• Third-Quarter Earnings By Sector
    Posted by on November 19th, 2007 at 1:31 pm

    So far, it looks like earnings for the S&P 500 will decline about 8.5% from last year. The pain, however, is not being felt equally.
    Health Care………………………..14.80%
    Information Technology………..13.68%
    Consumer Staples……………….12.61%
    Industrials………………………….11.82%
    Materials…………………………….5.50%
    Telecommunication Services…..4.09%
    Utilities……………………………….0.73%
    S&P 500……………………………..-8.48%
    Energy……………………………….-9.92%
    Financials…………………………..-33.15%
    Consumer Discretionary………..-38.94%
    The lousy number for the Consumer Discretionary sector is due to the homebuilders.

  • America Finally Wins Vietnam War
    Posted by on November 19th, 2007 at 10:08 am

    It took awhile:

    HANOI — Hang around Vietnamese cafés long enough and you are likely to see an arresting sight: one person handing another a grocery bag stuffed with bank notes. Drug deal? Bribe?
    In fact, this is the way many Vietnamese buy stocks these days – not through a broker or the stock exchange but through the Internet, with payment made in cold cash. Finding each other through stock-trading chat rooms and websites, buyers and sellers strike a deal online and then close it by exchanging cash for stock certificates.
    It’s a vivid sign of the times in booming Vietnam. With the economy growing at its fastest clip in a decade, everyone wants to get in on the action. From taxi drivers to tycoons, Vietnamese are speculating wildly on anything that might go up – apartments, gold, land and, above all, stocks.
    Online trading is an easy way to play the game. Traders don’t need to open an account with a broker. They don’t even need a bank account. Unregulated, informal and private, the online market works something like Craigslist or eBay. But they’re not trading baseball caps or Dad’s stamp collection.
    Participants are trading stocks in privatized state companies that make everything from fertilizer to tractors.

  • A Look at Apple’s 10-K
    Posted by on November 19th, 2007 at 9:47 am

    Michelle Leder reads Apple’s 10-K so we don’t have to:

    When Apple (AAPL) came out with its Iphone at the end of June, there was a flurry of activity to take it apart. That’s kind of the way I feel about the 10-K they filed late yesterday. There were so many interesting disclosures in the 170-page filing, that it’s hard to know where to begin. The filing also included the compensation and perks information that’s more commonly found in the proxy.
    Yes, Steve Jobs still made a single buck last year, but that’s still more than Google (GOOG) CEO Eric Schmidt made for serving as a director at Apple. As the filing notes, “Upon his initial appointment to the Board on August 29, 2006, Dr. Schmidt declined the annual retainer fee and the automatic stock option grant to purchase 30,000 shares to which new directors are entitled under the Director Plan. Instead, Dr. Schmidt purchased 10,000 shares of the Company’s common stock on the open market.”
    Former Vice President Al Gore, who earlier this week became a partner at VC firm Kleiner Perkins, was the lowest paid director (next to Schmidt) but was the biggest beneficiary of the free computer equipment that Apple gives to its directors. Gore received $15,245 worth of Apple swag. Directors are eligible to receive two free computer systems a year, but clearly this includes some extra bells and whistles.
    One of Apple’s risk factors is its ties to a single carrier for the Iphone. In the US, that’s AT&T (T), which has faced criticism for its slow network, but the company also lists 02, T-Mobile and Orange as well. In that same risk factor, Apple notes that because these agreements “require each carrier to make revenue-generating payments” to Apple, the frenzy to unlock the Iphone “could have a material adverse effect on the Company’s future financial condition and operating results” which is why Apple keeps on coming up with new ways to prevent that from happening.
    Finally, there were some interesting details about the free Iphones, which Apple employees had been rumored to receive. According to the K, each of Apple’s 21,600 employees, including the named executives received a free Iphone, which the company then grossed-up for taxes. Judging by one of the footnotes to the summary comp chart, some employees received a $250 gross-up and others received a $379 gross-up, which presumably was the difference between the 4 and 8-gig models. The only employee who didn’t get the free Iphone appears to be Steve Jobs, who the filing notes did not get a gross up for the Iphone, or, for anything else.

  • A-Rod and W-Buf
    Posted by on November 19th, 2007 at 7:13 am

    It looks like A-Rod will re-sign with the Yankees. He’ll also win his third MVP award today. The Wall Street Journal reports that A-Rod got some help in his negotiations with the Yankees from none other than Warren Buffett:

    Mr. Rodriguez’s initial defection happened in late October, a tense period for the team during which its beloved manager Joe Torre was effectively ousted after the Yankees were eliminated in the playoffs. Hoping to net a richer contract elsewhere, Mr. Boras advised his client to exercise his opt-out clause, a move reported Oct. 29. The player reluctantly took his agent’s advice, say people familiar with his thinking, even though he and his wife Cynthia were eager to stay in New York and have him continue to play for the Yankees.
    Amid deafening criticism by sports writers and on talk radio, a worried Mr. Rodriguez called Mr. Buffett, say people familiar with the matter. The two had become friends a few years ago, after the slugger flew to Omaha to meet with the investing guru and rabid baseball fan. After that, the two met socially several more times, say the people familiar with the matter. Signifying their mutual admiration, an autographed Rodriguez jersey hangs at Berkshire Hathaway’s Omaha headquarters.
    Mr. Buffett’s advice was simple, says a person familiar with the matter: approach the Yankees solo, without Mr. Boras. “A-Rod really loves being a Yankee,” says Mr. Buffett. He declined to comment on the substance of any conversation with Mr. Rodriguez, saying he doesn’t discuss private talks.

    Of course, they’re not such an odd couple. A-Rod could be a billionaire before his career is up.

  • RIP: John Noble
    Posted by on November 17th, 2007 at 12:25 am

    Have a look at this amazing obituary of John Noble, an American who lived in Germany during the World War II. Although he was never charged with any crime, Noble was sent to Buchenwald.
    By the Soviets.

  • The Bank of Starbucks
    Posted by on November 16th, 2007 at 7:40 pm

    I always liked this Starbucks (SBUX) in suburban Maryland. It’s so obvious that it used to be a bank. The even kept the drive-thru:
    Bank%20of%20Starbucks.jpg

  • The Decline of Fannie
    Posted by on November 16th, 2007 at 11:18 am

    I have to say that I’m amazed by the decline and fall of Fannie Mae (FNM). Not that the company doesn’t deserve it, but to anyone who know who remembers the esteem with which this stock was held, the recent fall has to be disheartening. In the last six weeks, the shares are down -41%.
    Shares of Fannie Mae were a no brainer for years. From late 1981 to late 2001, the stock went from 50 cents a share (adjusted for a 12-for-1 split) to $80 a share. Throw in dividends and that’s about another 100% to your return. That’s a return to investors of over 30% a year for two decades!
    Today the stock broke below $38 a share, a level it first hit 11 years ago. Fannie Mae was loved by everyone. Peter Lynch touted it in his books. It was politically popular. Who could be against homeownership? Unlike the tobacco stocks, which everyone hated.
    Here’s perhaps the most amazing stat: Both Fannie Mae and Altria (MO) are projected to earn $4.68 a share next year. Yet, Altria is going for $73 a share, which is close to twice FNM’s price.

  • Inflation and Sex
    Posted by on November 16th, 2007 at 10:46 am

    When people are asked what the inflation rate is, apparently your gender is an important factor. Caroline Baum has the 411:

    “That men and women occasionally see things differently is not a remarkable observation,” says Michael Bryan, economist at the Federal Reserve Bank of Cleveland. “But that the sexes could report vastly different perspectives on the rate at which prices are rising over a long period of time is astonishing.”
    Bryan has studied decades of data on this battle of the sexes, using the University of Michigan Survey of Consumers, a joint survey conducted by the Cleveland Fed and Ohio State University among others. He found that demographics played a role in determining the public’s estimates and predictions of inflation.
    Those who are rich, married, white and middle-aged have lower inflation perceptions and expectations than those who are poor, single, non-white and young. That seems almost intuitive: Society’s “haves” are better positioned to endure cost-of- living increases than the “have-nots.”
    New View
    Yet even after holding income, age, education, race and marital status constant, “men and women hold very different views on the rate at which prices are changing.” Bryan writes in a November 2001 commentary, “The Curiously Different Inflation Perspectives of Men and Women.” Women consistently think inflation is 1.9 percentage points higher than men, and they expect prices to rise 2.1 percentage points more than men.

    Baum recommends that Bernanke should go to Tupperware parties. But how does she know he doesn’t?

  • Nassim Nicholas Taleb on Charlie Rose
    Posted by on November 16th, 2007 at 8:31 am

  • Homebuilding Stocks
    Posted by on November 16th, 2007 at 7:53 am

    Here’s a colorful look at how some homebuilders have done for the past five years. As you can see, a company’s industry group is a major indicator of returns:
    homebuilders%20five%20years.gif