• Today’s Jobs Report
    Posted by on March 5th, 2010 at 2:39 pm

    Here’s a strange statistical angle to today’s jobs report. Officially, the unemployment rate was unchanged, 9.7%. But you break down the numbers, the rate was eerily the same.
    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.

  • The Buy List YTD
    Posted by on March 4th, 2010 at 4:37 pm

    It’s early but the Buy List has gained 4.06% so far this year. The S&P 500 is up just 0.71%.
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  • The Day Trader With 40 Computer Screens
    Posted by on March 4th, 2010 at 2:05 pm

    This is nuts.

  • Dean Foods
    Posted by on March 4th, 2010 at 1:57 pm

    I’ve been looking at Dean Foods (DF) as an attractive value play. Like a lot of value stocks, this company is not without its bruises. The company’s recent earnings history has not been very terribly strong. Still, they are making money and the stock is so beaten down that it could rally 10%-20% from here and still be seen as a bargain.
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    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.

  • Should Greece Sell Some Islands to Pay Its Debt?
    Posted by on March 4th, 2010 at 12:05 pm

    Some politicians are floating the idea of Greece selling some of its islands to pay down its debt. The only problem is that the aforementioned politicians aren’t Greek but German.

    “The bankrupt one has to do everything he can to make money for the sake of his creditors,” said Josef Schlarmann, a member of Angela Merkel’s Christian Democrat party who heads a lobby of small and midsize businesses that back the CDU. “Greece possesses buildings, businesses and uninhabited islands, which can be used to pay down debt.”
    The sentiment was echoed by Frank Schaeffler, a financial expert with the CDU’s coalition partner the FDP. “The chancellor can’t break the law, and may not promise Greece aid. The Greek state needs to get rid of stakes in businesses and sell real estate — e.g. uninhabited islands.”

    To be fair to the Germans, they’ve always had some difficulties with the concept of sovereignty.

  • Buffett Has Made Nearly $10 Billion Since the Stock Split
    Posted by on March 3rd, 2010 at 2:46 pm

    Earlier this year, the B shares of Berkshire Hathaway were added to the S&P 500. The B shares also split 50-f0r-1 on January 21. Measuring from two days before the stock split to the price right now, the B shares have gained 27%. After the split, Buffett owns 75 million B shares, so that’s a gain of roughly $1.4 billion.
    The big money, however, is in the A shares. Buffett owns about 350,000 of them (going by the last numbers I could find). Those are up 23% since January 19 netting Buffet a gain of $8.2 billion.
    Added it all together, Buffett has seen his net worth jump from about $40 billion in mid-January to about $50 billion today. Thank you stock split and S&P!
    (If you haven’t seen it, here’s the latest Chairman’s Letter).

  • Dallas Fed President Richard Fisher
    Posted by on March 3rd, 2010 at 10:24 am

  • ADP Reports 20,000 Jobs Lost Last Month
    Posted by on March 3rd, 2010 at 9:43 am

    Wall Street is heavily focused on Friday’s jobs report. We got a sneak preview today with the report from ADP (ADP), the private payroll folks. According to ADP, the economy lost 20,000 private sector jobs during February. That’s pretty bad. ADP also revised lower the job losses for January from 22,000 to 60,000. The only bright spot is that this is the smallest decline since the jobs numbers started going negative. So it’s not much of a bright spot at that.
    For Friday, the Street expects the government numbers to show an increase in unemployment to 10% from 9.7%, and nonfarm payrolls to drop by 55,000.
    I recently mentioned that Bristol-Myers (BMY) looked like a good value. The company just announced that Lamberto Andreotti will be their new CEO. Andreotti was made president and COO last year. This is an interesting time for the company. BMY’s recent strategy has been to shed anything that doesn’t deal directly with drugs. They’re doing the exact opposite of diversifying. With their hugely successful drug Plavix going off patent next year, they need to alter their business. Expect to see a string of acquisitions here. BMY has a gigantic cash horde of $10 billion.

  • Berkshire Inclusion to Erase All the Dividend Gains in the S&P 500
    Posted by on March 2nd, 2010 at 1:54 pm

    I was looking at the dividend history of the S&P 500 and I came across this recent story. Companies in the S&P 500 have been increasing their dividend payments recently, but the entire gain will be erased by the inclusion of Berkshire Hathaway in the S&P 500. This is interesting for a few reasons. Even though value weighted indexes are, in my opinion, much better than price weighted indexes, they’re open to statistical noise as well. Also, lots of historical market data, even when accurate, is open to interpretation.

  • The Dangers of Market Timing
    Posted by on March 2nd, 2010 at 12:17 pm

    Here’s a very cool graphic I found via Paul Kedrosky. Unfortunately, I can’t fit the entire thing on my blog, but here’s most of it. You can adjust the toggles below to set buy and sell rules for jumping in and out of the market.

    Here’s the full graphic from Vanguard.