• Where has the money gone?
    Posted by on October 22nd, 2009 at 2:35 pm

    Here’s a conversation to contemplate (2:48 mark):

    Maria Bartiromo: Where has the money gone?
    Elizabeth Warren: We not only don’t know, Maria, we’re not ever going to know.

  • Danaher Beats Estimates and Guides Higher
    Posted by on October 22nd, 2009 at 1:19 pm

    Danaher (DHR) has had a rough year, but the earnings are better than I thought they’d be. Today the company reported 3Q EPS of 89 cents which was three cents better than estimates.
    For Q4, the company said to expect EPS between 99 cents and $1.09. That’s pretty good guidance, however the shares seem a bit on the high side. I’m not sure if Danaher will be on the Buy List next year.

  • The NICK Sell Storm
    Posted by on October 22nd, 2009 at 10:13 am

    I’m not sure exactly what happened, but it appears that someone sold off about 100,000 shares of Nicholas Financial (NICK) this week (some mutual funds follow an October 31 accounting year). The stock didn’t take it well. Such are the risks in owning a very small-cap stock. Nevertheless, it’s still an excellent stock and the next earnings report should be out in the first week of November.

  • Black Thursday—Eighty Years Ago
    Posted by on October 22nd, 2009 at 9:17 am

    The Great Depression began 80 years ago. Wall Street suffered Black Thursday on October 24, 1929. (The actual anniversary is Saturday, but since today is Thursday, I’m going for it).
    The Dow had peaked on September 3 at 381.17. Traders were even breaking out their Dow 400 hats. Slowly, the market started losing ground. On October 23, the Dow dropped 6.33% to 305.85. Then on Thursday morning, the Dow dropped nearly 11% to 272.32.
    In one of the great scenes in Wall Street history, around mid-day on Thursday several bankers got together and had Richard Whitney, the future president of the NYSE, to go down to the exchange and make a great show of buying huge blocks of stock for the pool. Whitney walked across the trading floor placing order far above current prices. A visitor named Winston Churchill watched in the gallery.
    The tactic worked and stocks rallied. On Black Thursday, the Dow closed down just 2.1%. Check out this article from The Guardian. Here’s the final paragraph:

    Most experts claim that there is nothing in the general conditions to warrant pessimism. The deluge of selling today is said merely to have pumped water from a number of highly saturated overvalued securities. But the fact is that today’s crash affected good issues as much as bad ones. New York bankers were tonight blaming the panic on the technical inadequacy of the ticker-tape system (Quick! Call Patrick Byrne) in processing such massive volume trading. Whatever the reasons, the spree of easy money and over-confidennce is now over. The bear market has returned with a vengeance, crushing the dreams of an army of small investors some of whom lost everything: 11 speculators are said to have committed suicide.

    The following Tuesday, the Dow crashed 12.8%, then another 11.7% on Wednesday bringing the index down to 230.07.
    The closing low came on November 13 when the Dow hit 198.69. After that began a sucker’s rally as the Dow topped 290 by mid-April.
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    On July 8, 1932, the Dow bottomed out at 41.12 for a loss of 89%. An equivalent loss from today would bring the Dow to about 1,075.
    Oh, I nearly forgot. That Richard Whitney guy? It turns out he a little embezzlement problem and got his ass locked up in Sing Sing.
    Here he is denouncing Securities Exchange Act of 1934. Except for the name of the bill, this speech could be delivered verbatim today.

  • From the New Yorker
    Posted by on October 22nd, 2009 at 8:46 am

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  • So How Was Your Day?
    Posted by on October 21st, 2009 at 8:19 pm

    If you’re Steve Jobs…pretty good.

    Shortly after 2 p.m., before the market tanked, Apple was up 9.71 points to an all-time intraday high of 208.62, and Disney was up .36 points to $29.71, together adding $103.5 million to Jobs’ bottom line.

  • Newsweek Asks
    Posted by on October 21st, 2009 at 7:55 pm

    Was Germany better off under the Nazis? Let’s look at key comparisons like forestry and divorces.

  • The VIX Is Close to Going Below 20
    Posted by on October 21st, 2009 at 11:43 am

    The VIX has been as low as 20.10 today. We haven’t been below 20 since August 29, 2008.
    The VIX isn’t strongly correlated to market returns. The only exception is that a very low VIX — lower than 13 — seems to be good for stocks.

  • Buy List Earnings from Stryker, Lilly and SEI Investments
    Posted by on October 21st, 2009 at 11:16 am

    This is a bit strange. Lilly is down today on good news and Stryker is up on bad news. I don’t get it, but I didn’t write the rules.
    Eli Lilly (LLY) earned $1.20 a share which was 18 cents better than estimates. The company also raised EPS guidance for next year to $4.30 to $4.40 from their earlier estimate of $4.20 to $4.30. The stock was up in the pre-market but is down now. I have no idea why, but Lilly is a great stock.
    Stryker (SYK) is our big winner today. The company said it earned 69 cents a share for the third quarter which matched estimates. The company also cut its 2009 EPS forecast to $2.90 and $3 from $3.12 to $3.22, but that’s hardly a big deal since it’s just one more quarter.
    SEI Investments’ (SEIC) business got hit hard last year, but it’s recovering nicely. The company earned 27 cents a share for the third quarter which is a 50% jump from the 18 cents a share it earned a year ago. They beat the Street by two cents a share.
    Cognizant (CTSH), Danaher (DHR) and Sysco (SYY) are all at new 52-week highs today.

  • No More Historical Comparisons Graphs
    Posted by on October 21st, 2009 at 9:54 am

    Starting today, I refuse to look at any more charts that contain five or more squiggly lines, one labeled 2009, another labeled 1929, another 1974, another 1379. Enough!
    These charts were kind of fun to look at a few months ago, but seriously, markets don’t trace out precise patterns from decades ago. On the morning of October 19, 1987, the WSJ famously ran a similar chart comparing the Dow’s current run with the market’s run-up in 1929, but there was one major difference. They altered the x-axis to make it a better fit. Once you start toying around with the data, you can make anything fit.