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  • ICICI Bank - Take Advantage Of The Dip To Add Positions In This Stock [View article]
    Itau survived and grew in economic conditions that were at times difficult. The merged bank will not be taken unawares by political upheaval in Brazil, recession, rising unemployment, inflation, currency devaluation, or a downgrade to Brazil's bond rating. ITUB is a conservatively managed bank operating in a market where the net interest margins and return on equity for banks are comparatively high.

    There is also much to admire about ICICI. I owned IBN shares in the past, and sold them at a gain.

    At the present time, there is a bear market underway both in India and Brazil equity markets. So if I had to "bet", both ITUB and IBN share prices will go (with the flow) lower for a while.
    Aug 24, 2015. 12:45 AM | Likes Like |Link to Comment
  • ICICI Bank - Take Advantage Of The Dip To Add Positions In This Stock [View article]
    I agree that IBN is not currently "extremely cheap". (But I believe IBN has been extremely cheap in the past, and may be so in the future.)

    Based on Price/BV there are well-managed banks in developing economies that are currently cheaper than Icici P/BV = 1.97x. For example, in Brazil Itau-Unibanco, symbol ITUB, 8/21/15 price = $7.47, BV = $5, P/BV=1.49x
    Aug 23, 2015. 02:55 PM | Likes Like |Link to Comment
  • Is The Tide Turning At Last For Gold And For Gold Stocks? [View article]
    Week-ending 8/21/15 the discount on Central Fund of Canada (closed end fund in gold and silver bullion) did notch an improvement in sentiment for precious metals. A week ago the discount was -11.98%. At close 8/21/15 the discount was -10.98%.

    I saw comments in the media this week that gold was up as a result of safe-haven buying. I would also imagine there has been considerable short-covering in gold futures markets.

    Perhaps sentiment for precious metals (and PM miners) basically follows price movements. As prices declined, I believe sentiment went to extreme disfavor. It may be that a reversal of sentiment will gradually follow, if prices of PM continue to rise week after week.
    Aug 23, 2015. 02:17 PM | Likes Like |Link to Comment
  • Is The Tide Turning At Last For Gold And For Gold Stocks? [View article]
    Yes, Druck has a policy of concentrating investments, and recently increased his concentration in gold. (I would not say he was previously bearish on gold and his sentiment changed from negative to positive... but his example may perhaps inspire the odd bear to reverse opinion.)
    Aug 18, 2015. 09:10 AM | 1 Like Like |Link to Comment
  • Is The Tide Turning At Last For Gold And For Gold Stocks? [View article]
    I don't know what the most recent "flows" into/out of GLD and gold mutual funds have been, but I believe that for several months there have been net redemptions. I would agree that if capitulation is underway, then it stands to reason that at the bottom of the cycle a reversal by a small percentage of naysayers to a positive sentiment could be the start of a big rally.

    In the main article I did not see the evidence that capitulation in gold had reached exhaustion. If there are indications, I hope that discussion here would bring them to readers' attention.
    Aug 17, 2015. 01:49 PM | Likes Like |Link to Comment
  • Is The Tide Turning At Last For Gold And For Gold Stocks? [View article]
    What evidence can be given that investor sentiment towards gold "may be changing for the positive"?

    In today's Financial Times was the report that "August has seen the largest fall in sentiment towards gold since May 2013, according to the Lloyds Bank private banking investor index".

    Another indicator for deteriorating sentiment of retail investors for gold and silver bullion: the discount on the closed-end Central Fund of Canada (symbol CEF): 5-year average discount 0.65%; 1-year average discount -7.98%; discount on 7/23/15 -12.32%... narrowed to -9.72% on 8/12/15 ... widened to -11.98% at close 8/14/15.

    There is a widespread belief among investors that precious metals are and will continue to be a losing investment because: XAU is at a multiyear low; the US Dollar is strengthening; interest rates in the US are soon to rise; and Global manufacturing and trade are contracting.

    Where is sentiment for gold changing from negative to positive?
    Aug 17, 2015. 11:45 AM | Likes Like |Link to Comment
  • The Dividend Growth Wide Moat 7 From Canada [View article]
    The linked IRS document sets a limit of $300/$600 on foreign income taxes... not foreign dividends. At a 25% foreign tax rate, the amount of foreign dividends could be up to $1200/$2400 (tax-filer single/married-filing-... before a Form 1116 calculation would be required.

    On my Form 1116 for 2014, approximately 33% of my total foreign taxes paid was the amount allowed as a foreign tax credit.

    I am not an accountant. I had an experienced CPA prepare my return. For people receiving significant income from abroad, I would recommend hiring a capable accountant at tax time.
    Aug 12, 2015. 02:20 PM | 1 Like Like |Link to Comment
  • Canadian oil sands price nears $20/bbl, cut in half since July 1 [View news story]
    I believe those with leases will work them, albeit with the slimmest possible capital expenditure.... like a Wisconsin dairy farm, where they will not quit milking until their lender evicts them. It may be necessary to "hunker down" and take losses until prices improve.
    Aug 12, 2015. 01:02 PM | Likes Like |Link to Comment
  • Plum Creek Timber Biding Its Time [View article]
    I believe Jeremy Grantham's conclusion that timber on the stump increases in value at a rate 3% above CPI. Explanations may include the diffuse nature of commodity price inflation, as well as a forest's biological growth of 2 to 8% per year.
    Also, land is an appreciating asset long-term ... or in other words: the Dollar is a fiat currency.

    When I was accumulating my position in PCL with DRIP and optional share purchases (2008-2014), I sought to avoid paying too much per share by spreading purchases out. My average cost when I converted from DRIP to direct deposit of dividends was nothing to brag about, nor to be ashamed of. I anticipate holding until the year 2025.

    PCL stock coefficient of correlation to the SP500 Index over the 15 year period ending in 2013 was about .55 ... That does not predict the future. But I think the low correlations with SP500 is one reason Grantham has long allocated investments in the timber asset class.
    Aug 11, 2015. 02:14 PM | 5 Likes Like |Link to Comment
  • Assured Guaranty - Roughly 50% Of Liquidation Value [View article]
    Based on Yahoo Finance, during the past 6 months AGO insiders have bought zero shares and sold 10.86 million shares in the company. (Institutions also have been significant net sellers).

    I assume the CEO is "smart". On February 9 he disposed of some of his shareholdings at $25.22

    I also assume Wilbur L. Ross has a finely honed scimitar for value. On March 19, 2014, AGO Director Ross was selling at $25.43

    Only time will tell if there is much more upside in the share price.
    Aug 10, 2015. 11:01 PM | Likes Like |Link to Comment
  • SCHP: The Best TIPS Exposure Investors Can Get [View article]
    Waiting in cash before buying TIPs is a timing decision, which seems sensible assuming that over the short run TIPs will continue to pay a negative return.

    If my information is correct, the manager of PIMCO's PRAIX, Mihir Worah, is allocating 40% to cash, 58% to TIPs (with an average duration of 10.27 years or so).

    In June 2015, Dr. Worah wrote in PIMCO's "Secular Series" that his team expects inflation to accelerate over the next few years... more likely to surprise on the upside, "overshooting central bank targets". He states "TIPs prices ... reflect an insufficient risk premium". In other words, market participants continue to believe there is a significant risk of deflation, but the correction in commodity prices is already history.

    The current NAV of PRAIX is $8.20. The net annual expense is 0.55% The 3-year average return -2.65%. Duration 10.27 years. (No endorsement of PRAIX is implied)

    As of Friday, July 31, The TIPs spreads were 1.44% on the 5 year and 1.76% on the 10-year. So, if actual CPI-U increases at 2.5% over these time periods, owners of TIPs would be comparatively better compensated than owners of straight Treasurys.

    TIPs may be regarded as a hedge against unexpectedly high rates of inflation. If I were timing purchases of TIPS in a contrarian manner, the ideal time to buy would be when market expectations of inflation are minimal, when market participants believe deflation is looming.

    But from an asset allocation point of view, timing is of little consequence. In my view, for a retiree with a substantial employee pension and Social Security coming in, Long Term Investment Portfolio should be:
    36% Risk Securities
    64% Investment Grade Fixed Income Securities, of which
    ... 36% Muni Bond ladder (individual full-faith-and-credit or water/sewer revenue bonds to be held to maturity)
    ... 15% Muni Bond low cost short duration fund
    ... 13% TIPs, of which
    ...... 6% funds (closed end WIW or WIA, and low cost short duration TIPs fund)
    ...... 7% TIPs ladder (individual bonds to be held to maturity)

    Nothing herein is to be construed as investment advice. I am stating personal opinion only.
    Aug 2, 2015. 12:56 PM | Likes Like |Link to Comment
  • SCHP: The Best TIPS Exposure Investors Can Get [View article]

    I agree that to the extent it is known (or planned) when in the future there will be withdrawals of capital, the lowest risk and lowest cost security would be a directly-owned (no intermediary) TIP maturing in that year.

    For instance, if the investor plans to annuitize $100,000 in constant dollars per year at age 73 to 75 (in 2023 to 2025) he might consider purchases of $100,000 principal TIPs maturing in each of the 3 years. The yield would be low, as befits a very low-risk investment in an era of "zero interest rate policy".

    I doubt that this tactic would be terribly popular. It would perhaps appeal only to investors ( some retirees might be among them) who are convinced that "the way to win will be by not losing".
    Aug 1, 2015. 02:30 PM | Likes Like |Link to Comment
  • Gold Crush - It Ain't Pretty And It Will Get Uglier [View article]
    My guess is that it is VGPMX, Vanguard's fund that is mainly invested in miners' stocks.
    Jul 20, 2015. 02:12 PM | Likes Like |Link to Comment
  • Saudis' Real Target May Be Canadian Oil Sands [View article]
    Saudi's Real Target Canadian Oil Sands? Seriously?

    (I agree with the observation that U. S. shale producers are not "the target". Ali bin Ibrahim Al-Naini, Minister of Petroleum and Mineral Resources for Saudi Arabia, said as much to an audience in Germany on March 4 of this year.)

    The Saudi goal is "market stability". They plan to "moderate" the "volatile oil investment cycle". In November of 2014, in response to falling Brent crude prices, they decided not to cut production. Why not?

    In Al-Naini's stated opinion, Saudi Arabia was mistaken to cut production in the 1980's, because this action ceded market share to other producers (both OPEC and non-OPEC).

    Saudi Arabia evidently expects global (especially Asian) demand for petroleum to increase over the long term. Their goal is to maintain market share as demand grows. They intend to maintain "spare production capacity" with which to increase exports, if there is a supply disruption elsewhere.

    The market is presently oversupplied, but Saudi Arabia expects long-term supply reductions from high-cost areas, such as the arctic, deep offshore, oil sands of Canada and Venezuela, and shale oil in the US. With the cuts in capital spending in the high-cost areas, Saudi Arabia is likely to see their expectations realized.

    Perhaps of greater importance is the behavior of national oil companies in Iran (NIOC) and Iraq (INOC). Al-Naimi argued for price stability "for the benefit of all producers", and he called for "co-operation". In other words, Saudi Arabia will continue increasing production, until national oil companies of other countries join in a multinational arrangement to limit production.

    Russia will meet with OPEC July 30, and no doubt the topic of Russian production will be discussed.

    If any country is "Saudi Arabia's Number One Target", Iran would be it.

    King Salman bin Abdulaziz Al-Saud clearly perceives Iran as a rival for influence in the gulf region and a threat to security within the kingdom. The suicide car-bombing in Riyadh on July 16 could be perceived as orchestrated by Iran. Saudi Arabia is increasingly committed to the use of military force in Yemen and Syria to fight Iran's proxy groups. Theoretically the lifting of "nuclear sanctions" on Iran could allow Iran to double petroleum exports. Somehow, I think Saudi Arabia will not allow Iran's coffers to be filled by new oil revenues.

    The full text of Al-Naini's speech is on-line on the website of the Embassy of Saudi Arabia.
    Jul 17, 2015. 01:06 PM | 5 Likes Like |Link to Comment
  • Bond Yields Are Too Weak; I Would Rather Buy Dividend Growth, Microcap, And Drywall [View article]
    TIPs would be nice to have in a portfolio if there is an unexpected increase in CPI-U. That is generally be deemed a low probability event... but nonetheless one that an investor might want to hedge the risk of.

    Based on the 10-year TIPS Spread, last time I looked the bond market was priced on the expectation of 1.86% inflation.

    I don't pretend to know that the bond market will be "shocked" some day by unexpected inflation. But with Fed openly aiming for 2%, and the ECB committed to do "whatever it takes" to avoid deflation... just maybe it could happen.

    Such is the appeal of an inflation-protected bond. Would you like yield with that? Then the choices get slimmer, and other risks enter into the scene. For example Western Asset Management has a couple of closed end funds, WIA and WIW. (Funds, in contrast to a TIPs bond held to maturity, can go down and stay down in price.) WIW was recently priced at $11.12.
    NAV=$12.83 Discount -13.33%
    The maximum discount in the past 52 weeks = 15.12%
    The average discount over the past 5 years = 11.19%
    Distribution yield=3.62%
    (Data from cefconnect)

    Comparatively, I doubt that drywall (with my carpentry skills, for sure!) would increase in value, to say nothing of distributing monthly income like WIW.

    Fixed Income investments are not for everybody. However, a retiree might consider some allocation to fixed income, with its highly predictable (full faith and credit) schedule of future payments.
    Jul 16, 2015. 06:06 PM | Likes Like |Link to Comment