Learning from Jesse Livermore
Posted on May 28, 2008 - Filed Under Investing | Leave a Comment
Years ago I asked a friend of mine to recommend a book about investing and the stock market. He recommended “Reminiscences of a Stock Operator” by Edwin Lefevre and it was then that I was introduced to Jesse Livermore.
Livermore was born in 1877, and started trading at age 15. He was a highly visible stock trader and speculator for almost fifty years. Livermore was famous for making and losing several multimillion dollar fortunes during his professional career.
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And You Thought You Knew The P/E Ratio
Posted on May 27, 2008 - Filed Under Investing | Leave a Comment
The Price –Earnings (P/E) ratio is one of the most common measurements investors use to measure the performance of individual stocks or the overall stock market.
The traditional PE ratio is calculated as:
For example, if stock A is trading at $24 and the earnings per share for the most recent 12 month period is $3, then stock A has a P/E ratio of 24/3 or 8.
But today, bulls and bears calculate earnings a little differently. Bulls use what is called operating earnings (operating earnings exclude write-offs) and also use the forward projections of earnings for the next 12 months. Forward or projected earnings are typically higher than trailing earnings.
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Google Owner Larry Page Speaks With Forked Tongue
Posted on May 22, 2008 - Filed Under Investing | Leave a Comment
I had to laugh when I read Google founder Larry Page’s comments about a potential Microsoft takeover of Yahoo, saying it would concentrate too much power in the online communications market, stifling innovation and curbing competition.
But he discounted the idea that an advertising deal between Google Inc. and Yahoo Inc.—one the two companies are now exploring—would present any potential antitrust problems.
Page said a successful Microsoft-Yahoo deal would “close a lot of things that are really important … like instant messaging” and also Web-based e-mail communications.
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The Bear Position
Posted on May 21, 2008 - Filed Under Commentary | Leave a Comment
The stock markets 12% rise in the last two months has the bulls on Wall Street believing that the worst is over, and the market is heading higher the rest of the year. The bears point to the following macro events as to this was simply a bear-market really
- Industrial production fell 0.7% in April as the weak dollar is not helping manufacturing
- S&P reported Q1 earnings of the 500 compnaies were down 25.9% from the same three months last year. This is the 3rd straight quarter of declining profits
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Bulls and Bears Battle on Berkshire Hathaway
Posted on May 20, 2008 - Filed Under Credit Cards, Investing, Stocks | 1 Comment
I was surprised to see two different opinions this week in Barrons on the stock market performance of Berkshire Hathaway (BRK-A). In separate articles, the bulls and bears both have their opinions of where the stock was going.
The bullish opinion was provided by T2 Partners Hedge Fund. T2 points out that the value of investments of Berkshire has climbled to $90,343 in 2007 from $52,507 in 2002.
In calculating future stock growth, T2 uses a formula to calculate intrinsic value. Intrinsic value is the investment value per share + 12 times earnings per share , excluding investment income.
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Financial Links
Posted on May 19, 2008 - Filed Under Investing | Leave a Comment
While surfing the web last week here are some of the financial sites that caught my attention:
- FlyerTalk is a great site for travelers and collectors of frequent-flier miles
- FatWallet is terrific site on credit cards.
- The Bank Deals blog, is a great resource for new high-rate account offerings.
- Consumerist is provides really good advice for anyone who feels as if they have gotten a bad deal from a particular retailer or service provider. A
- Bogleheads investment forum is a good place for information on index-fund investing
- Wealth Junkies has solid advice on debt, credit, investing, and money
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Top-Performing Midcap Blend Funds
Posted on May 16, 2008 - Filed Under Mutual Funds | Leave a Comment
Midcap blend is that sweet spot in the market between growth and value stocks. A blend fund is a fund that buys enough growth and value stocks to being categorized as either one of those groups. Managers either jump back and forth across the divide as needed or tend to hold a steady array of each kind.
What got my attention is that the MidCap Blend Funds is the second best performing group for both year-to-date and the past five years, according to Morningstar Inc. For the past five years, Midcap Blend Funds returned an average annual 13.51% vs. 10.25% for the S&P 500.
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Stock Focus: W.W. Grainger (GWW)
Posted on May 15, 2008 - Filed Under Stocks | Leave a Comment
For those investors looking for a stock that provides a steady divided income, W.W. Grainger is a stock they should consider.
Grainger is a stock with a stable growth pattern, Over the last three-years and five-years its earnings have grown by 17% a year and its sales by 8%.
It is this sort of stable performance that has Grainger to raise its dividend for 37 consecutive years. Only 20 companies in the S&P 500 can match or surpass that claim. After raising the dividend in April, its yield now stands at 1.8%.
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Learning From Peter Lynch
Posted on May 14, 2008 - Filed Under Investing | Leave a Comment
Peter Lynch is the legendary former investment manager of Fidelity’s Magellan fund. In today’s volatile investment climate, the investment philosophy of legends like Peter Lynch and Warren Buffet are suddenly back in vogue.
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Stock Focus: Parker Hannifin (PH)
Posted on May 12, 2008 - Filed Under Stocks | Leave a Comment
The falling U.S. dollar has many investors looking for U.S. stocks with large international footprints. One such stock is Cleveland-based Parker Hannifin (PH).
Company Profile:
Parker Hannifin Corporation manufactures fluid power systems, electromechanical controls, and related components worldwide.
Background:
In 2001, international industrial sales made up about 21% of Parker Hannifin’s net sales. Today that number is 42% and some analysts think even that number is understated. North American industrial sales make up about 34% of net sales; aerospace, 15%; and climate and industrial controls, 9%.
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