• Worst. Conduct. Ever.
    Posted by on March 2nd, 2006 at 7:24 am

    Every day I wish I would have stepped up from that table and walked out. That was the worst conduct I had ever been part of and everybody knew exactly what was going on at that meeting.

    So said David Delainey yesterday in his scathing testimony against Skilling and Lay.

  • Which Fed Members Move the Market?
    Posted by on March 2nd, 2006 at 6:12 am

    Seriously geeky analysis from Macroeconomic Advisers. They looked at the speeches of Fed officials to see who had the biggest impact on the financial markets.

    Greenspan, who was replaced as chairman by Ben Bernanke on February 1, hit markets the most. But his importance dropped sharply compared with previous years, while the influence of St. Louis Fed President William Poole climbed into second place from third in a previous survey conducted between November 2001 and December 2004.
    Poole was followed by Board Governor Donald Kohn, up from fourth in the prior survey, with Dallas Fed President Richard Fisher in fourth place and New York Fed chief Timothy Geithner in fifth. Philadelphia Fed President Anthony Santomero placed sixth in both 2005 and in the previous survey.
    “The most provocative interpretation (of this change) is that market participants anticipated that the Committee was going to become more democratic once Greenspan departed, and hence began to pay more attention to the comments by other FOMC members,” Meyer and Sack wrote.

  • S&P 500 Total Return Index
    Posted by on March 1st, 2006 at 10:49 pm

    Please don’t show this to Robert Shiller, but here’s a graph we don’t see enough of. Over the last 10 years, the S&P 500 with dividends is up 135%, or 8.9% a year. That’s greater than the long-term average.
    SPtotret.png
    The reason the market didn’t rise in a perfectly straight line is because Alan Greenspan is mean.
    Here’s another interesting graph. This is the Wilshire 5000 Total Return Index (^DWCT) since 1980. This the broadest index on Wall Street. Due to the strength of small-caps, this index has been outperforming the S&P 500. Note that this graph is different from the one above in that I used a logarithmic scale.
    Looking at this, I don’t see how people can claim that the bear market is evidence against market timing. It looks like that the market started growing too quickly around 1997. If you had ignored the market from 1997 to 2004, you probably wouldn’t have been surprised to see where the market ended up. Today, we’re only about 3% from an all-time high.
    wilshire.png

  • The Market Today
    Posted by on March 1st, 2006 at 4:19 pm

    Except for Donaldson (DCI), it was a pretty good day. I know that’s a big exception. Donaldson got whacked over 5.9% on its sluggish earnings news.
    The cyclicals had another good day. The S&P 400 Mid-Cap Index (^MID) hit an all-time high. The small-cap indexes like the S&P 600 (^SML) and the Russell 2000 (^RUT) are right at the verge of new all-time highs. Heck, even Cisco (CSCO) closed at a new 52-week high.
    On our Buy List, Expeditors (EXPD) and Brown & Brown (BRO) both hit new highs. Does anyone remember when Brown & Brown was downgraded a few months ago? Good, me neither. SEI Investments (SEIC) is still looking good. Also, Fiserv (FISV) was up over 3% today. It’s about time someone starts buying that guy. It’s one of the cheapest stocks I see.
    At the beginning of the year, I dumped Progressive (PGR) from the Buy List. That was pretty good timing, as the stock has run into trouble since then. Interestingly, the company has introduced a new dividend policy. The company will replace its quarterly dividend with an annual dividend that will be based on a formula. Progressive expects to pay a larger dividend in the future, but it will be more volatile. I’m curious if this will catch on.
    Also, Goldman’s Laura Conigliaro said that Dell‘s (DELL) growth rate has probably hit bottom. The stock is still below $30.

  • Google Apologizes
    Posted by on March 1st, 2006 at 3:41 pm

    for telling the truth.

    We would like to clarify and provide further information on these statements. As we have stated before, monetization improvements will continue to be a key factor in driving future revenue growth. We still see significant opportunities to improve monetization and intend to continue to focus our efforts in this area.

    Move along. Nothing to see here.

  • Top 10 Stock Symbols
    Posted by on March 1st, 2006 at 3:35 pm

    1. (BUD) Anheuser-Busch
    2. (WOOF) VCA Antech (veterinary services)
    3. (BOOM) Dynamic Materials
    4. (FIZ) National Beverage
    5. (LVB) Steinway Musical Instruments (in honor of Ludwig Van Beethoven)
    6. (ZEUS) Olympic Steel
    7. (CHUX) O’Charley’s Inc.
    8. (TAP) Molson Coors Brewing
    9. (BID) Sotheby’s Holdings
    10. (LENS) Concord Camera

  • Carol Bartz and AutoDesk
    Posted by on March 1st, 2006 at 1:57 pm

    AutoDesk (ADSK) reported good earnings again. This is one of the best software stocks in Silicon Valley. They make computer aided design (or CAD) software, which is used by architects and engineers. It’s the second-oldest software company, younger than only Microsoft (MSFT).
    Much of AutoDesk’s success is due to its CEO Carol Bartz. After 13 years at the helm, she’s stepping down in May. Business Week has more on Bartz’s future (“Just Don’t Call It Retirement”).
    Seeking Alpha has the transcript from yesterday’s conference call.

  • Trading Algorithms Grow Increasingly Sophisticated
    Posted by on March 1st, 2006 at 12:48 pm

    OK, I find this a but unnverving.

    The next generation of trading algorithms will be far more flexible, react to unexpected events and handle highly complex relationships, according to a new report released by the Tabb Group, a Westborough, Mass., research firm.
    Algorithms, or trading software that seeks to execute trades more efficiently, are now well-entrenched in Wall Street. Adam Sussman, senior consultant at Tabb Group and author of the latest Tabb report, points out how Wall Street firms are developing new products to eliminate the shortcomings of earlier generations of algorithms.
    For one thing, Mr. Sussman said that some of the larger brokers are developing multi-asset class algorithms that can trade varied assets such as bonds, stocks and currencies. For instance, someone looking to trade a European stock and wanting to simultaneously hedge their currency risk would find such an algorithm useful. The use of these kinds of algorithms is more prevalent among hedge funds, according to Mr. Sussman. These algorithms help ensure that “you are never exposed to more currency risk or credit risk than you want to be,” he said.
    The Tabb study also found that portfolio algorithms are becoming increasingly complex in how they execute orders and are becoming better at formulating an effective execution strategy to trade a portfolio. For instance, some of these algorithms are able to gauge how selling one stock will impact another. The Tabb Group estimates that over the next two years, algorithmic portfolio trading will become as common as single stock algorithms today.

    What could possbily go wrong?

    I know I’ve made some very poor decisions recently, but I can give you my complete assurance that my work will be back to normal. I’ve still got the greatest enthusiasm and confidence in the mission. And I want to help you.
    – HAL 9000 in 2001: A Space Odyssey

  • Dell CEO Sees Revenue Growth Picking Up
    Posted by on March 1st, 2006 at 12:40 pm

    Duh.

    Dell Inc., which last year disappointed investors with slower-than-forecast revenue growth, expects growth to pick up after the current quarter, Chief Executive Kevin Rollins said on Wednesday.
    Dell, the world’s biggest personal computer maker, last month said it expected revenue in its fiscal first quarter to rise 6 percent to 9 percent from a year earlier, much less than the double-digit pace of prior periods.
    “Our belief is that we would want to grow faster than that,” Rollins said at a Goldman Sachs technology investment conference in Phoenix, Arizona. “A six to 9 percent growth rate is not something we aspire to.”
    Rollins said growth should increase as the company focuses on selling more-expensive products and services after it last year cut prices on entry-level consumer computers, causing it to twice miss analysts’ revenue estimates.

    The stock is currently less than $1 above its 52-week low.

  • Asbestos, Inc.
    Posted by on March 1st, 2006 at 11:10 am

    James Surowiecki on asbestos litigation.