TTBF

Hang Seng: Full Steam Ahead

Great info. Thanks. The one thing I would add, however, is that estimates (for US companies anyway) for next year are still being cut at a breakneck clip. Zacks has the estimate ratio (ratio of earnings estimate increases to decreases) at about .17 right now and still falling. A bit more than 4 estimate increases for every 25 estimate decreases. Ouch.

And this recession could easily last another couple years and get deeper. So the 11.9 figure you mention as the P/E based on next years earnings will likely move much higher in the months ahead. And the year after may see poor results from many companies as well if the recession is long-lasting.

Is Buy-and-Hold Dead? Hardly

If you look at the 1929 crash or even the Nasdaq crash of 2000, starting to invest with a 5-10 year time horizon after the initial 60% haircut was a decent gamble. There will likely be plenty more major pullbacks in the market over the next few years. Each one will be a buying opportunity for well-managed companies with solid dividend yields, low price to book values and for even a few growth stocks with defensible businesses.

The real problem with the market right now is shrinking demand and too much supply. Sure, hedge funds are going bust right and left and that will end sometime next year most likely. But boomers have started to pull their money out - for good in many cases as their risk appetite weakens naturally with age. The bull market from 1982 to 2000 was as much a demographic phenomenon than anything else as demand for stocks grew. Most stocks will trade down to their real value - their dividend yield as demand falls off. Everyone will be looking back and wonder why they were paying 25 times earnings for a company yielding 1.5% or nothing at all. Why not just buy a CD? Sure, the company can be purchased for an amount based on their earnings yield. But how often will that happen and how long will those earnings last before a better product/service based on new technology becomes available?



On Nov 14 10:46 PM skyflyz wrote:

> I think the declaration "The Death of Buy and Hold" coming from
> a CNBC show signals a contrary indicator of some sort. I guess we'll
> just have to wait and see.

An Alternative Perspective on Apple's iPod Growth

I think that is Apple's biggest threat right now. Google's new platform will bring plenty of competition Apple's way. The G1 looks pretty good for starters with its retractable keyboard and removable battery. The data plan is a little less. You can get it for about $150 now at Walmart they say. But the graphics on the iphone are better. I have to believe Apple is preparing for the onslaught of competition with its huge cash position.


On Nov 04 04:08 PM Hi_Hater wrote:

> There's also a new alternative to the iPhone called the Krave (motorola.com/krave).
> It has a QWERTY keyboard and its narrower then the iPhone. It's a
> flip phone that has a clear top and its touch sensitive, so you can
> use your phone without even opening it!

Apple Rumors: Mac Upgrades and iPhone Production Drop

I'm not so sure about the 40% production cut either. I was in a local Apple store in the Research Triangle area in Raleigh, NC the weekend before Halloween. It was as busy as ever with plenty of interest in the 3g iphone. The store was a mob scene and it was difficult to get some time to talk to one of the reps. Given the huge upside surprise this past quarter, I'd be surprised if sales were not strong this quarter.

Although overall Holiday sales will likely be off this year, it will still be an iphone Christmas.

We featured Apple in our newsletter this past weekend as a great covered call trade over the next year or so. With 25 billion in cash, they are well positioned to weather this economic downturn. About as well positioned as any other tech company....

Brian C Neall
Founder - Tradetobefree.com




On Nov 04 01:25 PM kris23 wrote:

> Maybe there just pulling back production in anticipation of decreased
> consumer spending. Although 40% sounds like an exaggeration from
> "sources." Either way I have no doubt Apple will make it out strong
> through the holiday season. Sentiment has been becoming stronger
> for AAPL (www.predictwallstreet....)
> and the price shot up this morning. I'm still bullish on APPL.

Buffett Buys GE, Goldman: Should You Follow?

GE has 2 pretty big problems as I see it:

1. The have a large financial business that is hurting as are the rest of the financials. I just read Charles Morris's book, 'The Trillion Dollar Meltdown' and discovered that GE was a pioneer in creating Asset Backed Securities to finance numerous things the company needs. According to Charles this lowers apparent debt using special purpose entities. An ABS is a type of CDO. The company is obviously desperate enough to give Buffet a 10% guaranteed dividend to raise some capital. Now there are questions about whether GE can get another $85 billion they need the next time their short-term commercial paper comes due. Its hard to imagine that a great company like GE would have problems getting that loan but credit markets are frozen and need time to thaw.

2. GE has been a proxy for the economy and the economy doesn't look good going forward. All of the analysts that I listen to say the earnings outlook for the entire market is going to turn pretty ugly as numbers are released this quarter. Estimates are starting to be cut at a breakneck pace. And GE is a bellweather.

With the short ban being lifted last night and earnings for GE out tomorrow, look out below. This is a rare instance that I would consider buying put options on a company but I just did. Will buy some more on any bounce.

The fed is backstopping top rated commercial paper right now which should help GE. However, the downturn in earnings could be a real problem for them going forward and perhaps threaten their AAA credit rating at some point. I have to believe thats what they are worried about most and what prompted them to give Buffet the sweetheart deal.