It's All Malarkey By Charles Payne

Dec. 06, 2012 9:35 AM ETDRI, C
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Long/Short Equity, Portfolio Strategy

Contributor Since 2008

Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political, and general opinions by several prestigious news organizations. Currently, Mr. Payne is a contributor to the Fox News Network and Fox Business Network. He also hosts his own radio show on KFIAM 640 every Saturday from 2-4pm PST. Mr. Payne recently released his first book entitled Be Smart Act Fast Get Rich. Our all-star analytical team is called first when the media needs to know. We are regularly featured on several well respected finance-oriented radio and television programs such as Fox, CNBC, BNN, WSJ to name a few and widely recognized in the media as a leaders in the analyst community. In addition, Wall Street Strategies is part of Factset, Jaywalk, and Thomson-Reuters Consensus Estimates. Meet our analysts: Brian Sozzi is an equity research analyst specializing in the softline/hardline goods sectors of the retail industry for Wall Street Strategies Inc. Mr. Sozzi graduated Summa Cum Laude from Dowling College, receiving his Bachelors of Business Administration with a concentration in Finance and Accounting. Routinely sought after as a trusted point of reference for opinions and insight on the global economy and retail sector stock evaluation, Mr. Sozzi is a frequent on air contributor to CNBC, Fox Business Network, and Bloomberg, and is cited regularly by online/print publications that include Forbes, Bloomberg, The Wall Street Journal,, CBS Marketwatch, Reuters, Seekingalpha, Associated Press, Crain’s NY Business, Fortune, Barron’s, AOL Finance, and the Financial Times. In 2009, Mr. Sozzi became recognized by Starmine as a top-ranked equity research analyst for stocks under coverage in such categories as EPS Estimate Accuracy and Industry Excess Return. David Silver is a Research Analyst for Wall Street Strategies. He is a graduate of Tulane University’s A.B. Freeman School of Business where he received his Bachelor of Science in Management with a dual degree in Finance and Accounting. David actively covers companies in the Transports, Autos, and Beverage sectors. He is routinely invited to appear on business oriented television and radio shows including CNBC, Fox News, Fox Business News, the Business News Network of Canada, WCBS Radio, and the Wall Street Journal Radio. In addition, David has been quoted in major business publications such as the Wall Street Journal, Forbes, Marketwatch, CNN Money, and Autoweek. David Urani is a research analyst with concentrations on the homebuilding, staffing, medical devices, and logistical services industries. Along with providing institutional clients with up-to-date reports of individual stocks within his industry coverage, David assists the rest of the Wall Street Strategies research desk with timely analysis of vital economic data. A graduate of the A.B. Freeman School of Business at Tulane University, David earned a Bachelor of Science in Management while majoring in finance. With prior training experience running small businesses, he has an eye for key fundamentals that keep Companies running efficiently. David’s insight has been featured in several outside sources, including the Fox Business Network, MarketWatch, and SeekingAlpha. Carlos Guillen is an Equity Research Analyst providing coverage of the technology sector for Wall Street Strategies, Inc. Mr. Guillen has had experience working in both the sell side and the buy side. Prior to working as an analyst, he was a Design Engineer for Lambda Electronics. Mr. Guillen holds an M.B.A. from NYU’s Stern School of Business, and he has a B.S. in Electrical Engineering from Manhattan College. Conley Tuner is a Research Analyst with Wall Street Strategies Inc. He is a frequent contributor to a number of media outlets including MarketWatch, Bloomberg, BBC news and Xinhua news. Conley holds a Masters in Business Administration and a Masters in International Affairs from the George Washington University. Jennifer N. Coombs is an Equity Research Analyst at Wall Street Strategies. She previously worked on the buy side as an Associate Equity Research Analyst covering the transportation subsector of the industrials sector at AIG SunAmerica Asset Management Corporation. Jennifer also covered Real Estate Investment Trusts (REITs) and has done broader research for the industrials, financials and consumer sectors. Prior to joining their research department, Jennifer worked as a Trading Assistant for SunAmerica’s index funds. She also worked briefly in the client portfolio management department at Dwight Asset Management Company – a fixed income subsidiary of Goldman Sachs. Jennifer graduated with distinction from Clarkson University where she earned a B.S. in Financial Information Analysis and Political Science, with minors in Economics and Law. Jennifer specialized in international markets, and briefly studied East Asian Economics at Sungkyunkwan University in Seoul, South Korea. Jennifer is currently a member of the New York Society of Security Analysts (NYSSA).

Question of the Day

Merriam Webster has an eclectic mix of words in its top ten but I bet you know one or two they missed.

Question of the day- what should be the word(s) of 2012?

Let me know the word and your reasoning.

Click here to post your answer and let Charles know what you think.

Merriam Webster is out with its top ten words of 2012. Heading the list is a tie between "Socialism" and "Capitalism." Maybe not a surprise that these words would make the list, but I'm somewhat taken aback there would be a tie at the top of the list. Anyone that believes capitalism brought the nation to greatness should be alarmed at the short-term reaction of those that think capitalism brought the nation to the brink.

There is a full-fledged war afoot, and maybe those that love capitalism and how it created the road map to the American Dream, are too busy working to notice - but they better wake up before it's too late. This particular list is heavy with influence from the political season chocked full of emotions and anger which lifted Schadenfreude and bigot near the top of the list.

Merriam Webster Top Ten Words 2012

1. Socialism & Capitalism
2. Touché
3. Bigot
4. Marriage
5. Democracy
6. Professionalism
7. Globalization
8. Malarkey
9. Schadenfreude
10. Meme

The last word on the list piqued my interest. It's one of those words we see pop up from time to time. Sourced to "The Selfish Gene" written by Richard Dawkins "meme" is defined as:

An idea, behavior, style, or usage that spreads from person to person within a culture.

I haven't read Mr. Dawkin's book (I ordered it last night for weekend reading), but from what I can gather, meme serves a purpose similar to genes with respect to passing on things among the human species that help us survive and adapt. The blessing from God has been the fact we aren't wedded to embedded data in our genes, so we don't have to fly south for the winter or be born and pass away as working drone ants, living in day to day drudgery in service to the queen.

Of course, survival of the species is paramount among all living things, but you have to wonder if our free will is more harmful than good. It goes without saying people are self destructive. I spent hours as a child watching nature. Scenes like giant red ants fighting smaller black ants captured my time and fed my imagination. Yet nature always seemed to have a corrective aspect that put things in order after such scenes. All those encounters were driven by survival, not nefarious hatred or petty jealously.

Now America is embroiled in a battle that could destroy the nation because we've hit a rough patch and forgotten how to correct it and get back on track. This notion of meme suggests we can actually forget about survival of the species and instead become a dependent species looking for thought, sustenance, and beliefs to come from government. In other words, move over drone ants, so Americans can get in line.

Darden Blinks

I made a big deal over how the mass media has begun to bully companies that dare make disparaging comments about the administration's policies or other aspects of the liberal agenda. Sure, such criticism has been around all along, but it's taking on a different twist, one that sees a deliberate attempt to negatively impact the earnings of such companies. The big targets are publicly traded companies which are more sensitive to negative publicity and the emotional whims of the stock market.

On Darden's DRI homepage visitors are greeted with these options:

> 2012 Community Service Report
> Sustainability
> 100 best companies to work for

Heck, it's easy to forget what the company does at first blush. Darden isn't alone, but these efforts on websites and all the wonderful multi-cultural faces smiling in their annual reports aren't going to be enough to stop the media barbarians at the gate. So, Darden blinked with management now saying it will not shift full time workers to part time in 2014. A Company spokesperson went so far as to say such moves at "test" restaurants may have already backfired, citing internal surveys showing employee and customer satisfaction declined.

Darden said the negative fallout from an announcement to make current full time workers part time employees already hit its bottom line and posed a threat going forward. But the mea culpa could doom future efforts from management to help its bottom line. Lower take home pay is a disincentive whether you're on minimum wage or earning more than $250,000 a year so that Darden survey isn't surprising. The company has larger issues with respect to the food it serves.

Once an unstoppable juggernaut, Olive Garden has seen an average monthly decline of 4.5% in foot traffic since March. That has been countered with price increases, but that's not smart business (just look at the Post Office, slashing delivery and raising prices). Darden is in trouble and doing what it has to do to weather this period. There is no way management wants to pay people less, but it might be that or fewer workers. In the past, each server handled four tables now they handle three and tip sharing has been adjusted so the Company has to pay less. In FY2007, labor was 32.5% of revenue and in the most recent quarter it represented 30.8% of revenue.

Cutting wages and raising prices is a flawed business model, but when it happens to all Americans who incidentally have suffered an average $4,500 cut in real wages during the last four years as gasoline has doubled, it is overlooked by the media. This double standard is awful and dangerous as it placates a sense of desperation and need for immediate change and answers. Businesses, unlike our government, can't spend more than they make into infinity. Some can borrow to stay alive and a few get bailed out but others make adjustments.

These are hard adjustments. I think Darden's management does take pride in being on the list of 100 Best Companies to Work For and doesn't want to jip its workers. The alternative will be fewer workers bussing more tables. That means more unemployed, more food stamps and more dependency. Ironically it might also mean a higher stock price, case in point, Citigroup C shares soared on news that the company is laying off 11,000 people. But for those seeking to replace capitalism with another form of government, higher stock prices while people suffer makes for great ammo.

In the end, I suspect Darden, where 75% of its 185,000 workers are already part time, will quietly shift more off full time duty but as quietly as possible.

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