Alan Brochstein

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  • Stocks Still Cheap in This New Bull Market
    Toro, what is the source of your earnings projections? The S&P website has a bottom-up forecast from analysts on the S&P 500 stocks as 70.78, which is down a lot over the past month or so (not too surprisingly). These are "operating earnings", which exclude one-time charges. This number is actually growth from the projected 2008 EPS (67.59). Based upon the changes since November, analysts killed Q4 estimates, leading to projected 18% y-o-y earnings decline, but they look for modest growth in 2009. I think not...

    I believe that PEs will remain extremely low due to high interest rates (corporate, that is), a belief that the projected earnings are too aggressive and extreme risk-aversion.
    Jan 07 08:39 am |Rating: +1 0 |Link to Comment |View article
  • Could Gold Be 2009's 'Trade of the Year?'
    I believe that many of the companies in GDX or XAU have much higher debt than historically, which would skew the relationship between the price of stocks and gold. You should compare the enterprise value (stocks + bonds less cash).

    NEM, to you, is worth $18 billion, but the actual value of the whole company is $20.8 billion. It's probably not a huge deal, but it does make a difference in aggregate.

    Another point is that FCX is one of the XAU components - your trade is implicitly going long coppper vs gold partially.

    Jan 05 09:46 am |Rating: 0 -1 |Link to Comment |View article
  • Cash Is Not Yet King When it Comes to Market Performance
    A couple of thoughts:

    1) The amount of cash in and of itself is irrelevant. What matters is how much cash relative to market cap. Also, one has to be very careful, as sometimes cash on the left side is offset at least partially by an obligation on the right side (often not debt but rather deferred revenues).

    2) Picking November as a start date isn't exactly fair. These stocks most likely held up much better in the free-fall in October. In any event, it would make sense to use a longer time-frame - perhaps the mid-July lows, for instance. As the author pointed out, the stocks did do better than the S&P 500 ytd.
    Jan 01 13:02 pm |Rating: +2 -1 |Link to Comment |View article
  • The Dr. Doom Space Is Getting Crowded
    Great idea, but there is no shortage of optimists!
    Dec 31 08:17 am |Rating: +1 -3 |Link to Comment |View article
  • General Electric: Not Quite a Value Trap, More Like a Value Pit
    Excellent points, Chris B. I think, to be fair though, GE Healthcare is pretty real...


    On Dec 29 01:47 PM Chris B wrote:

    > GE is mostly a financial company with secondary revenue streams from
    > licensing their brand name to Chinese manufacturers and a few actual
    > industrial businesses. Forget about light bulbs and washing machines.
    > GE hasn't gotten most of their revenues from making products in a
    > long, long time. Forget the image of a factory - think auto loans,
    > insurance, and brand name licensing.
    >
    > Any company that is paying 10% plus conversion options to borrow
    > money is on its last leg. GE may be a familiar brand name, but as
    > the author points out, it consists mostly of debt. A lot of people
    > never thought GM would get to the point it is at today. It was just
    > too big, too well known, still paying dividends. I think the comparison
    > is appropriate.
    Dec 29 16:10 pm |Rating: +2 -2 |Link to Comment |View article
  • General Electric: Not Quite a Value Trap, More Like a Value Pit
    GE is no GM - their importance to the world is much greater and their financials aren't nearly as challenging (especially outside of GE Capital). I think some of you may have missed my point. GE's balance sheet has left them vulnerable in this horrid economy. Maybe part of our difference in views is that I think that the economy is likely to produce very negative GDP for 2009. Traditionally, a company like GE might benefit, taking share or buying assets from weak competitors, perhaps expanding its reach. Unfortunately, it isn't in a position to do so. Au contraire, it is a seller in a weak market (and not a successful one apparently).


    On Dec 29 09:51 AM bocaj21 wrote:

    > Alan's comment is well researched and a good analysis. But he then
    > extrapolates illogical conclusions from his data. For one thing,
    > he implicitly makes non-analogous comparisons between the balance
    > sheets of GE and GM. True, GE shareholders will likely have a tough
    > go this coming year, but to intimate that GE could fall into "the
    > pit" in 2009 like GM did in 2008, is analyticallly nonsense, given
    > that it intimates not only a short-term rocky road, but possible
    > demise of a respected global company (in no way like AIG). GE certainly
    > will survive the current world economic crisis, though a leaner company
    > with less emphasis on GE Capital will result. In the long run that
    > is good news for equity holders.
    >
    > What the current economic crisis has produced is a lack of patience
    > and a bias that everything will fail. That actually is the important
    > good news -- it means that though bad times continue for the foreseealbe
    > future, such negativity is the sure sign of better times are ahead
    > for those with patience and knowledge that things are never as bad
    > )or as good) as they seem.
    Dec 29 11:05 am |Rating: +5 -1 |Link to Comment |View article
  • General Electric: Not Quite a Value Trap, More Like a Value Pit
    Dr. Jackpot, while no doubt GE's lights will be burning, they may do so without equity shareholders benefiting...

    On Dec 29 08:54 AM Dr.Jackpot wrote:

    > GE's lights will be burning after all the others are out. The world
    > can't exist without GE.
    Dec 29 09:41 am |Rating: +6 -4 |Link to Comment |View article
  • More ProShares Ultrashorts Tomfoolery
    They do in many cases:

    www.proshares.com/fund...

    On Dec 29 01:49 AM Northern Observer wrote:

    > Excellent review and commentary on the ultrashorts. They are only
    > good if you hold them for a very short period. It would be nice if
    > they offered just straight shorts as a hedge.
    Dec 29 08:21 am |Rating: 0 -1 |Link to Comment |View article
  • WSJ on the Old 'Gold as Inflation Hedge' Saw
    You could be right about constricted credit impeding the flow of goods, but it won't be like you envision in my opinion, at least not initially. Suppliers may cut off Company A, but they will then supply more to Company B and Company C, etc.

    When you say that this is already happening in other zip codes, can you give me one or two to support your contention?



    On Dec 23 10:00 AM Kelly Lieberman wrote:

    > If the "average Joe' could wrap their head around the wider concept
    > of what is going to happen in 2009 we would be seeing the panic in
    > the street already.
    > Most have been so lulled into complacency by the media and the so-called
    > experts that they are in a coma. They have lost their ability to
    > react appropriately to danger signals.
    > Supply will dwindle and store shelves will be empty because stores
    > can't get credit like they used to. Be prepared for shortages and
    > closures on Main street and side streets across the country.
    > Buy goods now while they are are still plentiful, and make sure you
    > have a 12 month stash of water, food, medicines, toiletries, batteries,
    > propane etc..
    > Try to think at least 6-12 months ahead. Give a heads up to family,
    > friends, and neighbors so they are prepared as well - that way your
    > preparations will last longer. Don't be naive and think it won't
    > happen here. It already is. You just may not live in that zipcode
    > yet...
    Dec 25 22:56 pm |Rating: 0 -1 |Link to Comment |View article
  • Cramer Is Right about Ultrashort ETFs
    You answered your own questions about these securities. Anyone who reads the prospectus (a lost art I suppose) would know that these don't work well in non-trending markets. While you choose to look at Point A and Point B and then shoot the horse, realize that you kept shorting as the market went down (not just Point A), maintaining a constant exposure. Thus, when the market would rally back, your horse was weighed down with the additional burden.

    For longer periods of time, just short or short on margin for leverage. Period. Unless the market is a straight shot, which it never is. Yes, these are trading vehicles.

    I find it interesting that Cramer is apparently ragging on these things and blaming them for the market volatility (and probably direction too I suppose). Investing 101: Know what it is you are buying.

    Dec 23 16:50 pm |Rating: +4 -1 |Link to Comment |View article
  • Own Gold? Time to Fold
    Thanks for your comment, ladygbug. Now that we are past the initial reaction to the news that we don't need to worry cuz the Fed is going to do "whatever it takes" to prop up the economy, it is time for gold and every other asset to get dumped. You, like most of the rest who have replied, probably agree with the last sentence except for the gold part. The markets are very thin, so I won't even attempt to predict that the move has actually started, but it feels like it has. Bonds have continued to rally while everything else seems to have rolled over, at least for the very short-term.


    On Dec 17 06:57 PM ladygbug wrote:

    > I can't believe you still think you are right.
    >
    >
    > On Dec 17 05:53 PM Alan Brochstein wrote:
    Dec 23 12:31 pm |Rating: 0 -1 |Link to Comment |View article
  • Equity Buyers, Beware of Companies' Big, Bad Balance Sheets
    Thanks, Tim, excellent suggestions. I might add retailers with leases as well.


    On Dec 22 07:19 AM Tim Hannon wrote:

    > Watch out for future commitments - real estate companies with committed
    > construction pipelines, resource companies working on infrastructure
    > projects, telco companies doing network rollouts, etc. These don't
    > show up on balance sheets but are a cash drain
    Dec 22 07:22 am |Rating: +1 -1 |Link to Comment |View article
  • Own Gold? Time to Fold
    Well, you are one pretentious holier-than-thou kind of person. I actually took the time to visit your website to learn more about you. You are so much better than everyone in the USA that you abandoned it for Thailand. Clearly, you haven't been able to move on. Rather than just enjoying your life there, you spend apparently countless hours denigrating your former country of residence, telling everyone to "get out now".

    Well, you are certainly entitled to your beliefs and can express them however you choose, but please don't poison the conversation here by projecting qualities on to me when YOU HAVE NO CLUE. Just make your points - you don't have to call me a frat boy or accuse me of "selling schemes". I don't work for Wall Street and am not part of any "establishment&qu... Further, I didn't argue "against the personal ownership of bullion". You mistake my analytical conclusions for political views. Actually, almost every comment you made is an attempt to frame the debate politically and on a personal level. While you call it being "sensitive", I call it be intellectually honest. Ad hominem attacks don't progress any debate.

    Your style of argument reminds me of folks who used to post negatively on Yahoo message boards after the market crashed in 2001. They had been either fired by the company or had lost a lot of money investing in it, so they spent countless hours "punishing" the company by posting. I say life is too short to bitch and moan about how unfair it is. I really felt sorry for those folks who couldn't let it go and move on.


    On Dec 21 03:24 AM bosun.j wrote:

    > @Alan Brochstein:
    >
    > A little sensitive Alan? Granted my disgust with the corrupt extremist-capitalist
    > system that you seem to embrace is often difficult to conceal. Well,
    > frankly, I don't even try any more.
    >
    > That said Alan, it seems to me that many who put food on the table
    > doing what you do are vehemently against the personal ownership of
    > gold bullion. You might understand how one is likely to conclude
    > that the reason you don't like gold "cultists" is because they are
    > not grist for your mill? That one might further conclude that perhaps
    > there is a sense gold is stealing food off your table?
    >
    > Alan, whether you're in Houston, Orange County, the City, Hong Kong
    > or on Wall Street you are still selling Wall Street's schemes. <br/>
    >
    > From your writing you seem to have bought the "company" line hook
    > line and sinker. I could have it all wrong though I don't think I'm
    > far off the mark there.
    >
    > Where we do agree is that things don't look good at all.
    >
    > What many can't understand is when smart guys like you accept this
    > fundamental truth you continue to sell the schemes that have brought
    > the economy to the very edge of the abyss.
    >
    > Now, if you were to tell me that hey you gotta put food on the table
    > I'd likely salute your honesty.
    >
    > But Alan, I'm willing to bet that you have acquired the accoutrements
    > of an upper middle class lifestyle, the huge bills that go with them
    > and that you are unwilling to give them up even in the face of a
    > collapse. While we may agree it's your money and you are entitled
    > to spend it how you choose I do have to ask myself how one can justify
    > suggesting the Rubes continue to throw their rapidly dwindling resources
    > down the Wall Street sewer for such important pursuits.
    >
    > See, Alan, it's a character thing. Nothing personal Alan, I have
    > never met you. I may be reading you all wrong. Your writing does
    > give one pause.
    >
    > Chok dee
    >
    Dec 21 10:22 am |Rating: +1 -2 |Link to Comment |View article
  • Own Gold? Time to Fold
    I was NEVER in a fraternity, I didn't go to B-school and I am not in the "Mecca of New York". I don't know that I have a "belief" in fractional reserve banking, but I do know that we are in very deep doo-doo now. The cult of gold is running its two-minute drill, but we are just in the 1st quarter. Sure, this could end in high inflation, but I have little confidence that there is anything anyone can do for the next few years that will keep the boat afloat.

    It's funny how my comments can bring out the best of people like you, so quick to insult and to try to degrade rather than argue intelligently. If I don't believe that gold is going up I am all of the sudden guilty of being a Fed pansy or Wall Street frat-boy? I just believe that the best bet in this environment is to avoid or short companies with lots of debt and to expect stocks to continue to erode in value (like other assets, including gold, sorry).


    On Dec 20 07:10 PM bosun.j wrote:

    > Alan has made several assumptions.
    >
    > Most egregious is that because his amusing gold bugs opinions differ
    > from the one he and all his B school frat buddies hold that the gold
    > bugs must be wrong.
    >
    > Alan's "belief" in the FED and fractional banking scheme is at least
    > as "faith based" as his amusing gold bugs.
    >
    > Alan and many going at each other here remind me of the Sunni and
    > Shia. Arguing about essentially meaningless nonsense. You will never
    > agree.
    >
    > Many observers outside Alan's vaunted extremist-capitalist Mecca
    > of New York, USA have concluded that America, much like GM, has vastly
    > over extended itself and has chosen to double down rather than admit
    > it's abject failure.
    >
    > Whether one buys the counselors tulip bulbs or some other tangible
    > form of value with their remaining fiat currency one will need to
    > buy something while one still can.
    >
    > Perhaps Alan's most egregious assumption is that American "greatness"
    > exempts it from following the same rules it demands at gunpoint the
    > rest of the world obey.
    >
    > At any rate, events will very soon prove Alan and his frat buddies
    > right or wrong.
    >
    > I suppose then he will take up the banner for Pepsi or Coke......
    Dec 20 22:58 pm |Rating: 0 -2 |Link to Comment |View article
  • Own Gold? Time to Fold
    Jim is bright guy. While he certainly highlights the risks of too much monetary stimulus, he doesn't address this key issue of plunging velocity of money.


    On Dec 20 07:08 PM Pterostyrax wrote:

    > online.wsj.com/article...
    >
    > Alan, thoughts?
    Dec 20 22:49 pm |Rating: 0 -1