Seeking Alpha

System6

System6
Send Message
View as an RSS Feed
View System6's Comments BY TICKER:
Latest  |  Highest rated
  • The Last Two Oil Crashes Show Peak Oil Is Real [View article]
    To the author: Congratulations on describing the size of the forest (i.e., where energy cost exists), without getting into the distraction of counting trees (i.e., the countless variables that go into it!). Very good example of critical, strategic thinking, backed by analysis. Kudos.
    Apr 26, 2015. 10:18 PM | Likes Like |Link to Comment
  • Netflix: Street Applauds Disastrous Financial Results [View article]
    gap123, traders may be raising cash, but investors are still investing and always will be. Going to cash means betting on a market reaction traders believe and hope will happen. Investors don't indulge such whims and prognostications, and certainly won't wager on them. They avoid exotic, indecipherable bets that require lucky timing and greater fools. Instead, they wager on things they can competently explain. "The market" is not particularly driven by mania at the present time, value-wise, but certainly there are examples of mania within it. Just as there are genuine pockets of value to be found by those who work at it.
    Apr 15, 2015. 10:12 PM | 1 Like Like |Link to Comment
  • Netflix: Street Applauds Disastrous Financial Results [View article]
    These days we are treated to the spectacle of bubbl-icious Tech stocks defying gravity like world class athletes launching their long-jump. Logic defines nor constrains their path forward, nor their eventual path downward. They will float in space far higher and longer than you could ever have imagined possible. Short them at your extreme peril because we spectators are ignorant about when they will return to earth. Arguing which one is the most gravity-defying is academic folly. They all come back to earth eventually. Enjoy the show, but do not wager on it. Word.
    Apr 15, 2015. 09:59 PM | 4 Likes Like |Link to Comment
  • Daily State Of The Markets: Are Stocks Overvalued (And Does It Matter)? [View article]
    Dave, I cannot think of another article that more clearly describes the present status of the market, valuation wise. Your point is that there is absolute valuation, and relative valuation. No matter how you cut market valuations, on an absolute basis compared to history, they look high - though not particularly stratospheric. But relative to the status of the economy and contemporary fiscal practices, they don't look high. Very well explained and demonstrated by you, so kudos.

    In theory this should make bulls and bears both happy to hear they have sound reasons to continue arguing that they are right. But I think this theory will fail because they each want to be both absolutely right and relatively right (i.e., the other guy has to be wrong!).

    As a final thought, I wonder how much the overall market valuation is or isn't unusually skewed (compared to historical levels) by the number of highly valued companies that produce relatively little profits. For example, TESLA, AMAZON, FB, LNKD, and so on. Perhaps if they were removed from the mix, the "market" would seem even less out of kilter. Or, perhaps the market historically has a similar mix of speculative stocks, and therefore it would be wrong to remove them from comparison. Would you have any thoughts to offer on this?

    Thank you for your good work.

    Jeff Fisher
    Southlake, TX
    Mar 16, 2015. 02:43 PM | 2 Likes Like |Link to Comment
  • Why Herbalife May Enter A Death Spiral Quickly [View article]
    It appears an easy way to get a headline on this "analytical" site is to post a mostly non-analytical opinion piece on HLF. Probably doesn't matter whether you argue the long or short side because there's so much pent up emotion waiting for a reason to post up arguments that are, on both sides, getting long in the tooth.

    Seems like shorts coming on the site to churn the waters with emotional convictions backed with scant analysis is sort of outside the mission of SA. Usually one clicks on Business Insider if they want tabloids.
    Jan 8, 2015. 10:06 AM | 5 Likes Like |Link to Comment
  • Barron's: Today's bubble is in private market [View news story]
    ....but beware if your favorite ETF has some sand in it
    Dec 7, 2014. 01:17 PM | 1 Like Like |Link to Comment
  • Kinder Morgan: Stock Nosedives, Time To Sell Out Or Buy With Both Hands? [View article]
    I would add two further catalysts may also be involved:

    1. the tax consequences of this consolidation, which may have some shareholders trading in order to deal with upcoming capital gains. For instance, if a holder has a low basis and therefore a large potential cap gain, they may be selling now that this has been voted to proceed in order to trigger gains in 2014 to offset other losses they may be planning to close out before year end, and

    2. That for certain funds that may have already held the maximum amount of KMI they could invest in a single holding in a portfolio, they need to sell of some KMI or KMP to avoid going outside their investment guidelines as these are consolidated.

    It is only a hypothesis, but I think there will be some repositioning triggered by the vote. It doesn't seem like that would have a hugely negative impact on the stock price, and unusual volatility seems likely to be temporary.

    The thoughts above only complement your thesis and conclusions.
    Nov 20, 2014. 07:45 PM | 9 Likes Like |Link to Comment
  • Retirees, You CAN Count On Dividend Stocks To Deliver From Here [View article]
    I also read that other article and was confused about the concept of holding 3 years of cash.

    I get the intention to use the cushion of cash in downturns instead of selling shares in a down market. But as a practical matter, for the vast majority of people, setting aside cash equivalent to 3 years of expenses would mean parking a large slice (if not substantially all) of ones investable cash in a low/no return cash account.

    Few people hold 6 years of investable cash, but even if they did, parking 3 years' worth would cut their total returns by half. I don't see how that can produce a "market" return over a full cycle.

    I think it is more logical to invest in dividend stocks and reinvest dividends, then access dividend income (rather than selling shares) for your living expenses during down times. Even if you had to sell some shares during a down market, I suspect that you'd have done better having a fully invested portfolio most of the time, than having 3 years worth parked in cash permanently.
    Sep 30, 2014. 10:57 AM | 5 Likes Like |Link to Comment
  • Sell Apple And Prepare For A Market Crash [View article]
    "Long/short equity, contrarian, newsletter provider, research analyst" ... about covers it all (though prognosticator, forecaster, and economist, if there's still room on the business card.

    My curiosity, genuinely, is whether the author is personally investing his wealth in accordance with his advice? Folks who have been doing this and have been "contrarian" have become less wealthy in recent years. Unless they are loaded up on Puts and the market goes way south soon, it becomes mathematically difficult to recover, no matter how right you are in the end.

    While the analysis was about was the intellectual equivalent of a Slurpy and Twizzler lunch, I would applaud the author posting up his personal portfolio and how his recommended investment mix is performing.
    Sep 5, 2014. 03:43 PM | 4 Likes Like |Link to Comment
  • Is The Dow Overvalued? Comparing Historical Valuations With Fundamentals [View article]
    Very commendable analysis. Love the introductory paragraphs for context. The takeaways support my view that the market is in a situation (like politics) where both "sides" are equally unhappy, therefore things remain relatively stable. The market has the benefit that its stable slow growth slowly attracts more capital, which inches it up higher and perpetuates the argument.

    What keeps me sleeping soundly while relatively highly invested is that if the market dropped 20% my tendency would be to plow in, rather than run away. And if I feel this way about the value offered, I assume a lot of other people do as well. If so, then there's somewhat of a floor under the market. And any interim softness is just a chance to get more of what I like at a better price than I already have -- to the author's premise.
    Aug 18, 2014. 10:58 AM | Likes Like |Link to Comment
  • Tech Bubble 2.0 - Prem Watsa's List Of Social Media Stocks To Avoid Or Short [View article]
    Thought-provoking analysis that compels a few questions:

    1. How many companies can you think of that have been priced at >15x on a P/S basis, and have grown into that valuation without seeing share price come down substantially to facilitate that convergence?

    2. How many of these companies are truly literally growing (you pick: revenues, operating income, ebitda, net income...) at "exponential" rates in which, if one were talking X to the power of Y, the "Y" would be greater than 2? [It often seems we are searching for a way to describe admittedly high but nevertheless linear growth as something it's not.]

    3. In the end, don't these tech companies all face a future that - if they SUCCEED wildly - will leave them with valuations in line with MSFT, AAPL, GOOG and ORCL with P/E's in the 10-30 range?

    4. And what are the chances that any 2 or more of these companies will sustain the test of time? Isn't it conceivable that YELP matures into the online version of "Yellowpages" and NFLX matures into "Blockbuster" (once a high P/S company also, right?)?

    I'd bet on the valuation of this basket of firms getting compressed significantly...if I only knew when it will happen. A bubbly market can make fools of shorts who are correct about direction but wrong on timing.
    Aug 5, 2014. 08:41 PM | Likes Like |Link to Comment
  • Cutting My Dividends By 35% - Improving My Dividend Growth Portfolio [View article]
    Earlier this year I assembled a portfolio of high quality, decent-yielding stocks, plus a couple of "flyers" that I hoped to get some growth from:

    Yielders:
    -----------
    BNS, RY, BLX, (banks)
    AAPL, MSFT (tech)
    VZ, T (telecom)
    BP, KMI, KMP (energy)
    KO (consumer)

    Flyers:
    --------
    AIOCF (tech)
    another not disclosable

    Overall these investments have outperformed the major indices, thrown off considerable cash, and seem to act somewhat low-beta vs. the market. I'm confident I've built a base for relatively safe, low double-digit investment growth (price+dividends) and sleep well at night knowing that market PE's may be stretched, but mine aren't so much. And I don't have any ETF/mutual fund management fees to support.

    As a 50+ who can see retirement over the horizon, this seems like a low maintenance approach to generating total yields certain advisors would tell you don't exist in the "new normal."
    Jun 23, 2014. 10:38 PM | 1 Like Like |Link to Comment
  • Reuters: iWatch likely to have 2.5" display, enter production in July [View news story]
    The key will be to make it available in gold color, for Asia, and rainbow colors for the rest of us who want people to notice our bling. Beyond that they'll probably sell 50m units even if the things don't work.
    Jun 19, 2014. 04:14 PM | 2 Likes Like |Link to Comment
  • Chicago Bridge responds to attack [View news story]
    Insider selling timing and meaningful % reductions in holdings by various C levels and directors all in the same timeframe strongly suggests people inside saw time to delever personally. I would hesitate to buy shares insiders are voting to cash out of. While I have no interest in going long or short this company, the article deserves credit for being very thorough and the authors were clear to disclose their short position. The company's response was boilerplate, and anything but thorough.

    If I were a professional investor I would be inclined to wager with the shorts on this one, but what keeps me out of this space is that even when it turns out there is book-cooking going on, you never know how long you're going to have to keep your money on the table until the truth comes out.

    A safe wager is that CBI's board and audit committee are giving this report serious review and discussion, and will be looking to the company's external auditors and perhaps outside counsel to assess the issues and risks.

    If you're sitting in the accounting cube-farm at CBI, count on some long nights for the foreseeable future.
    Jun 18, 2014. 01:58 PM | 2 Likes Like |Link to Comment
  • Sell In May? No Way! [View article]
    The article mentions something along the lines of the equity markets "teetering at all time highs," which has to be one of the most commonly expressed sentiments in the financial press over the past year or so. Questions I continue to grapple with are -

    1. Why are we alarmed/concerned about a market reaching new highs? It seems we should be only to the extent it appears it is doing so in conflict with fundamentals. [Question 3 below raises a further question related to this]

    2. Why does reaching new highs imply that it is teetering, as if about to fall off a cliff, rather than simply moving along a trajectory corresponding to improvement in the economy and business performance (EPS growth)?

    3. Various equity indexes may currently be above historical averages -- but is this in fact more of a mathematical issue arising because certain companies are "pulling up the averages" (i.e., average P/Es) and if you exclude those companies, the core market isn't priced significantly out of line with historical means?

    Said another way, if we back out certain speculative high-P/E stocks (FB, AMZN, TSLA etc.) in which many of us aren't playing, is the core market in fact priced significantly above a normal range?

    I'm biased toward thinking that many investors are assuming somewhat emotionally that the market is "bubbly" when perhaps only certain stocks are, and assuming the market is generally overpriced/overstimulated when in reality it is only marginally higher than it was nearly a decade ago [and with the tailwind of improving economics].

    Thoughts?
    Jun 4, 2014. 12:13 PM | Likes Like |Link to Comment
COMMENTS STATS
39 Comments
89 Likes