The Stingy News Weekly (05/17/02)
The Markets This Week
DOW 30: 10,353 +4.15% with a median P/E of 35.8
S&P/TSX: 7,727 +1.72% with a median P/E of 34.3
The Value View
Dow at a P/E of 20: 5,784 (-44.1%) Poor Value
Dow at a P/E of 15: 4,338 (-58.1%) Fair Value
Dow at a P/E of 10: 2,892 (-72.1%) Good Value
S&P/TSX at a P/E of 20: 4,506 (-41.7%) Poor Value
S&P/TSX at a P/E of 15: 3,379 (-56.3%) Fair Value
S&P/TSX at a P/E of 10: 2,253 (-70.9%) Good Value
Stock analysts' dirty little secret
"It's not that analysts have lost their integrity. It's that they never had it to begin with -- and everyone in the industry knew it. Maybe the brokerages should fire them all."
The Enron story is nothing new
"Long before Enron and off-balance-sheet accounting became part of the financial lexicon of average American investors, creative accounting was an accepted way of doing business in Silicon Valley. A small, perfectly legal and completely finished piece of financial engineering executed between 1998 and 2000 by Intuit illustrates that technology companies have long been willing to use accounting tactics to tell the stories they want told."
Retirement: Ready or not, hear it comes!
"Will you have enough? Study after study shows that Americans aren't saving enough for retirement."
Yikes! My stock's in single digits!
"There is something strange about Focal Communications' stock chart. Very strange. No, it's not just that its shares recently traded at $3. That, as we all know, is hardly a mark of distinction these days. It's that a couple of years ago the chart shows FCOM trading at around $3,000!"
Why companies fail
"Why do companies fail? Their CEOs offer every excuse in the book: a bad economy, market turbulence, a weak yen, hundred-year floods, perfect storms, competitive subterfuge--forces, that is, very much outside their control. In a few cases, such as the airlines' post-Sept. 11 problems, the excuses even ring true. But a close study of corporate failure suggests that, acts of God aside, most companies founder for one simple reason: managerial error."
Scary business versus nirvana
"After analyzing a typical structured product, Turnbull said, 'in order for the trust to provide the targeted distribution and meet its fee requirements, our model indicates that the managed portfolio must achieve an annual growth rate of 21.71%. We think that 21.71% is a highly aggressive goal than can only be achieved by exposing the managed portfolio to significant risks.'"
The trivia questions this week are:
Q1. When did Warren Buffett file his first tax return?
Q2. When did Warren Buffett make his first profit?
Q3. Is singer Jimmy Buffett related to Warren Buffett?
The answers for last week's trivia questions are:
Q1. Who said "Financial statements ought to be aimed at people equipped to use them, not stock market speculators focused on earnings per share from operations."?
A1. Martin Whitman
Q2. What is Warren Buffett's annual salary?
A2. $356,400 (including directors fees and deferred stock)
Q3. When did Warren Buffett buy his current home?
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