Stocks and Trading Thread - Channeling your inner Mono

[alfred russel]

Are P/E ratios adjusted for dividends in any way?  And does it matter, or does the math somehow wash?

The math doesn't wash. A company will have a higher P/E ratio at the end of a year if it pays significant dividends versus if it doesn't.

But P/E ratios aren't a serious way to value a company; they are just an easily calculated and transparent benchmark. Analysts use discounted cash flow models, but those are complex and too involved to work through on a web forum.

[MadImmortalMan]

Are P/E ratios adjusted for dividends in any way?  And does it matter, or does the math somehow wash?

The math doesn't wash. A company will have a higher P/E ratio at the end of a year if it pays significant dividends versus if it doesn't.

But P/E ratios aren't a serious way to value a company; they are just an easily calculated and transparent benchmark. Analysts use discounted cash flow models, but those are complex and too involved to work through on a web forum.

And yet, we can still reliably use it to see if market valuations are fair or not.

[alfred russel]

Are P/E ratios adjusted for dividends in any way?  And does it matter, or does the math somehow wash?

The math doesn't wash. A company will have a higher P/E ratio at the end of a year if it pays significant dividends versus if it doesn't.

But P/E ratios aren't a serious way to value a company; they are just an easily calculated and transparent benchmark. Analysts use discounted cash flow models, but those are complex and too involved to work through on a web forum.

And yet, we can still reliably use it to see if market valuations are fair or not.

Very arguably.

Upthread you posted the PE ratio of the S&P 500 was 17.12 on 1/1/1960 versus 25.59 today. Without a lot more work regarding differential interest rates, differences in accounting treatments both due to rules changes and to changes in the types of companies in the S&P 500, changes in the risk premium of the S&P 500 due to the changing makeup of the index, tax changes, and other factors, I don't think those data points tell us much of anything.

[MadImmortalMan]

Finally closed over 20000. CNBC's muppets are happy.

[Admiral Yi]

Finally closed over 20000. CNBC's muppets are happy.

I won a drink off a guy in a wheelchair who's on disability! 

[Ed Anger]

Ed Anger portfolio update:

[Alcibiades]

Just waiting for that crash.

[Richard Hakluyt]

Ed Anger portfolio update:

Funny how the markets tanked whenever it looked bad in Greece, but when a chap with special needs becomes president of the US they do fine 

One would almost think that the rational markets hypothesis was a load of cobblers.

[CountDeMoney]

Former Piggly Wiggly employees told stock values plummet to near zero
By Warren L. Wise
Feb 7, 2017 Post and Courier
Updated 13 hrs ago

The employee-owned parent of Piggly Wiggly Carolina is now essentially worthless, and former workers will not receive stock payouts this year, according to a letter from the head of the once-prominent supermarket chain.

"The company has no positive value," said David R. Schools, president of Mount Pleasant-based Greenbax Enterprises, in a recent mailing to participants in the employee stock ownership plan.

Schools said an outside firm determines the value of the business each year and, because of financial obligations of Greenbax and the negative value of its assets, "there will be no ... distribution this year based on share value."

Joe Pinto, a former employee of Piggly Wiggly for nearly 40 years, said he wasn't surprised that the value of the stock has been nearly wiped out.

"We are terribly, terribly disappointed," the West Ashley resident said Tuesday.

Pinto declined to say how much he has lost with the company's collapse, but he noted at one point Greenbax shares were valued at more than $700 each.

While he continues to earn an income by working for a different company, he said he feels sorry for all of the Piggly Wiggly employees who counted on the stock plan for retirement and now have nothing.

"This is all so many had," Pinto said.

The letter to shareholders comes a year after a group of former employees sued the grocer in federal court, seeking millions of dollars in lost retirement money and alleging poor decisions and inaction by top company executives, including Schools, led to the company's ruin.

The pending case, representing a group that could be larger than 1,000 people, alleges that senior officials with the grocer and Greenbax enriched themselves while the value of the employee-owned stock plan plummeted by nearly 90 percent over eight years, "devastating the retirement accounts of thousands of company employees."

Schools declined further comment on the stock shares' negative value Tuesday.

The 83-page lawsuit, which is seeking class-action status, estimates that the stock value skidded from $88.7 million in 2008 to $9 million in 2015. The CEO's letter puts the stock plan's value at just under $457,000 for the annual period that ended March 31, 2016.

The employee-owned Piggly Wiggly franchise - with a tagline of "Local Since Forever" in recent years - was established in downtown Charleston 60 years ago. The beginning of the end came in 2013, when the company began selling assets and closing stores after encountering serious financial problems. Bi-Lo and Harris Teeter, longtime rivals of Piggly Wiggly, acquired most of the chain's Lowcountry supermarkets. The last remaining company-owned store in the Charleston area - in Hollywood - was sold last spring.

Also last year, Greenbax sold 14 shopping centers in South Carolina and Georgia, including three in the Charleston area, to a Virginia-based real estate company for $71 million.

"Most assets have been liquidated," Schools said in his letter. "Remaining are partnerships in two real estate parcels and restricted cash."

Details about the land are not included in the letter. The restricted cash refers to $4 million held mostly by the S.C. Workers' Compensation Commission as collateral to service open claims. The rest of the money is with the Board of Workers' Compensation in Georgia, where Piggly Wiggly operated some stores.

Schools said Greenbax applied to the South Carolina agency to release all or some of the cash collateral because it believed the amount being held was "excessive based on our claim liability," but that request was denied.

The inability to tap into those funds "greatly reduced the value of Greenbax," Schools said in the letter. The company can request that the money be released just once every 12 months, so it must wait until the fall to reapply, he said.

Schools also said Greenbax continues to incur expenses such as real estate leases, including rent payments for stores that are now closed.

"The leases are those for which we tried to negotiate reasonable exits, but were unable to do so," he said.

Schools said the company and its subsidiaries will continue to sell off assets "to wind-down the business." He also said Greenbax will try to eliminate its overhead expenses "so that, possibly, distributions can be made to ... participants in the future."

[Admiral Yi]

Yi's Lending Club account update, one year (more or less) anniversary.

2/14/16 I moved five large into my account, took a couple days for the transfer to hit, so let's say today.

Today my Adjusted Account Value is $5,247.90. By simple math that's a yield of 4.958%. The "adjusted" refers to partial write downs of loans that are currently late. 

I have two loans that are in Grace Period (up to 15 days late) with a remaining face value of $41.56, adjusted down to $30.75.
I have nine loans that are late 31-160 days with a face value of $203.91 and an adjusted value of $46.90.
I have 13 loans fully charged off (defaulted) with a face value of $303.82 and an adjusted value of 0. Duh.

Lending Club reports my Adjusted Net Annualized Return as 5.50%, but what I'm pretty sure they're not taking into account is all the time your cash is sitting idle.  I.e. minimum loan is $25, so anything <25 the cash is just sitting there. Also once a loan request gets fully matched with funding it sits there for a couple days "processing."

In contrast to Granny Valma with his milksop A's and B's, I opted for the automated allocation heavy on C's, D's, and E's.  Then once most of my money had been allocated I switched off automatic allocation, but tried to mimic it manually, because I found early that the automatic allocation put a lot of money into loans that never closed, because not enough other lenders signed up for it.

c. 5% is a reasonable yield, and sure beats the hell out of CD rates, but I was expecting and hoping for better, maybe 7.

I definitely think if someone had sent me a referral email so I could get that $75 bonus that first year yield would look a lot sweeter.

I'm going to play out the string with my original investment (i.e. keep plowing profits back into new loans) because it is kind of fun. I am Shylock, with no ability to collect a pound of flesh. However my biggest worry is what will happen if we hit a recession and unemployment pops.

[Razgovory]

Ed Anger portfolio update:

You've become a doorman?

[Valmy]

In contrast to Granny Valma with his milksop A's and B's, I opted for the automated allocation heavy on C's, D's, and E's.

I wanted a firm and secure foundation.

[Ed Anger]

I'm glad I stuck with Boeing. 

[Admiral Yi]

Glad I held on to Square.

[Admiral Yi]

Etrade is frozen up and not updating today's prices.