Deere & Company: Canary in the Austerity Coal Mine [View article]
Markos, your statement "... Yes, our entitlement programs are out of control, and yes our democratic demigods have reached the limit of sane spending. But no, now is not the time to implement austerity...." is incomplete without telling us when is the time to implement fiscal and monetary sanity and return to a semblance of sound money, budget balance, and bearable deficits? Next year ? 2012 ? 2013? The excuse that "now is not the time" will be always with us.
IMHO, the time was several years ago, and we have procrastinated ever since, and the longer we procrastinate, the deeper we dig ourselves into the hole. This vicious spiral must end, and the sooner the better, because this is how great nations have bankrupted themselves into oblivion throughout history.
The Europeans have shown wisdom and courage to take the bulls by the horn before it is too late, we need to do the same.
Looking at the Market from a Rational Perspective [View article]
" Here are some examples. Deere & Co (DE) fell from about $94 down to $25 at the March low and has rallied 88% up to $47 ...."
I had never owned DE before, but recently purchased a position in the high 20's after a little research, intending to hold it for the long term. My thoughts were intrinsic value in the mid 30's. After holding it for a few weeks, I sold most of my position in the mid 40's for an attractive return in excess of 60%.
This illustrates the enormous divergence of sense of value between different market participants. Some thought it was worth $90+ just a couple of years ago. I was glad to sell it in the mid-40's for a tidy profit, to someone who obviously thought it was a bargain. I don't think that anyone involved is smart or stupid, it's just that different market participants can look at the same thing and come up with very different conclusions regarding value.
The 'Sell After Dividend Cut/Freeze' Rule, With Exceptions [View article]
A very sensible and excellent article. However, those who say that the stocks mentioned by the author are down just because of the general market downtrend have a very good point.
The author would be commended if he were to present, in a future article, data over a longer period, and to show the change suffered by the stock which froze or cut its dividend relative to the change in the S&P500 12 months after the dividend freeze or cut. My hunch is that the author would indeed find a correlation that concurs with his current thesis.
Having been a dividend investor for over thirty years, my experience is that dividend cuts are usually (perhaps 80% of the time) a sign that a stock will underperform.
Six Canadian Banks That Should Reward Long Term Investors [View article]
The Canadian economy is heavily dependent on natural resources, energy, timber, minerals, etc. There is also considerable manufacturing of autos and other engineered products. So Canada is not immune from a significant downturn if the global (and especially the US) recession continues.
Although Canadian banks have, not surprisingly, been managed much more prudently than US banks, they are still vulnerable to an asset crash. Alberta in particular has had frothy real estate values, so is particularly vulnerable if energy prices do not recover in 2009.
Deere & Company: Canary in the Austerity Coal Mine [View article]
IMHO, the time was several years ago, and we have procrastinated ever since, and the longer we procrastinate, the deeper we dig ourselves into the hole. This vicious spiral must end, and the sooner the better, because this is how great nations have bankrupted themselves into oblivion throughout history.
The Europeans have shown wisdom and courage to take the bulls by the horn before it is too late, we need to do the same.
Looking at the Market from a Rational Perspective [View article]
I had never owned DE before, but recently purchased a position in the high 20's after a little research, intending to hold it for the long term. My thoughts were intrinsic value in the mid 30's. After holding it for a few weeks, I sold most of my position in the mid 40's for an attractive return in excess of 60%.
This illustrates the enormous divergence of sense of value between different market participants. Some thought it was worth $90+ just a couple of years ago. I was glad to sell it in the mid-40's for a tidy profit, to someone who obviously thought it was a bargain. I don't think that anyone involved is smart or stupid, it's just that different market participants can look at the same thing and come up with very different conclusions regarding value.
The 'Sell After Dividend Cut/Freeze' Rule, With Exceptions [View article]
The author would be commended if he were to present, in a future article, data over a longer period, and to show the change suffered by the stock which froze or cut its dividend relative to the change in the S&P500 12 months after the dividend freeze or cut. My hunch is that the author would indeed find a correlation that concurs with his current thesis.
Having been a dividend investor for over thirty years, my experience is that dividend cuts are usually (perhaps 80% of the time) a sign that a stock will underperform.
Six Canadian Banks That Should Reward Long Term Investors [View article]
Although Canadian banks have, not surprisingly, been managed much more prudently than US banks, they are still vulnerable to an asset crash. Alberta in particular has had frothy real estate values, so is particularly vulnerable if energy prices do not recover in 2009.