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Bruce7b

Bruce7b
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  • Coca-Cola's Decade-Long Struggle To Fix Its Declining CSD Business [View article]
    Seth: Wasn't talking about harm. Was suggesting that the old formula was superior in taste and impact.
    Apr 7, 2014. 09:26 AM | 4 Likes Like |Link to Comment
  • Coca-Cola's Decade-Long Struggle To Fix Its Declining CSD Business [View article]
    Couple of related points. As cola sales continue to fall, what is the impact on McDonalds and other fast food restaurants? My guess is they fall together. (see MCD revenue drops in last two years).

    Berkshire now holds 400 million shares (9% of coke). What happens if Buffett agrees with your analysis? What happens to the share price when that first share is sold? How much does Berkshire lose in trying to unload those shares unless they arrange a sweetheart deal with Coke to buy the shares directly.

    I sold my coke shares years ago (too soon by far) and still consume a daily 8 ounce bottled coke--don't care for the plastic version. Some think the secret formula included a small amount of the coca plant (thus the name coca cola) until some time in the 1960s. My memory of the 1950s version had a coke with a lot more buzz so maybe the answer is....
    Apr 7, 2014. 09:20 AM | 1 Like Like |Link to Comment
  • The CEF Industry's Managed Distribution Policies May Lead To The Exploitation Of Investors [View article]
    NYer: Agree with your comments until you get to your recommendation to buy 4-6 closed end funds. There are few closed end equity funds that can claim to match their benchmark over any period of at least 5 years and those probably because they used leverage. Better luck with the income funds but again it is mostly because of leverage. Leverage, to me is nothing more than buying on margin if you are doing it yourself--and what leverage gives in a bull market it takes away in a bear. Maybe you can provide us a list of 6 closed end funds that beat their benchmark over the last 10 years. There are hundreds of open end funds that have performed well over the last 10 years (without leverage) and thousands of ETF/open end index type funds that come close to matching.

    Closed end funds are a nit in the investment world and there is a reason for that (although I own a few, including SOR and PDI, and am constantly looking for the exception).
    Apr 5, 2014. 08:55 AM | Likes Like |Link to Comment
  • Capital Destruction, Inc. [View article]
    Skip: It's not quite as bad as it seems. The leverage generates about .74% of that expense according to Morningstar. The comparable expense ratio is "just" 2.04% (when compared to the typical un-leveraged open end fund).
    Apr 5, 2014. 07:06 AM | Likes Like |Link to Comment
  • The CEF Industry's Managed Distribution Policies May Lead To The Exploitation Of Investors [View article]
    about: You must be looking at a different CLM. In April 2007 this one sold for $36.96. In Nov of 2008 it was $7.40. Now it is $6.52. If that is barely budging I would hate to see a crash. It does have a HIGH monthly distribution but before long there will be no NAV. Maybe a reverse split will do it.
    Apr 4, 2014. 09:15 PM | 1 Like Like |Link to Comment
  • The CEF Industry's Managed Distribution Policies May Lead To The Exploitation Of Investors [View article]
    Or never think of the distribution as a yield. If the long term distribution is greater than the long term performance, the NAV will be less than the IPO. The IPO seems to be either $15 or $20 (easy to find out by looking at the chart) so the current NAV will quickly tell you if the fund is trying to buy investors. Many CEFs have NAV well below their IPO level.
    Apr 4, 2014. 04:54 PM | 1 Like Like |Link to Comment
  • Gulf Coast Refiners Entering A Golden Age [View article]
    Charliezap: You seem to know what you're talking about so maybe you can answer this one. These articles never seem to address the conversion process for taking U.S. refiners that process heavy crude and switch them so they can process light crude (since we seem to have more than we can currently refine). Why pay all the transportation costs to bring in heavy crude (not to mention the environmental issues) and then pay the transportation costs to export light crude. Why not just spend the bucks now to convert more refiners? Then the issue of exporting goes away until some day we might become oil independent.
    Apr 3, 2014. 06:17 PM | Likes Like |Link to Comment
  • Old Economy Strikes Again: Why Investors Need To Keep A Close Eye On This Rail Stock [View article]
    Henrobrice: Again, not being an expert, I think you will find that most of the miles from 1910 were passenger trains. Trains replaced the stage coach and then were replaced by the car/plane. Many call that "creative destruction" and is happening all the time. Same thing seems to be happening to PCs and cable TV today. I think Penn Central was about the last of the large private passenger trains and it went bankrupt in the 1970s (I think)--now about the only passenger trains are government supported like Amtrak. Every investor who held on to those dividend aristocrats passenger trains of the 1950s lost everything. Not putting you in that category but anytime there is a negative article about a stock (be it Coke or McDonalds or Kinder Morgan) all the long time holders come out of the woodwork to defend their stock. They don't want to hear anything negative but instead want to look backward and tell you what price they paid for their stock and how much the dividend has grown. I appreciate negative articles or better yet balanced articles and want to know about the future of the company and not the past (although the past is a good starting place for analysis). And again, I am not negative about Union Pacific, I just think they are bubbling because of short term oil profits.
    Apr 3, 2014. 04:47 PM | Likes Like |Link to Comment
  • Old Economy Strikes Again: Why Investors Need To Keep A Close Eye On This Rail Stock [View article]
    Henro: Mostly I am giving opinions so proof needs to come from experts. I will throw out a few tidbits I found by google searches. Miles of class 1 railroads (the 7 big companies investors are most concerned with) in 2002 was 100,125. In 2010 according to Association of American Railroads it had fallen to 95,700 and in 2011 it had fallen to 95,414. You've heard of "rails to trails--those lost miles are being converted into bicycle trails.

    Oil pipeline miles were stuck in the 150,000 range for many years and trending down until shale oil production began and in the last three years have exploded to 180,000. I am guessing it will surpass 200,000 in the next year. Read the annual report of any mid stream MLP (suggest EPD, MWE or PAA) and you will see their plans for pipelines. They don't seem to be having any problem building pipelines.

    Do a google search on the July Quebec rail crash that killed 47 and destroyed a town. The small rail company has filed for bankruptcy. Read the January 4, 2014 Wall Street Journal article on the crash and the insurance issues all railroads face--the story is entitled "Fiery Oil Train Crash Raise Railroad Insurance Worries". Basically it says that Union Pacific and other class 1 railroads are grossly under insured for a similar rail crash if it occurs in a urban setting (think Houston).

    If you have been to Alaska and seen the Alaskan Pipeline, that is what I thought an oil pipeline looked like--but it is the exception. Gathering pipelines from the fields can be as small as 2 inch diameter and 6 foot is typical for the transporting lines. Easy to build, easy to get approval for unless you cross national borders.

    My initial comment on this article was 100% related to the oil transport business of railroads. I think the railroads are building capacity (including buying cars) that will be unneeded in just a few years. Pipelines are cheaper and safer and far easier to build. My guess is that oil transport on rail will peak within three years and within 10 years will mostly disappear. I could be wrong but trying to read the future is what investing is all about for me and that is my read.
    Apr 3, 2014. 07:38 AM | Likes Like |Link to Comment
  • Old Economy Strikes Again: Why Investors Need To Keep A Close Eye On This Rail Stock [View article]
    Sdavid0419: You make some good points about double stacked cargo. I am sure there are many efforts to improve efficiency in the rail business. I was referring specifically to the oil transport section of the business which has resulted in a large increase in business in recent years and I think much of it is temporary. So instead of "bubble" I should have used the word "obsolescent". If you are familiar with the MLP world you will know that pipelines are being built at an amazing rate--at least based on the dollars spent. I get the feeling it is not a slow process unless it happens to cross an international boundary. That is the only reason the portion of the Keystone that crosses from Canada has been delayed (and that is related specifically to oil shale issues). Just recently a large chunk of the Keystone was opened within the U.S., as well as a new line from Cushing to the Gulf. I am thinking it is far easier and quicker to build a pipeline than it is to build a spur on a railroad.

    As for railroads owning oil tank cars--here is a recent headline "BNSF to move into tank car ownership "(5,000 new cars being ordered). Can Union Pacific be far behind? The railroads are currently forced to transport anything on their rails as long as they meet the standards for hazardous substances which are pretty minimal. The railroads are pushing for much stronger safety regulations but are stuck in the middle until that happens so some are buying their own cars. They have much of the legal liability and very little control. One major oil accident in the right (wrong) place could destroy your Union Pacific.
    Apr 2, 2014. 10:44 AM | Likes Like |Link to Comment
  • Old Economy Strikes Again: Why Investors Need To Keep A Close Eye On This Rail Stock [View article]
    Seems to me that volume increases and profits are misleading for the railroads--at least for those moving oil. New pipelines are being built to transport oil from North Dakota and other new fields. Pipelines are both safer and more efficient (at least based on everything I have read) and will take the business at some point not that far in the future. Hesitate to use the word "bubble" but that is what I think you have in those oil moving railroads. What looks worse is the big investment in rail cars used to move the oil.
    Apr 2, 2014. 07:18 AM | 2 Likes Like |Link to Comment
  • 2-Year Performance Comparison Of Selected MLPs [View article]
    Bruce: My guess is that it would be a little trickier than that. First we would have to adjust the S&P returns for the tax they will pay each year to get an after tax return (and of course that would vary by individual and their marginal tax bracket, etc. and where they held the investment). Then we would have to adjust that tax owed in the future on the MLP--maybe discount it would be the better word. A tax liability owed in 10 or 15 years isn't equal to a tax paid today. You can call that the value of tax deferral (similar to that received by investing in a conventional IRA) or see it as investing/compounding of that deferred tax. My guess is that in the accounting world you don't get into discounting to present value.

    And I'm not even suggesting that it is worth the effort. When the muni yield is adjusted for its tax advantage it is usually a very rough calculation based on top marginal tax rates. What I am really suggesting is that Ron be careful about comparisons of investments that receive different tax treatment and at the least make mention of those differences in his article--better yet is to avoid the comparisons altogether.
    Apr 2, 2014. 07:03 AM | Likes Like |Link to Comment
  • Why ETFs Are More Tax-Efficient Than Mutual Funds [View article]
    Dr. Gray: Can you bring us up to date on the status of your ETF IPO? I understand it has been at the SEC for quite a while. Or maybe there is a quiet period for such proposals?
    Apr 2, 2014. 06:43 AM | Likes Like |Link to Comment
  • 2-Year Performance Comparison Of Selected MLPs [View article]
    Ron: I wonder how valuable it is to compare MLPs with the S&P 500 without factoring in the major tax advantages of MLPs. It is almost like comparing Munis with taxable bonds without considering the tax advantages of Munis. My guess is that MLPs didn't "underperform" the S&P over the last two years after any reasonable adjustment for taxes.
    Apr 1, 2014. 07:02 PM | 3 Likes Like |Link to Comment
  • Amgen: Allowing Dividend Growth Investors To Capitalize On The Biotech Sell-Off [View article]
    Nicholas: Based on your picture you seem to be way too young to be worried about dividends. Amgen is trading in line with fair value and Gilead is 80% below fair value, according to the source you quote. Yet you give up all of that differential for a 2% dividend? Either the fair market estimates you quote are worthless (in which case I wonder why you mention them) or you place some mystical value on dividends.
    Mar 31, 2014. 07:09 PM | Likes Like |Link to Comment
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