• Copper Calls Top in Stocks. Wait…What?
    Posted by on January 20th, 2010 at 2:58 pm

    Copper, apparently, is a pretty good predictor of stock prices.

    The stock market may be headed to or already mired in a correction mode, with the price of copper among the signals telegraphing caution for equities.
    “Copper prices recently recorded a 12-month rolling rate of return in excess of 150%. Historically such a ‘copper cropper’ has market a ‘grading top’ in copper and telegraphed caution for the equity markets,” writes Jeffrey Saut, an investment strategist at Raymond James.
    Not all, however, agreed with Saut’s take.
    “I still believe the uptrend is currently in place, that we’re in a full-fledged bull market,” said Robert Pavlik, chief market strategist at Banyan Partners LLC.
    While copper futures hit a new high earlier this month, “there is no indication in the five-month chart that copper is about to approach a correction of any sort,” said Pavlik.
    Used in both residential and commercial construction, copper has long been dubbed the metal “with the PhD” due to its ostensible ability to forecast changes in the economy based on its pricing and demand.

    And if you’re planning on converting your entire retirement nest egg into pennies, think again. A modern penny on only one part per 40 copper, the other 39 parts are zinc.
    The old alloy (pre 1982) was 95% copper and just 5% zinc. The metal in that penny is now worth more than one penny. The government, however, has made melting them down a crime.

  • Berkshire Votes to Splti 50-for-1
    Posted by on January 20th, 2010 at 2:53 pm

    If you’ve always wanted to own a piece of Warren Buffett but didn’t want to shell out a few thousand dollars, you’re in luck. The company voted to split the B shares by 50-for-1.
    The pricey A shares aren’t splitting. These are the shares currently for nearly $105,000.
    The B shares are worth about $3500 and will be worth about $70 after the split takes effect.

  • New Highs All Around
    Posted by on January 19th, 2010 at 11:01 am

    So far today, Aflac (AFL), Eaton Vance (EV), Johnson & Johnson (JNJ), Medtronic (MDT), Reynolds America (RAI) and Stryker (SYK) have all hit new 52-week highs. The Buy List is now up 6% for the year. Did I mention it’s January?
    Before I get too cocky, let me reread my previous post.

  • The Market Doesn’t Always Do What We Want
    Posted by on January 19th, 2010 at 10:20 am

    Before Intel’s earnings came out I wrote, “The Street is looking for 30 cents a share which is definitely too low. I expect earnings around, 35 cents a share, but the mystery is how Wall Street will react.”
    I was more right than I realized. Intel obliterated the Street by earning 40 cents a share, yet the stock fell 3.2% the next day. So if exceeding expectations disappoints, you have to wonder what the true expectations were.
    There was some talk that Intel’s gross margins are now so high (67%) that there’s no way they can increase them anymore. Sure, I buy that. The company has said it’s targeting margins 61% for this year. But it in way means that Intel will be less profitable.
    The point for us is how unpredictable investing can be. Even when all the fundamentals go our way, we can still lose. If the market wants to go down, it will go down. The media and analysts will attempt to seize on any bit of info to explain the sell-off. Yet, the accurate explanation for why it happened is simply unknowable.
    Unfortunately, that doesn’t make for a good analyst report or news item. In the long run, stock prices do make sense. But in the short term, it might as well be astrology.

  • Intel Delivers Huge Quarter
    Posted by on January 14th, 2010 at 4:17 pm

    Yesterday I said that I expected Intel (INTC) to report earnings of 35 cents a share which was well above Wall Street’s consensus of 30 cents a share. Even my optimistic estimate was too low. The company just reported earnings of 40 cents a share.
    Here’s a look at their future guidance:

    Q1 2010
    * Revenue: $9.7 billion, plus or minus $400 million.
    * Gross margin percentage: 61 percent, plus or minus 2 percentage points.
    * R&D plus MG&A spending: Approximately $3 billion.
    * Amortization of acquisition-related intangibles and costs associated with the Wind River acquisition: Approximately $20 million.
    * Impact of equity investments and interest and other: Gain of approximately $20 million.
    * Depreciation: Approximately $1.1 billion.
    Full-Year 2010
    * Gross margin percentage: 61 percent, plus or minus 3 percentage points.
    * Spending (R&D plus MG&A): $11.8 billion, plus or minus $100 million.
    * R&D spending: Approximately $6.2 billion.
    * Tax rate: Approximately 30 percent.
    * Depreciation: Approximately $4.4 billion, plus or minus $100 million.
    * Capital spending: Expected to be $4.8 billion, plus or minus $100 million.

    That Q1 revenue target of $9.7 billion +/-$400 million is well above Wall Street’s consensus of $9.35 billion.

  • Barney Vs. Erin
    Posted by on January 14th, 2010 at 4:02 pm

    Here’s an entertaining interview of Barney Frank by Erin Burnett:

  • The Dow Jones Hit Its Bull Market High 10 Years Ago Today
    Posted by on January 14th, 2010 at 6:48 am

    On Friday, January 14, 2000, the Dow closed at 11,722.98 — a level it wouldn’t break for over six years. That peak capped an amazing 17-1/2 year run. In the ensuring 10 years, we’ve lost about 1,000 points or roughly 8.9%. Inflation, or at least the CPI, has increased by about 28% which makes the inflation-adjusted close from ten years more like 15,000. Ten years ago, gold was going for about $280 an ounce (around $360 inflation adjusted).
    In the letters section of the January 2000 issue of the Atlantic, J. Douglas Van Sant of Stockton, California criticized the article in the September 1999 issue on Dow 36,000 by James Glassman and Kevin Hassett.
    Mr. Van Sant wrote:

    I would be willing to bet Glassman and Hassett that even ten years from now, when earnings and dividends should have nearly doubled, the Dow Jones Industrial Average will still be closer to its current level of 11,000 than to their hyperbolic projection of 36,000.

    Good call. The Dow closed yesterday at 10,680.77.
    Glassman and Hassett replied:

    To J. Douglas Van Sant we say, if the Dow is closer to 10,000 than to 36,000 ten years from now, we will each give $1,000 to the charity of your choice.

    I recommend Haiti.
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  • Once Again, Economists Are Split
    Posted by on January 13th, 2010 at 12:21 pm

    I sometimes think that a group of academic economists couldn’t agree on the color of the sky. The WSJ surveyed economists over Ben Bernanke’s view that low rates didn’t contribute to the housing bubble (to be fair, Bernanke merely said it wasn’t the primary cause of the bubble).
    Here’s what the WSJ found:
    NA-BD420_Bernan_NS_20100112225240.gif

  • This Just In
    Posted by on January 13th, 2010 at 12:16 pm

    “Whatever we did, it didn’t work out well.” Lloyd Blankfein CEO of Goldman Sachs

  • The Buy List So Far
    Posted by on January 13th, 2010 at 11:20 am

    I probably shouldn’t mention this so early and jinx myself, but the Buy List has gotten off to a very nice start this year. Through 11am this morning, the Buy List is up 3.77% for the year which is almost exactly double the S&P 500, which is up 1.88%. So far, so good.
    The Buy List will get a big test tomorrow when Intel (INTC) reports its earnings. The Street is looking for 30 cents a share which is definitely too low. I expect earnings around, 35 cents a share, but the mystery is how Wall Street will react.