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wdchil

wdchil
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  • John Deere: Down On The Farm [View article]
    "So, is John Deere a good investment capable of providing a good, but lumpy return? ... Disclosure: my clients and I own shares of Deere."

    Hmmm. I look forward to your next installment. Also long DE.
    Sep 19 07:02 PM | Likes Like |Link to Comment
  • IBM And Intel: The End Game For IBM Semiconductor [View article]
    TOLLSFORTHEE - Did you cash out at the exact peak and buy back in at the exact bottom (or close to it) in the 08/09 stock decline/rise? Did you buy Microsoft when it was a penny stock and then sell out at the peak? If not, then by your own definition that is a screw-up - maybe even galactic for that matter. We always make decisions based on the best information we have at the time and there will always be better things to do in hindsight. The only guy that took advantage of that was in "Back to to Future part II."
    Sep 17 04:37 PM | Likes Like |Link to Comment
  • In The Next Correction, Will You Be A Winner Or A Loser? [View article]
    MKW, This is true, but timing the move to cash and back to stocks is always difficult - many folks do worse than if they just held their positions. I prefer to take a hybrid strategy with different kinds of assets that tend to respond differently to recession versus boom, high versus low rates, and inflation versus deflation. When one sector takes a big hit I can move assets to the more undervalued sector.

    Of course one might argue that I am always half wrong and half right and therefore mediocre - and they would be half right in saying so! But I always seek the high quality and modestly valued type companies or funds to invest in and try to avoid high fliers or companies with weak finances. Thus I think I can avoid the extreme shifts that burn portfolios. It seems to work - but I am always a student trying to find better approaches. No one has this wired perfectly.
    Sep 17 04:30 PM | Likes Like |Link to Comment
  • IBM And Intel: The End Game For IBM Semiconductor [View article]
    Galactic screw-ups ?? Where? Is that why BRK is at an all time high and yet still undervalued (according to Morningstar's accountants)? Please enlighten me!

    It sound more like you missed the boat on this one. (I didn't.)

    IBM's current and future success has more to do with a plethora of related offerings including analytics software, consulting, and high value-added cloud initiatives (that AWS is incapable of providing) as opposed to commodity servers and fab capabilities. Stating that they are in secular decline is ignoring the vast majority of their profitable business which is not in a decline at all and is always being strengthened by industry vertical software offerings which are difficult for competitors to replicate. Based on their EPS trajectory I think that Warren's investment will be just fine.
    Sep 17 03:50 PM | 6 Likes Like |Link to Comment
  • In The Next Correction, Will You Be A Winner Or A Loser? [View article]
    It depends upon what the individual issues are. If the portfolio focuses on reasonably valued dividend paying (and increasing) stocks the portfolio may do better than the S&P during a downturn because you are essentially "de-risking" the S&P - basically taking out the Teslas and the Amazons. An example of such as strategy is Vanguard Wellington which is also about a third bonds by the way.
    Sep 17 11:21 AM | 3 Likes Like |Link to Comment
  • North Dakota oil output jumps to new highs even as flaring rule changes loom [View news story]
    To the author, JBILL and others. The link is to the government order regarding flaring.

    Regarding the 74% number - it is actually the capture goal for this year:

    "The Commission believes the North Dakota Petroleum Council’s Flaring Task Force’s targets of capturing 74% of the gas by October 1, 2014; 77% by January 1, 2015; 85% by January 1, 2016; and 90% by October 1, 2020 with potential for 95% capture are attainable and should be adopted as gas capture goals by the Commission. The restrictions imposed by this order will strive to meet such goals."

    If you read further the wells having excess flaring need to be necked down (to give time to put gas transportation in place) and there is a schedule for that. For example a well that captures less than 60% of the gas has to be necked down to 100 barrels per day (and some of these wells can produce more than 200, so that is a big incentive).

    The government is not perfect but it looks like they are trying to strike a balance between economically reasonable and pushing a long term policy of not wasting resources for our grandkids.

    http://1.usa.gov/1oQElEk
    Sep 15 02:20 PM | 1 Like Like |Link to Comment
  • Can IBM Launch Apple's Enterprise? [View article]
    I think that MacPad Pro is still a rumor - or has there been an official statement ?
    Sep 15 02:07 PM | Likes Like |Link to Comment
  • Retirement Strategy: How Will Rising Interest Rates Affect Dividend Growth Investors? [View article]
    "I agree but sometimes the market does move in a non orderly fashion. Plus it can stay that way for a longer period than we might want..."

    Definitely wisdom of an investor with experience!
    Sep 15 11:16 AM | 1 Like Like |Link to Comment
  • Retirement Strategy: How Will Rising Interest Rates Affect Dividend Growth Investors? [View article]
    RS - rates may go up but the reports I have seen indicate pretty small changes are likely. Our 10 year treasury yield is much higher at 1.6% than say Germany at 1.08%. European growth is as close to zero as one can get. The +4% growth in the US for the most recent quarter followed the previous -4% with the two quarters effectively canceling each other out. A single quarter of data is almost meaningless. I think that some forecasters are grabbing on to every little bit of optimism they can get but for all practical purposes we are not seeing robust growth in the US (probably little more than 2% annually) and we are seeing effectively zero growth in Europe.

    The upshot - any rate increases in the next year are probably too small to do much harm to mREIT's, preferred stocks or the like. Chances are the interest payments will more than make up for any small change in market value. Of course there may be some wild fluctuations because investors tend to make irrational extrapolations in the short term - and I can't predict irrational behavior - I can only extrapolate the data I am seeing.
    Sep 14 08:50 PM | Likes Like |Link to Comment
  • Amazon's Second Quarter: The Competitive Advantage By The Numbers [View article]
    I make math errors all the time-so not meant to criticize-just that the difference is 14 days. But my point is that the time difference between payables and receivables as a cash flow factor will eventually wane when it stops expanding or growth slows. It also needs to be compared with their cash position since it is a liability-perhaps around $3 billion. I don't know the future of Amazon. They need to eventually find a path to GAAP profits-I think they will some day-when that happens we will find out the true value of the company. Meanwhile investors are giving them a free pass-we will see who winds up being right-I won't make any predictions.
    Sep 13 07:29 PM | 3 Likes Like |Link to Comment
  • Devon Energy: Seasonal Trends Indicate Significant Upside From Here [View article]
    We have already been in a huge global recession (EU growth is close to zero right now) and oil prices have trended down. But hitting $50 has a likelihood probably less than 1%. The following link is to the EIA's market price and uncertainty report. Trying to predict the price is, not surprisingly, an extremely complex multivariable problem that most of us (including me) are not in the position to tackle.

    http://1.usa.gov/15t2Dvo

    But based on the industry reports I have seen, a large move even below $80 has less than a 5% chance of occurring.
    Sep 13 05:55 PM | Likes Like |Link to Comment
  • Apple Pay will contribute little to profit, Nomura analyst says [View news story]
    HUMBLE EAGLES - excellent response - thank you - sorry if I misunderstood something. As you say, this just builds the case for buying an iPhone - as does the watch by the way - since you need an iPhone to use it. Like I am sure you are - I am long Apple since I think that there are far more positives to revenue growth than negatives over the next couple years and I don't think the stock price fully reflects the forward looking FCF and assets.

    Regarding Visa - I looked at them again - wow, the FCF and earnings really bounce around - not sure why. The FCF appears to be in the 2.5 to 4.5 billion annual range historically. The reason Visa is a good benchmark is the huge market share although I am sure that the revenue per transaction will be different - but I am guessing that there are multiple mouths to feed. Apparently Apple is partnering with Visa, MasterCard, and AMEX. I understand that there will be some hardware upgrades required for most retailers so it will be a while before this is universally available. So far the number is at 200,000 out of 3 million retail locations - about 7% - but I would expect this to rise in the future - something worth monitoring.

    One more point - Apple's security advantage (lack of malware) could be another selling factor going forward.
    Sep 13 02:20 PM | Likes Like |Link to Comment
  • Apple Pay will contribute little to profit, Nomura analyst says [View news story]
    You might want to consider his comment again - even with high market share the transaction revenue will be minuscule to Apple. I think he is correct - Visa's entire revenue is $12 billion and Apple's is nearly $200 billion - so adding that business is not going to move the needle much except inasmuch as it sells more phones - which is what Stuart was saying.
    Sep 12 09:17 PM | 1 Like Like |Link to Comment
  • Sanctions against Russia threaten Exxon's Arctic drilling deal with Rosneft [View news story]
    The correction doesn't just correlate to the Russian situation - lower Brent prices are a bigger factor. My point is that Russia likely is a smaller factor than some of these other things.
    Sep 12 02:35 PM | 2 Likes Like |Link to Comment
  • Amazon's Second Quarter: The Competitive Advantage By The Numbers [View article]
    "In 2013, AMZN held inventory for 37 days plus 23 days to collect receivables or 50 days in total. AMZN pays accounts payable in 74 days, thus achieving a negative cash conversion cycle. This metric strengthened in the first six months of 2014."

    Note: 37 + 23 = 60

    Cash flow is positively impacted by the time difference (14 days) multiplied by the growth in revenue - and also of course any increase in that difference. Of course, if revenue growth goes to zero and the time difference no longer changes then this no longer is a factor in reported cash flow.

    Also 74 days seems like a long time to pay a vendor.
    Sep 12 01:25 PM | 4 Likes Like |Link to Comment
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