• Defending EMH
    Posted by on October 28th, 2009 at 9:39 am

    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?

  • CNBC Debuts!
    Posted by on October 28th, 2009 at 8:15 am

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

  • Fiserv Narrows Guidance
    Posted by on October 27th, 2009 at 6:49 pm

    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.

  • Eight-Year Trailing GDP Growth
    Posted by on October 27th, 2009 at 1:47 pm

    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.
    image867.png
    Man, George W. Bush does not look good here.

  • No, Earnings Estimates Haven’t Been Lowered
    Posted by on October 25th, 2009 at 8:58 pm

    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.

  • More Problems with Efficient Markets
    Posted by on October 25th, 2009 at 8:51 pm

    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.

  • 10 highest-paying blue-collar jobs
    Posted by on October 23rd, 2009 at 6:35 pm

    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.

  • Replace the Dollar? Not so Fast.
    Posted by on October 23rd, 2009 at 10:45 am

    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.

  • The Case for Buy-and-Hold
    Posted by on October 23rd, 2009 at 10:39 am

    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.

  • I Was Dead Wrong on Amazon
    Posted by on October 23rd, 2009 at 10:19 am

    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???)