This post first appeared at TheFelderReport.com.

There is a growing chorus surrounding the topic of stock buybacks and whether they should be banned. Most recently, Chuck Schumer and Bernie Sanders wrote a piece for the New York Times arguing that buybacks are nothing more than corporate self-indulgence that leads to long-term harm to both companies and the economy. This may be true and, with equity valuations at or near all-time highs, buybacks certainly appear uneconomic at current prices but this is no reason to ban them. Companies should be allowed to throw money down the drain if they so choose…

“For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments.” -Warren Buffett

“My greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities.” -Jesse Livermore

It’s popular these days to note that valuation is not a good timing tool. While it may be helpful in understanding the prospects for long run returns it just has little utility for those focused on the near term. At the same time, technical analysis, or more precisely…

This post first appeared at TheFelderReport.com.

Warren Buffett is famous for many things one of which is his general dislike for precious metals as an investment. But maybe you’re old enough to remember when, just over 20 years ago, he backed up the truck and bought a ton of silver — over 3,000 tons, to be more precise. From the 1997 Berkshire Hathaway letter to shareholders:

Our second non-traditional commitment is in silver. Last year, we purchased 111.2 million ounces. Marked to market, that position produced a pre-tax gain of $97.4 million for us in 1997. In a way, this…

It was almost a year ago I wrote “What Were You Thinking?” referring to a quote from an interview with Sun Microsystems CEO, Scott McNeely, that he gave a year or two after the peak of the DotCom mania:

At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees…

The following is an excerpt of a recent market comment that first appeared at The Felder Report Premium.

What is the opposite of a margin of safety? That is a question this market has had me asking myself for some time now. A margin of safety is a discount to intrinsic value that provides a safety net in the result of an error in analysis or unforeseen negative developments. The opposite of a margin of safety then is a premium to intrinsic value than can vanish even if your analysis is correct or things go unexpectedly in your favor. There…

This post first appeared at TheFelderReport.com.

I recently ran across a terrific chart in Grant’s Interest Rate Observer that got me thinking about Hyman Minsky and The Financial Instability Hypothesis. After remaining relatively unknown during the course of his lifetime, Minsky really came to fame in the immediate aftermath of the financial crisis as his hypothesis helped to explain what left most economists baffled: the fundamental cause of the crisis. …

This post first appeared at TheFelderReport.com.

The majority of the research I do is company specific. But over the past few years I’ve been much more concerned with the macro risks to my micro strategy. Extreme valuations, matched by euphoric sentiment and technical warning signs, have had me focusing on the big picture more than I normally would like to. Balancing the two has really been a high wire act.

In studying individual companies the research is pretty straight forward. I want to find stocks that offer a very compelling risk/reward setups (like Apple in early-2013 and Herbalife in early-2015)…

This post first appeared at TheFelderReport.com.

Taken together, stocks and bonds have never, in over 100 years of history, been as expensive as they are today. If it is true, as Warren Buffett says, that “the price you pay determines your rate of return” then investors paying the highest price on record for financial assets are very likely standing at the brink of the worst returns in history. That’s the bad news…