The Stingy News Weekly (02/15/02)
The Markets This Week
DOW 30: 9,903.0 +1.63% to a P/E of 30.1
TSE 300: 7,515.3 -0.27% with a negative P/E
The Value View
Dow at a P/E of 20: 6,580 (-33.6%) Poor Value
Dow at a P/E of 15: 4,935 (-50.2%) Fair Value
Dow at a P/E of 10: 3,290 (-66.8%) Good Value
A Stingy Contest
Test your investment knowledge for a chance to win a copy of "The New Investment Frontier" by Howard Atkinson and Donna Green.
Dividend stocks pay off
"After all of my reading, it was Benjamin Graham and his books Security Analysis and The Intelligent Investor that really influenced me more than anything. I realized that it was values that, in the long run, determine price more than anything else."
As phony as a $3 bill
"With all the recent news about con men operating phony businesses, I was struck by a curious item I came across on eBay. It was a $3 bill from the Salem & Philadelphia Manufacturing Company of New Jersey, dated 1828. It wasn't the $3 amount of the note that caught my attention, as notes from that period came in many amounts that have long since gone out of style. It was the issuer, the Salem & Philadelphia Manufacturing Company. From my reading of the newspapers of the day, I recognized the issuer to be one of the many scams of that time, indeed, one of the more audacious."
The panic spreads
"The world--including even the previously sanguine Japanese--is now catching on to the fact that Japan's 12-year slump has deteriorated into a full-blown crisis, threatening a wild global ride. Falloffs in various indicators in the world's second-largest economy resemble the plunge of such countries as the U.S. into the Great Depression of the 1930s."
Terrorism insurance: pray as you go
"In fact, in the past weeks, thousands of companies whose commercial-property, commercial inland marine, farm, crime, and business-owners insurance policies expired on January 1 have received letters stating that the policies will not be renewed as written. While the standard property policy, for example, will still guard against the perils of fire, explosion, smoke, theft, and wind, it will not cover them if terrorism caused the problem."
"Fannie Mae and J.P. Morgan Chase seem mighty. But their stocks are cheap for good reason. Their risk exposure is huge, with a big reliance on derivatives."
When it comes to clones, we like the real thing
"Hallett's short-term mix has a broader diversification than the current investments our patients hold. It will generate a higher rate of return and save our patients a couple of hundred dollars a year on fees. And when the market turns down, their funds won't suffer as much."
Money in your pocket
"A trailer fee is the commission that mutual fund companies pay fund sellers to entice investors into buying their products. It can often go as high as 1% annually for every dollar you have invested for as long as you hold the fund (regardless of how well the fund performs)."
The trivia questions this week are:
Q1. Who said "The stock market is filled with individuals who know the price of everything, but the value of nothing."?
Q2. Who said "In the short run, the market is a voting machine but in the long run it is a weighing machine."?
Q3. Who said "We attracted a lot of market timers and asset allocators. I don't need those goddamn amateurs in my fund."?
The answers for last week's trivia questions are:
Q1. Who said "The only way to be loved is to be loveable, which really irritates me."?
A1. Warren Buffett
Q2. Who said "When you mix raisins with turds, they are still turds."?
A2. Charlie Munger
Q3. Who said "Based on my own personal experience - both as an investor in recent years and an expert witness in years past - rarely do more than three or four variables really count. Everything else is noise."?
A3. Marty Whitman
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