Investments Trade Log

[Chad]

*IF* you add MORL, wait for a day where it dips by a bigger % than its component parts. Last Monday, It was down 2% more than the big mREITS were (AGNC, NLY, TWO, etc). Also note, it's an ETN, not ETF.

I don't want to get run out of ERE-town on a rail if it tanks

Given that it is leveraged and rather new, I won't be putting a high percentage of my money in MORL. Just enough that it makes me pay attention.

[workathome]

Want to buy puts in TSLA, but lack the chutzpah.

[secretwealth]

I want TSLA puts too, but they're too expensive. Options seem very efficiently priced for TSLA, especially for bears.

[Chad]

Well, that's interesting. An actual down day and both BP and MORL are positive.

[secretwealth]

The mREITs are doing good because bond yields are down--it seems there's a pause in the tapering hysteria.

This is so clearly the year to get into bonds, but just the bigger question is how and when!

[George the original one]

I'm still at 20+% cash. Need to find my entry points.

[tylerrr]

I'm currently buying SH monthly until the stock market starts correcting.

[jennypenny]

I think we're going to get another shot at MORL. I put in an order @$17. I might lower it if it takes a nose dive.

Anyone else sick of Hedgeye??

[George the original one]

Added KLAC & AVA last week to my Roth IRA and WPC added today. Also added KLAC last week to my regular portfolio.

Roth is now 3% cash. Regular portfolio is still about 15% cash.

If OHI dips below $28, I'll probably buy some in the leveraged account and/or the regular portfolio since I had divested at $32-34.

[George the original one]

Nice surprise from MSFT today. Increased the dividend by 21.7%, thus bumping yield from 2.8 to 3.4. On top of that, they're buying back shares.

For income investors, this is a historical opportunity to buy MSFT (in terms of yield). See http://ycharts.com/companies/MSFT/dividend_yield.

[Chad]

Unless the Xbox One is a major hit, and it doesn't look like it will be, it's hard to see this move by MSFT as more than just the rearranging of the deck chairs on a ship slowly going down.

Apple just made the first real jump towards eliminating the computer part of desktops and laptops by putting a x64 processor in the new iPhone 5S. This means we are probably a few years away from most people only needing their phone to be their computer and only needing "open" monitors/keyboards to plug in their phones for real work.

Google will have to follow suit and that means they will upgrade Android (Apple already has a real operating system) or at least a version of it to be a real operating system. I don't see how MSFT can survive that going forward. 10 years from now MSFT might be the Wang of the last two decades.

[slimicy]

@Chad: I think comparing Apple, Google, and Microsoft is still a bit of comparing apples to oranges to bananas at this point. That being said, I don't think any of your observations are wrong, but I seriously doubt that consumer PC sales are really going to affect Microsoft, because regardless of what we use at home we're still going to be using Win7, SQL Server, Windows Server 2008, ect., at the office.

Where I currently work is a very small (<40 employees) software company, and our licensing fees to Microsoft for our hosted servers is a very substantial amount of money, and that doesn't include the initial upfront costs.

[workathome]

With the projected $170 billion in year-end cash, Apple looks like good value to my inexperienced eye.

I'm using a discount rate of 9%. Even dropping projected growth rate to match 4% inflation you're looking at a 15% margin of safety. Once you count the cash, this expands to 50%. If I understand right, the risk is simply in revenue growth going negative, not just slowing down?

You're also getting the branding, locked ecosystem and sticky user base.

A split followed by a stock buyback would be a good move, eh?

[Chad]

@Chad: I think comparing Apple, Google, and Microsoft is still a bit of comparing apples to oranges to bananas at this point. That being said, I don't think any of your observations are wrong, but I seriously doubt that consumer PC sales are really going to affect Microsoft, because regardless of what we use at home we're still going to be using Win7, SQL Server, Windows Server 2008, ect., at the office.

Where I currently work is a very small (<40 employees) software company, and our licensing fees to Microsoft for our hosted servers is a very substantial amount of money, and that doesn't include the initial upfront costs.

That's fine and I don't disagree on the business side, but this scenario is not one of a growing company. They are essentially going to lose the consumer side of their business unless a miracle happens. Even if the Xbox One is a decent hit, unless it turns out to be a must own for every single household, it's not going to move the needle much. On top f that, the profit margin on Xbox is nothing even remotely comparable to Windows and Office (which is also under heavy pressure). Their business side can't grow enough to cover the decline in the consumer side.

I think the comparison with Apple and Google is fine. They have a number of crossover industries and products (tablets, operating systems, phones, spreadsheets, word processing, Xbox Live vs. Apple TV vs Google Chromecast, etc.). The only real difference is the large business software side at MSFT.

Declining revenue and declining profit margins are not great for dividends or a stock price. Once this pile of money is gone, it's not coming back.

This giant link is to a revenue by business segment graph for Microsoft and Apple. Business software maybe a 1/3rd of MSFT's revenue.

http://www.google.com/imgres?imgurl=htt ... Ag&dur=870

[George the original one]

AAPL has a smaller product base than MSFT, so a gaffe in one product will hurt them more.
AAPL's earnings are more volatile than MSFT.
Both have had downturns in profit for TTM (-1% for MSFT, -12% for AAPL).
AAPL has an excellent PE ratio, slightly lower than MSFT.
MSFT has an attractive yield and AAPL's yield is below my threshold.
AAPL doesn't have a track record for raising dividends yet, where MSFT has a decade's history.

Both companies are a fine addition to a portfolio and one is more in line with typical income investing guidelines than the other.

[Chad]

I'm not arguing for AAPL or against them. Everyone can make there own call on APPL, as it can go either way. But, I am arguing against MSFT. I couldn't disagree with you more on MSFT. Don't compare it against APPL or any other company, as comparison is just confusing the issue. MSFT needs no comparison, it's a dying company...and it's a....

http://www.youtube.com/watch?v=4F4qzPbcFiA

[George the original one]

You don't think it will become the Government Motors of the IT industry?

[Chad]

No, because it will go slowly and may never fully die. Plus, other companies will replace it. No worries about lost jobs or economic damage. Much easier to replace a software company than a large complex manufacturing company (though, Tesla is giving it a good go).

Obviously, they could throw a ridiculous hailmary, but that seems unlikely considering how far behind the curve they have been for almost the last 20 years.

It will also be be difficult to get rid of Ballmer's bad decisions (corporate structure). Especially, when the new CEO will be taking over a company with Balmer's last giant bad mistake (Nokia) stilling being implemented.

[jennypenny]

Good news for everyone for the time being.

It's soooo tempting to sell off more mREITs since I'm up 12% since 4th of July. Holding tight though. The fed announcement (or lack of one) should make for higher dividends this quarter.

[George the original one]

It's absolutely amazing the size of Mr. Market's reaction for some of the securities. OHI, for instance, is +3% as a result.