The Stingy News Weekly (12/14/01)
The Markets This Week
DOW 30: 9,811.15 -2.37% to a P/E of 27.1
TSE 300: 7,425.70 -2.51% with a negative P/E
The Value View
Dow at a P/E of 20: 7,241 (-26.2%) Poor Value
Dow at a P/E of 15: 5,431 (-44.6%) Fair Value
Dow at a P/E of 10: 3,620 (-36.9%) Good Value
A New Stingy Contest
Figure out how much the XXY company is worth for a chance to win a copy of Jim Otar's new book "High Expectations and False Dreams: One Hundred Years of Stock Market History Applied to Retirement Planning."
There have been only a handful of entires. So, enter today!
A capitalist Christmas
"It's the most pro-capitalist of all holidays because its temporal joys are based on private property, voluntary exchange, and mutual benefit."
Pricey bear market
"Disappointments lie ahead for investors who buy at current lofty multiples. The market is too expensive, and earnings won't be rejuvenated anytime soon. And factor in the potential for additional terrorist attacks, which will give the market another surprise wallop."
Who's in charge here?
"Given Coke's place in corporate history and the investing world's psyche, people care about what happens to this company, and about who is entrusted to run it. Since the death in 1997 of legendary CEO Roberto Goizueta--and the ensuing failure of his successor, Doug Ivester--they have been sorely disappointed. The once powerful stock is now trading at $47, right where it was five years ago."
When glamour fades
"True, at the peak of the bubble growth stocks briefly shot into the lead but over the past 12 months growth, as defined by Independence, has underperformed by 34 per cent on a worldwide basis (and by 43 per cent in the US alone). Over the whole period since 1975 value has outperformed worldwide by 4.4 per cent annually on average."
"An iron law of government regulation holds that a would-be regulator can fix either the price or the quantity of a chosen commodity but not both at once. To enforce a very low funds rate, the Fed must supply an awful lot of funds"
Redemption "iceberg" ahead
"There were relatively few funds in existence at the time of the 1973-75 bear market and their assets were very small compared to today's giants. Many equity funds dropped 60 or 70% or more in their NAV. Redemptions were handled by the managers without the problems we envision today. However, mutual fund investors were so disheartened by the "moderate" bear market that there were net fund redemptions for the next nine years."
Highlights of budget 2001
Please ignore the onerous tax rates.
SEC: Stick to bottom line--or else
"the commission just issued a pointed reminder that "pro forma" earnings releases that mislead investors are subject to federal anti-fraud rules."
The trivia questions this week are:
Q1.How many of 1999's top ten funds posted above average returns in 2000 & 2001(YTD)?
Q2. How many funds have been top quartile annual performers since 1994?
Q3. How many funds have been bottom quartile annual performers since 1994?
The answers for last week's trivia questions are:
Q1. What is the median P/E of the TSE 300?
Q2. What is the median P/Book Value of the TSE 300?
Q3. What is the median P/Sales of the TSE 300?
A3. About 1.3
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