Eye Forget's Comments

Why an Export-Led Recovery Won't Work

Wed, 18 Nov 2009 19:46:56 -0500

Good comments.

I spent a career in US and non-US manufacturing. The causal agent of the death of US manufacturing was around 40 years ago. Far before the financial sector hogged all the capital, prior to our best and brightest seeking financial, law or medical degrees, prior to any desire to go offshore and prior to the virtual disappearance of an infrastructure.

Here's a list:

A refusal to invest in anything that required more than a year's payback.

Refusal to invest in manufacturing technology and R&D.

Reallocation of resources from internal growth to paying absurd premiums over market doing acquisitions.

Bloated Human Resources, Finance, Marketing and, lacking any better term, administrators to help senior management occupy themselves in anything other than company functions.

A reliance on consultants (buddies of the BOD) who's re-engineering programs took an immense toll on internal resources and resulted in no discernible improvement,

Constant sidetracks: Best Practices, brainstorming sessions, benchmarking, task forces and champions of one thing or another, ritualized dog and pony shows, annual goal setting processes, annual strategic and budget plans that took forever and were obsolete by the time they were done, growth (at any cost), mission statements, and on and on and on.

Weak, if not dysfunctional boards.

Overpaid senior managers focused on their personal goals, often in conflict with shareholder goals.

Value -- another term for cheap at any cost.

After stints in the Far East and Europe, I completed my career working in Europe. A seven figure salary could not get me back into US manufacturing, a decision I've never regretted.

10 Top Oil and Natural Gas Exporting Countries

Sat, 01 Aug 2009 07:09:22 -0400

"Russia is a very rich country that many persons associated with this
site like to think of as being a poor-house."

They've been a very rich country for centuries. What do they have to show for it?

Resurrect U.S. Manufacturing

Tue, 21 Jul 2009 08:13:00 -0400

Competence in U.S. manufacturing began to fall apart in the 70's. To resurrect it would be a futile effort.

Manufacturing competence was replaced by PIP (Profit Improvement Programs), cash milking mindsets, constant cost reduction programs, a refusal to advance technologically, poor labor/management relations at many of the leading manufacturing firms, lack of engineering talent and, perhaps most important, a complete lack of quality control.

While unfortunate, rebuilding the U.S. manufacturing base to competitive levels is virtually impossible.

Chrysler Models Already on the Chopping Block

Mon, 20 Jul 2009 19:57:56 -0400

"i do not know any model of fiat which will hold up to the miles driven on usa roadways"

A luddite view reminiscent of the early days of Toyota and Honda.

"the smaller models of fiat are too small for fat americans."

The model range sizing is comparable to the smaller Far Eastern cars. Does not appear to be much of an issue.

Why Volkswagen, Mercedes, Honda and Porsche Are Cars with APEAL

Mon, 20 Jul 2009 19:08:25 -0400

Let me provide another viewpoint.

We've owned 5 BMW's, 2 MB's and a Porsche in the last 12 years. We currently have one of each.

BMW #1: ABS never worked. More niggling problems that I could ever recap here. Sold after 5 years with less than 10,000 miles on it.
BMW #2: HVAC never worked and was sent back to the leasing company early.
BMW #3: No problems.
BMW #4: Over an inch thick stack of work orders including a new engine.
BMW #5: Squeaks and rattles throughout.
BMW All: Wretched service. MB is phenomenal versus BMW.

MB #1: A two inch stack of work orders.
MB #2: Entire front suspension replaced, at least a once a year problem, usually electrical/electronics and usually +$1,000.

P #1: Engine failure (at 35 mph) within 10,000 miles. More rattles than shaking a can of nails.

I now buy my own cars. Since I no longer get a free status trip (which is what sells these cars) I will no longer be looking at German cars.

These surveys are worthless. When people stop buying status they will buy based on word-of-mouth. Try to find a German car buyer that believes he got his money's worth.

Fortunately for the Germans, there are plenty of developing markets where they can foist their cars.

Oh, and they all handled and drove beautifully. But, how much of a market is that?

New U.S. Natural Gas Pipeline Displacing Canadian Gas

Sat, 11 Jul 2009 22:50:07 -0400

Conversions will be too difficult to implement and control.

Cost <$1,000 (less than $200 for a pickup and DYI).

Needs approval of EPA. Even though the EPA says natural gas emits 93% less toxic emissions than comparable use of gasoline. No individual can afford to get his conversion certified. No idea how these folks do it now but, assuming the conversions are technically illegal, if the nation switched en-mass there would be dangerous cars all over the place with no inspection capability available in most states. Won't happen.

The car companies will have to do it and that's where any incentives have to go. Cost would be a small premium over gasoline (assumes NG only).

Distribution needs to be in place before cars are mass produced. Distribution capacity takes time and will be virtually dormant until cars are in the mass market. Car companies can turn on capacity much quicker but will have to wait for distribution. At home filling? How many of us want half our neighbors filling up compressed NG in their garage?

Makes a lot of sense but bill 1408 is a product of zero knowledge on the part of another of our brain trusts in Congress.

The Prospect of Deflation and What to Do About It

Sun, 28 Jun 2009 12:02:05 -0400

"The best deflation trade that we have found is to be long bonds."

I agreed with this article until I saw the above. Swinging from 30 day paper to 20 year bonds has a lot of time between them. What prices one market has little or nothing to do with the other.

I agree the Fed has no choice but to hold down the short end. However, going forward, the long end is characterized by the Fed's requirement to fund growing deficits during a period China (for that matter, all of East Asia) is redirecting its excess cash internally. In the absence of buyers, the Fed will have no choice but to revert to printing. Whether meaningless backward focusing USG CPI statistics show mild deflation or inflation, at the 20 year end inflation expectations will be built in. Thus, downward price correction in the secondary markets and higher yields.

I think a better place to look is to find vehicles that make money on the spread.

Are High Yielding aMREITs Ready to Run?

Sun, 28 Jun 2009 11:34:45 -0400

"manage the risk of a flattening yield curve"

This is the key to dividend security in these stocks. My belief is the yield curve will widen in the near-term and begin to flatten later. However, even once it flattens, there will be an unusually high spread remaining.

The short end will remain low as long as the economy is sluggish and there are concerns about any deflation. The long end will come under increasing pressure as China redirects it excess funds internally and the Fed starts printing more money (as they are the only buyer left than can fund the deficits).

Good article.

Are High Yielding aMREITs Ready to Run?

Sun, 28 Jun 2009 11:27:00 -0400

Other should understand this is one person's opinion of something he admittedly does not understand. One might ask the question how an investment with the implicit guarantee of the USG can blowup. A rather simple question that appears absent from this comment.

On Jun 28 09:09 AM David Van Knapp wrote:

> Very good article, thanks. I am not an expert in aMREITS, but while
> I was reading the description of what they invest in, and considering
> myself as a possible investor in them, I couldn't help but think
> that this is the same kind of thing that blew up for so many banks
> and led to the banking/financial crisis we are in right now: Leveraged
> bets on packages of mortgage-backed securities with hard-to-believe
> returns.

Seeds of Growth for Monsanto

Fri, 26 Jun 2009 11:51:23 -0400

I admire MON and SYT but they are fighting an uphill battle with little chance of winning in developing countries. Rightly so, hungry children will come first.

In developed countries they face the EU "natural foods" lobby and protected markets all over the place that allow farmers to plow postage stamp size fields with oxen and sell to local populations unhampered from competition.

The end result is US farmers will have more costs than the competition, cry louder, hire more lobbyists and force the US consumer to pay for a Hollywood directed mentality towards absurd intellectual property rights legislation.

I've traded in and out of both companies. They tend to be good short term plays but I have my doubts they will flourish in the long-run. Sort of like picking up free dvds (that replenish themselves) in the privacy of one's own fields. Even if the seed use spreads, the income steams won't.

Give Obama 40 More Years in Office!

Wed, 17 Jun 2009 21:37:20 -0400

You misspelled Obama. Its spelt Congress. Opps, lobbyists.

Natural Gas: The Next Big Thing

Wed, 17 Jun 2009 20:24:46 -0400

Don't I recall reading that new supplies of oil are getting harder to find yet I hear about new "mega" gas fields every day. Where are the new applications for all this gas? 10 years out with fuel cells. Cars can run on LNG quite well. But that would take something like a national energy policy. Renewable energy utility plants with gas providing the flex fuel? Probably takes another act of our national assets in congress.

Too much supply, not enough demand.

The Sound and the Fury of Bond Market Vigilantes

Wed, 10 Jun 2009 09:10:36 -0400

Good article.

"Greg Mankiw of Harvard are calling for the US government to run significant inflation" Assuming I understand the context, a bigger concern is he probably "educates" our brightest.

"More not so good news: Chinese and large sovereign holders of US Treasury debt may actually be part of the bond market vigilante posse." Not sure I agree that this is not good news. Someone has to run this country. The electorate certainly has chosen not to.

The Low Hanging Fruit of Credit Downgrades

Wed, 10 Jun 2009 08:55:28 -0400

"What, if any, is the golden nugget we have in our back pocket this
> time..."

Don't sell us short. Financial innovation, tort law, Congress (oops, lobbyists), leverage at every level, education, the world's healthiest gun (oops, crime) industry, health care, extremest political (oops, religious) groups and a public too preoccupied to bother getting involved.

The rest of the world need not advance, we will do it for them.

Mac Pricing: Value Is in the Eye of the Buyer

Wed, 10 Jun 2009 08:14:17 -0400

You have to look beyond the hardware. Apple sells a package of well built, technically decent machines, superb service, unmatched integration, superb design and a great OS. What that's worth to people is their decision. Judging by their sales and profits history, they appear to know what they're doing.

The lower prices are as much a competitive response as it is a reflection of costs. Apple was, and probably still is, the lowest cost manufacturer of pc's. Their operations area gets little press but it is an envy of manufacturers.

Palm Pre: You Call 50,000 Sold a Success?

Mon, 08 Jun 2009 15:23:06 -0400

"Apple sold 146,000 units its first weekend."

Try 270,000 in the first 30 hours.

Are REITs a Good Place to Hide from Inflation?

Fri, 05 Jun 2009 12:12:27 -0400

Your article asks a lot of questions, takes few positions and explains nothing. XRE is down about 50%. I assume this is your dollar hedge?

Loews: Counting on CNA Earnings

Thu, 21 May 2009 11:12:14 -0400

Start off with the significant discount verus L's sum of its parts.

Combine that with a higher rate affecting management.

You have two very good reasons to spin off the few parts to shareholders. The only reason to hold is to hope the discount narrows. In a spin-off, its instantly.

On May 03 07:57 PM Dan Braem wrote:

> There is no way the Tisch family is selling out. I agree with you
> that Obama will raise the 15% rate.

Beware 'Dividend Aristocrats' that Actually Offer Low Yields, No Real Income

Thu, 09 Apr 2009 11:24:02 -0400

YoYo,

he understood exactly what you were saying. You don't.

On Apr 09 09:19 AM YoYoMama wrote:

> Please read my post again. I never said that 8% yields will go down
> to 5%. I simply said that the yields will decrease as a stock price
> increase. This holds true if the dividend rate remains the same.
> And my name is YoYoMama.
>
> Learn to read.

The timing of its Adamo luxury computer launch shows just how out of touch with consumer trends Dell (DELL) has become. Douglas McIntyre says the poorly-run PC company faces the serious risk of "playing the fool in front of its investors again."

Tue, 17 Mar 2009 17:32:20 -0400

Apple certainly is not successful selling expensive computers let alone cell phones.

The issue is management, not how expensive/inexpensive the product is.

Housing Starts climbed 22.2% in February to 583K from January's 477K (revised) vs. 450K consensus. Building permits +3% to 547K vs. 500K consensus. Completions +2.3% to 767K. Unclear whether the jump is a sign of healing, or a troublesome indication of the failure to prune inventories.

Tue, 17 Mar 2009 11:09:24 -0400

One should never forget that developers make their money developing, not selling. Their profits are pulled out in the form of fees during the construction stage. By the time the building is completed, they can forgo their equity interest and still have a decent gain.

In the case of multi-family, the risk lies with the banks and funds that backed the loans and the banks.

The fact that this increase does not make sense actually should make sense to anyone remotely familiar with the stellar investing and lending acumen of the parties at risk.

Aircastle's Surprise Dividend Reduction

Tue, 13 Jan 2009 16:08:31 -0500

I think Wainshal explained it quite well.

If you're waiting for tangible evidence of perception to change, good luck investing.

The best way to enhance value is to keep making money, something these folks tend to do very well.

Revisiting the iPhone’s Browsing Market Share (Part II)

Thu, 23 Oct 2008 19:16:37 -0400

Admob should buy an iPhone. They would then understand their market a whole lot better.

I can render a complex web page on my iPhone about 4 times quicker than my old Windows "Smart"phone. That is if the page even loads in IE.

Anyone who uses Admob's data to make a business decision is a fool.

WSJ: Glory Days Fade for U.S. Farmers

Thu, 23 Oct 2008 19:05:14 -0400

Here's a different take. The farmers are responsible for much of this problem.

We split our time between Europe (Switzerland) and the US. Here's some observations:
- ever see much prime beef in US supermarkets anymore?
- US beef used to be a selling point on European restaurant menus. Now its virtually non-existent. Its priced the same or less at retail.
- US produce does not even resemble what produce tastes like.
- US pork has a natural growing market in the far-east yet its considered too low in quality to sell at anything other than a major discount.

US farmers fell in love with mass production. Feed them fast, feed them cheap, transport them in deplorable conditions (a significant impact on the quality of meat is stress level) and respond to whatever prices supermarkets dictate.

A dependence on chemical fertilizers and a poor distribution strategy aimed at providing Americans with "choice and price" rather than something that tastes like food drives this industry. Hopefully tomatoes can be used for ethanol production as they're not much good for anything else.

Like the auto business, US farmers have placed themselves at the lowest margin end of the business. And, like the auto business, its a dillema of their own making.

They know it. Go on ag forums and read the discussions. These are smart businessmen and the discussions are quite frank. They simply have to find the cojones to redirect their business model or face a slow creep towards obsolescence.

"Value". This country is going to "value" itself into extinction.

U.S. Voters Lean Toward Government Intervention. Here's How to Invest for It

Tue, 21 Oct 2008 19:26:35 -0400

He will do what he did in Congress, nothing. Which means Congress will pork its way to a greater deficit. You want to invest in our illustrious Congress?

High-Yield Bonds: An Indicator for the Ebb and Flow of Greed and Fear

Tue, 21 Oct 2008 19:21:06 -0400

Until mortgage REITs adjust (comparable yield, much safer asset) the junk bond market will have little attraction for yield or appreciation investors. Way too early.

Saut: Consider These CEFs at a Substantial Discount

Tue, 14 Oct 2008 22:11:02 -0400

"these recommendations are like buying the indices at a substantial discount"

Don't count on the discount making you money. ETG has sold for discounts since its inception. Its part of investing in these funds.

State Capitalism: Ideology Now Bonds Russia, U.S.

Tue, 14 Oct 2008 20:13:39 -0400

The Marxist state is financing its business due to the mass flight of foreign capital out of the Marxist state. That in and of itself defines a very significant difference. I wonder how much deployable reserves the Marxist state will have once its finished? With the wealthy not paying taxes, the rest barely making ends meet (except a few spots of a nascent middle class in Moscow), not to mention a free fall in commodities, who will cover the cost?

Russia has been around longer than we have and has been endowed with natural resources and the ability to feed itself the whole time. Where are they? The RTS sells for about a 6 multiple. Companies are selling for less than cash on hand.

Yawn ...

Solar Breaks Oil Price Dependence

Mon, 01 Sep 2008 10:42:59 -0400

"knows very little about solar technology and where its heading"

"solar stocks will deliver a lot of investment risk for a while to come"

Where's the disagreement?

Why Apple Stock Is Poised To Go Flat - At Best

Mon, 01 Sep 2008 10:34:03 -0400

This writer is so misguided the article is not worth examining in detail.