Knight Capital Group: An Object Lesson In Emergency Financing [View article]
Last I checked, TSLA only had $33 million left on its DOE credit line before that's maxed out. I had previously thought they had several times that untapped. So I would have sold TSLA shares to raise another $100 million - $250 million back in May. Raise cash when it's easy.
KCG's problem was that software glitch cost them about 4 years of earnings in 30 minutes. Many companies would have declared bankruptcy, because few smaller companies can borrow 4 years of earnings in a weekend. Their P/E of 3 looks promising. I'd look harder at TSLA if they had a P/E of under 5. I know a couple of times Ford, GM and Chrysler got in that range.
YRCW has massive leverage, and if they ever get to 1% margins from negative, there's a lot of room there. But the company is afloat only because bondholders support current management. Considering previous management, I understand. So you are treating YRCW as an option. Too Enron for me - note I think YRCW has honest accounting. Nice entrance and exit on KCG. Guess I made enough on SVU - covering is harder for me than shorting.
So Bill Gross Is Bearish On Equities [View article]
Over generational timespans, demographics rule. The U.S. has decent demographics in 2012, compared to Europe, Japan, and China, and not so good vs. Brazil and India.
They key is that over the next 30 years, U.S. demographics will move a bit closer to Brazil/India than to the EU, Russia, China and Japan. And Southern Europe's demographics are downright scary. China's demographics are already worse than Japan 1990, and with a few policy shifts, mostly in energy, we could be looking at deflation similar to U.S. 1870-1900.
So I would invest in select Latin America and India, as long as their governments keep corruption under control. That would include Brazil, Chile, Uruguay, Paraguay and Costa Rica. In addition to India, Vietnam, Cambodia, Laos and Australia look promising, as do Norway and Canada. U.S. stocks would be in the mix, but underweight.
I am somewhat puzzled at your long list. SVU,and YRCW are staring at bankruptcy, although SVU has several quarters to go. I can see that KCG might be too important to fail, but don't have any feel at all for terms. In my experience, the guys with rescue plans come to the meeting with baseball bats. At least you may have already flipped this one. YRCW is 1-2 reverse splits away from another reverse split. FAS might get up to 93-96, so I understand that one.
Who Cares About The Fed Funds? We All Do [View article]
I would argue that it's not the demand for money, but the supply. In 2005, a family with a 630 credit score could borrow $300,000 at 6.5% for a house with an effective no money down - true, often with teaser rates. In 2012, a family with a 650 credit score can't borrow squat for a home, even with 20% down - but can borrow a limited amount on a credit card at 29.9%.
The lowering of interest rates has of course helped those with credit scores of 780 - buying a house for 40% less, interest rates 50% less, for a savings on interest paid of 70% from 2005. But then, people in this category contribute to political campaigns, have good connections, etc. Rather than ZIRP, I'd rather see a return of the deductibility of credit card and other interest - it'd help retail stores and people who buy at retail, and banks would be able to write off fewer loans at the same credit quality.
The Bernanke Cargo Cult: Bankrupt Policy For A Bankrupt Generation [View article]
Stops on stocks sound good, but my backtesting indicates that it would cost me money.
What has cost me more money, however, has been stubbornness and failure to monitor my holdings. If my thesis for holding or shorting a stock is wrong, and I delay, the usual result is more pain. So the no stops rule only applies if I have the discipline to close out a position at a loss.
The Bernanke Cargo Cult: Bankrupt Policy For A Bankrupt Generation [View article]
You put into words what I've been thinking for months/years. Monetary policy leads to malinvestment, which leads to more monetary policy. The most likely ways to end it are the Paul Volcker way, which is politically extremely unlikely, Zimbabwe the Mugabe way, Germany the Weimar way, and France the John Law/Louis XVIth way. But the John Law part of our cycle ended in 1929/1930.
Of these possibilities, I think the French way is the most likely, although we could end up like the Spanish at the end of the 1500s, where after decades of trading North American gold for Dutch gunpowder, it ended with the Spanish running out of gold.
I live in Ohio and I know farmers who are hurting bad. The worst thing about droughts is that they sometimes last more than one year. 1932, 1934, and 1936 were bad years for Ohio farmers, and much worse in Missouri and Oklahoma. Lots of recent construction activity, through 2009 at least, that hasn't yet been paid off.
Banks would prefer not to foreclose, as most of the farmers here know their land very well, and farm it near maximum efficiency. With people expecting a federal backstop, banks and farmers have taken on more risk in farm country. I expect farm subsidies to be worked in a way that keeps most farmers on their farms, as it is politically expedient for both parties. More important, we are going to need the food. Still, food riots are likely in 2013 in poor countries all over the world.
High New England Heating Oil Use Is A Potential Gold Mine For Natural Gas Utility UIL Holdings [View article]
Payback around 7 years if the previous furnace/heating works well. but varies from around 4 years to 20 years depending on details. Issue is lots of people don't look 4 years ahead, let alone 20, plus limited number of contractors means labor will cost a bit more than usual, given the high demand for conversions over time.
What If Your Only Option Was To Own 10-Yr Treasuries Or The S&P 500 For 10 Years [View article]
When AAPL was $12 per share, I told everyone to buy it because it had $12 per share cash, so you were getting the company for free. Few listened, as it was the post tech crash. But that's what makes large fortunes - buying when there's figurative blood in the streets. However, it did drop another 45% to around $6.50 before beginning its rise, so patience, timing and guts are needed.
Why China Matters To U.S. Dividend Income Investors [View article]
China's switch to the Euro from the US dollar has not been timely. I would expect China to buy more raw materials, precious metals, and companies that produce them rather than paper assets not backed by physical or production capacity. But China is running out of places to store physical, much like crude oil and refined oil in the U.S. So we may see a bout of deflation, leaving the Fed and other central banks pushing on a string. In that case, U.S. Treasuries would look better than Greek etc. eurobonds, unless Germany goes all in.
Why McDonald's Is Significantly Overvalued [View article]
I think MCD is a bit overpriced. But then, as a value investor, I think most stocks, most of the time, are overpriced. So I would rate it as a market perform, near term. If it gets down to 13x trailing earnings, I may reconsider.
Thursday Failure For The Euro: $1.22 Or Bust [View article]
Maybe SVU shorted its competitors. But it looks to me that they took their negative margins and made them more negative. Their cash flow isn't so horrible as to be in imminent danger of bankruptcy, but they haven't been earning their dividend for a while, so it was appropriate to cut it. I'm neutral at the current price of $2.50, but shorted it at $4.28 a month ago today (6/13). I may shop more at their stores, though.
Demystifying Energy Storage System Costs [View article]
I'd be willing to bet a nominal sum that a model S owner needs a replacement pack before Tesla goes bankrupt. Please understand this to mean that I don't believe that the model S pack will have .9999 reliability, not that I expect Tesla to remain in business in 2021, absent a significant addition of capital.
The Curse Of The Obvious Ticker [View article]
Knight Capital Group: An Object Lesson In Emergency Financing [View article]
KCG's problem was that software glitch cost them about 4 years of earnings in 30 minutes. Many companies would have declared bankruptcy, because few smaller companies can borrow 4 years of earnings in a weekend. Their P/E of 3 looks promising. I'd look harder at TSLA if they had a P/E of under 5. I know a couple of times Ford, GM and Chrysler got in that range.
Friday's Fiscal Fantasy Camp [View article]
So Bill Gross Is Bearish On Equities [View article]
They key is that over the next 30 years, U.S. demographics will move a bit closer to Brazil/India than to the EU, Russia, China and Japan. And Southern Europe's demographics are downright scary. China's demographics are already worse than Japan 1990, and with a few policy shifts, mostly in energy, we could be looking at deflation similar to U.S. 1870-1900.
So I would invest in select Latin America and India, as long as their governments keep corruption under control. That would include Brazil, Chile, Uruguay, Paraguay and Costa Rica. In addition to India, Vietnam, Cambodia, Laos and Australia look promising, as do Norway and Canada. U.S. stocks would be in the mix, but underweight.
Friday's Fiscal Fantasy Camp [View article]
Who Cares About The Fed Funds? We All Do [View article]
The lowering of interest rates has of course helped those with credit scores of 780 - buying a house for 40% less, interest rates 50% less, for a savings on interest paid of 70% from 2005. But then, people in this category contribute to political campaigns, have good connections, etc. Rather than ZIRP, I'd rather see a return of the deductibility of credit card and other interest - it'd help retail stores and people who buy at retail, and banks would be able to write off fewer loans at the same credit quality.
The Bernanke Cargo Cult: Bankrupt Policy For A Bankrupt Generation [View article]
What has cost me more money, however, has been stubbornness and failure to monitor my holdings. If my thesis for holding or shorting a stock is wrong, and I delay, the usual result is more pain. So the no stops rule only applies if I have the discipline to close out a position at a loss.
The Bernanke Cargo Cult: Bankrupt Policy For A Bankrupt Generation [View article]
Of these possibilities, I think the French way is the most likely, although we could end up like the Spanish at the end of the 1500s, where after decades of trading North American gold for Dutch gunpowder, it ended with the Spanish running out of gold.
Tut Tut Tuesday: Still No Rain [View article]
Banks would prefer not to foreclose, as most of the farmers here know their land very well, and farm it near maximum efficiency. With people expecting a federal backstop, banks and farmers have taken on more risk in farm country. I expect farm subsidies to be worked in a way that keeps most farmers on their farms, as it is politically expedient for both parties. More important, we are going to need the food. Still, food riots are likely in 2013 in poor countries all over the world.
High New England Heating Oil Use Is A Potential Gold Mine For Natural Gas Utility UIL Holdings [View article]
What If Your Only Option Was To Own 10-Yr Treasuries Or The S&P 500 For 10 Years [View article]
Why China Matters To U.S. Dividend Income Investors [View article]
Why McDonald's Is Significantly Overvalued [View article]
Thursday Failure For The Euro: $1.22 Or Bust [View article]
Demystifying Energy Storage System Costs [View article]