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Good day to add to my preferred stocks.
As Churchill said, "never let a good crisis go to waste". That idea works for investors as well. From mid-2020 to the end of 2021 a monkey with a dartboard could have made good money in the market. For example, this monkey really liked investing in energy companies when their products were sitting in tankers and they paid people to take product off their hands. Now it's time to be patient and clip coupons. We've been here several times since I started investing. Maybe JP and the gang of seven will overdo the tightening or maybe Belarus and Russia will both attack Ukraine this winter. We never know what the next crisis will be but 8 billion humans can't resist creating one. Until then, I'm in the 5-6% fixed and semi-fixed income club along with one new real estate investment.
I've always used the Baltic Dry Index, ($BDI), as a measure for ocean transport cost. BDI indicates that the most recent low was earlier this year. Also, we should remember that 23 months ago, (as mentioned in the article), retailers in the US were paying whatever they had to, including airfreight, to stock shelves. Ever since then many have been trying to move unsold product.
I don't disagree that the world economy is slowing but reviewing BDI doesn't reveal anything severe unless you're in the shipping business. As a business owner who has moved hundreds of containers from Asia to the US, it looks like good news to me. Below is a 20 year chart of BDI.
Both of these videos make good points and I don't think there's much disagreement on the board wrt hybrids being a much better current solution to electric vehicles. I had hoped the TED presentation would make it clear that either an electric or PHEV will produce significantly less CO2 if charged entirely with solar panels. Practically, this can become a burden with a vehicle driven more than 30-40 miles a day as one of these vehicles driven 40 miles a day on electric energy requires ~300 kwh a month of charge.
And, of course, if one is being perfectly honest, you're counting carbon offsets and not actually charging your car at night from your solar panels unless you also install a system like a Tesla Powerwall, (13.5kWh).
My current choice for a car for the remainder of the 2020s is a Toyota Prius Prime. These aren't widely available yet but should be by next year. Given my average monthly mileage a tank of fuel should last three months. And bonus feature, not going to a gas station very often is the best feature of a hybrid car.
Imagine what it will be like for North Koreans if they're ever required to live in an entrepreneurial state. No matter how bad it is, most people get used to having everything planned for them.
Of course they do have to actually launch a payload into orbit. They've yet to achieve that milestone while they burned $40MM last quarter. This is no longer a stock, it's a roulette table. This is a $100MM company that has burned through $200MM in the last 3 quarters. Time is not on their side. If the next rocket is just another excuse even DOD will tire of throwing our money away.
I think Forsyth should quit cribbing my posts..:).
Otherwise, he’d opt for a so-called ladder of Treasury securities over varying maturities to capture rising yields as they mature, albeit tilted toward the peak yield of 5.39% at six months.
The ECB is functionally the hand puppet of the Bundesbank.
I've attached a chart of the SPX from 2003-2013. As you can see there was a massive recovery in 2009-early 2010. After that there were two drawdowns in the summer of 2010 and 2011. It wasn't until the summer of 2013 that the SPX reached a higher level than it had seen in 2007.
As we all noted at the time, October 2022 was very likely the bottom for this current bear. Since then the SPX has moved up over 25%. The scale is different than the GFC but I don't expect the patterns to be much different. There should be at least one more strong draw down. Maybe not until next year as more people take on higher cost mortgages, pay back student loans and begin to ease-up on new revolving debt. Also the job market is easing as debt becomes more expensive.
If one wanted to argue for a continuing bull market out of October it may be the IRA that saves the day. Those hundreds of billions in spending are just beginning. Interesting times.
The Supreme Court struck down affirmative action in college admissions. Justice Free Lunch Thomas had this to say:
“I’ve heard the word ‘diversity,’ quite a few times, and I don’t have a clue what it means,”
Thanks, should be a good July 4th holiday read.
As I've noted before, the newer Libre 3 is really excellent, much better than the Libre 2. Managing glucose is not just for diabetics, the Libre 3 can give athletes up to the minute feedback on their levels well before they 'hit the wall'. Wait until, at least American business people, start wearing them to make sure they're at the top of their game before making an important presentation or business decision.
Unfortunately, Americans are willing to take a sometimes rather nasty drug, Ozempic, instead of moderating calorie intake and performing some limited and regular exercise. The current ad for Ozempic leads with a very happy actor and follows with a quite healthy support team. At the bottom are the warnings. Not the least of which is pancreatitis. Because, of course, Ozempic is screwing with your pancreas if it's currently working normally.
As I'm sure I've said before, we're the robots. We'll continue to wear more internal and external devices that extend our useful lives and give each of us an advantage over as many competitors as possible. Devices like Libre 3 offer red-yellow-green signals and the solutions are simple. Drugs like Ozempic offer the instantaneous fixes Americans love but they don't represent palliative care for obese patients who will be instructed to continue using the drug instead of changing lifestyle.
One solution is; you make the change and we'll help you monitor your progress. The other is; you accept a magical cure for obesity where no one understands the long term outcomes and your medical professional will encourage you to continue using it. We're at an interesting crossroad where your doctor, a reasonable diet, an Apple Watch and a Libre 3 can help the average person lead a more healthy life or we can give in to classic American pills-as-a-solution. It's going to be an interesting decade as technology offers the willing excellent solutions to a longer, more healthy life.
I currently hold about 20% in preferreds as detailed in an earlier post and 80% in short term, 1-3 month CDs. I plan to move preferreds up to 25-30% over the rest of the year, move another 25-30% into munis and 2-year treasuries when they hopefully peak above 5% and drop the remainder into into CDs of 1 month duration, laddered each week as I begin reinvesting in the market. My recession idea is moving out to early 2024 but if that doesn't happen it's unlikely Powell will strap Biden with a recession in the middle of election season. I've had pretty much the same investment ideas since late last year when I decided making 5% doing almost nothing was more appealing than making 8-10% working at it.
I would never try to sell my investing ideas as better than another set of ideas, they're just the best for us. Coming out of the pandemic we were heavily invested in the market because it was obviously oversold. It's the same thing we did with real estate in 2011-2013, and I did with metals in 2001-2003, (both well documented in my earlier posts here). Lots of other ideas would have worked just as well or better but those were areas we understood and were willing to pile into without 2nd guessing our thesis.
For us today, a total SWAN investment strategy for 2023 and 2024 is better than trying to guess where the next issue is going to pop up as we've been busy marketing and now closing one home here in Santa Fe while we're managing a ground up remodel in the mid-Atlantic and supervising a new home design approval on one of the tributaries to the Chesapeake Bay. For someone dealing with a land locked state and will we have enough water problems, to dealing with the quality of our massive amount of water is a new situation.
I'll have to change my tag line to one of WB's most famous quotes. Rule #1, don't lose money. Rule #2, read rule #1.
At a European economic conference in Portugal today Powell reiterated that rates will move up again and he's not ruling out two increases without an additional pause. Asked when he sees interest rates returning to 2% he said "not until 2025". He's careful in how he phrases his desire to kill jobs but as I read it, he's going to continue to raise the overnight rate until people quit spending and the best way to do that is to ensure fewer people are working.
An article in the WSJ yesterday or the day before showed that Americans are still spending down the additional savings they gathered during the pandemic years. That may last through the end of 2023. The trick for investors is to be fully invested in munis, treasuries and mid-term CDs before the punchbowl is empty. Interest rates could come crashing down if there's a sudden realization at the Fed that they've gone way too far and that every working American would spend all their extra savings until it was gone. "Who knew".
Thanks. They hinted in their shutdown note that they were looking for a partner. I hope this works out for them.
I was knee deep in the search engine wars until 2003 when GOOG won and it was time to move on.
I had used Neeva for the last 2-3 years. I paid $1 a month for search but apparently not enough people cared about a search engine that didn't track everything you do. Founders were GOOG alumni. They stopped a month ago, so now I'm looking. I've tried Edge which is better than it was a few years ago but not excellent. GOOG is more annoying than it ever was and I have to remind myself to ignore all of the scammy advertising on the first results page. I may try DuckDuckGo again but it has always been lacking. With AI we may get a subscription search service with an option to delete tracking. If it's excellent, $20-30 a month doesn't seem too expensive. If I had a service that only read and analyzed quarterly reports and conference calls I could easily digest 150-200 companies a quarter instead of 20-30. I'm imagining a trainable AI that improves as you use it and understands what is most pertinent to your investing style.
Yahoo search is AltaVista. They bought AV's public search 20 years ago and have never really understood how to improve it. RIP AV, I used it for years in the early days of the WWW.
On a different subject, Stock Charts is coming out with improved advanced screening and alerts this summer. I've been playing around with it this week trying to understand if it's as good as DeMark's Symbolik. That one has a simple language and produced excellent results but could not handle complex technical algos without breaking for reasons their technical staff could not fix. I'm hoping the new SC system will work well. $25 a month for 100 alerts and $40 a month for 200 along with their usual excellent charting package. To begin, I want to track large cap, US based SPX and near-SPX companies by industry.
Good discussion on Power Lunch today regarding GOOG. Their issues stem from a couple of areas. One, GOOG is getting ad competition from several sources as streaming services move to an ad based structure to keep their profits up and monthly cost down. See NFLX et. al. Two, AI based search is causing sites like Reddit and Quora to put up walls, go dark to generative AI. As this happens, GOOG is just a site with ads and little interesting content. Many of us quit using GOOG years ago because of this but it's getting worse with the advent of AI search. GOOG search grew only 2% YoY in Q1. It could get worse in Q2. Side note: The NYT now makes more money from subscriptions than ads.
Thanks Court. I like those choices for me as I'll be more invested in the story than the specific companies. I'm still waiting but this is an interesting longer term thesis.
It appears Chapter 11 is the best way for them to exit a non-performing partnership and recoup some losses. As one might expect with a poorly run, failed business, RIDE is under SEC investigation and being sued by shareholders and another partner, Karma Automotive. Maybe Jack Smith wants to dive into this one as well to untangle something close to the truth..:).
Very brave prediction since MMM is trading at $100.15 this morning. Below is a 20 year chart of MMM. A technician might think it's simply returning to its mean price channel after a bullish run-up during the zero interest years. Fundamentally, we know there's more going on under the surface but I always find these charts instructive. The current channel is ~$80-$113.
I don't follow this area closely. Maybe a self formed ETF; equal parts BHP, RIO & FCX. Current aggregate dividend 6%.
The editors at Barron's need to keep a closer eye on what's published. Possibly this guy doesn't remember the record high in 2021 or the fact that we've lost about 12% of the US$ value over the last two years. The comparative value of today's SPX, discounting for inflation is 3,827.
Hope for the best. Prepare for the worst.
Such is the message from the options market as the S&P 500 index continues to dance on a razor’s edge near record-high territory.
I was reading the e-magazine edition. I had actually pulled that article up very early this morning and didn't get a chance to read and post until later so very likely they updated the mistake. When Al Root writes it's often a dumb article. I don't think he's done a moment's research in his life.
We've talked here several times about 3M and their legal woes. I've shed my 3M shares and will be on the sideline for the time being. 3M needs to split from its healthcare business and settle all of its major lawsuits before I'll be ready to invest again. It's certainly possible 3M will cut it's dividend and lose it's vaulted Dividend King status but it's also likely management will resort to raising the dividend by a penny a year for a while.
Put This on a Post-It: 3M’s Payout Looks Dicey
One of the “dividend aristocrats” is in trouble—and a payout cut is likely coming. Investors should avoid 3M stock, at least until the payout is reduced.
3M(ticker: MMM) has paid a dividend for more than 100 years and raised its annual payout for over 60 years, putting it in rarefied air. The company is one of the 66 dividend aristocrats in the ProShares S& P 500 500 Dividend Aristocrats exchange-traded fund (NOBL), a portfolio of firms that have raised payouts for at least 25 consecutive years.
The list might be 65 soon. 3M currently pays a $1.50 quarterly dividend, giving the stock a yield of almost 6%. That’s too high for an aristocrat—the average company yields less than 2%—and shows that investors are worried about something. That something is 3M’s legal issues— two of them, to be exact. First, the company is defending itself against accusations that it sold faulty earplugs to the military. It also has to worry about so called forever chemicals—they’re technically known as per- and polyfluoroalkyl substances, or PFAS—that the Environmental Protection Agency designated as hazardous substances in April due to their potential to cause cancer and other health issues. Last Thursday, 3M announced a $12.5 billion settlement for PFAS remediation for public water suppliers, and more settlements are likely to come.
Settling or fighting both issues will drain liquidity and might make cash preservation a higher priority for the 121-year-old company, famous for its Scotch tape and Post-it Notes.
With 3M stock trading at just 11 times estimated 2024 earnings, below its five year average of 16 times, it’s possible that those issues are reflected in the price. But that was before the legal liabilities started to weigh on the stock. And with all the unknowns, RBC analyst Deane Dray can’t recommend the shares. He rates 3M stock underperform, which is the equivalent of Sell. His price target is $95 a share, down about 6% from recent levels of about $102 a share.
Overall, 3Mmight have to take on as much as $30 million, (s/b Billion but it's Al Root writing so we need to moderate expectations), in debt to cover all settlements, according to Wolfe Research analyst Nigel Coe. That would take debt levels to about five times earnings before interest, taxes, deprecation, and amortization, or Ebitda, based on 2023 estimates— well above the typical ratio below two times for S& P 500 nonfinancial companies. What’s more, that debt could add more than $1 billion in annual interest expense, which would eat up roughly 20% of projected free cash flow and push annual dividend payouts to more than 80% of projected free cash flow.
“The 3M board faces some hard choices,” writes Coe, who also rates shares the equivalent of Sell and has a $92 price target on the stock.“It isn’t a question of whether, but how much, the dividend resets.” 3M directed Barron’s to recent comments by CEO Mike Roman, who said the dividend has been “a high priority.”
A dividend cut could come when 3M completes the spinoff of its healthcare business, slated for the end of 2023. The new healthcare company is expected to have more debt than the parent company, which will help 3M’s balance sheet. But the spin will also remove healthcare’s earnings, some $2.4 billion in 2022 Ebitda, or 36% of profits, before corporate and other expenses. 3M will hold about 20% of the healthcare IPO, which could be worth $5 billion, but that isn’t enough to shore up the balance sheet, given all the legal woes.
Yes, there might be one or two more $1.50 payouts ahead of the healthcare spin. But investors looking for yield should pass on 3M—at least until some of the legal dust settles and the reset is done.
Thanks Nick. Now we can focus on the two Annapolis projects. Feel like coming out and helping us pack?!?! LOL...We do it every couple of years and while we're very organized after all these moves it's still not fun. We've lived here 27 years and have owned 13 houses, (one was a triplex). We've moved into 9 of these homes for at least two years to ensure we were eligible to sell our house as a home owner and avoid taxes. We sold one other as a 1031 exchange. I'm a constant evangelist for any young couple that will listen to how this can be accomplished.
During the follow-on to the 2009 GFC, some home owners quit paying their 2nd mortgage or line of credit because the mortgage companies had gone out of business or quit sending notices. Private investors bought up many of these loans and are now coming out of the woodwork to collect. One example:
Warren A. Brown was flummoxed when he got a notice last fall telling him that the Randallstown, Md., home he lives in was subject to foreclosure. The reason, he learned: failure to make payments on a home equity line of credit taken out in 2006.
I worked with Boeing in the '90s, when engineers ran the company. While I enjoyed the fellow geek camaraderie, they were so detailed it was near impossible to complete the project. On more than one occasion I reminded my associates that we weren't flying folks at 30k feet. Apparently management decided that engineers were also too annoying to be allowed to build planes correctly.
Jack Smith is a stealthy, brilliant prosecutor. He starts with Mar-a-Lago and lets Florida and Canon have that one. Then he focuses on NJ and revealing top secret documents which will be another set of charges and before Trump can hire lawyers for either of these, he's granting immunity to fake electors to turn on Trump in an early J6 related case. And he's not even at the real crime, the J6 insurrection. The Donald may never go to prison but he'll spend the rest of his life fighting all these charges.
The two companies have very different issues. The MAX was also ill designed from the beginning, relying on hardware sensors and software to keep it aloft. They've since added more of the same but it's still a crap design and everyone knows it. There will never be a Miracle on the Hudson with a MAX or whatever they're calling it today. The engines are moved too far forward. It can cause a stall. The center of gravity sucks on a MAX. Pilots don't fly them. As I've said many times before, I don't fly them either.
Get your news, the pot calls the kettle black. At least Oceangate only killed four passengers. The only difference between Boeing and Oceangate is that Boeing had to buy off the government so they could kill 346 people. From the WSJ.
The OceanGate CEO spoke of relationships with partners such as Boeing, which now calls the claims overstated.
Real estate report. We accepted an offer for our home this morning. Millennial family relocating here from So Cal. We were on the market for about 10 days. While sales are a bit subdued due to interest rates, any home correctly priced without excuses will sell quickly in this market. There is very little competition and many are still priced and prepared like it's the summer of 2022. My takeaway is that real estate has not come down in price so much as there is some cost to ensure every detail is addressed because buyers are concerned they don't have to spend additional money after buying.
Oceangate fired Lochridge then sued him. The court documents clearly outline his point which appears to be exactly what happened to these passengers. At least Rush went down with the ship so it's unlikely anyone else will die from his naked hubris.
There are always a few 'roid women at the gym. MTG is a classic rager.
The SPX was down a bit over 2% this week. The majority of sectors were down well over 2% with Real Estate down almost 4%. Recession fears combined with everyone being bullish, (only a few buyers left on the sideline). It may just be a pause but I'll continue to nibble on my preferreds with the majority still in fixed income. The 2-year bond should be over 5% by the end of the summer. That's certainly worth considering for a portion of funds if the Fed is going to boil the frog, as someone said this week.
A thought so nice you said it twice..:).
Traders don't troll and trolls don't trade.
I'm sure Good Meat goes well with Brawndo.
I'm not sure why investors aren't taking this more seriously.
A 40 year-old guy living with his mom. Pretty much describes that gaggle of misfits on Jan 6.
"I love the poorly educated". DT.