Sideways Summer?

It's beginning to look a lot like last summer SeekingAlpha

Bear Market..Bull Market? It Just Doesn't Matter

SeekingAlpha

High Tech...High Yield!

Check out a recent  post to Seeking Alpha. No shortage of Apple fanboy blowback. SeekingAlpha

The Three States of Wealth

My oldest son is finishing up 6th grade. It was a big change from 5th grade. Puberty. Girls. Tighter cliques. iPhones. Profanity (an unavoidable rite of passage among males). And a more challenging academic regimen, mainly, science. Hard as Chinese arithmetic science. Chemistry. Not my stronger suit as a dad, tutor, and spirit guide. Luckily, my mom is a science teacher with 40 plus years in the can. I grew up around it and have a pretty good understanding.

A few weeks ago I was meeting with a client: one of the brightest media/advertising/marketing guys I've ever known and incidentally, an educational background in microbiology. Smarter than a tree full of owls. As we talked about the business outlook, the markets. and the inordinate amount of twenty something female employees who walked around his shop loudly in boots, our conversation turned towards the hobbled real estate market. We trade stories about deals we has heard about where investors who while surfing the wave of the 2003 to 2007 "anyone can make money" real estate business would parlay a big win into the next deal and then the next until the tone arm was abruptly ripped from the record. His conclusion was a theory that wealth, like matter, isn't really created or destroyed. It's just moved around or changing states. He's a smart cookie.

I never looked at it that way but it makes sense. So if you took the three different states of matter, solid, liquid, gas, what asset classes would fall under each?

Solids - Naturally, commodities or, what Dennis Gartman refers to as "stuff that hurts if you drop it on your foot: metals, energy (I know..it comes in all three solid, liquid and gas..but work with me here), even real estate. You can touch and pick up coal or gold or corn or the dirt on a commercial lot. The value of these can go way up or way down. But at the end of the day, it's still there. It may be worth a million dollars. It may be worth pennies. It's worth something if you can sell it. Then it becomes a liquid.

Liquids - Financial assets like stocks and bonds and cash are pretty liquid. So are mutual funds and ETF's to some extent but I have my doubts. More in a second. Stock and bond markets flow by the minute. By the tick. Constantly in motion. You can literally press a button and get a check that day. I've always loved that idea. The danger is that they could become the third state of matter: gas.

Gas - The price of a stock goes to zero. A bond issuer defaults. That's what I would consider a gas. It's there but you can't really see it and, eventually, it evaporates all together. Most options, save for calls written against a long stock position, are gaseous. They have a defined expiration date which means that they are guaranteed to go to zero. CMO's on all the insane asset backed shit Wall Street cooked up during the boom? Y'know...the ones that were layered with so many slivers of different mortgages that the dumbass ratings agencies said "What the fuck! AAA!!" A lot of that stuff is or will eventually be in the gas bracket when some analysts throw in the towel on trying to figure out what's in them. Beachfront condo pre-sales for condos that were never built? Nebulous. And although my jury is still out, ETF's are increasingly giving me that derivative, bullshit vibe. I hope I'm wrong.

As much as the investment industry, especially the technicians, wants you to think it's a science, it's not. It's an art with a lot of math mixed in. Leave the science to the smarter people.

Follow us on Twitter @Yieldpig

Why Rick Santorum Scares the Crap Out of Me

I try to keep this column somewhat politically neutral. But with the 2012 Presidential race gaining engine pressure, I can't resist.

I don't like Rick Santorum at all. I have no clue about his economic or national security policies. To my knowledge, he has none. I am pretty familiar with his social issues. My impression is that if it feels remotely pleasurable, he's against it.

He hates porn. He's virulently homophobic. He believes that married people should only have sex to procreate. These really have nothing with fixing the economy of or the huge fiscal issues we have staring down the barrel at us. Unless he plans to tax them or eliminate them so that we can focus better.

Rick is a politician of the worst kind. The kind that doesn't have a clue about how to govern a state as complex as the U.S. So, in order to win, he resorts to vitriol and demogougery. Hmmm...sounds like a guy you can catch anytime on the Military Channel.

Ultimately, this is even more dangerous than a clueless, rookie senator with a scary sounding ethnic name or an out of touch, ultra wealthy uber white guy who is about as exciting as beige paint.

I don't like where our nation is. We need our groove and can do spirit back. Taking the Oliver Cromwell approach isn't going to fix things.

Santorum is a guy standing on the corner of Repressed and Denial. Let's make him and his kind go away.

Who's with me?

Imagine All the Fanboys...Living Without Steve

Over my shoulder the other day, I barely saw a snippet of a segment on CNBC about two guys who were organizing some kind of birthday celebration thing for Steve Jobs who, sadly, won’t celebrate anymore real, earthly realm birthdays. After grumbling under my breath about how stupid that seemed, I recalled the scene from the John Lennon docu-pic “Imagine” where a dirty, young hippie was caught sleeping (stalking?) in the garden of Lennon’s gigantic mansion: Tittenhurst.


The “security detail”, who look like they could’ve been in his band at the time, nab the scraggly kid and bring him to Lennon on the porch. Obviously, the kid is an obsessed fan and when he comes face to face with his messiah, he presses Lennon for the deep, mystical, inner meaning behind his songs. John, ever the cynical realist, bursts the kid’s bubble with a plain “I’m just a guy who writes songs.” I’m sure the former Beatle was playing up the working class hero thing for the cameras before he hopped into his Rolls Royce to be whisked to his waiting private jet. But whether Lennon saw himself as “just a guy who writes songs” or not, he was trying to put things into perspective for his young visitor.


After putting that all together, It kind of makes me wish that Steve Jobs had done the same for the legion of Apple fan boys or the market for that matter. Granted, Jobs was a genius on the level of a Thomas Edison (and consequently and equal SOB as well). He helped change the way we do a lot of stuff and made himself and many others obnoxiously wealthy in the process. But when you break it down, he was a guy in a black mock turtleneck and jeans that sold computers.


But wait? If Steve had kept it real for the fan boys he would have lost his slavish army that would help to hype product launches and insure that the shiny, happy people would line up in the freezing dark around the block to buy the newest shiny happy gadget. Couldn’t John Lennon have done the same thing? Convince the kids that the Beatles were still bigger than Jesus so they’d keep buying the shiny happy records? Sure he could’ve and he could’ve probably pulled it off. But he didn’t. And they still bought the records. And to think that Steve Jobs was so into the Beatles that he named his computer after their record label.


Again, I’m not knocking Steve Jobs. The guy helped change media as we know it. But just like John Lennon said that he was a guy who just wrote songs. Steve Jobs was just a guy who sold consumer electronics. And now he’s gone. Remember him, if you like, but let it be.


Honestly, Apple’s cool and all, but who in their right mind should pay $500 for their stock? Here’s how to get exposure to AAPL, at a decent value, using these three lil’ piggies.


AT&T (T)

Recent Price: 30.14
Fwd P/E: 11.9
Current Yield: 5.8%

Ma Bell got first dibs on the iPhone since it’s inception. They were also the first telecom provider to peddle the iPad. Sure, everyone else sells the iPhone now, but T was there first. And something tells me that the deal with giving away the old iPhone 3’s is sort of a consolation price when the exclusivity went away. The company’s a cash flow monster and the yield is sweet. Think of T as the railroad. Apple makes the locomotives. But T gives ‘em something to roll on.

Corning, inc. (GLW)

Recent Price: 13.52
Fwd P/E: 9.73
Current Yield: 2.21%

After building tens of thousands of miles of fiber optic cable for telecom providers to over build at the end of the century and seeing their stock price soar to near $100 and crater to around $2, GLW proves that there are second, third and fourth acts in America. The company created a boss product in Gorilla Glass which is used for touch screens in smart phones and tablets as well as LCD panels and televisions. The company counts Apple as well Samsung and other tablet and smart phone titans as customers. Great fundamentals: good free cash flow, low debt, trades right at book value. Remember, iPhones aren’t the ONLY smart phones and lots of smart phone makers use Gorilla Glass.

Intel Corp (INTC)

Recent Price: 26.89
Fwd P/E: 11.14
Current Yield: 3.12%

What can you say? INTC is a hoss. Piles of cash. Low debt (if any). A growing dividend. And they make the brains for 80% of the world’s desktops and laptops. Wait? Those’re buggy whips? Oh, well, I guess the $9 billion commitment to capex to develop products for the smart phone, tablet, and everything else space. Pretty soon your handheld, your tablet, your car, your microwave, your refrigerator will all have Intel inside. Consider the people who make the Core processor a core holding.

Follow us on the Twitter. @Yieldpig



Yieldpig, Copyright © 2012 All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Yieldpig does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment Communications from Yieldpig are intended solely for informational purposes. Statements made by various authors, advertisers, sponsors and other contributors do not necessarily reflect the opinions of Yieldpig, and should not be construed as an endorsement by Yieldpig, either expressed or implied. Yieldpig is not responsible for typographic errors or other inaccuracies in the content. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided "AS IS" without any warranty of any kind. Past results are not indicative of future results. s should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question

Oil? Shmoil.

I'm looking at the weekly chart of USO. I'm the farthest thing from a wiggle reader. But it looks like lower lows and lower highs

The whole thing with oil is really starting to piss me off. And if you drive, too, you should share the sentiment. There's absolutely NO reason for prices to be here.

Iran? Please.

Oh..I know I've been dark. I owe you guys at least 1500 words. I'll make good. Promise.