The Stingy News Weekly (11/29/02)
The Markets This Week
DOW 30: 8,896 +1.03% with a median P/E of 24.8
S&P/TSX: 6,570 +0.24% with a median P/E of 23.2
The Value View
Dow at a P/E of 20: 7,174 (-19.4%) Poor Value
Dow at a P/E of 15: 5,381 (-39.5%) Fair Value
Dow at a P/E of 10: 3,587 (-59.7%) Good Value
S&P/TSX at a P/E of 20: 5,664 (-13.8%) Poor Value
S&P/TSX at a P/E of 15: 4,248 (-35.3%) Fair Value
S&P/TSX at a P/E of 10: 2,832 (-56.9%) Good Value
A new Stingy Contest
Try to outfox other investors for a chance to win a copy of the new
book "The Contrarian Investor's 13". Based on previous contests, the
odds of winning are quite good!
The Contrarian Investor's 13 is perhaps the best looking business book
in stores today and it makes for fine reading. Benj touches on a
variety of investment topics in a down to earth way. The main focus
is on his winning investment strategy which involves buying beaten
down stocks when everyone else hates them. In this way, we share
similar philosophies and have purchased the same stocks in the past.
Although Benj uses more technical indicators than I do, his book
contains a number of useful insights that I expect to incorporate into
my own operations. So, be sure to put The Contrarian Investor's 13 on
your Christmas list.
Myths about business
"Of course, people by nature are "greedy." We want not only more money and more possessions, but also more time to spend with our family, more time to read and learn, and more time to relax. Would you go to work everyday if you didn't get paid? Have you ever turned down a pay raise or Christmas bonus? I think I know the answer. So, why aren't we portrayed as evil or greedy for trying to get as much as we can, but businesses are evil if they want to get as much as they can?"
Private Capital Management Q3
"The bull market's decline began early in 2000, after the NASDAQ/Internet bubble reached its zenith in March. For some time we had warned of valuation excesses, particularly within the technology sector. Still, the magnitude of the mania seems all the more remarkable in retrospect."
"The current scandals pale in comparison to the energy industry's biggest problem: massive debt it can't repay."
Lessons from the man who sells to Buffett
"Chief executive of secretive Private Capital Management of Naples, Fla., Sherman specializes in taking large to very large stakes in up to 75 companies at a time, and holding for as long as it takes to make a bloody fortune. In the past four years alone, he has sold four companies to the Buffett investment vehicle Berkshire Hathaway, including the ice-cream joint International Dairy Queen, carpet maker Shaw Industries and children's clothing maker Garan."
Will Wal-Mart take over the world?
"First it gobbled the mom-and-pops, then mauled discount department stores. What's the insatiable chain's next target?"
The great milk fiasco
"Parity and fairness are the two watchwords when discussing farm subsidies, and we find ourselves up against the old conflict. Not surprisingly, Mises had a strong grasp of the likely outcome when he wrote, "what those people who ask for equality have in mind is always an increase in their own power to consume.""
Beware the pension monster
"Like the unseen menace that stalked Elm Street, the pension monster has been hidden in the shadows. Now it's stepping out into the light. And is it ever one mammoth ugly creature: Big corporate pension plans in America owe some $1.2 trillion to their current and future retirees, and for the first time in years companies don't have enough money stashed away to pay for those benefits. The size of the current shortfall? $240 billion. To put that in perspective, that's more than half of what they're expected to earn this year."
Location, location, location?
"Few of the Rankin Inlet families buzzing by on their quads bother to look over at the gaggle of outsiders-mostly executives and upper managers of the North West Co. Inc. (TSX: NWF.U)-climbing out of the store manager's crew-cab pickup. Despite the extreme isolation of this community of 2,200-there are no roads to the outside world, and the nearest major city, Winnipeg, is nearly 1,500 kilometres to the south-the heavy hand of government and the resurgence of mining in the region have resulted in a stream of visitors to the remote town on the windy western shore of Hudson's Bay. Besides, there are plenty of familiar faces among the group, thanks to their past visits. Moments after they step inside the store, a squat Inuit woman hustles over from behind the KFC fried-chicken counter located near the entrance. "My nine-year-old daughter harpooned her first seal the other day," she tells them with a wide, toothy grin. No, Toto, we're not in Toronto anymore."
Playing the dividend market
"With income stocks, you don't just get the chicken, you get the eggs too. The trick is to pick 'em right."
Crisis in a coffee cup
"The price of beans has crashed. Growers around the world are starving. And the quality of your morning cup is getting worse. So why is everyone blaming Vietnam?"
This week's trivia questions are: Q1. Who said "A small loss, when realized, becomes an opportunity for profit elsewhere."? Q2. Who said "One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do. Most people always have to be playing - they always have to be doing something."? Q3. Who said "If you expect to continue to purchase stocks throughout your life, you should welcome price declines as a way to add stocks more cheaply to your portfolio."? The answers to last week's trivia questions are: Q1. Who said "It was the steady investors who kept their heads when the stock market tanked in October 1987, and then saw the value of their holdings eventually recover and continue to produce attractive returns."? A1. Burton Malkiel Q2. Who said "In the book of things people more often do wrong than right, investing must certainly top the list, followed closely by wallpapering and eating artichokes."? A2. Robert Klein Q3. Who said "Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves."? A3. Peter Lynch 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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