• Cyclicals Continue to Lead
    Posted by on January 2nd, 2013 at 11:08 am

    Here’s a look at the Morgan Stanley Cyclical Index ($CYC) relative to the S&P 500.

    sc01022013

    The cyclicals grabbed the lead right after Mario Draghi said that the ECB would do “whatever it takes” to save the euro. As I said before, today is a high-beta rally. The Russell 2000 ($RUT) and the Equal Weight S&P 500 are at all-time highs.

  • 2013 Is Off to a Strong Start
    Posted by on January 2nd, 2013 at 10:52 am

    For the last few weeks I’ve cautioned investors to ignore the hype about the Fiscal Cliff. Eventually, I believed, some deal would be reached, and late last night, that’s exactly what happened. Here are the details.

    It wasn’t pretty and not everybody got what they wanted, but compromise is the cornerstone of democracy. Plus, there will be more battles ahead on the debt ceiling.

    The good news is that the markets are responding very well this morning. The S&P 500 has been as high as 1,457.53 this morning. That’s a 2.2% jump and it brings the index just eight points shy of its highest close since 2007. On our Buy List, Oracle ($ORCL) is up to an 18-month high this morning.

    big.chart01022013

    Today’s rally is what’s called a high-beta rally which means that the leaders are small-cap stocks plus industries like tech (like Oracle), finance and cyclicals. High-beta rallies usually (but not always) tend to pull along lower-quality stocks with them. There are lots of sketchy names among small-cap tech stocks. Since our Buy List is concentrated among high-quality stocks, we tend to lag the broader markets on days like this. The Russell 2000, which is a popular index of the small-cap sector, is up to an all-time high this morning.

    Still, our Buy List is beginning 2013 on a strong note. Every stock but Ross Stores ($ROST) is higher today. I was pleased to see that CR Bard ($BCR) was upgraded by JPMorgan today. (The Buy List is so new I haven’t had time to enter in comments for the new additions. I’d better get on that.)

    On the economic front, the ISM Index for December rose to 50.7. If you recall, the number for November was 49.5 which was a dud. Any reading above 50 means the manufacturing sector is expanding. Below 50 means it’s shrinking. The worry zone doesn’t really kick in until the ISM drops to 45 or so. The next big report will be Friday’s jobs report.

  • Morning News: January 2, 2013
    Posted by on January 2nd, 2013 at 6:49 am

    U.S. Fiscal Cliff Deal Prompts Broad Global Market Rally

    Bipartisan House Backs Tax Deal Vote as Next Fight Looms

    Bond Tab for Biggest Economies Seen Falling $220 Billion

    Senate Plan Undoes Most of $600 Billion in Budget Changes

    Euro-Zone Manufacturing Shrinks in December

    Macau Casinos End Year on a High

    Malls Blossom in Russia, With a Middle Class

    Tech Giants Brace for More Scrutiny From Regulators

    Arcelormittal To Sell $1.1bln Stake In Canadian Unit

    Hyundai, Kia Forecast Slowest Growth in Seven Years

    Middleby Buys Appliance Maker Viking For $380 Million

    Buffett Combines BofA With Buybacks to Beat S&P 500

    Crime Forfeiture Pays for U.S. Attorney’s Office (Sometimes in Dinosaur Bones)

    Joshua Brown: Binary Sunset, Revisited

    Phil Pearlman: Crushing It Is a Process

    Be sure to follow me on Twitter.

  • BW: How Your Buy Order Gets Filled
    Posted by on January 1st, 2013 at 9:18 am

    Here’s a cool graphic from Business Week on how your buy order gets filled.

  • Morning News: January 1, 2013
    Posted by on January 1st, 2013 at 7:45 am

    U.S. Budget Compromise Deal Reached

    Senate Passes Legislation to Allow Taxes on Affluent to Rise

    Wall Street Ends 2012 Riding High On “Cliff” Deal Optimism

    Debt Limit Reached, U.S. Moving To Avoid Default: Timothy Geithner

    Yen Tipped To Underperform In 2013

    China Manufacturing Index Shows Third Straight Expansion

    Best and Worst Bond ETFs of 2012

    Bond Craze Could Run Its Course in New Year

    U.S. Mortgage Firms Said to Near $10 Billion Settlement

    Tribune Co. Looks To Television After Bankruptcy

    Best Buy Loses Two Board Directors

    Elbit Drop Cut as Conflict Lifts Orders: Israel Overnight

    Facebook’s Last Sell Rating Is Lifted

    Cullen Roche: Lessons From 2012…

    Roger Nusbaum: A New Year

    Be sure to follow me on Twitter.

  • The 2013 Buy List
    Posted by on December 31st, 2012 at 8:56 pm

    Here are the 20 stocks for the 2013 Buy List. It’s locked and sealed and I can’t make any changes for 12 months.

    For tracking purposes, I assume the Buy List is a $1 million portfolio that’s equally divided among 20 stocks. Below are all 20 positions with the amount of shares for each, and the closing price for 2012. Whenever I discuss how the Buy List is doing, the list below is what I’m referring to.

    Company Ticker Price Shares Balance
    AFLAC AFL $53.12 941.2651 $50,000.00
    Bed Bath & Beyond BBBY $55.91 894.2944 $50,000.00
    CA Technologies CA $21.98 2,274.7953 $50,000.00
    Cognizant Technology Solutions CTSH $73.88 676.7731 $50,000.00
    CR Bard BCR $97.74 511.5613 $50,000.00
    DirecTV DTV $50.16 996.8102 $50,000.00
    FactSet Research Systems FDS $88.06 567.7947 $50,000.00
    Fiserv FISV $79.03 632.6711 $50,000.00
    Ford Motor F $12.95 3,861.0039 $50,000.00
    Harris Corporation HRS $48.96 1,021.2418 $50,000.00
    JPMorgan Chase JPM $43.97 1,137.1390 $50,000.00
    Medtronic MDT $41.02 1,218.9176 $50,000.00
    Microsoft MSFT $26.71 1,871.9581 $50,000.00
    Moog MOG-A $41.03 1,218.6205 $50,000.00
    Nicholas Financial NICK $12.40 4,032.2581 $50,000.00
    Oracle ORCL $33.32 1,500.6002 $50,000.00
    Ross Stores ROST $54.09 924.3853 $50,000.00
    Stryker SYK $54.82 912.0759 $50,000.00
    Wells Fargo WFC $34.18 1,462.8438 $50,000.00
    WEX Inc. WXS $75.37 663.3939 $50,000.00

    There are five new stocks and five stocks that I’m removing. The five new stocks are Cognizant Technology Solutions ($CTSH), FactSet Research Systems ($FDS), Microsoft ($MSFT), Ross Stores ($ROST) and Wells Fargo ($WFC).

    The five stocks I’m removing are Hudson City Bancorp ($HCBK), Johnson & Johnson ($JNJ), JoS. A Bank Clothiers ($JOSB), Reynolds American ($RAI) and Sysco ($SYY).

    The average market cap is $49 billion. That ranges from a high of $225 billion for Microsoft to $150 million for Nicholas Financial ($NICK). Moog ($MOG-A) is the second-smallest and it’s still 12 times the size of Nicholas.

    Fourteen of the twenty stocks pay dividends. The average yield is 1.64%.

    Only four stocks have remained on the Buy List for all seven years: AFLAC ($AFL), Bed Bath & Beyond ($BBBY), Fiserv ($FISV) and Medtronic ($MDT).

  • The 2012 Buy List
    Posted by on December 31st, 2012 at 7:43 pm

    The 2012 trading year has come to a close. I’m happy to report that our Buy List had another market-beating year. The 20 stocks on the Crossing Wall Street Buy List gained 14.56% while the S&P 500 gained 13.41%. This is the sixth year in a row that we have beaten the market.

    Including dividends, our Buy List gained 17.85% compared with 16.00% for the S&P 500. The dividend yield for the Buy List worked out to 2.16% while it was 2.28% for the S&P 500. For the year, our beta was 1.0376.

    Over the seven-year history of the Buy List, we’ve gained 62.30% to the S&P 500’s 32.65%. Our annual turnover has been just 25% which means we’ve only changed five stocks per year. The seven-year beta is 0.9591.

    I’ll restate the rules of the Buy List. I choose a portfolio of 20 stocks at the beginning of the year. After that, the Buy List is locked for the year and I can’t make any changes until the following year. For tracking purposes, I assume that the Buy List is a $1 million portfolio equally divided among the 20 stocks. You can check the performance of the Buy List anytime at our Buy List page.

    My goal is to show investors that by choosing stocks wisely and by sticking with high-quality stocks, they can beat the market—and that’s exactly what we’ve done. I try to beat the market by a few percentage points and to do it with less risk.

    Our top-performing stock in 2012 was WEX Inc. ($WXS) which gained 38.85%. Other big winners were Harris Corp. ($HRS) up 35.85%, Fiserv ($FISV) up 34.54% and JPMorgan Chase ($JPM) up 32.24%.

    Here’s how each stock performed:

    Stock Shares 12/31/2011 Beginning 12/31/2012 Ending Profit/Loss
    AFL 1155.8021 $43.26 $50,000.00 $53.12 $61,396.21 22.79%
    BBBY 862.5151 $57.97 $50,000.00 $55.91 $48,223.22 -3.55%
    CA 2472.7992 $20.22 $50,000.00 $21.98 $54,352.13 8.70%
    BCR 584.7953 $85.50 $50,000.00 $97.74 $57,157.89 14.32%
    DTV 1169.3171 $42.76 $50,000.00 $50.16 $58,652.95 17.31%
    FISV 851.2087 $58.74 $50,000.00 $79.03 $67,271.02 34.54%
    F 4646.8401 $10.76 $50,000.00 $12.95 $60,176.58 20.35%
    HRS 1387.3474 $36.04 $50,000.00 $48.96 $67,924.53 35.85%
    HCBK 8000.0000 $6.25 $50,000.00 $8.13 $65,040.00 30.08%
    JNJ 762.4276 $65.58 $50,000.00 $70.10 $53,446.17 6.89%
    JOSB 1025.4307 $48.76 $50,000.00 $42.58 $43,662.84 -12.67%
    JPM 1503.7594 $33.25 $50,000.00 $43.97 $66,120.30 32.24%
    MDT 1307.1895 $38.25 $50,000.00 $41.02 $53,620.91 7.24%
    MOG-A 1138.1744 $43.93 $50,000.00 $41.03 $46,699.29 -6.60%
    NICK 3900.1560 $12.82 $50,000.00 $12.40 $48,361.93 -3.28%
    ORCL 1949.3177 $25.65 $50,000.00 $33.32 $64,951.27 29.90%
    RAI 1207.1463 $41.42 $50,000.00 $41.43 $50,012.07 0.02%
    SYK 1005.8338 $49.71 $50,000.00 $54.82 $55,139.81 10.28%
    SYY 1704.7392 $29.33 $50,000.00 $31.66 $53,972.04 7.94%
    WXS 921.1496 $54.28 $50,000.00 $75.37 $69,427.04 38.85%
    Total $1,000,000 $1,145,608.20 14.56%

    Here’s how the Buy List performed throughout the year.

    image1296

  • Two Thoughts As 2012 Winds Down
    Posted by on December 31st, 2012 at 11:45 am

    Here are two things that have been on my mind as the year winds down.

    I’m curious if the March 2009 low in the S&P 500, now nearly four years old, marked the end of the brutal nine-year bear market that began in March 2000. That, of course, was the capstone of an 18-year bull market that began in 1982.

    If so, it’s interesting that the bear run was about half the time of the bull run. We never know these things until a few years after they happen. I suspect that it was the low.

    The other item on my mind is, did the bond market’s peak this past July of this year mark the end of its 31-year run? On July 25, 2012, the yield on the three-, five-, seven-, ten-, twenty- and thirty-year Treasuries all hit their lows. This was right at the time of Mario Draghi’s “whatever it takes” pledge.

    Yields have risen since then but every prediction of the bond market’s demise — and there have been many — has been wrong. I’m fairly certain that stocks hit their low, but I’m not so sure about bonds.

  • NICK’s Special Dividend
    Posted by on December 31st, 2012 at 11:27 am

    A few of you have asked about Nicholas Financial‘s ($NICK) special dividend. I was expecting it to hit accounts today but haven’t seen it yet. I’m not sure why but I’m looking into it. I’m sure there’s no need to be alarmed. Like many of you, I just want to find out exactly what’s happening.

    Update: The big dividend hit my personal account around 5:30 pm.

  • A Deal May Be Near
    Posted by on December 31st, 2012 at 11:09 am

    The final day of trading is underway. The seemingly unending Fiscal Cliff drama continues. Honestly, I’m a bit dizzy from the constant news. The latest is that both sides are very close to reaching a deal. On the major points, the Democrats have agreed to raise the tax threshold to $450,000. The GOP is holding out for $550,000. The Democrats want to raise dividend taxes to 20% on households making over $250,000.

    Despite the positive news on Fiscal Cliff negotiations, the market is up rather modestly. Joe Weisenthal of Business Insider notes that the market is actually doing quite well when compared to some of the worse points of the futures market this weekend. The Senate has just reconvened to discuss the Fiscal Cliff.

    The S&P 500 is currently up five points to 1,407.