Well, I would argue that there's not much profit to make from your short. Let's apply discount factors to the 4 components of values based on the negativity of your comments: 50% on retail, 80% on RE, 80% on brand, and 50% on EL. I get 240*(0.5*0.24+0.8*0.45... The discount factors are of course arbitrary (perhaps you can spell out what d.f. you think are appropriate), but the $158 estimate is 76% higher than its current PPS of $90. In fact, my discounted RE value is $86.4 (i.e. 240*.8*.45) which is almost equal to its PPS.
Mr. Hanson's article may not be making perfect sense, but I found the following very illogical as well:
"high Beta stocks are supposed to do well in a rising market---it’s when things decline that high Beta gets troublesome. High Beta amplifies returns in both directions."
When you say "supposed to...", I interpret that as "at least a >50% probability"... so if things are this easy, one can just buy high-beta stocks in a rising market and short them in a down market? But then, you don't really know when a market is "rising"... you really only know whether it has JUST risen or not. Thus, doesn't that make your proposition about the value of beta not very useful?
IMHO, beta is just what it is.. an indication of the volatility of a security, but NO indication of whether it should go up or down.
Riddle: What Currency Is Warren Buffett Buying? [View article]
"But how would he actually buy the currency?"
There's something called NDF (non-deliverable forward) traded in Singapore that allows one to bet on the directions of the Yuan. The carry is about 5%, meaning that the Yuan needs to raise at least 5% in the next year to break even. Not a sure bet, I say.
Sears Holdings' True Value [View article]
240*(0.5*0.24+0.8*0.45... The discount factors are of course arbitrary (perhaps you can spell out what d.f. you think are appropriate), but the $158 estimate is 76% higher than its current PPS of $90. In fact, my discounted RE value is $86.4 (i.e. 240*.8*.45) which is almost equal to its PPS.
American Express Drops a Bomb on Consumer Spending [View article]
Why Volatility and Beta Matter [View article]
"high Beta stocks are supposed to do well in a rising market---it’s when things decline that high Beta gets troublesome. High Beta amplifies returns in both directions."
When you say "supposed to...", I interpret that as "at least a >50% probability"... so if things are this easy, one can just buy high-beta stocks in a rising market and short them in a down market? But then, you don't really know when a market is "rising"... you really only know whether it has JUST risen or not. Thus, doesn't that make your proposition about the value of beta not very useful?
IMHO, beta is just what it is.. an indication of the volatility of a security, but NO indication of whether it should go up or down.
Riddle: What Currency Is Warren Buffett Buying? [View article]
There's something called NDF (non-deliverable forward) traded in Singapore that allows one to bet on the directions of the Yuan. The carry is about 5%, meaning that the Yuan needs to raise at least 5% in the next year to break even. Not a sure bet, I say.