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Econovan

Econovan
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  • Why My Coffee Is Costing So Much More This Year [View article]
    Like everything else the government subsidizes prices will rise faster than inflation. Just like the PPACA will drive up medical costs even faster now. Of course I wouldn't count on food stamps being abolished so retail food stocks and agriculture stocks (like medical stocks) should also rise faster than inflation. Good call!
    Apr 18 02:55 PM | 1 Like Like |Link to Comment
  • BP can be a bridge between Russia and the West, Dudley says [View news story]
    Actually this sounds like a CEO backed into a corner sitting on an investment in the wrong side of history.
    Apr 10 04:35 PM | Likes Like |Link to Comment
  • Can Emerging Market Bonds Help Us Predict The Next Bear Market? [View article]
    Yes, but forest fires cause ice cream to melt. :)
    Feb 28 01:05 PM | Likes Like |Link to Comment
  • Intel Should Outperform Qualcomm And ARM Holdings In The Smart Connected Device Space [View article]
    It may take a couple of years for all that INTC revenue growth to become income growth, due to subsidies and expenses of ramping up production and placement of these new product lines. That might be good for the long term (difficult to predict) but short term I'm still braced for earnings difficulty.
    Feb 11 03:25 PM | Likes Like |Link to Comment
  • Intel: Getting Innovative To Gain A Foothold [View article]
    Note to author - duel is a fight to the death (maybe appropriate in this context.) Otherwise you made some good points!
    Feb 5 03:14 PM | 2 Likes Like |Link to Comment
  • Gold- Buffett And Morgan Stanley Agree [View article]
    This article sort of misses the point by questioning the value of gold as an investment. Of course it is only a gamble if you want short term gains. Gold and land are among the few things you can own that do not depreciate. Gold is among the very few things that do not depreciate and are portable and do not rely on governments to enforce your ownership rights. As such it is simply an alternative to cash. Right now neither gold nor cash offer any return as an investment, but as a store of value (when purchased at the right price) gold offers the advantage of being counterfeit-proof. To me that makes it worth holding a portion of my long-term cash allocation in gold.
    Jan 31 11:13 AM | 3 Likes Like |Link to Comment
  • Strategies For When The Bull Market Finally Dies [View article]
    Nice illustration of the futility of market timing. Maybe you could do an analysis of using an asset allocation model based on the Shiller CAPE ratio - using a lower stock allocation when the CAPE ratio is higher and vice versa. Without looking at trend lines and just measuring the market with objective long-term valuation methods seems safer to me, and causes me to maintain a fairly low allocation to stocks right now. I might get hurt by this while I wait and I might not get out as quickly as I should, but on the other hand my model should allow me to have plenty of cash for the next market down cycle and plenty to live on in the meantime. Then the question is what to do with the non-stock allocation.
    Jan 23 05:08 PM | 1 Like Like |Link to Comment
  • Freeport-McMoRan: An Anti-Cyclical, Undervalued Copper Play With A Near 4% Dividend Yield [View article]
    Does Richard Adkerson speak English or was this translated poorly from an Indonesian paper? It's almost unreadable. That doesn't instill much confidence, sorry to say. Also, this article doesn't consider the distinct possibility of economic meltdown in China due to unsustainable local government debts. I own some FCX shares, but it's getting a little uncomfortable holding until China starts growing again.
    Jan 23 11:50 AM | 1 Like Like |Link to Comment
  • Stages Of A Bull Market - Part II: Cisco Systems [View article]
    I think the "buy at any price" crowd tends to be younger, more optimistic people who would not give CSCO that respect even if their earnings picked up. It's just not cool any more, so it will trade like IBM or ORCL now. The only way that changes is a new CEO and maybe splitting up the company. (Not saying that's good for the company or shareholders long term - probably not.)
    Jan 7 10:16 AM | Likes Like |Link to Comment
  • High Yielding Cisco Is Not A Buy At These Levels [View article]
    I have found that when the earnings yield approaches a satisfactory total return (10-11% right now), the PEG ratio rule of thumb becomes meaningless. I wish someone would propose a better formula than the PEG ratio for evaluating a fair PE ratio. Being an amateur investor I haven't been able to develop a good alternative. However as a dividend growth investor I'm not bothered by CSCO having a P/E that is twice their growth rate (provided they don't actually go into long-term decline).
    Jan 6 09:15 PM | Likes Like |Link to Comment
  • Have Index Funds Become Too Popular? [View article]
    Index investing still requires timing skills because if all investors were index investors they would pay ANY price for stocks based on the going price. Y2K demonstrates why this didn't work. Investors must in aggregate be price sensitive or their investments simply can't give an adequate rate of return (unless your definition of success is purely measured by the indices you are trying to replicate).

    I have this general problem with using indices to measure success or to gauge value. I prefer absolute ratios like price to long-running earnings or earnings yield to long-running average bond returns. At least then you can weight a portfolio based on real value and not the mood of the crowd.
    Dec 27 12:03 AM | Likes Like |Link to Comment
  • What If Stocks Crash And Don't Bounce Back? [View article]
    I tried that in fall of Y2K after the market had fallen 20%. I still lost 50% from there on those investments until two years later when I decided to go to a more conservative stance. Both were bad decisions. Timing is very difficult or impossible. Since then I maintain an allocation that lets me sleep at night and view corrections as opportunities to rebalance. The challenge now is the bond side of the allocation - waiting for decent yields is harder than waiting for decent P/E ratios.
    Dec 18 02:25 PM | 3 Likes Like |Link to Comment
  • Frontier Communications Doubles Down On Landlines [View article]
    One question for the author - you mention that the assets FTR is acquiring have EBITDA about 1/4 of the purchase price. Do you know what the FCF is on these assets? In other words, is there CAPEX required to maintain that earning stream? That seems to be the challenge in this wire line business, to maintain the earnings without significant capital expenditures.
    Dec 18 01:50 PM | 2 Likes Like |Link to Comment
  • Cisco: Unloved, Undervalued, Misunderstood And Loads Of Income Stream Potential [View article]
    After a few years the scenario becomes flawed because if CSCO is able to raise dividend 5% a year the stock would eventually have an unrealistic yield and remaining valued at 20.24 would indicate they are increasingly at risk of cutting the dividend or going bankrupt.

    Also your DRIP model, by making the assumption that the stock trades for increasingly ridiculous valuations as time goes on, becomes flawed by acquiring a very high yielding stock at unrealistically low valuations.

    It's a nice fantasy, but more realistic to assume either a lower dividend growth rate or a share price appreciation closer to that growth rate. Over time one or the other must be true.
    Dec 16 12:56 PM | 3 Likes Like |Link to Comment
  • I Couldn't Find Value In AT&T [View article]
    I appreciate your humor, rare in the financial world!
    Dec 13 03:23 PM | 1 Like Like |Link to Comment
COMMENTS STATS
44 Comments
68 Likes