• Sluggish Day So Far
    Posted by on November 8th, 2005 at 1:39 pm

    A sluggish day so far. Not awful, just sluggish. The S&P 500 is down 0.39%, while our Buy List is down 0.21%. eBay (EBAY) is our leader today, up about 2.77%. Commerce Bancorp (CBH) is also having a nice day thanks to a New Jersey court dismissing a lawsuit against the company.
    Late yesterday, Frontier Airlines (FRNT) said that its passenger count rose in October. The stock is unchanged today, after a rotten day yesterday. Fiserv (FISV) said that its CEO will be retiring, and the new CEO will be the COO of H&R Block (HRB). Also, Dell (DELL) will report its earnings after the Thursday’s close. The stock is down today.
    On a side note, I track 20 homebuilders—every single one is down today. Bonds are having a very strong day, which I find a bit surprising. The 10-year yield is down to 4.65%.

  • Riots Are Hurting the Euro
    Posted by on November 8th, 2005 at 11:32 am

    After 12 straight nights of rioting in France, the euro is beginning to feel the squeeze:

    “The riots in France will have impacted confidence over Europe and we’re also seeing key technical levels being broken, pushing the euro lower,” said Paul Mackel, a currency strategist at ABN Amro Holding NV in London.
    Against the dollar, the euro fell to $1.1763 at 11:10 a.m. in New York, from $1.1805 late yesterday, according to electronic foreign-exchange dealing system EBS. It traded as low as $1.1710, the weakest since Nov. 13, 2003. The euro slid to 137.90 yen, from 138.92.
    The euro’s drop accelerated in the past two days because traders have placed automatic sell orders to limit losses on the currency as their bets have gone the wrong way. The euro’s low for 2004 was $1.1760.
    “If people are selling the euro on a technical basis and you get any kind of negative news, it just exacerbates the situation,” said Ryan Schiff, global head of foreign exchange at Fimat Group in Chicago, whose company trades about $2 billion in currencies daily.

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  • Toll Brothers Warns
    Posted by on November 8th, 2005 at 10:04 am

    Toll Brothers (TOL), the largest builder of luxury homes, cut its forecast for next year. The company said that it will build 9,500 to 10,200 homes, lower than its previous guidance of 10,200 to 10,600 homes. Plus, it sees “softening in demand” in some markets.
    The entire homebuilding sector is taking a hit this morning. Toll Brothers is down about 13%, DR Horton (DHI) is down 11% and Pulte (PHM) is down 9%. Incidentally, Toll Brothers posted great earnings for the quarter, but no one seems to care.
    Here’s a chart of the homebuilding sector. At one point, the sector was up nearly ten-fold for this decade, but since July the stocks have been retreating.
    homebuilders.bmp

  • How Much Would You Pay
    Posted by on November 8th, 2005 at 7:28 am

    For a studio apartment in midtown Manhattan?
    $1,000,000?

    Higher.

    Higher??

    River View.

    $1,500,000?

    Dishwasher.

    Of course, $1,502,000?

    Hardwood Floors.

    Um, $1,700,000?

    **Foot Tapping**

    No way…$2,000,000?

    Look, I bet you’d love Jersey.

    Yep, this is a studio. Is it worth it?

  • The Earnings Scorecard
    Posted by on November 8th, 2005 at 7:15 am

    According to Zacks, 80% of the S&P 500 has reported earnings so far; 279 companies have beaten expectations, 89 have missed and 50 have nailed it on the head. For 2005, profits are expected to rise by 12.1%, and 12.5% for next year.
    Profit growth is now expected to be 11.7% for the fourth quarter. Every sector but tech is expecting to have slower growth this quarter compared with the third quarter.
    Here’s what Zacks has to say about revisions:

    Positive estimate revisions are widespread, eight of the sectors had more positive than negative revisions over the past four weeks.
    Energy loses the lead for 2005. While the estimates are still rising, it falls to third place in terms of average estimate change up (1.04%) and eighth place in terms of the revisions ratio (1.15).
    Energy still firmly in the lead for 2006. Its average estimate has increased 4.27% on a revisions ratio of 2.84.
    Technology has the highest 2005 increase in average estimate, rising 2.71% on a revisions ratio of 1.35.
    Telecom has the highest 2005 revisions ratio at 3.39, which powered a 1.85% increase in the average estimate.
    Eight of the ten sectors have more positive revisions than estimate cuts for 2005, five of ten for 2006.
    The Consumer Discretionary sector suffered an average decline of 5.47% for this year and 3.48% for next year.

  • Dividends and the S&P 500
    Posted by on November 8th, 2005 at 6:46 am

    Standard & Poor’s reports that cash dividends in the S&P 500 will set another record in 2005. For the year, dividend payments have increased by 12.4%. The indicated dividend is now $22.70. Currently, 386 of the 500 stocks pay dividends, and 256 stocks have increased their dividend this year. What’s interesting is that 63 of those stocks are financial stocks. Through November 7, dividend-paying stocks have gained 5.29% while non-dividend-payers are up 3.81%.

  • Slow and Steady Wins the Race
    Posted by on November 7th, 2005 at 6:42 pm

    If you invested $600 in the S&P 500 every month for the past 25 years and reinvested the dividends, today you’d have $1,011,700.47.
    Pretty cool, huh?

  • The Market Today
    Posted by on November 7th, 2005 at 5:40 pm

    Today was another teeny rally. The S&P 500 gained 0.22%, which is about eleven times what it did on Friday. I still don’t feel much richer, but our Buy List was up 0.20%. Except for Frontier Airlines (FRNT), the Buy List had a pretty decent day. The little airliner dropped $0.34 a share, or 3.53%.
    Way back when, the original reason why Johnson & Johnson (JNJ) wanted to buy Guidant (GDT) was to get its foot in the lucrative defibrillator market. But now that Guidant has been knocked down, two of our Buy List stocks, St. Jude Medical (STJ) and Medtronic (MDT), are gobbling up its market share. Stephen D. Simpson at the Motley Fool has some interesting comparisons:

    (Guidant’s) sales dropped 14% in the quarter, led by a 26% drop in defibrillator sales to $331 million. By way of comparison, St. Jude recently posted sales of $277 million, with growth of 68%. Medtronic is a more difficult comparison because it reports an out-of-sync quarter, but sales of ICD products for the last reported quarter were up 30% to about $718 million.

    Those are two excellent stocks.
    Here’s something not a lot of folks are talking about: The Dow Jones Transportation Average (^DJT) closed at an all-time high today at 3,979.44. Not bad, especially when you consider that the Industrials are still about 1,000 points off their high. The DJT index includes Expeditors (yay!) and Southwest Airlines (boo!). The index has shot up only in the past two weeks. Also, the Dow Jones Energy Index (^DJUSEN) got hit again today. It finished down -1.62%. The government reported that gas prices fell for the fifth straight week.

  • Another Hedge Fund Cop
    Posted by on November 7th, 2005 at 3:58 pm

    If hedge funds were blues singers, Connecticut would be Mississippi, and Greenwich would be the Delta. Now that more regulations are coming from the Feds, Connecticut’s Attorney General, Richard Blumenthal, wants even more. It’s not just Eliot Spitzer that Wall Street has to worry about.

    Mr. Blumenthal is putting together a task force of regulators and hedge-fund executives to jump-start changes. He says he will move to impose his recommendations on any hedge fund with operations in Connecticut or pursue necessary legislation to allow him to put the new rules in place.
    Among the changes he says he could pursue: forcing funds to disclose much more about who audits their holdings and whether they have conflicts of interest with the fund’s management; changing current civil and criminal penalties for hedge-fund fraud; and requiring funds to tell prospective investors whether other investors received preferential terms. He also would like to force funds to disclose any fees paid by brokers or other parties.
    But Mr. Blumenthal concedes that he doesn’t wield the same power as Mr. Spitzer, potentially undercutting his efforts. For one thing, under Connecticut law, he can bring only civil charges, unlike New York, where Mr. Spitzer’s arsenal includes the authority to bring criminal charges.

  • Energy Stocks Continue to Fall
    Posted by on November 7th, 2005 at 1:19 pm

    The market and the Buy List are basically flat today. Frontier Airlines (FRNT) is off 30 cents which is weighing us down. I’m not sure why it’s down so much today. Independence Air filed for bankruptcy, but I wouldn’t think that would hurt Frontier.
    Continuing my theme from last week, the energy sector continues to fall. The Dow Energy Index (^DJUSEN) is off about 2% today. One energy analyst said that prices at the pump could be at $2.15 in another month. Ironically, the CEO’s of oil companies are going to testify before Congress on Wednesday. It might make for bad economics, but it will be good television.
    To show you how dramatic the decline has been, here’s a chart of prices at the pump from GasBuddy.com.
    gasprices.png