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Retired and loving it

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  • The Future Of Seeking Alpha [View article]
    Quite so. I think it is a fact that if anything on SA was truly worth something it would not be on SA. That said pretty much anything you will read about investments is of no value. Professional advice is also pretty much worthless.

    Having spent nearly 40 years in the investment business 99% of all investors would be best served by buying a very low fee index fund.
    Mar 25, 2015. 12:48 PM | 40 Likes Like |Link to Comment
  • The Active Passive Debate Evolves By Necessity [View article]
    The 60:40 has been an ineffective strategy for at least five years. And Cullen Roche has indeed got it right. Beating a benchmark provides no comfort if the return achieved leaves you short of money.
    Mar 24, 2015. 10:37 AM | 1 Like Like |Link to Comment
  • Greece's Real Problem [View article]
    It is a truism that poor competitive position ultimately leads to massive fiscal deficits and unmanageable debt levels. The reason is simple: governments step in to replace lost income when private sector employments collapse.

    The longer term solution is to improve the competitive position. The problem however is that policies to improve the competitive position are not easily implemented (lower business taxes, reduced government involvement in the economy, lower wages etc). Almost every country on the planet chooses the easy solution of simply lowering the currency. The problem with this however is that it encourages business as usual. Reform is usually forgotten and nothing changes.

    Greece probably cannot be saved. But letting them go on their own raises significant security risks. Greece will become the playground for terrorists if they are set adrift.
    Mar 12, 2015. 09:34 AM | 4 Likes Like |Link to Comment
  • This Is Why The Stock Market Is Tumbling [View article]
    Two things. Sell everything and wait for a 20% pullback. Or do nothing and continue to receive your dividends.
    Mar 11, 2015. 10:52 AM | Likes Like |Link to Comment
  • Does Reading Seeking Alpha Really Help Beat The Market? A 5-Year Meta-Analysis [View article]
    Total gibberish. Glad to see that there are lots of people who still back test everything. In the investment world back testing is like trying to relive history. Interesting only to those with nothing better to do. Real value would come from a strategy that works in the future rather than the past.
    Mar 11, 2015. 10:07 AM | Likes Like |Link to Comment
  • Exxon's Tillerson on M&A: "No limitation on what we might be interested in" [View news story]
    If the young prefer explosive capital appreciation over dividends then they are making the same mistake that bygone youth made. Once they have blown their brains out a few times they will appreciate the value of a regular dividend.
    Mar 6, 2015. 07:07 PM | 1 Like Like |Link to Comment
  • HSBC: Amazing Banking Franchise But Management Is Asleep [View article]
    Citibank and BAC are arguably the two most stupid banks in the U.S.. What saves them from being ranked worse is that there are a dozen or more banks in Europe and Japan that are even more stupid.
    Mar 6, 2015. 07:02 PM | Likes Like |Link to Comment
  • HSBC: Amazing Banking Franchise But Management Is Asleep [View article]
    Quite so. HSBC may be where most banks eventually evolve. A low return but stable business model. I would prefer that management do a complete mea culpa with all regulators and then comply with all regulations. I don't want HSBC involved in derivatives of any kind, sub prime lending of any kind, tax avoidance schemes of any kind etc. I want them to roll back their activities to what they did 40 years ago. I don't care if they only make a 10% ROE. That is a marvelous return if it is stable.

    I expect that HSBC will never grow earning or dividends by more than 2% annually and I don't expect them to raise the dividend for at least two more years. None of this matters. HSBC is a bond with a terminal price that hopefully goes up a little over time. Why buy some junk high yield bond which is worth who knows what when you can buy HSBC and get the same yield with a stable and lower risk business model.

    Who needs junk bonds?
    Mar 6, 2015. 09:41 AM | Likes Like |Link to Comment
  • Retire Well: Keep The Vigorish (Expenses) To A Minimum [View article]
    There was a time 35 years ago when the most expensive part of investing was stock brokerage commissions. When I first started in the business it cost $1.50 a share for an institution to trade a stock. And commissions only got that low for institutions who traded thousands of shares at a time. Retail investors paid more. Today it is possible to trade stocks for as little as 3 cents a share. Even retail investors can trade for maybe a dime a share. Technology is the reason commissions have come down. Everything is done electronically. No one has moved physical paper around in a couple of decades.

    At the same time however fees charged by asset managers have hardly changed in 35 years. Management fees remain at more than 1%. Given the improvement in technology a case can be made for fees to drop dramatically. Why investors don't demand it is a mystery.
    Feb 18, 2015. 06:34 PM | 2 Likes Like |Link to Comment
  • Exxon: Please Lord, Don't Buy BP [View article]
    Wrong. The assets you mention are indeed being highly valued by the market already. It is why Exxon trades at a low dividend yield. Management do not set the dividend yield, they set the dividend and the market decides what to pay for it. The fact that Exxon trades at a low yield reflects the fact that investors pay up for quality. If investors hated Exxon and viewed them as conniving thieves the yield on Exxon would be much higher, like it is for BP. I don't understand why everyone confuses a low dividend yield with bad dividend strategy. Management does not determine the yield. The market does that.
    Feb 17, 2015. 01:38 PM | 5 Likes Like |Link to Comment
  • Exxon: Please Lord, Don't Buy BP [View article]
    There is truth in what you say but the criticism can be levelled at all CEO's in every company on the planet. CEO compensation has gotten truly out of hand and boards of directors are at their wits end to stop it. It will only stop when shareholders demand an end to the nonsense.

    I worked in industry for 40 years and my experience is that there is at best two or three CEO's on the planet who are worth the hundreds of millions they are paid. While most are indeed competent they all still put their pants on one leg at a time. No CEO is worth 20 times plus what the average worker in a company gets paid. We need to return to the era of the 1960's when CEO compensation was rational.
    Feb 17, 2015. 01:32 PM | 6 Likes Like |Link to Comment
  • Exxon: Please Lord, Don't Buy BP [View article]
    I don't think so. Exxon is like a planet that produces oil. They know where every body in the oil world is buried. If they buy BP it is because they have dug up the corpses and had a sniff and still feel ok.
    Feb 17, 2015. 01:26 PM | 3 Likes Like |Link to Comment
  • Exxon: Please Lord, Don't Buy BP [View article]
    Exxon's lower dividend yield relative to the other majors is not the fault of management. They pay out a healthy share of earnings. The low dividend yield is due to the fact that investors appreciate how great Exxon is and they pay up for this excellence. BP for example trades at a very high dividend yield not because they are shareholder friendly but because everyone believes they are incompetent and investors demand a high dividend yield to compensate for this concern. In simple terms Exxon's low dividend yield is the fault of investors not Exxon. Investors would rather buy Exxon at a lower yield than BP. Should we blame Exxon for that?

    The other oil companies you spoke of spun off assets because investors convinced management that they could not manage these assets well and they would be better off in the hands of others. Conoco for example listened to this message in spades and blew off all sorts of assets. If you look at the performance of these spin offs however you will realize that Conoco would have been wise to keep them as they have all performed well and the old Conoco shareholders would have been rewarded if they had been kept.

    I have met the senior managements of all of the majors and there is a world of difference between Exxon and everyone else. Management at Exxon can squeeze a nickel till the buffalo poops. They are the worlds best cost choppers.
    Feb 17, 2015. 01:23 PM | 9 Likes Like |Link to Comment
  • Exxon: Please Lord, Don't Buy BP [View article]
    Exxon has a history of being a savvy buyer of assets. The only boo boo that I can recall was the big purchase of U.S. natural gas assets. The concept was and remains good but the timing was bad. They bought just before natural gas prices collapsed. The purchase of BP however would be very beneficial for Exxon for a number of reasons. First BP's share price is very cheap while Exxon's is expensive. Two BP is mainly an oil producer an oil is worth far more than natural gas so this would be a big positive for Exxon if or when oil prices rise. Three BP has a unique asset in Russia that cannot be replicated. This relationship is worth very little at the moment because of low oil prices and sanctions against Russia. Exxon is trying very hard to grow its Russian oil production. They could find no better way to do so than by buying BP. And finally BP is near the end of its problems with Macondo and Exxon because of its experience with the Exxon Valdez disaster is uniquely positioned to deal with the politics of a nasty oil spill.

    An Exxon purchase of BP may not sound like a good idea but it would be the best strategic move Exxon could ever make. Asking Exxon to spin off assets into an MLP is window dressing. Exxon knows more than anyone on the planet about the pluses or minuses of MLP's. If they choose not to get involved it is because they have examined all the positives and decided it is not in the best interests of shareholders. Exxon is the most shareholder friendly of all the world's oil majors and the reason is simple. Exxon is by far and away the best managed oil company on the planet. They have the highest return on equity and have the lowest operating costs of any major. No one else is close. It may be true that there is a junior somewhere on the planet with great assets but Exxon would need to buy a hundred of these to move the needle. A purchase of BP would make Exxon the pre-eminant oil company in the world. BP has some really great assets. BP is suffering from a combination of bad management and bad luck. In Exxon's these negatives would be mitigated quickly.
    Feb 17, 2015. 09:09 AM | 11 Likes Like |Link to Comment
  • Forget Beaten Up Utilities, Buy This 7.1% Clean Energy REIT [View article]
    Margin of safety? That's the greatest myth in investing. The proof 40 plus years of seeing "the margin of safety blow big"
    Feb 14, 2015. 01:21 PM | 1 Like Like |Link to Comment