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The Rebel

The Rebel
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  • Holy Smoke - My Favorite Idea That Everyone Knows But Doesn't Understand [View article]
    "They have pretty much zero chance of surviving in their present form (PG is already starting to divest itself of its worst performing brands)."

    They won't succumb to the same fate that befell companies such as Kodak, Digital, Polaroid, etc. because they are not beholden to one or two product lines, and because the people who buy their products do so every day and week, as opposed to a one time purchase at those now defunct companies. So they can easily divest non-performing brands without destroying the heart of the company. This indicates PG is doing what good management does, and that is to rid the company of products that aren't pulling their weight. Good management also seeks out new businesses that are growing faster than their present ones, so acquisitions cannot be ruled out.

    For every Trader Joe's or Whole Foods there is a much larger Kroger or Safeway, to mention just two. While the typical supermarket may carry 50,000 items, Trader Joe's carries only about 4,000 items, 80% of which carry one of its brand names. So there is much less variety to choose from, and I would refer to it as a niche business that will only attract so many shoppers. Much like the doomsayers in the oil business predicting the end for companies like Exxon and Chevron as wind and solar replace them, one could conclude from your comments that the Krogers and Safeways will also soon fall to the wayside as these upstarts take over.
    Apr 26, 2015. 07:10 PM | 1 Like Like |Link to Comment
  • The Madness Of Mr. Market [View article]
    Another area that is overlooked is the baby boomer generation now moving into retirement. Many of these boomers could have moved their 401(k) plans into safer environments during the great recession, such as money market accounts and guaranteed fund accounts, in preparation for their upcoming retirement. As they have been retiring over the past 5-6 years, many of them may have transitioned into individual stocks, specifically DG stocks, as well as bonds. I don't know if the mutual fund inflows/outflows take into account the separate funds set up within the 401(k) accounts.
    Apr 26, 2015. 02:57 PM | 1 Like Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    Anthony- thanks for the compliment. My risky comment was only because you had said "...the risk of writing call options...". Because of the assignment, I gave up about $300 in additional profit over and above the strike price proceeds received and the sold call proceeds. The dividend to be received on May 1 is unaffected, whether assigned or not. I guess I just cannot accept the notion that a strategy that may take less of a profit from selling covered calls is a risk, since you are taking a profit and not a loss. I tend to use the word risk in connection with losses or potential losses. But no big deal. I've been reading many of your articles for some time, and we've had some nice discussions in the past. :)
    Apr 25, 2015. 05:59 PM | 2 Likes Like |Link to Comment
  • HCP, Inc.: This Problem Just Got Bigger [View article]
    gawilley- I agree 100%. I've been saying the same thing for the past week on various articles. Some people just accept what they see and make their own conclusion, instead of doing further due diligence. Also, a great deal of the shares issued to Aviv investors on April 1 at the conclusion of the acquisition have been sold, including one investor that sold 40% of the total shares issued to Aviv holders. That probably spooked retail investors further to sell.
    Apr 25, 2015. 05:29 PM | 2 Likes Like |Link to Comment
  • Seadrill, North Atlantic Drilling, And Rosneft - A Long-Term View Of Perspectives In Russia [View article]
    "The Russian Minister of Finance Anton Siluanov stated (Google translate link) that there are risks that Russian Reserve Fund would be empty by the end of 2016 if the country fails to change its budget policy."

    Tell Putin that his military budget must be drastically reduced.
    Apr 24, 2015. 09:08 PM | 3 Likes Like |Link to Comment
  • HCP, Inc.: This Problem Just Got Bigger [View article]
    "The overhang from all of this is part of the reason why HCP is yielding around 5.3% today and competitors Ventas, Inc. (NYSE:VTR) and Health Care REIT, Inc. (NYSE:HCN) are yielding 3.2% and 4.4%, respectively."

    Yet Omega Healthcare (OHI) yields 5.6% and has no single operator subsequent to the Aviv acquisition that approaches 10% of revenues, let alone Justice Dept. investigations of its operators. I don't understand why HCP's credit rating hasn't been reduced as a result of these HCR ManorCare troubles. Meanwhile, HCP's stock has had a nice pop since the March low, yet OHI since then continues to just muddle along.
    Apr 24, 2015. 09:02 PM | 6 Likes Like |Link to Comment
  • Holy Smoke - My Favorite Idea That Everyone Knows But Doesn't Understand [View article]
    No smart CEO telegraphs his plans for all the competition to see. Do you think they (Philip Morris at the time) told the investment community their plans to buy Kraft or Miller Brewing before they did so? I have enough faith in the management of this company, based on decades of excellent corporate governance, to continue making the right decisions in maintaining their competitive advantage, and in maximizing total returns to shareholders.
    Apr 24, 2015. 07:39 PM | 5 Likes Like |Link to Comment
  • Kinder Morgan: Have You Missed The Boat? [View article]
    Resistance here in New England is nothing new. The Kennedy family compound in Hyannisport overlooks Nantucket Sound. The family, led by the late Sen. Edward Kennedy, has long opposed the 130-turbine Cape Wind project. But, as this link from two months ago shows, the environmental lobby just loves the wind farm, since it won't be in their back yard:

    http://bit.ly/1I5IHUP
    Apr 24, 2015. 07:15 PM | 1 Like Like |Link to Comment
  • Holy Smoke - My Favorite Idea That Everyone Knows But Doesn't Understand [View article]
    18214212- The short answer to your question is that all of the companies you mentioned were technology companies, and they were not able to keep up with, or adapt to, the fast paced technological changes of their era. The companies I discussed are not technology companies, so they don't have that additional pressure to contend with, and can more readily adapt to changing market conditions.

    As for alternative energy sources, of course they will gain some market share. They already are gaining. But I seriously doubt that they will become the dominant energy suppliers in the next 30-50 years, let alone relegate oil to the dustbin of history.
    Apr 24, 2015. 05:51 PM | 3 Likes Like |Link to Comment
  • Holy Smoke - My Favorite Idea That Everyone Knows But Doesn't Understand [View article]
    "The only way to make money over the long term in the market is to understand the businesses you invest in."

    I understand quite well that the products manufactured by PG and KMB are items that I and millions (billions?) of people throughout the world use in their daily lives. I understand that the oil produced by XOM is not going to be replaced by wind and solar alternatives for many decades, if ever. And I understand that businesses like KO and MCD may stumble once in a while, but are fully capable of righting their ships and continuing to thrive long into the future.
    Apr 24, 2015. 04:48 PM | 4 Likes Like |Link to Comment
  • Holy Smoke - My Favorite Idea That Everyone Knows But Doesn't Understand [View article]
    I'm old enough to remember seeing far more headwinds in the 1960's and 70's aligning not only against the company, but against the whole industry. Altria made it through that and through the lawsuits of the 90's and subsequent Master Settlement Agreement of 1998. Altria management is quite smart and adaptable, so I'm sure they have a long-term plan for the future that will address your concerns.
    Apr 24, 2015. 04:20 PM | 5 Likes Like |Link to Comment
  • Holy Smoke - My Favorite Idea That Everyone Knows But Doesn't Understand [View article]
    Many people have had their heads handed to them shorting this stock over the years. While it may be a bit overvalued at the moment, you can short it at your peril. The only times a short worked in the last 15 years was during the recessions of 2001 and 2008. So unless you see a recession on the horizon, shorting MO would be a bad move.
    Apr 24, 2015. 03:06 PM | 5 Likes Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    BTW, there is a large price gap on T now between $32.89 and $33.33 due to the higher opening today. These gaps tend to get filled in during the ensuing weeks, so selling cash secured puts after assignment is a good strategy to use in reacquiring the shares.
    Apr 23, 2015. 03:23 PM | 2 Likes Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    Anthony- Those 1,000 shares of T were acquired on March 25 for $32.65. So if assigned at $33.50, in my tax-exempt account, I will record a gain on the shares of $850, proceeds of $192 from selling the calls, and $470 dividends payable on May 1, for a total cash flow of $1,512 for one month. That works out to well over a 50% annualized return. Sure, I may have given up a little additional gain on the shares, but who's complaining. I can then do what another commenter posted and sell a cash secured put to pick up the shares again at a lower price. There are still 11 weeks before the next ex-dividend date. I don't know how you can conclude that writing these calls was risky, given the total return realized.
    Apr 23, 2015. 02:55 PM | 1 Like Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    All I keep hearing is watch what happens to dividend stocks once the Fed raises interest rates. How far do you think they will raise rates and how long do you think it will take to get to your forecasted level? The Fed ratcheted down its projections for the federal funds rate sharply at its last meeting. The median projection for year-end 2015 was the midpoint between 0.5% and 0.75% -- a hefty half-percentage-point lower than the previous forecast made last December. And the projection showed a drop to the midpoint between 1.75% and 2% for the end of 2016, down significantly from 2.50% previously.

    Given the lowered rates around the world, coupled with the fact that even moderate interest rates would strain US coffers just to pay interest on all the debt, I can envision the Fed's forecasted rates coming down even further.

    For the last 2-3 years we have heard the same mantra about the increase in interest rates being the death knell to dividend stocks. It's time to give that repetitious chant a rest.
    Apr 22, 2015. 10:52 PM | 10 Likes Like |Link to Comment
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