Donald Johnson

Candidates to Replace GM, Citigroup in the Dow

Well,

AAPL, NUE, USB and MON didn't make it. It was fun to speculate about which companies would be picked. Thanks for all the comments.

Candidates to Replace GM, Citigroup in the Dow

I've purchased more than 100 Macs for my business and myself since 1986. Apple is a consumer electronics company, and all consumer electronics, including PCs, have relatively short life cycles and are faddish, in my opinion. Apple's been especially good at anticipating and creating fads in very competitive markets.

At the moment, it's market share is growing in a troubled economy. I think it should be in the DOW because its revenues and profits depend on everyone from teens to presidential candidates, corporations and old folks like me.

As for GOOG, it's selling for 22 times cash flow, it's PE is a relatively high 30 given that its sales are growing only 6% a year, and it depends on advertising revenue. It's PEG is a relatively cheapt 1.07, according to data on YAHOO. The company doesn't provide guidance to investors, and its governance structure is rigged to deny voting rights to shareholders, which, I happen to think is wrong. At some point it will go the way of MSFT.


On May 30 05:20 AM Timeline Strategy Consulting wrote:

> Apple's products 'faddish'? My definition of 'faddish' would be GM,
> cranking out endless undesirable combinations of models that require
> heavy discounts and incentives to sell, all to meet the cost accountant's
> model of 100% factory capacity utilization.
>
> Remember that Apple pioneered desktop computing and operating systems.
> It was the logical successor to the Silicon Valley garage ideal in
> the vein of Hewlett and Packard.
>
> Apple had hard hard times, but unlike GM, revitalized itself by adapting
> its business model to reflect the changing way that customers consume
> media. In doing so, it created a second act that rivals any in business.
> And, this second act also has allowed Apple to return to its first
> act, which is computing and software for the masses.
>
> And now it has completely revolutionized mobile computing.
>
> Maybe you should ask your grandkids.

Stress Test Leaks: Endgame Emerging

I agree that the leaks probably are intended to test the market's reactions. But today's surge in bank stocks' prices seems irrational and may be giving a false positive. How much of the rally is due to short covering? What kind of black box trading is distorting the markets?

And why the leaks against Wells? Is it being punished because its CEO has been politically incorrect about TARP and his desire to return TARP funds to the government?

And Geithner has said that the stress test is designed to identify banks that couldn't lend under the worse scenarios. Is that an honest stress test?

If a bank could survive the worse scenario by reducing lending, why should the government dilute shareholders. After all, under the worse scenario, who would want to lend, and what harm would be done if there were less lending?

Stress Test Results: Markets Know and Show the Strong, Weak Banks

Yep. Good catch, TCarberry. Short calls in a covered call trade.

Nobody Knows What Bank Stocks Are Really Worth

What makes banks stocks volatile and risky?
First, politicians are messing with the money and banking markets as never before, and predicting what they will do to and demand from banks is like reading Barney Frank’s mind. Impossible.
Second, it’s almost impossible to predict spending trends for consumers or businesses. As a result, only 23% of the companies that have reported earnings for the first quarter have provided guidance on the sales and earnings for the rest of the year. If banks’ customers can’t predict their futures, how can banks?
Third, the critical housing market remains in decline and probably will for a long time. We just don’t know how bad the toxic assets on the big banks’ balance sheets are and we probably won’t even after the government gives a peek at its stress tests. Results of the stress tests, or at least some of them, are due on May 4.
Fourth, the world continues to have the ability to cause turmoil, and we don’t know when some dictator will decide to turn on the heat on the U.S. and the West in an effort to take his people’s eyes off their domestic problems. I own USB, and I have sold covered calls against the stock.

TARP: Bailout or Money Pit?

I think propublica.org has little credibility as an objective source of information. It's apparently backed by lefties.

When you make big moves you risk big mistakes. Paulson took big risks and made some big mistakes. Whether his efforts have been beneficials will be discussed by academics for years. I don't see easy answers to the Paulson question or to the crisis that still is evolving.

I wonder if there are smaller, less risky things that can be tried? I have no confidence in the Obama team and little confidence in the wisdom of those leading our major institutions.

Obama and Bush: Different Objectives, Same Results

Both presidents have treated the financial crisis as a political problem rather than an economic problem. In fact, they've pretended to treat the crisis as an economic problem but their actions have been all about politics.

Neither understands or appreciates markets. Not even Bush, who ran businesses and has a Harvard MBA. Both have had flawed economic and financial advisers who bowed to political realities rather than dealing with the market's problems.

Would Gore, Kerry or McCain have done better? No.

Only Romney might have been more successful in dealing with the crisis, but who really knows.

So now we're stuck with a president who is more intent on changing America into a state dominated by government rather than on providing the leadership that might shorten our depression/recession. He might get his cherished left wing legislation passed, but he'll also get his lunch handed to him, and we'll all pay.

Cramer's Mad Money - Obama's Revenge (3/5/09)

Cramer's fat cat skit was a classic, and everyone should watch it and recommend it.

The White House took on Cramer, and he extended his comments on the Obama Bear Market big time. Good for him.

Rating the Top 12 U.S. Banks - From Hidden Gems to Zombies

Very useful. Thanks.

Citigroup Bottoming - Plus Some Free Advice for Meredith Whitney

These stocks look like shorts to me.

Citigroup Bottoming - Plus Some Free Advice for Meredith Whitney

Shoot the messenger.

NYSE's John Thain Moves to Merrill (update)

Maria had a relatively long interview on CNBC right after the close with Thain.

She asked good, tough questions. He fielded them like a pro, giving a mostly positive picture of MER, but predicting the industry is likely to see some more write downs and CBO valuation slippage. He'll be good for MER and he'll fix it, I'm thinking. I doubt he ever was a good fit for C.