The Do Something Congress
Posted by Eddy Elfenbein on January 2nd, 2007 at 1:26 pm

Andrew Roth of the Club for Growth ran the numbers on 2006. When Congress was in session, the S&P 500 went up 2.25%. On days when it wasn’t it session, it went up 11.56%.

So you’re probably asking yourself, “Was this just coincidental?” The cynics out there would say no. And the cynics would be right. Long term empirical evidence says that correlation does, in fact, mean causation. According to two economists, Mike Ferguson of the University of Cincinnati and Hugh Douglas Witte of the University of Missouri at Columbia, if you had invested $1 in the Dow Jones Industrial Average back in 1897 when the index first started and conducted the In/Out Session schemes until the year 2000, here’s how much money you would have:
In Session: $2
Out Session: $216

“Cautiously Optimistic”
Posted by Eddy Elfenbein on January 2nd, 2007 at 11:12 am

One of my favorite media phrases is “cautiously optimistic.” It means nothing while it sounds important. Can you think of a situation where it wouldn’t apply? (Apocalypse to Strike Earth, Experts Cautiously Optimistic). See! You can’t go wrong.
A few years ago, Neil Westergaard wrote:

What a great all-purpose, meaningless qualifier to keep from looking stupid. It’s much better than just saying “I don’t know.” It implies that that the person really does know something important, but is being conservative and careful in the distribution of information, holding back the unverifiable facts for the good of the republic.
Or covering their behinds.
“Cautiously optimistic.” If the economy goes into the dumper again, we can say our earlier caution was warranted. If things pick up, we were right to be optimistic and “knew it all along.”

Which brings me to today’s New York Times:

Economists Cautiously Optimistic About 2007

I hope they’re right.

How Will the Dow do in 2007?
Posted by Eddy Elfenbein on January 2nd, 2007 at 10:58 am

The new-and-improved Wall Street Journal asks its reader how will the Dow do in 2007?
Here are the results as of 11 a.m.:
Up more than 10%…………………..24%
Up 5% to 10%………………………..45%
Up less than 5%……………………..15%
Down less than 5%…………………..4%
Down 5% to 10%……………………..5%
Down more than 10%………………..7%
This stikes me as somewhat conservative.

Happy New Year!
Posted by Eddy Elfenbein on January 1st, 2007 at 12:08 am

818,304 visitors for 2006.
Thank you all!

Economics Discovers Its Feelings
Posted by Eddy Elfenbein on December 31st, 2006 at 8:10 pm

Here’s a fascinating article from the Economist:

If people are bad at recalling their feelings, they are worse at predicting them. They fail to anticipate how a person feels after moving to a new city, losing a limb or winning a jackpot. Prisoners imagine that solitary confinement will be worse than it really is; mothers-to-be think the pain of childbirth will be more bearable than it typically proves to be. And it is not just unusual events that trip people up. According to Mr Kahneman, people struggle to predict how their appetite for ice-cream, low-fat yogurt or music might change in the course of a week of enjoying them. If man is an iron-balance that weigh pains and pleasures, the scales are sadly askew.

Footnote of the Year
Posted by Eddy Elfenbein on December 31st, 2006 at 6:12 pm

Michelle Leder has awarded the Footnote of the Year:

But in the end, it came down to this post from April 10 on Aaron’s Rent (RNT). As I footnoted at the time, getting the company that you work for to spend nearly $1 million teaching your sons to be race-car drivers as Aaron’s executive Bill Butler did is an interesting use of shareholder money. But calling it an marketing expense really reached a new nadir.

Oh dear lord. Here’s the proxy.

S&P Expects Q4 Earnings Growth to Slow
Posted by Eddy Elfenbein on December 31st, 2006 at 5:39 pm

S&P released this on Friday:

The fourth-quarter operating earnings for the S&P 500 is on track to post its lowest year-over-year gain in over four and a half years, announced Standard & Poor’s today. Estimated fourth-quarter 2006 earnings of $22.08, or $199 billion in aggregate, would represent a 9.4% gain over the $20.19 reported for the fourth quarter of 2005 – marking the first single-digit earnings gain for the index since the first quarter of 2002. However, Standard & Poor’s expects full-year 2006 to be the best year ever for operating earnings, with a projected 14.9% gain over 2005.

Deanna Brooks Wins Playboy Stock-Picking Contest
Posted by Eddy Elfenbein on December 31st, 2006 at 2:50 pm

Congratulations to Deanna. Her portfolio was up 43.43% for the year.
Deanna’s five stocks were Hauppauge Digital (HAUP), Pfizer (PFE), Yamana Gold (AUY), Petroleo Brasileiro (Petrobras) (PBR) and IBM (IBM).

The National Mall
Posted by Eddy Elfenbein on December 30th, 2006 at 10:10 pm

I saw President Ford’s funeral procession earlier today. Even the monuments seemed to be in a somber mood.

2007 Buy List
Posted by Eddy Elfenbein on December 30th, 2006 at 6:55 am

Here’s my 2007 Buy List. For tracking purposes, I assume it’s a $1,000,000 portfolio and each position is worth $50,000. Here’s each stock, ticker, starting price and number of shares. This is what I’m refering to when I write on how the Buy List is doing.

Fifteen stocks return from 2006. The five new stocks are Amphenol, Graco, Jos. A Bank Clothiers, Nicholas Financial and WR Berkley. The sells are Brown & Brown, Dell, Expeditors, Home Depot and Wachovia.
The total market cap of all the companies is $288 billion, which is much smaller than last year. UnitedHealth is the largest at $72 billion. Nicholas Financial is by far the smallest at $117 million. The average dividend yield is 0.55%.
That’s it. The list is now “lock and sealed,” and I can’t touch it until next year.