Return on S&P500 = 90 day treasuries since 1999

[brewer12345]

Brewer thinks banks are a bargain, but I think earnings may be at risk. Shipping does look pretty good in the near term though. (Bought DRYS at 61.30 yesterday. Pray for me.)

Whew, you picked the riskiest of the lot. I hope this was bought with your "Black Swan" capital.

I think the banks that are still in one piece will be feasting like pigs at the trough for the next few years, especially if the Fed drops rates.

 

[twaddle]

Whew, you picked the riskiest of the lot. I hope this was bought with your "Black Swan" capital.

Yup. I have some of the more boring shipping stocks too, but DRYS has a bit more momentum going for it. Hopefully.

I think the banks that are still in one piece will be feasting like pigs at the trough for the next few years, especially if the Fed drops rates.

I think I'll wait a couple more quarters to see how the ARM resets go. Lots of big banks have already booked phantom revenue on those bad boys.

 

[brewer12345]

I think I'll wait a couple more quarters to see how the ARM resets go. Lots of big banks have already booked phantom revenue on those bad boys.

I am talking about boring, traditional portfolio lenders that never took a whole lot of credit risk. AF is a posterboy, for example. They've been getting squeezed for years by all the boobs giving away prime jumbo mortgages to clean borrowers. Now all the competition has been vaporized and spreads on the loans have gapped out, yet AF and its brethren maintain liquidity and the ability to fund loans with deposits and FHLB borrowings.

 

[haha]

Even with the "correction," I'm not seeing any raging bargains today. TIPS at 2.4% aren't a bargain. The S&P 500 with a 1.7% yield probably isn't a bargain (unless recent earnings growth can be sustained).

I agree with your assessment. I did buy BAC; we will likely get lower interest rates for a while now, and what seems to be a very secure 5% dividend looks good to me. Ditto Pfizer and some pipelines and pipeline GPs. These apear to me to be pretty secure sources of steadily increasing cash flows and payouts to securities holders.

The only really cheap group of securities I know of is some stocks/MLPs/royalty trusts tied to natural gas. That they are bargains is not so easily determined unless you have a positive POV on the commodity.

Natural gas draws are very sensitive to weather, and right now we have an awful lot of gas around pushing down prices. Not many things change faster than weather so almost by definition this is a temorary factor.

I believe that before long even warm winters and cool summers will not be able to keep the USA in gas balance and it will be off to the races in this sector. But I admit they are not comfortable investments.

Ha

 

[Hamlet]

How do you feel about Pfizer's long-term prospects, given the patent is going to expire on Lipitor in a few years? Do you think that they will be able to replace that revenue?

Note-- I own Pfizer, but they are probably so cheap for good reason. They face a fair amount of business risk in the next five years.

I agree with your assessment. I did buy BAC; we will likely get lower interest rates for a while now, and what seems to be a very secure 5% dividend looks good to me. Ditto Pfizer and some pipelines and pipeline GPs. These apear to me to be pretty secure sources of steadily increasing cash flows and payouts to securities holders.

The only really cheap group of securities I know of is some stocks/MLPs/royalty trusts tied to natural gas. That they are bargains is not so easily determined unless you have a positive POV on the commodity.

Natural gas draws are very sensitive to weather, and right now we have an awful lot of gas around pushing down prices. Not many things change faster than weather so almost by definition this is a temorary factor.

I believe that before long even warm winters and cool summers will not be able to keep the USA in gas balance and it will be off to the races in this sector. But I admit they are not comfortable investments.

Ha

 

[haha]

How do you feel about Pfizer's long-term prospects, given the patent is going to expire on Lipitor in a few years? Do you think that they will be able to replace that revenue?

Note-- I own Pfizer, but they are probably so cheap for good reason. They face a fair amount of business risk in the next five years.

I agree with your assessment. I feel that no one can predict what might happen with pipeline drugs, if he can even find out what they are. My approach in drug stocks is to stick with proven marketers and figure that when they are cheap enough you are being paid to take the risks.

As I see it, the business risk is to muddle along. Not great, but not bad when you are getting a secure 5% dividend.

Ha