Stocks Vs. Bonds—Another Look
Posted by Eddy Elfenbein on August 26th, 2009 at 1:24 pm

Here’s an interesting chart. I divided the total return of two index funds, the Vanguard 500 Index Investor (VFINX) by Vanguard Long-Term Investment-Grade (VWESX). The chart begins in 1988.
It’s a quick-and-dirty way to look at how well stocks have done against bonds.

Although stocks have historically outperformed bonds, that hasn’t been the case in recent years. Bonds haven’t been just less volatile, they’ve been more profitable over the last ten years.

JoS. A. Bank to accelerate expansion
Posted by Eddy Elfenbein on August 25th, 2009 at 1:17 pm

This is good news for JoS. A. Bank Clothiers (JOSB):

JoS. A. Bank Clothiers Inc. said Tuesday that it will open more stores in fiscal 2010 than planned for the current year to take advantage of real estate opportunities.
The retailer expects to open 30 to 40 new stores in fiscal 2010, compared with an estimated 10 to 15 stores in fiscal 2009.
“Quality real estate opportunities are beginning to open in the marketplace and we are ready to expand our store base at a more rapid rate,” President and CEO R. Neal Black said in a statement.
The openings are part of the company’s long-term goal of running 600 stores. It currently has 467 stores.

Medtronic’s Earnings
Posted by Eddy Elfenbein on August 25th, 2009 at 12:18 pm

Medtronic (MDT) reported adjusted earnings of 79 cents a share which matched estimates. Revenues rose 6.1% to $3.93 billion. The market seems mildly displeased as the stock is down today.
Here’s a look at MDT’s sales and earnings for the past several quarters:
Quarter………..EPS………….Sales
Jul-01…………$0.28………..$1,455.70
Oct-01………..$0.29………..$1,571.00
Jan-02………..$0.30………..$1,592.00
Apr-02………..$0.34………..$1,792.00
Jul-02…………$0.32………..$1,713.90
Oct-02………..$0.34………..$1,891.00
Jan-03………..$0.35………..$1,912.50
Apr-03………..$0.40………..$2,148.00
Jul-03…………$0.37………..$2,064.20
Oct-03………..$0.39………..$2,163.80
Jan-04………..$0.40………..$2,193.80
Apr-04………..$0.48………..$2,665.40
Jul-04…………$0.43………..$2,346.10
Oct-04………..$0.44………..$2,399.80
Jan-05………..$0.46………..$2,530.70
Apr-05………..$0.53………..$2,778.00
Jul-05…………$0.50………..$2,690.40
Oct-05………..$0.54………..$2,765.40
Jan-06………..$0.55………..$2,769.50
Apr-06………..$0.62………..$3,066.70
Jul-06…………$0.55………..$2,897.00
Oct-06………..$0.59………..$3,075.00
Jan-07………..$0.61………..$3,048.00
Apr-07………..$0.66………..$3,280.00
Jul-07…………$0.62………..$3.127.00
Oct-07………..$0.58………..$3,124.00
Jan-08………..$0.63………..$3,405.00
Apr-08………..$0.78………..$3,860.00
Jul-08…………$0.72………..$3.706.00
Oct-08………..$0.67………..$3,570.00
Jan-09………..$0.71………..$3,494.00
Apr-09………..$0.78………..$3,830.00
Jul-09…………$0.79………..$3,933.00

Hussein Reappoints Shalom
Posted by Eddy Elfenbein on August 25th, 2009 at 11:00 am

Congratulations to Ben Bernanke for being renominated by President Obama. This is a good move on Obama’s part and I continue to believe that Bernanke has been an outstanding Fed chair.

Preview of Medtronic’s Earnings
Posted by Eddy Elfenbein on August 24th, 2009 at 1:25 pm

Medtronic (MDT) is due to report its earnings tomorrow. The consensus on Wall Street is for earnings of 78 cents a share compared with 72 cents per share a year ago.
In June, the company reaffirmed its earnings growth expectations of 10% a year. The Minneapolis Star-Tribune reports:

So, given the uncertainty, the competition and a long-standing, lackluster stock performance, why do 29 analysts have buy or hold ratings on Medtronic’s stock?
Not a sell recommendation in sight.
“Although its growth profile has changed markedly in recent years, Medtronic remains one of the strongest companies in the health care industry,” wrote William Blair & Co. analyst Ben Andrew in a note to investors last month.
Year to date, the company’s stock is up 20.3 percent, compared with the S&P Health Care index, which has inched up just 7.4 percent.
Andrew, who has an “outperform” rating on Medtronic’s stock, cites a stabilizing market for pacemakers and defibrillators and the company’s pipeline of future products, such as an MRI-friendly pacemaker.
“We believe the company’s heavy research-and-development investments will begin to reaccelerate growth in fiscal 2011,” he wrote.

An overdraft? That’ll be £200 at Lloyds TSB (but only £15 if you’re a Muslim)
Posted by Eddy Elfenbein on August 24th, 2009 at 10:55 am

The Daily Mail:

Many Lloyds TSB customers are being hit with charges of up to £200 a month if they go into the red – while Muslims who use the bank are only being charged £15.
The part-nationalised bank has been accused of religious discrimination over the disparity between overdraft charges on its standard current account and its Islamic account.
The Islamic account was set up by the high street bank to attract Muslim customers by allowing them to keep faithful to their religion.
Sharia law does not permit the payment of interest so the ‘typical’ Islamic account at Lloyds TSB has been set up without an overdraft facility.

The New Gold Rush
Posted by Eddy Elfenbein on August 24th, 2009 at 10:44 am

The Washington Post reports that with the economy in rough shape and gold prices still near $1,000, folks are out there paning for gold. Literally.

Maybe it was the nail in Ray’s head. Maybe it was the economy. His wife said one as much as the other drove the decision to auction off everything that wouldn’t fit in the trailer and leave Vermont for the mother lode.
“Thought we’d try to make a living at it,” Kim Lague said, standing in a mining camp that was busier during the Great Depression than it was in the Gold Rush of 1849, and is busy once again.
And so, 18 months after a co-worker’s pneumatic hammer drove a 2 1/2 -inch stainless-steel nail into Ray Lague’s skull — “the plunger of the gun brushed my hat and discharged” — the once-thriving contractor took his place among the prospectors lining the steep banks of the South Fork of the Stanislaus River, 40 miles west of Yosemite National Park. The bearded man helping him drag the mining gear into the water was a jobless logger who lost his home to foreclosure.
Fifty feet downstream, an unemployed concrete-truck driver scoured the river bottom beside a laid-off furniture mover, back to prospecting after a day spent wrestling with the unemployment office.
“You have to consider the economy,” said Gary Rhinevault, caretaker of the Lost Dutchman’s Mining Association campground, where 45 prospectors pay as little as 30 cents a day to pitch their tents. “In 1932 there were more prospectors out trying to make a living than in the 1850s.”

Nicholas Financial (NICK), a $12 Stock
Posted by Eddy Elfenbein on August 24th, 2009 at 10:32 am

Alex Bossert is an 18-year-old financial blogger in Minnesota. Check out his take on Nicholas Financial (NICK).

The economic indicator that best correlates to Nicholas’s charge off rate is the unemployment rate. The pre-tax margin for the quarter was 6.34% and the provision for credit losses was 6.16%. Credit losses would have to double from here to bring Nicholas into the red, a very unlikely scenario, given that the provision for credit losses fell from 6.26% of average credit receivables to 6.16% in the current quarter. Net charge offs fell from 8.94% in the fourth quarter to 7.72% in the 1st quarter. Management anticipates losses absorbed as a percentage of liquidation will be in the 11%-16% range during the remainder of the current fiscal year. Losses as a percent of liquidation were 11% in the 1st quarter.
The loans the company is making are getting more profitable as their competition has diminished during the credit crisis. The average discount of new loans purchased has risen to 9.29% from 8.87% a year ago.

Alex thinks NICK is a $12 stock and I agree. Even after NICK’s big run this year, it’s still going for around 85% of book value.

Jedi Mind Inc (JEDM)
Posted by Eddy Elfenbein on August 24th, 2009 at 10:05 am

What’s the hottest stock on the market? Tim Sykes points us toward shares of pink sheet listed Jedi Mind (JEDM).

Yep, that looks like a nice move.
As best as I can tell, the company makes “software for thought controlled technologies, allowing the user to interact with the computer and other machines through the power of the mind.” CBS’ 60 Minutes ran a story on this technology and that appears to be driving the surge in the stock.
A lot of these pink sheet stocks produce little in the way of products but they’re great at putting out press releases. If a company is serious about its future, it won’t be listed on the pink sheets. Investors like Tim Sykes love watching this marginal stocks skyrocket — they wait until the party gets going, short the stock and often make big gains.
I admit I know nothing about Jedi Mind but I think I know how this story will end.

What Bloggers Were Saying at the Low
Posted by Eddy Elfenbein on August 24th, 2009 at 9:57 am

The S&P 500 is up again this morning. From our low in March, the index is up nearly 55%.
With such tremendous gains under our belt, the Reformed Broker decided to take a look at what bloggers were saying at the low, and was nice enough to include me in the retrospective.
At the time, I ran a chart showing that the inflation adjusted Dow was unchanged over the last 43 years.

The next time that happens, I’ll know that’s a big buying opportunity.