Archive for November, 2009

  • Guess How Much Money GM Lost…
    , November 16th, 2009 at 11:20 am

    Between January 2005 and its Chapter 11 filing on June 1?
    Answer = $88 billion.

  • S&P 500 = 1,100
    , November 16th, 2009 at 10:59 am

    The Suckers Rally continues to be very kind to our Buy List. We’re now up over 40% for the year. FactSet (FDS), Donaldson (DCI), Danaher (DHR) and Cognizant (CTSH) are all at new 52-week highs today. Plus, Stryker (SYK), Medtronic (MDT) and Amphenol (APH) aren’t too far away.
    The S&P 500 is up to 1,110 which is its highest level in 13 months.

  • Your Handy Guide to Wall Street Conspiracies
    , November 16th, 2009 at 10:19 am

    Gary Weiss provides a nice overview of the various conspiracy theories floating around Wall Street. The Giant Vampire Squid won’t be pleased.

  • Atlas Yawned
    , November 16th, 2009 at 9:50 am

    Barry Ritholtz notes the reemergence of Ayn Rand. This is one of those phenomena, like orange soda, that I will never understand.
    Barry rightly calls Rand’s prose “a giant pedantic bore,” and also zeros in on the cult-like behavior of Randians. I just don’t get it. My theory is that Rand’s appeal is mainly to make college sophomores feel superior to freshmen.
    Michael Shermer (via Oliver Kamm) addressed the Randians a few years ago when writing “The Unlikeliest Cult in History.”

    One of the closest to Rand was Nathaniel Branden, a young philosophy student who joined the Collective in the early days before Atlas Shrugged was published. In his autobiographical memoirs entitled Judgment Day (1989), Branden recalled: “There were implicit premises in our world to which everyone in our circle subscribed, and which we transmitted to our students at NBI.” Incredibly, and here is where the philosophical movement became a cult, they came to believe that (pp. 255-256):

    • Ayn Rand is the greatest human being who has ever lived.
    • Atlas Shrugged is the greatest human achievement in the history of the world.
    • Ayn Rand, by virtue of her philosophical genius, is the supreme arbiter in any issue pertaining to what is rational, moral, or appropriate to man’s life on earth.
    • Once one is acquainted with Ayn Rand and/or her work, the measure of one’s virtue is intrinsically tied to the position one takes regarding her and/or it.
    • No one can be a good Objectivist who does not admire what Ayn Rand admires and condemn what Ayn Rand condemns.
    • No one can be a fully consistent individualist who disagrees with Ayn Rand on any fundamental issue.
    • Since Ayn Rand has designated Nathaniel Branden as her “intellectual heir,” and has repeatedly proclaimed him to be an ideal exponent of her philosophy, he is to be accorded only marginally less reverence than Ayn Rand herself.
    • But it is best not to say most of these things explicitly (excepting, perhaps, the first two items). One must always maintain that one arrives at one’s beliefs solely by reason.

    By the way, here’s a letter to the editor of the New York Times from November 3, 1957:

    To the Editor:
    Atlas Shrugged is a celebration of life and happiness. Justice is unrelenting. Creative individuals and undeviating purpose and rationality achieve joy and fulfillment. Parasites who persistently avoid either purpose or reason perish as they should. Mr. Hicks suspiciously wonders “about a person who sustains such a mood through the writing of 1,168 pages and some fourteen years of work.” This reader wonders about a person who finds unrelenting justice personally disturbing.
    Alan Greenspan, NY

  • The Gladwell Bubble Bursts
    , November 16th, 2009 at 9:27 am

    Over the weekend, Harvard psychology professor, Steven Pinker, reviewed Malcolm Gladwell’s latest, What the Dog Saw, for the New York Times. Pinker writes:

    An eclectic essayist is necessarily a dilettante, which is not in itself a bad thing. But Gladwell frequently holds forth about statistics and psychology, and his lack of technical grounding in these subjects can be jarring. He provides misleading definitions of “homology,” “saggital plane” and “power law” and quotes an expert speaking about an “igon value” (that’s eigenvalue, a basic concept in linear algebra). In the spirit of Gladwell, who likes to give portentous names to his aperçus, I will call this the Igon Value Problem: when a writer’s education on a topic consists in interviewing an expert, he is apt to offer generalizations that are banal, obtuse or flat wrong.

    Ouch! Steve Sailer notes that Gladwell assertion that quarterback performance isn’t correlated to draft choice is incorrect. Finally, Vanity Fair chimes in with a Gladwellian parody on Christmas:

    He is grotesquely overweight. He is childless. He lives in the chilly and undesirable North Pole. He insists on dressing in a bright-red jumpsuit with fur trimmings. He can only ever find employment on one day a year, and, even then, it is night work.
    On every accepted level, Santa Claus is a total loser.
    Yet this is a man who heads up a brand that commands 98 percent global recognition.
    Furthermore, he is universally adored.
    How does he do it?
    In a controlled research investigation involving uninterrupted surveillance videotaping, a sustained loop of twinkly music, and state-of-the-art ¬merriness-determination equip¬ment, a Dutch santologist named Hans Bunquum discovered the secret to Claus’s phenomenal success.
    “The conclusion is both remarkable and inescapable but also—most importantly—counter-intuitive,” Dr. Bunquum told me over a glass of organic lemonade in his stunn¬ing waterstulp, or waterside studio, near Rotterdam. “To become the object of universal love, one must first live with a red-nosed rein¬deer, and then gain a premier position as the sole registered employer of elves in the Northern Hemisphere. It’s as simple as that.”

  • Don’t Tell Dennis Kneale
    , November 15th, 2009 at 12:58 am

    The Onion:

    CNBC Cameraman Can’t Believe He’s Filming Another Blog Off A Computer Monitor

  • A Great Earnings Season
    , November 12th, 2009 at 3:54 pm

    At Zacks, Dirk Van Dijk notes what a good earnings season it’s been:

    It’s almost time to close the books on a fantastic earnings season. With almost 90% of reports in, there have been 339 that have exceeded expectations while only 62 have fallen short — a ratio of 5.47. While it is true that most companies will normally try to under-promise and over-deliver, this quarter the beats are beating the misses by about twice the normal margin of 3:1.
    Nor have all the surprises only been by a penny or two, but there have been lots of companies that simply crushed their earnings estimates. The median surprise is a very high 7.11%. Over the last five years, a median surprise of about 3.0% has been normal. Part of the reason is that expectations were set very low going into the earnings season.
    For most companies, their earnings are still below year ago levels, just not as far down as people thought they would be. Only 193 firms have posted positive year-over-year growth, versus 251 that have fallen short of year-ago levels — a ratio of 0.77.
    The disparity between firms beating estimates but having negative year-over-year earnings growth is particularly noticeable in Tech, where the earnings surprise ratio is an awesome 9.25. However, the growth ratio (# of firms with positive growth/# of firms with negative growth) is just 0.49. A similar situation, but not quite as extreme, is true for Materials. Staples and Medical have been both growing earnings and beating expectations.
    On the top line, it has also been a successful season so far (relative to expectations), but in terms of actual year-over-year growth it has been downright ugly The total revenues of the 444 firms that have already reported are 13.4% below year-ago levels. A total of 241 firms have reported higher-than-expected revenues, versus 176 that have disappointed, for a ratio of 1.37. On the other hand, only 127 actually had higher sales than a year ago, versus 314 with lower revenues, a ratio of 0.40. Put another way, only 28.6% of all firms reporting so far have had higher sales than a year ago.
    In other words, cost-cutting has been the major force driving earnings and earnings surprises. However, the costs to one company are either the revenues of another company or someone’s paycheck, which is then spent to create revenues for firms. The bottom-up data coming out of all these individual firms seems to confirm what we have been getting from the government’s macro statistics. The economy is growing due to increases in productivity. Higher GDP with fewer workers.

  • 10 States Facing Budget Disasters
    , November 12th, 2009 at 10:01 am

    I’ll spare you the suspense — California is one.

  • Why Lord Why
    , November 11th, 2009 at 6:00 pm

    The Wall Street Journal reports:

    Hewlett-Packard Co. agreed

    me running slow motion

    to acquire

    waving my arms

    networking-equipment maker 3Com Corp.

    screaming

    in a deal the companies valued

    NOOOOOOOOOOOO….

    at $2.7 billion.

    OOOOOOOOOO…..

  • The Humpy Pattern Lives
    , November 11th, 2009 at 5:29 pm

    The S&P 500 closed at its highest level in 13 months. During the day, we got as high as 1105.37, but we haven’t been able to hold 1,100 going into a close yet. The S&P 500 was down slightly yesterday but the Dow was up. In fact, the Dow has been up every day this month.
    I still cling to my Humpy Pattern Thesis. This chart below of the S&P 500 CLEARLY shows a rising pattern of surges—humps if you will. I have no idea what it means for the future but I’m passing it on to you.
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