A Walk on the Supply Side
March 10, 2010
Keynesian demand-side economics still rules the minds of the policy makers in Washington, D. C. Their actions and their analysis continually point to their focus on aggregate demand and the “green shoots” that are expected to accompany an economic recovery based on the stimulus of spending.
For over a year I have been arguing that more attention needs to be given to the supply side of the equation. Yes, the growth rate of real GDP has been going down and the rate of employment has been going up. But, the rate of inflation, as measured by the rate of increase of the GDP price deflator has not declined since the fourth quarter of 2007. If it were just a demand side problem, this would not be the case.
The Future of Monetary Policy: The Exit Strategy
January 12, 2010
The recession seems to be ending. However, many people do not feel that the recovery will be very robust. (See my post “Is the Recession Over?” http://maseportfolio.blogspot.com.)
The crucial claim in the near term though is that the recession seems to be ending.
Because of this the issue that seems on the minds of many people is: how is the Fed going to remove all the bank reserves it has pumped into the banking system over the past ten months? The obvious concern is that the recessionary downdraft would turn into an inflationary nightmare. In other words, these people are asking for an explanation of the “exit strategy” the Federal Reserve plans from its policy of preventing a major economic collapse?
The Long and the Short of it All
July 15, 2009
We are presenting a list of companies which we believe are currently mispriced, based on our estimate of fair value, by the market. We develop our fair value ranges by projected free cash flow out one year and estimating an appropriate FCF multiple based on our assessment of risk and the strength of the balance sheet.
Cisco Systems [CSCO: 26.08, 0.00 (0.00%)] Recent Price $17.04 Value Range 21.86 – $38.41
Cisco Systems, Inc. designs, manufactures and sells Internet protocol (IP)-based networking and other products related to the communications and information technology (IT) industry, and provides services associated with these products and their use. Read more
Natural Resources, Energy and Precious Metals Update
June 24, 2009
Many investors are somewhat dazed and befuddled as they watch what used to be called “The Natural Resources Sector” bounce up and down as the summer season commences. With the dollar up again, commodities including the precious metals and oil were off sharply yesterday. All in all, it was just a broadly negative day. Little was spared, including equities, which also took a serious hit. Even perennial bull James Moore, of TheBullionDesk.com, was forced to write that, “Short-term the metal [gold] could extend lower as a result of the dollar.” John Reade, of UBS in London, concurred, writing that, “We would not be surprised to see further short-term declines, especially in the absence of any material jewelry, physical-investment or ETF demand.” Read more
Investment Ideas and Timing
June 22, 2009
“Timing is everything” goes the old adage. But all investors and traders know that timing an entry point or exit point of an investment idea and strategy is like predicting the weather without sophisticated radar equipment. In fact it might be more difficult.
Why? Not only because the fundamentals these days are enormously complicated, whether we are speaking of the stock markets, the bond markets, or the commodities markets, but because there are so many factors beyond our control and knowledge. Read more
Stocks For An Economic Recovery – Energy
May 29, 2009
Whenever someone mentions the idea of an economic recovery, I immediately start thinking about what would happen if natural gas rose back towards late 2007 and early 2008 levels. This won’t happen in the near term as it is anticipated that we will be in a weak hurricane season and there are still a few more shoes to drop in the economy. However, long term energy demand predictions and the loose fiscal and monetary policy of the United States have paved the way for another energy bull-run. Natural gas is currently trading around $3.70. With the forward curve looking at price closer to $5.70 by the end of this year, there is no better time to get in than now if you have faith in the commodity over the long term. Read more
Best Stocks of 2009 Review: The First Third
May 10, 2009
More than a third of the year has passed and the markets have rebounded nicely from their lows to turn a small profit on the year. It seems that the worst may be behind us when it comes to equity prices as many stocks have rallied more than 50% this year alone. Here at Bullish Bankers, we published a “Best Stocks of 2009″ newsletter at the beginning of the year, and our equities have performed very admirably when compared to our benchmark, the S&P 500. This article is designed to give a recap of how our equities have performed and give some additional explanation to our initial stock picking process. Through Friday, May 8th, our BB2009 Index has outperformed the S&P 500 by 11.51% on a geometric basis ex-dividend payments. Beside each of the sectors I have listed our three picks and the comparable ETF to show our relative performance on a sector by sector basis. Read more
GAAP Energy Earnings Are Worthless
May 9, 2009
One of my biggest pet peeves every time energy earnings come around is how addicted the media is to the shock value that is associated with GAAP accounting standards in relation to the earnings release. I understand that the media has to make headlines that make your eyes jump out of your head in order to stay in business, but I find this type of reporting to only use select facts to make the case of the author. Obviously this is very prevalent in the financial journalism industry and I myself am sure that I have done this on a multitude of occasions but I’d like to think that I rarely try to use these facts to make a situation seem more dire than it is in actuality. A great example of this is what happened to Chesapeake Energy [CHK: 25.42, 0.00 (0.00%)] this past week after their earnings release after hours on Monday, May 4th. Read more
Analysts Are Clueless On Noble
May 5, 2009
Following the energy companies through their earnings for a number of years now it as become apparent to me that while it is extremely difficult to predict earnings going into the future, nobody even does a mediocre job at this for a number of energy companies. This is very understandable for small capitalization companies as well as refiners as well as exploration and production companies because their mid-quarter transparency is not very high for the most part. This shouldn’t be true many of the majors integrated companies, and it definitely is not true for companies such as Noble Corp. [NE: 42.92, 0.00 (0.00%)], one of the three largest deepwater drilling companies. The actions of analysts before and after the earnings release and conference call continue to confuse me, especially when you consider that Noble’s revenues come from what is in most cases fixed contracts which they update at least once every forty-five days for their shareholders. Read more
Revisiting Some Previous Picks
May 4, 2009
The volatility in the markets over the past year has been staggering to say the least. Even during these turbulent times, I was always of the belief that utilities were relatively safe. As a result, I wrote about a few stocks in the past seven months or so that I thought were pretty good plays in the current market situation. For the most part, I was drawn to these stocks because of their potential for growth moving forward, their steady history, and their extremely strong dividends. Although “sure things” do not exist, I was fairly confident in the ability for these stocks to perform well. It has become quite evident that even with strong fundamentals such as those that these stocks possessed there is no guarantee that a stock is going to perform well. I thought that the safe play would be a large cap that boasted a high dividend. This is initially what attracted me to Southern Company [SO: 32.86, 0.00 (0.00%)] when I first wrote about the company here. On the other hand, I was unsure of how a mid-cap energy stock would perform in the current economy because of volatility. I wrote about one of these, EQT Corporation [EQT: 43.50, 0.00 (0.00%)], because I thought it looked very appealing, but I was unsure of whether or not it would perform during such a tough time. Looking back, a few months later, these two stocks have had extremely different results that prove my previous beliefs to be wrong. Read more
