Companies Hoarding Cash

Where will all the cash hoards on U.S. corporate balance sheets turn up?  Too often companies with large cash holdings blow it on wasteful acquisitions rather than return it to shareholders.  However, there is so much cash on U.S. corporate balance sheets that it will end up in investors pockets somehow.  Companies will either give it directly to thier own shareholders via dividends and buybacks or they will spread it around the market as a whole (donating it to other shareholders) through acquisitions.

It's appropriate that found my comments on the matter at Kapitall.  After all, the companies with the famously largest cash positions (Microsoft, Apple, Cisco) are also the largest companies listed on the NASDAQ Exchange.


Disclosure:  I own Apple and Microsoft.  I am short in-the-money puts on Cisco.


Ben Bernanke: Thanks for All The Bubbles

The Federal Reserve Open Market Committee (FOMC) statement that it will keep interest rates near zero until mid-2013 basically will create a bubble in everything except U.S. dollars.   Where will you see bubbles?  Stocks, gold, bonds, Asian currencies, commodities, Swiss Francs, old cars, collectibles, worn-out shoes, sand and just about anything

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What Does the Debt Downgrade Mean For The Average Person

I was invited to Q13 Fox News again today.  I was there to talk about the Standard and Poors downgrade of  U.S. debt.

It's hard to notice, but I actually say that I think the markets  will be up by the end of the day. Luckily, I didn't say equity or bond. I was right on the bond part and totally wrong with the equity market.  I went on at 7:15 PDT when the Dow was down 211 points. Later, the Dow Jones Industrials closed down over 600 points.   I stand by my prediction that the debt downgrade will be uninteresting in the financial markets in a year but still very political. 

Oh and what did I trade? 

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Why the Market is Really Down - European Troubles

The Dow closed down over 500 points yesterday and I’m getting lots of questions about it. There are several factors at work. But the most important is the dollar going up...

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If I Had A Trillion Dollars: European Banks and American Debt

Every month I am lucky enough to be invited to participate with a group of economists, financial analysts and traders from all over the world, in a sort of roundtable. We discuss markets and the global economy...

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ETF Tax Headaches

What am I up to this week? Sitting tight on my cash position, and waiting for the market to fall back a bit more. Luckily, this gives me time to work on my taxes…

My taxes are quite complex...

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Quoted at CNBC: End of the World 2012 - How to Profit


This is a pretty minor quote but how often does a financial commentator get quoted as an expert on apocalyptic investing?

I wanted to be seen as clever but the reporter used me as the serious trader.  I'm always the contrarian to the END.

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Investment Update: ValueAppeal Gets Additional Funding

ValueAppeal is an online tool for challenging and lowering property tax investments.  It is also one our private equity investments.  Today, the company announced additional funding.  

I hope you try out the service.   It's a great business model for the consumer.  You fill out a form with the address of your property, your tax assessment is a public record and they can tell you if it's too high based on comparisons.  If your assessment is too high they offer to create and fill out all the necessary forms for you.  The charge is $99.  If the assessment appeal fails they refund your $99. 

I tried my house and it was not over-assessed.  There wasn't much for me to do except rest easy.  Are your property taxes too high?


Adjusting My Portfolio for a Forced Renegotiation of Greek Debt

I’ve been following Greece’s economic woes pretty closely since the bottom fell out this year (or something along these lines) and in my opinion, the debt-plagued nation is about to go through a restructuring.  There is loads of precedent for it in emerging markets.  I went to part of high school in Argentina, my graduate school focus was developing country finance and my first Wall Street job at Chemical Bank (now JPMorgan Chase) was trading emerging market defaulted government debt.  Over the course of my adult life I’ve seen the following countries stick it to their lenders.

Argentina (2 negotiated, 1 unilateral),
- Brazil (negotiated),
- Poland (negotiated),
- Venezuela (unilateral sort of),
- Mexico (unilateral internal debt, negotiated external),
- Russia (unilateral then cured). 

Seeing a renegotiation of timing or payments by Greece and some sort of guarantee by the EU is not without lots of precedent.   It seems all but inevitable. And that said, bond prices have had plenty of time to price in a partial default.


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Adding TEVA Pharmaceuticals to My Portfolios at Kapitall

I used the market pullback over the last couple days to add the pharmaceutical company TEVA (TEVA $49.22) to my portfolios. They have a good generic drug business which ads stability. With a POP (forward price earnings ratio) of 9 and a dividend yield of 1.6%, the company is also attractively valued.

I think the entire pharmaceutical sector offers a compelling value opportunity.

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