Donkey Kong

Prudential's Bullish 2010 Market Outlook

I'm shocked that a sellside brokerage firm would have a bullish outlook for equities....

Not to be left out, Nestle (NSRGY.PK) is thought to be considering a bid for Cadbury (CBY) to challenge Kraft's (KFT) $16.7B hostile offer and a potential counterbid by Hershey (HSY). One analyst says Nestle could "blow Kraft out of the water" if it ops to execute an option to sell its majority stake in Alcon (ACL) to Novartis (NVS) for more than $20B come January.

Yet another party (Nestle) that wants to overpay. No wonder acquisitions are value-destroying in most instances. The acquiring firms' management too often think with the wrong head.

As the FDIC debates whether it'll need to hit the Treasury up for a loan, Institutional Risk Analytics - which has usually taken a grim outlook on bank prospects - now thinks that more than 1,000 banks will fail in the current cycle. With 25 down in 2008 and 94 so far this year, that just leaves another 900 or so.

Another bullish data point for the market. LOL! Look for investors to push the SPX through 1100 by the end of the week....

Forget 'Cash for Clunkers': Try 'Dough for Dumps'

Agree 100%. Policies of the U.S. Government are always "short-sighted" because they are already running for re-election!


On Aug 23 04:24 AM Faisal Humayun wrote:

> All the policies of the U.S. government have one thing in common...They
> are all short sighted...So in the near term money printing might
> make people feel that thing are recovering...But it is a disaster
> in the long term...The same goes for other policies as well...I hope
> one day they decide to leave the free markets work....But I guess
> its too late for that....

Democrats Headed for a Train Wreck

I'm a little confused by the bearish outlook implied in this article while Dr. Morici is constantly talking up the U.S. equity markets with his fellow shill, Larry Kudlow. So the market is up 50% DESPITE the terrible economic policies of the Obama administration? That makes no sense.

The Obama administration and their enablers in the media think they can save the banks and the economy by "talking up the markets" i.e. green shoots, other BS. Unfortunately, the impact is only temporary because we refuse or are unwilling to fix the structural flaws in our economy.

38 Reasons the Google IPO Isn't the Big Deal Some Are Making It Out to Be

The breathless news-readers at CNBC are all excited with GOOG up over 400% since the IPO. Impressive absolute performance, but not so great relatively speaking.

On the 5th year anniversary of going public, MSFT was up over 1300% or a compound annual return of over 70%. So, it fair to say that MSFT was a much more dominant franchise in its first five years of public ownership than GOOG. Certainly, investors thought so.

Consumer Bankruptcy Filings Hit 4 Year High

Is this your CNBC casting call?


On Aug 10 05:21 PM Jack FghtClb wrote:

> I think historians will use a 'mo' prefix to the -ron used to describe
> you.
>
> Relative public debt to most economic indicators are at higher levels
> but within normal ranges. And the consumer has seen benefits of
> a 50% increase in the SPX - spell it with me f-e-e-d-b-a-c-k...c-y-...
> Unemployment is l-a-g-g-i-n-g.

Who's Blowing This Bubble - And When Will It Pop?

"Don't look now, but the discount rate is awfully low. You guys took math, right?"

When you use a low discount rate, by definition you are receiving a low return. I thought the idea was to generate HIGH returns, Mr. Math?


On Aug 07 07:44 PM Deepv wrote:

> Where is the bubble? dell on 10x earnings? China -- fine. Show me
> the bubble! I thin you all need to get a grip and learn stock = PV
> of future cashflows. Don't look now but the discount rate is awfully
> low. You guys took math right?

Confidence Games and Ponzi Schemes: No Way to Run the World's Largest Economy

I don't disagree. See my post about SAVERS, SPENDERS and INVESTORS / SPECULATORS. By definition, the Fed with the support of the U.S. Government "hate / don't respect" SAVERS given their zero interest rate policy. SAVERS include the thrifty, people on a fixed income, etc. Artificially low interest rates are to the benefit of SPENDERS (to finance their over-consumption) and INVESTORS / SPECULATORS (to finance their investments / boost the value of their holdings). If you live within your means, eschew debt and save for the future, why should you have to finance the indulgences of the SPENDERS and INVESTORS / SPECULATORS? Fed and U.S. Government policies should be fair and balanced towards all three groups. This is the only way we can have a long-term, sustainable recovery.


On Aug 07 07:27 AM Michael Clark wrote:

> Very good article, Tim. Notice the chart on the savings rate: interest
> rates started down in 1983 and never came back up. How can we expect
> people to save when they are getting nothing from the banks in terms
> of interest and our 'leaders' in Washington and New York are doing
> all they can to debase the dollar?
>
> This crisis has exposed a lot of lies and corruption. And, as you
> suggest, the cat is out of the bag: the management of the economy
> and finance through Wall Street and the Fed is just another PONZI
> scheme, with more pomp and better rhetoric.
>
> Wall Street is just another form of Caesar's Palace, without the
> naked women.

Abby Joseph Cohen's Bullish Calls

When I think of Abby Joseph Cohen, I think of the phrase..."even a broken clock is right twice a day".

Five Reasons the Market Could Crash This Fall

The 50% rally from the March lows is not surprising at all. Given the unprecedented levels of debt in the system (public and private) and the threat of insolvency, the world was headed towards Armageddon. Therefore, the Fed and U.S. Government decided the only way to avert disaster was to boost ASSET VALUES! Everything else is secondary. So, what's the best way to boost asset values? Massive fiscal and monetary stimulus!

In my mind, there are three groups of people in the world: SAVERS, SPENDERS and INVESTORS / SPECULATORS. SAVERS put money into CDs, savings accounts, etc., refrain from leverage and focus on living within their means. The Fed and the U.S. Government are essentially saying f*** you to SAVERS by keeping short-term interest rates artificially low. Monetary and fiscal policy is unfairly skewed to the benefit of SPENDERS and INVESTORS / SPECULATORS. These groups can borrow cheaply (at the expense of SAVERS) to finance their consumption (SPENDERS) and to boost the value of their investments (INVESTORS / SPECULATORS). Much of the growth, consumption and investment returns since the early '80s was due to increasing amounts of leverage. The U.S. will not return to steady, sustainable, long-term until Fed and Governmental policies are equally fair to SAVERS, SPENDERS and INVESTORS / SPECULATORS.

Huron Consulting's Spectacular Blow Up

Growth by acquisition strategies or "roll-ups" ALWAYS end badly....


On Aug 04 08:40 AM Alan Brochstein wrote:

> Tyler, interesting take, but I am not sure it is correct. From what
> I understand, the selling principals moved money directly to their
> underlings rather than receiving it, paying taxes and then doing
> whatever they wanted. HURN didn't benefit from this as far as I
> can tell. Worst case, the spread between GAAP income and non-GAAP
> income would have been wider, but it certainly didn't do anything
> to alter "organic growth" perceptions. It was a roll-up, period.
> Nevertheless, it isn't something that will help them gain new clients,
> will it?

Goldman Sachs (GS) upgrades 3M (MMM) to Buy from Neutral, sending shares up 2.4% premarket. Goldman likes 3M's significant exposure to early cycle auto and consumer electronics markets.

Congratulations on missing the move from $41 to $71......

The Fallacy of 'Money on the Sidelines'

Excellent article! It supports the simple financial premise: leverage magnifies returns - a huge stimulant when asset values are increasing and the proverbial weight around your neck when asset values are in decline.

Jeremy Grantham stated that in December 2008, the world had $50 trillion in assets at the peak which was supported by $42 trillion of leverage (80%). He believes the max leverage ratio should be roughly 50%. With asset values at roughly $35-40 trillion, leverage still needs to come down by roughly half. This does not bode well for the global economy, equity markets, etc.

The Bears Capitulate

contrarian SIGNAL...


On Jul 30 08:35 PM Donkey Kong wrote:

> Reminds me of the BusinessWeek cover from August 1979, "Death of
> Equities". This was the ultimate contrarian single and I wouldn't
> be surprised if the Newsweek cover will be as well.