C : Mea culpa

January 16, 2009

The recent fall in the Citibank’s stock price has brought home the dangers of writing put options to me painfully; I have closed out my Jan $5 put positions in Citibank at a siginificant loss, enough to offset all gains I had reaped from put writing in all stocks. Previously, I believed that while Citi’s […]

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Will deficit spending lead inevitably to inflation?

December 27, 2008

A New York Times article today rehashes the conventional myths about deficit spending : that it is inflationary and dangerous, and that its use in extremis today must be carefully reversed in the future, lest it lead to foreign countries dumping US Treasuries and causing a cataclysmic increase in the US interest rate. The author […]

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GEOY : Living off the government

December 20, 2008

I first became interested in GeoEye (GEOY) after reading a blog entry over at Old School Value, and was especially attracted by the fact that GeoEye’s major customer is the federal government, which makes its earnings especially resistant to the current economic downturn. However, at that time, the stock price of GEOY has soared after […]

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MOS : A defensive stock

December 10, 2008

The Mosaic Company (MOS) is the largest producer of phosphate fertilizer in the world, accounting for 15% of global supply, and 59% of the US production of phosphate fertilizer. It is also the third largest potash producer in the world, accounting for about 14% of world supply and 38% of the US market. Mosaic is […]

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C : A stab at valuation

November 30, 2008

For the first time in the current crisis, the US government has managed to rescue a financial institution without severely diluting the common shareholders. In this case, the shareholders of Citigroup were luckier that those of Bear Stearns, Freddie Mac, Fannie Mae, and AIG. Perhaps the government finally realized that short sellers are going to […]

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Does a plummeting share price affect underlying value? The lesson of Citigroup

November 23, 2008

Value investors take it for granted that a company’s stock price does not necessarily reflect or impact the underlying business. Of course, declining stock prices often reflect fundamental problems in the business, but in times of crisis, stocks may sink for no reason whatsoever, frequently overshooting even the most pessimistic economic scenario. While a declining […]

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RCI : A wobbly monopoly

November 18, 2008

After reading about Rogers Communications from TMWTFS, I decided to evaluate if RCI is a possible defensive portfolio holding in these turbulent times. Rogers Communications (RCI) is an integrated telecommunications company based in Canada, and has 3 operating segments, wireless, cable and media. Their wireless segment makes up 50% of revenue, and 70% of operating […]

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Parking cash in TIPS

November 7, 2008

TIPS, short for Treasury Inflation-Protected Securities, are bonds which provide a degree of inflation-protection and are backed by the full faith and credit of the United States government. The principal of a TIPS increases with inflation (as tracked by the CPI-U published monthly by the Bureau of Labor Statistics) and decreases with deflation, and interest […]

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Calendar effects and October crashes

November 4, 2008

The finance literature is littered with examples of many calendar effects in the stock market; the following is a partial list : The weekend effect : The mean return from buying stocks on Friday and selling them on Monday is larger than buying stocks on Monday and selling on Friday. This is especially unusual since […]

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SEB liquidation

November 4, 2008

I have liquidated SEB from my portfolio at $1365 a share, which is a 6% gain from my entry price. In the end, I felt that this company has too many cash flow streams which is beyond my circle of competence to analyze, and the fact that management is so uncommunicative is starting to worry […]

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