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August 19, 2008 Random Observation Is it me or is everyday either a good day for commodities and commodity stocks and a rotten day for financials and value stocks, or an awful day for commodities and commodity stocks and a good day for financials and value stocks? Posted by Eddy at 1:04 PM | Permalink Flashback from 1998: NYT: Commodities' Price Slide Victimizes Economies of Several Nations On December 10, 1998, the price for oil reached a low of $10.72 a barrel. That was the lowest price since 1986, and it turns out, it was the beginning of a huge turnaround for the price of crude. So the low prices were good news, right? Well, not exactly. The New York Times was able to find the downside: Market Place; Commodities' Price Slide Victimizes Economies of Several Nations: Victimizes? What worries analysts now is that the recent decline is a signal that prices will not turn around soon. At the time, Kofi Annan approved oil sales to Iraq for "humanitarian goods," which apparently including several palaces for Saddam. According to a CNN article from 1998: But Benon Sevan, executive director of the program, turned down Iraq's request to improve its telecommunications system, saying Baghdad had not answered an October 30 letter requesting information on the subject. Mr. Sevan unfortunately couldn't be with us today. It turns out that according to the Volcker Report, he was taking cash bribes from Saddam. Posted by Eddy at 11:39 AM | Permalink Medtronic Earns 72 Cents a Share This morning, Medtronic (MDT) posted adjusted fiscal first-quarter earnings of 72 cents a share which topped Wall Street’s forecast of 69 cents a share. For last year’s Q1, the company earned an adjusted 62 cents a share, so that’s an impressive increase. Revenues rose 18.5% to $3.71 billion. Sales for its spinal biz rose 33%. Revenue outside the U.S. grew by 24% and accounted for nearly 40% of all revenue. This is the latest is a string of good news for the company. A few weeks ago, the board increased the quarterly dividend by 50%. In May, the company said it expects earnings-per-share for 2009 to range between $2.94 and $3.02. After today’s report I wouldn’t be surprised to see that range revised higher. If Q2 earnings come in at 70 cents a share or better, than I think MDT should easily earn $3 this fiscal year. Here's a look at MDT's sales and earnings for the past several quarters: Quarter...........EPS.............Sales Posted by Eddy at 9:54 AM | Permalink PPI Rises at Fastest Rate Since 1981 Ah, it seems like old times. Not only is the Cold War coming back, but today’s report on producer prices indicates that wholesale inflation is at its highest level in 27 years. The PPI jumped 1.2% last month which is more than double what economists were expecting. Even if you strip out food and energy and just look at the “core rate” wholesale inflation still rose by 0.7% or more than three times the 0.2% expected by economists. For July, wholesale energy prices jumped by 3.1 percent following a 6 percent gain in June. That increase reflected big jumps in the price of natural gas, home heating oil and liquefied petroleum gas, which offset a 0.2 percent dip in gasoline costs. Naturally there’s a bit of a lag to these numbers and the dramatic sell-off in oil prices will most likely be seen in next month’s report. Posted by Eddy at 9:29 AM | Permalink August 18, 2008More Troubles on Wall Street Part 1: Part 2: Part 3: From Equity Private. Posted by Eddy at 2:07 PM | Permalink From the Halls of Academia Finally! A New Value-Weighted Total Return Index for the Finnish Stock Market 1912-1969 Posted by Eddy at 1:50 PM | Permalink JNJ Hits New High I really like the stock of Johnson & Johnson (JNJ). Few companies have been as stable long-term winners as JNJ. A few months ago, I said it was a good buy, especially under $60. Just recently, the shares finally took out their 2005 high. The company reported good earnings again last month. JNJ now sees 2008 EPS coming in at $4.45 to $4.50 which is almost certainly too low. Here’s a look at JNJ’s stock (blue line, left scale) and earnings (gold line, right scale with EPS projection in red). The two lines are scaled at 16-to-1.
Posted by Eddy at 1:11 PM | Permalink The Nasdaq Lauches for New Indexes The Nasdaq has announced that it's launching four new indexes; biotech, coal, steel and precious metals. If anyone needs me, I'll be shorting biotech, coal, steel and precious metals. Posted by Eddy at 11:42 AM | Permalink The Plunge of Gold Continues A few weeks ago, I wrote about the recent peak in gold prices and said that we're never quite sure if we're in a bubble until it's over. Perhaps one of the best signs that we're in a bubble is that people will refuse to acknowledge that we're in a bubble. If that's any indication, the commentors on my post at Seeking Alpha definitely should have clued us in that gold was headed for a big fall. Bloomberg reports this morning: Gold may fall for a sixth straight week, the longest slide in four years, as a strengthening dollar erodes the precious metal's appeal as an alternative investment. If you have some time for a little cheap entertainment, this link will take you to the Yahoo Message board posts for Cisco’s stock on March 27, 2000. That was the highest day for the hottest stock of the era. These posters are so madly in love with their stock it’s almost funny. Absolutely no criticism is allowed. Just look at the posts. They have a religious intensity to them. To scroll through the posts, just click on the > symbol right by the time stamp. Posted by Eddy at 11:20 AM | Permalink A 400,000% Return Floyd Norris asks, “Has a Penny Stock Become a Big Company?" In my opinion, the short answer is no. If any company is serious about its business and its future, it has no business being listed on the pink sheets. Any real company has nothing to fear from full disclosure. Multimedia Kingpin Tim Sykes makes his living doing nothing but spotting phony pink sheet stocks that have no reason business outside of issuing daily press releases. The longer answer, however, is that yes, a very smaller number of stocks that have fallen to less than $1 per share have gone on to become real companies. In early 1985, Apco Argentina (APAGF) traded for as little as 12.5 cents (or an 1/8 back then). The stock has since split 4-for-1 (last November) so it was even less than that. It's now worth about $27 a share, A better example is Mylan Labs (MYL). That stock was going for 75 cents a share in 1976. Since then it’s split 11 times (one 5-for-4, four 2-for-1 and six 3-for-2) for a total of 227.8125 for 1. Which means that adjusted for splits, the stock was going for less than one-third of a penny per share. Mylan is now going for $13.72 which is about half what it was five years ago. Still, that’s a nice 400,000% return from its low. (H/T: Paul K.) Posted by Eddy at 11:06 AM | Permalink August 14, 2008Inflation at 17-Year High Ugh. Inflation reached a 17-year high last month, fueled by high gasoline and food prices, all but assuring that the Federal Reserve will keep interest rates at their current level for the time being.
Posted by Eddy at 4:09 PM | Permalink August 13, 2008Stat of the Day From its peak in 1980, if the price of gold had kept pace with total return of the Wilshire 5000, today gold would be worth over $21,000 an ounce. Posted by Eddy at 6:42 PM | Permalink August 12, 2008When All the Small Things Includes Your Portfolio He lost Say it ain’t so Na, na, na, na….. Posted by Eddy at 4:25 PM | Permalink A Very Short Post I'd really like to buy T. Rowe Price (TROW) but I think it's about $10 too expensive here.
Pretty sweet chart tho. Posted by Eddy at 12:06 PM | Permalink Sysco's Earnings In terms of relative performance, these have been great times for the Buy List. Yesterday, Sysco (SYY) added 4% on good earnings news. Typically, this is one of the most stable large-cap stocks on Wall Street. For Q2, Sysco earned 55 cents a share, three cents more than estimates. Last year, Sysco netted 49 cents a share so the company is growing well. Posted by Eddy at 11:17 AM | Permalink Thank You NICK I'm up 27% in three weeks since my last purchase of Nicholas Financial (NICK). It takes patience but the market is not efficient. The stock is still going for less than 80% of book. Posted by Eddy at 10:43 AM | Permalink August 11, 2008From the NYT Corrections The Arts Posted by Eddy at 10:54 AM | Permalink Gas Prices fall for 24 Straight Days Supply and Demand continues to work its magic: Retail gasoline prices have fallen for the 24th straight day, a AAA survey of gas station sales showed. Posted by Eddy at 10:45 AM | Permalink August 8, 2008Citigroup Trader "Dooced" Michael J. McCarthy aka "Large" has been fired from his job as a Citigroup trader for running his blog, Take A Report. "This employee was terminated for behavior that violated the firm's code of conduct and policies," Citigroup spokeswoman Danielle Romero-Apsilos said. McCarthy, a vice president, declined to comment on his departure from the New York-based bank. Financial industry regulatory records show he's been at Citigroup for seven years, most recently trading shares of utility and power companies. Posted by Eddy at 1:08 PM | Permalink August 7, 2008My Buy List YTD
Through today, the Buy List is down -10.39% while the S&P 500 is down -13.78%. Neither figure includes dividends. The daily volatility of the Buy List is 7.17% greater than the S&P 500. |
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