New All-Time High — 1,733.15
Posted by Eddy Elfenbein on October 17th, 2013 at 10:52 pm

The S&P 500 closed at a new all-time high today of 1,733.15. The previous one came last month after the Fed’s “no taper” decision.

The current bull market is now 55 months old. The S&P 500 is up 156% from its March 9, 2009 close.

This is one of the greatest bull markets in history — and it’s been hated all the way.

Invest in Arian Foster?
Posted by Eddy Elfenbein on October 17th, 2013 at 11:36 am

Morgan Housel points us to this from USA Today:

Beginning in about two weeks, that might change. A San Francisco-based company is announcing Thursday that it has made an agreement to obtain an interest in the current and future income of Houston Texans star running back Arian Foster in exchange for $10 million that it hopes to raise through the creation and sale of a tracking stock tied to Foster’s marketability.

The company, known as Fantex Holdings, has filed a registration statement with the Securities and Exchange Commission and soon will stage an initial offering of 1.055 million shares at $10 per share, co-founder and CEO Buck French told USA TODAY Sports. If successful, Fantex hopes to make deals that will result in the creation of tracking stocks tied to other athletes and entertainers.

The sale of all initial Foster shares will activate a contract with Foster that, according to French, has been in place since Feb. 28. Foster will get the $10 million from Fantex, which will get 20% of his football, endorsement and other brand-related income reaching back to Feb. 28 and going forward in perpetuity. If, for example, Foster gets a broadcasting contract after his playing career ends, Fantex will get 20% of his pay.

If all of the Foster shares do not sell, Fantex’s contract with Foster will not go into effect and people who made commitments to by shares will get their money back, French said.

Morning News: October 17, 2013
Posted by Eddy Elfenbein on October 17th, 2013 at 6:21 am

Corruption Watchdog Slams Chinese Firms’ Lack Of Transparency

BBVA to Take $3.1 Billion Charge on Chinese Banking Stake

The U.S. Default Risk May Be Passing, But A Downgrade Could Still Lie Ahead

J.P. Morgan Probe Shows Aggressive Moves as ‘Whale’ Losses Mounted

LG Display Posts Solid Q3, Warns of Weak TV Panel Prices

IBM Reports Another Decline in Revenue

EBay Holiday Quarter Forecast Trails Analysts’ Estimates

Alibaba Nears Facebook Sales With Double the Profit

Twitter Doesn’t Want to Be Facebook 2.0

Developments At Apple And Samsung Promise New Brand Ethos For Smartphones

Roche Boosted by Strong Drug Sales in U.S. and China

Nestle Sees Emerging Markets Lift Sales Growth

Emerging Markets Weakness Weighs on Diageo

Cullen Roche: Great Job Congress. You Accomplished…Nothing After All That

Jeff Carter: The Opportunity is Now

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It’s Over
Posted by Eddy Elfenbein on October 16th, 2013 at 10:48 pm

The government shutdown is over. At the least, we won’t face another showdown for a few more months.

In addition to lifting the $16.7 trillion debt limit , the emerging measure would fund the government through Jan. 15, delaying the next threat of a shutdown until after the Christmas and New Year’s holidays. It would set up a conference committee to hammer out broader budget issues, such as whether to replace deep cuts to agency budgets known as the sequester with other savings.

But the bill’s timeline sets up another potentially bitter showdown over spending cuts and entitlement programs that will unfold in the halls of Congress over the next four months.

In a small Democratic concession on the Affordable Care Act, Republicans got additional safeguards to ensure that people who receive subsidies to buy health insurance are, in fact, eligible.

“Republicans remain determined to repeal this terrible law,” McConnell said in announcing the agreement alongside Reid. “But for today – for today – the relief we hope for is to reopen the government, avoid default and protect the historic cuts we achieved under the Budget Control Act.

Wall Street anticipated the deal and celebrated with a strong rally today. The S&P 500 is close to a new all-time high, and the Nasdaq closed at a 13-year high.

IBM Drops After Hours
Posted by Eddy Elfenbein on October 16th, 2013 at 6:40 pm

IBM (IBM) is a stock that I’m seriously considering for next year’s Buy List. The company reported decent profits after today’s close. The tech giant beat earnings by three cents per share, but that was mostly due to favorable taxes. Their revenue number was terrible. IBM generated sales of $23.7 billion last quarter which was $1.1 billion below expectations.

I still have to look at the details but IBM said it will earn $16.90 per share this year. Given the after hours drop, the stock is going for about 10 times this year’s earnings.

The WSJ notes:

Some analysts were expecting IBM’s technology-services business to return to growth, especially after Mr. Loughridge promised investors on a second-quarter conference call that improvement was in the cards, pointing to a 3% increase in the company’s services backlog. But sales in that division fell 3% to around $14 billion, even as its backlog grew another 2%.

Results in IBM’s hardware group worsened compared with the previous quarter, as revenue fell 17% and the unit swung to a $167 million loss. In the second quarter, hardware sales fell 12%.

Software is typically IBM’s strongest business unit, but growth decelerated to 1%, from 4% growth in the second quarter.

IBM blamed growing weakness in international markets for most of its problems. Sales in that area, called growth markets, fell 9%.

International markets, accounting for about a quarter of the company’s sales, have provided the bulk of IBM’s growth over the past few years, according to Morgan Stanley. But those markets have shown little to no growth in the last six quarters.

Strong companies usually have a way of bouncing back from problems like this. But not always.

Stocks Rally on Hope for a Deal
Posted by Eddy Elfenbein on October 16th, 2013 at 10:11 am

Today is D-Day which is either Debt Day or Default Day. At midnight, the U.S. exhausts its borrowing authority. A deal finally seems likely and the stock market is rallying strongly. The S&P 500 is up to 1,717 which is pretty close to an all-time high.

Several of our Buy List stocks are doing very well. Nicholas Financial ($NICK) broke $17 yesterday. The shares got as high as $17.20. AFLAC (AFL) is over $65 and at a new 52-week high. Fiserv (FISV) is up to $103 per share.

Our Buy List is now up 26.6% for the year. Stryker (SKY) will report earnings tomorrow.

Morning News: October 16, 2013
Posted by Eddy Elfenbein on October 16th, 2013 at 7:09 am

Inflation, Unemployment and UK ‘Misery’

Dudley Says Central Banks Should Use All ‘Policy Tools’

Fitch Puts US Credit Rating on Negative Watch

Buffett: Threat to Not Raise Debt Limit is ‘Political Weapon of Mass Destruction’

Averting U.S. Debt Default May Hinge on Rule Shortcuts

Twitter Revenue More Than Doubles in Third Quarter

Rebounding Citi Stung by Slowdown

Alibaba Nears Facebook Sales With Double the Profit

Mattel 3rd-Quarter Profit Up 16% as Doll Sales Improve

Low Fast-Food Wages Come At High Public Cost, Reports Say

JPMorgan Expected to Admit Fault in ‘London Whale’ Trading Loss

BNY Mellon’s Profit Beats Estimates On Higher Fees

Apple’s Hire Of Burberry’s Angela Ahrendts Shows Its Future Is In Lifestyle, Not Tech

Credit Writedowns: Dollar Little Changed; No Default Tomorrow Even Without Agreement

Howard Lindzon: The Other Side of This Stock Market Boom …More Boom? or KaBoom? ….and ‘Momentum Monday’

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Morning News: October 15, 2013
Posted by Eddy Elfenbein on October 15th, 2013 at 7:13 am

Central Banks Gaming Out U.S. Default as Deadline Nears

UK Inflation Holds Steady at 2.7%

China Calls for Dollar to Be Replaced as Global Reserve Currency

China Buys Up Britain as Politics Takes a Back Seat

As US Default Nears, Investors Shrug Off Threat

Hero or Goat? Jamie Dimon Inspires No Consensus

Yahoo CEO Mayer Has Advertisers’ Attention, But Can She Get Their Dollars?

BlackBerry Seeks to Reassure Customers With Newspaper Ads

Burberry Designer Bailey to Become CEO as Ahrendts Goes to Apple

Macy’s to Open Thanksgiving for Black Friday Sales

Shareholders Voting on Alitalia Bailout Plan

Alcatel Job Cuts Pose Test for French

WOW: Tablet Gaming Startup Supercell Just Raised $1.5 Billion

Pragmatic Capitalism: Marc Faber on Bloomberg TV: There is No Safe Haven Left

Joshua Brown: Is Unprecedented Inequality the Reason the Economy Can’t Recover?

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Dow/S&P 500 Hits Five-Year Low
Posted by Eddy Elfenbein on October 14th, 2013 at 12:45 pm

Not all indexes are created equal. The Dow has been getting clobbered by the S&P 500. The Dow/S&P 500 Ratio is now below 9.0 and is at a five-year low.

The Key to Success: Failure
Posted by Eddy Elfenbein on October 14th, 2013 at 11:39 am

Scott Adams:

To put it bluntly, goals are for losers. That’s literally true most of the time. For example, if your goal is to lose 10 pounds, you will spend every moment until you reach the goal—if you reach it at all—feeling as if you were short of your goal. In other words, goal-oriented people exist in a state of nearly continuous failure that they hope will be temporary.

If you achieve your goal, you celebrate and feel terrific, but only until you realize that you just lost the thing that gave you purpose and direction. Your options are to feel empty and useless, perhaps enjoying the spoils of your success until they bore you, or to set new goals and re-enter the cycle of permanent presuccess failure.