cranky investor

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  • Did New Car Sales Bottom in November?
    Unemployment is still rising; real credit is still being doled out a lot more judiciously; and the ups-and-downs of gas prices still troubles lenders' projections of residual values of low-mileage trucks & suvs. Add the end of "aspirational buying" as a means of self-expression and the greater availability of auto mechanics who've been laid off by dealers, and you find that more owners will hold on to cars that still run fine, and won't feel the need to buy just to prove something to their neighbors (especially the guy across the street who was just laid off by Citibank).

    A return to 16million cars per year is a way off.
    Jan 07 06:12 am |Rating: 0 0 |Link to Comment |View article
  • A Troika of REITs: Creating Higher Income in a Depressed Market
    safer investment - if you like hrp, you'd love their preferreds; they yield 16 percent, should yield 11 if they were priced like other reit preferreds relative to their overall cash-flow to preferred div coverage ratios.

    they can move up to a 10 percent yield with only a slight easing in the markets, with an effective 40 percent return per annum over the next 2 years.
    Jan 06 07:17 am |Rating: 0 0 |Link to Comment |View article
  • Is Williams-Sonoma Going Downscale?
    It's not just the $50 carrot-peeler; it's the really top-priced rents at the most upscale malls to sell what are essentially kitchen pots and pans and replacements for perfectly good coffee makers. It's a tough call for the next few years as to how many people will find love in a $269 le crousset pot when Target sells the equivalent for $49.
    Jan 06 07:14 am |Rating: +1 -1 |Link to Comment |View article
  • When Will the Housing Market Bottom?
    we've seen oil go from 40 to 155 back to 35; it's driven by marginal demand. so will housing be. the idea that everyone has to live someplace doesn't take into account the thousands of 2nd homes, speculative homes, trade-up homes, etc. It also brushes aside the entire idea of fewer primary demands for homes.

    1. there are a lot of dual-home (north & florida or arizona) retirees. with reduced savings and retirement income, many will dispose of one or another; already, many formerly retiree-only communities in Florida are admitting and even encouraging families as their owners are otherwise unable to find buyers or tenants.
    2. In tough economic times, many young-marrieds double up with their parents. Since the advent of the McMansions for the middle class, this is a lot more plausible than when homes averaged 1200 sq ft.
    3. In even tougher economic times family formations drop like a rock, further reducing the demand for housing. The last thing a college grad who was just fired by Citi or Bank America wants to do is get married. Moving back with mom is a lot easier.

    It may be a while until the demand for housing moves prices back to the 2006 peak.
    Dec 25 12:27 pm |Rating: +3 0 |Link to Comment |View article
  • AIV
    It's still not fully in the clear; but it's somewhat saved by using a ton of sales proceeds to pay down debt. Minimizing the distribution to the tax needed for the cap gain distribution makes a lot of sense. Go with the real beneficiary of this transaction - the preferred stocks which are yielding in the 15 - 16 percent range.

    If AIV can prove it's healthy, they'll move to where they yield 11 - a big pop in price; until then, the preferred is a lot safer than the common with almost as much upside potential - unless you think the stock's going to 35, in which case you might be smoking something totally illeagal.
    Dec 25 11:22 am |Rating: 0 0 |Link to Comment |View forum topic
  • GMAC: Who's in Charge?
    There are hundreds of soldiers coming in from the front in this unprecedented economic war; if we can stabilize some, maybe we'll find a way to rehabilitate them down the line. Otherwise, if we just let them die, we'll regret it later.

    The GMAC conversion stinks like last week's fish; but it's better than having it go down the drain - at least for now.
    Dec 25 11:19 am |Rating: +1 0 |Link to Comment |View article
  • Is Apple the Beacon of Light In This Dreary Recession?
    the whole retail environment can't survive on the i-phone.
    Dec 25 11:11 am |Rating: 0 -2 |Link to Comment |View article
  • The Case for Higher Interest Rates and Lower Home Prices
    the economics work for a little slump and would be fine if existing homes weren't overleveraged, and the paper wasn't concentrated in leveraged portfolios.

    however, to get that home to 240k, the current mortgagee at 280k will have to take a real big haircut; if the mortgagee is a bank with only 10 cents per dollar in the game, the drop in house value to 240k would wipe out all the capital at the bank --- closing citi, bankamerica, and a whole bunch of others.

    the finesse that's needed here is to save a few of these banks
    Dec 25 10:57 am |Rating: +1 0 |Link to Comment |View article
  • What the Fed Giveth, The Ratings Agencies Taketh Away
    Ratings agencies may not be credible any more, but they still have the right to raise questions; and that's really all that S&P did - they questioned whether GE can continue to maintain its business model in the face of higher risks to the entire financial system.

    Standing right up front in the biggest spotlight of the world is the Chairman of GE, Jeff (former wonder-boy) Immelt. He's trying to maintain the value of GE's common stock while continuing to hold it hostage to his greatest fear - being known as the guy who cut the dividend.

    Many of us have learned that the adage of 2002-2007, "you can have it all", no longer is operative. Jeff better learn this soon or he'll go down as the guy "who blew GE's AAA rating" and forced it to retreat from businesses that otherwise might have restored it to growth.
    Dec 19 06:28 am |Rating: 0 0 |Link to Comment |View article
  • Has Cutting Interest Rates Saved Anyone?
    Not all of us are trust fund babies; some have an entrepreneurial spirit and are, at the same time, risk-takers. Lowered interest rates mean that our investments in REITs will mostly survive the downturn, as higher cap rates will be offset by lower rates on commercial r/e loans.

    A mortgage has a better chance at being refinanced if the decline in value of the property can be partially offset by lower rates.

    And trust-fund babies should still work; it's good to get out of the house and meet people at work. Remember Jennifer Anniston in "the Good Girl". She worked at a Walmart "smell-alike"... and met the guy who knocked her up there.
    Dec 18 08:05 am |Rating: +1 0 |Link to Comment |View article
  • Commercial Real Estate Offering 8%-9% Cap Rates, Anyone Interested?
    Higher cap rates are reflective of lowered expectations for growth in the underlying property revenue streams. Heading into an indeterminate recession it may not be realistic to assume that an Avalon Bay can roll over rents at higher rates, or that a Simon Properties can keep its inline stores occupied by profitable retailers.

    Those who differ are invited to buy these stocks at "bargain prices".
    Dec 18 06:10 am |Rating: +2 0 |Link to Comment |View article
  • Trading Down: How Will Frugality Affect Retail Spending?
    More and more consumers are now adopting the shop-up strategy, under which when you need something you start shopping for it at the cheapest place around and only shop up if you can't find it at a bargain price. Thus, the first place to look becomes Walmart or the generic aisle of the supermarket; only if WMT's quality doesn't satisfy does one trade up.

    The best sign of this strategy taking hold is the number of BMW SUVs one finds in the parking lots of Walmart; it is a massive reversal of psychology as the BMW SUV was the ultimate in aspirational buyer vehicle.
    Dec 16 04:39 am |Rating: 0 0 |Link to Comment |View article
  • Madoff's Curtain Call: Sell When Transparency Is Absent
    Tough act to follow, but how about this:

    There is still no way for accountants to determine the dilution effect to participants in the Treasury bailout; everyone will be giving some warrants, etc.; but how and when they negotiate Treasury bow-outs from their companies will affect the dilution from these equity-lite deals. And the arbitrary manner in which Treasury can assert itself regarding these warrants makes it impossible to assess their impact on future earnings.
    Dec 15 05:26 am |Rating: 0 0 |Link to Comment |View article
  • A Long and Painful Consumer Slowdown - Barron's Interview
    what joe blue collar does will dramatically effect the retail world; there's a lot of retail space out there, regardless of whether it's 30 redundant Macy's or 300 redundant Walmarts.

    Sooner or later there will be far more consolidation in the retail space; Macy's will either have to raise additional capital or turn the business over to its bondholders.
    Target will survive because of its reasonably clean balance sheet, but other Gen'l Mdse companies will also be forced out of business.

    If 15 percent of the retail space in America suddenly reverted to pasture, consumers would still have adequate access to all the goods and services they could ever want
    Dec 14 15:08 pm |Rating: +1 0 |Link to Comment |View article
  • Stock Buybacks: What's Causing the Decline?
    We are in the midst of a liquidity crisis -- Cash is King!!

    Many strong companies are holding on to cash as they watch credit markets dry up and are unwilling to risk not being able to roll over debt.

    The absolutely strongest firms are trading at less of a discount; for them, holding on to cash gives them the ability to swoop in and buy some complementary firm on the cheap or to use accelerated payment terms and other credits to suppliers to achieve lower prices.

    When cash is king,it's a shame to waste it on shareholders.
    Dec 11 06:34 am |Rating: 0 0 |Link to Comment |View article

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