"There is no such thing as a giant iron ore stockpile somewhere."
The glut means, readily accessible to support the demand. In other words, the capital intensive part you described has already played itself out, to support the hyper growth of China. Now that that phase is over, there is overcapacity. Anyone thinking vale is going to $35 is dreaming. Ore prices have COLLAPSED from $180 to $80. VALE will trade between 10 and 14 for the next 5 years.
I mean, I am pulling for apple but...no way I choose them over Samsung. They lost the touch. Maybe Jobs was bigger than we ever made him to be, and that says a lot.
I wish I could produce 1 to 2 year old technology and boast about it while the zombies fall all over each other over it. Pretty soon they will change the name to Granny's Apple.
Prepare for massive dumping. They have shown that they are second banana. There is so much quiet dumping you can do before the snowball starts to take everything out in its path.
This dog has started to wag its tale. Hopefully divi news coming and maybe more.
The $12 puts are paying that much. I mean, if all you want to chase is divi then go and do an arbitrage play like BYI. The thing has a 10% discount to its acquisition value. Although it might have tighten as of late. All I am saying is, who gives a #$%$ about the divi. This thing will lose 3% before you get there
PS Right now I am neither short nor long. The reason I am here is that I had an alert when VALE hit $13. I thought that it would be a good play for a technical bounce based on the chart. But after doing some DD I am not even comfortable selling the $11 puts. Maybe I will when it cracks $12
"Why not sell now before the debacle and buy the stock back at cheaper prices?"
Because they are not thinking and greed has clouded their thinking. They are looking at the chart and looking for a bounce, the problem is that all the bounces happened with IO over $100. As I mentioned before this think is going to tank hard in the next 6 months, but the newbies here want to get that 2.5% divi at the expense of 20% stock drop. It's like trying to reason with a cardboard box.
This article was written when IO was at $100. It is now 15% below that. That means earnings will probably down next quarter by 50%. Don't get caught holding the bag.
Though Vale enjoys the advantage of being the lowest-cost iron ore producer, it still isn't immune to a rapid and prolonged slump in the commodity's price. According to an analysis by Barclays, just a 10% reduction in the price of iron ore would reduce Vale's 2014 earnings by 32% and cut its net present value by nearly half. A 25% decline, as Goldman predicts, could greatly constrain profitability, despite the company's recent cost cutting measures
a_b you are buying way to early. The strategy for VALE is to somehow run the small miners out of business. Fine but in the meantime they are going to eat their profits and them some to do it. Meanwhile supply will double, prices will tank in the low 70s and chinese economy will slow down. If you want to get paid, sell the $11 or $12 puts. When it hits you will get the stock cheaper without the need to spend $12.60 to make .24c lousy cents. OK, open your eyes now, NEVER make an investment based on dividend or tax reasons. Yes these reasons are peddled all the time, just like religion, but that does not mean it is good for you.
The October $12 puts are paying more than the October dividend. You are welcome !
How does it feel to lose 10% chasing a 2.5% dividend.
I mean really, are you people this dumb ? This is not rocket science.
Fight between the technical (buying at 12.60) and the dumpers who see the writing on the wall. You are looking at a death by 1000 cuts over the next 3 months. $11s coming by the end of next week
Yes no bad news ahead, other than double the supply by 2015 and a slowing chinese economy and $72 ore price. Yeah man, no bad news ahead, it is all good.
PS Check with your water company. I think they are not filtering the lead out of it.