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System6

System6
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  • Is Apple Really A 'Buy'? [View article]
    This is not an investment analysis, per se.

    First, the "law of large numbers" is actually not a law, scientific or otherwise. Suggesting it is, is a false premise. Therefore, your first point is merely personal conjecture.

    Your second point is more or less that they're somehow uniquely in a tough business. Of course, you don't provide a basis for what makes this industry uniquely difficult.

    Your point 3 is that many large previously successful firms eventually peaked then lost their value. As a point of fact, historically, virtually all of them have. But this has no bearing on any successful company at any random point in time.

    Ironically, your dismissive comment about Cramer - of whom I'm neither a fan nor detractor - suggests his investment analysis is simplistically contrarian. You don't give him credit for the load of fundamental analysis he does to back his recommendations -- and I would argue that your article lacks comparable due diligence.

    SeekingAlpha tends to be a quantitatively oriented site where analysis, rather than opinion, is the measure of merit. By that standard, your article is uncompelling.

    For disclosure purposes, I continue to be long Apple, though I sold down at 550 and at 650 late last year.
    Jan 13, 2013. 03:50 PM | 14 Likes 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
  • Herbalife At Risk: The FTC Can't Ignore Demonstrable Evidence [View article]
    Without taking sides on the argument, this article is an opinion piece posted on an analysis site. Usually SA merits primarily fact-based analysis, whereas it is noteworthy that the headline cites "Demonstrable Evidence" but in the body and conclusion, the author states they "believe" there is such evidence. None was cited. Furthermore, the primary reference for the article is a prior article by the same author using similar opinion-based "analysis." Numerous logical gaffes can be cited in the article: e.g., does anybody accept the premise that Carl Icahn likely did not bother with due diligence on this investment? The basis for this assertion is that he allegedly cited the ticker symbol incorrectly in an interview.

    This op-ed seems more suitable for CNBC infotainment purposes than for thoughtful evaluation on SA. Just saying.
    Mar 13, 2014. 10:16 AM | 7 Likes Like |Link to Comment
  • BlackBerry: The Absolute Coolest Brand In South Africa [View article]
    Two comments tangentially supporting your article, in the first case, and your conclusion, in the second. Here goes:

    First, "Searching For Sugarman" is/was a great movie, and I've even downloaded some of Sixto's music which is like vacationing in the 70s. Awesome parallel you draw here to our sometimes somewhat inward-looking view at the investment world, while giving short shrift to what matters outside the CONUS.

    Second, on Saturday it was my wedding anniversary, so when my wife asked if I'd accompany her to a mall (wow, they still have those?) to exchange a dress, it was an offer I couldn't refuse, if you know what I mean. While she did her thing, I wandered the mall not to look at the things, but to see who's selling what. Actually a surprising number of newer names with mall address these days. Anyway, I happened to walk past the Apple store, and this in a tony upscale mall in Dallas on a Saturday morning, and it was anything but stuffed with customers. Not empty, but certainly not getting the kind of buzz as the Organic Cosmetics store was.

    I bought my share (and then some) of Apple products the last several years and owned a lot of Apple stock, which I sold off when they quit hinting about the next blockbuster product in the pipeline and the "mother of all backlogs" for existing product. I presume Apple will be around and healthy decades on, just as MSFT has done, but I think we've seen the worst of the damage it is going to cause to BBBY, Nokia, Samsung, and others. So if these contenders are still on their feet here and actually thriving elsewhere, I think your thesis is supported.
    Jun 3, 2013. 11:08 AM | 6 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
  • How The Herbalife Short Squeeze Would Work [View article]
    I bailed on this stock right around my basis of mid-40s. I'd enjoyed its runup to ~70 and then watched it get repeatedly pummeled by one allegation after another. Ackmann took its knees out, then - and I thought I'd never say this - Icahn came to the rescue and, at least for me personally, gave me an exit point to get out "whole."

    What seems missing in all of the banter above is that i) this stock isn't trading on fundamentals, so it is not worth arguing how much the stock price should be (i.e. zero or maybe $60), ii) none of us know when Ackmann or Icahn will throw in the towel and our thesis will evaporate, and iii) this stock price is only as good as the latest news or rumor.

    For all those reasons, I wish it good luck, and I'm sleeping better at night knowing I'm only a spectator.
    Jan 30, 2013. 03:01 PM | 5 Likes Like |Link to Comment
  • Herbalife Vs. David Einhorn: 3 Possible Outcomes [View article]
    Great job summarizing the most likely avenues this takes. I have listened to and read excerpts that contained the Einhorn questions and what stuck with me is that they weren't particularly pointed or aggressive, but rather sounded like due-diligence questions.

    I understand Einhorn has a reputation as a notorious short-seller, but if I hadn't known that, his questions and the way he presented them might have led me to expect that he was actually evaluating/diligence-ing to buy shares, rather than short them.

    I've been rewarded nicely, even after the effects of the Einhorn-induced selling, from owning HLF, and haven't seen any of the types of warning signs (e.g., cash flow delinked from income growth, etc.,) that would give one pause about the accounting or the underlying business results.

    As such, I plan to continue to sit on my long position until the company or someone else presents something more damning than a small number of rather business-like questions, as was my impression of Einhorn's queries.

    Thanks again for your analysis of the situation.
    May 7, 2012. 12:26 PM | 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
  • Buy Gold Now Before The Coming Rally [View article]
    With all due respect, this is pretty thin on analysis and thick on hope and conjecture.

    I especially note the way your hypothesis of higher gold prices ahead is validated by quoting - "Peter Schiff, one of the most famous gold proponents....".
    Oct 26, 2012. 05:28 PM | 4 Likes Like |Link to Comment
  • How Inflation Could Happen In The U.S. [View article]
    Excellent analysis, thank you.

    Followup question I would appreciate your view on, is the concern I have recently heard voiced that there is a global race by many countries to devalue currencies relative to other currencies in order to spur domestic exports, and this will lead to inflation.

    What is your assessment of that hypothesis?

    Side note, I find SA appealing because of the abundance of thoughtful and fact- and analysis-based articles, such as this yours, and enjoy and often learn from the intellectual back and forth demonstrated in many of the above comments. However, I suppose it is only human, though nevertheless somewhat disappointing, that certain commenters find the need to make personal attacks should an author come to conclusions that conflict with the commenter's beliefs. Ironically, those ad hominum retorts are usually devoid of comparably illuminating insights, and instead rather heavy on unsubstantiated dogma.
    Feb 24, 2013. 04:04 AM | 3 Likes 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
  • 5 Ways You Can Excel At Picking Stocks [View article]
    Your approach makes sense....basically, discipline and hard work should pay off. Where it seems unwieldy for most people, would be to keep any degree of true, up to date, awareness about a short list of 100 or so stocks.

    I suggest a much more limited list unless someone is doing this full time. And maybe even then. Being full time employed, there is no way I could meaningfully watch 100 or so stocks. Instead, I watch perhaps a dozen and hold shares in maybe half at any one time.

    Overall, I prefer to invest in fewer than 10 companies at any time, switch in and out only when the thesis no longer works (I've held most of my companies for 1-3 years), and rebalance holdings as conditions merit (perhaps every 60-90 days). This approach has beat the market with very low fees and churn, and I'm not glued to the screen in my off hours. Typically, 2/3 of my holdings substantailly outperform the market and 1/3 can be viewed as either disappointments, lessons learned, or theses that haven't paid off yet, but still might.

    Altogether, I tend to do better than if I'd just bought an index fund. Perhaps others would find it reassuring to hear that they can do well for themselves with a narrow portfolio focus that requires little babysitting and minimal trading activity.

    For what it's worth, SeekingAlpha is my number one tool for monitoring the market and my companies of interest. Being alerted to high quality analysis (such as yours) on my investment interests is priceless. If I could only use one tool for my investment analyses, it would be SA, hands down.

    I commend your approach of doing the homework. Good investment returns demand it. And the math of outperforming the market while having advisor fees skimmed off the top seems too improbable.

    As a final note, a disciplined investment approach relieves investors of trading mentality, which is where perhaps individuals may be legitimately disadvantaged. Occasionally I tune to CNBC to hear what Cramer and others are saying is supposed to be the hot stock of the day or the week, and wonder how well listeners are doing by chasing in and out of those. I've seen analysis that suggests if you trade these recommendations, you're generally underwater within 2 weeks, because it's all about momentum rather than fundamentals, and the street had that info before it shared it with you.
    Sep 3, 2012. 11:24 AM | 2 Likes Like |Link to Comment
  • Buy Apple Stock Before Earnings (Under One Condition) [View article]
    Well said. Seems like the hottest question in town, doesn't it:
    Buy (or sell) before or after earnings?

    Noting that AAPL is a) anything but a stable, predictable business, and b) there's tremendous speculation about how to game "the day," it's nearly impossible to sift through all that and then out-guess everybody else.

    Were I contemplating whether to buy or sell AAPL, I'd want the fresh numbers and "the why," and then I'd decide. Naturally, I'd stand a decent chance of then buying into a higher price, or selling into a lower one, than had I committed prior to the day. But I'd be making an informed, market-value decision, rather than a guess and a bet.

    Those of us who have ridden AAPL up have missed a lot of one-day trade opportunities, and have sat through lengthy periods as the stock bounced seemingly directionlessly within a range.

    And then we've made very good money.

    That approach doesn't seem broken, so it seems to make little sense to try to improve upon it now.

    As to Iron Double Cross Condors and so on, I'll have to concede all this quantum physics to rocket scientists who either have much higher IQs and much more time on their hands than I do!
    Jan 18, 2012. 02:13 PM | 2 Likes Like |Link to Comment
  • The $400 Question: Should You Buy Apple Ahead Of Earnings? [View article]
    What makes your analysis most valuable to me, is that you seem to remember that every decision is unique and personal.

    I knew (believed, was convinced, whatever) last summer that I coul exit my AAPL long and come back to it in early Jan, and have missed very little in the interim. I was right - even though I didn't actually do it.

    I suspect one might similarly do all right in the "timing game" by exiting next week and coming back in at some point in the future. I further suspect that one could add some incremental return with your options strategies.

    However, these paths would be a poor match for me personally.

    My first purchase was at $30, and I sweated it. I worried the same when buying more at $200, $300, and even $360. But the investment thesis - based on expected market penetration rates and timeframes, and new product innovations - continued to make sense and the company has generally over-delivered.

    On the same basis, I have little question about a $550 price for the shares, aside from when, exactly. So, as long as AAPL management continues executing (and I will certainly be watching closely), I'll sit on my shares and lose little sleep over the ebbs and flows of the periodic trading ranges, and any missed opportunities from out-guessing all the other guessers.

    As you sagely advise, how one approaches this investment decision, or any other, is a very personal matter. Thank you for sharing your enlightening thoughts.
    Jan 10, 2012. 09:32 PM | 2 Likes Like |Link to Comment
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