Gone with the wind tax credits

 

Sewell Avery, chairman of Montgomery Ward:
the last businessman to tell the government, "Fuck you."
Arrested in 1944 for defying Franklin Roosevelt's executive order.

"Siemens  to shed US jobs over wind tax credits threat," says the Financial Times.

Siemens is set to cut more than 600 wind power jobs in the US in response to regulatory uncertainty over the future of wind tax credits that has buffeted the renewables industry and threatens thousands of jobs. ...

Local politicians blamed Congress for holding up a renewal of the tax credit.

Maybe you have to be over a certain age to find anything strange about this. Little by little, we've become accustomed to industries, businesses, and jobs that depend on what the federal government will buy or subsidize. We're slouching toward state capitalism.

That, however, is a theme for our other blog, Reflecting Light. The subject of Ghost Money is investing.

There's a lesson here for investors: don't imagine you can simply hitch a ride on the federal government's latest fad. While the Fall of the House of Wind probably won't even scratch the paint on Siemens, a huge international company, that isn't necessarily the case for smaller companies engaged in -- for instance -- green energy, in response to Washington's calculated vote buying. The same will apply to next year's purple energy.

Maybe you think you can time your play so you're there when the dollars that formerly belonged to taxpayers fall from the ceiling, and be out of there when the rain has passed. Perhaps that's no greater risk than many others you can be exposed to in the markets. But you'd better be nimble.

The government giveth. And the government taketh away.

Keywords: [Siemens] [wind power] [government subsidies]

Ghost Money's author does not claim to know what he's talking about. He is not an investment advisor. This site is for entertainment, if it can even manage that.

When the chips are down

Intel (INTC) continued its downward slog after we bought it. What to do? 

We doubled down and bought the same number of shares again.

Yes, the chip maker is going through a soft patch, lowered its guidance, all that. Tablets are the stage of the rage, and INTC is conspicuous by its absence in that quarter.

No company is bulletproof. But step back and look at the view from space. INTC reportedly has 80 percent of the market for PC and server chips versus 20 percent for AMD. (Whatever happened to Taiwan Semiconductor? Must have dried up and blown away.)

Ghost Money is generally leery of tech companies. We're not smart enough to understand what many of them do, and the Latest Thing can quickly spill its te and become the Last Thing. We make an exception for a few big, big tech companies that are seasoned by survival through many of the inevitable market cycles, that spend on research and development like the day of judgment draws nigh, that have huge economies of scale, clean-sheet financials, and management that seems to look farther out than the next quarter.

Oh, and that pay you to hang around till the next time they blow the doors out with a profit boom. At the price for our second tranche of INTC, the annual dividend was 3.78 percent. You look at the dividend history and see a long record of steady or increasing dividends.

Being able to buy an INTC on sale is one of the advantages of having a Chinese wall between an ultra-conservative retirement account, however modest, and a trading account. Knowing the retirement account is safe (except from inflation) steadies the nerves.

Keywords: [INTC] [chip makers] [AMD]

Ghost Money's author does not claim to know what he's talking about. He is not an investment advisor. This site is for entertainment, if it can even manage that.