Comments on: Where Should I Put My Money These Days? http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days/ Value Investing Blog Mon, 16 May 2011 10:55:06 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Joe Ponzio http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days/#comment-3012 Joe Ponzio Thu, 03 Sep 2009 15:34:16 +0000 http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days#comment-3012 westabot, Definitely a question worthy of another post. I'll put it in the Joe Ponzio backlog (along with all my other yet-unfulfilled-but-working-on-it tasks!) westabot,

Definitely a question worthy of another post. I’ll put it in the Joe Ponzio backlog (along with all my other yet-unfulfilled-but-working-on-it tasks!)

]]> By: chauncy Ve' http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days/#comment-2994 chauncy Ve' Fri, 21 Aug 2009 19:52:50 +0000 http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days#comment-2994 It sole depends on what arena you want to step into.. I've been in this game a while and I've seen investors loose and win. My suggestion is that you gear in towards the private sector with other investors Im talking about private placements trade platforms. But be so very careful because there's so many ones that do not perform. I only know of 2 in the world that I've been a principal my self with beautiful returns better than your typical wall street trading situations. If your interested I could get you on a conference with the trade platform manager. of course Im direct. If your serious you could talk with the Trader with in days of you pursuing into the platform. It sole depends on what arena you want to step into..

I’ve been in this game a while and I’ve seen investors loose and win.

My suggestion is that you gear in towards the private sector with other investors

Im talking about private placements trade platforms. But be so very careful

because there’s so many ones that do not perform. I only know of 2 in the world that I’ve been a principal my self with beautiful returns better than your typical wall street trading situations.

If your interested I could get you on a conference with the trade platform manager.

of course Im direct. If your serious you could talk with the Trader with in days of you pursuing

into the platform.

]]> By: westabot http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days/#comment-2993 westabot Fri, 21 Aug 2009 04:21:45 +0000 http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days#comment-2993 OK, SO........ WHERE DO I PUT MY MONEY? OK, SO…….. WHERE DO I PUT MY MONEY?

]]> By: David http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days/#comment-2504 David Tue, 09 Dec 2008 03:53:38 +0000 http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days#comment-2504 GM and F are priced very low, but the idea that they are cheap (and thereby inferring that they might be value candidates) is false logic. Look at their historical (10-year or longer) returns on capital and equity, as well as their historical earnings and book value. They hold no competitive advantages as defined by Buffett and other selective contrarian investors (consistent, high returns on capital and equity in excess of 15%, coupled with comparably high, consistent operating margins which generate great amounts of free cash flow). Furthermore, the earnings of these companies are completely unpredictable. And I do not think that a major reorganization of either company will correct this flaw. In conclusion, the automobile industry is a highly unpredictable industry in which to invest if one seeks reliable, consistent returns on equity (the investor's primary metric), compound earnings' growth, and improvement in book value. I do not think that there's any good reason for to invest in the common shares of any automobile manufacturer, at any price. Under the current market conditions I think that there are many, many other opportunities in which to invest capital at a much lower risk of permanent loss and with a higher, more predictable chance for capital gain which exceeds the historic average. GM and F are priced very low, but the idea that they are cheap (and thereby inferring that they might be value candidates) is false logic. Look at their historical (10-year or longer) returns on capital and equity, as well as their historical earnings and book value. They hold no competitive advantages as defined by Buffett and other selective contrarian investors (consistent, high returns on capital and equity in excess of 15%, coupled with comparably high, consistent operating margins which generate great amounts of free cash flow). Furthermore, the earnings of these companies are completely unpredictable. And I do not think that a major reorganization of either company will correct this flaw. In conclusion, the automobile industry is a highly unpredictable industry in which to invest if one seeks reliable, consistent returns on equity (the investor’s primary metric), compound earnings’ growth, and improvement in book value. I do not think that there’s any good reason for to invest in the common shares of any automobile manufacturer, at any price. Under the current market conditions I think that there are many, many other opportunities in which to invest capital at a much lower risk of permanent loss and with a higher, more predictable chance for capital gain which exceeds the historic average.

]]> By: Rene http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days/#comment-2483 Rene Tue, 02 Dec 2008 08:48:51 +0000 http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days#comment-2483 BPal, I've always made it a point to live close to work as I view commuting as unpaid work. I am currently a ten minute bus ride from work. BPal,

I’ve always made it a point to live close to work as I view commuting as unpaid work. I am currently a ten minute bus ride from work.

]]> By: Joe Ponzio http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days/#comment-2477 Joe Ponzio Mon, 01 Dec 2008 19:27:40 +0000 http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days#comment-2477 pnnyj, I'm not saying that mine is the best solution; but, I think it's better than the current beg-the-taxpayer thumb sucking going on at GM for the past few years. BPal, I walk to work ☺ pnnyj,

I’m not saying that mine is the best solution; but, I think it’s better than the current beg-the-taxpayer thumb sucking going on at GM for the past few years.

BPal,

I walk to work ☺

]]> By: BPal http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days/#comment-2473 BPal Mon, 01 Dec 2008 09:37:33 +0000 http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days#comment-2473 I think it's a bit of a stretch to call the auto industry a moribund industry, although I like the fancy adjective!! As to why I say that, you got a better way to get to work? I think it’s a bit of a stretch to call the auto industry a moribund industry, although I like the fancy adjective!! As to why I say that, you got a better way to get to work?

]]> By: pnnyj http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days/#comment-2470 pnnyj Sat, 29 Nov 2008 07:37:35 +0000 http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days#comment-2470 GM means "Good bye Money", what you suggest is remarkably similar to what Studebaker did in the mid-1960s. Studebaker left the automotive business but continued as an investment holding company. Joe, as a car guy and as an investment guy I've been paying a great deal of attention to GM's plight for years, I don't agree with your assessment of the effects of an inventory firesale, most particularly this bit: "And, it forces a greater need for your products. GM makes parts. When you have the lion's share of the market because you gave your cars away, you create massive demand for your parts and service." #1 GM doesn't make very many parts anymore. GM has sold off or spun off most of their parts making businesses. Delphi, which has been operating under Chapter 11 for several years now, is the biggest and best example of this. Even their AC Delco parts brand has been hollowed out by outsourcing and exists only as a brand name, the last AC Delco plant was closed several years ago. The replacement parts business contributes next to nothing to GM at best. #2 The dealerships that provide the service are all independent businesses and the profits from their service departments stay at the dealership level. GM gets virtually none of this revenue. Today the service department and used car lot of a car dealership are by far the biggest profit generators, new car sales departments generally contribute little. I do agree with your overall assessment of GM though. Your investment logic is very sound. I wouldn't put GM into my own "Too Hard" pile but it is absolutely and unequivocally in my NO pile. GM means “Good bye Money”, what you suggest is remarkably similar to what Studebaker did in the mid-1960s. Studebaker left the automotive business but continued as an investment holding company.

Joe, as a car guy and as an investment guy I’ve been paying a great deal of attention to GM’s plight for years, I don’t agree with your assessment of the effects of an inventory firesale, most particularly this bit:

“And, it forces a greater need for your products. GM makes parts. When you have the lion’s share of the market because you gave your cars away, you create massive demand for your parts and service.”

#1 GM doesn’t make very many parts anymore. GM has sold off or spun off most of their parts making businesses. Delphi, which has been operating under Chapter 11 for several years now, is the biggest and best example of this. Even their AC Delco parts brand has been hollowed out by outsourcing and exists only as a brand name, the last AC Delco plant was closed several years ago. The replacement parts business contributes next to nothing to GM at best.

#2 The dealerships that provide the service are all independent businesses and the profits from their service departments stay at the dealership level. GM gets virtually none of this revenue. Today the service department and used car lot of a car dealership are by far the biggest profit generators, new car sales departments generally contribute little.

I do agree with your overall assessment of GM though. Your investment logic is very sound. I wouldn’t put GM into my own “Too Hard” pile but it is absolutely and unequivocally in my NO pile.

]]> By: Joe Ponzio http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days/#comment-2469 Joe Ponzio Fri, 28 Nov 2008 14:57:02 +0000 http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days#comment-2469 To be clear, I think that GM is a bad business and not worth owning right now...even at $3 or $5 a share. There is definitely value in the assets; but, is it enough to offset the liabilities in the event of a liquidation? As Jeff said, it's a very tough valuation. Like most auto manufacturers, GM resides in my "No" pile. If I really wanted to take a look at it, I'd be surprised if it made it past my "Too Hard" pile. To be clear, I think that GM is a bad business and not worth owning right now…even at $3 or $5 a share. There is definitely value in the assets; but, is it enough to offset the liabilities in the event of a liquidation?

As Jeff said, it’s a very tough valuation. Like most auto manufacturers, GM resides in my “No” pile. If I really wanted to take a look at it, I’d be surprised if it made it past my “Too Hard” pile.

]]> By: GM means "Good-bye Money" http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days/#comment-2468 GM means "Good-bye Money" Fri, 28 Nov 2008 09:42:51 +0000 http://www.fwallstreet.com/article/168-where-should-i-put-my-money-these-days#comment-2468 You have some good ideas about GM. I think back to Warren Buffet in his early days at Berkshire Hathaway, stuck in a rut with a declining textile business. Instead of asking for a govt bailout or import tariffs, he made the decision to exit the business with bad economics and move to one with better prospects. Maybe GM's best decsion is to punt the auto business entirely - sell off the inventory, liquidate the plant, equipment and real estate, pay off all the creditors and invest all the proceeds into lending money to people who want to buy Toyotas and Hyundais. This is not what anyone wants to hear but as a course of action it probably makes more sense than begging for money from a bunch of Washington pinheads to prop up a moribund industry. If GM is not willing to do what it takes to make the company as currently configured work, maybe the best idea is to tell everyone involved (especially the UAW and Congress) to go to hell and serve the existing shareholders as well as possible. You have some good ideas about GM. I think back to Warren Buffet in his early days at Berkshire Hathaway, stuck in a rut with a declining textile business. Instead of asking for a govt bailout or import tariffs, he made the decision to exit the business with bad economics and move to one with better prospects. Maybe GM’s best decsion is to punt the auto business entirely – sell off the inventory, liquidate the plant, equipment and real estate, pay off all the creditors and invest all the proceeds into lending money to people who want to buy Toyotas and Hyundais. This is not what anyone wants to hear but as a course of action it probably makes more sense than begging for money from a bunch of Washington pinheads to prop up a moribund industry. If GM is not willing to do what it takes to make the company as currently configured work, maybe the best idea is to tell everyone involved (especially the UAW and Congress) to go to hell and serve the existing shareholders as well as possible.

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