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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.
This is the model China uses for every industry they want to enter. In the early 2000s we bought solar panels primarily from Japan and South Korea. We never sold a Chinese solar panel. By the time I left the industry in the mid-2010s it was difficult to compete without selling Chinese panels. Today they own the market and most of the non-Chinese brand panels are manufactured in China.
Customers would ask about Canadian Solar as a non-Chinese brand. Their sales office is in Ontario. Everything else is owned and operated in China.
During periods when I was not managing my own company I most often worked at public software start-ups as an analyst, product manager or in a technical sales capacity. At these companies compensation is almost always weighted heavily toward stock options and stock based performance awards. One of the best pieces of advice I got early on was to always sell stock as it vested. That is, don't play roulette with small company stock where you work - An all your eggs in one basket argument. This story reminded me how dangerous it is to be heavily invested where you work.
When SVB and First Republic collapsed, so did their employees’ savings.
The two California-based banks encouraged workers to buy company shares, and top employees often received much of their pay in stock awards. Now shares of both banks, which once traded for hundreds of dollars each, are worth pennies in over-the-counter trading. Employees are facing the whirlwind loss of money they planned to use for retirement, kids’ college educations and other big-ticket expenses, according to interviews with more than a dozen current and former workers.
One of the things I'm sure has been happening is that bears have been covering so they don't have to explain to clients why they not only missed the beginning of a bull market but were positioned against that idea. Bears playing catch-up. I think those folks will find themselves getting whipsawed later this summer. We'll see. For now I'm clipping coupons while we're in the middle of selling one house, building out another and working through the final design and early permit phase of a 3rd one. It's going to be a busy summer.
Thanks. And that was true this time. Early in the rally it was all tech. Really all the big seven tech companies and it was a good time to nibble on preferrerds.
One of the problems with materials/goods based cost-push inflation is that wage inflation is a laggard but always catches up most to all the inflation cost. Thankfully in the US 60% of all mortgages are still under 5%. Not great for lenders but good for consumers. It's likely a major reason US consumers haven't thrown in the towel or been in the streets protesting.
Powell reiterated today that two more rate hikes were "probable". What I find interesting is that my preferreds are up 1/2% today. I would have thought they'd be down and I could do some buying. This market feels way too hopeful. Reminds me of the line from Dumb and Dumber where Jim Carrey is trying to get a date with Lauren Holly and she tells him; you're chances are about one in a million. Carrey's character says, "so you're telling me there's a chance".
Although I don't see much strength or growth in the economy over the rest of this year, I also don't see much of a chance of a meaningful recession. In that case the Fed will keep muddling through until the jobs market weakens, the consumer quits spending and/or inflation returns to 2%. I don't see any of those as likely scenarios until at least after summer.
Now that the Fed has indicated there may be two additional 25bp hikes this year, there is additional time to get into preferreds. If there's another regional bank default it may be a good time to add preferred shares in some of the big banks.
One wonders when Barr finally realized this?
They get bored and/or impatient. They feel invincible so why not take extreme chances to do something as inane as getting into the Guinness Book a few times. Hopefully it won't end up as another Kobe moment. See his Instagram post below. Apparently they knew it was less than ideal conditions.
British businessman Hamish Harding, one of the five people confirmed to be on the vessel, wrote in an Instagram post Saturday: "Due to the worst winter in Newfoundland in 40 years, this mission is likely to be the first and only manned mission to the Titanic in 2023."
From JP's statement Wednesday afternoon one could surmise that the July meeting will result in a 25bp hike. CME Fed Watch estimates a 75% chance of a July hike in rates. Below is from this morning's Barron's:
The pause was an odd decision— and one that left many observers scratching their heads. The Wall Street Journal’s Nick Timiraos spoke for many when he told Fed Chairman Jerome Powell at the news conference after the decision, “I don’t lose weight just by buying a gym membership; I have to actually go to the gym.” Powell didn’t really have an answer, beyond stating that “the committee thought overall that it was appropriate to moderate the pace, if only slightly.”