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I Liked Czar Better

Ken Feinberg's official title is "The Special Master for TARP Executive Compensation."

Posted by edelfenbein at 10:58 AM

Disturbing Stat of the Day

I wasn't aware of this: "Reinhart cited Robert Shiller to the effect that house prices rose more from 2000 to 2006 than in the previous 100 years put together." Yikes!

Posted by edelfenbein at 10:42 AM

NICK Earned 22 Cents a Share

Nicholas Financial (NICK) just came out with earnings and it was another good quarter. The company earned 22 cents a share compared with just eight cents a year ago.

It really is remarkable how cheap this stock is. For the first six months of their fiscal year, NICK earned 43 cents a share. For Q4 of last year's fiscal quarter, they made 20 cents a share, so that's 63 cents for the last three quarters. The big issue to watch for NICK is percentage for credit losses and that fell to 5.84% from 9.86% a year ago. This is the second quarter in a row of declining year-over-year numbers. In other words, things are most likely to get better for them.

Whoever sold out last week was probably expecting some bad news. Well, it didn't come. NICK's book value is now $8.54 a share.

Posted by edelfenbein at 12:35 PM

Aflac Keeps Its Real

I like this stock. I really do:

Aflac Inc., the world’s largest seller of supplemental health insurance, said third-quarter profit more than tripled as investment losses narrowed and a stronger yen magnified revenue from Japan.

Net income rose to $363 million, or 77 cents a share, from $100 million, or 21 cents, in the same period a year earlier, the Columbus, Georgia-based insurer said today in a statement. Operating income, which excludes some investment results, was $1.25 a share, beating the $1.20 average estimate of 17 analysts surveyed by Bloomberg. The stronger yen boosted quarterly profit by 9 cents a share, Aflac said.

Aflac, which gets most of its revenue from Japan, is counting on earnings there and in the U.S. to support capital as the recession pressures the value of investments held to back policies. Chief Executive Officer Daniel Amos is diversifying holdings to reduce potential losses from defaults. Realized investment losses in the third quarter shrank 42 percent to $226 million from a year earlier, Aflac said today.

“They’re still working through some of their issues, but the results look pretty impressive,” said Bill Smead, who helps manage $160 million, including Aflac shares, as chief investment officer of Seattle-based Smead Capital Management. “It’s the beginning of a long process” of improving earnings.

So I guess the world wasn't really going to end for them a few months ago. My only concern is that I didn't load up when the shares were at $11.

The CEO said they're on track to make $4.75 to $4.83 a share for this year and their objective is to grow earnings 9% to 12% next year. That's roughly $5.20 to $5.40 a share. Not bad for a stock going for $42.

Posted by edelfenbein at 10:44 AM

Defending EMH

In today’s Wall Street Journal, Jeremy J. Siegel comes to the defense of the Efficient Market Hypothesis. I agree that blaming EMH for the credit crisis a stretch. There’s a lot wrong with EMH, but I don’t think we can hang our current mess on it.

I’m still skeptical that the government can and should act to break investment bubbles. My issue isn’t EMH-centered, that prices are always right. Instead, I just don’t trust the government nor am I convinced that a burst bubble is for the general good. As Daniel Gross has pointed out, bubbles can be very good things.

This one time, let’s leave EMH alone. To me, the real mystery around EMH isn’t whether it’s true or not, but how could anyone have ever believed it?

Posted by edelfenbein at 9:39 AM

CNBC Debuts!

This is a little painful to watch. It almost looks like a high school AV club.

Posted by edelfenbein at 8:15 AM

Fiserv Narrows Guidance

Simply put: Fiserv (FISV) is a great company. Every quarter, this company delivers. Fiserv just reported Q3 EPS of 92 cents which was in line with the Street’s forecast. For last year’s Q3, they made 81 cents so that’s pretty good growth.

For all of last year, Fiserv made $3.29. In July, they said to expect 2009’s EPS to range between $3.61 and $3.75. Today, the company narrowed the range to $3.63 to $3.68. The market seems a bit freaked out by that (the shares are off about 4% after hours), but I’m not concerned at all. That’s a very small adjustment and we’re still talking about a stock that’s going for about 12 times next year’s earnings.

Fiserv is a very good buy here.

Posted by edelfenbein at 6:49 PM

Eight-Year Trailing GDP Growth

The third-quarter GDP report comes out on Thursday and it might not be completely horrible. In fact, it could be quite good.

Here's a look at the real annualized GDP growth rate for the trailing eight years.

Man, George W. Bush does not look good here.

Posted by edelfenbein at 1:47 PM

No, Earnings Estimates Haven’t Been Lowered

This is an interesting earnings season because so many companies have been topping expectations. Doug Kass writes that the companies are beating expectations because expectations have been lowered. But Bespoke has the numbers and they show that expectations have actually been rising.

Just prior to the market lows in March, however, the net earnings revisions ratio began to tick higher. Earlier this summer, the earnings revisions ratio actually moved into positive territory, which meant anaysts were raising estimates for companies more than they were lowering them. Leading up to this earnings season, the percentage of companies raising estimates hit a two-year high.

Posted by edelfenbein at 8:58 PM

More Problems with Efficient Markets

A sharp-eyed reader picked this up from the San Francisco Chronicle:

If you haven't heard of her by now, Roomy Khan, a former local employee of Rajaratnam's Galleon Group LLP, has emerged as a key government "cooperating witness" in the $20 million insider trading affair. Khan's Bay Area ties include running a hedge fund, Digital Age Capital Ltd., out of her $13 million Atherton mansion which she sold for $9.4 million in May.

If a $13 million mansion recently sold for $9.4 million, then I’m pretty sure it’s a $9.4 million mansion.

Posted by edelfenbein at 8:51 PM

10 highest-paying blue-collar jobs

MSNBC lists the 10 highest-paying blue-collar jobs. I had no idea that the average elevator installer gets $42.08 an hour.

I'm curious if "idle blogger" is considered blue collar.

Posted by edelfenbein at 6:35 PM

Replace the Dollar? Not so Fast.

Vincent Fernando writes that any plan to replace the dollar as the global reserve currency is way too premature.

Despite worldwide consternation, there simply isn't a currency ready to trounce the dollar's reserve status, even if somehow we wanted to change the system.

Why the Euro remains a pipe dream:

USA Today: But for all its attractions, the euro lacks some essential attributes. Although the European Union has a central bank, comparable to the Federal Reserve, there is no European treasury. Instead, there are 27 European treasuries. Investors can't easily track or influence fiscal policy on the continent.

The dollar is also buoyed by the existence of a massive government bond market. There's roughly $4 trillion worth of U.S. Treasuries floating around, and almost $100 billion changes hands each day, according to investment management firm Pimco. Trading that's carried on almost 24 hours a day, rolling east to west from Tokyo to London to New York, makes it easy to move into and out of dollar positions in a hurry.

Europe, by contrast, has no analogue to the U.S. Treasury market. Instead there is a fragmented scene with individual sovereign debt from Germany, Italy, France and other EU members. No individual market enjoys anything like Treasuries' liquidity and size.

Posted by edelfenbein at 10:45 AM

The Case for Buy-and-Hold

Abnormal Returns has a good roundup of links on buy-and-hold. I often hear the argument that buy-and-hold doesn’t work because the market does in fact occasionally down. Yes, that’s true, but the case for buy-and-hold isn’t for a perpetual rally. Instead, it claims that being in stocks all the time is more efficient than a person’s ability to time the market consistently.

Here’s a stat to consider: On average, the stock market’s best day every 100 trading days is roughly equal to the market’s return average return over 100 days. The other 99% of the time, the market is net flat. So to be a good timer, you have to a really, really good timer. And you get no days off.

Posted by edelfenbein at 10:39 AM

I Was Dead Wrong on Amazon

OK, it's time for me to admit that I've been dead wrong on Amazon.com (AMZN). I said the stock was vastly overpriced around $85. It's up $20 today to $113. My hero and mentor, Howard Lindzon, was exactly right and I was wrong.

There you have it. The market abides. Now let's never speak of this again.

(P.S. $113?? Are you nuts???)

Posted by edelfenbein at 10:19 AM

Norway's Tax List Reveals Everyone's Wealth

Norway has a really, really bad idea—they publish the income and wealth of every taxpayer in the country. Everyone.

I not only find this troubling that people can find out everyone’s income, but that somebody would want to know.

One columnist, Jan Omdahl (a man) wrote, “Isn't this how a social democracy ought to work, with openness, transparency and social equality as ideals?”

Um, no.

Let’s just start with the fact that this is an egregious invasion of privacy. On top of that, it’s not even democratic. Less than one-third of Norwegians want the list published.

Posted by edelfenbein at 11:05 PM

The Eddie Murphy Rule

Excerpt from remarks by Chairman Gary Gensler, OTC Derivatives Regulation, Futures Industry Association Annual Expo:

Further, we have recommended that we extend insider trader prohibitions to include parties who receive misappropriated information from any government agency. We call this the Eddie Murphy rule after the movie “Trading Places.”

Still no word on Norbit.

Posted by edelfenbein at 10:49 PM

Lawsuit: Madoff's Workplace was Rife with Cocaine, Sex

All that's missing is rock and roll:

A new lawsuit alleges that convicted swindler Bernie Madoff financed a cocaine-fueled work environment and a "culture of sexual deviance," and he diverted money to his London, England, office when he believed federal authorities were closing in at home.

The lawsuit, filed Tuesday in New York's State Supreme Court, was brought on behalf of former investors and seeks unspecified punitive damages and compensation.

Beyond that, it offers a look at what the plaintiffs' attorneys say was once Madoff's multimillion-dollar empire and what is now his world in a federal prison in North Carolina.

Among the allegations in the 264-page lawsuit are that during the mid-1970s, Madoff began sending employees to buy drugs for company use.

The complaint alleges that some employees and investors were aware of the drug purchases, and that BMIS [Bernard Madoff Investment Services] was known by insiders as the "North Pole" in reference to the excessive amount of cocaine use in the work place.

C'mon. It was the 70s. Who wasn't sending employees out for blow?

Posted by edelfenbein at 10:38 PM

Where has the money gone?

Here's a conversation to contemplate (2:48 mark):

Maria Bartiromo: Where has the money gone?

Elizabeth Warren: We not only don’t know, Maria, we’re not ever going to know.

Posted by edelfenbein at 2:35 PM

Danaher Beats Estimates and Guides Higher

Danaher (DHR) has had a rough year, but the earnings are better than I thought they’d be. Today the company reported 3Q EPS of 89 cents which was three cents better than estimates.

For Q4, the company said to expect EPS between 99 cents and $1.09. That’s pretty good guidance, however the shares seem a bit on the high side. I’m not sure if Danaher will be on the Buy List next year.

Posted by edelfenbein at 1:19 PM

The NICK Sell Storm

I'm not sure exactly what happened, but it appears that someone sold off about 100,000 shares of Nicholas Financial (NICK) this week (some mutual funds follow an October 31 accounting year). The stock didn't take it well. Such are the risks in owning a very small-cap stock. Nevertheless, it's still an excellent stock and the next earnings report should be out in the first week of November.

Posted by edelfenbein at 10:13 AM

Black Thursday—Eighty Years Ago

The Great Depression began 80 years ago. Wall Street suffered Black Thursday on October 24, 1929. (The actual anniversary is Saturday, but since today is Thursday, I’m going for it).

The Dow had peaked on September 3 at 381.17. Traders were even breaking out their Dow 400 hats. Slowly, the market started losing ground. On October 23, the Dow dropped 6.33% to 305.85. Then on Thursday morning, the Dow dropped nearly 11% to 272.32.

In one of the great scenes in Wall Street history, around mid-day on Thursday several bankers got together and had Richard Whitney, the future president of the NYSE, to go down to the exchange and make a great show of buying huge blocks of stock for the pool. Whitney walked across the trading floor placing order far above current prices. A visitor named Winston Churchill watched in the gallery.

The tactic worked and stocks rallied. On Black Thursday, the Dow closed down just 2.1%. Check out this article from The Guardian. Here's the final paragraph:

Most experts claim that there is nothing in the general conditions to warrant pessimism. The deluge of selling today is said merely to have pumped water from a number of highly saturated overvalued securities. But the fact is that today's crash affected good issues as much as bad ones. New York bankers were tonight blaming the panic on the technical inadequacy of the ticker-tape system (Quick! Call Patrick Byrne) in processing such massive volume trading. Whatever the reasons, the spree of easy money and over-confidennce is now over. The bear market has returned with a vengeance, crushing the dreams of an army of small investors some of whom lost everything: 11 speculators are said to have committed suicide.

The following Tuesday, the Dow crashed 12.8%, then another 11.7% on Wednesday bringing the index down to 230.07.
The closing low came on November 13 when the Dow hit 198.69. After that began a sucker’s rally as the Dow topped 290 by mid-April.

On July 8, 1932, the Dow bottomed out at 41.12 for a loss of 89%. An equivalent loss from today would bring the Dow to about 1,075.

Oh, I nearly forgot. That Richard Whitney guy? It turns out he a little embezzlement problem and got his ass locked up in Sing Sing.

Here he is denouncing Securities Exchange Act of 1934. Except for the name of the bill, this speech could be delivered verbatim today.

Posted by edelfenbein at 9:17 AM

From the New Yorker

Posted by edelfenbein at 8:46 AM

So How Was Your Day?

If you're Steve Jobs...pretty good.

Shortly after 2 p.m., before the market tanked, Apple was up 9.71 points to an all-time intraday high of 208.62, and Disney was up .36 points to $29.71, together adding $103.5 million to Jobs' bottom line.

Posted by edelfenbein at 8:19 PM

Newsweek Asks

Was Germany better off under the Nazis? Let's look at key comparisons like forestry and divorces.

Posted by edelfenbein at 7:55 PM

The VIX Is Close to Going Below 20

The VIX has been as low as 20.10 today. We haven't been below 20 since August 29, 2008.

The VIX isn't strongly correlated to market returns. The only exception is that a very low VIX -- lower than 13 -- seems to be good for stocks.

Posted by edelfenbein at 11:43 AM

Buy List Earnings from Stryker, Lilly and SEI Investments

This is a bit strange. Lilly is down today on good news and Stryker is up on bad news. I don’t get it, but I didn’t write the rules.

Eli Lilly (LLY) earned $1.20 a share which was 18 cents better than estimates. The company also raised EPS guidance for next year to $4.30 to $4.40 from their earlier estimate of $4.20 to $4.30. The stock was up in the pre-market but is down now. I have no idea why, but Lilly is a great stock.

Stryker (SYK) is our big winner today. The company said it earned 69 cents a share for the third quarter which matched estimates. The company also cut its 2009 EPS forecast to $2.90 and $3 from $3.12 to $3.22, but that’s hardly a big deal since it’s just one more quarter.

SEI Investments’ (SEIC) business got hit hard last year, but it’s recovering nicely. The company earned 27 cents a share for the third quarter which is a 50% jump from the 18 cents a share it earned a year ago. They beat the Street by two cents a share.

Cognizant (CTSH), Danaher (DHR) and Sysco (SYY) are all at new 52-week highs today.

Posted by edelfenbein at 11:16 AM

No More Historical Comparisons Graphs

Starting today, I refuse to look at any more charts that contain five or more squiggly lines, one labeled 2009, another labeled 1929, another 1974, another 1379. Enough!

These charts were kind of fun to look at a few months ago, but seriously, markets don’t trace out precise patterns from decades ago. On the morning of October 19, 1987, the WSJ famously ran a similar chart comparing the Dow’s current run with the market’s run-up in 1929, but there was one major difference. They altered the x-axis to make it a better fit. Once you start toying around with the data, you can make anything fit.

Posted by edelfenbein at 9:54 AM

NYT: Thin Line Separates Insider Trading and Research

The NYT makes some good points about the Rajaratnam case:

A close reading of the two criminal complaints filed so far, and an associated civil complaint filed by the Securities and Exchange Commission, suggests a web in which hedge fund managers, analysts, corporate executives, and consultants and other people outside Wall Street traded tips — sometimes for money, sometimes for other tips, and sometimes for little more than the promise of unspecified future favors.

Not every trade that the complaint outlines was profitable. In fact, Mr. Rajaratnam’s hedge fund, the Galleon Group, lost millions of dollars buying shares of Advanced Micro Devices, the computer chip maker, after learning that the government of Abu Dhabi planned to invest in A.M.D., according to the complaint. The investment did occur, but A.M.D. stock plunged between August 2008, when Galleon began buying, and October 2008, when the deal was announced.

At other times, Mr. Rajaratnam received information from an unnamed witness who is cooperating with the government investigation. But the complaint does not state whether Mr. Rajaratnam knew the ultimate sources of the information he received from the witness. Nor does it allege that Mr. Rajaratnam paid the witness for the information.

Still, the existence of a cooperating witness — along with the fact that prosecutors wiretapped some of Mr. Rajaratnam’s conversations — gives them a great advantage in the case, said David S. Ruder, a law professor at Northwestern University and a former chairman of the S.E.C. The conversations may help show that Mr. Rajaratnam knew the information was valuable and that he should not be trading on it, Mr. Ruder said.

“It gets you around the mens rea, or state of mind question,” he said. “If you know it’s coming from an insider, or if you have strong reason to believe it’s coming from an insider, you’re in trouble.”

Posted by edelfenbein at 11:05 PM

How to Argue

This is slightly off-topic but I wanted to highlight an excellent post written by Phil Birnbaum at his Sabermetrics Research site. This is one of my favorite blogs on sports statistics. Phil doesn’t post often, but when he does, the posts are consistently outstanding.

In the post, Phil rips apart an argument that purportedly shows anti-French discrimination in the NHL. I certainly understand if the topic isn’t of interest to you. Even if you’re not interested, you may want to check it out because it’s a perfect example of how to argue.

I sometimes think that learning how to present a case is a lost art. Phil’s post is methodical and clear-headed. He sticks to the facts, uses logic and questions assumptions. Reading Phil reminds me why I get so annoyed with people like Matt Taibbi because they take facts out of context, use false symmetries, mix up causation or simply betray their point in froth of “style.” Phil argues the way it should be done.

Posted by edelfenbein at 10:42 PM

CNBC Reports Bogus Press Release

Posted by edelfenbein at 5:14 PM

Fannie Mae, Freddie Mac Price Targets Cut to $0

Keefe, Bruyette & Woods lowered its rating on Fannie (FNM) and Freddie (FRE) to $0.

They also downgraded the stock to "Underperform." Of course, if you think it's going to $0 that makes sense.

Both stocks trade a little over $1.

Posted by edelfenbein at 3:59 PM

S&P 1100

For a very brief moment, the S&P 500 jumped over 1,100, saw its shadow and ran back below.

Someone's been dumping lots of NICK today (and buying it as well). The stock is poised to have its biggest volume today in five months. The ask is currently at $6.88. I wouldn't mind buying more if it goes lower.

Posted by edelfenbein at 3:41 PM

Rosenberg Rewrites History

If you’re in the business of making market calls, you’re going to wrong. That’s just how it is. I’m wrong all the time. So is Jim Cramer. It happens. But I won’t tolerate someone trying to run away from their calls. There’s no excuse for that.

For the second time, David Rosenberg is trying to rewrite history and claim that he was neutral at the bottom. First he claimed it a few weeks ago and again today. As Joe Wisenthal points out, Rosenberg claims he “turned agnostic” in March.

Bullshit. That’s just complete bullshit.

Check out these stories.

March 9, 2009

Merrill Lynch & Co.’s chief North American Economist David Rosenberg said today the S&P 500 may bottom out at 600 in October, lowering his estimate after the benchmark’s decline last week.

April 2, 2009

Based on the outlook for corporate profits and the typical trough P/E multiple that characterized recession bear markets, it would not surprise us to see the S&P 500 gravitate in a 475-650 range for an extended period of time.

At every point, Rosenberg discounted the rally (see here, here and here). After the market experienced a stunning rally, this is what he said in September.

I never did turn bullish enough at the lows, which is true. But I did turn neutral and while I did see the prospect of a complete throw-in-the-towel move towards 600 on the S&P 500, I can recall putting in print that the good news was that the bear market was about 95% over. Why quibble about another 60 points at that juncture. And, in the name of keeping an open mind, in my final report at Merrill Lynch, I played a game of Devil’s Advocate with myself … what if I was unduly bearish?

I didn’t stay bearish at the lows, which is contrary to popular opinion. I was basically neutral. And I continued to — still do, by the way — frame what we have experienced in the context of a bear market rally as opposed to the onset of a new secular bull market (the first you rent, the second you own). I am always skeptical of rallies that are purely premised on technicals and liquidity but bereft of a solid economic foundation. While green shoots did appear in the economic data, all the growth we have seen globally, and in the U.S.A. in particular, has come courtesy of unprecedented government stimulus. We see nothing organically in the economy to get us excited.

I’ll quibble about 60 points because it was a lot more than 60 points. We’re now up more than 400 points since then and Rosenberg said that bottom could come in October (i.e. now).

You simply can’t say that you’re neutral but you see the prospects of a big move down. That statement makes no sense. It can be used to say anything, which is another way of saying it means nothing.

If the market were at a new low now, then I doubt Rosenberg would say he had truly been agnostic in March.

Posted by edelfenbein at 2:13 PM

Buy List +38%

Thanks to today’s rally, the Buy List is up 38.2% for the year. Sysco (SYY), Danaher (DHR) and Cognizant (CTSH) are all at new 52-week highs. Eaton Vance (EV) hit one earlier today and Amphenol (APH) isn’t far behind. Nicholas Financial (NICK) has traded at $7 a share several times over the past two months but can’t seem to get one penny above it.

Posted by edelfenbein at 12:28 PM

Loonie Closing in on Greenback

While Wall Street is celebrating the Dow being over 10,000, there's another milestone coming up: The Canadian dollar is about to reach parity with the U.S. dollar.

Seven years ago, a loonie was worth about 60 cents.

Posted by edelfenbein at 11:23 AM

Technical Analysis Strikes Out

A new paper finds that technical analysis is pretty much a dud around the world.

Technical analysis is not consistently profitable in the 49 countries that comprise the Morgan Stanley Capital Index once data snooping bias is accounted for. There is some evidence that technical trading rules perform better in emerging markets than developed markets, which is consistent with the finding of previous studies that these markets are less efficient, but this result is not strong. While we cannot rule out the possibility that technical analysis compliments other market timing techniques or that trading rules we do not test are profitable, we do show that over 5,000 trading rules do not add value beyond what may be expected by chance when used in isolation.

(HT: Alea)

Posted by edelfenbein at 11:17 AM

22 Years Since the 1987 Crash

It was 22 years ago today -- October 19, 1987 --that the market busted. The Dow plunged 508 points, also on a Monday.

As it turned out, the crash was an excellent buying opportunity as the market can surging for another 12-1/2 years.

If you bought the day after the crash, you would have improved your annualized return by 1.25%.

Posted by edelfenbein at 11:02 AM

You Know It's Bad...

...when the Catholic Church files for bankruptcy.

Catholic Diocese of Wilmington files for Chapter 11

Catholic Diocese of Wilmington Inc filed for Chapter 11 bankruptcy protection, court documents showed.

In a filing with the U.S. Bankruptcy Court for the District of Delaware on Sunday, the diocese listed estimated assets in the range of $50 million to $100 million and estimated liabilities in the range of $100 million to $500 million.

Posted by edelfenbein at 12:46 AM

Time to Bury MPT

Any idea for ditching Modern Portfolio Theory gets a thumbs-up from me, and it gets two thumbs up if it’s from David Merkel.

David says it’s time to put MPT and beta in their grave. He suggests a “contingent claims theory.” If I have him right, we ought to view equity, not as a separate animal, but as simply the next point on the process of debt. Equity is the folks who get paid last so they get the highest yield.

I like the logic, but my question is—what if a firm has little or no debt?

Update: David responds:

Good question. The total volatility of a firm can be broken up into three pieces: financial leverage, operating leverage, and sales volatility. Saturday’s piece dealt with financial leverage and its costs. An unlevered firm in the financial sense still possesses operating leverage and volatility of sales. Different unlevered firms have different costs of equity capital because they have different levels of sales volatility, and different degrees of operating leverage.

That will manifest itself in option implied volatility, which is a crude measure of what people would pay to gain and lose exposure to the equity of the company. The cost of equity should be positively related to that. More volatile companies should have a higher cost of equity.

Another way to look at it is to ask what is the effect on the firm if the company issues or buys back equity. How much does the generation of free cash flow change relative to the price paid or received for equity?

Posted by edelfenbein at 11:10 PM

We go to gain a little patch of ground that hath in it no profit but the name

Christopher Hitchens reviews Peter Hart's The Somme: The Darkest Hour on the Western Front:

From Hart’s book I was able to learn and grasp (and even picture) the historic importance of the “creeping,” or perhaps better say “staggered,” barrage. The descriptions one has so often seen, of entire ranks and files of British infantry lying dead almost symmetrically, like so much freshly scythed wheat, are all true. But these men were being expended while the British artillery struggled to evolve a system of covering bombardment that “walked” in front of them, smashing trench after trench and clearing them a path. Painstakingly leading us through a series of terrible engagements, Hart succeeds in showing how the gunners got steadily better (as did the guns). He also succeeds in giving one an enhanced respect for the German soldiers who held positions under this unbelievable rain of fire and were still—almost always—ready to fight. Sometimes they were too stunned and deafened and dazed to do anything but surrender, or rather, try to do so. An unpleasantly recurrent theme in the diaries and letters of British soldiers—Niall Ferguson has also been able to be honest about this often-avoided question—is the casual or even gloating way in which the Tommys boasted of killing German prisoners.

In America, World War II is really the Great War, but I've become convinced that World War I was the worst thing to ever happen in the history of the world.

Posted by edelfenbein at 2:26 PM

Stephen Colbert on Dow 10,000

(HT: Kedrosky)

Posted by edelfenbein at 1:19 PM

The Idiot-Maker Rally

The stock market's rally since March caught a lot of people off guard. I'm still waiting for the mega-bears to grovel before Jon Stewart and promise to do better. I'm not holding my breath.

John Carney at Clusterstock has a great round-up of folks who were made to look silly by the rally.

Posted by edelfenbein at 9:29 AM

Investor Quiz

How many times has the Dow crossed 10,000?

26.

Posted by edelfenbein at 1:49 PM

Inflation Still Contained

The government reported on consumer prices for September:

Inflation pressures remained modest in September even though gasoline prices edged higher.

The Labor Department said Thursday that consumer prices rose 0.2 percent last month, matching economists' expectations. Prices excluding energy and food were also up 0.2 percent, slightly higher than the 0.1 percent increase analysts had forecast.

Over the past 12 months, consumer prices are actually down 1.3 percent, reflecting a severe recession which has kept a lid on price pressures across a wide range of products and services.

The core inflation rate, which ignores food and energy prices, comes in for a lot of ribbing, but it is useful. Take a lot at the headline inflation rate (blue) compared with the core rate (black) and you can see how much more stable it is:

The core rate hasn't left range between 1% and 3% in 14 years.

Posted by edelfenbein at 1:11 PM

Earnings from Baxter and Amphenol

Earnings season is kicking into high gear and we had two earnings report from our Buy List stocks this morning.

First up is Baxter International (BAX). For the third quarter, the company earned 98 cents a share which is one penny ahead of estimates. The problem is that sales came in at $3.15 billion which is just below estimates of $3.19 billion. The company said to expect Q4 earnings between $1.02 and $1.04. The consensus is $1.04. The stock is down about 3.5% today which doesn’t make a lot of sense to me.

This was a good report and BAX is doing very well. Since Baxter usually provides precise guidance, it doesn’t often deliver a big earnings surprise. The stock is currently going for about 13 times next year’s earnings which is a good deal.

Amphenol (APH) is also lower today after beating earnings. The company reported earnings of 47 cents a share which was a big drop from 63 cents a share one year ago. Fortunately, that came in four cents above the Street’s estimates. Sales dropped 17% but analysts were expecting an even large drop.

For Q4, APH sees earnings ranging between 47 and 49 cents a share, and revenue between $720 million and $735 million. The Street was expecting earnings of 47 cents a share on revenue of $711.6 million.

Finally, Donaldson (DCI) doesn’t report until November but the shares are up today thanks to an upgrade from Credit Suisse. The analyst raised his price target from $28 to $41.

Posted by edelfenbein at 11:02 AM

Dow 10,000

We did it! The Dow cracked 10,000.

The Dow first broke 10,000 more than 10-1/2 years ago.

Posted by edelfenbein at 1:22 PM

The Countdown to Dow 10,000

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Posted by edelfenbein at 11:55 AM

S&P 500 Above 1080

Thanks to Intel’s (INTC) impressive earnings report, the market is up again today. As a rule, Octobers following presidential elections don’t have a great history for Wall Street, but this October is defying expectations.

The S&P 500 is currently up to 1083 which is about 60% above the March 9 closing low. I’ve been amazed that there are folks who have dismissed this rally from the get-go. Why aren’t they groveling to Jon Stewart? Where’s the public anger at them?

As impressive as this rally has been, we’re still a long way from where the market was. Going back to the beginning of 2008, the S&P 500 is still down by about 25%.

Posted by edelfenbein at 10:45 AM

Man who threatened Options Exchange guard with can of beer arrested

The right to beer arms.

A homeless man was charged with assault after allegedly raising a can of beer threateningly at a security guard and yelling obscenities at Chicago Board of Options Exchange patrons Monday night in the Loop.

The 43-year-old man who lives at the Pacific Garden Mission was charged with misdemeanor aggravated assault, according to police who said the man was arrested on a sidewalk on the 440 block of South LaSalle Street outside the CBOE.

Police were not immediately releasing the man's name.

At 9:30 p.m. a CBOE security guard told police he saw the man using obscenities and verbally abusing patrons of the exchange, according to police.

The guard asked the man to leave the premises and the man was taken into custody after allegedly yelling at the guard, acting violently and raising a can of beer towards him in a threatening way, according to police.

No injuries were reported.

Posted by edelfenbein at 3:34 PM

Earnings Preview for Baxter International

From AP:

Specialty drug and device maker Baxter International reports its third-quarter 2009 results Thursday morning. The following is a summary of key developments and analyst commentary for the period.

OVERVIEW: Baxter announced several high-profile product launches and agreements during the last three-month period.

Last week the Deerfield, Illinois-based company said authorities in the European Union approved its swine flu vaccine. Baxter said preliminary trials of the Celvapan H1N1 vaccine is "well tolerated" by patients 18 and older.

Baxter along with Sanofi-Aventis SA, GlaxoSmithKline PLC and several other pharmaceutical companies are rushing vaccines onto the market as governments around the world brace for a swine flu pandemic. Baxter has contracts to produce the vaccine for several countries in Europe, but not the U.S.

BY THE NUMBERS: Baxter said in July it expects to report earnings of 95 to 97 cents per share for the third quarter.

ANALYST TAKE: Analysts surveyed by Thomson Reuters have earnings per share of 97 cents per share on revenue of $3.2 billion.

WHAT'S AHEAD: Baxter has already begun making shipments of its H1N1 vaccine to countries with which it has contracts, including Ireland and the U.K. The company is now studying whether a single dose of the vaccine will be enough to prompt an immune response to the flu.

Posted by edelfenbein at 12:13 PM

Madoff Gets in Prison Fight

And it was over stocks!

Bernie "The Bruiser" Madoff got into a prison-yard tussle with a fellow inmate over -- of all things -- the stock market, eyewitnesses told The Post.

And, by inmates' accounts, the 71-year-old Ponzi schemer came out the winner.

Madoff, serving 150 years at the Butner, NC, federal prison, was heard last week getting into a heated debate over the state of the market with another senior-citizen jailbird.

The shouting match got so heated that the inmate pushed Madoff, who shoved back harder with both hands, causing his attacker to stumble.

As the attacker tried to stand up straight, Madoff hovered over him red-faced and glaring, eyewitnesses said.

The stunned attacker went chicken and took off -- allowing Madoff to collect some "cred" among his fellow prisoners.

"I didn't think Bernie had it in him. He got the best of him; he was really aggressive, and the other guy was in shock that he fought back," an inmate said.

The shoving match occurred near a ball field at the lockup in front of about 20 inmates during a rare time when prison guards weren't watching.

An inmate said the two got lucky because if guards had seen the fight, Madoff and his pushing partner "would have went in the 'hole,' " solitary confinement.

The next day, Madoff and his attacker, described by inmates as a white male over 60 years old, made up and were spotted hanging out together.

Prisoners interviewed by The Post said this was the first known physical altercation at the slammer for Madoff -- who paid a consultant for a crash course in prison culture and survival tips before he was locked up.

Posted by edelfenbein at 12:10 PM

The Microcredit Myth

Three years ago, Mohammad Yunus won the Nobel Peace Prize for his work in micro-finance. This was the idea that you could help the world’s poor, not by large aid projects, but by small loans to poor people in the Third World. The idea is extremely popular.

There’s just one problem—it doesn’t work:

But two new research papers suggest that microcredit is not nearly the powerful tool it has been made out to be. The papers, by leading development economists affiliated with MIT’s Jameel Poverty Action Lab, have not yet been published, but they are already being called the most thorough, careful studies yet done on the topic. What they find is that, by most measures, microcredit does not offer a way out of poverty. It helps a few of the more entrepreneurial poor to start up businesses, and at the margins it may boost the profits of existing microenterprises, but that doesn’t translate into gains for the borrowers, as measured by indicators like income, spending, health, or education. In fact, most microcredit clients actually spend their borrowed money not on a business, but on household expenses, on paying off other debts or on a relatively big-ticket item like a TV or a daughter’s wedding. And while microcredit champions point to microloans as a tool for empowering women, the studies see no impact on gender roles, and find evidence that if any one group benefits more, it’s male entrepreneurs with existing businesses.

Posted by edelfenbein at 9:20 PM

Stocks Soar, VIX Plunges

The S&P 500 (^GSPC) broke out to a new 52-week high today. We’re now up to 1078. If you’re into the number stuff, that’s almost exactly the Golden Ratio times the March intra-day low (666.79 * 1.618 = 1078.89). Spooky!

The VIX is below 23 again. The low point today was 22.67. During 2009, we’ve been lower intra-day, but not on a closing basis. If this holds up, the VIX will close at its lowest level since last September, just before Lehman went under.

Posted by edelfenbein at 11:47 AM

Econ Nobel Goes to Two Americans

Congratulations to Elinor Ostrom and Oliver E. Williamson.

The prize committee cited Elinor Ostrom of Indiana University “for her analysis of economic governance, especially the commons,” and Oliver E. Williamson of the University of California, Berkeley, “for his analysis of economic governance, especially the boundaries of the firm.”

Ms. Ostrom becomes the first woman to win the prize for economics. Her background is in political science, not economics.

“It is part of the merging of the social sciences,” Robert Shiller, an economist at Yale, said of Monday’s awards. “Economics has been too isolated and these awards today are a sign of the greater enlightenment going around. We were too stuck on efficient markets and it was derailing our thinking.”

The prize committee, in making the awards, seemed to be influenced by the credit crisis and the severe recession that in the minds of many mainstream economists has highlighted the shortcomings of a unregulated marketplace, in which “economic actors,” left to their own devices, will act in their own self-interests and in doing so, will enhance everyone’s well-being.

The committee, in effect, said that theory was too simplistic and ignored the unstated relationships and behaviors that develop among companies that are competitors but find ways to resolve common problems. “Both scholars have greatly enhanced our understanding of non-market institutions” other than government, the committee said.

“Basically there is a common understanding that develops even among competitors when they are dealing with each other,” Mr. Shiller said, adding “when people make business contact, even competitors, they can’t anticipate everything, so an element of trust comes in.”

That is what the Nobel committee recognized, he said, in citing Mr. Williamson and Ms. Ostrom.

Posted by edelfenbein at 11:05 AM

The Market Is Not Overvalued

Joe Weisenthal notes David Rosenberg’s comments that the stock market is overvalued. I’m sorry, I just don’t see how you can argue against this market on a valuation basis. Could there be a double-dip? Sure, that’s a risk and I can’t say how large. But the idea that the market is not only high, but dangerously high, makes no sense to me.

Rosenberg writes:

While we will not belabour the point, when all the write-downs are included, the trailing P/E on “reported” earnings just widened to its highest levels in recorded history of nearly 140x (see chart below), which is three times the levels prevailing during the height of the tech bubble.

Yes, but that’s extremely depressed trailing earnings. When the economy tanks like that, these metrics lose some of their usefulness. Also, whenever the stock market initially spikes, it’s common for the P/E Ratio to rise since stocks are going up while earnings are still going down.

Rosenberg notes this criticism and compares today’s valuations to previous depressed earnings environments. Still, outside the great depression, the historic comparisons aren’t in the ballpark. Once we get Q4 2008 off our backs, then things will start to look like normal and we can again use traditional metrics again.

Another fact that the valuation argument must address is the low interest rates. As interest rates go down, valuations tend to rise in order to be competitive so I would expect higher multiples.

Rosenberg rightly notes that relying on future earnings is tricky since these are rarely correct. That’s true, but this is a crucial point and it goes back to my disagreements with Nassim Taleb. The forecasts and models don’t need to be perfect. They simply need to be reasonable.

In making a valuation judgment we need to make reasonable assumptions. For example, I recently said that corporate profits are likely to grow faster than the economy for the next few quarters (say three year).

Here’s a look at corporate profits’ share of GDP.

As you can see, it looks to be below trend. Note that I’m not predicting exactly where it will go, but based on past info, I’m making an assumption that profits will take up a larger share of the economy in near future.

This is why I believe the Street estimates of $92 earnings for the S&P 500 in 2011 are reasonable, which makes the market well priced, if not a little on the cheap side.

Posted by edelfenbein at 10:45 AM

Mortgage Rates in U.S. Fall to 4.87%

Wow!

Mortgage rates for 30-year fixed U.S. home loans fell for the second consecutive week, pushing borrowing costs to near record lows.

The average U.S. 30-year rate dropped to 4.87 percent from 4.94 percent last week. The 15-year rate was 4.33 percent, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement.

Falling rates helped boost home-loan applications last week to the highest level since May. The Mortgage Bankers Association’s index of applications to purchase a home or refinance rose 16 percent. Rates around 5 percent, slumping home prices and a government tax credit for first-time homebuyers are bolstering demand for housing.

Posted by edelfenbein at 10:19 AM

Obama Wins Nobel Peace

Congratulations to President Obama on winning the Nobel Peace Prize. Strangely, this comes on the same day that we bombed the Moon.

My guess is that he won't win the prize in economics. (By the way, here are the odds for that.)

Posted by edelfenbein at 9:25 AM

Economics Fail: Forbes Edition

Congratulations Forbes, you're today’s winner of our economic illiteracy prize! Boy, this one is a doozy. They ran a remarkably silly article titled Countries Billionaires Could Buy. Here’s a typical brain-hurting passage:

Castles in France. Islands in the Caribbean. Private jets. With a collective $1.27 trillion at their disposal, the members of The Forbes 400 could buy almost anything.

How about a country? A quick glance at the CIA Fact Book suggests the individual fortunes of many Forbes 400 members are as big as some of the world's economies.

Bill Gates, America's richest man with a net worth of $50 billion, has a personal balance sheet larger than the gross domestic product (GDP) of 140 countries, including Costa Rica, El Salvador, Bolivia and Uruguay. The Microsoft visionary's nest egg is just short of the GDP of Tanzania and Burma.

Yes, they’re confusing net worth with GDP.

Ok class, turn to page 208 of N. Gregory Mankiw’s Principle of Macroeconomics for a definition of gross domestic product:

Gross domestic product (GDP) is the market value of all final goods and services produced within a country in a given period of time.

In other words, net worth = stuff you have; GDP = stuff you make. It’s like confusing the price of the stock with its earnings.

The net worth of a country is far larger than what it produces in a single year. Not only is Costa Rica wealthier than Bill Gates, it’s a lot wealthier. Furthermore, the comparison between a western billionaire to a developing country is heavily skewed due to the Penn Effect.

Posted by edelfenbein at 7:37 AM

Stocks Vs. Bonds—Another Look

One very simple way of looking at the stock market’s valuation is to compare it with how well long-term bonds have been doing. Over the long haul, stocks have outperformed bonds by a bit but that fact has been thrown into disarray this decade. Since the market peaked in March 2000, bonds have pummeled stocks. In fact, bonds have beaten stocks so badly that they’ve erased the entire lead accumulated over the past 40 years.

Here’s the fact that surprised me. While stocks have rallied since March, the rally when compared with bonds was dramatic but short. Stocks only beat bonds from March 5 to May 8 (I’m using VFINX for my stock proxy and VWESX for my long-term corporate bond proxy). Since May 8, bonds have slightly beaten stocks plus they’re far less volatile.

Posted by edelfenbein at 1:58 PM

Ken Lewis Resigns

The Onion takes a closer look:

Once heralded as a shrewd innovator, embattled CEO Ken Lewis is now leaving Bank Of America. Here are some key missteps from the past 18 months that have cast a pall over his tenure:

* Thought bank had so much more money than it actually did
* Accidentally set the Canton, OH branch on fire during a visit
* Mailed out millions of checks that incorrectly read "Bank of Armenia"
* Problems involving banks, America
* Caught placing cameras in Bank of America's women's locker room
* Bank of America cash registers consistently $10 short on his shift
* Idea to have ATMs beep incessantly has driven away tens of thousands of irritated customers
* Worldwide economic collapse

Posted by edelfenbein at 11:45 AM

Moron Attacks Peter Schiff

I've had my disagreements with Peter Schiff but this attack on him is just plain silly.

Posted by edelfenbein at 11:27 PM

Carney Vs. Taibbi

There’s a nice little blog war going on between Matt Taibbi and John Carney over naked short selling, and Carney is mopping the floor with him.

Taibbi posted a video which he claimed show a trader placing a naked short sale. Well, not a short sale exactly but a locate. And this proves that naked shorting is fraudulent because, well, I don’t get that part.

The only point that I see is that the software the trader uses isn’t worth a damn. It claims to have instantly found a bazillion shares of Citi. Taibbi claims it’s Penson though that’s not the case.

Carney writes:

Importantly, this trade would have to be put through some broker who would have the responsibility to check whether the shares could reasonably be located in the amount requested. The speed with which this transaction takes place implies that it is a fully automated system that processes trades that would then have to be passed on to an actual back-office at a brokerage where much a much slower review would take place. And at the brokerage, putting aside an egregious human error (which is always possible), the trade would have been rejected.

As I see it, this is like posting a video of guys wearing ski masks standing outside a bank and claiming it’s a video of a hold-up. No, I mean it could be a video of a hold-up. Impressed? Me neither.

More from Kid Dynamite:

Daily, traders and brokers will obtain a list of easy to borrow stocks, which get loaded into their trading system. If you go to short GE, it's on the "easy to borrow list," and as long as you don't try to short 10,000,000,000 shares, you won't have to call your stock loan department to "borrow" shares to short - everyone knows the stock is readily available. Other stocks, however, like Citi (which is almost certainly the stock in Taibbi's video) can at times be difficult to borrow - like during the summer when they were doing an exchange of preferred stock for common stock, and everyone wanted to be short the common (and long the preferred) to arbitrage the spread between the two share classes.

So, if you try to short Citibank (a few months ago), any good execution system will check its easy to borrow list, see that Citi is not on the list, and ask you where your "locate" is from - in other words, which broker agreed to lend you the stock. There are also many electronic systems where you can request a stock locate electronically - but this is not what's in Taibbi's video! What the video clearly shows is that the stock in question (let's call it C) is on the hard to borrow list. The trader gets a warning message saying that the stock needs to be borrowed, and asking for the trader to either submit the borrow information or elect not to submit the trade.

The trader in the video is NOT submitting a request for the stock to be borrowed - he's entering information into an audit trail point asking WHO the stock was borrowed from, HOW MUCH was borrowed, and WHEN it was borrowed - exactly to prevent problems related to naked short selling! This way, if the seller fails to deliver shares, the broker can easily pull the exact reference that was used for the short sale. Of course, just because I say that I was able to obtain a locate for a gajillion shares of C doesn't mean that I actually was able to - and that's why especially hard to borrow stocks should have another level of compliance checking embedded in them. If this trading system in the video allowed a trader to claim a locate that was clearly impossible, then that's a condemnation of the inadequacy of this trading system - not of the borrow market and the legitimacy of short selling. Fortunately, there was no naked short sale of tens of billions of shares of C on this trade, and Taibbi's post is a gigantic misunderstanding of what was actually going on.

Posted by edelfenbein at 10:43 AM

Gold Makes New All-Time High

The price of gold is up strongly today to nearly $1,040. Gold and the S&P 500 had been tracking each other, but the S&P took a big lead over the summer. Now it's close again. The S&P 500 is only about 14-15 points above gold.

In March 2008, gold reached a peak over $1,000 an ounce but it pulled back to nearly $700 by November. Since then, the price of gold has gradually climbed higher.

Posted by edelfenbein at 10:16 AM

The Market Is Still Cheap

Can profits grow faster than the economy forever?

The answer is no, but profits can grow faster than the economy for some time and that’s pretty much what the market is expecting.

For 2009, the S&P 500 will make around $55 to $60 a share. For 2010, earnings will probably be around $75 a share. For 2011, and now it’s starting to become hard to forecast, Wall Street sees earnings at $92 a share.

If that’s correct, then the stock market is still pretty inexpensive. At 15 times earnings, $92 a share translates to 1380 for the index by the end of 2011. If we discount that by 8% to today (I get 8% by adding a 3% premium to 5% which is about where AAA corporates are), we get 1160. That’s more than 12% from where we are today.

Of course, this assumes that there will be no double dip. If that comes along, then all bets are off.

Posted by edelfenbein at 12:10 PM

Government report questions rescue claims

Remember when the government gave $125 billion to nine large banks and said not to worry because the banks were healthy? Yeah, about that.

Posted by edelfenbein at 8:09 AM

Summers Profile in the New Yorker

I admit I haven’t yet read Ryan Lizza’s massive profile on Larry Summers in the New Yorker. When I say “massive,” I’m not joking—this thing is over 11,000 words.
I hope to get to it later today.

Posted by edelfenbein at 7:49 AM

Stocks Are Wrong But Roubini Is Right

Bloomberg quotes Nouriel Roubini, “Markets have gone up too much, too soon, too fast.” Well, that’s one way of putting it.

I think it’s more accurate to say that Roubini’s forecasts were too bearish for too long.

So how’s the market been doing for the last seven months?

The global equity rally has added about $20.1 trillion to the value of stocks worldwide since this year’s low on March 9. Governments have poured about $2 trillion of stimulus into the global economy while central banks have cut interest rates to close to zero in efforts to revive growth.

“In the short run we need monetary and fiscal stimulus to avoid another tipping point and to avoid deflation, but now this easy money has already started to create asset bubbles in equities, commodities, credit and emerging markets,” Roubini said. “For the sake of achieving growth stability again and avoiding deflation, we may be planting the seeds of the next cycle of financial instability.”

Posted by edelfenbein at 7:04 AM

"California is on the verge of becoming the first failed state in America."

From the Guardian:

California has a special place in the American psyche. It is the Golden State: a playground of the rich and famous with perfect weather. It symbolises a lifestyle of sunshine, swimming pools and the Hollywood dream factory.

But the state that was once held up as the epitome of the boundless opportunities of America has collapsed. From its politics to its economy to its environment and way of life, California is like a patient on life support. At the start of summer the state government was so deeply in debt that it began to issue IOUs instead of wages. Its unemployment rate has soared to more than 12%, the highest figure in 70 years. Desperate to pay off a crippling budget deficit, California is slashing spending in education and healthcare, laying off vast numbers of workers and forcing others to take unpaid leave. In a state made up of sprawling suburbs the collapse of the housing bubble has impoverished millions and kicked tens of thousands of families out of their homes. Its political system is locked in paralysis and the two-term rule of former movie star Arnold Schwarzenegger is seen as a disaster – his approval ratings having sunk to levels that would make George W Bush blush. The crisis is so deep that Professor Kenneth Starr, who has written an acclaimed history of the state, recently declared: "California is on the verge of becoming the first failed state in America."

Posted by edelfenbein at 3:23 PM

47% of Households Pay No Income Tax

The Tax Policy Center reports that 47% of American households pay no federal income tax. The original figure was 38% but it was bumped up thanks to the stimulus.

Actually, the number is a little misleading since it excludes payroll taxes. The Tax Policy Center says that once that's factored in, 24% of households are tax free.

Posted by edelfenbein at 3:15 PM

Update on First Day of the Month

Yesterday was a tough beginning for the month of October. September also started on a downbeat. However, the strategy of investing on the first day of the month has been a big winner this decade.

Cumulatively, the market is up over 20% on the first day of the month while the S&P 500 is still down about 30% for the decade.

Posted by edelfenbein at 11:25 AM

All About Naked Short Selling

Naked short-selling is one of those topics that gets people angry mostly because they don't understand it. It's not counterfeiting. In fact, it helps the market a great deal and it's almost exactly the same as regular shorting.

Fortunately, John Carney has spelled out the details in a great post: Everything You Ever Wanted To Know About Naked Shorting But Were Afraid To Ask.

Here's more on naked shorting from the SEC's website:

Naked short selling is not necessarily a violation of the federal securities laws or the Commission's rules. Indeed, in certain circumstances, naked short selling contributes to market liquidity. For example, broker-dealers that make a market in a security4 generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example, if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time.

Posted by edelfenbein at 10:59 AM