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  • Cramer's Mad Money - 4 Stocks I Don't Like (2/28/11)  [View article]
    CAT can certainly raise prices. Yellow paint and steel are not going to be that inflationary for them - the biggest cost component is labor in the manufacturing process. This remains very tame. Prices rises for CAT should have more impact on profits.

    The biggest problem for CAT is managing international expansion in the demand for their products. You can't stop a roaring locomotive going full speed ahead - in this case its a roaring bulldozer.
    Mar 1, 2011. 11:30 AM | 3 Likes Like |Link to Comment
  • Economic Growth and Dividend Expansion Will Lead Banks Higher  [View article]
    BAC is the tobacco stock of this century. I agree the dividend will be increased sometime in the future but when? I certainly hope sometime before 2018 & 19 when my warrants expire. While I wait my money is parked in a zero Treasury to come due at that time.

    They are continually being plagued by the headline news. The management takes it all in stride and continues to write-off all they can to show little profit for shareholders. As the ultimate liability diffuses, the balance sheet will grow fatter and fatter from the non-claims from litigation.

    They are going to be reluctant to make too large an increase in the first payout for fear of being continued to be painted as a "bad boy" image.

    The ultimate benefit for the shareholder is going to come - long term. This is not an investment for anyone needing income at any time in the near future.
    Mar 1, 2011. 09:50 AM | 3 Likes Like |Link to Comment
  • Would $130 Oil Derail the Bull Market?  [View article]
    The biggest limitation to price rise will be the increased infrastructure needed to bring oil shale production on-line. The oil shale resource has the potential to increase production many times over the current level of "peak oil." It will take long sustained prices above $100 for enterprise to exploit this. The Saudies would have to play it smart to not allow oil to get above the price that would encourage oil shale production to start.

    The infrastructure to exploit oil shale is very expensive, but once the decision is made and put in place - it becomes a fixed cost. The enterprise of shale production would not stop. Keep in mind, MC is just the cost of day to day operation of the enterprise. The fixed cost in a price decline may not be recoverable and overall the enterprise could operate at a loss. But, the effort to recover some of the investment would require the producer to continue to exploit oil shale reserves until MC=MR.

    The peak oil price IMHO will never exceed the cost of producing oil from shale.

    If the US Government were to announce subsidies to encourage oil shale production, the music for the oil bulls will stop. There will not be enough chairs for all the longs to sit down. Limit down moves in the oil market would spell economic ruin for many speculators from no bidders for contracts and margin calls.
    Feb 27, 2011. 01:11 PM | Likes Like |Link to Comment
  • Would $130 Oil Derail the Bull Market?  [View article]
    Peak oil is being interpreted as a Malthusian concept. The exploration and use of oil is governed by Ricardian economics. As such, it would never run out and only gets pumped out of the ground according to the cost of production. Production economics in a pure competition situation has the producer continuing to pump it out as long as marginal cost = marginal revenue. As the price declines less will get pumped unless there is a shift in demand. As substitutes come into play, especially with automotive fuels, when the price rises more people buy fuel efficient vehicles or shift to electricity or CNG. Then when the price declines it will be from reduced usage/demand and less oil will be consumed than previously at the same price decline. This is under pure competition.

    However, we do not have a free enterprise price situation.

    The Middle East Cartel is restricting competition and artificially controlling the supply entering the market. The first Government that doesn't blow up their oil fields and when liberalized to provide its people the maximum benefit from this rich resource will start pumping all they can at the inflated price. Some of these countries can pump it out at less than $20/Barrel. Then, other countries seeing how this first country is scalping the market, will follow suite until all will be in competition lowering the price until MC=MR.

    Anyone speculating in oil futures should take Econ 101 and then supplement this with a course in Production economics. Then to research Maurice Kelso, Professor Emeritus at the U. of Arizona who wrote an excellent paper on the economics of pumping oil from a common pool.
    Feb 27, 2011. 12:49 PM | 1 Like Like |Link to Comment
  • Would $130 Oil Derail the Bull Market?  [View article]
    When the market breaks - Bulls will get busted.
    Arab liberation and the demise of the sheikdoms could break the cartel. Oil could drop to $30/Barrel. With free competition the oil will keep pumping until the price equals the cost of delivering it.
    Feb 25, 2011. 03:33 PM | Likes Like |Link to Comment
  • Just another day at the office in the grain pits - corn gives up a month worth of gains on Monday and Tuesday only to gain it all back and close about unchanged for the week. Beans, wheat, and rice see similar, but not quite as dramatic reversals. JJG +3.7%. CORN +3.8%. AGU +2.9%. POT +3.4%.   [View news story]
    Corn futures - The longs lose money and the shorts lose money but we continue to make our commissions Valentine. Isn't that right Mortimer?
    Feb 25, 2011. 03:28 PM | Likes Like |Link to Comment
  • The legal mess Bank of America (BAC +1.6%) inherited from Countrywide keeps getting worse. Several large institutional investors, including BlackRock and Calpers, reject a court settlement where Countrywide had agreed to pay $600M to a number of national pension funds; instead they'll pursue their own lawsuits.   [View news story]
    BAC probably employs more lawyers than any other publicly traded firm. I haven't seen many poor lawyers lately and I doubt that BAC would have any on the payrole if they weren't earning their keep.
    Feb 25, 2011. 03:24 PM | 1 Like Like |Link to Comment
  • CBS (CBS +6.5%) shares hit their highest point in - ahem - two-and-a-half years despite ending production of TV's top-rated sitcom after a rant by lead actor Charlie Sheen. CBS could suffer a ratings hit, but Warner Brothers (TWX +1.2%) would lose syndication revenue. Investors are more impressed with CBS' advertising recovery and content deals with the likes of Netflix (NFLX -1.3%).   [View news story]
    CPV - preferred up today and selling at a premium. Not hurting this CBS preferred stock.
    Feb 25, 2011. 03:20 PM | Likes Like |Link to Comment
  • Value Traps? 20 Most Undervalued Stocks With Bearish Crossover Signals  [View article]
    UVV I take it is the worst and I've had negative feelings about it for awhile now and have trimed back my holdings. This is a rare negative comment from any SA analyst and I congratulate you. UVV has had its problems. Sales and bottom line are punky. They are being scalped by direct sales of tobacco by farmers to cigarette companies in some important markets. If this trend continues, it could be the end of the hey-day for this company. Tobacco consumption world-wide continues to grow but this company's market share is in danger of further shrinkage.
    Feb 23, 2011. 11:10 AM | Likes Like |Link to Comment
  • Focus on Manufacturing: 6 Dividend Stocks for Every Portfolio  [View article]
    BUCY is going to get a cash payment of $92 - that doesn't leave much room for a gain compared to a CD till mid-year. I was surprised this morning to see that I doubled my dividend in CAT since the last Q payment then realized it was because I doubled up on my position. I wish I bought it sooner but can't complain in currently carrying a 39% gain in the total position with this best performing stock of last year's DOW Jones performance.

    GE was recently purchased for my wife's IRA. GE with its broad diversification and large capitalization is an excellent proxy to owning the whole DOW in performance over the long term.

    I can't say I am a fan for the defense reliant companies - GE offers enough exposure for me in that category. Government is cutting - defense is on the chopping block.
    Feb 23, 2011. 10:08 AM | 2 Likes Like |Link to Comment
  • Silver Rally Going Strong - For Now  [View article]
    "both futures traders and ETF buyers are heavily participating in silver's rise. The increased volume behind last week's move gives credence to the notion that the current uptrend can be sustained"

    Why is this so bullish? If volume is increasing when you get close to the contract expiration date, do you anticipate that these are miners that are ready to deliver the silver according to the terms of the contract? Or, if these are speculators who are long are they going to be forced to sell their contracts before the expiration date?

    With futures it is a no sum game. Anyone making profit has another making the same exact loss. The only ones making any money, net, are the brokers and managers of these funds.

    In saying the traders are participating in the price rise but to my understanding there has to be a seller for every futures contract. Obviously if the price rise, there is a trader taking a loss.

    This then should be an accurate statement, more money is being lost today in the silver futures market than in the past several years. I could be wrong if it is the miners delivering the silver but they too probably are buying back their contracts because the futures market in almost all cases is not an efficient manner to deliver silver for actual sale of the commodity. Their loss is in hedging costs that they write off as a business expense.

    Feb 22, 2011. 01:03 PM | 1 Like Like |Link to Comment
  • Valuations for Five Major Banks With Bearish Warnings  [View article]
    I like your tag of looks like they are in trouble for BAC. They are doing everything they can right now to get off the negative headline tirade and to remove the "kick me hard" bulls-eye target sign that is pinned to their butt.

    BAC continues to write-off all they can to get the financial crisis behind them. These losses are goodwill impairments, reserves and mandatory set asides for litigation that is turning positive for them in many cases. But, the cash flow continues.

    When they are given the green flag - I look for a modest increase in the dividend - then some better more realistic valuation according to their LT prospects should take hold.
    Feb 22, 2011. 11:34 AM | Likes Like |Link to Comment
  • A Look at Foreign Stock Investing Through ADRs  [View article]
    GMK - I like your coverage of these ADRs. My biggest holding in that category is GMK. They recently put out an interesting report on their finances and I would appreciate your view if you were to investigate it.
    Feb 22, 2011. 11:20 AM | Likes Like |Link to Comment
  • Will Silver Stocks Outperform Bullion at $130 per Ounce?  [View article]
    I don't think it would be wise to assume that any type of fund or miner that benefits from the price rise in silver does not use derivatives and futures. I'd recommend investigating the use of derivatives before your invest in these securities.

    I got burnt by a financial company last week on their use of derivatives and 2 years ago in with GMK in their poor hedging operations.
    Feb 22, 2011. 11:16 AM | Likes Like |Link to Comment
  • Will Silver Stocks Outperform Bullion at $130 per Ounce?  [View article]
    You have to think of your opportunity cost to pick any of these companies. The profits that you would expect over an alternative investment whether it be a T-bond, CD or blue chip stock should then be discounted by the probability of a loss on your selection. If these stocks have already had a run up in price, this could prove to be a very risky decision to buy these miners at this time.

    The way I play mining in general is CAT. The higher the price of silver goes - the more mining equipment gets sold.

    Disclosure - the man in the hat is long CAT and it comprises between 1-2% of my total capital invested.

    The best way to make money in the market is not to lose it.

    Feb 22, 2011. 11:10 AM | 1 Like Like |Link to Comment