July 31, 2007
A Hodge-Podge from CROX earnings review (Oh my, that was tough on us Shorts) to the Stock-Buyback/Artificial EPS growth problem. Discussion of Zumiez (ZUMZ) as well. We take listener questions.
You can ask questions on our new online Voicemail system.
We talk about the boom and eventual bust of this market, real estate and how to get in and out. There is a show that will knock your socks off!
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Book PreOrders are being accepted at the website…Coming to bookstores August 2007. All pre-orders will be signed by ME with other goodies included.
July 29, 2007
With al of the recent volatility it will be interesting to know where you think the DJIA will be at the end of 2007.
Poll will close to votes at the end of August.
DJIA value end of 2007?
- Dow: 12,500 - 13,500 (29%)
- Dow: 14,000 - 15,000 (24%)
- Dow: Less than 12,500 (16%)
- Dow: Over 15,000 (16%)
- Dow: 13,500 - 14,0000 (15%)
July 29, 2007
What could go wrong? That has been the question I have been trying to answer for some time now. The markets have been set up for a bull run and there has been nothing stopping it from going straight north, or is there?
In TDI Podcast 11, (May 27th) we looked at The TOP 10 MISTAKES made when investing. In that show, we explored how this was a key part of the investing process and discussed why they should be avoided at all cost. If nothing else, every once in a while we need to force ourselves to remember these 10 points. It is meant purely as a way to keep us grounded on the road towards successful investing.
Realize that very so often we have a confluence of occurrences that take the market by storm. It may occur in the stock market, but it can just as easily be the real estate markets or perhaps even the commodity markets. In fact, if we look back at the recent run up in the markets, we can see that the global concern over material shortages, coupled with the fact that liquidity entered the markets was a recipe for a swift rise. Add to that the idea that investors needed to find another opportunity after shying away from real estate investments and the stage was set.
Liquidity, did he say liquidity? Yes sir! The forces at play have been amazing. Corporations have been stockpiling cash over the past several years. This was due to profits rising and the cutting of expenses. With so much money sitting in cash (at the beginning of 2007, cash levels of the S&P was at 6.5% total market cap), companies were continuing to buy back their own stock at a blistering pace. Of course this has a significant effect on earnings (see post on buyback problem)
The dollar being weak helps as well. Foreign investment has been rising after all but dried up after 9/11. The increase had been prompted by the belief that investing in the US is safe and the fact that it is cheap. According to the NY Times article by Floyd Norris’s Off the Charts column on surge in foreign investment of US bonds and stocks; says US Treasury Department reported this week that foreign investors put $68.6 billion in American corporate bonds in May and $42.5 billion in American stocks; notes figures are largest ever for one month; says China, which has huge amounts of dollars to invest, has been growing investor in American corporate bonds, but has not yet shown much appetite for American stocks; holds Japan, which was heavy buyer of American stocks when prices were low in 2002, has become net seller of shares this years.
Is it any coincidence that the dollar (versus the Euro as an example) and the S&P 500 are positively correlated these days? Under most circumstances we may be able to put that aside and pay little attention to this. Yet, now is a bit different. I would go so far as to say that the Read more
July 27, 2007
We have a new voice and comment system for the site. It is easy to use and will allow for you to leave a voice message or comment up to 2 minutes in length. If you would like to have a question answered on an upcoming podcast give it a whirl!
Make sure you have a computer with a microphone….
Someone test it out to make sure it works… we need some voice mail….Testing 1 2 3
Look to the right sidebar under Message Me! Enjoy….
This is how the new system looks ( click to try )
July 24, 2007
How much bullshit are we supposed to take? What is going on with the media and with corporate America? First, we are shoveled a pile of fast-talking, brain-frying commentary from Jimbo “BooYaa” Cramer that it could even make a grown bull cry. Then we have television shows talking about finance like it was last night’s sporting event. They MUST think this is a game.
What happened to reporting? For years now, we have been watching the evolution of facts being mixed with opinion and a blurring of the two. Sure, blogs, podcasts and the ability to pay-your-way-to be-a journalist has fueled this phenomena, but we need to take a step back here and look at what is going on a broader scale.
As an example, for years I have been perplexed about the lack of reporting that has been given to the excessive amount of corporate buybacks. The mainstream media is all but silent on this subject. Here is the rub: As corporations continue to buyback their own company’s stock with an insatiable appetite, little has been said about the potential long-term effects. Since the act of buying stock will pull shares off the market, earnings per share will naturally (albeit artificially) increase.
To illustrate, Company ABC has 1 millions shares outstanding with $1 million profit. The EPS equation shows a simple division of Read more