• Still a Bull
    Posted by on November 13th, 2007 at 11:13 am

    He’s a chart of why I still like the stock market. The black line is the S&P 500 and it follows the left scale. The yellow line is its earnings and it follows the right scale. I scaled it at 16.66 to 1 which has been roughly the average P/E ratio for the past few months.
    The part of the yellow line in the future is obviously projections. You can see that the market is anticipated to recover from a modest dent in earnings growth.
    image551.png

  • Breakfast at Wall Strip
    Posted by on November 13th, 2007 at 9:12 am

    Lindsay does a great Audrey Hepburn. Next, I hope they do My Fair Isaac. (“I could have bouuuught all night…”)

  • Leucadia National (LUK)
    Posted by on November 12th, 2007 at 2:26 pm

    One of my favorite stocks, Leucadia National (LUK), reported earnings on Friday. If you’re not familiar with Leucadia, it’s basically the Greta Garbo of the stock market. The company has no analysts who follow it, no earnings estimates, no whisper numbers, barely any press releases and it does minimal volume
    Talk about bare bones, check out their website.
    So what does Leucadia do? It’s often called a “mini Berkshire Hathaway” because it’s a holding company that buys assets on the cheap. For nearly thirty years, the firm has been run by Ian Cumming and Joe Steinberg. They own a hodgepodge of businesses; some real estate here, some timber there, even a winery. Nothing terribly exciting.
    But what is impressive is the stock’s long-term performance. Remarkably, Leucadia National has done even better than Berkshire Hathaway.
    Since the stock market bottomed in August 1982, shares of Leucadia National are up over 32,600%. Berkshire is up only 29,600%. (Poor Warren.) Actually, LUK has done even better because it paid out a ginormous dividend in 1999. The stock is up another 60% this year, and unlike Berkshire, they split the shares so normal humans can buy it.
    The lesson here is, don’t be afraid of companies that aren’t widely followed. Some of the best stocks are off Wall Street’s radar screen. Inhabitants of Wall Streetistan tends to see all time and space as neatly divided into three month chunks. The quarterly earnings game is tough to play and there’s a benefit to ignoring it altogether.

  • How to Profit from a Crash in China
    Posted by on November 12th, 2007 at 11:10 am

    Some market observers think the Chinese market is a bubble. Me, I’m convinced. The Shanghai Composite has basically doubled this year, and it doubled last year as well. That’s not normal and it shouldn’t be expected to continue. In fact, the index is already down about 15% from its peak.
    The good news for investors is that ProShares has launched a new ETF designed to profit off China’s misery. The UltraShort FTSE/Xinhua China 25 ProShare (FXP) moves twice in the opposite direction of the Chinese stock market. The underlying index is the FTSE/Xinhua China 25 Index (FXI). Check out how that index has done:
    image550.png
    Yep, that might be a bubble.

  • Jim Cramer’s 10 Reasons to Be a Bull
    Posted by on November 12th, 2007 at 10:26 am

    At TheStreet.com, Jim Cramer lists 10 reasons to be a bull. Here are his Top 5:

    1. The stock market is cheap. Most of the stocks I follow are in low or mid-teen multiples or at a price-to-earnings ratio vs. high growth rate that I regard as being just flat-out cheap, particularly when you consider a 4% 10-year Treasury. Retail at 10 times earnings? Lots of high-growth tech stocks at mid-teen multiples? It makes no sense to me.
    2. Takeovers and going-privates could come back. On a large scale we saw BHP Billiton (BHP) make a move today for Rio Tinto (RTP). On a smaller scale there’s money to go private, witness Restoration Hardware (RSTO).
    3. There are some very strong bull markets out there. Health care cost containment, agriculture, oil and oil services, infrastructure, tech and aerospace defense. There are a lot of sectors that work.
    4. Interest rates. The financials are so dire that the Fed will have to cut twice by year-end or give us another half-point cut, which will flush a huge amount of money from the sidelines and embolden banks to start lending again.
    5. The market still loves high growth. Witness Google (GOOG), Research In Motion (RIMM), First Solar (FSLR), Apple (AAPL) and Intuitive Surgical (ISRG). Believe me, if this market were really bad, you wouldn’t get those to go up, either.

    If I made a top 10 list, I would simply restate Jim’s first point 10 times.

  • Google Millionaires
    Posted by on November 12th, 2007 at 10:15 am

    Bonnie Brown is a former Google employee who made several million dollars off her stock options. So what did Ms. Brown do at Google? Programmer? Designer?
    Nope, she was the company’s in-house masseuse:

    “I’m happy I saved enough stock for a rainy day, and lately it’s been pouring,” said Ms. Brown, 52, who now lives in a 3,000-square-foot house in Nevada, gets her own massages at least once a week and has a private Pilates instructor. She has traveled the world to oversee a charitable foundation she started with her Google wealth and has written a book, still unpublished, “Giigle: How I Got Lucky Massaging Google.”

  • Remembrance Day
    Posted by on November 11th, 2007 at 11:00 am

    poppies.jpg

  • Did She Say Shittygroup?
    Posted by on November 9th, 2007 at 3:48 pm


    Nah, it must be me.

  • Investing With Nickels and Dimes
    Posted by on November 9th, 2007 at 10:38 am

    Ok, I’d admit I’m a sap for these kinds of stories, but c’mon…this is great. Earl Crawley, a 69-year-old Baltimore parking lot attendant who makes $20,000 a year has amassed a portfolio worth $500,000.

    How did you get started investing?
    Soon after I started working for Mercantile Bank in Baltimore 44 years ago, one of the bankers took me aside and told me I didn’t have enough education to go very far at the bank. He suggested I invest in stocks.
    Where did you get the money?
    I did it with good old-fashioned nickels and dimes. My mother taught me how to budget, which made me appreciate how a little money can grow. I saved what I could from odd jobs, such as lawn-cutting and window-washing, that I did in addition to my day job. I used that money to buy one share of IBM stock back in 1981.
    How did you learn how to invest?
    I really didn’t know enough to be scared. In school I was considered a slow learner — dyslexic, it’s called now. My true gift from God is my ability to listen, and that’s how I’m able to ask questions and use tips from the brokers, financial planners and bank customers I see every day.
    Do you have a formula for picking stocks?
    When I first started out, I had to be conservative and take my time because I couldn’t afford to lose money. Now I look for companies with stability that pay dividends. I read the stock pages but don’t claim to know everything about them. I have a broker, but many times I’ll go where my spirit leads me.
    Any stocks you’re excited about now?
    I’ve been buying shares of ExxonMobil.
    We’ve heard that you’re helping others invest.
    I started an investment club at my church. And I’ve been coaching a couple of young men, such as bar-and-grill cook Antawn Davenport and Dana Mouse Smith, who toured with the late rapper Tupac Shakur. They can help spread the message that people can do whatever they set their minds to do.

    Mr. Crawley, you are my hero.
    (Hat Tip: Capt. Kirk.)

  • A Bond Bubble?
    Posted by on November 9th, 2007 at 10:06 am

    Ever notice how, in the eyes of the media, the bond market is never in a bubble? No, that’s only for tech stocks and real estate. Look at the five-year Treasury yield (^FVX): It’s down to 3.75%, that’s its lowest yield in over two years.
    When Baidu hits $400, well…that’s irrational. Yet, if the bond market does that same, it’s assumed to be correct. Where are the editorialists and central bankers wagging their fingers at the moral laxity of the investing public? Can anyone get Bob Shiller on the line?
    The same thing goes for currencies and the bond market. Does the fact that every single commodity rally since, oh…the Enlightenment, has ended the same way, the media considers these judgments to be sound? If oil is at $100, the problem is easy, we drive too much! Gold’s at $900? Yikes, they must know something.
    I don’t see how a yield of 3.8% is suitable competition against equities. The S&P’s dividend yield is about half that. What kind of equity premium are we talking about?
    Rant over.