The Stingy News Weekly (01/04/02)
The Markets This Week
DOW 30: 10,259.74 +1.21% to a P/E of 28.1
TSE 300: 7,833.24 +2.06% with a negative P/E
The Value View
Dow at a P/E of 20: 7,302 (-28.8%) Poor Value
Dow at a P/E of 15: 5,477 (-46.6%) Fair Value
Dow at a P/E of 10: 3,651 (-64.4%) Good Value
Stingy investors value American Express at $23.6 billion
Visitors to the StingyInvestor.com website were asked to value a mystery company in bid to win a copy of Jim Otar's new book "High Expectations & False Dreams: one hundred years of stock market history applied to retirement planning".
The mystery company was none other than credit card giant American Express in disguise. The disguise? Raw financial numbers such as sales, earnings and book value were divided by 2. As a result, sales of $22 billion became sales of $11 billion and so on.
On average, the stingy contestants thought that the mystery company should be worth $11.8 billion. Multiply by 2 and American Express is worth $23.6 billion. However, the market took a different view and at the end of the contest American Express traded at about $50 billion.
Dell does domination
"It's a terrible time to be selling computers--unless you're Michael Dell, who is slashing prices and stealing share from less efficient rivals. Is it 'game over' in PCs?"
The Top Achievements, Challenges, and Failures of Finance
"There is much subjectivity in my particular selection of subjects. Still, I would guess that most finance professors would agree that most of my final choices below represent important progress in the development of finance. Alas, I would expect none to agree with my specific rankings. Thus, my hope is that the list below is of interest to many practitioners and academics. " [PDF]
The facts on tax
"Come Jan. 1, the federal government will take a bigger slice of many Canadians' paycheques, despite the contention it is delivering on promises of significant tax relief."
Primer for Canadian Do-It-Yourself Investors
"The purpose of this web document is to serve as a primer for Canadian do-it-yourself (DIY) investors who wish to manage their own investment portfolio. It is aimed particularly at individuals who will be using their investment portfolio as the main source of retirement income."
Jack Bogle, man on a mission
"Here the longtime advocate of low-cost index investing describes what he expects from the market in coming years and what he believes investors should be doing, as well as what issues in the mutual fund world he's working on at the Bogle Center."
The trivia questions this week are:
Q1. What is Buffett's first rule of investing?
Q2. What is Buffett's second rule of investing?
Q3. What is Buffett's first instruction in his succession plan?
The answers for last week's trivia questions are:
Q1. How many Canadian mutual funds existed in 1980?
Q2. How many Canadian mutual funds existed in 1990?
Q3. How many Canadian mutual funds existed in 2000?
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Stingy Selections & Dartboard Dynamos
I've put my feet in the fire by taking up the Canadian MoneySaver stock picking challenge. Check out my picks and those submitted by the dastardly dartboard.
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