constantnormal

IEA Report - Trouble for Oil ETFs?

Projections that are 20 years out are nothing but fantasies. Nobody can accurately project anything, in any area 20 years into the future.

There are so many status quo assumptions built into this projection that will ultimately be toppled that it is ludicrous. Technologies change, markets change, the global economy changes. And so far as global warming goes, who's to say that a decade from now some process to actively suck greenhouse gases out of the atmosphere will not emerge, that happens to use oil as a working medium? I can indulge in ridiculous fantasies just as much as the IEA.

The IEA is first and foremost, selling advice to rich oil-producers, so one would expect that advice to be heavily tailored to what their customers want to hear.

S&P 500's Top Returners in 2009

It would be nice see how the "valuation model" used to assess these stocks compares to things like PEG and price/(free cash flow per share).

Just tossing out the results from an ill-defined black box does not engender any confidence in me -- looks too much like a fund that is "talking its book".

Will The Federal Trade Commission Have an Issue with Apple and Google?

The obvious defense is that Apple is a hardware company whose software is (for the most part) restricted to its hardware. Google is an advertising firm, and also heavily into software (as an advertising medium), none of which is restricted to Apple products, and some of which competes directly with Apple.

Kinda tough to derive any antitrust benefit from those profiles.

Apple's Valuation: My Stance

" ... So I'm going to shy away from drawing estimates for 2010, but I openly welcome thoughts on what 2010 might bring and the supporting arguments leading to such conclusions."

" ... I think 2010 will be significantly better than 2009 ..."

OK, so which is it? I take it from your latter comment, that you believe this recession is "only" a recession, and that it will definitely be on the wane by 2010.

OTOH, IF this is something deeper and more structural (we call those things "depressions"), with unemployment and home foreclosures continuing to squeeze the global economy smaller and smaller, then 2010 could see increasing pressure on AAPL's customers, constraining their ability to buy products.

We have yet to hit the single-digit PE multiples characteristic of bottoms in extreme downturns, so there is a reasonable prospect that AAPL will continue to see its outstanding operating performance (which I fully expect to continue) rewarded rather weakly in the equity markets.

Revising Apple's Outlook in Line with Reality

Just what do you guys mean by "long-term"?

If you are talking "long-term" as in long-term capital gains, then Andy should take his profits now, before the bear-market rally gives out and AAPL sinks (along with everything else -- slower, but sinking just the same) as PE multiple compression drives valuations toward the single-digit regimes that occur at real bottoms.

Of course, if you are talking "love-of-my-life" long-term, well then you are correct and nobody should ever sell a well-run profitable company that they are in love with, certainly not over a small thing like losing money.

There were people buying at the top in 1929 (and 1937), some buying excellent companies (at inflated values, considering the impending future) and it took decades for them to break even.

There were people in love with gold, back in the 70's, and it took 30 years to regain the levels they loved it at.

Buying a stock for love can blind one to the fact that even the best-managed, most profitable companies can have their stock prices suffer for a very long time, if the larger market environment is bad enough. The name of the game is not to own the best stocks, it is to make money owning them. Those who forget that (or have never learned it) are doomed to be parted with their money.

4 Possible Market Scenarios

Tech companies may be "swimming in money", but most are only knee-deep in revenue -- possibly soon to be ankle-deep.

If you can envision a recovery where the consumers get renewed confidence that their jobs will be around, and have the bulk of their debt paid down, maybe you can project ahead to when the revenue picture improves for these companies.

Until then, the declining revenues are likely to provide a number of air pockets for these high-flying stocks.

Buying cash-rich tech stocks because they are cash-rich is not a sound decision in the face of massive future uncertainties. The only thing that is (nearly) certain is that these companies will survive until the next boom. AAPL could almost certainly withstand the financial collapse of the United States, but that does not mean one would make money owning it.

If you want to gamble on a recovery emerging because stocks are rising, you may as well buy housing stocks or TBTF banks. The returns for them are likely to be much greater in a recovery scenario.

Not so much if the recovery does not materialize.

I would be watching for large-scale insider buying at these cash-rich tech companies as a sign to acquire them. I have not seen any signs of this yet.

1100 Tonnes Now in the GLD Trust

It should probably be recognized that while GLD is "bullion-backed", that need not necessarily mean that they have 1100 tonnes of bullion in a warehouse. For example, they could have futures contracts to receive 1100 tonnes of gold, and no physical gold, or an actual 1100 tonnes of gold, or any mix in between. The thing to understand that GLD is not a substitute for owning physical gold, it is a substitute for participating in the price movement of physical gold, and as such, should be thought of as a form of derivatives contract, much the same as futures contracts or options, structured across various prices and dates so as to achieve the desired price relationship. But it differs from options and futures contracts, in that there is no expiration date.

Here's a link to a page regarding the GLD fund, and their auditability:
news.goldseek.com/Jame...

I think that so long as one recognizes the ETF for what it is, one should have no problem whatsoever making money using it.

If however, you are a goldbug wingnut, intent upon amassing a horde of the yellow metal along with adequate stockpiles of bullets and bottled water, eagerly anticipating the Libertarian Rapture, then GLD is clearly not your cuppa tea.

Just be aware of what you are buying and why you are buying it. If you are looking for a hedge against dollar depreciation in times of inflation and currency panic, then GLD should do the job at a very low overhead, as compared to the generous markups of buying gold coins or managing secure storage of bullion.

1100 Tonnes Now in the GLD Trust

oops. Apparently I'm not so good at the math either. Should be 71 pallets of a thousand bars each, not 7. Still, it's not that much physical space, and there is little danger of theft due to the difficulty of moving the stuff. (You're not going to haul it away in a fleet oF Mini-Coopers)

As to where it comes from, there are a bunch of mining companies all over the world, where do you think they sell their product?

1100 Tonnes Now in the GLD Trust

User 325302 -- have you ever calculated how much physical space it takes to hold 1100 tons of gold bars?

The standard gold bar is 7" x 3.625" x 1.75" and weighs 30.94 lb
[www.elmhurst.edu/~chm/vchembook/125Ade...

1100 tons = 1100 x 2000 lbs = 2.2 M lbs = 71,105.36 gold bars, or about 7 pallets of 10 bars wide x 10 bars deep x 10 bars high or 7 pallets that are 70" x 36.25" x 17.5"

It's not that large an amount of physical space. Do the math.

Standing Tall with Chemical & Mining Co. of Chile

I prefer quotes from Mr T to those from The Rock.

Apple and Amazon's Open Embrace

If we had ubiquitous wifi availability, then one could look at the Kindle as an "always-on" portal to written content -- there are more things written than just hardback books, like magazines, newspapers, comics (color will eventually come to the Kindle).

But there is a dearth of open access wifi in this nation, and in most parts of it, of wifi access of any sort. The Kindle is going to have a long runway before it takes off and threatens the magazine rack.

It must come down in price -- A LOT -- and improve in capability (color, for instance, is a requirement before comics and a lot of magazine content is practical) before it really goes mainstream, and there must be widespread access to open wifi.

Until that happens, it will remain a toy for rich folks who spend a lotta time in airports/airplanes and would like to have a lightweight library to accompany them.

With a King's Ransom in Cash, Why Still No Buying Spree in the Tech Space?

I suspect they will start buying when revenues at the companies they would like to acquire turn higher -- which is going to be some time from now. Nobody is going to plunk down good cash (the most prized asset in deflationary times) for something that is going to be cheaper next month.

Equities vs. Inflation

<sigh>

Roger, as a "professional" money manager and investor, you of all people ought to realize that inflation occurs across all sorts of economic backdrops. A mild inflation is not at all detrimental to stocks, so long as it stays low, keeping price changes low and predictable, as that implies plenty of liquidity in a economy strong enough to make use of it. Even a moderate rate of inflation can be accommodated in a strong economy, for a while.

But if you crank of the rate of inflation, to where it becomes difficult for businesses to manage the monthly changes in raw materials and wages, then it's not so good for businesses. Stocks don;t do so well then.

Or if the economy is flat on its back, weak as a kitten, then you get stagflation, with constantly rising costs an companies struggling to turn a profit. Stocks don't do so well then either.

So what kind of inflation do you see (eventually) coming, from all the trillions the Fed is pumping into the money supply, hmmmm?

And how strong is the economy likely to be, in the face of record unemployment and record home foreclosures?

Options Trader Friday Outlook: GDPhew!

the 3.8% number exists only because the huge unsalable inventories that did not sell at Christmas counts as "production" in the GDP equation.

Take them out, and 3.8% becomes 5.1%. But Phil knows this.

And the numbers will, of course, be revised downward. The first taste of truth is always sugar-coated, if you can call a 3.8% drop "sugar-coated".

When you consider that this was for the strongest economic quarter of the year, and we are now well into the weakest quarter, with simply unbelievable numbers of unemployed being churned out, our Gross Domestic PRODUCTION for this quarter will make even the revised previous quarter look pretty good. I think that a 5% drop for this QUARTER, not the projected annual rate, but just due to this quarter, is looking possible.

And XOM was not so much "an incredible job managing a tough quarter" as an incredible job of managing refinery output in the face of huge drops in crude prices, to maintain sufficiently high prices of refined products. Slap them on the back and congratulate them for doing a nice job of managing their vertically-integrated oligopoly!

If Apple Does Correct, It Will Do So Soon

I can't see much call for Apple to invest their cash in a stock buyback, as over the past 12/9/6/3 months cash has performed MUCH better than AAPL. If a company is so desperate that they feel the need to use their cash to artificially inflate their stock, that's a stock I don't feel good about buying -- if I wanted that kind of company, I'd be buying shares in ExxonMobil.

Looking ahead, I don't see Apple's sales improving much, as people who are losing their jobs and homes (or fear the loss of their jobs and homes) don;t spend their last dollars/euros/whatever on a new Mac or iPhone.

I DO see the company remaining financially strong, with the PE not suffering much more compression, but the stock price WILL follow the near-term earnings lower.

Near-term, the emotional rally in the markets, with the few remaining bulls scrambling to drive stocks higher as they catch a breath, it may well result in AAPL performing pretty much as Zach says -- just as the stock has performed as Zach has predicted in his past essays. I still expect is to dive lower over the next quarter or two, just as Zach does, as sales inevitably decline because PEOPLE HAVE NO MONEY TO SPEND on consumer electronics.

Apple remains a fantastic company, with excellent products and the best management team on the planet (name me one other company with the breadth and depth of top-management talent that Apple has), but the stock markets remain in bear status, deflation has not yet been tamed, and it is shrinking the global economy day by day.

Happytalk AAPL fanbois who can only see their beloved AAPL marching ever higher, ignoring the state of the global economy around them, are invited to pave the way lower with their money, by becoming the other side of my downside trades. As they say, making money and being successful is the best revenge.

You can name-call all you like about those who predict AAPL will decline in price, but how much money have you made in AAPL over the past 12 months? The chart at the top of this page suggests "not much". Trash-talking doesn't move stocks higher or lower, turn off CNBC and take a look at the Real World. Go run over to Minyanville and read "Emotion is the Enemy" [www.minyanville.com/ar...] repeatedly, until the message sinks in.