Thursday, October 14, 2010

BAGAKOAA 14 October 2010

I love how the financial media like to make a mountain out of, well you can’t even call it a mole hill. Comments such as “Financials led US markets lower as investors became concerned about the likely impact on banks’ balance sheets from legal overhang over foreclosure procedures. Also weighing on investor sentiment was a general nervousness over earnings and a worse than expected jobless claims. Major indices recovered from their worst levels in a late day rallies. In currency, the US dollar continued on its downward trend, weakening against all the major counterparts.” were echoed all over Bloomberg TV and radio today. If they are talking about the DJIA, it was down 1.51 points which is .01361% down. Even my index, the S & P 500 was down less than 1% (.36%). But you would think the sky was falling.

Hey batter batter batter.

Well we stepped into the batters box Sunday night and took a few swings. Let see how we did.

We suggested that JP Morgan would miss by 2 cents and come in at 86 cents a share versus the 88 cent estimate. A SWING AND A MISS. They beat to the tune of 1.01 a share. The CEO was very cautious in his statements and the foreclosure debacle is keeping the stock in check.

We also foresaw a miss for the private education company Apollo APOL. A SWING AND A MISS. STRIKE TWO.

We also thought Google GOOG had a big miss coming. STRIKE THREE, they hit 6.72 well above the 6.67 the market was looking for and gobs (a financial term for a whole bunch) more than the dismal $6.42 I predicted Sunday night.

We also said AMD, Advanced Micro Devices would meet estimates of 6 cents a share. STRIKE FOUR. (Do you get strike fours?) They beat to the tune of 15 cents.

I don’t think I can take anymore of this self abuse, but we did say GWW Grainger would beat big. They were looking for 1.81 a share, I suggest a huge beat to 1.94 a share. A BASES LOADED GRAND SLAM (Is there another kind one might ask). They hit a whopping (a financial term for more than whole bunch) $1.99 a share. The calls we bought really popped and then pooped out. The earnings were great but the CEO tempered them by saying the sales related to the BP clean up were underwhelming and they are slow to build their inventories. That whacked the heck out of the stock by days end creating a GREAT buy opp. We will pick up more calls (Jan 130) and wait for the inertia to return.

In economic guesstimations we prognosticated that the trade deficit would comedown further that expected to -45 billion and it did come down all the way to -46 billion. We also thought the Producer’s Price Index would be up above the .1% forecast all the way to .3%. It actually came in higher to .4%. That even lends more credence to my guess of .2%. we will see sports fans.

A look in the rear view mirror

A year ago this week we posted:

”How about a stock with top line growth. GOOG had 1% top line growth. Net income is $5.13 a share. After some accounting adjustment this was a real beat of the analyst’s expectations by more than 50 cents a share. Benchmark, Barclays, Bernstein and FBR are all upgrading. Target prices are being adjusted up to 620-680 a share. It’s up 21 bucks a share, about 4%, but I would think that will settle a little by the end of the day. I do own this and my average price is 468 a share.”

GOOG hit 615 in January 2010. We eased out at 590 and change before the peak. It is looking good again at 540. More homework to do.

A view from Down Under

One of the highlights of having so many people reading the blog is that they share pertinent and new information with us. I just had the pleasure of reading Paterson’s Weekly Market Wrap. (Paterson, being one of the largest and most respected brokerage houses in Australia.) This interesting and informative weekly report runs about 40 pages and gives tremendous insight into the stock market and economy down under. (Australia) Here are some interesting highlights from the report. The RBA (Reserve bank of Australia) decided to leave their prime rate alone, but hinted they might have to tap the breaks in the future. The royal, the austral, the oz, the boomer, the roo, the kanga, the emu, the digger, the kwid, the dinkum, the ming or what ever you want to call the Australian dollar is the 5th most traded currency in the world. Companies in Australia, worried about European Sovereign Debt and the US economy are not borrowing and instead are floating more bonds for their capital needs. This is one of the only anchors to a rather robust economy. (It is really stinging the banking sector.) The report spends quite a bit of time looking at CBA one of their largest banks. The rest of the report does an amazing job of analyzing about 26 stocks.  Thanks Terry.

From the White House "Situation" Room

Ok I would not have known what that meant either If I did not watch dancing with the stras this year.  The Situation is a guy from an MTV show called Jersey Shore who has abs of steel.  Hey The President don't look too bad.

Really observant people will note that I have used this photo before in another post.

Salve Lucrum


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