Harry Newton's In Search of The Perfect Investment, Technology Investor. Harry Newton
AM ET, Friday, December 18, 2009: Want
to trade like the experts? Here's a way to have a portfolio that mirrors the trading
of so called stock "geniuses." Two sites are doing it:: kaChing and
Covestor. Read more, go to TechCrunch.
is wrong, occasionally. On September 24, 2009, Jim Cramer wrote:
You see stocks
like YRC Worldwide(YRCW Quote) run, you know that it's been up pretty much
every day since September began, and you say to yourself, did I miss it? Am
I too late?
If the recent history of plays like this pans out, you still have a lot of
points to run. Here's why. In the last month, the old Yellow Freight, the
largest trucking company, has been able to undo some viciously bad labor agreements
and credit agreements. In doing so, it avoided bankruptcy. Just by a hair,
but it avoided it.
Until it got
those agreements, which occurred at the beginning of the month, YRCW's survival
wasn't assured. In fact it was pretty much of a given that it wouldn't make
it. Which is why one-third of the company's stocks have been sold short.
But these stocks
are binary. They are fabulous shorts if they don't solve their problems. They
are the world's worst shorts if they do.
theirs. So it is now a nightmare short.
Mind you, we
have no idea what the normative earnings power of YRCW is. In the old days
in a solid economy, I would have said it could earn $5 a share in a boom and
$1 coming out of a slowdown. But that's when it had labor agreements that
were about $1 billion more costly than they are now. So maybe you could argue
it could earn $2 a share coming out of a recession.
Now, you start
thinking, hmm, $2 a share, sells at $5. Who knows what kind of multiple you
should give a company that was losing money hand over fist that can now survive?
You can't give it the multiple, say, of Con-Way(CNW Quote), which is 30 times
But surely it
is worth more than 3 times earnings.
So why stop
Of course, you
could say, wait a second, the balance sheet is still terrible.
But I would
counter with the following observation: If the company were to sell 20 million
shares right here, it would be able to pay down even more debt and be even
more valuable. We are in virtuous-circle mode.
You missed the bottom. You haven't missed the top. And the higher it goes,
bizarrely, because of the ability to re-liquefy, the more valuable it becomes!
This is what happened
to YRC Worlwide since:
It fell. The shorts
were right. Cramer was wrong. Drek happens.
the U.S. be on the edge of a double dip recession? Roubini Global
Today we look
at the links between the current economic conditions and those of the 1930s,
another era where the threats of sovereign defaults and inflation worries
loomed large. A lengthy recent analysis by RGEs Mikka Pineda identifies
striking similarities in U.S. inflation attitudes between the mid-1930s, when
the U.S. began to show signs of recovery from the Depression, and 2009. Americans
during the Great Depression voiced the same concerns about excess bank reserves,
budget deficits, competitive devaluations and commodities speculation as they
do today. Even dissenting arguments followed the same script in both eras.
The eerie resemblance in the psychological and economic backdrop of the mid-1930s
and 2009both historic junctures when recovery was thought to have begunraises
concerns that the U.S. could be on the edge of a double-dip.
plummet: From the Wall Street Journal's MarketWatch:
Nearly all of
the nation's largest air carriers are pulling advance-purchase rules for holiday
travel, dropping some ticket prices by as much as 79%, Bestfares.com reported
In an unexpected
move that underscores how much trouble airlines are having attracting cash-starved
business and leisure consumers, American Airlines, United Airlines, Delta
Airlines, Northwest Airlines, US Airways, Frontier Airlines, AirTran Airways
and Midwest Airlines are waiving their holiday advance-purchase requirements.
suck. Sometimes they know. Sometimes they don't. But it's your
life. Questioning experts will keep them honest and you healthy. Here is the
screw that snapped on my bicycle, causing my face to kiss the concrete and lose
a tooth. The top screw from the bike is 1/8" in diameter. The bike should
have come with a 1/4" inch screw, shown below.
I wondered, how
much bigger is the bigger screw? Though 1/4" is twice as large as 1/8",
the bigger screw is actually four times larger in area. And, I'm guessing,
four times stronger.
There's also the
story of our architect who didn't design enough structural bracing in our house
and got really pissed off when I suggested that the house was "sagging."
1. Experts are
2. Experts come
with large egos.
3. The Internet
can make you an "instant" expert on anything in two hours. (That
doesn't include investing.)
P.S. I conspired
with the builder and we secretly shored up the house with a long I-beam and
a half dozen metal posts. We put them where we felt the spans were too wide.
Architects like open spaces that sag.
Claus bailout hearings.
Brilliantly done. The congresspeople and their questions are real. Only
the beggar for the bailout is different. Click here.
Premier Bank hits a high note: This is the
credit card offer from First
Here are excerpts
Huffington Post story.:
It's no mistake. This credit card's interest rate is 79.9 percent.
APR is how First Premier Bank, a subprime credit card issuer, is skirting
new regulations intended to curb abusive practices in the industry. It's a
strategy other subprime card issuers could start adopting to get around the
First Premier card comes with a minimum of $256 in fees in the first year
for a credit line of $250. Starting in February, however, a new law will cap
such fees at 25 percent of a card's credit line.
In a recent
mailing for a preapproved card, First Premier lowers fees to just that limit
$75 in the first year for a credit line of $300. But the new law doesn't
set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9
The terms are
eyebrow raising, but First Premier targets people with bad credit who likely
can't get approved for cards elsewhere. It's a group that tends to lean heavily
on credit too, meaning they'll likely incur the steep financing charges.
So for a $300
balance, a cardholder would pay about $20 a month in interest.
get any better than this! Excerpted from an
email floating the Internet:
Let me get
this straight: We're going to pass a health care plan written by a committee
whose head says he doesn't understand it, passed by a Congress that hasn't read
it but exempts themselves from it, signed by a president that also hasn't read
it, and who smokes, with funding administered by a treasury chief who didn't
pay his taxes, overseen by a surgeon general who is obese, and financed by a
country that's nearly broke.
could go wrong?
My favorite Christmas story.
Three wise men traveled from afar to visit
the little baby in the manger. They brought gifts of great value -- gold, frankincense
They came to worship
the new King of Israel.
As they reached
the manger, one tripped, and shouted, "Jesus Christ." (It was a painful
looked up and said, "And we were gong to call him Moishe Finkelstein."
This column is about my personal search
for the perfect investment. I don't give investment advice. For that you have
to be registered with regulatory authorities, which I am not. I am a reporter
and an investor. I make my daily column -- Monday through Friday -- freely available
for three reasons: Writing is good for sorting things out in my brain. Second,
the column is research for a book I'm writing called "In Search of the
Perfect Investment." Third, I encourage my readers to send me their
ideas, concerns and experiences. That way we can all learn together. My email
address is .
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