Birinyi: New Dow Companies?

Another great idea from Laszlo Birinyi who wants to get rid of all the companies that people were clamoring to have added into the Dow at the last rotation. Laszlo is all about removing Bank Of Countrywide Lynch (BAC), GE (GE), Alcoa (AA) and General Motors (GM) and adding the companies that have not been hammered (yet) such as Chubb (CBB), Visa (V), Newmont (NEM), and Schlumberger (SLB).

Of course, in two years when these four (and who knows how many others) get to the point where Citi's whopping 20% move only budged 5 points in the DJ50, Laszlo will pull some other big cap companies to replace those. Even better, we should just have a weekly rotation in the Dow so that any company that falls below $50 billion in mkt cap should immediately get thrown into the S&P500 microcap index as punishment.

In the meantime, the most "shocking (per CNBC)" headline is that JP Morgan (JPM), just like Citi, was also profitable in the past two months. It is good, if a little surprising, to know that both these banks account for their otherwise once-a-quarter-evaluated massive books of Level 2 and Level 3 assets on a daily basis. This kind of instantaneous reporting is phenomenal: we should do away with 10Qs and 10Ks altogether and public companies should just make their general ledger public at market close every day. How about that for added transparency?

Also, for all those who did not read Press Releases, (most notably CNBC) this is not news! JPM announced just this when it cut its dividend on February 23, at which point it said it was profitable for the quarter. It would be amazing for the bank to lose money in the past 14 ultra volatile days.

Comments

[James Wilson:]

JPM invested 100 million in a China steel company in the past 2 months.

But have not paid back bailout money.

Is this China cashing in U.S. Dollars ?

Mar 12 08:47 AM

[The Spiral ...:]

Your tone is clear. Let's face it the sequential YOY results that will appear in the third quarter will give the economy, not to mention the banks who MTM’d themselves to prosperity, the appearance of a lift. Economists are buying it, of course, and so are the armies of bean counters bent on returning clients to the good old times. In that light completely revamping the index compositions is part cosmetics, but I'm okay with it because it's also good if it helps us forget some of those miserable companies that botched their privilege of being in the index in the first place. Thanks

Mar 13 11:07 AM

[donzelion:]

"we should do away with 10Qs and 10Ks altogether and public companies should just make their general ledger public at market close every day..."

Cute idea...hmmm, that sort of "transparency" wouldn't work unless you could strike the bulk of the important stuff off the ledgers (nothing about anticipated long-term receivables, firm v. probable orders, very very certain debts v pretty certain but not totally sure v. "never gonna repay but he looked swell on paper" debts, etc.).

All of those things working out as subjective expectations (hopes). Depending on how one looks at it, a corporation is little more than a network of relationships intended to convert hope into cash flow. The problem with too many media outlets is that they get the "hope" portion of the story, and overlook the fact that "conversion" is a tricky bit of alchemy. The team doesn't win just because it has the most enthusiastic cheerleaders.

Mar 13 04:51 PM