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  • Vanguard Wellesley Income Fund: The Reverse Of Wellington [View article]
    I appreciate the articles. Wellington and Wellsley don't get much coverage by the investment community and they are two great funds.

    "And remember that the two funds had very similar performance numbers over that span."

    Keep in mind that the time span (15 years) covers a dramatic period of declining interest rates. Clearly that cannot be repeated in the next 15. Thus I would expect Wellington to outperform Wellsley over the next 15, perhaps by a considerable margin.

    For myself I have a fair amount of Wellsley because it helps provide my fixed income allocation.

    Jul 29, 2015. 08:33 PM | 5 Likes Like |Link to Comment
  • Retirement Strategy: The Oil Crash Could Be A Dividend Growth Investor's Best Friend Of The Decade [View article]
    RS, I agree whole-heartedly regarding XOM. It is and has been my top oil and gas stock. I also hold COP and DVN. Exploration budgets have been slashed for conventional oil in many countries and the long term decline rate on production is 5-8% per year for conventional oil. The question is - how long will it take the decline rate to work off the excess? WD
    Jul 28, 2015. 09:36 AM | 3 Likes Like |Link to Comment
  • Bigger Is Not Always Better: Why Amazon Is Worth More Than Wal-Mart [View article]
    Well lets see:

    WMT: Market Cap is $229 billion, Last FY earnings $16.4 billion, AA Credit Rating.

    AMZN: Market Cap $247 billion, Last FY earnings -0.24 billion, BBB+ Credit Rating

    WMT earns 21.5% on equity; Amazon loses 1.7% on equity.

    WMT FCF is nearly 10X that of Amazon. Amazon's FCF actually declined YOY between 2013 and 2014. WMT FCF increased during the same period. Don't worry, AMZN has a litany of excuses for that.

    Regarding losing market share. WMT sells mostly staple items - food, diapers, etc. Are we going to receive our cabbage heads from Amazon via UPS? If so then perhaps I should buy UPS stock. Cabbage heads by drone anyone?

    So AMZN is worth more than AMZN? OK. Sure. There was a moment in time when Yahoo had a higher market capitalization than Berkshire Hathaway. I opted for the latter - and think I made the right choice.

    Long WMT and not worried.

    Jul 27, 2015. 05:44 PM | 15 Likes Like |Link to Comment
  • Apple: The Stark Contrast Between iPad And Surface Sales [View article]
    Perhaps the best way to look at iOS devices is the 12 month moving average (which I track every quarter). Keep in mind that the numbers below are the prior 12 months. Here is how they have changed:

    In 2014 Q1 the iPAD peaked at 74.1 million units; the iPhone was at 153.4 million; total iOS device (iPAD + iPhone only) stood at 227.6 million.

    In 2015 Q3 the iPAD was down to 57.2 million units (6 straight quarters of decline in 12 month moving average); the iPhone was up to 222.4 million; so total iOS units are 279.6 million.

    So the iPAD 12 month moving average continues to drop while iOS overall has continued to rise. But think of the installed base. If you assume a ratio of 2.5:1 it suggests an active installed base of perhaps 700 million units and rising. That quite an amazing number!

    Jul 24, 2015. 07:27 PM | 2 Likes Like |Link to Comment
  • What's Qualcomm Worth As Two Separate Entities? [View article]
    "A number of people have suggested attempting to sell QCT but their R&D is part of the intellectual property creation engine."

    That is pretty obvious. Splitting the company makes no sense for that reason and will, if anything, actually devalue the company.
    Jul 24, 2015. 02:08 PM | 8 Likes Like |Link to Comment
  • How Do You Solve A Problem Like Qualcomm? [View article]
    "QCOM ought to think big and use its cash hoard to buy its way into other markets like enterprise/data center or communication infrastructure."

    I don't think we can make this blanket statement with any confidence. Any acquisitions should be typically be relatively small - less than $500 million - and be some company having a technology that can be leveraged effectively by QCOM in a way that adds much more value than the purchase price. Trying to do some massive acquisition to change the nature of the business is likely to be a colossal waste of shareholder money.

    My commitment to QCOM is currently less than 1% of my portfolios. Even that seems high given the situation. But I think the company is probably undervalued now and the risk going forward is probably quite low.

    Jul 23, 2015. 09:04 PM | 1 Like Like |Link to Comment
  • Why IBM Actually Had A Great Second Quarter [View article]
    Lester, Very good points about IBM.

    I am surprised that even some big name "analysts" don't seem to understand the finance business and its implication for the balance sheets. IBM generates enough free cash flow in one year to wipe out the non-financing debt. Of course the financing debt is offset by financial receivables and generates positive cash flow. That is why IBM has a AA- bond rating.

    The biggest concern is probably Europe and when its economy will recover so that FX can reverse itself and European companies are more willing to make IT investments. That is really depressing IBM's earnings and growth in the new initiatives are not yet big enough to offset it. But the cycle will probably reverse itself at some point in a way favorable to IBM. That would be the time to be holding the stock.

    For me I continue to hold the stock and allow dividends to accrue. I seem to have quite a number of out-of-favor big names in my portfolio.

    Jul 23, 2015. 01:48 PM | 2 Likes Like |Link to Comment
  • What Everyone Is Missing About IBM [View article]
    Bob - Thank you for a good article that puts things in perspective for IBM. I agree that IBM is a buy, particularly considering that as you say the FCF yield is 10%. That is far higher than the market average. The growing strategic initiatives are also encouraging but so far they are not quite offsetting weakness in core business.

    One more thing to consider is the entire effect of foreign business. The FX headwind is partly there because the EU economy is still so anemic. So you have a double-whammy - the EU companies restrain IT spending to navigate the weak economy and the central banks try to inflate the currency making the dollar stronger. Thus you can see that a turnaround in the EU economy would also be a double positive because both of these factors would go the other way. Of course the timing of that is anyone's guess.

    Jul 23, 2015. 10:11 AM | 7 Likes Like |Link to Comment
  • What's Next For Devon Energy? [View article]
    RSCOE55, Keep in mind that the decline rate on conventional oil production is in the range of 5-8% per year. That removes about 4 to 7 million barrels a day without development. Also keep in mind that exploration has been severely slashed for countries representing about half of the entire world's production. The effect of the exploration cutbacks should be felt in 2016 and should be quite significant in 2017. The timing as to when the decline rate begins to take over has some uncertainty because shorter term projects are still being funded but the shorter term ramp-ups will start to wane within the next year or two absent re-starting the exploration. There is a lot of uncertainty going forward in all this and I am not satisfied with the analysis I have seen so far. WD
    Jul 22, 2015. 08:26 PM | 4 Likes Like |Link to Comment
  • Apple's call: Watch sales, iPhone/iPad inventories, China, forex discussed [View news story]
    "Those who missed the AAPL gravy train continue to make it obvious."

    Good one. Fortunately I didn't.
    Jul 21, 2015. 07:32 PM | 9 Likes Like |Link to Comment
  • Vanguard Wellington Fund: Can One Fund Do It All? [View article]
    The above comment seems to be in error:

    See the question "Is it true that mutual fund shareholders have to pay “someone else’s taxes” if they buy fund shares at a certain time?"

    "No—fund shareholders do not pay someone else’s taxes. Every fund shareholder is taxed only on his or her own economic income over the life of the investment.

    Shareholders purchase and sell a fund at the fund’s net asset value (NAV), which is calculated daily. A fund accumulates realized and unrealized capital gains, interest, and dividends until it makes distributions. These gains and income increase the fund’s NAV until they are distributed...Compared to other forms of investments, the only issue with a mutual fund is the timing of the taxes paid, not the amount of taxes paid. Taxes may be paid sooner (if gains accrued before purchase are realized and distributed) or later (if losses accrued before purchase offset realized gains), but total taxes paid will be the same."
    Jul 20, 2015. 09:12 PM | Likes Like |Link to Comment
  • Vanguard Wellington Fund: Can One Fund Do It All? [View article]
    I have a good amount in this fund. Both managers - equities and bonds - seem very good. Most of my equity investment is in individual stocks, but I am frequently looking at what fund managers like Edward Bousa of VWELX and Don Kibride of VDIGX are doing. I like to see their top positions and what they have been buying.

    My eventual objective (within 5-7 years or so) is to get the dividend rate up to at least 3.5% and perhaps more like 4%. That will probably require the vast majority of my equities to be outside of funds because every quarter of a percent in overhead hurts. But that said I do find a place for some funds both as an investment and to observe what these guys are doing.

    Jul 20, 2015. 05:07 PM | 3 Likes Like |Link to Comment
  • Wal-Mart: Another Bear Sighting As YiHaoDian Founders Quit [View article]
    Hmm. I have WMT and IBM - and various other out of favor stocks. That is how I have prospered over 40 years - buying great companies when they are undervalued relative to the market. I think that negative "secular trend factors" have been overstated for these two and other companies as well. I don't worry about what the bulls like or "Wall Street Trends". Trying to chase the trends is, in my observation, a sure way to lose money. WD
    Jul 20, 2015. 03:41 PM | 2 Likes Like |Link to Comment
  • U.S. Bancorp: Q2 2015 - Buy [View article]
    I am long USB also. M* has it 12% below fair value which seems reasonable. USB never had a money-losing quarter during the 08/09 financial crisis. It was during that downturn that I picked up my shares and I have let the dividends accrue since.

    Jul 20, 2015. 03:37 PM | 1 Like Like |Link to Comment
  • Wal-Mart: Another Bear Sighting As YiHaoDian Founders Quit [View article]
    One more quick comment - the time of opportunity is during bearish sentiment that is overwrought. WMT seems to be that kind of investment.
    Jul 18, 2015. 05:59 PM | 1 Like Like |Link to Comment