RPK

http://theinvestingchroncile.com

19 Comments

    • The "Worst Is Over" Crowd Is In for a Shock [view article]
      The decline in the energy and materials sectors is due to the general drop in commodity prices and the rise in the dollar. Overall, that is a good thing for the US economy and consumer.

      Buy and hold can work as a strategy but the timing of the purchase makes all the difference.

      Irrespective of the declines in various sectors of the US markets, the major indexes are mostly still above their troughs in late-2002 and early-2003. However, I suspect a further decline in the markets will occur until the Lehman, Washington Mutual, Fannie Mae, Freddie Mac and other issues are sorted out.       Sep 11 10:27 PM
    • Five Struggling Dividend Stocks I'm Still Bullish On [view article]
      Too much emphasis on financials and real estate. Aug 23 01:03 PM
    • Where Starbucks Went Wrong [view article]
      Starbuck's did the right thing in closing unprofitable stores and stores that were cannibalizing sales from other stores. SBUX expanded too fast and had too many stores leading to poor execution, a reduction in quality, a lack of focus on the customer, and a dilution of the brand. This is similar to the problems suffered by McDonald's several year's back. However, SBUX can recover as the problems the company suffers from are only operational in combination with a poor economy. Aug 22 10:25 PM
    • Senator Schumer's Careless Remarks Result in IndyMac's Early Demise [view article]
      You seem to be blaming the messenger in this situation. The focus of any inquiry should be on why the bank was allowed to operate with "...years of careless lending and bad management, IndyMac Bank was eventually likely to fail anyway...", as you contend. Jul 13 10:51 PM
    • Motorola: Dead Company Walking? [view article]
      The last I checked U.S. Steel or United States Steel (X) is still around and iis an approximately a $20+ billion company. The stock price increased greater than 50% a year since 2006.

      Regarding Motorola, strip out is handset division and the company is profitable. Motorola has three choices, (1) invest capital and try to regain profitability, (2) sell the division, (3) spin the division off as a stand alone company. Based upon public comments from the company number (3) is the most probable.       Jun 22 10:41 PM
    • Starbucks: Understanding the Business Model [view article]
      The strength of Starbuck's was its experience. Prior to the company's more recent high growth years, Starbuck's picked good locations in generally affluent areas. The stores attracted people with decent coffee in a relaxing environment and became a gathering place for people. Many of Starbuck's new stores deviate from that formula. Some are primarily drive thrus near major intersections or highway entrances.

      Starbuck's also lost focus as the company tried to push into warm breakfasts, sell music and books, sponsor movies, etc. While some of these make sense not all do.

      In addition, the coffee and specialty drinks are not consistent from store to store. Starbuck's has attempted to address this problem with a three hour long training shutdown, which is probably not sufficient.

      Most of the company's problems are solvable but aggressively opening new stores and pushing sales via the CPG division it not the answer. Starbuck's needs to drive sales through it current existing stores to increase operating income and justify the capital costs of building a store.       Jun 17 09:26 PM
    • GM Shifts Into Reverse, But Can It Catch Toyota? [view article]
      You give Toyota too much credit for producing fuel saving cars. Toyota also produces the Tundra and Sequoia, two gas guzzlers. Toyota has also experienced sales decreases in six of the last seven months. Their market share gains resulted from larger drops in sales by the U.S. auto producers.

      Honda is the big winner in terms of sales. Honda is also less exposed to declining large vehicle sales since the company does not sell a full-size pick up or a large SUV.

      Ultimately, GM's (and the other domestic automakers) success will come from cutting costs in the U.S. (and Europe) and growing at other overseas locations. It is a bit ridiculous that a company with somewhat over 20% share of the U.S. market is not profitable on a consistent basis.       Jun 04 09:56 PM
    • GE: Immelt Gets Welched [view article]
      Considering that Immelt was Welch's hand picked successor I am unsure that Welch is in a position to criticize. The assumption is that Welch guided and trained Immelt to assume the role of Chairman and CEO of GE.

      Other GE alumni, such as Nardelli at Home Depot and Johnston at Albertson's, have not done too well either in producing shareholder value. Although Bossidy did a great job at AlliedSignal.
       Apr 17 09:37 PM
    • GE's Earnings Miss: What Ever Happened to Warning Investors First? [view article]
      Companies should not provide earnings estimates and/or guidance. When companies do not provide such information, most if not all analyst are unable to provide accurate earnings estimates.

      Additionally, reiterating the previous comment, I am unsure why GE's earning miss was a surprise. A good chunk of their revenue comes from commercial and consumer finance.

      If anything the strength and geographical diversity of their industrial divisions earnings shows the benefits of their business model.       Apr 13 10:04 PM
    • Don't Get Fried With McDonald's - Barron's [view article]
      In the US, McDonald's is generating positive sales growth, whereas most restaurants are struggling to maintain sales. The company's major burger competitors, such as Wendy's, Burger King, and Sonic, are significantly smaller. Some are even exploring strategic alternatives, a euphemism for selling the company. It's other competitors, such as Taco Bell, KFC, Popeye's, etc. do not even compete at the same level. Can one imagine going to these companies for breakfast or coffee.
      One to two years ago everyone worried about Starbuck's taking sales from MCD during breakfast. McDonald's proved they can hold their own, in fact they increased sales in the face of competition, and then expanded in to their competitor's core market. SBUX is now canceling some warm breakfast sandwiches and is trying to reinvent their coffee business to generate positive sales and earnings growth.
      Internationally, MCD is expanding, and sales are increasing. In addition, the dollar is weak and most likely will not strengthen in the near future.
      The time to purchase MCD, however, was at the end of 2002 and early-2003, when it is trading in the teens to low-20s. Since MCD is returning cash to investors by paying down debt, stock buybacks, and dividends, it is a good stock to hold for those that already own it.       Mar 17 07:28 PM
    • Ackman vs. MBIA: Self-Serving Propaganda Disguised as Analysis [view article]
      These are models, garbage in = garbage out. Three years ago most would have considered MBIA to be correct and Ackaman to be wrong. Feb 15 09:50 PM
    • What Should Apple do with Its $15B in Cash? [view article]
      Apple has never done a major acquisition and likely will destroy value if it makes the attempt. Apple is very good at making trendy products that are simple and easy to use. It should not change its strategy. A large stock buyback at this time is probably unwise as Apple’s shares are trading at a premium. The reason to hold cash is its rating and to deal with any future downturn. For those that remember Apple was growth stock in the early and mid-80s, followed by a long period poor financial performance and declining market share. Dec 09 12:46 PM
    • Bank Stocks: Dividend Yield Post Subprime Meltdown [view article]
      Not all of the banks listed are the same. For example, State Street (STT) is primarily an asset manager and provides back-office functions. It can hardly be classified as the same type of bank as Citibank (C), J.P. MorganChase (JPM), Bank of America (BAC), etc.. Northern Trust (NTRS) and Charles Schwab (SCHW) are also significantly different. Even the banks with significant mortgage operations are different, some have a large retail presence and others do not. Some funded mortgages through debt whereas others issued mortgages primarily based upon retail deposits. Nov 20 06:36 PM
    • Bank Stocks: Dividend Yield Post Subprime Meltdown [view article]
      Not all of the banks listed are the same. For example, State Street (STT) is primarily an asset manager and provides back-office functions. It can hardly be classified as the same type of bank as Citibank (C), J.P. MorganChase (JPM), Bank of America (BAC), etc.. Northern Trust (NTRS) and Charles Schwab (SCHW) are also significantly different. Even the banks with significant mortgage operations are different, some have a large retail presence and others do not. Some funded mortgages through debt whereas others issued mortgages primarily based upon retail deposits. Nov 20 06:36 PM
    • Merrill CEO Approaches Wachovia Without Board Approval; Grounds For Dismissal? [view article]
      It is true that MER is cheap by historical metrics. The possibility, however, of future unspecified write downs exists. After the fiasco of the past quarter, WB would be taking on considerable risk in purchasing MER. Oct 28 05:58 PM
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