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Coke or Pepsi?
Topical, as both companies are currently on similar forward P/E's of around 14 and yields of 3.0-3.5%, and we are all desperate for some stability.
Almost makes me want to go and buy KO. But 'cause I'm a cheapskate I might also stock up on second-rate Dr. Pepper Snapple (DPS) at a P/E of around 9 (but no yield), with the hope someone puts this recent spin-off out of its misery and takes it over...
Fear and Value: Together Again
The statistics are distorted by the fact that Financial stocks have been major contributors to the yield, and we all know what is happening to them.
Maybe we are just going back to the good old days: Equities = higher risk = higher yield. In a depression you can forget inflation, for a while at least
Why Buy High Yield Bond Funds?
So crunch time is delayed until the final redemption date. Investing now is a bet that credit conditions will get back to where they were: your call if you think this is likely, but many borrowers don't really have a plan B.
Law of Supply & Demand Is Dead for Gold & Silver
Cutting interest rates is a much simpler strategy of instantly strengthening bank balance sheets and profits, and one the Fed is used to executing - so watch for a rate cut, possibly this week.
Still, gold is a better store of value than greenbacks just now, so probably worth buying: maybe worth waiting until end of September, when some hedge fund bets have been shaken out by quarterly redemptions ...
Alternative Buyers for Lehman (and Not Just the Usual Suspects)
BAC's Ken Lewis Mulls Another Deal as Lehman Reaches Brink
First to answer correctly gets a LEH share. Second prize: two LEH shares.
Write to Kenneth Lewis, c/o Bank of America to claim your prizes.
Let Lehman Fail
If LEH gets rescued now with a Fed backstop, it will be open season for buying the bonds and shorting the stock of the next victim (Merrill, say) in the expectation that the Fed will have to step in again and effectively guarantee the debt.
And again when the next domino falls,... and again...until they run out of credible buyers that can be strong-armed or bribed into fronting these bailouts.
Lehman: Nobody Knows Anything
The Fed's problem is to find another "credible" stooge to stand in for what JP Morgan did when taking over Bear Stearns and to front a rescue with a Fed backstop. Giving a Fed guarantee to a foreign buyer just wouldn't look so good...
Goldman Sachs would have loved to do this if it weren't for the fact that they worry about being dragged down: there are enough questions about their own exposure, particularly as they have been messing about with commodities trading for the past quarter.
Time will tell...In the meantime Fuld is lucky not to be lynched by Lehman staff, who own a third of the stock.
Fannie/Freddie Bailout 'Disastrous Fiasco'
In the long run you may be right: The liabilities taken on by the government may be balanced by the "assets". Problem is, as John Maynard Keynes pointed out, in the long run we are all dead. In the meantime ask Bill Miller how well he's done by taking a medium term "value" view on these stocks.
The scary thing about this particular socialisation of losses is that it was deemed necessary despite everyone being reassured, not so long ago, that the Fed would effectively stand behind FNM and FRE debt if push came to shove.
It seems that even this wasn't good enough any more for investors - they needed the security of seeing the junk physically on Uncle Sam's balance sheet. Great vote of confidence....
Timber ETFs...Without the Timber?
More often than not the underlying stocks are only tangentially related to the actual asset you are looking for, or there are so few pure-play stocks that you can afford to research and cherry-pick among the top five names and get good sector exposure.
NYT Smears David Einhorn, Again
Either way, we know we are at an inflection point in the economy when press and governments have to go on a witchhunt for speculators and dark powers (those bad,bad hedge funds) as a scapegoat for market forces: not very rational, and more of a psycho/sociological phenomenon a this stage of the cycle.
Penn West Energy Trust: My $50 Price Target
Hedging Your Bet With American Capital Strategies
It was IPO'd by Citibank at EUR 10 last year and is currently priced at EUR 5.75. A price-to-book of less than 0.7 and a yield of 11 per cent leave plenty of safety margin for slip-ups in their portfolio, which in any event is not excessively exposed to the toxic covenant-lite LBOs which will hit a wall in the next few years. Plus, the very capable and driven ACAS COO, Ira Wagner, has nailed his colors to the mast of that particular ship, and ACAS is really motivated to support the ECAS share price for the reasons outlined above (SFAS 157) - they have even announced a share buy-back. (Disclosure: I am long ECAS with a base price of around EUR 5.45)