Archive for 2006

  • Fifty Years Ago Today
    , October 8th, 2006 at 9:59 pm

    Larsen.gif
    Twenty-seven batters up. Twenty-seven down.
    Retrosheet has the details:

    (more…)

  • Today’s Jobs Report
    , October 6th, 2006 at 9:25 am

    This morning, the government reported that the unemployment rate fell to 4.6% (or 4.578% to be exact), which is the lowest rate since before 9/11. But the economy only created 51,000 new jobs last month which is less than half what economists were expecting.
    The economic environment continues to be defined as one with surging corporate profits and very meager job growth. Over the last three years, the economy has created an average of 160,000 new jobs a month, which is just barely above the rate of growth of the labor pool. Contrast this with the 1990s when the economy routinely created over 250,000 jobs a month.

  • Berkshire Hathaway Breaks $100,000
    , October 5th, 2006 at 4:04 pm

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    The stock reached $100 a share on the first day of trading in 1977.

  • The Correlation of Stocks and Bonds
    , October 5th, 2006 at 12:58 pm

    I wanted to follow-up on my previous post about how stocks and bonds have become correlated.
    This is a very important point, and I think it explains much of the recent rally. Here’s at look at how they’ve performed since April 25. For my bond proxy, I’m using the American Century Target Maturity 2025 Fund (BTTRX).
    image267.bmp
    The two asset categories were negatively correlated until the middle of June. Since then, stocks and bonds have moved in tandem.
    A scatter plot will show it better. Here’s the S&P 500 and the BTTRX from April 25 to June 15:
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    A downward sloping lines mean a negative correlation. The worse bonds did, the better stocks did. This tells us that money went directly out of one asset and into the other. But then, the markets suddenly converged in mid-June. Here’s a scatterplot from June 16 to yesterday:
    image269.bmp
    Except for a few strays, that’s a pretty strong positive correlation. This tells us that money was coming out of hard assets like gold and into paper assets.

  • Third-Quarter Earnings Season
    , October 5th, 2006 at 11:21 am

    Thirteen of our 20 Buy List stocks ended their quarter in September, so we have these earnings announcements to look forward to:
    Company…………………..Ticker…………………Date……………………EPS
    Wachovia…………………….WB……………………16-Oct…………………$1.19
    SEI Investments…………..SEIC …………………18-Oct…………………$0.57
    Danaher………………………DHR …………………19-Oct…………………$0.82
    UnitedHealth Group………UNH…………………..19-Oct………………..$0.76
    Brown & Brown…………….BRO…………………..23-Oct………………..$0.28
    AFLAC………………………….AFL……………………24-Oct………………..$0.72
    Fiserv…………………………..FISV………………….24-Oct………………..$0.62
    Varian Medical Systems….VAR……………………25-Oct………………..$0.53
    Expeditors International…EXPD…………………7-Nov…………………$0.30
    Fair Isaac……………………..FIC………………………TBA………………….$0.57
    Harley-Davidson…………….HOG…………………….TBA………………….$1.10
    Respironics……………………RESP……………………TBA………………….$0.30
    Sysco……………………………SYY……………………..TBA………………….$0.36

  • The Campari Family Feud
    , October 5th, 2006 at 6:43 am

    How’s this for a dysfunctional family:

    Luca Garavoglia, chairman of the Milan-based beverage company, has just been slapped with a court order to pay his sister and fellow shareholder 100 million euros ($127 million) in damages.
    Maddalena Garavoglia had complained in court in 2000 that the company, in which she held a 23% stake, had tried to push her out in the run up to its 2001 stock-market listing. Using a capital increase, she alleged, it tried to pressured her to sell her holdings to investment powerhouse UBS, misleading her about the value of her stake.

    That’s not all. Maddalena’s brother and mother also face criminal charges for allegedly giving her false information.

  • Value Versus Growth
    , October 4th, 2006 at 3:45 pm

    The market is rolling again today. The Dow broke 11850 and the S&P 500 is closing in on 1350. I’ve mentioned before that this is one of few market rallies I can think of where the market’s P/E ratio has declined as the rally has wore on. Not only that, the market”s dividend yield has climbed as well. In other words, as well as stocks are doing, profits and dividends are growing faster.
    There’s something else interesting to note which is probably related. Value stocks have led growth stocks during this rally. Looking at the relative performance of growth versus value is a basic sentiment indicator. Growth tends to cream value during market tops, and vice versa during market bottoms.
    This rally may not be over. Here’s how growth and value have done since March 2003:
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    Growth has closed the gap some over the last two months.

  • Melissa Francis: Child Star
    , October 4th, 2006 at 2:00 pm

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    Before she was Melissa Francis, hardass CNBC reporter, she was widdle Missy Francis playing Cassandra Cooper-Ingalls on Little House on the Prairie.
    Unlike most child stars, Missy’s future lay not in porn and blow, but Harvard and basic cable. Not that there’s some similarity.

  • Wolverine World Wide’s Earnings
    , October 4th, 2006 at 9:28 am

    Wolverine World Wide (WWW) is one of those teeny companies I love to follow. Despite its strange name, the stock is up around 200-fold in the last 30-odd years. Still, most people have never heard of it.
    The company makes shoes under various labels like Hush Puppies, Sebago and even Harley-Davidson (HOG), and its stock has been doing very well lately. Shares of WWW are up about 30% for the year.
    Today looks to be another good day for Wolverine as the company announced very good earnings this morning. EPS rose 9.5% to 46 cents a share, two cents more than Wall Street was expecting.
    This is the company’s 17th straight record quarter. Wolverine also raised its forecast for this year to $1.41 to $1.44 a share, and for next year to $1.56 to $1.62 a share.
    Here are the results for the last few years:
    Year…………………………..Sales…………………………..EPS
    1996………………………..$511.03 ……………………….$0.51
    1997………………………..$665.13………………………..$0.64
    1998………………………..$669.33………………………..$0.65
    1999………………………..$701.29………………………..$0.17
    2000………………………..$665.58………………………..$0.52
    2001………………………..$720.07………………………..$0.72
    2002………………………..$827.11………………………..$0.77
    2003………………………..$888.93………………………..$0.85
    2004……………………..$1,061.00………………………..$1.27
    2005………………………..$991.91………………………..$1.09
    2006*………………………$800.15………………………..$1.05
    * First Nine Month

  • Erasing Our Losses
    , October 4th, 2006 at 12:27 am

    The New York Times writes:

    Market historians have noted that stocks can take a long time to recover from periods of great excess. The Dow and the S.&. P., for instance, did not return to their 1929 pre-crash peaks until 1954, long after the Depression and World War II ended.

    That’s true, but it ignores the effect of dividends–which were quite generous back then–and inflation, which in this case was deflation.
    The total return of the stock market in real terms made a new high by 1936, which is surprisingly similar to the period from the March 2000 peak to today. After 1936, the market collapsed again for another five years.