The Market Today

The market closed its fifth straight boring-as-hell day. Not that I’m looking for excitement, but this is getting ridiculous. Let at these numbers: the Dow, +6.49 points, the Naz +3.74 and the S&P 500 +2.06. Of the 100 stocks in the S&P 100, 74 moved less than 1% today. This is like watching the WNBA. The VIX (^VIX) is now back below 13.
Here’s something a little bit interesting. After an accounting scandal earlier this year, American International Group (AIG) restated its profits for the last five years. It turns out that the company had overstated its profits by $3.9 billion. Hey, those pesky decimals can be kinda confusing. Millions, billions, kilometers, it’s all one big blur. Well, now the company is correcting the correction. AIG says that it understated the previous correction by $500 million. That’s nice to know but something tells me this story isn’t quite over.
Here’s a little tidbit from the Wall Street Journal on Hank Greenberg, AIG’s former Grand Poobah.

When AIG executives traveled with him on business, they were required to use the small pilots’ bathroom in the front of a corporate plane. A large, fancy bathroom in the back of the plane could be used only by Mr. Greenberg, his wife and their Maltese dog, Snowball, according to a former AIG executive.

A dog named Snowball? Wasn’t that Trotsky in Animal Farm? Or wait, that was a pig. But still, Snowball? The bathroom??
Moving on, the Buy List had a decent day. We beat the market again. The S&P 500 was up 0.17%, and the Buy List was up 0.44%. Both Fair Isaac (FIC) and Expeditors (EXPD) hit new 52-week highs. Danaher (DHR), the tool company, reiterated its fourth-quarter forecast. I like to see companies do that around the middle of a quarter.
Outside our Buy List, Cisco (CSCO) reported earnings after the close. I’m enjoying this because this is the first time Cisco is required to expense its stock options. Several tech stocks fought this regulation hard. Cisco regularly had its earnings inflated by about 20%.
Just two months ago, Cisco was trying to get the SEC’s approval on a shady option-expensing scheme. Fortunately, the SEC shot them down. I always enjoyed hearing people on CNBC say that Cisco has a P/E ratio of around 16. Yes, by their accounting.
For the quarter, Cisco earned 25 cents a share, 20 cents without options. Including options, the Street was looking for 24 cents a share. Starbucks (SBUX) just said that options-expensing will cost them about 9%.
And finally, General Motors (GM) fell to another 52-week low as Delphi reported that its loss widened by seven-fold.

Posted by on November 9th, 2005 at 5:45 pm


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