Archive for June, 2009

  • The Best of the Money Blogs
    , June 29th, 2009 at 4:35 pm

    I’m honored to have been nominated by Howard Lindzon and David Berman as one of the best money blogs at the Globe and Mail.
    You can vote here for Crossing Wall Street. Please vote early and often. You can see the gentleman at the Acorn office for additional assistance.

  • Stocks Chillax
    , June 29th, 2009 at 4:14 pm

    The stock market’s volatility continues to subside. The VIX closed at its lowest level in nine months. At one point in October, the VIX came within inches of 90. Now it’s close to dipping below 25.
    Except at very low points (like below 13), a low VIX is neither good nor bad for stocks. It simply means that there will be less volatility.

  • Taleb Watch
    , June 29th, 2009 at 12:17 pm

    I think the world is beginning to catch on to the increasingly tedious Nassim Nicholas Taleb. A few weeks ago, Janet Tavakoli blew the whistle on the claim made in GQ that Taleb “made $20 billion for our clients, half a billion for the Black Swan fund.” Taleb says he was misquoted (Felix comes to his defense).
    On his website, Taleb writes:

    Note that NUMBERS are wrong. This is not a business/finance, but a philosophy article written by a literary person the novelist Will Self. So read the article for ideas. Someone used the errors as a platform for her (failed) smear campaign.

    Saying that it’s a philosophy article not a finance article is not an excuse. If the numbers are wrong, then GQ should put out a correction. If Self stands by the quote, then he should stand by it. I don’t buy the argument that Taleb exists in some higher plane where ideas trump facts.

  • Hey Bernie
    , June 29th, 2009 at 11:34 am

    See you in 2159!

  • I’m Back!
    , June 29th, 2009 at 8:31 am

    I’m back in the office after a very relaxing week in Maine. Here’s an interesting investing lesson: I didn’t pay attention at all to the stock market last week and the Buy List still outperformed the market. The S&P 500 dropped 0.3% last week while the 20 stocks on my Buy List gained an average of 2.2%. By doing nothing, I still beat most money managers.
    The Buy List has been locked in place since the start of the year and we’re beating the S&P 500, 15.2% to 1.7% (not including dividends).
    The best news last week came from Bed Bath & Beyond (BBBY). The earnings report was outstanding. Not only did the company cream Wall Street’s estimate by nine cents a share (34 cents to 25 cents), but earnings were also higher than the same quarter one year ago. So in BBBY’s case, things are actually improving instead of saying that the rate of worsening is slowing.
    Here are the earnings results going back a few years:

    Quarter Sales Gross Profit Operating Profit Net Profit EPS
    May-99 $356,633 $146,214 $28,015 $17,883 $0.06
    Aug-99 $451,715 $185,570 $53,580 $33,247 $0.12
    Nov-99 $480,145 $196,784 $50,607 $31,707 $0.11
    Feb-00 $569,012 $238,233 $77,138 $48,392 $0.17
    May-00 $459,163 $187,293 $36,339 $23,364 $0.08
    Aug-00 $589,381 $241,284 $70,009 $43,578 $0.15
    Nov-00 $602,004 $246,080 $64,592 $40,665 $0.14
    Feb-01 $746,107 $311,802 $101,898 $64,315 $0.22
    May-01 $575,833 $234,959 $45,602 $30,007 $0.10
    Aug-01 $713,636 $291,342 $84,672 $53,954 $0.18
    Nov-01 $759,438 $311,030 $83,749 $52,964 $0.18
    Feb-02 $879,055 $370,235 $132,077 $82,674 $0.28
    May-02 $776,798 $318,362 $72,701 $46,299 $0.15
    Aug-02 $903,044 $370,335 $119,687 $75,459 $0.25
    Nov-02 $936,030 $386,224 $119,228 $75,112 $0.25
    Feb-03 $1,049,292 $443,626 $168,441 $105,309 $0.35
    May-03 $893,868 $367,180 $90,450 $57,508 $0.19
    Aug-03 $1,111,445 $459,145 $155,867 $97,208 $0.32
    Nov-03 $1,174,740 $486,987 $161,459 $100,506 $0.33
    Feb-04 $1,297,928 $563,352 $231,567 $144,248 $0.47
    May-04 $1,100,917 $456,774 $128,707 $82,049 $0.27
    Aug-04 $1,273,960 $530,829 $189,108 $120,008 $0.39
    Nov-04 $1,305,155 $548,152 $190,978 $121,927 $0.40
    Feb-05 $1,467,646 $650,546 $283,621 $180,980 $0.59
    May-05 $1,244,421 $520,781 $150,884 $98,903 $0.33
    Aug-05 $1,431,182 $601,784 $217,877 $141,402 $0.47
    Nov-05 $1,448,680 $615,363 $205,493 $134,620 $0.45
    Feb-06 $1,685,279 $747,820 $304,917 $197,922 $0.67
    May-06 $1,395,963 $590,098 $148,750 $100,431 $0.35
    Aug-06 $1,607,239 $678,249 $219,622 $145,535 $0.51
    Nov-06 $1,619,240 $704,073 $211,134 $142,436 $0.50
    Feb-07 $1,994,987 $862,982 $309,895 $205,842 $0.72
    May-07 $1,553,293 $646,109 $154,391 $104,647 $0.38
    Aug-07 $1,767,716 $732,158 $211,037 $147,008 $0.55
    Nov-07 $1,794,747 $747,866 $203,152 $138,232 $0.52
    Feb-08 $1,933,186 $799,098 $259,442 $172,921 $0.66
    May-08 $1,648,491 $656,000 $118,819 $76,777 $0.30
    Aug-08 $1,853,892 $739,321 $187,421 $119,268 $0.46
    Nov-08 $1,782,683 $692,857 $136,374 $87,700 $0.34
    Feb-09 $1,923,274 $785,058 $231,282 $141,378 $0.55
    May-09 $1,694,340 $666,818 $142,304 $87,172 $0.34

    Here’s a look at the trailing four-quarter earnings-per-share:
    Note the last bump up in the line. It may not look terribly impressive right now but consider how poorly the economy has done, especially in the housing sector. Bed Bath & Beyond is an excellent long-term stock.

  • Greetings from Maine
    , June 24th, 2009 at 4:07 pm

    I just wanted to pop my head in and say hi from the beautiful state of Maine. Unfortunately, it has rained every singe day. The forecast is for still more rain the rest of the week. (The rain in Maine is driving me insane.)
    Still, I’m having a great time just relaxing and not worrying about stocks bouncing up and down. The lake house is really nice. Also, I won’t say that I’m having a large-scale remote control naval/sea war complete with nerf dart guns. But I won’t say that I’m not having one either.
    Bed Bath & Beyond (BBBY) is due to report today but I haven’t seen anything yet. The last earnings report was great and the stock has pulled back since then. Anything below $30 is a good buy, and below $28 is very good.
    Tomorrow will be the GDP report. We’re now at the stage where the first quarter is a long time ago so the report won’t be too important. I’m curious if there will be an upward revision to a horrible quarter.
    If you’ll excuse me, I have to get back to my battle station (ie, deck chair).
    Elfenbein out.

  • Weekend Poll
    , June 19th, 2009 at 1:49 pm

  • Vacation
    , June 19th, 2009 at 11:25 am

    It’s time to head out on vacation. I’m off to a wonderful lakeside cottage in Maine. Best of all, the laptop is staying behind.
    It’s good to take some time off every once in a while so you can recharge your batteries.
    While I’m gone please check out of the folks on my blogroll. I’ll be back in the office on June 28. Have a great week!

  • A New York Times Editorial on 2009 — Written in 1909
    , June 18th, 2009 at 11:47 am


  • Wall Street Is Close to Fully Bionic
    , June 18th, 2009 at 9:28 am

    I, for one, welcome our new computer overlords:

    Investors and pundits are left clutching at straws to explain big moves in the stock market, such as attributing a June 8 bounce to rehashed comments from Nobel Prize-winning economist Paul Krugman. The difficulty in divining a fundamental explanation stems from a structural change in the U.S. stock market: The majority of stock trades now originate with fully automated “high frequency” funds, a phenomenon that has accelerated during the market turbulence of recent years because of the relative success of the strategy.
    These funds employ no traders in the conventional sense. They employ no economists or chart trackers. Rather, programmers at funds such as those operated by Citadel Investment Group and Renaissance Technologies outfit computers with strategies based on obscure mathematical correlations. Then the machines trade in and out of stocks at light speed without human intervention, a departure from the “fundamental” investing model that dominated trading for the last century.
    The growth of these funds is such that institutions whose names have never appeared in the newspaper are now trading hundreds of millions of shares a day. Major hedge funds that have put other strategies on ice are opening new funds devoted to high-frequency strategies and hiring the mathematicians and computer programmers that run them. Some of the fastest-growing market makers, such as Global Electronic Trading Company, or Getco, also use the automated strategies.
    With the rise of these automated funds, the stock market is more prone than ever to large intraday moves with little or no fundamental catalyst. Computers don’t analyze the news (although some strategies use headlines as triggers) or seek to justify their buying and selling. Even in the relative quiet of the last three months, investors have often watched individual stocks or sectors move by 10% or more without explanation.