David Lentz

David Lentz
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  • Apple: We Know That We Don't Know Anything  [View article]
    One would expect other indications than a report from a single Japanese trade journal. TSM publishes monthly revenue figures, and while the past couple of years monthly revenue data has been choppy, I saw no indication of an Applocalypse in THAT data.

    If one actually READS the Nikkei report, there is none of the hysteria that I perceive in all the "news" reports that reference it, instead referring to this as a short-term inventory adjustment, similar to others that have occurred in the past.

    The Apple earnings report is due out in a few weeks … I know this is a radical notion, but why assume anything when the actual data will be presented there?

    Surely no one is fool enough to think that they are likely to receive the inside scoop from a zillion frantic domestic "news" reports, all referencing a single foreign trade journal that does not identify its sources, or even say how many sources the data comes from … and its own interpretation of the stories it received from its sources is "an ordinary inventory adjustment, not unlike those experienced in the past".

    Nah, NOBODY is dumb enough to run with THAT, are they?
    Jan 5, 2016. 08:43 PM | 8 Likes Like |Link to Comment
  • Is Technology Making Us Worse Investors?  [View article]
    How is the data in the chart segregated so as to minimize/eliminate the impact of HFT, where shares may be held for only milliseconds, and turnover becomes astronomic?
    Dec 12, 2014. 08:20 AM | Likes Like |Link to Comment
  • Nothing New Under The Sun  [View article]
    My own hot-button issue is the uncertainty about disruptions in the global oil market — while the US is nearly "energy independent" at present, the prices that we pay for oil-derived gasoline are still determined by the world market for oil. While it is (extremely) unlikely that we will see gas lines and rationing, a national gas price in the mid-$4 range is likely to have an impact on our national economy, and could spark a significant stock market correction (although I think that gas prices would have to sail past $5 toward $6 to drive us into the next recession).

    I just recently trimmed my holdings, raising cash in anticipation of the buying opportunity that a correction might provide, and am presently evaluatinig places to deploy that cash, when the time is right. But I did not sell everything, because (believe it or not) I am occasionallly wrong.

    I suspect that when the next recession does arrive, it will come as a surprise to the markets, with the spark being the uncovering of some massive financial fraud, or a surprise war that throws a monkey wrench into the global economy, an event that is totally unexpected (e.g., Japan and China going to war over some worthless islands with no value to either), or some other unanticipated event. The things that cause people concern are never the things that unhinge the markets, because the markets adjust as the concerns of the participants make those participants invest accordingly.

    When The End of All Things arrives, be it global thermonuclear war, an unstoppable global plague, or the sun going nova, it will also come as a surprise to all, with no possibility of being able to do anything about it. Trying to position our individual finances for such an event is a pointless exercise, and a waste of our time in this life.
    Jun 18, 2014. 03:53 PM | Likes Like |Link to Comment
  • What If Lowflation Isn't A Trap?  [View article]
    [• Low inflation means the Fed can afford to keep rates ultra low.

    While many view this as a negative, it's actually a huge benefit to debtors who are able to reduce their debts and benefit from lower debt service costs. In a period where aggregate consumer debt levels are still very high, this is an enormously positive development.]

    … it is helpful only so long as debtors fear that higher rates are coming, Real Soon Now, and are thus both motivated to pay down excessive levels of debt, and able to do so (at some level of repayment).

    Once people decide (rightly or wrongly) that low rates are here to stay, now and forevermore, their motivation to reduce debt disappears and their past bad behavior reasserts itself.

    Janet Yellen ought to throw out a little uncertainty from time to time, in a Greenspan-esque inscrutable manner, so that debtors will continue to pay down their debts. I find the recent rise in consumer debt, a departure from the past many months of pell-mell debt, to be a tad disconcerting, even if it is providing some of the recent acceleration to our consumer economy.

    We don't want an improving economy to be the thing that paves the path to the next economic crisis (even though Minsky would say that is the way that it works).
    May 11, 2014. 11:40 AM | 3 Likes Like |Link to Comment
  • Probable Versus Possible  [View article]
    If excessive leverage is one of the root causes of excessive volatility -- you tell me if this is so or not -- then has the aggregate leverage gone up or down since the calamity in 2008-2009?

    Everything I see says it has probably increased, with the amount of credit default swaps out in the world having liabilities of between 3 and 10 times the global aggregate GDP. I suspect that essentially all of these things are "hedged" but that a large number of them are hedged not by US Treasuries or other assets, but by other default swaps.

    What fraction of these chains of interlocking hedges needs to come undone to bring the whole mess down, in a classic cascade collapse?

    There's just a whole lotta unknown and unknowables around this entire mess that makes me unwilling to adopt a position of "we have our eyes open now, so bad stuff cannot happen to us".

    Reality always exceeds our imaginations. Until we institute some effective regulations, some rules to disallow unaudited derivatives, and place some limits on the amount of leverage a publicly-owned company is allowed to use, I think that the risk of a catastrophe remains.

    What have we learned? Some would say we have learned a lot.

    If so, what changes have we put in place that will prevent this from happening again? I see nothing of consequence. The Dodd Frank circus is thousands of pages of swiss cheese, that so far as I can see, has few complete prohibitions for any sort of activities or behavior.

    Wake me up when we have muzzled and chained the squids of Wall Street. It may be months or even years, but all the ingredients are in place to allow Wall Street to blow up the world once again. It will happen, and it will almost certainly do so within the next decade.
    Dec 11, 2012. 03:40 PM | 1 Like Like |Link to Comment
  • FedEx: Moderate Economic Expansion Continues  [View article]
    This is one company's experience. It would be more useful to see the business volumes of the entire industry, including the USPS ...
    Dec 16, 2011. 03:12 PM | Likes Like |Link to Comment
  • Ratings Agencies Become Even More Useless  [View article]
    A lotta people seem to believe this canard, that simply because we CAN print our own money, that we would choose to do so rather than inflate (or hyperinflate, if we are in a hurry) our debts into worthless junk.

    And yet this flies in the face of historical fact. There have been a great many nations that have defaulted on their own debts over the centuries, and almost all of them had the ability to choose the inflation "escape hatch".

    Many, many more choose the path of debt default rather than the inflationary path. So why do nations choose to default? Because when they analyze the situation, it is the easiest and quickest way to get back to a more normal mode of operation, and they know their societies could never hold up under the extended period of inflation that would be required.

    When the time comes (and not for a few years, for sure), we will have to make that choice as well.

    Or, our political "leaders" could sober up, stop bashing each other, and abandon clinging to insane goals, and get down to the business of leading and compromise.

    Just kidding ... I can assure you that is the one outcome that will NOT happen ...
    Apr 19, 2011. 09:57 AM | 2 Likes Like |Link to Comment
  • A Review of Chilean Investment Opportunities  [View article]
    In looking at their latest annual report, I see that only about $4M out of their net increase in assets over the past year ($50M) was from stockholding dividends, the rest being from "investment transactions" ($46M) and foreign currency transactions ($1.4M) and an adjustment from unrealized gains/losses to to exchange rate translation between the local currency and the US dollar ($2.2M).

    As they pay their dividend/distributions out of the net increase in net assets, that would account for the effective yield being higher than the dividend streams from the constituent companies -- i.e., the dividends/distributions also come from trading profits and other sources that contribute to the increase in NAV. If the NAV were to decrease on a sustained basis, it seems that there would be no payments made.

    From the Note to Financial Statements section in the Dec 2010 annual report:

    "The Fund has a managed distribution policy of paying quarterly distributions at an annual rate, set once a year, that is a percentage of the rolling average of the Fund’s prior four quarter-end NAV’s. In June 2010, the Board determined the rolling distribution rate to be 10% for the 12 month period commencing with the distribution payable in July 2010. This policy will be subject to regular review by the Fund’s Board. The distributions will be made from current income, supplemented by realized capital gains and, to the extent necessary, paid-in capital."

    The fund has just placed a shelf registration with the SEC that will allow them to issue new shares in the future, based on a criteria of the share prices being greater than the fund's NAV. As I interpret this, it is a way of generating income (sale of stock) that can be used to pay dividends, while having the stock price more closely adhere to the NAV.

    But that's just my take on the matter, based on how they pay dividends/distributions. I was concerned, upon seeing the shelf registration, of possible dilution in my own holdings of CH. But after examining their payout strategy, I'm leaning toward the notion that any dilutive impact would be mediated by increased quarterly payments. Still mulling this assessment around in my head, though, so it's just an opinion at this point. I plan on watching things to see if this holds up in practice.

    The question of what happens should share price-to-NAV drop below 1:1 is very real in my mind, as there seems to be no mechanism to decrease the number of outstanding shares in a similar manner to the expansion provided by the shelf registration's ability to issue additional shares.

    The annual report is available in pdf form from the Aberdeen Funds web site.
    Mar 26, 2011. 03:17 PM | 1 Like Like |Link to Comment
  • Farmland Is Not a Bubble  [View article]
    If there isn't an ETF to do this (perhaps similar to a REIT), there will be soon.
    Mar 25, 2011. 08:34 AM | Likes Like |Link to Comment
  • Farmland Is Not a Bubble  [View article]
    Do what we did for mortgages -- securitize farmland and leverage the living daylights out of it, mixing in some EPA superfund sites and flood plains or deserts along with the good topsoil farmland.

    THEN, you'll have a "farmland bubble".
    Mar 24, 2011. 04:25 PM | 4 Likes Like |Link to Comment
  • Apple's iPad 2 Launch and the Line Obsession  [View article]
    re: lines.

    It all depends upon how many they have ready to sell. Early rumors were that the initial run was only 400,000 units. Assuming that the non-Apple store outlets are "second-class citizens" when it comes to initial distribution, and there are only a handful available at Best Buy, Wal-Mart, Sam's Club, then a lot of people wanting them could be motivated to queue up in front of the local Apple Store (where they have physical Apple Stores).

    However, the same rumors that were touting only 400K units at the first opportunity to buy, were also saying that the April and beyond production rate had been cranked up a significant amount greater than the previous model, so any shortages would not only be artificial, but very short-lived.

    And face it -- lines in front of Apple Stores are good (free) advertising, sending the message that the products are popular and in demand, which can only help sell more of them. Same as classy TV ads and making evaluation units available to the media. If you hate waiting in line, and want a model 2 iPad, order one through the web and have it arrive a week (or so) later.

    The Verizon absence of lines was possibly attributable to the fact that existing Verizon customers had to deal with the transition from one plan+phone to another, which no phone company (except Virgin Mobile) makes easy. Or maybe the demand for iPhones among Verizon customers is simply not that great. We should be able to tell as the quarters roll by, whether there is a steady stream of Verizon customers switching to iPhones as their existing contracts run out, or not.

    Or ... Verizon could remove the roadblocks, and make it easy for existing customers to transfer from their existing contracts to new ones, without any penalties or monetary pain.

    Just jokin' -- no American phone company would EVER do THAT !
    Mar 9, 2011. 04:59 PM | 1 Like Like |Link to Comment
  • The Ambitious Scheme Known as Tres Amigas  [View article]
    One the cautionary side, while AMSC appears to have no significant competitors, I can point to GE, which also has a superconductor business, and makes wind turbines, and a politically well-placed CEO who positively adores the thought of moving large chinks of his industrial capital into China. And then there is the president, who is no fan of smaller businesses (if one can infer anything from his actions, it is that).

    So the biggest risk I can see is that Jeff Immelt will grab AMSC's business opportunities with government backing. Paranoid? Perhaps.

    But as I say, it is the biggest risk I can see, outweighing the possibility that the Chinese will hold critical supplies of rare earth materials hostage in order to force AMSC to move their production facilities and technology into their hands.

    One ought to always look at the possible risks in any investment.
    Feb 17, 2011. 10:05 AM | 2 Likes Like |Link to Comment
  • The Ambitious Scheme Known as Tres Amigas  [View article]
    Also, the high-current circuit breakers, which (I believe) use superconducting components to limit current flow -- as they heat up, they lose conductivity, a fault-tolerant failure that copper wires do not possess (they melt).

    But I might be wrong about this, as I have nothing I can point to in the way of documentation.
    Feb 17, 2011. 10:00 AM | Likes Like |Link to Comment
  • The Ambitious Scheme Known as Tres Amigas  [View article]
    Anyone have a clue as to when we might see actual revenues begin to flow into AMSC from the Tres Amigas project? Are they scheduled to begin construction in 2011 or 2012?
    Feb 16, 2011. 10:15 AM | Likes Like |Link to Comment
  • Is the Central Bank Causing Inflation?  [View article]
    wow. one of the discredited Chicago School academicians. I thought they were all extinct. Tell me again the ones about the efficient market theory, and the rational man. And please show me how deception, fraud and irrational greed fit into your equations.
    Feb 10, 2011. 08:07 AM | Likes Like |Link to Comment