Superstitious investors watch the Super Bowl results closely to get a
sense of where the market's going. It sounds rather silly, but the
so-called Super Bowl Indicator is often correct.
But this year,
the prediction is a little odd. According to the indicator, stocks will go up this year no matter which team wins the championship.
The indicator says the market will rise when a team from the original
National Football League wins the Super Bowl. This goes back to the time
when there was also an American Football League in operation from 1960
to 1969. The AFL teams became part of the NFL in 1970.
This year,
both teams hail from the original National Football League. Well, the
Baltimore Ravens technically didn't exist until 1996, but the team
originated from the Cleveland Browns, which was part of the NFL. So it
counts, right? One could argue that the San Francisco 49ers might have a
little more NFL cred, so maybe investors should be rooting for a 49er
victory.
At any rate, it seems like this year's game is a big green light for
jumping back into the market. But wait, let's look at what happened the
last time two original NFL teams played each other. That happened in
2001, when the Ravens absolutely trounced New York Giants.
That was not the best year for the markets, according to the Wall Street Sector Selector site. The Dow Jones Industrial Average ($INDU -0.36%) fell 7.1% and the Standard & Poor's 500 Index ($INX -0.26%) fell 13.04%.
In
other words, don't rely on one football game for your investing
strategy this year. But if you want another sign that stocks might
behave nicely this year, check out the "January effect." MSN Money's
Charley Blaine writes that
this indicator shows that a higher market (measured by the S&P 500)
in January leads to a higher market for the year, and it's correct
about 75% of the time.
Thursday, January 31, 2013
Saturday, January 26, 2013
new home sales down (but up)
New home sales unexpectedly
fell 7.3% month-over-month (m/m) in December to an annual rate of
369,000, below the 385,000 rate expected, but the disappointing report
was offset by an upward revision of November's figure to a 398,000
annual rate from the previously reported 377,000 rate. The median home
price rose 1.3% m/m and 13.9% y/y to $248,900. The inventory of new
homes of 151,000 was slightly up from the 149,000 recorded last month,
representing 4.9 months of supply at the current sales rate. New home
sales are considered a timely indicator of conditions in the housing
market as they are based on signings instead of closings. The decline in
sales was led by a 29% fall in sales in the northeast in December,
coming on the heels of a 48% jump in November.
Despite the somewhat disappointing report, for all of 2012, new home sales gained 19.9%, the biggest jump since 1983 according to Bloomberg, and the first increase since 2005.
[But according to AP], For the year, sales rose nearly 20 percent to 367,000. That's the most since 2009, although the increase is coming off the worst year for new-home sales since the government began keeping records in 1963. Sales are still below the 700,000 level that economists consider healthy.
Despite the somewhat disappointing report, for all of 2012, new home sales gained 19.9%, the biggest jump since 1983 according to Bloomberg, and the first increase since 2005.
[But according to AP], For the year, sales rose nearly 20 percent to 367,000. That's the most since 2009, although the increase is coming off the worst year for new-home sales since the government began keeping records in 1963. Sales are still below the 700,000 level that economists consider healthy.
Friday, January 25, 2013
Ackman vs. Icahn
Carl Icahn and Bill Ackman really hate each other.
The two billionaires duked it out in an amazing show of verbal hostility on live television Friday, letting loose with a torrent of insults and obscenities. It was an unprecedented spectacle, one that the financial world won't forget anytime soon.
And the stock at the center of it all, Herbalife (HLF +0.79%), went nuts during the conversation.
The two investors have been fighting for years, going back to 2003, when Ackman's former company was under investigation by the Securities and Exchange Commission. Icahn bought Ackman's shares in a real estate company called Hallwood Realty, but the issue turned into a nasty legal battle later.
There's so much animosity between the two, in fact, that New York restaurants know not to seat them near each other, according to The New York Times.
The two are feuding again over Herbalife, a stock that Ackman has made a well-publicized bet against. Ackman has called the company a pyramid scheme. News reports later said that Icahn had bought a position in Herbalife -- something Icahn has not publicly confirmed.
The tension between the two has been building for days. In an interview with Bloomberg television, Icahn said he didn't respect Ackman and challenged his "holier than thou" attitude. Ackman went on CNBC to defend himself, and Icahn joined in as well.
*** [7/16/14]
NEW YORK, July 16 (Reuters) - Carl Icahn and William Ackman are friends again.
The billionaire investors, who have been at odds over nutrition and diet company Herbalife, made up in public on Wednesday, ending a decade long feud that exploded on cable television 18 months ago.
Icahn, 78, who made his reputation in the 1980s, and Ackman, 48, seen by some as a young version of the older corporate raider, sparred over opposing bets on Herbalife on CNBC in January 2013. Icahn has taken a long position on the stock and Ackman is short.
On Wednesday at the CNBC Institutional Investor Delivering Alpha Conference, the men hugged and then praised each other over their investor activism.
When asked about who would win the Herbalife bet, Ackman said "it is not about winning. I would love to get Carl out of Herbalife."
He added that Icahn could walk away with a handsome profit.
The war of words that began when Icahn called Ackman a cry baby in a school yard and Ackman shot back that Icahn was not an honest man captivated Wall Street for roughly half an hour on CNBC and was played repeatedly by the network.
The network provided the stage for the reconciliation at its CNBC Institutional Investor Delivering Alpha conference after suggesting the move to Ackman three weeks ago.
The detente has been months in the making, with both sides saying relations improved in late April and hinting they might even team up. Each man took pains to say nice things about the other in recent weeks, often while appearing on CNBC.
On Wednesday, Ackman appeared as a "mystery guest" at the conference, causing the audience to applaud when he walked onto the stage and gave Icahn a hug.
The men agreed good corporate chiefs need to run companies and that boards should let executives do their jobs, as long as they do them well.
Icahn said there was room for their kind of activism.
"At the risk of sounding immodest, there is no one better at finance than us," Icahn said to Ackman.
The two billionaires duked it out in an amazing show of verbal hostility on live television Friday, letting loose with a torrent of insults and obscenities. It was an unprecedented spectacle, one that the financial world won't forget anytime soon.
And the stock at the center of it all, Herbalife (HLF +0.79%), went nuts during the conversation.
The two investors have been fighting for years, going back to 2003, when Ackman's former company was under investigation by the Securities and Exchange Commission. Icahn bought Ackman's shares in a real estate company called Hallwood Realty, but the issue turned into a nasty legal battle later.
There's so much animosity between the two, in fact, that New York restaurants know not to seat them near each other, according to The New York Times.
The two are feuding again over Herbalife, a stock that Ackman has made a well-publicized bet against. Ackman has called the company a pyramid scheme. News reports later said that Icahn had bought a position in Herbalife -- something Icahn has not publicly confirmed.
The tension between the two has been building for days. In an interview with Bloomberg television, Icahn said he didn't respect Ackman and challenged his "holier than thou" attitude. Ackman went on CNBC to defend himself, and Icahn joined in as well.
*** [7/16/14]
NEW YORK, July 16 (Reuters) - Carl Icahn and William Ackman are friends again.
The billionaire investors, who have been at odds over nutrition and diet company Herbalife, made up in public on Wednesday, ending a decade long feud that exploded on cable television 18 months ago.
Icahn, 78, who made his reputation in the 1980s, and Ackman, 48, seen by some as a young version of the older corporate raider, sparred over opposing bets on Herbalife on CNBC in January 2013. Icahn has taken a long position on the stock and Ackman is short.
On Wednesday at the CNBC Institutional Investor Delivering Alpha Conference, the men hugged and then praised each other over their investor activism.
When asked about who would win the Herbalife bet, Ackman said "it is not about winning. I would love to get Carl out of Herbalife."
He added that Icahn could walk away with a handsome profit.
The war of words that began when Icahn called Ackman a cry baby in a school yard and Ackman shot back that Icahn was not an honest man captivated Wall Street for roughly half an hour on CNBC and was played repeatedly by the network.
The network provided the stage for the reconciliation at its CNBC Institutional Investor Delivering Alpha conference after suggesting the move to Ackman three weeks ago.
The detente has been months in the making, with both sides saying relations improved in late April and hinting they might even team up. Each man took pains to say nice things about the other in recent weeks, often while appearing on CNBC.
On Wednesday, Ackman appeared as a "mystery guest" at the conference, causing the audience to applaud when he walked onto the stage and gave Icahn a hug.
The men agreed good corporate chiefs need to run companies and that boards should let executives do their jobs, as long as they do them well.
Icahn said there was room for their kind of activism.
"At the risk of sounding immodest, there is no one better at finance than us," Icahn said to Ackman.
Dow 6000 (says Harry Dent)
on CNBC today with Ron Insana on the other side
I see this video (transcript) from 11/15/12 that he's predicting 5600 to 6000 on the Dow by 2015 and 3300 to 3800 on the Dow by 2020 to 2022 (0:55 into the video).
Here (3/31/11) he says Dow 3300.
Here (9/12/11) he says Dow 3000 (also 7/24/12)
So he's doubled his price target.
On the other hand, Seth Masters forecasts Dow 20,000. (No, I never heard of him either.)
Wait, here's one from 2004, Dow 40,000 by 2009.
From Barron's, 9/17/11:
Prophets of doom and gloom are often criticized for being stopped clocks: bound to be right, but just twice a day. Financial-newsletter writer and best-selling author Harry S. Dent Jr., by contrast, can lay claim to being a prophet of boom or gloom, depending on the circumstances.
Dent is as comfortable calling for Dow 35,000, as he did 13 years ago, as he is forecasting Dow 3800 now. His 1998 book, The Roaring 2000s: Building the Wealth and Lifestyle You Desire in the Greatest Boom in History, was a New York Times best seller. Its bleaker companion, The Great Crash Ahead: Strategies for a World Turned Upside Down, co-written with Rodney Johnson, will be published this week.
Based on these and similar titles (see below), Dent swings for the fences. But not always with grand-slam results.
Why is CNBC helping this guy sell books?
From wikipedia:
In the late 1980s, Dent forecast that the Japanese economy, then the darling of the world, would soon enter a slowdown that would last more than a decade. In the early 1990s, he predicted that the DOW would reach 10k. Both of these predictions were met with much skepticism, and yet both eventually came to pass.
In 2000, based on his forecast that economic growth would continue throughout the 2000s, Dent predicted that the DOW would reach 40k, a prediction which was repeated in his 2004 book. In his book, he also predicted the NASDAQ would reach 13-20k. In late 2006 he revised his forecasts to much lower levels, estimating the Dow would reach 16-18k and the NASDAQ 3-4k. In January 2006, he predicted that the DOW would reach 14-15k by the end of the year. It ended 2006 at 12,463, 11% below the lower end of his prediction. It ended 2007 at 13,264, again significantly lower than Dent's revised prediction of 15,000 by early 2008. Since then, the Dow crossed 14,000 in late 2007 before retreating.
His 2011 book goes on to suggest consumer spending will begin to plummet in 2012 with the Dow bottoming out somewhere between 3,000 and 5,600 in 2014. After hitting bottom, stocks will experience a mini-rally in 2015-2017 before falling into a final bottom during the 2019-2023 period, when the 45-50 age group troughs because the U.S. birth rate reached its own low in 1973.
OK, he's been right before (and also wrong).
P.S. Not to be confused with Harvey Dent.
I see this video (transcript) from 11/15/12 that he's predicting 5600 to 6000 on the Dow by 2015 and 3300 to 3800 on the Dow by 2020 to 2022 (0:55 into the video).
Here (3/31/11) he says Dow 3300.
Here (9/12/11) he says Dow 3000 (also 7/24/12)
So he's doubled his price target.
On the other hand, Seth Masters forecasts Dow 20,000. (No, I never heard of him either.)
Wait, here's one from 2004, Dow 40,000 by 2009.
From Barron's, 9/17/11:
Prophets of doom and gloom are often criticized for being stopped clocks: bound to be right, but just twice a day. Financial-newsletter writer and best-selling author Harry S. Dent Jr., by contrast, can lay claim to being a prophet of boom or gloom, depending on the circumstances.
Dent is as comfortable calling for Dow 35,000, as he did 13 years ago, as he is forecasting Dow 3800 now. His 1998 book, The Roaring 2000s: Building the Wealth and Lifestyle You Desire in the Greatest Boom in History, was a New York Times best seller. Its bleaker companion, The Great Crash Ahead: Strategies for a World Turned Upside Down, co-written with Rodney Johnson, will be published this week.
Based on these and similar titles (see below), Dent swings for the fences. But not always with grand-slam results.
Why is CNBC helping this guy sell books?
From wikipedia:
In the late 1980s, Dent forecast that the Japanese economy, then the darling of the world, would soon enter a slowdown that would last more than a decade. In the early 1990s, he predicted that the DOW would reach 10k. Both of these predictions were met with much skepticism, and yet both eventually came to pass.
In 2000, based on his forecast that economic growth would continue throughout the 2000s, Dent predicted that the DOW would reach 40k, a prediction which was repeated in his 2004 book. In his book, he also predicted the NASDAQ would reach 13-20k. In late 2006 he revised his forecasts to much lower levels, estimating the Dow would reach 16-18k and the NASDAQ 3-4k. In January 2006, he predicted that the DOW would reach 14-15k by the end of the year. It ended 2006 at 12,463, 11% below the lower end of his prediction. It ended 2007 at 13,264, again significantly lower than Dent's revised prediction of 15,000 by early 2008. Since then, the Dow crossed 14,000 in late 2007 before retreating.
His 2011 book goes on to suggest consumer spending will begin to plummet in 2012 with the Dow bottoming out somewhere between 3,000 and 5,600 in 2014. After hitting bottom, stocks will experience a mini-rally in 2015-2017 before falling into a final bottom during the 2019-2023 period, when the 45-50 age group troughs because the U.S. birth rate reached its own low in 1973.
OK, he's been right before (and also wrong).
P.S. Not to be confused with Harvey Dent.
Monday, January 21, 2013
the sell decision
The decision to sell liquid investments such as stocks and bonds is much
harder than the buy decision. The reason for this is simple: human
emotion. When an investor is considering purchasing a new position they
aren’t psychologically wedded to the idea. Therefore, they can be open
regarding the relative strengths and weaknesses of the investment.
However, when an active investor expresses a position in a security, they undoubtedly have a reason. Upon purchase, the investor is now committed to the idea. If the investment increases in value, either the investor was correct in their thesis or the investor was just lucky. Either way, the investor feels good that the investment increased and is hopeful for additional gains.
Having a specific selling strategy is paramount for success. Some value investors have price targets based on analysis, some sell only when they find better ex-ante values in other securities. The below quotes are curated to represent the selling methodologies of exceptional investors.
However, when an active investor expresses a position in a security, they undoubtedly have a reason. Upon purchase, the investor is now committed to the idea. If the investment increases in value, either the investor was correct in their thesis or the investor was just lucky. Either way, the investor feels good that the investment increased and is hopeful for additional gains.
Having a specific selling strategy is paramount for success. Some value investors have price targets based on analysis, some sell only when they find better ex-ante values in other securities. The below quotes are curated to represent the selling methodologies of exceptional investors.
Thursday, January 17, 2013
David Gardner interview
Earlier this week, I invited Fool co-founder David Gardner into our
brand-new Motley Fool studio space here in Alexandria, Va. We spent
nearly an hour talking about the state of the retail investor here in
2013, his investing philosophy, and his current thinking on a half-dozen
specific stocks in his Supernova universe.
What follows is the video in full (run time: 40:24)
***
co-author of Rule Breakers, Rule Makers
see also The Greatest Secret to Investment Riches
***
David Gardner likes "overvalued" stocks
*** [1/26/14]
Another interview with David Gardner (run time 51:42)
What follows is the video in full (run time: 40:24)
***
co-author of Rule Breakers, Rule Makers
see also The Greatest Secret to Investment Riches
***
David Gardner likes "overvalued" stocks
*** [1/26/14]
Another interview with David Gardner (run time 51:42)
Friday, January 11, 2013
Morningstar performance
In this Morningstar study, five and four star stocks outperformed three and two stars stocks. But, interestingly enough, one star stocks also outperformed three and two star stocks.
Looking further, wide moat stocks actually underperformed no moat stocks.
Five star wide moat stocks did the best, but only barely better five star stocks with no moat. And doing almost as well were one star stocks with no moat!
Looking further, wide moat stocks actually underperformed no moat stocks.
Five star wide moat stocks did the best, but only barely better five star stocks with no moat. And doing almost as well were one star stocks with no moat!
Wednesday, January 09, 2013
richer than Romney
Al Gore is.
A lot has changed for former Vice President Al Gore, who left the White House with a reported $1.9 million net worth.
With an estimated $100 million gross profit from the sale of his Current TV to pan-Arab broadcaster Al-Jazeera, Gore is now worth more than $300 million, according to an estimate from Forbes.com.
That puts his net worth well ahead of that of former presidential candidate Mitt Romney, who has an estimated fortune of $230 million and was often mocked for being out of touch with ordinary Americans during the election.
Gore's wealth accumulation began soon after he left the White House in 2001. Apple (AAPL) tapped him in 2003 to serve on its board, and the former vice president held more than 100,000 shares and options in the tech company as of Dec. 17, according to a regulatory filing. That makes Gore's stake worth more than $56 million, based on Apple's recent trading price.
The truth is, serving in the White House often proves beneficial to a person's financial health.
A lot has changed for former Vice President Al Gore, who left the White House with a reported $1.9 million net worth.
With an estimated $100 million gross profit from the sale of his Current TV to pan-Arab broadcaster Al-Jazeera, Gore is now worth more than $300 million, according to an estimate from Forbes.com.
That puts his net worth well ahead of that of former presidential candidate Mitt Romney, who has an estimated fortune of $230 million and was often mocked for being out of touch with ordinary Americans during the election.
Gore's wealth accumulation began soon after he left the White House in 2001. Apple (AAPL) tapped him in 2003 to serve on its board, and the former vice president held more than 100,000 shares and options in the tech company as of Dec. 17, according to a regulatory filing. That makes Gore's stake worth more than $56 million, based on Apple's recent trading price.
The truth is, serving in the White House often proves beneficial to a person's financial health.
Sunday, January 06, 2013
Charlie Tian
Did you know that the founder of gurufocus does not have a degree in finance?
"As the founder of GuruFocus.com, many people naturally assume that I have a degree in finance, or some other closely related field. However, I actually possess a Ph.D. in physics.
I worked as a research scientist at a giant telecommunications company, publishing many scientific papers and hold 35 U.S. and international patents.
But I Had One Problem: I had absolutely no knowledge whatsoever when it came to investing. At the peak of the internet bubble, I was buying shares in fiber optic companies which I thought had the brightest future. My fiber optics stocks quickly doubled or tripled. Making money with stocks was easy, I thought. Then the bubble burst...
It was then that I learned about Warren Buffett, Ben Graham, and Peter Lynch."
***
I wonder how successful Charlie is as an investor now? However I assume that gurufocus has turned into a successful business. [Hopefully for him, enough of these $249 memberships will add up. A bargain, still the same price since 2007.] So I suppose one must assume he's now a successful businessman.
He invests his own money in the Buffett-Munger model portfolio (don't know what percentage though) which apparently has been successful.
Don't notice many stocks that Buffett actually owns though. The only one of note is WMT. I also note that they have a 50% turnover rate, again quite un-Buffett-like.
"As the founder of GuruFocus.com, many people naturally assume that I have a degree in finance, or some other closely related field. However, I actually possess a Ph.D. in physics.
I worked as a research scientist at a giant telecommunications company, publishing many scientific papers and hold 35 U.S. and international patents.
But I Had One Problem: I had absolutely no knowledge whatsoever when it came to investing. At the peak of the internet bubble, I was buying shares in fiber optic companies which I thought had the brightest future. My fiber optics stocks quickly doubled or tripled. Making money with stocks was easy, I thought. Then the bubble burst...
It was then that I learned about Warren Buffett, Ben Graham, and Peter Lynch."
***
I wonder how successful Charlie is as an investor now? However I assume that gurufocus has turned into a successful business. [Hopefully for him, enough of these $249 memberships will add up. A bargain, still the same price since 2007.] So I suppose one must assume he's now a successful businessman.
He invests his own money in the Buffett-Munger model portfolio (don't know what percentage though) which apparently has been successful.
Don't notice many stocks that Buffett actually owns though. The only one of note is WMT. I also note that they have a 50% turnover rate, again quite un-Buffett-like.
Friday, January 04, 2013
10 Stocks to Last The Decade
Barry Ritholtz looks back at Fortune's 10 Stocks To Last The Decade from 2000:
1. NokiaRitholtz writes:
2. Nortel Networks
3. Enron
4. Oracle
5. Broadcom
6. Viacom
7. Univision
8. Charles Schwab
9. Morgan Stanley Dean Witter
10. Genentech
The portfolio managed to lose 74.31%, with 3 bankruptcies, one bailout, and not a single winner in the bunch. Even the Roche Holdings takeover of Genentech was for 37% below the suggested purchase price. The lesson is that valuation matters.
2012 Predictions
Rather than insult you with another list of predictions for the year
ahead, I find it more valuable to look back at how some of last year's
prediction lists fared. A year ago, analysts were making a variety of
predictions, but there was one common theme: Most of them were wrong.
Dead wrong.
***
From John Paulson’s call for a collapse in Europe to Morgan Stanley (MS)’s warning that U.S. stocks would decline, Wall Street got little right in its prognosis for the year just ended.
Paulson, who manages $19 billion in hedge funds, said the euro would fall apart and bet against the region’s debt. Morgan Stanley predicted the Standard & Poor’s 500 Index would lose 7 percent and Credit Suisse Group AG (CSGN) foresaw wider swings in equity prices. All of them proved wrong last year and investors would have done better listening to Goldman Sachs Group Inc. (GS) Chief Executive Officer Lloyd C. Blankfein, who said the real risk was being too pessimistic.
***
From John Paulson’s call for a collapse in Europe to Morgan Stanley (MS)’s warning that U.S. stocks would decline, Wall Street got little right in its prognosis for the year just ended.
Paulson, who manages $19 billion in hedge funds, said the euro would fall apart and bet against the region’s debt. Morgan Stanley predicted the Standard & Poor’s 500 Index would lose 7 percent and Credit Suisse Group AG (CSGN) foresaw wider swings in equity prices. All of them proved wrong last year and investors would have done better listening to Goldman Sachs Group Inc. (GS) Chief Executive Officer Lloyd C. Blankfein, who said the real risk was being too pessimistic.
Wednesday, January 02, 2013
tax rates on dividends still attractive
The bad news is that taxes on dividends were raised in the negotiations over the fiscal cliff that ended on Tuesday.
Now the good news in the dividend rates is this: The talk before this weekend was that going over the fiscal cliff meant dividends would be taxed as ordinary income -- as they were under the Reagan administration's 1986 tax law.
In other words, investors were looking at a 39.6% rate or higher on dividends.
No wonder companies like Wynn Resorts (WYNN +4.96%), Las Vegas Sands (LVS +5.61%) and others declared special dividends to return cash to shareholders (often the CEO) before higher tax rates kicked in.
Didn't happen. And dividend-paying stocks will still attract investors looking for income.
The bill that Congress passed and President Obama says he will sign
raises the top rate on dividends to 20%. But that rate applies only if
you are single earning $400,000 or more a year or if you're married and
filing jointly and earning $450,000 a year or more.
For everyone else, the rate on dividends is still 15%. The bill also capped taxes on capital gains at 15% and 20% for the most affluent.
Now the good news in the dividend rates is this: The talk before this weekend was that going over the fiscal cliff meant dividends would be taxed as ordinary income -- as they were under the Reagan administration's 1986 tax law.
In other words, investors were looking at a 39.6% rate or higher on dividends.
No wonder companies like Wynn Resorts (WYNN +4.96%), Las Vegas Sands (LVS +5.61%) and others declared special dividends to return cash to shareholders (often the CEO) before higher tax rates kicked in.
Didn't happen. And dividend-paying stocks will still attract investors looking for income.
For everyone else, the rate on dividends is still 15%. The bill also capped taxes on capital gains at 15% and 20% for the most affluent.
Result: Dividend-paying stocks like AT&T (T +3.83%), Merck (MRK), Washington Real Estate Investment Trust (WRT -0.46%), Edison International (EIX +1.81%) and Pfizer (PFE +3.31%) enjoyed solid gains. AT&T jumped $1.29 to $35. Coca-Cola (KO +3.72%) climbed $1.35 to $37.60.