• Poll Update
    Posted by on May 4th, 2009 at 7:00 pm

    Thanks again to everyone who participated in my latest poll on how much tax should a family earning $40,000 pay. I was curious to see what the median or middle answer would be. Since I used 5% blocks, I’d have to estimate that it was about 8.2% which comes to a tax bill of $3,280.
    The earlier poll asked how much should a family making $250,000 pay, and that median came to about 22.6% or $56,500.
    There are lots of ways to reconcile the two answers but one would be (roughly, not exactly) a flat rate of 25% on income above $27,000.

  • S&P Nears 2009 High
    Posted by on May 4th, 2009 at 1:48 pm

    The S&P 500 got up to 899.01 today which is the highest its been since early January.
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  • The Boston Globe May Be No More
    Posted by on May 4th, 2009 at 1:15 pm

    I was a rookie broker in Boston and I loved that Boston was an authentic two-paper town. Whenever you got on the T you could easily find a Boston Herald but it was much harder to find a Boston Globe. The Herald was far more populist and conservative, while the Globe was a bastion of liberalism. It’s hard to imagine that the Glove may soon go away.

    The paper’s circulation dropped 14 percent in the most recent six-month period. The Globe is expected to lose $85 million this year, the company says.
    Boston residents have long resented the takeover of the Globe by a company based in New York, with which the region competes in sports, banking and cultural bragging rights.
    The notion that Boston, home to some of the country’s top universities, could lose its major daily would have been unthinkable before the recent nationwide plunge in advertising revenue. That dive has triggered a wave of newspaper bankruptcies and the closing of the Rocky Mountain News and the Seattle Post-Intelligencer.
    A Globe shutdown would leave the city with only one daily newspaper, the tabloid Boston Herald, which has just 10 news reporters and is battling its own financial difficulties.

    I can’t help thinking of this scene:

  • Cognizant Seen Posting Higher Q1 Profit
    Posted by on May 4th, 2009 at 11:48 am

    Cognizant Technology Solutions (CTSH) reports tomorrow. Here’s a preview from Reuters:

    IT service provider Cognizant Technology Solutions Corp (CTSH.O) is expected to post a higher first-quarter profit as it benefits from a stable and diversified customer base, even as the sector has been hit by delays in client decision-making and sluggish demand.
    Analysts expect Cognizant to back its 2009 revenue outlook, citing its ability to handle pricing pressure and the offshore focus maintained by its largest customer, JPMorgan Chase (JPM.N).
    “JPMorgan, among other banks, is probably in a better shape, and on top of that the bank seems to be continuing to have a very strong commitment to its offshore strategy,” Cowen & Co analyst Moshe Katri said by phone.
    JPMorgan accounts for about 4 percent to 6 percent of Cognizant’s revenue, according to Katri. Other key customers include Pfizer Inc (PFE.N), eBay Inc (EBAY.O) and Credit Suisse (CSGN.VX).
    “The better sentiment around financials and stock markets is an incremental positive as Cognizant gets 45 percent of revenue from the financial services sector,” UBS analyst Jason Kupferberg said.
    For the first quarter, analysts on average expect the company to earn 37 cents a share, excluding items, on revenue of $735.4 million, according to Reuters Estimates. The company posted a profit of 34 cents a share in the year-earlier quarter.
    In February, Cognizant had forecast 2009 full-year revenue of at least $3.1 billion. Analysts are expecting $3.06 billion.

    Cognizant is our second-best performing stock this year. It’s up more than 40%.

  • Buffett Attacks the Stress Test
    Posted by on May 4th, 2009 at 10:59 am

    From the BBC:

    US investor Warren Buffett has hit out at the government’s “stress tests” of US banks, saying they do not properly assess the industry’s health.
    Mr Buffett’s Berkshire Hathaway company holds stakes in three banks that underwent the tests.
    He said the tests ignored differences in business models, but added it was right the government try to save banks.
    The results of the stress tests were due to be published on Monday, but have been delayed until Thursday.
    Referring to Berkshire Hathaway’s holdings in Wells Fargo, US Bancorp and SunTrust Banks, he said, “I think I know their future, frankly, better that somebody that comes in to take a look.
    “They may be using more of a checklist-type approach.”

    I was also glad to hear Buffett criticize the crazy practice of stock buy-backs.

  • Sysco’s Earnings Fall
    Posted by on May 4th, 2009 at 10:55 am

    While the rest of the market is higher today, Sysco (SYY) is down modestly on its earnings report. Earnings were in line at 38 cents a share, down from 40 cents a year ago. Revenue declined 4.5% to $8.7 billion.
    Overall, I like Sysco a lot. This is one of the most stable companies on the market. I recently pointed out that the stock has been an amazing performer after a Citigroup exec looked down on Sysco’s employees.

  • Weekend Poll
    Posted by on May 1st, 2009 at 8:24 pm

  • Fiserv’s Earnings Still Growing
    Posted by on May 1st, 2009 at 3:37 pm

    Pretty good.

    Fiserv Inc. said its earnings from continuing operations increased in the first quarter, reflecting improved operating margins from the growth in sales of more profitable services.
    The Brookfield-based provider of services and technology to the financial services industry reported income from continuing operations of $102 million, or 65 cents per share, compared with $99 million, or 60 cents per share, for the same period a year ago.
    Continuing operations excludes the results of the firm’s 51-percent investment in the insurance business, which Fiserv (NASDAQ: FISV) sold in July 2008.
    Revenue declined in the quarter to $1.04 billion from $1.31 billion. The decline in revenue was attributed in part to declines in the home equity processing business.
    “Our results showcase the strength of our business model as we continue to deliver highly valued products and services across the financial services market,” said Jeffery Yabuki, president and CEO of Fiserv. “In spite of the expected revenue weakness in the quarter, we managed the business to optimize margins and grew adjusted earnings per share 10 percent.”
    Fiserv continues to expect full-year 2009 adjusted earnings per share from continuing operations to be within a range of $3.61 to $3.75, which represents growth of 10 to 14 percent compared with $3.29 in 2008.

    Fiserv (FISV) is a good stock going for a good price. The shares got punished way too much during September and October.
    Here’s the earnings call from Seeking Alpha.

  • Strangest Graph You’ll See All Day
    Posted by on May 1st, 2009 at 2:59 pm

    Bear with me on this one. The long-term evidence suggests that the stock market’s total return outperforms inflation by about 7% a year (or doubling in real terms every ten years). That’s of course an average—the stock market has been dead flat against inflation for 12 years now.
    Here’s a look at the stock market’s real total return, meaning with dividends and adjusted for inflation, divided by a line rising at 7% a year. In other words, a flat line is a real increase of 7% a year.
    Just to make things even weirder, I used a log scale. The idea is to get the purest measure of the stock market’s performance.
    image800.png
    Since earnings growth tends to be fairly consistent, this line is surprisingly similar to a graph of price/earnings ratios. Of course, there’s no guarantee that stocks will continue to outperform inflation by 7% a year.
    What I find interesting is that the peaks and valleys seem to line up well. Warning: It’s dangerous to see relationships where none may exist. Still, it’s kind of interesting. I think it’s also interesting to see that there are very long periods of out-performance and under-performance. Stock investing is hardly a game for all seasons.

  • The Geography of Jobs
    Posted by on April 30th, 2009 at 12:20 pm

    Cool graphic on jobs.