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Fueled By Randomness

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  • Retirees: I Did Not Buy IBM To Sell; It's About The Dividend Income, Stupid [View article]
    Credit ratings agencies are fine but like other humans, are NOT infallible. Many seasoned professionals once thought Enron was a solid company. And as another poster mentioned, Kodak was once one of the safest and bluest of the blue chips. Not saying IBM will follow either example but in general "nullius in verba" ("take nobody's word for it.")
    Oct 23, 2015. 06:46 PM | 12 Likes Like |Link to Comment
  • Do-It-Yourself Home Improvement - Can We Afford It? [View article]
    Ironically, the internet is a great source of info about fixing things - for example, I found out how to fix my AC unit via a web article. And the portability of the iPhones and iPads make it possible to read the directions while you work (kinda hard with my old desktop, but my printer filled the gap. :) Of course, it's of no use to someone who doesn't know which end of a hammer is the business end - but I'm sure there's info out there on how those work as well.
    Nov 17, 2014. 12:28 PM | 2 Likes Like |Link to Comment
  • How To Survive A Secular Stagnation [View article]
    "These involve pro-growth initiatives such as investing in education and infrastructure..."

    Seriously, these are new ideas? Don't we already have multitudes of unemployed debt-burdened English and History majors? How many more of those do we need? And even if they were to major in astro-physics instead, what are they going to do when they graduate? There are no jobs. Companies hire because they need help, not because a lot of graduates are available.

    And infrastructure - didn't we just spend 800 billion bucks on "infrastructure" a few years ago? "Shovel-ready" jobs, I think the term was. Too bad more of that money didn't get spent on actual infrastructure instead of dog parks and such. There probably ARE actual useful infrastructure projects that would help the economy but don't count on them being funded unless the correct politicians' cronies will benefit.

    As you say, "the book rightly argues that serious thinking should be devoted to developing alternative policies." Great, when do they start doing that?
    Aug 28, 2014. 04:25 PM | 16 Likes Like |Link to Comment
  • Karl Popper And Dividend Growth Investing [View article]
    Buying the "Nifty Fifty" was the 1970s "can't fail" strategy which did. And we all remember the mantra from the last decade, "housing never goes down" which pretty much guaranteed it was going to go down. So yeah, the time to be the most cautious about any market strategy is when everybody agrees it's a no-brainer. To me, the most important rule is "price matters." As Jim Grant said, "You don't want to stand on line to buy an asset, you want to go where there's no lines." Right now, there's a line for dividend growers.
    Aug 4, 2013. 10:16 AM | 8 Likes Like |Link to Comment
  • "Many Americans don't have enough money to carry them through retirement," writes Jeff Sommer in the NYT. A recent study found that around 44% of households in the baby boom and Generation X generations are likely to run short of cash in their retirement years. One (temporary?) problem is low bond yields, while another is that people are "ill equipped" to mange Individual Retirement Accounts. And then there are 401(k) and other defined-contribution plans, which have ended up as a major part of the retirement system rather than as the supplements they were supposed to be. [View news story]
    "people are 'ill equipped' to mange Individual Retirement Accounts."

    Guess what - governments and corporations seem to be ill equipped to mange retirement money as well, judging from the unfunded liabilities in so many pension funds. Maybe it's all the same problem - the tyranny of "now" overshadows future considerations.

    Jun 16, 2013. 11:24 AM | 2 Likes Like |Link to Comment
  • Dialed In To France Telecom [View article]
    If you're referring to the foreign withholding tax on dividends, you don't get those back. But, if you file a US tax return, you can either claim a deduction for them -or- a tax credit for them on your US return. If you use tax software, such as Turbo Tax, it should be able to help you with this. If you use professional preparers (H&R Block et al) they should be able to do it as well.
    Jun 12, 2013. 09:22 AM | 1 Like Like |Link to Comment
  • Pfizer (PFE) plans to spin off its remaining stake in Zoetis (ZTS) through a tax-free exchange offer in which Pfizer owners can exchange their Pfizer shares for stock in Zoetis owned by Pfizer (got that?). Pfizer has received a waiver of the 180-day lock-up from the book runners of the Zoetis IPO. PFE +2.1%, ZTS -1.2% premarket. (PR[View news story]
    Unfortunately, it is becoming a fairly common practice. Quite a few big name companies have done this in the past few years. Kraft's 2008 "split-off" (instead of spin-off) of Ralcorp is one, Bristol Meyers split-off of Mead Johnson was another that comes to mind. Obviously, it's a problem for shareholders because you have to decide between holding shares of a known quantity or exchanging them for some number of shares in a unknown one. Interestingly enough, the folks who took the split-off company shares make out better than the ones who kept the old company ones, at least in the examples that I can remember. Many times, not always but often, a traditional spin-off ends up being a POS company, overburdened with debt, that fails because the assets being spun off were not really wanted by the parent anyway. I don't know if that's happened with a split-off yet but to recall the old maxim, if things can go wrong, they will.
    May 22, 2013. 02:37 PM | 2 Likes Like |Link to Comment
  • The Dirty Secret About The 1929 Stock Market Crash [View article]
    Y, this same idea can be seen in the "Nifty Fifty" downdraft of the 1970s - in 1972-73, the mantra was that it didn't matter what price you paid for certain standout companies (the Nifty Fifty) because they always went up or something (sounds just like the housing bubble talk just before it burst.) By 1975, the prices of these companies crashed along with the rest of the market. The businesses hadn't changed much, just the illusion. As always, price matters.
    Apr 14, 2013. 10:45 AM | 4 Likes Like |Link to Comment
  • Wind And Solar Share Fatal Flaws: Politics And Variability Of Output [View article]
    The UN's (or anyone's, for that matter) prediction and $4 will buy you a latte.
    Apr 4, 2013. 09:11 PM | 6 Likes Like |Link to Comment
  • "The impact of the improvement in financial conditions on the real economy has been somewhat stronger than I anticipated," says FRBNY chief Bill Dudley, patting himself on the back with both hands. Not only that, but the risks of QE are even less than he anticipated (need 3rd hand now). Why does growth remain so slow? Fiscal policy, he says. Governments are tightening at precisely the wrong time. [View news story]
    His expectations must've been extremely low.
    Mar 25, 2013. 01:52 PM | 1 Like Like |Link to Comment
  • America Divided: Inflation Felt By Many While Bernanke Fights Deflation [View article]
    What you say makes sense. The bridge is not rising, but the river is lowering. One reason real incomes are falling is ZIRP. Anyone who has a savings account or short-term money market account is getting zilch return from it. Bonds and bond funds are not doing much better. Meanwhile, Helicopter Ben's "mild" inflation continues inexorably onward and upward, zilch returns on savings or not.
    Mar 5, 2013. 10:23 AM | Likes Like |Link to Comment
  • No One Will Win A Currency War [View article]
    Kinda like the intersection with a gas station on each of the four corners. One of the proprietors begins a price war; the "winner" will be the guy with the most money to lose.
    Feb 25, 2013. 05:26 PM | 2 Likes Like |Link to Comment
  • Two days of losses is apparently enough: Ben Bernanke shrugged off concerns the Fed's policies are fueling asset bubbles at a meeting earlier this month, reports Bloomberg, citing anonymous sources. Does Jon Hilsenrath have the day off? [View news story]
    Great, I'm on board with that too. 8 of the 10 wealthiest counties in the US voted for Obama so they should be also:

    Hollywood, Warren Buffett, George Soros, the Googlers, etc, etc. All Democrats, all wealthy. Let's raise taxes on those rich one percenters.
    Feb 22, 2013. 03:09 PM | 4 Likes Like |Link to Comment
  • Robert Shiller: Don't Invest In Housing [View article]
    Like anything else, in housing price matters. Unlike commercial properties, owner-occupied residential housing produces no cashflow so it's hard to value. I saw a number of writers during the last boom propose using some multiple (say 150-200) times a month's rent on a comparable property as a proxy. My own idea is that one should take the long term trend line in prices for a given area (which would intuitively incorporate currency inflation as well as local economic cyclicalities) and extrapolate it and consider buying for investment when prices were well below that trend line and sell or avoid buying when above. If buying for personal use only (not investment) buying at the trend line is OK.

    My own personal experience with housing has shown over the long term, it compounds at roughly the rate of inflation. If you were lucky or perspicacious enough to buy after the S&L crash in the early 90s and sell during the bubble in the 2000s (i.e. buy low and sell high) you could've made a killing.

    And never buy from a developer as an investment. Because if the price goes up, the developer will simply build more (he is basically competing with you.) I know people who ignored that rule and were crushed.
    Feb 8, 2013. 09:58 AM | 3 Likes Like |Link to Comment
  • Greenpeace issues its starkest warning yet about the need for action on climate change, pinpointing 14 coal, oil and gas projects - in Canada, the Arctic, the U.S., Venezuela, the Gulf of Mexico, Brazil, Africa, the Caspian Sea, Iraq, Kazakhstan, China, Indonesia and Australia - it says will soon add 20% to emissions already causing climate change. [View news story]
    Jan 23, 2013. 01:01 PM | 3 Likes Like |Link to Comment