7zb...
""Republicans have had to clean up inflation messes and inherited recessions in 2000, 1980 and 1952.""
According to data from the NBER, the severe 16 month Reagan recession began in July 1981. The first GW Bush recession began in March 2001 and lasted just 6 months. The second GW Bush recession began in December 2007, and it lasted 18 months.
""Blinder and others deliberately include Hoover but exclude the success of Republicans in the 1920s, following up on Democrat Wilson's failures. The best president for the stock market was Republican Calvin Coolidge.""
The Blinder article covers only the post-WWII period from 1948 to 2008. Ancient history is less relevant. As for Coolidge, we know how that one ended!
""Obama has the worst growth record, the worst jobs record, the worst overall record of any president in our lifetime. . . . ANYONE will be better for the economy and the stock market.""
The Great Recession of 2008 was not a normal inventory recession like other post-WWII recessions. It was a financial recession, more akin to the Great Depression of the 1930's. This means that there was no simple solution to the crisis that household debt (credit cards and mortgages) had brought about. Households just had to deleverage and downsize, and that is something that could not happen instantly. In the first year of Obama's presidency jobs were in freefall -- in 2009, we lost 5 million jobs, while the Obama administration struggled to come up with a stimulus program in the face of Republican intransigence. From the end of 2009 til now we have gained back 2.5 million jobs, thanks in part to the stimulus program. Had McCain been elected president we would have been in much worse shape -- perhaps a la Herbert Hoover!
As for the stock market, the Dow index is up 56% (from 7,949 to 12,418) in the less than 3 years since the day that Obama took office. That's good enough for me!
Fact: Using the establishment data, employment under Reagan (December 1980 to December 1988) increased by 16 million. During the Clinton years (December 1992 to December 2000) jobs gained were 23 million.
Frankly, I'll go with the statistics, not the promises of just another presidential candidate. Especially, if Romney is getting his economic advice from Glenn Hubbard, who, along with Larry Lindsey of Harvard, was the architect of GWB's economic policy -- the three tax cuts, remember, that took the US budget from surplus to deficit and left us with the housing bust.
Alan Blinder, the Princeton economist, had a great article in the NYT back on August 30, 2008. It pointed out that in the 60 previous years, Republicans held the presidency for 34 years and the democrats for 26. Growth in the economy averaged 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats. Professor Blinder pointed out a second fact: Over the entire 60-year period, income inequality trended substantially upward under Republican presidents but slightly downward under Democrats, thus accounting for the widening income gaps over all. Growth in inequality is an obvious drag on overall economic growth, for if the middle and lower classes don't have the spending power, growth in demand will lag.
Wells Fargo: A Plagued Stock With Serious Risks For Investors [View article]
Agree 100%. Ratios such as a the current ratio, gross margin, and asset turnover are meaningless for a bank. There are simply too many SA articles that purport to provide "analysis" by reciting a few random numbers or chart points, but show not the slightest bit of understanding of the underlying business. The article does no one any good by reciting a list of risk factors from the 10-Q, such as the problems with mortgage assets, as these risks are already well known and are presumably discounted in the stock price.
5 Great Oil And Gas Dividend Stocks For 2012 [View article]
These might or might not be good stocks in which to invest, but one could not tell it from this "analysis"!
Sasol's yield, based on past 12 month's dividends, is 4.2%, not 5.5%. (Yahoo is wrong.) BP's price is $43.28, not $450. BP's P/E (ttm) is 5.99 (Yahoo data), not 370. BP's debt/equity ratio is 30.9%, not "41.06" [sic].
Doesn't anyone at SA vet these articles before they get published?
The last time the Fed held down interest rates for an extended period (Fed Funds below inflation for 3 years beginning in 2003), we got the housing bubble and bust. The markets will determine the future course of interest rates, both short and long term. But good for you if you think you can beat the interest rate market.
My advice: Have only a small percentage of your portfolio in high yield mortgage REITs. There is high risk, because of leverage and rate volatility.
Disclosure: I own HPT, My spouse has a small position in NLY
Just another slipshod, uninformed article that makes no distinction between equity REITs, such as HPT, that invest in brick and mortar buildings, and mortgage REITs that invest in paper mortgages. The mortgage REIT's are heavily leveraged and are playing the risky age-old game of borrowing short and lending long. That's why the yields on the mortgage REIT's are so high. Hopefully, they are hedged through derivatives, but they have been whupped before when the yield curve flipped, and they will be whupped again!
Solar Industry After Buffett's Big Buy: A New Look At 5 Solar Stocks [View article]
Another useless article on Seeking Alpha. The fact that Warren Buffett's utility company is buying into a solar power plant operation proves nothing. The power plant will produce a predictable income stream for some time into the future. (Buffett is quoted by Bloomberg as saying that "investing in a solar farm won't make you rich, but it will keep you rich.")
But investing in the solar panel manufacturers mentioned will not produce a "predictable income stream." There is no real analysis in this article -- only a recitation of recently reported earnings and meaningless ratios. I wish that the Seeking Alpha editors would become a little more picky ito what is posted.
Investors Should Take Note Of The U.S. Oil And Gas 'Boom' [View article]
"""The oil & gas industry is not getting government subsidies? Sounds like an abject lie to me!"""
Before you call it a lie, why don't you list the specific subsidies that you have in mind. Remember, the depletion allowance was eliminated many years ago. Can't think of any subsidies right now? I'll help you out.
1. Foreign tax credits. So as to avoid double taxation of income earned abroad, all US companies, including oil companies, get a credit for taxes paid abroad, applied only to non-US income.
2. Section 199 investment tax credit. All US companies, including oil companies, (and manufacturing companies, and software companies), qualify for Section 199 credits for new investment in the US, which is good for US job growth, among other things.
3. Expensing of Intangible Drilling Costs. Intangible drilling costs (IDCs) include the labor for setting up drill sites, designing platforms and drilling the wells — similar to research and development (R&D) costs incurred by many other businesses and industries.
Are these provisions overly generous to oil and gas companies? Not so, IMO.
Investors Should Take Note Of The U.S. Oil And Gas 'Boom' [View article]
Natural gas from fracking has added greatly to our energy supply. And despite impressions to the contrary, US crude oil production has increased strongly since Obama became president, from around 4.96 million barrels daily in 2008 to 5.62 million barrels daily through the first 9 months of 2011. But we are a long, long way from becoming an net energy exporter, especially with respect to oil and gas. IMO, it will never happen.
In the latest month (September) for which statistics are available, we produced 7.78 million barrels daily of crude oil and products, but we imported 11.20 MBD. The imports came, roughly in order, from Canada, Saudi Arabia, Mexico, Venezuela, and Nigeria. Our refineries produced 9.132 MBD of gasoline and we imported 0.099 MBD. We exported 0.529 MBD of gasoline. The rest, about 8.75 MBD (difference is inventory), we consumed in our cars and trucks.
In my opinion, there is not much upside to gasoline exports, unless we increase refinery capacity. I can't see the latter happening, primarily due to capital cost and environmental opposition.
9 High-Yield Mortgage REITs Now Trading Near Or Below Book Value [View article]
Equity REIT's will try to arbitrage the difference in yield on the assets they buy and the dividend yield demanded by investors, by selling new shares to invest in new assets. The new shares issued will partially dilute growth in earnings. The best way to earn capital gains in equity REIT's is to buy when they are oversold in the stock market, which happens from time to time, e.g., during the financial panic in 2008. Indications of an equity REIT being oversold are A) abnormally high yields, and, B) large discounts to Net Asset Value (based on estimates put out by some of the large broker frms). (PS: Because of building appreciation, accounting depreciation, and leverage, Book Value can be meaningless for an equity REIT.)
Mortgage REIT's play the borrow short, invest long arbitrage game, using much higher leverage than equity REIT's. They attempt to hedge the risks of an inversion in the yield curve through the use of derivatives and by investment in adjustable rate mortgages. Sometimes this works, and sometimes not. If this risk would go away, mortgage REIT's could theoretically be bid up to higher prices and lower yields. Its not happening and yields on mortgage REIT's remain high -- an indicator of the inherent risk in mortgage REIT's.
Bank Of America Will Likely Bottom At $5 [View article]
What Mitt Might Mean For Stocks [View article]
Wrong. If corporations save on taxes, and put it into buybacks, dividends and bonuses, then the tax savings goes to the top 1%, who earn over $200,000. After all, the major holders of corporate common stock are people in the upper brackets. These people use much less of their income for consumption than those at the bottom of the income scale, who spend practically 100%. Those at the top "save" by putting their excess income into hedge funds that "invest" in foreign currencies, commodity derivatives, and other quick return items that benefit neither man nor beast.
What Mitt Might Mean For Stocks [View article]
Can you show us a link for your conclusion. Here is a link that shows just the opposite:
http://tinyurl.com/7zb...
""Republicans have had to clean up inflation messes and inherited recessions in 2000, 1980 and 1952.""
According to data from the NBER, the severe 16 month Reagan recession began in July 1981. The first GW Bush recession began in March 2001 and lasted just 6 months. The second GW Bush recession began in December 2007, and it lasted 18 months.
""Blinder and others deliberately include Hoover but exclude the success of Republicans in the 1920s, following up on Democrat Wilson's failures. The best president for the stock market was Republican Calvin Coolidge.""
The Blinder article covers only the post-WWII period from 1948 to 2008. Ancient history is less relevant. As for Coolidge, we know how that one ended!
""Obama has the worst growth record, the worst jobs record, the worst overall record of any president in our lifetime. . . . ANYONE will be better for the economy and the stock market.""
The Great Recession of 2008 was not a normal inventory recession like other post-WWII recessions. It was a financial recession, more akin to the Great Depression of the 1930's. This means that there was no simple solution to the crisis that household debt (credit cards and mortgages) had brought about. Households just had to deleverage and downsize, and that is something that could not happen instantly. In the first year of Obama's presidency jobs were in freefall -- in 2009, we lost 5 million jobs, while the Obama administration struggled to come up with a stimulus program in the face of Republican intransigence. From the end of 2009 til now we have gained back 2.5 million jobs, thanks in part to the stimulus program. Had McCain been elected president we would have been in much worse shape -- perhaps a la Herbert Hoover!
As for the stock market, the Dow index is up 56% (from 7,949 to 12,418) in the less than 3 years since the day that Obama took office. That's good enough for me!
What Mitt Might Mean For Stocks [View article]
Fact: Using the establishment data, employment under Reagan (December 1980 to December 1988) increased by 16 million. During the Clinton years (December 1992 to December 2000) jobs gained were 23 million.
What Mitt Might Mean For Stocks [View article]
Frankly, I'll go with the statistics, not the promises of just another presidential candidate. Especially, if Romney is getting his economic advice from Glenn Hubbard, who, along with Larry Lindsey of Harvard, was the architect of GWB's economic policy -- the three tax cuts, remember, that took the US budget from surplus to deficit and left us with the housing bust.
Alan Blinder, the Princeton economist, had a great article in the NYT back on August 30, 2008. It pointed out that in the 60 previous years, Republicans held the presidency for 34 years and the democrats for 26. Growth in the economy averaged 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats. Professor Blinder pointed out a second fact: Over the entire 60-year period, income inequality trended substantially upward under Republican presidents but slightly downward under Democrats, thus accounting for the widening income gaps over all. Growth in inequality is an obvious drag on overall economic growth, for if the middle and lower classes don't have the spending power, growth in demand will lag.
http://tinyurl.com/72v...
Wells Fargo: A Plagued Stock With Serious Risks For Investors [View article]
Articles such as this are worse than useless.
35 Top Yielding Real Estate Investment Trusts, Part 3: Retail REITs [View article]
5 Great Oil And Gas Dividend Stocks For 2012 [View article]
Sasol's yield, based on past 12 month's dividends, is 4.2%, not 5.5%. (Yahoo is wrong.)
BP's price is $43.28, not $450. BP's P/E (ttm) is 5.99 (Yahoo data), not 370. BP's debt/equity ratio is 30.9%, not "41.06" [sic].
Doesn't anyone at SA vet these articles before they get published?
5 REITs That Are Worth A Look [View article]
My advice: Have only a small percentage of your portfolio in high yield mortgage REITs. There is high risk, because of leverage and rate volatility.
Disclosure: I own HPT, My spouse has a small position in NLY
5 REITs That Are Worth A Look [View article]
Solar Industry After Buffett's Big Buy: A New Look At 5 Solar Stocks [View article]
But investing in the solar panel manufacturers mentioned will not produce a "predictable income stream." There is no real analysis in this article -- only a recitation of recently reported earnings and meaningless ratios. I wish that the Seeking Alpha editors would become a little more picky ito what is posted.
Investors Should Take Note Of The U.S. Oil And Gas 'Boom' [View article]
http://bit.ly/uO8Mlw
Investors Should Take Note Of The U.S. Oil And Gas 'Boom' [View article]
Before you call it a lie, why don't you list the specific subsidies that you have in mind. Remember, the depletion allowance was eliminated many years ago. Can't think of any subsidies right now? I'll help you out.
1. Foreign tax credits. So as to avoid double taxation of income earned abroad, all US companies, including oil companies, get a credit for taxes paid abroad, applied only to non-US income.
2. Section 199 investment tax credit. All US companies, including oil companies, (and manufacturing companies, and software companies), qualify for Section 199 credits for new investment in the US, which is good for US job growth, among other things.
3. Expensing of Intangible Drilling Costs. Intangible drilling costs (IDCs) include the labor for setting up drill sites, designing platforms and drilling the wells — similar to research and development (R&D) costs incurred by many other businesses and industries.
Are these provisions overly generous to oil and gas companies? Not so, IMO.
Investors Should Take Note Of The U.S. Oil And Gas 'Boom' [View article]
In the latest month (September) for which statistics are available, we produced 7.78 million barrels daily of crude oil and products, but we imported 11.20 MBD. The imports came, roughly in order, from Canada, Saudi Arabia, Mexico, Venezuela, and Nigeria. Our refineries produced 9.132 MBD of gasoline and we imported 0.099 MBD. We exported 0.529 MBD of gasoline. The rest, about 8.75 MBD (difference is inventory), we consumed in our cars and trucks.
In my opinion, there is not much upside to gasoline exports, unless we increase refinery capacity. I can't see the latter happening, primarily due to capital cost and environmental opposition.
http://tinyurl.com/7wj...