On Monday, President Trump asked, “Why are we protecting the shipping lanes for other countries (many years) for zero compensation?” Few American voters give much thought to the U.S. Navy’s role in ensuring safe passage for seaborne trade around the world. This interactive map, although seven years old, provides a fascinating picture of the volume […]
Last week’s blog (see Plain Talk, Fuzzy Math) showed how Plains All American (PAA) miscalculates its cost of equity capital. Equity is the key component in a company’s Weighted Average Cost of Capital (WACC). In the presentation from their investor day, it was too low. We received several comments from readers and investors on the […]
Last year the U.S. set a new world record for annual increase in production of oil and gas by any country in history. The recently-released BP Statistical Review of World Energy 2019 highlights these and many other useful facts. Total U.S. energy consumption rose by 3.5% last year, the fastest in 30 years and a […]
Plains All American (PAA) held their investor day last week. Continued growth in output from the Permian in West Texas is driving new pipeline construction, for which PAA is at the forefront. Limited pipeline capacity has hurt economics for some drillers that have resorted to trucks to move their crude, which is far more expensive. […]
The current economic recovery, launched out of the cauldron of the 2008-09 financial crisis, continues to percolate. Directly following the 2016 presidential election, many stunned observers forecast numerous types of disaster. So far, those dire predictions have been wrong, although the future always provides lots to worry about The cancellation of tariffs with Mexico fits […]
Wednesday’s report on crude oil stocks from the Energy Information Administration (EIA) showed a sharp jump in storage of 1 million barrels per day (MMB/D). Given the already fragile mood around tariffs slowing GDP growth, crude oil prices predictably slumped. Interestingly though, over the past year the “Adjustment”, or fudge factor which is used to […]
A couple of months ago we noted in Blinded By The Bonds the paltry yields available on long term debt. Since the 2008 financial crisis, the main driver of returns has been capital appreciation, since current income has been so low. Sure enough, over the last couple of months ten year treasuries have dipped another […]
The Capital Asset Pricing Model (CAPM) is a widely accepted theoretical framework for valuing securities. An important feature is the Efficient Frontier. This reflects the concept that, although there’s an almost infinite number of portfolios that an investor can hold (think of all the individual stocks and bonds out there), a small number of these […]
Last week’s article by Jason Zweig (see Think Before You Fish for Bargains in Chinese Stocks) caught my eye, because it warns against investing in Chinese stocks with the expectation of high GDP growth driving high equity returns. A major reason investors allocate to emerging economies is because they expect that relationship to reward them, […]
