Sanitychecker

Richard Bernstein's Top 10 Predictions for 2010

Here are two links. The first shows some of Berstein's predictions during 2000 and 2001 (www.smartmoney.com/inv.../).

The second shows how various sectors performed between 1999 and 2009 (www.longfellowbenefits...).

J-dub, perhaps you could compare the two for the "hoot" you wanted.

Krugman Forgets How Long the Dollar's Been Declining

The NY WHAT?

S&P 500 Stocks with the Highest Short Interest

yea

The Congressional Bailout of Madoff's Investors

Caveat emptor

Dow 6500 in 6 Months or Less?

What are you talking about?

In your article, you said:
"Unreal. How can it fall 18.5% last year, so a buyer lost almost 20% of his home value, and then fall ANOTHER 20% to start this year? So if one's home was worth $100, it was then worth $73.50 during the free fall and is now worth $58.80??"

The S&P/Case-Shiller U.S. National Home Price Index that "The 10-City and 20-City Composites recorded annual declines of 18.6% and 18.7%, respectively." as you correctly quoted in your article. Therefore, depending on which composite you choose, the $100 house would now be worth either $81.4 or $81.3 a year later. Neither feels too good but it is far better, actually 38% higher than the figure you presented of $58.80.

To provide some balance, the press release also states that "These are slight improvements from their returns
reported for February" and "On a positive note, nine of MSAs are reporting a relative improvement in year-over-year returns and nine of the 20 metro areas saw an improvement in their
monthly returns compared to February. Furthermore, this is the second month since October 2007 where the 10- and 20-City Composites did not post a record annual decline."

You should also be aware, although the Case-Shiller index is one of the best around, it is also susceptible to being skewed by areas which comprise a large percentage of the housing stock/value and by greater price change extremes between areas. The two areas of LA and San Fran, two of the twenty metro areas in the index, were responsible for over 32% of the decline in the index year over year. That is because they are two of the top three largest areas and had declines of 22.3% and 30.1% respectively.

Let's face it, housing has a long way to go before recovery can be claimed. However let's try to keep the facts straight and eliminate comparisons to the speculative level highs of 2006 which serves no purpose. And with Korea starting a Pacific Rim war...... you may want to save your two cents, and add it to your "build a bunker" fund.

Stress Test Results: AQ Chances vs. SCAP Buffers

You might remember my question to you when you first proposed your AQ approach and the extraordinary health of WFC..

Which Banks Are Holding Those 'Hard-to-Value' Assets? [View article]
How did you account for Wachovia in your analysis of Well Fargo?

Isn't your analysis still something? Shouldn't Wachovia's market capitalization and revenues be included in the analysis enen though you are not necessarily scoring them? At first blush, it would seem to me that would allow for an apples to apples comparison and perhaps push WFC's AQ score back toward 0?

Disclosure: I am long WFC and short WFC calls but not for long!

Thursday Abbreviated Market Summary

Speedy recovery! Need you back in the saddle pumping charts and giving insights. I am not a technician, but do believe in market psychology, herd mentality and momentum and appreciate your work.

Looks to me that if SPY doesn't close above 88 on Monday with some volume it's time to take some money and hide for a while. It may be that the herd has run into a canyon and can only get out by turning around.

Government and taxpayer largess are fine for bounces but for a real recovery we need consumers voting with their wallets and businesses investing. Significant increases in either are more than six months out and beyond this market's ability to forecast.

Which Banks Are Holding Those 'Hard-to-Value' Assets?

Thanks. Did you run the analysis on Wachovia? If not, I'll run the numbers using your approach and see how I might combine them with WFC. Appreciate the approach.


On Apr 05 10:49 AM Victor J. Cook, Jr. wrote:

> The data in this analysis cover the 36 quarters ending 12/31/08.
> The Wells Fargo-Wachovia deal closed on Jan 1, 2009, so the impact
> won't show up in their financials till 3/31/09.

Which Banks Are Holding Those 'Hard-to-Value' Assets?

How did you account for Wachovia in your analysis of Well Fargo?

10 Dangerous Stocks to Avoid

Let me guess you are short some or all of these stocks. Naked short? You may want to reevaluate that decision on some or all of them.

You are right. Leverage can be a good or a bad thing. It must be investigated. So let's see what is under the covers of IBM during the period you show the most dramatic increase in their debt to equity ratios between 2007 and 2008.

The ratio can change higher by debt rising or the equity position falling. Debt rising occurs from taking on more debt ( more troublesome might be exchanging higher coast debt for lower cost debt but we won't digress since that didn't happen). The dollar amount of stock holders equity can fall due to a fall in the price of stock or reducing the number outstanding shares.

During 2008, IBM issued $13.8B new long term debt and retired $10B for a net increase of $3.8B in debt. That would increase their LT Debt to Equity ratio. They also repurchased $10.6B worth of equity. The result of both would decrease their debt to equity ratio so why did it increase? Oh. yea! The price of the stock must have dropped some during 2008. Between January 2nd and December 31st 2008, IBM stock fell over 18% (it actually had a 45% swing from high to low during the year) So. IBM is making positive moves in their capital structure but being penalized in the capital markets.

Perhaps a better way to look at the possible consequences of a high debt to equity ratio is to look at how well IBM can afford the level of debt it has taken on. Let's see. Between 2007 and 2008 , IBM's Gross Income has risen from $41.3B to $45.34B, EBIT increased 18% from $15.1B to 17.4B, Net Cash Flow from operations increased 17% from $16B to $18.8B, Capital surplus increased from $34.8B to $38.8B and Retained earnings grew from $60.7B to $70.35B. And most important, their interest coverage ratio is 25.8 times. It doesn't seem to be an issue for IBM to pay it's Long Term Debt obligations, nor does it seem that their Income Statement, Balance Sheet, Capital Structure or Cash Flow would give ANY bank or lender pause.

I wouldn't be surprised to see you didn't do your homework on any of the other stocks as well. I suggest you find a different advertisement of the advice you have to offer from your web site........... (In full disclosure, I own COP, IBM and ETP(closely related to EPD), all for different reasons but for reasons based on research and analysis of fundamental and technical reasons. That is the bottoms up part.)