Wednesday, January 13, 2010
Google takes on China
Frustrated with having to self-censor their premiere search product, Google (GOOG) announced today that it will leave the China market entirely unless the government allows for a truely open web within its borders. This move would leave the doors wide open for the current dominant search engine in China, Baidu (BIDU). It didn't hurt that revenue from China operations are currently "immaterial":
Friday, December 05, 2008
Beyond a lonely 10, all stocks are down
If you look at some of these New York Times interactive charts that show relative performance of stocks within a sector, you'll notice something remarkable: all the dots on the chart for most sectors are below 0% gain for the year. In fact, in some sectors it is so bad that +% and even 0% doesn't even show up on the axis!
This made me want to run a simple screen for YTD price gain > 0. I was fully expecting to get *nothing* back! Well, it's close. There was only one company > 30B market cap whose stock made money in the past year (WalMart). For market cap > 5 billion, only 10 companies out of all the stocks in the world made positive gains. Here is the "Lonely 10" screen. What other year does only 10 stocks make money? If you try and run similar screens, be sure to filter out bond funds and UltraShort funds. Basically long equity investors got slaughtered, and most of the downward spiral occurred in the past 2 months.
This made me want to run a simple screen for YTD price gain > 0. I was fully expecting to get *nothing* back! Well, it's close. There was only one company > 30B market cap whose stock made money in the past year (WalMart). For market cap > 5 billion, only 10 companies out of all the stocks in the world made positive gains. Here is the "Lonely 10" screen. What other year does only 10 stocks make money? If you try and run similar screens, be sure to filter out bond funds and UltraShort funds. Basically long equity investors got slaughtered, and most of the downward spiral occurred in the past 2 months.
Company Name | Symbol | 52w Price Change (%) | Institutional Percent Held | Market Cap |
Wal-Mart Stores, Inc. | WMT | 11.66 | 38.90 | 214.72B |
General Mills, Inc. | GIS | 3.87 | 77.14 | 20.55B |
Rohm and Haas Company | ROH | 32.33 | 80.17 | 13.86B |
UST Inc. | UST | 19.53 | 75.31 | 10.22B |
Southwestern Energy Company | SWN | 19.79 | 88.90 | 8.34B |
Nationwide Financial Services, Inc. | NFS | 14.43 | 21.78 | 7.04B |
Barr Pharmaceuticals, Inc. | BRL | 18.06 | 77.49 | 6.96B |
AutoZone, Inc. | AZO | 0.45 | 95.00 | 6.64B |
People's United Financial, Inc. | PBCT | 7.40 | 69.47 | 5.93B |
Sociedad Quimica y Minera (ADR) | SQM | 17.99 | 12.06 | 5.25B |
Wednesday, October 22, 2008
UltraShort Bonanza
Some new ETFs have become available over the past few years that provide investors an easy way to hedge without dancing with options, and to profit handsomely off of downward moves in the market. These are the ProShares UltraShort series. These ETFs are designed to provide a return equal to -2 times an index they track. So if the S&P500 goes down 5% for example, the UltraShort S&P500 will go up 10%. On extreme down days such as today during a period of heavy volatility, these funds are getting crazy single day returns. Here is a list of some of the UltraShort funds and their corollaries:
In times of less volatilty, these funds can be used as a hedge. This article details some basic hedging techniques that such funds enable.
Index | Long (% today) | UltraShort (% today) |
---|---|---|
S&P 500 | SPY(-5.45%) | SDS (+11.32%) |
Nasdaq 100 | QQQQ (-2.76%) | QID (+5.58%) |
FTSE China 25 | FXI (-10.72%) | FXP (+21.34%) |
Dow 30 | DIA(-5.40%) | DXD (+10.31%) |
In times of less volatilty, these funds can be used as a hedge. This article details some basic hedging techniques that such funds enable.
Sunday, October 19, 2008
VIX volatility index tops 80
Friday, October 17, 2008
Bargain Basement
The massive lows of late mean bargain basement prices for long-term investors. The problem is that fear could drive another 20% drop, and who wants to jump into that? For the brave however -- those that feel that they can catch flying knives -- here are some picks that seem like attractive values:
High Yield
- E - Eni @ 38.5 - 9.88% div - found large deep sea oil field off of Angola - 0.5 book
- BCS - Barclays @ 17.3 - 9.88% div - supported by UK government; picked up scraps of Lehman - 0.7 book
Materials
- PCU - Southern Pacific Copper @ 11.5 - 20% div - commodity darling fallen victim to hedge fund unwinding - 2.5 book
- RIO - Vale @ 11.1 - 2% div - near monopoly on iron, though there is plenty of iron on earth
- MCHP - Microchip @ 22.8 - 5.8% div - PIC controller maker; offer to acquire Atmel AVR and ARM chip line - 4.6 book
- NYX - NYSE Euronext @ 27.7 - 4.33% div - completed acquisition of of AMEX, 3rd largest option market - 0.7 book - Warning: Cramer's 2007 loser is down 75% and NDAQ is stealing trade share.
Blue Chips
- SPY @ 90 - 3%
- CVX - Chevron @ 60 - 4.33% div - 1.5 book
- KO - Coca Cola @ 44.2 - 3.44% div - 4.4 book
- MMM - 3M @ 54.7 - 3.66% div - 3.0 book
Wednesday, October 15, 2008
Fed Slams Beige Book on Market Elation
The US Federal Reserve regularly publish a "Beige Book" reporting the state of economic activity in each of its 12 regions. In the latest report, prepared last week but released today, the news was grim across the board and the markets reacted with the 2nd largest downward move ever...
2008 | |||||
---|---|---|---|---|---|
Jan 16 Report | Feb | Mar 5 HTML 286 KB PDF | Apr 16 HTML 182 KB PDF | May | Jun 11 HTML 144 KB PDF |
Jul 23 HTML 261 KB PDF | Aug | Sep 3 HTML 164 KB PDF | Oct 15 HTML 135 KB PDF | Nov | Dec 3 |
Monday, October 13, 2008
Economist Cover Metric
Sometime during the market downtrend of 2000-2002, I came up with a new metric based on inputs I was seeing: "If the cover of the Economist has a really grave picture such as someone peering over a cliff, jumping without a parachute, or anything like that, it is time to stay on the sidelines of the market." Well, the last two covers have fallen into this category. The first was the whirlpool of banks sinking down, the second was an investor peering over the cliff. The third, most recent one is of the world falling through the atmosphere, ignited in flames:
One could argue that selling in the midst of flames is bad timing, and that the markets will bounce back vibrantly as they did today. There is also a large amount of data that shows that the 18 months after a crash are not fun times and that the market slowly dwindles to the lows of the initial crash and beyond...
Now the question is what sorts of Economist covers trigger a buy signal?!
Sep 20th 2008 | Oct 4th 2008 | Oct 11th 2008 |
See contents | See contents | See contents |
Previous examples of when this would have been sapient advise are in late 2007:
Jul 7th 2007 | Aug 18th 2007 |
See contents | See contents |
And there was another cover series, if distant memory serves, that had a man in a parachute and one peering over a cliff that predicted the dot-com bust and the subsequent recession of 2001-2002. Can't find those exact covers that inspired the metric, but certainly this one of being chained to the bottom of the ocean would fit:
Mar 24th 2001 |
See contents |
Now the question is what sorts of Economist covers trigger a buy signal?!
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