The Stingy News Weekly (03/16/03)
The Markets This Week
DOW 30: 7,860 +1.55% with a median P/E of 20.4
S&P/TSX: 6,305 -0.86% with a median P/E of 20.5*
The Value View
Dow at a P/E of 20: 7,706 (-2.0%) Poor Value
Dow at a P/E of 15: 5,779 (-26.5%) Fair Value
Dow at a P/E of 10: 3,853 (-51.0%) Good Value
S&P/TSX at a P/E of 20: 6,151 (-2.4%) Poor Value
S&P/TSX at a P/E of 15: 4,613 (-26.8%) Fair Value
S&P/TSX at a P/E of 10: 3,076 (-51.2%) Good Value
"If the world economy does stumble, policymakers will have to act quickly. Starting from a position of ample global excess capacity, further sluggish growth, let alone a recession, could raise the risk of deflation in some countries. There is clearly a big chance of further falls in share prices: in its latest quarterly review, the Bank for International Settlements argued that, despite the war premium, America's stockmarket still looks overvalued relative to historical norms. After previous bubbles share prices have always become significantly undervalued before recovering. The economic and financial headlines could get worse before they get better."
Which way is the Enron probe going?
"In the days ahead, the federal government's latest charges against two mid-level Enron broadband executives will likely be remembered as a crucial watermark in the far-flung probe. The latest criminal complaints will be revealed as proof for either Scenario A: Prosecutors are moving methodically in this complex investigation to build their way to the top. Or Scenario B: They don't have a case against Enron's former top executives, Kenneth Lay and Jeffrey Skilling, despite more than a year of intense scrutiny."
What went wrong in corporate America?
"Tonight, I'd like to talk to you about what went wrong in our capitalistic system, about what's now beginning to go right, and about what you can do as a part-owner of corporate America. Whether you own a common stock or a share in a mutual fund, or participate in a private retirement plan, you have a personal interest in bringing about reform. Both as shareholders and as citizens, each of us must accept the responsibility to build a better corporate world."
How insiders can unload stocks in secret
"A lot of investors get nervous when company insiders start dumping stocks. But insiders increasingly are using hedged transactions to pocket cash in a way investors won't detect."
"Here's a novel strategy: Buy the competition--then build it."
Why J.P. Morgan Chase has the market panicked
"The complex instruments known as derivatives are meant to hedge risk. But they may raise the odds of a collapse at the storied bank -- and, say many, for the market as a whole."
The idiot's guide to derivatives
"Ismail is a successful mule trader in Peshawar. Every year Ismail delivers 30 mules to the Kabul Mule Market and gets $40 per mule. This year however, the Khyber Pass is full of warlord militias, so Ismail is not sure he can drive his mules to market without losing a mule here and there. Also, the demand for mules in Kabul seems to be dropping. Maybe he'll only be able to sell 20 mules, or, God forbid, 15, and then be forced to feed and water the rest of them on a money-losing trek back home. In other words, it's a scary market and Ismail is worried about feeding his family. What Ismail needs is to limit his risk with an Enron derivatives package."
This week's trivia questions are: Q1. How many S&P/TSX Composite stocks yield a return on assets of more than 10%? Q2. How many S&P500 stocks yield a return on assets of more than 10%? Q3. How many DOW30 stocks yield a return on assets of more than 10%? The answers to last week's trivia questions are: Q1. How many stocks in the S&P/TSX Composite have a debt-to-equity ratio of less than 0.5? A1. 115 out of 227 Q2. How many stocks in the S&P500 have a debt-to-equity ratio of less than 0.5? A2. 112 out of 500. Q3. How many DOW30 stocks pay out more in dividends than they earn? A3. 5 out of 30. Source: globeinvestor.comSymbol Search
Can you find all the DOW stock symbols in the following text block? Repeat symbols are allowed, but diagonals are not. U K V O H Q P H J O A F J K K M Q Z R F Z P S M E V G W F W X M I Y K L N I I H L U K F D G M J F F P Q B M K Q D Q Z C V R L A Number of hidden symbols: 6 The solution to last week's symbol search in lower case p x a M Q U O N D K F V M B W J B Z B R U I m o D Y H Q K M E F M W A p i F L J V D j A p A R U L I n o m D G B c N j m F X N U Number of hidden symbols: 8 Symbols: c, jnj, ip, ip, axp, mo, mo, mo The Stingy StoreDownload a sample of the Rothery Report Download a sample of Frugal Funds Subscribe Today Bullishly Yours, Norman Rothery ISSN 1499-2795 To (un)subscribe please use our email centre at http://www.stingyinvestor.com/cgi-bin/email.cgi Refer to legal & conflict of interest disclaimers at http://www.stingyinvestor.com/SI/legal.shtml http://www.stingyinvestor.com/SI/legal/conflict.shtml
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