I haven’t drilled down on the numbers but it looks like Seneca is going for about seven times earnings. Best of all, this is one of those stocks that’s almost completely ignored by Wall Street.

If you have the time, you can listen to a 42-minute presentation Seneca gave to Merrill Lynch’s Consumer Conference yesterday.

Looking at this, I can't help but think it's the Treasury equivalent of the Internet bubble from 10 years ago.

I'm not a bond investor but I won't even think of investing in any bond that had a real return of less than 2%. According to the bend of the current curve, the TIPS yields won't reach 2% for another four years. They won't even turn positive for another two years.

The combined record of the Buy Lists going back to 2006 has made a capital gain of 17.65% which takes out our previous high of 17.46% set on December 24, 2007.

Over that same time, the S&P 500 has lost -8.23%.

At our low point, exactly one year and one day ago, the Buy List had lost 50.36% of its value. Since then, we’re up 101.76%.

That’s just capital gains. If you include dividends, our Buy List is up 22.14% compared with a gain of just 0.39% for the S&P 500.

If add in Dupont (DD), the correlation jumps to 80.5%. (Note this is average daily change, so it assumes you invest equal amounts each day.)

If you add is Disney (DIS), the correlation rises to 85.4%.

Now the extra correlation really is hard to come by. If you add ExxonMobil (XOM), the correlation rises to 88.9%.

Still more?

If we add American Express (AXP) the daily correlations rises to 90.6%.

Verizon (VZ) brings it up to 92.6%.

If you want to go for seven stocks, IBM (IBM) will bring you up to 94%.

Now we’re almost out of room. Wal-Mart (WMT) will bring our eight stock index fund up to a 95% daily correlation with the S&P 500. This is, of course, an equally weighted fund.

If you want the extra 5% so you can be perfectly correlated with the index, just add 492 stocks and value weight them.

Imagine that your stockbroker - or the friend who’s always giving you stock tips - called and told you he had come up with a new investment strategy. Price-to-earnings ratios, debt levels, management, competition, what the company makes, and how well it makes it, all those considerations go out the window. The new strategy is this: Invest in companies with names that are very easy to pronounce.

This would probably not strike you as a great idea. But, if recent research is to be believed, it might just be brilliant.

(HT: Timmay Sykes)

This shows the company’s pre-tax profit (in millions) along with the provision for credit losses. What you see is just how damaging the credit loss provisions have been.

I think it’s interesting that when you combine the two, you can see that NICK’s business appears to be fairly stable. You can also see that the credit loss provisions are declining rapidly. If they get back to the level of 2006 then NICK will be much more profitable.

If the credit loss provisions were to run at the same rate today as they did in 2006, that would be an extra $2 million a quarter in pre-tax profits. Roughly speaking, that’s about 10 cents a share after taxes.

On top of that, there’s an acceleration effect. The better NICK’s business is now, the better it will be in the future. That’s because the more money going to the bottom line means that NICK will have more money to grow its portfolio.

A lot depends on how well the economy improves. If things keep going as they are now, then NICK should earn at $1 a share this year, with the ability to earn as much as $1.20 a share. That’s not bad for a stock going for $7.50 a share.

On the first anniversary of the bull market, E.S. Browning looks at the valuation debate between economists Robert Shiller and Jeremy Siegel. Not surprisingly, Dr. Shiller thinks the stock market is expensive and Dr. Siegel thinks it’s cheap.

Both men have held their positions for quite some time. For the last decade, Shiller has clearly won the debate (while Dr. Siegel has made some sloppy mistakes).

Despite Shiller’s accuracy, I’m skeptical of his methodology (after all, a person can be right for the wrong reasons). He relies on the market’s P/E Ratio with earnings going back 10 years. That seems too far for me. Plus, I suspect (both I’m not convinced) that earnings multiples need to be higher compared with decades ago. Shiller is very good at getting tons of data, often from many decades ago, but I’m not so sure such long-term comparisons are helpful. The economy and markets are quite different from the 19th century. Stocks are much safer compared with bonds and that difference should be reflected in valuations.

In fact, higher earnings multiples are nothing new for the market provided that you ignore the inflation racked period from 1966 to 1982. Earnings multiples started to rise in the 1950s and reached very elevated levels in the early 1960s. I think people forget that because the market didn’t suffer a severe reckoning until the 1970s (though there were some painful episodes in between).

Once inflation started creeping into the economy, interest rates soared and earnings multiples took a tumble. However, once Paul “Big Paul” Volcker squeezed inflation from the economy, multiples slowly resumed their climb back to JFK levels. The problem with that analysis, of course, is that you’re adjusting for a heck of a lot of data. So has the normal level for P/E Ratios been around 18 or so for the past 50 years with the inflation era as an aberration? Or are there natural 15 to 20 year periods of multiple expansion and compression? I lean toward the first, but I’m far from certain.

Siegal’s research centers around the fact that stocks have returned 7% a year adjusted for inflation. I’ve used that figure myself many times and it’s interesting to see how we’re doing against the long-term trend. In fact, when you adjust the market’s total return against a 7% trend line, it looks suspiciously like a P/E Ratio chart.

The problem with this method is that it assumes past data is an unbroken trend and all subsequent deviations have been corrected by reversions to the mean. That’s where I hold up a red flag. On top of that, the deviations from the long-term trend are very extreme. If the market can be so vastly out-of-whack from where it should be and for so long, then what’s the point? As an investor, I want to know what looks good right now.

My view is that I’m leery of all market forecasts. I tend to be on the bullish side simply because long-term interest rates continue to be low (Moody’s AAA Corporate Bond Index is currently around 5.2%), the market doesn’t expect a major resurgence of inflation anytime soon (the TIPs spread is fairly quiet) and the yield curve continues to be very wide (all of the market’s capital gains have come when the 3-month/10-year Treasury spread is over 65 basis points—the spread is currently at 355 points).

Still, I’m not investing in the entire market. My advice for investors continues to be to focus on high-quality stocks. The market's dislocation has left us some bargains. Some of my favorite stocks include AFLAC (AFL), Nicholas Financial (NICK), Dean Foods (DF) and Reynolds American (RAI).

Actually, I did see it but still didn’t pull the trigger. These are the trades that really annoy me. Here’s what I wrote last June after HD raised guidance:

Last year, HD earned $1.78 a share. In May, the company said that it expects to see EPS fall by 26% and sales to fall by 9%. That translates to full-year earnings of $1.32. Today they said to expect EPS to fall by 20% to 26%. A 20% drop works out to $1.42 which is slightly above Wall Street’s consensus of $1.40.

Make no mistake, this isn’t great news but it’s not awful and all the news until now has been awful. HD’s earnings peaked in 2007 at $2.83 a share so we’re going to see earnings fall in half—so has the stock price.

At its current price, I wouldn’t say Home Depot is a good buy, but it’s not unreasonable to see year-over-year earnings increases within a few quarters. If there’s more good news from HD, it could be a good buy before the end of the year.

The good news did come. HD beat earnings in August, November and a very nice beat a few weeks ago (24 cents per share vs. 17 cents per share), but moron me didn’t step it up.

The shares dipped below $25 in early November and it’s been off to the races ever since. Since November 4, HD is up 28% compared with 9% for the S&P 500. I let that one get away.

Tomorrow is the first anniversary of the bull market. The S&P 500 closed March 9, 2009 at 676.53. That was a Monday. During the day on the previous Friday, March 6, the index got to its spooky intra-day low of 666.79.

The day after tomorrow is the seventh anniversary of the 2003 market low. On March 11, 2003, the S&P 500 closed at 800.73. The intra-day low came the follow day at 788.90.

This month will also market the tenth anniversary of the bull market high of 2000. The S&P 500 reached its closing peak of 1527.46 on March 24. However, the index that everyone was watching back then was the Nasdaq which marked its closing high of 5,048.62 ten years ago this Wednesday.

We’re still than half of where we were.

JoS. A. Bank Clothiers, Inc. announces it is bringing back its popular “Risk Free” promotion. As part of the promotion, the Company will refund the price of a suit or sportcoat if the purchaser loses his job, and also allow him to keep the garment.

“We believe that our customers will appreciate another opportunity to look great at work and at the same time be assured that their purchase will be free if they lose their job,” stated R. Neal Black, President and CEO of JoS. A. Bank. “We think our 5.2 million customers and potential new customers deserve our support in these uncertain times,” continued Mr. Black.

Oh..and those ABT shares: $7 million.

Like many people who lived through the Great Depression, Grace Groner was exceptionally restrained with her money.

She got her clothes from rummage sales. She walked everywhere rather than buy a car. And her one-bedroom house in Lake Forest held little more than a few plain pieces of furniture, some mismatched dishes and a hulking TV set that appeared left over from the Johnson administration.

Her one splurge was a small scholarship program she had created for Lake Forest College, her alma mater. She planned to contribute more upon her death, and when she passed away in January, at the age of 100, her attorney informed the college president what that gift added up to.

"Oh, my God," the president said.

For January, the unemployment rate was 9.68662%. For February, it was 9.68719%.

That's an increase of 57/100,000 of one percent. Think of it this way: If the workforce had remained at 175,000 for January and February, then only person lost his job.

I'm not trying make any economic point, I just think it's an unusual statistical occurrence.

Dean is a large and well diversified food company. They own about a zillion brands. Despite that lackluster earnings, they are profitable which says a lot in a rough economy. Dean has bought up a ton of businesses over the past several years and they now find themselves fighting not one, not two, but three anti-trust battles. On top of that margins are under attack thanks to retailers using milk as a loss-leader to get folks in the door.

Last month, the company said it earned $1.59 for all 2009. For 2010, Dean said they expect EPS to range between $1.54 and $1.64. The mid-point, of course, is exactly what they made last year. So that means they don’t expect any growth. Still, the stock is going for less than 10 times next year’s earnings. Considering what you can get in the bond market right now, that’s not so bad. For Q1, Dean expects EPS between 25 cents and 30 cents.

The bottom line is that Dean is in rough shape right now, but it things start to turnaround by the middle of 2011, the stock could rally quite handsomely.