Archive for July, 2009

• Kudos to Cramer
  Eddy Elfenbein, July 2nd, 2009 at 7:16 am

  I can believe I’m saying this but Jim Cramer’s show last night was…pretty good.
  As someone who hasn’t exactly been shy about criticizing CNBC or Jim Cramer, I feel an obligation to praise them when they do a job, and I think Cramer did a good job last night. Perhaps he’s taking Jon Stewart’s criticisms to heart.
  In any event, it’s not perfect but it’s a lot better than the “buy, buy, buy” antics of two or three years ago. Instead, he does a good job of explaining what makes a stock a buy or a sell. There’s needs to be more of this on TV (and in the blogosphere).
  Some clips of the show are after the jump. (See, we’re not all cranks all the time on the Internet.)

  (more…)

• Albert Pujols and the Triple Crown
  Eddy Elfenbein, July 1st, 2009 at 11:14 pm

  Now that it’s July I think we can say that the Triple Crown is now in play for Albert Pujols. It’s a long short, but it can happen.
  No one has won the Triple Crown in 42 year, but Pujols currently leads the NL in home runs and rbi’s, plus he’s sixth in batting. He’s just .013 behind David Wright.
  Pujols also leads the league in runs and he’s tied for second in walks. Unfortunately, the Cardinal’s line-up is pretty thin outside of Phat Albert.

• The S&P 500 and Dividends
  Eddy Elfenbein, July 1st, 2009 at 9:45 am

  Here’s a look at the growth of the S&P 500 along with its dividends over the past 20 years. The S&P 500 is the black line and it follows the left scale, the dividends are the blue line and follow the right scale. The two scales are matched up at a ratio of 50-to-1, meaning the dividend yield is exactly 2% when the lines cross.
  
  That’s actually a very lenient standard. To be a better reflection of valuation, I should have set the scales at a ratio of 30-to-1, but I’m not presenting this as an outlook on stock valuations. The point I want to get across is how stable dividends are over time compared with stock prices. The average swing in stock prices is almost exactly five times the average swing in dividends.
  It’s interesting to see that dividends never bought into the late 90’s rally although they were more impressed by the tepid recovery of the middle of this decade (the dividend tax cut surely helped).
  As an investor, sometimes it’s to your benefit to ignore stock prices and focus solely on your dividends. That’s money they can’t take back from you. The other nice thing about dividends is that you pretty much know what you’re going to get. The line doesn’t jump around too much.
  Stock investing in the 19th century was really about the dividend. Sometimes I think they were a lot smarter than us. The idea of continuously rising capital gains really dates from the 1920s.
  One other point about the table: It goes up to the first quarter of 2009. We’ve seen a lot of dividend cuts this year. I’ll update the chart once the latest numbers are in.

• ZeroHedge Vs. Dennis Kneale
  Eddy Elfenbein, July 1st, 2009 at 8:46 am

  Sheesh, I take a week off, come back and everyone in blogland is fighting—even more than usual! First, we have Barry Ritholtz and John Carney debating and possibly betting on the role that the Community Reinvestment Act played in the housing blow-up. Steve Sailer has also joined the fray.
  Now a fight has broken out between ZeroHedge and CNBC’s Dennis Kneale. Actually, as fights go, this one is a pretty pathetic. It’s transparently obvious that Kneale is trying force a confrontation where it’s completely unnecessary.
  
  That’s what galls me about CNBC. They can’t just tell us they news. No, that would be too easy. Instead, they have to trick us into watching fights thinking that’s the only way we’d pay attention.
  I’m not being paranoid here. A few weeks ago, we found a video where Dennis Kneale freely admitted that stories need “conflict, drama and struggle” to fool people into learning good information (the video has since been removed, so you’ll have to trust me that’s what he said). Do they really need to insult us this way?
  Perhaps he’s right.
  Unfortunately, ZeroHedge fell for Kneale’s bait and their readers are in a tizzy. Trust me, I see their point and from the emails Tyler posted, it’s clear that Dennis isn’t being truthful about Tyler’s “dodge.” Well, what did you expect from someone who’s trying to force “conflict, drama and struggle”?
  In my opinion, Tyler’s response is all wrong. The problem is he’s missing Dennis’ agenda. Tyler wants to have a high-minded discussion of the issues and not on Dennis’ home turf. Well, that’s a noble idea but it won’t get you anywhere with Dennis Kneale.
  As usual, Monty Python is way ahead of us. This is from the Argument Sketch where a man pays to have an argument and is disappointed by what he gets:

  M: Oh look, this isn’t an argument.
  A: Yes it is.
  M: No it isn’t. It’s just contradiction.
  A: No it isn’t.
  M: It is!
  A: It is not.
  M: Look, you just contradicted me.
  A: I did not.
  M: Oh you did!!
  A: No, no, no.
  M: You did just then.
  A: Nonsense!
  M: Oh, this is futile!
  A: No it isn’t.
  M: I came here for a good argument.
  A: No you didn’t; no, you came here for an argument.
  M: An argument isn’t just contradiction.
  A: It can be.
  M: No it can’t. An argument is a connected series of statements intended to establish a proposition.
  A: No it isn’t.
  M: Yes it is! It’s not just contradiction.
  A: Look, if I argue with you, I must take up a contrary position.
  M: Yes, but that’s not just saying ‘No it isn’t.
  A: Yes it is!
  M: No it isn’t!
  A: Yes it is!
  M: Argument is an intellectual process. Contradiction is just the automatic gainsaying of any statement the other person makes.
  (short pause)
  A: No it isn’t.
  M: It is.
  A: Not at all.

  I’m all for a good fight. They can illuminate and be great TV. But cramming histrionics down our throats ain’t the right way. It’s bad TV and not very enlightening. Dennis Kneale has dumbed down his own standards and still failed to meet them.
  Yes, Beaker deserves to be mocked, but not for the reasons he wants us to use.