• Buffett Has Made Nearly $10 Billion Since the Stock Split
    Posted by on March 3rd, 2010 at 2:46 pm

    Earlier this year, the B shares of Berkshire Hathaway were added to the S&P 500. The B shares also split 50-f0r-1 on January 21. Measuring from two days before the stock split to the price right now, the B shares have gained 27%. After the split, Buffett owns 75 million B shares, so that’s a gain of roughly $1.4 billion.
    The big money, however, is in the A shares. Buffett owns about 350,000 of them (going by the last numbers I could find). Those are up 23% since January 19 netting Buffet a gain of $8.2 billion.
    Added it all together, Buffett has seen his net worth jump from about $40 billion in mid-January to about $50 billion today. Thank you stock split and S&P!
    (If you haven’t seen it, here’s the latest Chairman’s Letter).

  • Dallas Fed President Richard Fisher
    Posted by on March 3rd, 2010 at 10:24 am

  • ADP Reports 20,000 Jobs Lost Last Month
    Posted by on March 3rd, 2010 at 9:43 am

    Wall Street is heavily focused on Friday’s jobs report. We got a sneak preview today with the report from ADP (ADP), the private payroll folks. According to ADP, the economy lost 20,000 private sector jobs during February. That’s pretty bad. ADP also revised lower the job losses for January from 22,000 to 60,000. The only bright spot is that this is the smallest decline since the jobs numbers started going negative. So it’s not much of a bright spot at that.
    For Friday, the Street expects the government numbers to show an increase in unemployment to 10% from 9.7%, and nonfarm payrolls to drop by 55,000.
    I recently mentioned that Bristol-Myers (BMY) looked like a good value. The company just announced that Lamberto Andreotti will be their new CEO. Andreotti was made president and COO last year. This is an interesting time for the company. BMY’s recent strategy has been to shed anything that doesn’t deal directly with drugs. They’re doing the exact opposite of diversifying. With their hugely successful drug Plavix going off patent next year, they need to alter their business. Expect to see a string of acquisitions here. BMY has a gigantic cash horde of $10 billion.

  • Berkshire Inclusion to Erase All the Dividend Gains in the S&P 500
    Posted by on March 2nd, 2010 at 1:54 pm

    I was looking at the dividend history of the S&P 500 and I came across this recent story. Companies in the S&P 500 have been increasing their dividend payments recently, but the entire gain will be erased by the inclusion of Berkshire Hathaway in the S&P 500. This is interesting for a few reasons. Even though value weighted indexes are, in my opinion, much better than price weighted indexes, they’re open to statistical noise as well. Also, lots of historical market data, even when accurate, is open to interpretation.

  • The Dangers of Market Timing
    Posted by on March 2nd, 2010 at 12:17 pm

    Here’s a very cool graphic I found via Paul Kedrosky. Unfortunately, I can’t fit the entire thing on my blog, but here’s most of it. You can adjust the toggles below to set buy and sell rules for jumping in and out of the market.

    Here’s the full graphic from Vanguard.

  • Quote of the Day
    Posted by on March 2nd, 2010 at 11:11 am

    “I think failure is the only thing that works.” – Rick Santelli on CNBC moments ago

  • How Much Worse Can It Get?
    Posted by on March 1st, 2010 at 3:06 pm

    Spider-Man has just become unemployed.

    On Monday, Marvel said that in a plot line that begins in issue No. 623 of Amazing Spider-Man, Peter Parker — who has lately given up his gig at The Daily Bugle to become the official photographer of the mayor of New York — will lose that job and, potentially, his career as he becomes blacklisted throughout the city.

  • Unemployment Rate of Fed Governors Hits 42%
    Posted by on March 1st, 2010 at 2:32 pm

    Donald Kohn, the Vice-Chairman of the Federal Reserve, announced his retirement today.
    This is interesting because his retirement will bring the number of Fed governors down to four. There are supposed to be seven.
    President Obama and the Senate need to get on the stick. There are three vacancies to fill. Obama has only had one appointment so far plus reappointing Bernanke as Fed Chair which is a separate appointment.
    The Fed’s Board is not to be confused with the Federal Open Market Committee which makes decisions on interest rates. The FOMC has 12 members; the seven Fed Board members, called governors, plus five presidents of the regional Fed banks. The head of the New York Fed is a permanent member, the other presidents rotate.
    The idea of the Federal Reserve Act is that the bank presidents will always be outnumbered by the political appointees. Unless that’s done soon, the bank presidents will have a majority although Kohn can serve until there’s a replacement.

  • The Federal Reserve’s “Kid’s Page”
    Posted by on March 1st, 2010 at 2:09 pm

    I’m serious.

  • Bristol-Myers Squibb Looks Inexpensive
    Posted by on March 1st, 2010 at 11:17 am

    Bristol-Myers Squibb (BMY) has popped up on my radar screen as a decent value. The company had a lousy third-quarter earnings report, but the one for the fourth-quarter was pretty good. I was also impressed by their forward guidance.
    Here’s a look at the stock (in blue, left scale), earnings-per-share (gold, right scale) and dividend (black, right scale). The graph is scaled at a ratio of 16-to-1 so when the blue and gold lines cross, the P/E Ratio is 16; when the blue and black lines cross, the dividend yield is 6.66%.
    image909.png
    After the fourth-quarter earnings report, BMY said it expects EPS for 2010 to come in between $2.15 and $2.25 a share. As the rise in the gold line shows, that’s a pretty bold forecast. The future numbers for the gold line represent analyst estimates.
    Even if the stock trades at 14 times earnings by the end of the year, that would represent 26% growth. I’m not predicting that will happen. I’m just showing you how cheap the stock is relative to what the company expects.