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outcastsearcher

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  • Boosting Portfolio Returns With Tactical Asset Allocation To Best-Performing Sectors [View article]
    Intuitively, you are performance chasing, whether by buying the TLT which was commented on above, or by buying stocks AFTER they have performed well.

    I suspect a longer term look would show that such simple performance chasing schemes are unlikely to outperform the averages in the long term, even if a single 8 year backtest seems to produce a wonderful result.

    Jack Bogle's work would be an example of the kind of long term data which would directly contradict this type of program's outlook for long term success.
    Nov 20 06:09 PM | Likes Like |Link to Comment
  • Amazon: Serious Security Flaw In The Kindle Fire [View article]
    I agree Lintoid. I would call this MORE than a bit hysterical, I would call it downright misleading.

    First, since the vast majority of folks use credit cards on the web, you are protected above $50 against fraud and abuse. Second, even if you use a debit card -- if you don't have your account being accessed by a debit card fairly small and thoroughly WALLED OFF against your other accounts -- you are a complete idiot. Why take that kind of risk (this is a general issue, not an Amazon issue).

    I have no dog in this fight. While a satisfied Amazon customer, I've never owned the stock and have no plans to (too expensive for a retailer, IMO).

    However, shorts should present issues with logic, not hysteria as their basis. Looking at the Kindle, there were PLENTY of reasons I found it wanting without the need for gross exaggeration or downright misleading statements, which hurt the credibility of the author in general. (Once he resorts to this, why should readers believe any of his other statements are reasonable?)
    Nov 20 05:03 PM | Likes Like |Link to Comment
  • Turning Undervalued Dividend Aristocrats Into High Dividend Stocks [View article]
    One thought. In stocks like these, if you own the stock and are willing to let it go at a premium price, and are willing to buy some more at a meaningful discount -- then you can do BOTH the covered CALL and the cash secured PUT strategy. Now, you have something to be happy about regardless of how the market behaves.

    I like to trade like this "around he edges" of several stocks that I own meaningful chunks of. The additional option income one can garner over time can be pretty decent.

    Generally, I like to sell shorter term options, as the premium decay is more significant. The principle however, remains the same, and for low beta stocks it can be difficult to garner meaningful premium for short term options.
    Nov 19 11:36 PM | Likes Like |Link to Comment
  • Salesforce.com: Latest Jim Cramer Favorite To Be Crushed By Mr. Market? [View article]
    "Even Oracle uses Salesforce's product internally in at least one department--it's that good."

    I was heavy into the mainframe database world for 18 years as an IBM mainframe DB2 systems programmer -- who did lots of work for commercial customers. I can tell you that there are a LOT of reasons a serious database company like Oracle might have a competitive product in "at least one department".

    Some (just off the top):

    a). Evaluate the competition in a controllable real-world scenario.
    b). Learn to use the competitor's product, since big customers have it -- and you are gaining entry (or looking to gain entry) into such shops. Competitive metrics, having your product or apps using that product work with it / interface with it some how, etc.
    c). Learn the weak spots to figure out how to improve your competitvie product in that area, make your product LOOK better in marketing demonstrations, point out the weaknesses in general competitive marketing material, etc.

    I'm not saying that Salesforce MAY not eventually grow into its price (just like Amazon MAY grow into its price) -- I'm just saying that this statement can be interpreted many more ways than to prove that 'Salesforce's product is "that good"'.

    Disclosure, I am short some CRM via diagonal calendar option spreads, as a long term strategy. (I am too big a coward to be anywhere near a naked short on a wild stock like this).
    Nov 18 03:19 PM | 4 Likes Like |Link to Comment
  • Salesforce.com's CEO Discusses Q3 2012 Results - Earnings Call Transcript [View article]
    Why is it that this CEO talks the way Skilling and Lay talked at Enron? I have no problem with a CEO being upbeat, but this "pumping" language sounds like what I'd expect from the type of car salesman I walk away from.

    If you are running a solid business based on sound principles, this type of hype is unnecessary, and IMO inappropriate.

    One thing I always liked about Bill Gates -- he kept emphasizing that Microsoft made software, NOT stock. He actually was trying NOT to overhype the financials, even while Microsoft was trying to get their O/S on every desktop.

    Trust in CRM's promises at your own risk.
    Nov 18 12:16 AM | 1 Like Like |Link to Comment
  • 3 Reasons The Markets Might Rally [View article]
    Considering how hard it is to predict economic factors, human behavior, and global events -- isn't it a bit OVERCONFIDENT to assume the "no chance" predictions for these factors?

    I hate congress' idiocy as much as anybody, and I see the European Union as a massive screw-up -- but still....

    OTOH, when Ron Paul sounds like just about the only sane/credible voice in Congress and the presidential race, that really says something about how screwed up things are, IMO.
    Nov 17 07:54 AM | 1 Like Like |Link to Comment
  • 3 Reasons The Markets Might Rally [View article]
    I think you are making a good point, but I want to be sure I understand your meaning and the implications.

    1). I assume you are implying that at some point, the chickens come home to roost via high inflation in the US? (If so, I tend to agree but have no clue on the timing).

    2). If inflation gets bad, while high quality stocks may suffer in the short run, don't they give you some great inflation protection (especially compared to many other asset classes) in the long run?

    3). If inflation is bad for stocks, isn't it a complete fiasco for bonds, especially longer dated treasuries so beloved due to recent performance?

    ....

    I'm presuming that the energy MLP's, apartment REITs, miners, and broad-based oil/natural resource stock funds I'm holding will provide meaningful hedges against inflation, as either the commodities they deal with will surge in price, and/or the prices (such as rents) they can charge for their scarce resources will surge along with inflation.

    Am I missing something obvious?

    Thanks
    Nov 17 07:48 AM | 1 Like Like |Link to Comment
  • Valero Energy Trades Substantially Below Intrinsic Value [View article]
    "Third, there remain concerns over possible margin limitation in the Gulf."

    With the recent announcement of the likely reversal of the Seaway pipeline, this looks like a big understatement. WTI was trading about $35 below Brent for quite a while recently.

    Now the spread is going below $10 -- and likely headed to zero, since the lack of a pipeline from Cushing to the gulf was almost certainly the reason for almost all of the spread.

    (I presume insiders / smart money has known about this pipeline reversal liklihood for a while, and were front-running the news, which is why the spread was coming in for weeks. All I'd read was that pipeline reversal was expensive, difficult, and unlikely -- so I was puzzled by the rapid narrowing of the spread).

    Anyway, won't this be a meaningful dent in Valero's potential refining profits, even if Europe meanders along at slow growth?
    Nov 17 07:25 AM | 1 Like Like |Link to Comment
  • How Much Does Shorting Groupon Cost? Look At The Options [View article]
    You end the article (after the options pricing chart showing decreasing cost/month for the options), saying

    "It’s clear that traders are willing to accept less of a credit on a per day basis well into the future. And that could indicate that these “negative rebates” could get a lot less negative."

    It MUCH more likely indicates the fact that normally ALL options get MUCH cheaper per month, as the time to expiration grows significantly.

    Look at pretty much ANY option chart on CBOE.COM, for example.

    This is explained by the fact that over time, the expectation for volatility is lower (the daily ups and downs tend to average out).

    I have no dogs in the Groupon fight -- I'm just suggesting readers be cautious about using decreasing long term options volatility expectations to draw the conclusion that the negative rebates will decrease. (They may decrease if the Groupon float increases or if people get more bullish on Groupon, for example -- I just wouldn't bet on it ONLY from the longer term options spread prices).
    Nov 17 07:15 AM | 1 Like Like |Link to Comment
  • Salesforce.com: Not All Cash Is Born The Same [View article]
    Looking at several sites, it looks like the rough trend for short interest of about 11% of the float isn't far off the recent historical trend.

    OTOH, no telling how many more conservative folks (like me) are trying to be net short CRM over time via option spreads. At least I get to collect relatively big OTM PUT premiums on my short PUTs while I wait, so even if I end up wrong, I don't get killed.

    Short squeezes can really hurt naked shorts in the short term, but in the long term, CRM's stock will (eventually) reflect what the market expects long term future earnings/growth to be. My PUT spreads can stand MANY MANY times more pain than naked short positions.

    All I know is these valuations imply truly explosive earnings growth to justify the price, especially compared to competitors in the space.

    As a guy who actually was a system programmer for REAL databases (DB2) on mainframes for 18 years in the real mainframe world (IBM) for real clients (banks, major mining and manufacturing businesses, etc) -- I just don't trust this "It's in the cloud. It's in there." (like Prego Spaghetti sauce, I guess). Promises do NOT equal delivering safe and reliable data access. (And we had RACF and didn't have all the security challenges of the internet).

    Time will tell, with all the technical challenges, if these folks can really deliver quality AND exponential earnings growth as far as the eye can see. Call me a doubter that everything will come up roses.
    Nov 17 06:59 AM | 1 Like Like |Link to Comment
  • Time To Sell HYG, JNK And LQD [View article]
    I certainly don't want to be in long a long-dated treasury fund with a weighted duration of 12 or 13.

    However, to me, recently at prices around 34 to 36, I was plenty happy to try to get long SOME JNK (and continue to do so via selling PUTs on dips). Paying a net yield near 9% or more (at a somewhat lower price than now), Junk is at least compensating us for some credit risk. AND, a well diversified Junk bond ETF often has a weighted duration of under 5, which is a HECK of a lot less scary than long dated treasuries if inflation drifts up -- yet as ERIK mentions, provides some shelter against a potential recession/deflation risk in the U.S.

    I tend to think in terms of years to decades when choosing asset classes -- and use them as a strategy, selling options "around the edges" so talk of a 2% haircut doesn't bother me.

    OTOH, barring things getting bad enough to bankrupt LOTS of companies (which IMO would implode the stock market) -- a LARGE pullback (say 20% or more) in funds like JNK and HYG should likely provide some REALLY sweet prices to take long term positions is high quality dividend growth stocks, energy MLPs, etc. -- as I think that would likely bring a larger pullback in the stock market.
    Nov 15 08:05 PM | Likes Like |Link to Comment
  • Should Annaly Capital Be A Core Holding Of Your Retirement Portfolio? [View article]
    For the patient investor, this sounds like a REAL good strategy to me. As long as you don't panic and exit the stock when it drops, your average price per share is enhanced during the downturns.

    My only question is would it be prudent to diversify into some other MREITs with proven long term track records, or is NLY's reputation for superior management, hedging risks, etc, enough to justify a relatively concentrated MREIT portfolio (for the portion of your assets devoted to MREITs)?
    Nov 14 07:03 PM | Likes Like |Link to Comment
  • Philip Morris: Dividend Income With Excellent Growth Potential [View article]
    Not to mention that the concept of personal responsibility SHOULD come into play instead of just blaming. Cigarettes are ILLEGAL for children, so why isn't the government using our tax money to prevent them from smoking?

    It's always amazing to me that the anti-business, anti-profit left expects:

    1). Individuals to have little to no responsibility.
    2). Companies to have (comparatively) infinite responsibility.
    3). Big government, charged with and responsible for "fixing and preventing many of society's" ills" NO actual responsibility when they turn out to be corrupt and inept. (The latest revelation about it being common and LEGAL for congress to use insider trading to profit from stocks like Tobacco stocks while they create legislation about their industry (while it is of course illegal for the REST of us to trade on inside information) is, IMO, so blatant as to make any protest against this charge self-serving and irrelevant.)
    Nov 14 06:53 PM | Likes Like |Link to Comment
  • Do Buybacks Destroy Shareholder Value? [View article]
    OTOH, this kind of thinking has led many companies to buy when the stock is high (due to perceptions of good corporate performance).
    Long term, it can look like idiocy if the stock dives during less rosy times.

    I'm not convinced. Sometimes it works. Sometimes it doesn't. If a company has excess cash and cash generation by the boatload, like AAPL, and they can't find something worth investing much of that cash in -- why not pay it to the shareholders. Those shareholders can always buy more AAPL with the cash if they choose to.

    In the case of AAPL, a large one-time dividend might make sense if they don't want to commit to tying up future cash flow.
    Nov 14 05:10 PM | 1 Like Like |Link to Comment
  • Solution To Bond Investors' Yield Dilemma? Consider Dividends [View article]
    You also don't have to only consider a "one solution" approach. Diversification of asset classes is another safety valve.

    I agree with the author that to hold "high quality" corporate bonds yielding 2.3% on average in this environment, when the same stocks yield 4% and offer likely growth prospects over time is a STEEP price to pay for the perception of safety.

    OTOH, for a diversified junk bond ETF, like JNK, yielding almost 8% currently, that may be a much better risk/reward balance for some PART of your portfolio.

    I, for example, have been selling PUT options on this fund in recent months on dips, trying to buy the ETF at a net of about 33 or 35, which makes the yield more like 9%. (Or collect the option premiums, which is OK by me as well).

    Though the fund correlates more closely with stocks than a high quality corporate bond fund, I'm being paid MUCH more yield to wait, and the beta on this fund is still much less than, say the S&P, over time.

    Also, the effective duration on these types of funds tends to be fairly short -- generally under 5 years. So, while rising inflation hurts a bit -- it is NOTHING like (say) a long term treasury portfolio with a duration around 13. A few companies held may go bankrupt, but given the diversification by industry and the many company holdings, the liklihood of MANY of such companies folding up short term is very low. (For example, WIN, a common component of such funds, may end up having to cut its dividend down the road. But that's a LONG way from bankruptcy).

    It's all about trade-offs. One other thought -- if things get "bad" enough for this fund to get really hurt (say down 20%) - then the stock market should be getting CHEAP, to pick up some more core dividend grower stocks.

    IMO, unles folks don't fear inflation and in fact want to bet on deflation, holding high quality corporate bonds or long term treasuries is tantamount to running in front of a bulldozer to pick up a dime.
    Nov 14 04:55 PM | Likes Like |Link to Comment
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