Shabba

Christmas Comes Early: Key Retailer CDS / Equity Relationships

Your dates are mixed up, I took a look at the link you gave. Your numbers are correct but they are only for three months (Fiscal year starts in August in CA government, number you have are for Aug-Oct).

It's better to look at the July file:

2008: 27,911 Million
2009: 25,413 Million

That's a drop of about 9%. It may be true that things have stabilized more in Aug-Oct (due to cash for cliunkers??), but it isn't much. The personal income taxes are in free fall, 54,859 in YTD July 08 vs 43,699 down 20%!!.

Also a big chunk of the stabilization in sales taxes is because they have increased the sales tax rate dramatically in CA. I live in the bay area and in most parts it is about 9.5% (it's a combination of state, local and county I believe). I think it is up about 1.5%-2% in the past year or so. It's ridiculous. I don't think the tax/political situation here will change until the state goes bankrupt, it's out of control.

Amazon-Sized Craziness

I think the stock is more a reflection of cheap money than the actual fundamentals of the company. I'm short the stock, so I am kind of biased. But this just gets absolutely more and more ridiculous as time goes on.

I like the company, it's a great story and they'll do well but the stock is just totally ridiculous. You have to keep things in perspective by remembering that they earned .45 a share last quarter and that was .15 more than the same quarter last year. And on than news the stock has gone up $45.00 a share on the earnings announcement and the ridiculous pump and dump upgrades that followed.

Equities Update: Stocks Strike Fresh Highs

It's bad because everything you own is denominated in dollars and those dollars are becoming more and more worthless. The fact that foreigners own more and more US stocks can be that positive either.

In essence the federal government if forcing you to accept and asset devaluation and artificially low rates on your savings to bail out the idiots who created this mess. Most people would be &#$! furious if they understood this.

Equities Update: Stocks Strike Fresh Highs

People are converting their yen/euro/pound etc into dollars. When you do this you can borrow dollars at a very low interest rate AND you pick up an extra bonus in the appreciation of your currency vs. the dollar. The money is going into stocks apparently.

The decrease in the dollar is good for exports from the US, but it is bad for imports to the US (it increases the price). You could also argue that the importers won't be able to raise their price because demand is so weak, and that might be true.

At any rate it is a very bad sign that stock are rising along with a falling dollar. It probably indicates mass buying of equities by foreigners. In other words, Bernanke is effectively selling off the country by keeping rates low.

Valuing Amazon Like the Next Wal-Mart

Should also say that I am short the stock now. I just don't see the earnings growth or the economic environment to value a stock so highly.

Valuing Amazon Like the Next Wal-Mart

Interesting analysis. I've never valued a stock like this before. Are you saying that it is undervalued because the results of your analysis give an IRR of 17 or 13.9 and the market discount rate is 12, meaning that the company returns higher than the market and is therefore undervalued?

It seems like with long projection models you can argue any valuation though. It seems unlikely that growth rates will be high for economic reasons and the fact that Amazon is mature and so is the internet. But it is possible I guess.

It does seem strange to me that other similar high-tech internet based companies that have similar earnings growth (apple or google for example) aren't valued nearly as richly. I guess everything isn't logical.

Stocks to Watch as Market Leadership Changes Hands

I don't understand how investors can justify a PE of over 70 on Amazon. The company is over 10 years old and earnings seem to be growing by about 20%. Some of the other higher fliers like google and apple have PEs roughly half of Amazon. The valuation just seems absolutely ridiculous, even in a great economic climate (which of course we don't have). I am curious if there is some explanation here for the valuation, I really don't know.

Ten Reasons for an Imminent Stock Market Crash

And I meant to add: Q: Is there a propect earnings will get better? I mean to say, is the market rally based off of an anticipated earnings recovery in the near futre?
A: Highly unlikely, how would this work? Helicopter Benanke cutting rates to 0% only has a direct effect on what banks can borrow. If banks believe they will not get paid back they will not loan out their cheap money. There is no reason to believe they will get paid back because according to just about everyrhing you can measure the average American is swamped in debt and unable to pay his bills. The reason this dynamic is so important is that the economy over the last few years was based on CREDIT, not money. What is going to replace all of that credit?

Focus on earnings, stock are just a reflection of the current value of a business and future earnings potential. Everyone makes things so complicated. And yes, I believe the market is waaaaaaaay overvalued.

The question of whether it will crash is a different story though. Stock will drop once a broad enough group of people figure out that business won't be earning near what they use to. It's as simple as that. When will that happen? Who knows?

Ten Reasons for an Imminent Stock Market Crash

I look at it this way: Q: What are companies currently making?
A: Earnings in the last few quarters have been absolutely terrible, along with the rest of the economy.

Citigroup Looks Overpriced

I actually think it is underpriced. I understand the approach, but the stock price you're projecting here is completely a function of what earnings you ASSUME the bank will have. Is it reasonable to assume that Citi will earn that much less than it's peers given that it is doing substantially the same things as the other banks? I don't think so, but it is debatable.

I think the stock drew more fire during the crisis because of all the ridiculous media coverage. People were afraid to go near it. It is still priced like it is completely bankrupt (liquidation value) eventhough the federal gov. has said that will never happen. This stock has nowhere to go but up, even in a horrible economy which I think we'll see over the next couple of years.

Wells Fargo: Don't Take Earnings at Face Value

Zombie bank? LOL. They've had one losing quarter in like the last ten years. They made RECORD profits, RECORD revenues, and beat the EPS street estimates by about double. All in an environment that frankly can't get any worse. Home prices in CA have dropped 50% in a lot of areas. You're out of your friggin mind if you think they're going to drop another 50%. This is all a speculative game if you haven't figured it out yet, and the speculation has gone so far one way it has to revert.

Understanding Triple Leveraged ETFs

Thanks for the answer. Good article too! It was very informative.

Understanding Triple Leveraged ETFs

I'm new to ETFs and haven't invested in one before. I have a very basic question though, what keeps these things balanced?

For example suppose the underlying basket of stocks increases by 5% that the ETF represents in one day, is there some type of mechanism to ensure the ETF goes up 5% (assuming it isn't one of the levered ETFs)?

It doesn't seem like there is anything to force this, and you can't redeem your shares directly from the ETF for the individual stocks so there isn't an arbitrage opportunity. It seems like ETFs are promoted as representing a basket of stocks when in reality their performance is different because you have essentially created a new security by combining everything and not forcing the ETF to actually represent the underlying stocks. Or am I wrong about this?

Nationalization Makes Strange Bedfellows

Can anyone explain why B of A should be nationalized after making a profit in 2008? It was a small one but they did make a profit. They made a profit in all quarters except the fourth too. If I remember right they lost 67 cents a share. It doesn't seem like banking conditions could be any worse than what happened in 2008, especially for a whole year, so I got assume that things will get better.

I'm just assuming that nationalization has to do with a company's inability to honor its committments, and the "too big to fail" idea.

Eight Reasons Bank of America Is Going to $20

Ahmen. Finally a sane voice, in a completely insane market.