Archive for November, 2007

  • Jim Cramer’s 10 Reasons to Be a Bull
    , November 12th, 2007 at 10:26 am

    At TheStreet.com, Jim Cramer lists 10 reasons to be a bull. Here are his Top 5:

    1. The stock market is cheap. Most of the stocks I follow are in low or mid-teen multiples or at a price-to-earnings ratio vs. high growth rate that I regard as being just flat-out cheap, particularly when you consider a 4% 10-year Treasury. Retail at 10 times earnings? Lots of high-growth tech stocks at mid-teen multiples? It makes no sense to me.
    2. Takeovers and going-privates could come back. On a large scale we saw BHP Billiton (BHP) make a move today for Rio Tinto (RTP). On a smaller scale there’s money to go private, witness Restoration Hardware (RSTO).
    3. There are some very strong bull markets out there. Health care cost containment, agriculture, oil and oil services, infrastructure, tech and aerospace defense. There are a lot of sectors that work.
    4. Interest rates. The financials are so dire that the Fed will have to cut twice by year-end or give us another half-point cut, which will flush a huge amount of money from the sidelines and embolden banks to start lending again.
    5. The market still loves high growth. Witness Google (GOOG), Research In Motion (RIMM), First Solar (FSLR), Apple (AAPL) and Intuitive Surgical (ISRG). Believe me, if this market were really bad, you wouldn’t get those to go up, either.

    If I made a top 10 list, I would simply restate Jim’s first point 10 times.

  • Google Millionaires
    , November 12th, 2007 at 10:15 am

    Bonnie Brown is a former Google employee who made several million dollars off her stock options. So what did Ms. Brown do at Google? Programmer? Designer?
    Nope, she was the company’s in-house masseuse:

    “I’m happy I saved enough stock for a rainy day, and lately it’s been pouring,” said Ms. Brown, 52, who now lives in a 3,000-square-foot house in Nevada, gets her own massages at least once a week and has a private Pilates instructor. She has traveled the world to oversee a charitable foundation she started with her Google wealth and has written a book, still unpublished, “Giigle: How I Got Lucky Massaging Google.”

  • Remembrance Day
    , November 11th, 2007 at 11:00 am

    poppies.jpg

  • Did She Say Shittygroup?
    , November 9th, 2007 at 3:48 pm


    Nah, it must be me.

  • Investing With Nickels and Dimes
    , November 9th, 2007 at 10:38 am

    Ok, I’d admit I’m a sap for these kinds of stories, but c’mon…this is great. Earl Crawley, a 69-year-old Baltimore parking lot attendant who makes $20,000 a year has amassed a portfolio worth $500,000.

    How did you get started investing?
    Soon after I started working for Mercantile Bank in Baltimore 44 years ago, one of the bankers took me aside and told me I didn’t have enough education to go very far at the bank. He suggested I invest in stocks.
    Where did you get the money?
    I did it with good old-fashioned nickels and dimes. My mother taught me how to budget, which made me appreciate how a little money can grow. I saved what I could from odd jobs, such as lawn-cutting and window-washing, that I did in addition to my day job. I used that money to buy one share of IBM stock back in 1981.
    How did you learn how to invest?
    I really didn’t know enough to be scared. In school I was considered a slow learner — dyslexic, it’s called now. My true gift from God is my ability to listen, and that’s how I’m able to ask questions and use tips from the brokers, financial planners and bank customers I see every day.
    Do you have a formula for picking stocks?
    When I first started out, I had to be conservative and take my time because I couldn’t afford to lose money. Now I look for companies with stability that pay dividends. I read the stock pages but don’t claim to know everything about them. I have a broker, but many times I’ll go where my spirit leads me.
    Any stocks you’re excited about now?
    I’ve been buying shares of ExxonMobil.
    We’ve heard that you’re helping others invest.
    I started an investment club at my church. And I’ve been coaching a couple of young men, such as bar-and-grill cook Antawn Davenport and Dana Mouse Smith, who toured with the late rapper Tupac Shakur. They can help spread the message that people can do whatever they set their minds to do.

    Mr. Crawley, you are my hero.
    (Hat Tip: Capt. Kirk.)

  • A Bond Bubble?
    , November 9th, 2007 at 10:06 am

    Ever notice how, in the eyes of the media, the bond market is never in a bubble? No, that’s only for tech stocks and real estate. Look at the five-year Treasury yield (^FVX): It’s down to 3.75%, that’s its lowest yield in over two years.
    When Baidu hits $400, well…that’s irrational. Yet, if the bond market does that same, it’s assumed to be correct. Where are the editorialists and central bankers wagging their fingers at the moral laxity of the investing public? Can anyone get Bob Shiller on the line?
    The same thing goes for currencies and the bond market. Does the fact that every single commodity rally since, oh…the Enlightenment, has ended the same way, the media considers these judgments to be sound? If oil is at $100, the problem is easy, we drive too much! Gold’s at $900? Yikes, they must know something.
    I don’t see how a yield of 3.8% is suitable competition against equities. The S&P’s dividend yield is about half that. What kind of equity premium are we talking about?
    Rant over.

  • Looking at the Dow Jones Industrials
    , November 9th, 2007 at 8:10 am

    Eight years ago, Dow Jones decided to do a big shake up to the Dow Jones Industrial Average (^DJI). The gatekeepers of the index knocked out four stocks — Sears, Chevron, Goodyear and Union Carbide. The four new stocks they added were Microsoft, Intel, SBC and Home Depot. SBC is now AT&T.
    The new additions made a lot of news at the time because it was the first time that the Dow included stocks from that new-fangled Nasdaq. Also, this was the first time the “industrial index” made such a big nod to the New Economy.
    The new stocks started trading on November 1, 1999. The brave new world lasted exactly six days. On November 6, 1999, Microsoft was ruled a monopoly. Over time, Microsoft did better in court than in the trading pits.
    Here’s a look at how Microsoft and Intel have done since they were added to the index:
    image549.png
    As you can see, both stocks have lagged the index as have Home Depot and AT&T.
    As far as the old stocks go, Sears Roebuck is now Sears Holdings (SHLD). Union Carbide is no longer part of the Dow but it is part of Dow Chemical (DOW). Goodyear (GT) and Chevron (CVX) are still going strong but only Chevron has beaten the Dow over the past eight years.
    Interestingly, IBM was tossed from the index in 1939 and put back in in 1979 and it’s still there today. During those 40 years, IBM went up 22,000%. If it had been there the whole time, the Dow would be far higher today (by my rough estimate, about 35%). The Dow would have cracked 1,000 in 1961 instead of twelve years later. Behold the power of one really good stock.
    The other day, Barry Ritholtz said it’s time to purge GM from the Dow. I agree, and they can fire Alcoa too. He suggests Cisco as a replacement. That’s a good idea, but I’d lean more towards a stock like UPS.

  • Growth/Value Divergence
    , November 8th, 2007 at 8:33 pm

    Here’s an interesting aspect of today’s market. The S&P Value Index (^SVX) was up 0.38% while the S&P Growth Index (^SGX) was down -0.49%. That’s an unsually large divergence for one day.
    trigppfndb.png

  • Michael Lewis on Stan O’Neal
    , November 8th, 2007 at 1:54 pm

    Michael Lewis looks at Stan O’Neal’s “scorecards:”

    Aug. 12: Purchase Country Club.
    ALL ALONE ON THE COURSE. NO ONE TO TALK TO SO TALKED TO MYSELF. HAD A THOUGHT: NO ONE KNOWS WHERE I AM! REALLY! TURNED OFF CELL PHONE. FIVE HOURS LATER I WONDERED: WHERE DID THE TIME GO? A PERFECT DAY.
    Aug. 18: Purchase Country Club.
    BIRDIE ON 11 WAS A THING OF BEAUTY. IT WOULDN’T HAVE BEEN POSSIBLE IF I’D ALLOWED MYSELF TO BE DISTRACTED. DETAILS ARE THE ENEMY OF GOLFING EXCELLENCE. GAVE ME ANOTHER THOUGHT: GOLF IS LIKE RUNNING MERRILL LYNCH! THE TRICK IS TO KEEP IT SIMPLE. BE A BIG PICTURE PERSON. NOTE TO SELF: SMARTEST THING YOU EVER DID WAS TO TAKE FIRM AWAY FROM THE DAY-TO-DAY DRUDGERY AND MAKE JUST A FEW BIG BETS. FREES UP TIME.
    Aug. 26: Vineyard Country Club.
    FIVE BIRDIES AGAINST THREE BOGEYS. ALL THESE UPS AND DOWNS! MOODS SWINGS ARE TREMENDOUS AND EXHILARATING BUT CAN’T LET ANYONE AROUND ME KNOW WHAT I’M FEELING. NOT THAT THERE’S ANYONE AROUND ME — BUT YOU NEVER KNOW WHO’S ON THE NEXT TEE. GOLF IS SO MUCH LIKE RUNNING MERRILL LYNCH! WHEN I PLAY I FEEL I MIGHT AS WELL BE AT MERRILL LYNCH. IN A WAY, I AM.

  • On the Other Hand…
    , November 8th, 2007 at 11:10 am

    Baltimore Sun:

    Bernanke: Rates cuts, recession unlikely

    MarketWatch:

    Fed chief fears a downturn

    But my favorite headline of the day goes to the Sydney Morning Herald:

    GM sees bright side despite $42b loss