Industry Ranks February 2012
I’m working on my quarterly reshaping — where I choose new companies to enter my portfolio. The first part of this is industry analysis. My main industry model is illustrated in the graphic. Green industries are cold. Red industries are hot. If you like to play momentum, look at the red zone, and ask the...
We Eat Dollar Weighted Returns — III
Somebody notify the Bogleheads, they will like this one, or at least Jack will. Yo, Jack, I met you over 15 years ago at a Philadelphia Financial Analysts Society meeting. How bad are individual investors at investing? Bad, very bad. But what if we limit it to a passive vehicle like the Grandaddy of all...
A Book on Value Investing
A medium-sized publisher has approached me to write a book on value investing. I might do it, or I might not. I also might try to do it with another publisher, or I might do it through Amazon. I solicit advice from my readers on the prospect. Anyway, I thought about what the book might...
On Corporate Cash
In human terms, we are most often best off with the via media, that is, the middle way. So it is with corporate cash. The first article I wrote on the internet (in 2003) argued for the value of excess cash in the hands of intelligent management teams. But there is a limit to that,...
On Corporate Cash
In human terms, we are most often best off with the via media, that is, the middle way. So it is with corporate cash. The first article I wrote on the internet (in 2003) argued for the value of excess cash in the hands of intelligent management teams. But there is a limit to that,...
On Junk Bonds
If someone were to ask me my opinion on Junk Bonds at present, fool that he would be to ask me because I know real experts elsewhere, I would say this: They are good for a speculative trade, but dumb money has arrived. Be ready to sell when the momentum fails. High yield ETFs sell...
Redacted Version of the January 2012 FOMC Statement
December 2011 January 2012 Comments Information received since the Federal Open Market Committee met in November suggests that the economy has been expanding moderately, notwithstanding some apparent slowing in global growth. Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global...
Against Simple Valuation Metrics
There have been a lot of articles dealing with use of corporate free cash flow lately: Dividends — get them, are they sustainable? Buybacks — do they add value or not? Acquisitions — are they overpaying? What are the synergies? But you never hear about the last one — internal investment for organic growth. There...
The Rules, Part XXX (30)
In the recent run-up, there was talk of the infallibility of equities. This led to a higher level of variable compensation in the economy through option and share issuance and low pressure to raise fixed wages. This was yet another form of hidden leverage, which hid the unprofitability of enterprises through share dilution. That was...
What’s Up? What’s Down?
I can’t remember who gave me this idea, but sometimes I troll through the raw PPI data to get ideas on pricing power. Here’s a list of the top 50 rising items in the PPI: Code 2011 Px Increase Commodity Name WPU01130102 125.3% Dry pinto beans WPU01710802 109.8% Checks and undergrades WPU023307 90.7% Liquid raw...
On Predicting the Future
I’ve long admired ECRI for their timely and accurate forecasts, and their willingness to stick by their models when things don’t seem to be immediately going their way. I have also appreciated their lack of willingness to divulge their model elements; my thoughts were, “Hey, it’s probably a simple model that no one has ever...
Stock Idea Series
Every now and then an idea strikes me, and I wonder if it would be worth trying. Here’s one: much of the stuff that passes for analysis of stocks on the web leaves me cold. It feels like a computer spit out a few ratios, with standard verbiage. What if I chose some stocks at...
