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  • Caterpillar: A Fallen Angel With A Big Dividend  [View article]
    CAT is a great company but you are way to optimistic that all the ducks will line up for cat in the near future. PE compression seems inevitible if they miss on 2016 earnings by even a little bit. No oil price rise on the near term horizon. (how much CAT gear is used in oil industry anyway)Coal in the dog house, iron ore down again this week. tens of thousnds of units of big yellow machiines sitting unused now in yards across the globe. CAT is offering finance in Australia at .49% Incredible. Just no demand. Things will turn eventually but---------
    Everyone needs to take a cold shower and give things a chance to settle out a bit
    Buyer under $45
    Dec 4, 2015. 12:04 AM | 5 Likes Like |Link to Comment
  • BHP Billiton CEO bearish on commodities price outlook  [View news story]
    BHP is attempting to do what they have always done, drive smaller high cost producers out of business, then takeover or watch their mines shut down. This is a normal part of the commodity cycle, albeit one we have not seen since the days of the asian currency crisis.
    Dec 3, 2015. 10:23 PM | 1 Like Like |Link to Comment
  • BHP Billiton CEO bearish on commodities price outlook  [View news story]
    BHP as the dominant player doesnt have to "figure it out", just stay at the bottom of the cost curve and maximise production.
    Dec 3, 2015. 10:17 PM | Likes Like |Link to Comment
  • Tesla: There Is An Increased Chance I Might Be Wrong Regarding Model S Deliveries  [View article]
    Hi Paulo Nice article, I appreciate your intellectual rigour. Could Volkswagen's troubles provide a boost to Tesla. Superficially similar demographics maybe!! I admit to only having given this possibility about 10 seconds thought though!
    Dec 2, 2015. 06:08 PM | Likes Like |Link to Comment
  • Top 5 Picks For 2016  [View article]
    Good comment Bently. 99% of articles on SA are pretty fuzzy and should only be treated as a starting point. Not sure why the peanut gallery picked on this guy
    Nov 22, 2015. 01:57 AM | 1 Like Like |Link to Comment
  • Why Diversification Is An Important Tool Of Managing Risk  [View article]
    caj1455 Cant help but agree that the conclusion was reached long before any analyses was done. I think I will stick with the Buffet/Munger style of risk analysis. ie Put all your eggs in one basket and WATCH THAT BASKET
    Nov 18, 2015. 12:13 AM | 1 Like Like |Link to Comment
  • The Bubble Right In Front Of Our Faces  [View article]
    When selling or buying anything my view is that it is better to be too early than to late. Thanks John H for a timely reminder that the nature of a market of stocks is too reward the patient and prudent and punish the foolish and the greedy. I particularly liked the Market cap/gdp correlated to 12 year outcome graph. It illustrates beutifully how consitently overpaying is punished and how preferable it is to miss out on a run up in values than to run the risk of a loss of capital.

    Warren Buffett recently commented that " if interest rates stay low then stock prices are probably appropriate" (I am paraphrasing badly). Reminds me of similar comments he made in 1999, just before the crash.
    Nov 16, 2015. 09:42 PM | 1 Like Like |Link to Comment
  • This Housing Bubble Is Set To Pop  [View article]
    The US housing market appears to be structurally prone to speculative bubbles. Non-recourse loans were like drugs to a junkie. If a borrower can just hsand the keys back to the bank in the event of a default event then what real impediment is there to a bubble if the lending standards are lax or downpayments too small.
    Nov 16, 2015. 08:41 PM | Likes Like |Link to Comment
  • Crude Readies To Take Out The Lows  [View article]
    Coal might be close to marginal cost of production, but is a long way above zero. And the world is producing a LOT of it.
    Nov 16, 2015. 03:20 PM | Likes Like |Link to Comment
  • Crude Oil: OPEC Ministers Face A Supply Bonanza  [View article]
    Jerry, Eight years is pretty short term when planning major increases in production for a high cost project like bringing new fields into production. And I bet the majors are glad they didnt rush any more capex approvals than they already have.
    Nov 16, 2015. 03:04 PM | 1 Like Like |Link to Comment
  • Food Prices Getting Cheaper - Or Are They?  [View article]
    As a % of total income, food has never been cheaper than it is now. But consumers keep buying packaged and processed goods, which are NOT food but products, a subtle difference.
    Nov 16, 2015. 02:50 PM | Likes Like |Link to Comment
  • Is Coal Headed For A Collapse? From Simple Lack Of Demand?  [View article]
    Maybe in a century or so but unlikely within the lifetime of anyone alive today. Unless economic growth stalls completely aka 2nd great depression!!
    Nov 11, 2015. 02:58 PM | Likes Like |Link to Comment
  • Caterpillar: $74 Seems Like A Head Fake  [View article]
    Nice article Vince. Though I would argue that in the bulk commodity space the "replacement cycle" is currently irrelevant. The sheer amount of heavy machinery lying in yards unutilised is going to overhang the market for years to come. And even though global growth numbers might be ok the production of bulk commodities probably wont respond to any price signals for many years. ie the price isnt going up anytime soon. Even if that is only due to the huge upswing in production, underlhying demand is going to take a long time to soak up the increases.
    So effectivly CAT (and others) faces a triple whammy. As bulks prices went up in 2007-2011 producers picked up production andd at a rapid pace. Manufacturers respond to the "new normal" and ramp up. Price tops out but no one panics for a year or so. BUT forward expansion plans are curtailed a bit. Then rate of increase slows down but things are still increasing so no production/price signals as approved budgets/projects are still in pipline. As prices begin to fall and new projects come online a chill wind blows through industry. Projects on the drawing bourd are cancelled but producers are still ramping up production. Contractors etc are cut back on amount of development work and skinned on price. Fierce competition sets in BUT everybody still producing flat out. Port prices fall further faster as production ramped up. (2012- early 2013)Now real pain steps in. Layoffs begin in earnest(late 2013-2014) After that come small and medium service company bankruptcies. High marginal cost projects close but these are usually very marginal or older "end of life" projects. Now in a rush (2015) some of the large service contractors go bankrupt as well as a whole slew of smaller operators.
    But the interesting thing is that the bigger low marginal cost mines etc have ramped up production to such an extent that they more than cover up for lost production from failed smaller mines. The point of this is that while tonnages are now high there is no more expansion. But utilisation rates are very low for machinery. ie The remaining companies can pick over the carcasses of the destroyed companies for years to come. Labor force is very compliant now. Wages have dropped considerably no such thing as overtime. Whereas before some mining contractors employed extra bodies to jump in haul out trucks for brief periods so the mainline drivers could have lunch and toilet breaks, (trucks etc etc running 23.5 hours per day now they dont even run weekends in some cases (so no overtime)
    because its cheaper to run a mine site 9-5 weekdays (I am generalizing of course)
    My fear is that we need to go back to 2001-2002 to get a real look at how CAT may look over coming quarters or years It could be 15-25 years before we see an investment boom in the bulk commodity sphere the likes of the one just finished. There are thousands of yellow machines parked up unutilised. CAT has booked a profit on them already BUT no more orders are coming, perhaps not for years. Maybe housing can hold CAT up it would appear to be a tough ask. Maybe China pulls a rabbit out of the hat but ..gee I dont know.
    I am Long CAT at some point with a single digit P/E and after a savage earnings downgrade as its best in class but currently facing cyclonic headwinds.
    Nov 8, 2015. 08:10 PM | 3 Likes Like |Link to Comment
  • Berkshire Hathaway beats by $110.10  [View news story]
    What do you mean "finally"
    Nov 7, 2015. 10:55 PM | 2 Likes Like |Link to Comment
  • What's In Your Wallet: The Case For Cash  [View article]
    Thoughtful and interesting article Arete!! The truly great investors all understand that sometimes long periods of holding and building up of cash reserves are necessary for significant out-performance. The only thing I know for sure is that there is no such thing as " new normal". The concept is absurd. The more things change the more they stay the same.
    Nov 7, 2015. 12:26 AM | 2 Likes Like |Link to Comment
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