This Is Not An Investment Site; Do Not Make Any Investment Or Financial Decisions Based On Anything You Read Here Or Think You May Have Read Here -- May 18, 2015

I missed this last Friday. Apparently the S&P 500 eked out a record on Friday for the second day in a row, while the other major indices advanced towards recent highs.

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GS Downgrades Chevron; Sticks With Exxon

From Goldman Sachs:

We recommend investors buy Exxon as the company represents the only US or European major that can generate sufficient free cash flow to cover its dividend near $60/bbl in 2016-2017.

While other majors will be struggling to keep the dividend flat, we believe Exxon will actually be in a position to increase the dividend for the next several years…

We downgrade Chevron Corporation from Neutral to Sell – and lower our 12-month, multiples-based price target from $111 to $99 (5% total return downside vs. average Super Major total return of +4%) on lower earnings estimates.

Three factors underpin our negative view on Chevron: (1) the company will struggle to generate free cash flow after the dividend under our new oil price forecast, limiting capital allocation potential; (2) we see downside risk to the Chevron’s 2017 production guidance; and (3) after multiple years of outperformance, Chevron’s relative P/E multiple to Buy-rated ExxonMobil appears stretched.

Barron's says: 

Don’t tell that to Wells Fargo chairman and Chevron board member John Stumpf, who made the largest insider purchase of Chevron’s shares since 2001 on May 11.

Comments:

• 2016  - 2017 is a long way off in the investing world
• 2016 - 2017 is an eternity away in the oil and gas industry
• companies have been known to maintain dividends in adverse times
• Chevron (actually Texaco) has been through much worse
• does anyone really think oil will still be below $60 through 2017?

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A Note To The Granddaughters

I finally "know" what is meant by "moveable feast." I've heard that phrase a million times, and have read the Ernest Hemingway book by the same name but even after reading the book, never understood what it meant. I figured I was the only one who did not understand what was meant by it, but I asked another well-read friend if she knew the meaning, and she sort of thought she did but could not articulate it, and in the end, she, too, admitted she did not really know what it meant.

After all these years, I finally know. It was explained by Ernest Hemingway's grandson Sean who provides a lengthy introduction to the "restored edition" of A Moveable Feast which he edited, c. 2009. The new book was released in 2009 to celebrate the 50th anniversary of the first draft of the book; in November, 1959, Hemingway had completed and delivered to Scribner's a draft of a manuscript that lacked only an introduction and a final chapter. The book was published posthumously with heavy editing by his fourth wife.

For Hemingway, according to his grandson, a moveable feast is a "memory or even a state of being that had become a part of you, a thing that you could have always with you, no matter where you went or how you lived forever after, that you could never lose. An experience first fixed in time and space or a condition like happiness or love could be afterward moved or carried with you wherever you went in space and time," page xiv, A Moveable Feast: The Restored Edition, Ernest Hemingway, with a personal foreword by Patrick Hemingway and introduced and edited by Sean Hemingway, c. 2009).

Hemingway had many moveable feasts besides Paris.

My wife's eyes lit up when I had her read that Hemingway passage. She said her moveable feast would have been when she was with her family as a child in Japan. Her dad, US Army enlisted, was assigned to Japan when my wife was eight years old; they were there for two years at a small Army camp. My wife remembers that as the happiest time in her mother's life. Her mother, Japanese, was a war bride after WWII, during the Korean War, when she married my wife's Hispanic father. She was Buddhist; he was Catholic.

While in Japan, they lived in the nicest house they had ever lived in (one needs to remember my father-in-law's enlisted rank in the US Army at that time) -- a two-story duplex. Her mother would take the both of them to get their hair and nails done at the local beauty shop. They had a maid, Todosan who always burned the pancakes which my mother loved: crispy, "burned" pancakes. My wife remembers taking walks along the "water" which she thinks was the ocean (or more accurately the harbor), because of the cliffs, and not a river.

The general area of Kure, southeast of Hiroshima:

My wife remembers Camp Kure being in the Japanese town of Nijimura but yet one cannot find it on the map. In addition, there are very few google hits regarding the city of Nijimura, but it does exist.  It appears to have been swallowed up by Kure.

At wiki: Kure was the home base of the largest battleship ever built, the Yamato. One of the bases of the Japan Maritime Self-Defense Force (JMSDF) is still located there, its former center became the JMSDF Regional Kure District. While there is a hospital as a building of the Marine Self Defense Force, there are Escort Flotilla (Destroyers), Submarine Flotilla and the Training Squadron in the Kure District. A museum with a 1:10 scale model of the Yamato is located in the city.