dontcallmeamarter's Comments Stream Stats
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Circuit City: Outlook Is Grimmer Than Ever
The real question right now is how long it will take the board to realize they can not support this management team? Too many boards get to close to management and allow themselves to be blinded to what is happening. My guess is that they are not adequately informed about the business and that is their fault for not demanding more information. I have to believe though that eventually the desire to protect their own backsides will kick in and they wil do the right thing. Will it be too late?
The Global Economy: U.S. vs. World Growth
The average US consumer for example consumes 25 barrel equivalents of oil per year while China is estimated at between 1 and 2. It would be quite easy for them to show phenomenal growth over a short period and still consuming nothing close to what we consume. So for every 1% reduction in the US you would need a 12% increase in China for demand to remain static.
There is an old saying that still holds true, "When the US sneezes the world catches a cold."
The 20 Highest Yielding Dividend Aristocrats
How Bad Is the Oil Shock of 2008?
Investing Into the End of the Hydrocarbon Age
Investing Into the End of the Hydrocarbon Age
I agree we are seeing the end of the bydrocarbon age. There are giong to ba a lot of people though that have been profiting from this that are going to try and resist the change that is coming.
There are manythat think we are going to be able to use Hydrogen as a substitute fuel in the near future. In the past there have been lots of rumors about this and teh auto industry has looked at the feasability previously but nothing has happened yet. I suspect one reason is that liquid hydrogen is highly exposlive and no one really relishes the idea of a hydrogen explosion following a car wreck. However, I have also been hearing rumors about some new technology to extract hydrogen from water with greater efficieny than in the past. If that's true then the fuel can be stored as water until needed, now that would be impressive.
The Oil Story: Dallas vs. Indonesia
There has recently been a lot of discussion about how production has also fallen off in Mexico and Vanazuela, which has at least partially been attributed to lack of investment. I think what we are seeing in terms of US domestic production leveling off and now projected to increase demonstrates that there is oil to be found but to encourage exploration we are going to have to pay up to get it.
I think the announcement by GM that they are considering "Strategic options" with regard to the Hummer line speaks volumes. For a couple of decades now we have taken cheap energy for granted and our consumption had become an unsustainable bubble just like commodity prices are currently enjoying. Our consumption finally reached a point that with a little push from demand elsewhere caused prices to spike.
Capitalist markets will always seek an equillibrium but in the process they are usually given to radical swings in either direction as resources are reallocated more appropriately. In another twenty years people could very well be saying, "Remember gasoline engines?"
'Index Speculators' Responsible For Commodity Prices?
The bottom line is that this is not going to end well. As we have seen numerous times in the last 10 years or so speculative bubbles eventually run out of steam. The problem is that they have a tendency to expand further than we originally anticipate. The price will move forward until the speculators begin trying to cash out and they all move for the cash register at once.
Is This Oil Bubble Going to Deflate?
Is This Oil Bubble Going to Deflate?
hsgac.senate.gov/publi...
You can also read the article on Barron’s if you have access:
online.barrons.com/art...
Perfect Oil Storm Brewing in the U.S.
The pension funds and the ETF's do not have to deal with the same position limits as the companies actually trying to use commodities positions as a hedge for their business. There is such a disproportionate amount of the investment in commodities coming from speculators at this time that demand would have to come to a screeching halt before it would have any real impact to the price of commodities.
So why doesn't congress act? Currently the average consumer is getting hurt, not congress, not big oil, and thus far not big business. The farmer isn't going to protest because they are getting record prices for their crops. The big oil executives aren't going to stand up and tell Congress how to fix the problem when they are getting $130 per barrel and even though Congress knows what the cause of the crisis is they are not likely to act because the beneficiaries of this speculative bubble are also large political contributors.
Congress needs to act and all investors need to play by the same rules. Impose those same rules on pension funds and ETF's as other investors and we will have $50 oil and $2.50 gasoline within a month. Here is a link to Michael Masters presentation:
hsgac.senate.gov/publi...
You can also read the article on Barron’s if you have access:
online.barrons.com/art...
A Desperate Blockbuster Tries Something Else
To many uninformed and lazy investors it may look like BBI has embarked upon some fragmented desperation moves to save itself but that's because they don't really have a clue about the business to begin with. First, I suggest that you read a transcript from the CC call or listen to a replay there are some clues in there. They would not have embarked upon this venture to begin with unless Icahn had already agreed to fund the acquisition. It sure must be nice to have a Billionaire in your back pocket!
BBI needs the purcashing scale that CC brings for personal electronics. They are not trying to become an Apple store so you can alleviate yourself of that fantasy right now. Everybody is always trying to say that this thing is the next big thin or just like that company. I don't know how many clown analyst popped into my office trying to tell me that KKK was the next SBUX!
Anyway, the CC acquisition gives BBI better distribution for their current inventory. Anybody that knows the company understands this aspect of their business sucks. It gives them economy in purchasing. They should be able to offer products in their stores that they can't economically offer today. They should be able to close some locations and relocate the movie rentals into a CC driving traffic to those stores. They may also be able to off some additional electronics out of BBI locations and close CC locations where it is not economical.
Anyone curious what the new stores are going to look like should go look at the location in Frisco Texas near Lebanon and Legacy.