Posts Tagged ‘American Express’

Five Reasons to Avoid the Gold Rush (updated)

Here’s a follow up video on American Express and an updated article on gold by Vitaliy N. Katsenelson, at Contrarian Edge. - Ilene  

Vitaliy: I was on BNN-TV, a Canadian version of CNBC, discussing my take on American Express – a good company but not a good (fairly valued at the most) stock (click here to watch).   Gold just ran through a $1,000 mark.  I’ve been getting emails asking me if my thoughts on gold have changed, they have not.  Here is an updated article I wrote a few months ago.

Five Reasons to Avoid the Gold Rush (updated)

gold The reasons why one should sell the cat, pawn the mother-in-law, and use the proceeds to buy gold are well known: the Fed is printing money faster than you can read this, which will result in inflation; the government is borrowing like a drunken monkey, so the dollar will be devalued; this will debase all currencies, so the only thing that will save you is the shiny metal.

However, here are some arguments why one should think twice before jumping in bed with gold bugs, or at least remain sober while determining gold’s weight in the portfolio . 

1. For investors (not speculators) it is very hard to own gold, because you cannot attach a logical value to it. Unlike stocks or bonds, gold has no cash flow and has a negative cost of carry – it costs you money to hold it.  It is only worth what people perceive it to be worth right now.  The argument I commonly hear is, “What about all those Enrons, Lehmans, Citigroups, etc. that either went bankrupt or got near it?  What was the value of those?”  If the lesson learned is not to own stocks but to own gold, it is the wrong lesson.  The lesson should be: own companies you can analyze (the aforementioned companies were unanalyzable) and diversify – don’t put your all net worth into one stock. 

2. The gold ETF SPDR Gold Shares (GLD) is the seventh largest holder of physical gold in the world.  If its holders decide to sell (or are forced to sell; think of hedge-fund liquidations), who will they sell it to?  This is extremely important, as the presence of GLD changes the dynamics of the gold price, both to the upside and downside.  If gold keeps
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Is there any upside in American Express?

Is there any upside in American Express?

American ExpressCourtesy of Vitaliy N. Katsenelson at Contrarian Edge

Financial stocks had a huge run up from their bottom. Many have doubled and tripled, but are they still cheap?

It’s almost impossible to value big financial institutions like Citigroup (C), Bank of America (BAC), or Goldman Sachs (GS) — they’re a lot like hot dogs — you don’t really know what’s inside of them; for the most part, they’re leveraged hedge funds.

They may appear to be cheap on a price-to-book basis, but the book is an illusive concept when it comes to financial stocks, especially when leverage, a deteriorating economy, and accounting assumptions may transform the book into a pamphlet in a New York second.

There are very few financial companies that one can actually analyze and thus value — American Express (AXP) is one of them, and I believe it’s a great proxy for other financial stocks. American Express’s financials are transparent, thus you can make some fairly reasonable assumptions of its normalized credit losses (net write-offs), borrowing costs, fixed costs, etc… and come up with a ballpark earnings power.

In 2007, American Express earned $3.26, however, at the time, its net write-offs of its credit-card portfolio were hovering at an all-time low of 3.3%.

American Express was benefiting from the temporary impact of a new bankruptcy law passed in 2005 (people rushed to file for bankruptcy before the stricter law went into effect, which lead to lower bankruptcy filings in 2006 and 2007), in addition to easy access of credit through home equity loans, low unemployment, and expanding economy.

The 3.3% net write-offs are not coming back anytime soon, so $3.26 of earnings (which implies a price-to-earnings ratio of 10 at today’s price) is a number we can dream and fantasize about, but won’t see for a long, long time.

Fast-forward to today: American Express’s losses almost tripled, approaching 10% (though this number is a bit exaggerated by American Express proactively cutting available credit to its customers). Wall Street expects the company to earn $1 per share in 2009. However, similar to $3.26 earnings per share, this number is not really meaningful either — bad times, as good times, will not persist forever.

To figure out American Express’s normalized earnings power, you need to make an assumption of its normalized net write-offs, among other assumptions (borrowing costs, new level…
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Capital One Chargeoffs Rise To 9.4%

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Capital One Chargeoffs Rise To 9.4%; American Express Chargeoffs 10%; Card Issuance Drops 50%

credit cardsCourtesy of Mish 

Credit cards losses are accelerating at Capital One, a trend one should expect to continue given the rapidly rising unemployment rate. Interestingly, Capital One is returning TARP funds.

Please consider Capital One Card Write-Offs Advance to 9.4 Percent.

Capital One Financial Corp., the Virginia credit-card lender that’s returning federal bailout money, said uncollectible U.S. card loans rose in May.

Capital One wrote off 9.41 percent of U.S. card loans on an annualized basis, compared with 8.56 percent reported for April, the McLean-based bank said today in a federal filing. Loans 30 days or more overdue declined to 4.9 percent from 5.04 percent.

Charge-offs for international loans advanced to 9.77 percent from 8.91 percent, and auto finance climbed to 3.62 percent from 3.46 percent.

American Express Card Write-Offs 10 Percent

Bloomberg is reporting American Express Posts Card Write-Offs at 10 Percent.

American Express Co., the largest U.S. credit-card company by purchases, said uncollectible loans declined in May, aided by the sale of consumer debts written off in previous months.

American Express wrote off 10 percent of managed U.S. card loans, compared with 10.1 percent for April, the New York-based company said today in a federal filing. The decline reflects proceeds from selling bad loans that were already charged off, the filing said.

Loans 30 days or more overdue at American Express declined to 4.7 percent from 4.9 percent in April, while at Capital One, based in McLean, Virginia, late payments fell to 4.9 percent from 5.04 percent. Capital One estimated its charge-off rate was understated by half a percentage point, citing a surge in the number of bankruptcies that delayed processing of that data.

Banks Reduce Credit Card Mailings

Looking ahead expect these numbers to get much worse. Odds are unemployment continues to rise for a year or longer after the end of the recession is announced. And with each uptick in unemployment chargeoffs will increase.

Is it any wonder Banks Reduce Credit Card Mailings?

A major shift in the kinds of direct mail that banks send out occurred last quarter, according to Mintel Comperemedia, a firm that tracks direct mail advertising.

Overwhelmed by delinquent


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Phil's Favorites

How tech firms make us feel like we own their apps - and how that benefits them

 

How tech firms make us feel like we own their apps – and how that benefits them

ESB Professional/Shutterstock

Courtesy of Melody Zou, Warwick Business School, University of Warwick

Possessions are going out of fashion. An endless stream of media reports claim millennials – that amorphous mass of people...



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Insider Scoop

Earnings Scheduled For July 16, 2019

Courtesy of Benzinga.

Companies Reporting Before The Bell
  • Goldman Sachs Group Inc (NYSE: GS) is projected to report quarterly earnings at $5.00 per share on revenue of $9.13 billion.
  • Domino's Pizza, Inc. (NYSE: DPZ) is expected to report quarterly earnings at $2.02 per share on revenue of $836.92 million.
  • JPMorgan Chase & Co. ...


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Zero Hedge

US Beekeepers Lost 40% Of Honeybee Colonies Last Year, UMD-Led Survey Finds

Courtesy of ZeroHedge. View original post here.

Recent budget cuts by the Trump Administration slashed funding for the US Department of Agriculture's annual Honey Bee Colonies report that has recently detailed a collapse in the bee population across the nation. Now researchers will be observing a new study, one that hasn't been affected by spending cuts, shows beekeepers lost 40.7% of their bee colonies from April 2018 to April 2019.

The nationwide survey administered by the University of ...



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Kimble Charting Solutions

Silver/Gold Ratio Making A Bullish Reversal?

Courtesy of Chris Kimble.

Silver (NYSEARCA: SLV) is an important cog in the precious metals world. Not only is it a core precious metal but it is often a leading indicator for metals bulls.

Silver is a good risk-on / risk-off indicator. When it is out-performing Gold, it is risk-on. When it is under-performing, it is risk-off. It’s been the latter for the better part of the past 8 years.

And when the trend remains down, which historically means that metals rallies will be sold.

The Silve...



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Digital Currencies

Bitcoin Breaks Back Below $10k, Crypto-Crash Accelerates As Asia Opens

Courtesy of ZeroHedge. View original post here.

Update 2010ET: Having briefly stabilized after this morning's weakness, cryptos are tumbling once again as Asian markets open.

Bitcoin has broken below $10,000 again...

*  *  *

While all eyes are on Bitcoin as it slides back towards $10,000, the real mover in the last 12 hours has been Ethereum after...



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Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



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ValueWalk

Professor Shubha Ghosh On The Current State Of Gene Editing

 

Professor Shubha Ghosh On The Current State Of Gene Editing

Courtesy of Jacob Wolinsky, ValueWalk

ValueWalk’s Q&A session with Professor Shubha Ghosh, a professor of law and the director of the Syracuse Intellectual Property Law Institute. In this interview, Professor Ghosh discusses his background, the Human Genome Project, the current state of gene editing, 3D printing for organ operations, and gene editing regulation.

...

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Chart School

Gold Gann Angle Update

Courtesy of Read the Ticker.

Charts show us the golden brick road to high prices.

GLD Gann Angle has been working since 2016. Higher prices are expected. Who would say anything different, and why and how?

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The GLD very wide channel shows us the way.
- Conservative: Tag the 10 year rally starting in 2001 to 2019 and it forecasts $750 GLD (or $7500 USD Gold Futures) in 10 years.
- Aggressive: Tag the 5 year rally starting in 1976 to 2019  and it forecasts $750 GLD (or $7500 USD Gold Futures) in 5 years.

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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