• The 10 stupidest tech company blunders
    Posted by on August 18th, 2009 at 9:52 am

    InfoWorld runs down the 10 stupidest blunders from tech companies. Here’s a sample and it’s one I never knew about:

    2. Real Networks Punts on the iPod
    People think Steve Jobs invented the iPod. He didn’t, of course. Jobs merely said yes to engineer Tony Fadell after the folks at Real Networks rejected Fadell’s idea for a new kind of music player in the fall of 2000. (Fadell’s former employer Philips also turned him down.)
    By then MP3 players had been around for years, but Fadell’s concept was slightly different: smaller, sleeker, and focused on a content-delivery system that would give music lovers an easy way to fill up their “pods.” (Jobs is famous for driving the design of the iPod.)
    Today that content-delivery system is known as iTunes, and Apple controls some 80 percent of the digital music market. Fadell worked at, and eventually ran, Apple’s iPod division until November 2008. Real Networks is still a player in the streaming-media world, but its revenues are a fraction of what Apple makes from iTunes alone.

    Um…sorry.

  • S&P 500 Stocks Above Pre-Lehman Levels
    Posted by on August 18th, 2009 at 9:41 am

    Bespoke finds the very small list of stocks that are above their level prior to Lehman Brothers going kablooey. Only 55 stocks are up and just 27 are up by more than 10%.
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  • Insiders Are Dumping Stock
    Posted by on August 18th, 2009 at 8:51 am

    From Reuters:

    A massive rally in U.S. stocks since March has reawakened bullish spirits, but insiders are jumping out of the market in a sign the run up is getting stretched.
    Company executives are selling stock at a rate not seen in two years after a near 50 percent rise in the S&P 500 from a March 9 low. That suggests directors and managers may think stock prices are nearing the top end of their range in the current economic climate.
    There has been a decline in short interest — borrowed shares sold but not yet repurchased — which some analysts see as a warning. Some investors sell short to profit from price declines, and some say the recent rally has been supported by the reversing of short positions.

    After a 50% rally, I think a sharp pullback is necessary. When it will happen and by how much is still a question. However, I don’t think the market really experienced a rally as much as we saw an unwinding of a vicious bear market.
    The rally has been led by junk stocks which is really due to investors fleeing all investments which held any type of risk. The low-quality rally is mirrored by what’s been happening in the bond market with the closing of the gigantic spreads between corporates and Treasuries.

  • This Explains A Lot
    Posted by on August 17th, 2009 at 3:26 pm

    The Onion reports:

    ENGLEWOOD CLIFFS, NJ—Citing a need to provide quality programming 24 hours a day, CNBC has extended an invitation to anyone who owns a suit to drop by the financial news network and be a guest expert, cohost a show with Larry Kudlow, or do whatever. “Don’t worry about what kind of shape your suit is in,” said CNBC president Mark Hoffman, who explained that his network’s studio has an iron and some old phone books that people can press their jackets on. “Just come on down, run a comb through your hair, and if you’re here by 8 a.m., we’ll have you on Squawk Box at 8:15 making stock picks. But don’t forget your suit!” Hoffman added that men of ruddy complexion with neck sizes exceeding 19 inches are not required to wear a tie.

  • Well, That Changes Things
    Posted by on August 17th, 2009 at 2:38 pm

    From CNBC’s Correction page:

    An earlier version of this story misstated the amount of Goldman Sachs earnings, listing them as $344 billion when it should have read $3.44 billion.

    In other news, CNBC has a corrections page?

  • Abby Joseph Cohen: Recession Ending Now
    Posted by on August 17th, 2009 at 10:39 am

    Abby Joseph Cohen jumps on the Dennis Kneale bandwagon:

    The U.S. recession is ending “right now,” said Abby Joseph Cohen, a senior investment strategist at Goldman Sachs Group Inc.
    The economy may grow by 3 percent in the next couple of quarters and expand by 1.5 percent to 2 percent next year, Cohen said. While consumer spending is likely to rise, it probably won’t increase as fast as at the end of prior periods when the U.S. was emerging from a recession, she said.
    “Clearly the economy is on the mend,” Cohen said in an interview with Bloomberg Radio. “We do think that profit growth will be more substantial going forward.”
    Cohen, known for her optimistic forecasts for stocks during the 1990s stock-market rally, was replaced in March 2008 as the bank’s chief forecaster for the U.S. equity market. She predicted in a May 1 interview that the Standard & Poor’s 500 Index might jump 20 percent to 1,050 in the next 6 to 12 months. The index climbed 15 percent to 1,010.48 through Aug. 7 before retreating 0.6 percent last week.

  • Warren Buffett’s New Buy
    Posted by on August 17th, 2009 at 9:58 am

    We were very pleased to see that Warren Buffett’s Berkshire Hathaway (BRKA) has added Becton, Dickinson (BDX), one of our Buy List stocks, to his portfolio. Obviously, Warren must be a regular reader.
    There is one thing that troubles us. On the SEC filing, the company is listed as Beckton Dickson & Co.
    See for yourself.

  • The Market’s Excessive P/E Ratio
    Posted by on August 17th, 2009 at 9:37 am

    There’s recently been some commentary on the stock market’s elevated P/E Ratio (see here and here).
    I think this is a good instance where the P/E Ratio fails to tell us much. We have to remember that the P/E Ratio is an unusual statistic because it looks at the relationship between two different kinds of the numbers. A stock’s price is a fixed-point number, which means you know exactly what a price is at any given time, but earnings is a rate, meaning it must be defined at something that only exists between two certain points in time.
    There’s nothing inherently wrong about combining two different kinds of numbers though we should be bear in mind its limitations and this is one such time. The reason is that earnings took such a bath in the fourth quarter of 2008. Operating earnings for the S&P 500 were $-0.09 for Q4 of 2008 and reported earnings were $-23.25. As long as we’re carrying that dud quarter in our trailing four quarters, earnings will look very depressed.
    Those losses are massive outliers. The good news is that they’re also past us. At the end of the third quarter, the S&P’s trailing four-quarter operating earnings will probably be around $40, at by the end of the fourth quarter, they’ll vault up to $55. That’s simply because we’re subtracting an awful quarter and adding on a more typical quarter. We can expect that the market’s P/E Ratio will dramatically plunge, but that won’t mean that the market is suddenly becoming a good value.

  • Play the Federal Reserve Game
    Posted by on August 14th, 2009 at 9:02 pm

    The San Francisco Fed has created perhaps the wonkiest video game world history—it’s the Federal Reserve Game!
    Haven’t you always wanted to test your monetary policy skillz online? Well, now you can! Set rates too high and you’ll cause a recession. Go too low and inflation will creep up.
    See if you have….
    the cool judgment of an Arthur Burns.
    the sober confidence of a William McChesney Martin
    or the raw sexuality of a Marriner Eccles
    Note: I tried to audit the game but kept getting an error message.
    (Via: Economix via Carney)

  • 16 Companies that Have Raised Their Dividend by 10% or More for the Last Nine Years
    Posted by on August 14th, 2009 at 5:15 pm

    Let me add a disclaimer at the start of this post. This is the result of a data dump so the numbers may not be correct. I searched for companies that have increased their dividend by at least 10% for the last nine straight years. I haven’t doubled-checked the data off another source, but here are the initial results.
    Federated Investors (FII)
    Linear Technology (LLTC)
    Bank of Kentucky Financial (BKYF)
    C.H. Robinson Worldwide (CHRW)
    Expeditors International of Washington (EXPD)
    AFLAC (AFL)
    TJX Cos. (TJX)
    Brown & Brown (BRO)
    Novo Nordisk (NVO)
    Fastenal (FAST)
    John Wiley & Sons (JW-A)
    Johnson & Johnson (JNJ)
    Pfizer (PFE)
    Mercury General (MCY)
    Polaris Industries (PII)
    LSB Financial (LSBI)
    The current year isn’t included since we’re not done, but a few stocks may fall off the list by year’s end.
    The ones that really stand out are Pfizer, Johnson & Johnson and AFLAC. According to my data, these have raised their dividend by 10% or more for at least 18 years. Pfizer cut its dividend in half this year so it’s due to fall off the list.
    The smallest dividend increase for AFLAC has been 12%. The company has already raised its dividend by 16% this year, plus the stock is going for about nine times this year’s earnings forecast (not the Street’s forecast, but AFL’s).
    J&J increased its dividend by only 6.5% earlier this year so it’s also in trouble. The company has, however, raised its dividend for 47 straight years.
    Let me add a special shout out to LSB Financial which is the holding company for Lafayette Savings Bank. This isn’t a micro-cap, it’s a nano-cap. It’s a 140-year-old Indiana-based thrift with a market cap of just $17 million. That’s about 25 minutes worth of sales at Wal-Mart (WMT). LSBI has no analysts who follow it. Sadly, it will fall off the list this year — like many financial firms, the thrift chopped its dividend in half.