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TheDumbMoney (73.43)

April 2012



Sysco Corporation Should Not Have Five Stars on CAPS

April 23, 2012 – Comments (13) | RELATED TICKERS: SYY

As best I can tell, Sysco corporation has outperformed the S&P only two years in the last six (2006 and 2008), including this year so far, and is cumulatively massively underperforming both the S&P price index and the S&P total return index.  Yet it continues to be a recommendation of many smart people, and in fact has a 5-star rating here on CAPS.  Morningstar gives it a 4-star buy rating.  And not only has it not outperformed in the past, my (NON-expert) analysis of it and of its history of cash flows and likelihood of future cash flows makes it seem extremely unlikely either that it is remotely undervalued even now, or that it can outperform the S&P price or total return index going forward.  That seems true even though it is cheaper than it has been for years, as its P/E ratio has continued to contract in tandom with its slowing prospects.  In Peter Lynch terms it is a "sluggish grower," not even a "stalwart."  It is the epitome of a stock you buy only for the most conservative of reasons.  This post is complete in its conclusions, but if you like, you can see here for my longer analysis and cash flow spreadsheet.  [more]



I'm Not An Options Trader, But Apple Seems Like a Straddle Candidate

April 21, 2012 – Comments (2) | RELATED TICKERS: AAPL

I'm just sayin'.    [more]



Selling Altria (MO), Putting the Money in Philip Morris International (PM)

April 20, 2012 – Comments (2) | RELATED TICKERS: MO , PM

In keeping with my recent analysis of PM and my recent analysis of MO, I am selling my MO stock and putting it in PM.  One of the bad habits I am trying to combat is inertia.  I think that I use my aversion to paying capital gains taxes and commissions, and my long-term view, as a crutch, and excuse, not to sell even when I think I should sell.  MO has been a strong CAPS outperformer for me over the past two years (and I have owned it for longer than that).  But at these relative valuations, and given the long-term growth-prospects of each, I just see no compelling reason to own MO in addition to owning PM.    [more]



Traders Are, And Stocktwits Is, Boring

April 20, 2012 – Comments (4) | RELATED TICKERS: MO , AAPL

So I've been trying to promote my new blog ( as widely as possible, including on this site called "", which, I am sure, the crew would consider a competitor.  (I feel so disloyal!)  I would say that it's better in the sense that it's more active.  If I post my link there I get tons more hits (all hail Google Analytics) than I do when post something here.  But here's the problem: IT'S ABSOF@CKING CRAWLING WITH THE LOWEST COMMON DENOMINATOR OF TRADERS.  I don't get these guys.  There's like ten that are really good, that seem to know something, etc.  (And even they don't give you a link to their returns, but tell you they've been full-time traders, etc.)    [more]



Intuitive Surgical, My Strongest Performer, Richly Valued

April 19, 2012 – Comments (5) | RELATED TICKERS: ISRG

In summer 2010 I read me some Philip Fisher and realized I needed to get away from pure "value" investing.  My first purchase was ISRG, which I first bought around $286/share, and added to in December of that year at $255/share.  I then added in July 2011 at $365ish/share, also following a Philip Fisher rule, which I paraphrase as, "don't be afraid to add money just because a stock has gone up, if you still think it has great growth prospects.  [more]



You Would Have to Be Crazy to Own Chesapeake Energy

April 18, 2012 – Comments (14) | RELATED TICKERS: CHK

So shares of Chesapeake Energy Corp are down over 8% today on the news that the company loaned CEO Aubrey McClendon over ONE BILLION DOLLARS, secured by his stake in the company.  Here's the news on Marketwatch.  [more]



Updated Altria Valuation and FCF Analysis, Including SAB Miller "Look Through" FCF

April 18, 2012 – Comments (0) | RELATED TICKERS: MO , LO.DL , RAI

My Conclusions:   [more]



Name Change: "dumberthanafool" now "TheDumbMoney"

April 17, 2012 – Comments (9) | RELATED TICKERS: SPY

Well, I did it.  I have been meaning to do it since long before I started my own separate blog, which you can find here.  I originally chose "dumberthanafool" on a flash of...something...when signing up for this website, lo, back in 2009.  I honestly don't remember exactly what I was thinking.  Anyway, I started getting comments on my posts like, "you're not dumb, you're smart!"  Which is nice.  Who doesn't like getting called smart?  But let's face it, if I were that smart I'd be an All Star.  (I still hope to achieve that one day, using only my tiny number of real life picks, but that's another story.)    [more]



“Trader Arbitrage” and an Actual Apple Valuation Analysis

April 17, 2012 – Comments (11) | RELATED TICKERS: AAPL

I have been holding Apple stock since mid-ish 2011. I bought “late”, in the $350 to $365 range. I bought because my analysis showed a twenty percent discount to this model's (the linked chart has since been updated — see below) estimate of the value of the firm. I have not added shares since then. I have watched the recent rise with amusement, happiness, and some trepidation. I have also avidly followed how the technical guys, the traders, think about it.* (I generally find them amusing, and I am grateful as a citizen for all of the capital gains taxes they pay each year in exchange for their unceasing and frenetic efforts.)  [more]



Fully Updated Philip Morris International Analysis Per 2011 Annual Report, With DFCF Calculation,

April 14, 2012 – Comments (0) | RELATED TICKERS: PM , MO , SPY

Introduction/Historical Notes/Preliminary Gloating: Guess what I got in the mail yesterday?….my 2011 Philip Morris International annual report, that’s what! Philip Moris International (“PMI”) (ticker PM) is, along with ExxonMobile, my longest-term holding. I’ve owned Exxon since before it merged with Mobile, and I have owned Philip Morris International since before Philip Morris spun off Kraft, sold a portion of its interest in Miller to SAB (creating SAB Miller, which it still owns over 20% of), changed its name to Altria, and finally spun off Philip Morris International in 2008. Yup, I have owned shares in these companies continuously since 1998, or for going on 14 years now. I also added to my PMI position during the financial crisis, and during the entire past 14 years I have been reinvesting my dividends. It has been a pretty darn successful inflation-adjusted investment for me, epecially in comparison with the performance of the S&P during this time period. PMI used to be my largest single holding, but because I upped my stakes in other companies during the last two years, it is now just in the top four. Pish. I am now updating my PMI analysis, both my mathematical free cash flow analysis and my thoughts on the 2011 annual report, and analysis of its prospects. (To some extent these feed into each other, because future prospects go into setting some of the DFCF assumptions.)  [more]



The Buffett Rule is Alternative Minimum Tax 2.0

April 13, 2012 – Comments (10) | RELATED TICKERS: SPY

I have been spouting this on my Twitter stream since at least yesterday, but forget "class warfare," forget "it's just political," forget the polls.  The thing nobody is saying about the Buffett Rule is that is version two of the Alternative Minimum Tax.    [more]



Google Update

April 12, 2012 – Comments (9) | RELATED TICKERS: GOOGL , AAPL , SPY

Google reports earnings after the bell today.  Wall Street expects a small beat.  The Estimize whisper number expects a small miss.  Estimize is a network of financial bloggers whose predictions often been those of Wall Street analysts, who tend to be too optimistic for various institutional reasons.  On Apple, Estimize has pretty consistently nailed the earnings beats, while Wall Street has been too pessimistic on that one.  [more]



Keep it in Perspective

April 09, 2012 – Comments (13) | RELATED TICKERS: SPY , AAPL , BRK-B

So just before the end of March, when everybody was still ll atwitter with joyjuice and the world was our oyster, I wrote about how I was not buying and had not bought since January.  I'd just like to note that post predated Doug Kass' "Sell in April" call, and predated just about all other statements of risk-offedness.    [more]



Financial Advice for My Baby Boomer Mother in Law

April 05, 2012 – Comments (0) | RELATED TICKERS: SPY

Dear [Mother in Law],  [more]



How People Keep Misreading the Fed

April 04, 2012 – Comments (2) | RELATED TICKERS: SPY

So I do some blogging here now and some on my new blog "The Dumb Money," for the benefit of Twitter.  Here is a post I did there today:  [more]



Updated Deathwatch List

April 02, 2012 – Comments (13) | RELATED TICKERS: RSHCQ , BKS , LUV

My original post from last week is here.  [more]

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