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The Stingy News Weekly (06/24/2012)


"I make Homer Simpson look active."
- Tim McElvaine


Stingy Links

Mortgaging the future
"Uncontrolled public debt threatens to rupture society as the older generation thrives at the expense of the young."


Mauboussin on buybacks
"This report looks at buybacks from four distinct points of view: companies, shareholders, prospective shareholders, and the media. Naturally, the issues are intertwined."


Michael J. Burry commencement address
"2012 UCLA Department of Economics Commencement featuring Dr. Michael J. Burry as keynote speaker"


Desperately seeking income
"Many retail investors - and their advisors - are desperately seeking higher-income solutions in this ultra-low-rate environment. And institutional investment themes continually draw the retail sector to the trough - but usually only after the easy money has been made. Unlike institutions, however, retail investors must accept trade-offs. In an ideal world, retail exposure to institutional investment themes would boast abundant liquidity and reasonable fees to go along with their high income. But this has proven to be an elusive combination as high fees have squeezed returns and exposure is sacrificed for liquidity."


Operation Un-Twist
"I don't know who in their right mind is lending the US government money for 10 years at 1.59% and for thirty years at 2.67%. You have to believe inflation will be lower than these values just to get your money back, let alone make any real return. (The best I can do is to opine that these are not long-term investors, and they think they can get out before rates rise. I will admit that understanding such low rates is stretching my rational-investor efficient-market prejudices.) Well, no matter. When offered a screaming good deal, you should take it!"


Why Mutual Fund Boards Are Failing
"But while individual qualifications are rarely an issue, investor advocates say mutual funds allow far too many directors to serve on multiple boards. In the realm of public companies, people can draw criticism for sitting on more than a handful of boards. But YieldPlus's trustees, in 2010, each served on the boards of 72 other Schwab funds -- each with its own lengthy prospectus, regulatory filings and compliance issues to review. And that, it turns out, is nothing compared with Bruce Crockett's responsibilities on behalf of investors in the Invesco family of funds. Crockett, a former CEO of satellite company Comsat, is a shareholder watchdog for 140 stock and bond funds, roles for which he was paid $693,500 in 2011. For many critics, vetting so many funds is hard to fathom and is a prescription for overwhelmed and passive boards. 'Maybe we're just not as smart as they are,' says Steven Melnyk, a former ABC golf commentator-turned-investment banker, who says he has his hands full serving on three fund boards at Longleaf Partners. 'But I can't imagine how, if you're at a large fund complex, you could find the time to really review everything you need to look at.' The required reading alone, says John Bogle, founder of fund giant Vanguard, underscores the challenge. 'Mutual fund directors,' he says, 'are either not being paid nearly enough for what they should be doing -- or far too much for what they actually do.'"


A glimmer of hope?
"We've got a bank run. How to stop it? Ah, deposit insurance! But who is going to pay for that? 'Countries' are not credible. The whole problem is that 'countries' used their banks as piggy banks, stuffing them with sovereign debt. So, if the countries default on their sovereign debt, the banks go under, and the same 'countries' obviously don't have the money to guarantee deposits. A cross-national deposit insurance scheme, while banks are already stuffed with sovereign debt, is back to Plan A, run for the exit and stiff Germany with the bill."


The allure of long-term treasuries
"Financial advisers continue to profess that US treasuries should be a large part of a balanced portfolio. With the 10-year treasury yielding around 1.6%, the advice is hardly based on return expectations. It is also not due to expectations of mark to market gains. The up-side case in being long the 10-year treasury would be if the rate were to drop to the level of Japan's - just over half (a fairly unlikely outcome). The mark to market gain would be 7.5%. The downside case on the other hand would be if the 10-year yield rose to what it was just a year ago (or higher) - say around 3%. The mark to market loss would be around 11.5%. So the instrument effectively has an asymmetric payout profile and terrible current yield. What gives?"


Newspaper Work
"Over the years, newspaper owners have built monuments to themselves in the form of giant buildings, statues and plaques commemorating their roles in their communities and the country at large. At the headquarters of The Buffalo News here, a sand-colored office building across the river from a fragrant Cheerios factory, the only visible sign of the owner is a small photograph hanging in the office of the publisher, Stanford Lipsey, signed, 'To the best in the business, Warren.'"



DOW 30 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
AT&T (T)1435
Verizon (VZ)1245
Merck (MRK)2425
Pfizer (PFE)2415
Procter & Gamble (PG)2335
Johnson & Johnson (JNJ)2315
Chevron (CVX)5554
EI DuPont (DD)4144
General Electric (GE)3434
JP Morgan Chase (JPM)5534
Notes | More Info...


Low Price/Earnings StocksP/EP/BP/SYield
Chevron (CVX)5554
Hewlett-Packard (HPQ)5552
JP Morgan Chase (JPM)5534
Exxon Mobil (XOM)5353
Caterpillar (CAT)5242
Microsoft (MSFT)4213
Intel (INTC)4314
Boeing (BA)4152
Cisco (CSCO)4421
EI DuPont (DD)4144
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
Chevron (CVX)55542.05
JP Morgan Chase (JPM)55342.35
Hewlett-Packard (HPQ)55523.04
Exxon Mobil (XOM)53533.54
Intel (INTC)43143.67
EI DuPont (DD)41443.83
Microsoft (MSFT)42134.17
Merck (MRK)24254.17
Caterpillar (CAT)52424.46
General Electric (GE)34344.68
Notes | More Info...


US Stock SummaryYieldP/EV.R.
Chevron (CVX)YYY
EI DuPont (DD)YYY
JP Morgan Chase (JPM)YYY
Caterpillar (CAT)YY
Exxon Mobil (XOM)YY
General Electric (GE)YY
Hewlett-Packard (HPQ)YY
Intel (INTC)YY
Merck (MRK)YY
Microsoft (MSFT)YY
AT&T (T)Y
Boeing (BA)Y
Cisco (CSCO)Y
Johnson & Johnson (JNJ)Y
Pfizer (PFE)Y
Procter & Gamble (PG)Y
Verizon (VZ)Y
Notes...



S&P/TSX60 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
Enerplus (ERF)1535
Penn West Petroleum (PWT)2525
Canadian Oil Sands (COS)5225
TransAlta (TA)3445
Sun Life Financial (SLF)0555
ARC Resources (ARX)1315
BCE Inc. (BCE)3135
Shaw (SJR.B)3235
Bank of Montreal (BMO)4435
Power Corp of Canada (POW)4455
Notes | More Info...


Low Price/Earnings StocksP/EP/BP/SYield
Research In Motion (RIM)5550
First Quantum (FM)5311
Iamgold (IMG)5423
Teck Resources (TCK.B)5543
Canadian Oil Sands (COS)5225
Bombardier (BBD.B)5353
Barrick Gold (ABX)5322
National Bank (NA)5234
Inmet Mining (IMN)5521
Magna (MG)5453
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
Canadian Oil Sands (COS)52251.08
Penn West Petroleum (PWT)25251.77
Power Corp of Canada (POW)44551.91
TransAlta (TA)34451.94
National Bank (NA)52342.00
Bank of Montreal (BMO)44352.05
Husky Energy (HSE)44452.11
CIBC (CM)42342.13
Enerplus (ERF)15352.62
Iamgold (IMG)54232.63
Notes | More Info...


Canadian Stock SummaryYieldP/EV.R.
Canadian Oil Sands (COS)YYY
Bank of Montreal (BMO)YY
Enerplus (ERF)YY
Iamgold (IMG)YY
National Bank (NA)YY
Penn West Petroleum (PWT)YY
Power Corp of Canada (POW)YY
TransAlta (TA)YY
ARC Resources (ARX)Y
BCE Inc. (BCE)Y
Barrick Gold (ABX)Y
Bombardier (BBD.B)Y
CIBC (CM)Y
First Quantum (FM)Y
Husky Energy (HSE)Y
Inmet Mining (IMN)Y
Magna (MG)Y
Research In Motion (RIM)Y
Shaw (SJR.B)Y
Sun Life Financial (SLF)Y
Teck Resources (TCK.B)Y
Notes...



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