The Stingy News Weekly(11/08/02)
The Markets This Week
DOW 30: 8,537 +0.22% with a median P/E of 22.5
S&P/TSX: 6,390 +1.09% with a median P/E of 25.0
The Value View
Dow at a P/E of 20: 7,588 (-11.1%) Poor Value
Dow at a P/E of 15: 5,691 (-33.3%) Fair Value
Dow at a P/E of 10: 3,794 (-55.6%) Good Value
S&P/TSX at a P/E of 20: 5,112 (-20.0%) Poor Value
S&P/TSX at a P/E of 15: 3,834 (-40.0%) Fair Value
S&P/TSX at a P/E of 10: 2,556 (-60.0%) Good Value
New @ StingyInvestor
Growth is what it's all about for investors. Every investor wants to
see their portfolio grow and many attempt to generate wealth by buying
growth companies. At first glance, it seems to be a simple matter to
buy companies that have grown the most and, therefore, are likely to
continue growing. Regrettably, as with many simple investment
concepts, selecting growth stocks is fraught with difficulty.
The long shadow of Big Blue
"Can Microsoft now hold on to its dominant position-or might it go the way of IBM in the 1980s?"
What a fool believes
Bill Gross continues to be negative on stocks and takes a swing at proforma P/Es
Running with the 'Dogs of the Dow'
"Just as a contrarian would have predicted, the strategy started working just as disillusionment with it peaked. The formula beat the Dow in both 2000 and 2001. While the jury is still out on this year for the strategy, it is running neck and neck with the blue-chip index itself through the end of this third quarter."
Subsidies for stock pickers
"The bureaucrats have designed a broad plan to tax the investment banks and transfer the money to smaller stock research firms with no investment banking business. While the plan for a government board to choose the recipients of this revenue is meant to guarantee research free of conflicts of interest, it can do no such thing. In fact, the plan will create a stock research cartel more prone to conflicts and corruption than the system it replaces."
Buffett emerges as major Lloyd's insurance backer
"Recent investments by firms in Warren Buffett's empire have made the Omaha-based billionaire one of the biggest backers of the prestigious, but cash-strapped, Lloyd's of London insurance market."
Will Rogers on Government
"The only difference between death and taxes is that death doesn't get worse every time Congress meets."
'Temptation is all around us'
"Daniel Vasella of Novartis talks about making the numbers, self-deception, and the danger of craving success."
From EDS, some scary silence
"EDS, which has hit investors with a barrage of bad news this year, left unresolved a host of issues, from the timing of a recovery to its ability to win important new contracts and the future of its withering cash flow. And hovering like a Halloween ghost: a Securities & Exchange Commission inquiry started in the wake of a Sept. 24 revelation that EDS sold put options on its own shares that wound up costing it $225 million. "A lot of question marks are still out there," says UBS Warburg analyst Adam Frisch, who has been bearish on EDS since early 2001."
Boys will be boys
"Theoretical models predict that overconfident investors trade excessively. We test this prediction by partitioning investors on gender. Psychological research demonstrates that, in areas such as finance, men are more overconfident than women. Thus, theory predicts that men will trade more excessively than women. Using account data for over 35,000 households from a large discount brokerage, we analyze the common stock investments of men and women from February 1991 through January 1997. We document that men trade 45 percent more than women. Trading reduces men's net returns by 2.65 percentage points a year as opposed to 1.72 percentage points for women."
Watching the detectives
"Since the failure of the credit-rating agencies to predict the collapse of Enron and WorldCom, there's been plenty of grumbling from bond investors. Now a new survey that gives low marks to the major ratings agencies--Moody's, Standard & Poor's, and Fitch--is serving as an important opening salvo in what promises to be a heated political battle over whether the Securities and Exchange Commission should make it easier for new ratings firms to enter the market."
This week's trivia questions are: Q1. Who said "There are two times in a man's life when he should not speculate - when he can't afford it and when he can."? Q2. Who said "Timidity prompted by past failures causes investors to miss the most important bull markets."? Q3. Who said "Unless you can watch your stock holdings decline by 50% without becoming panic-stricken, you should not be in the stock market."? The answers to last week's trivia questions are: Q1. Who said "I don't know what the seven wonders of the world are, but I do know the eighth - compound interest."? A1. Baron Rothschild Q2. Who said "Get inside information from the president and you will probably lose half of your money. If you get it from the chairman of the board, you will lose all of it."? A2. Jim Rogers Q3. Who said "The chief losses to investors come from the purchase of low-quality securities at times of favourable business conditions."? A3. Benjamin Graham Source: Wall St Wit & Wisdom 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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