The Stingy News Weekly (11/15/02)
The Markets This Week
DOW 30: 8,579 +0.49% with a median P/E of 22.9
S&P/TSX: 6,457 +1.05% with a median P/E of 24.8
The Value View
Dow at a P/E of 20: 7,493 (-12.7%) Poor Value
Dow at a P/E of 15: 5,619 (-34.5%) Fair Value
Dow at a P/E of 10: 3,746 (-56.3%) Good Value
S&P/TSX at a P/E of 20: 5,207 (-19.4%) Poor Value
S&P/TSX at a P/E of 15: 3,905 (-39.5%) Fair Value
S&P/TSX at a P/E of 10: 2,604 (-59.7%) Good Value
Growth can be bad for investors
"Companies often pursue expansion long after their golden opportunities have passed, when they should be paying dividends. McDonald's and The Gap illustrate just how costly this can be."
The other side of Adam Smith
"A neglected work by the 18th-century economist is the taking-off point for a fine new book on how economics can improve society."
Patient Capital 1st Quarter
"The figures provided in the following table show the valuation of the Dow Jones Industrial Average at market lows. Today's valuations are substantially above the average and those of every individual bear market bottom. Just as interestingly, valuations have been far lower than they are today at even lower levels of interest rates."
Was the IPO frenzy rigged?
"Remember those high-flying stocks sold for the first time in the 1990s, the ones that soared from $20 a share to $100 a share in hours? Some insiders now say the great price leaps for these "initial public offerings" - IPOs - were the result of insider agreements designed to force prices artificially high. The scam is called "laddering.""
"It was an odd roulette wheel. Labeled "S&P," it had 500 slots. There were others nearby that were even larger. It was a strange casino I was in. But, hey, here to play, right? I moved my chip toward Red 19 -- an old favorite play of mine."
Bankruptcies: investors do have a hope
"It's conventional wisdom for investors unfortunate enough to own a stock in a company that files for bankruptcy: Just get out. Even if you have to sell for pennies a share, that probably will be more than you'd get when the company emerges from bankruptcy, since shareholder equity is usually wiped out in the reorganization."
Pestering millions offers path to profit
"Ms. Betterly's messages joined the roughly two billion other unsolicited commercial e-mails that hit in-boxes around the world every day. The company she runs from her home, Data Resource Consulting Inc., sends out as many as 60 million such messages a month. That puts the 41-year-old single mother in the most hated breed on the Internet. She sends spam."
Berkshire's Buffett bubble
"What is the single most expensive non-technology stock, based on its ratio of price to earnings, book value and sales? Here's a hint: Along with its main activity -- insurance -- this company's holdings include what its chairman has jokingly referred to as "cutting edge" businesses: candy, vacuum cleaners, shoes, paint, bricks and furniture."
Bernie Ebbers' foolish faith
"Poor not just literally--his net worth appears to be a negative nine-digit number, or maybe it's ten digits--but also poor metaphorically. The former CEO of WorldCom presided over a corporate blowup of thermonuclear proportions, making his company the biggest bankruptcy since the entire Japanese economy filed for Chapter 11 a few years ago."
Warren Buffett weighs buying GE's reinsurance unit
"Warren Buffett may buy General Electric Co.'s Employers Reinsurance Corp., making the investor's Berkshire Hathaway Inc. the world's biggest reinsurer by premium income, people familiar with the situation said."
Should you bet on the CEO?
"Deified by Wall Street, CEO stars have long been portrayed as money in the bank. Investors, though, aren't likely to cash in."
The 5 pitfalls of CEO succession
"For a board of directors, no decision is more momentous. Yet many boards--perhaps even most--do a dismal job of succession planning. According to one survey, a stunning 45% have no process for grooming potential CEOs. None! That sets them up for five big pitfalls"
This week's trivia questions are: Q1. Who said "The worse a situation becomes, the less it takes to turn it around - and the bigger the upside."? Q2. Who said "In investing money, the amount of investment you want should depend on whether you want to eat well or sleep well."? Q3. Who said "The time to buy securities is when the media is so full of doom that your trembling hand can scarcely hold the telephone to call your brokers with a buy order."? The answers to last 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."? A1. Mark Twain Q2. Who said "Timidity prompted by past failures causes investors to miss the most important bull markets."? A2. Walter Schloss 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."? A3. Warren Buffett 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
|Disclaimers: Consult with a qualified investment adviser before trading. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, financial advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. More...|