Mr. Sensitive

August 26, 2011

FSX Friday Update

Filed under: Uncategorized — lbej @ 17:11

So many questions.  Will the Fed launch a third round of quantitative easing?  Will Germany and France impose their Carolingian will upon the unruly Greeks, forcing them to accept the presence of German tanks fiscal restraints?  What will consumers do if the economy doesn’t start adding jobs?  And how will those consumers know what they’re supposed to buy now that Apple has lost its Jobs?  The market continues its long summer of inauspicious indecision; much like Scotty, it doesn’t know.  I am similarly hamstrung, unable to rid myself of the pesky need to have data and logical reasoning to support private conclusions, let alone public pronouncements.  So let us turn instead to someone who will not allow ignorance and incompetence to stand in the way of a 12-15% annual increase in the S&P 500—Abby Joseph Cohen!

Sorry, wrong picture.  My apologies to Mumm-ra for any inadvertent insult.

That’s better.  Here’s what she said this week:

“There are many different ways to look at the mathematics of valuation, but one of them is to say at these levels on the [Standard & Poor’s 500] what’s priced in is many years of no earnings growth. That does not seem to us to be the most likely scenario.”

Note that Abby doesn’t claim to know any of the ways to look at the mathematics of valuation, only that they exist.  Maybe she’s cleverer than I thought.  But perhaps her sagacious statement does not assuage your worry.  Perhaps you are saying, “How is that supposed to make me feel better?  I don’t know what any of that means!”  Your problem is that you are focusing on what Abby is saying, not what she means.  What she is saying is “Bloo-bloo-poo-poo the economy, therefore blah-blah-pee-pee earnings;” what she means is, “The S&P 500 will increase by 12-15% in 2011, because 2011 is a year, and I have three names.”

The Family Stock Index had a strong week on an absolute basis, but comparatively…eh.  We rallied, sure—up 5.9% on the week to close at 1049.61—but that was barely enough to avoid falling further behind our peers.  Of the four major U.S. equity market indices—the Dow Industrials, the S&P 500, the Nasdaq Composite, and the FSX—only the latter remains solidly in bear market territory, down 23% from the April high, compared to losses of 12-14% for the others.  I was hoping for a more decisive rally in response to the onset of the new school year, but it seems there are still too many wild cards to turn all the bears into bulls.  For one thing, Lucas’ adventures in middle school are apt to be perilous, because middle school kids are the meanest people in the world.  Add to that the ever-present threat of a nervous breakdown for Connecticut’s best but most tightly-wound English teacher, and you have an explosive mix that even my two inveterate teacher’s pets can’t entirely defuse.  Who knows where we’d be without Nicole B. and her 15% third-quarter gain?  I don’t like to think about it.

Advancers

  • Marcus (MCS) +18.2%.  ‘Why do you think Marcus would be up almost 20% this week?’ I asked the Empress on Thursday.  ‘Who even knows?’ she sighed.  Marcus is like a far-out-of-the-money call option at this point; it will take a big move in the underlying to get anything back on an investment, but the options themselves are cheap.  On the other hand, there are certainly those of us who would love the opportunity to stake a lot more.  If Warren Buffett can call Brian Moynihan on Wednesday morning and take down $5 billion in B of A preferred the next day, maybe there’s a way to get this deal done as well.  I nominate Charlotte for the role of Warren Buffett.
  • LULU +13.7%.  Not even the market can step on Lulu without getting ten claws right in the calf meat.  In general, the return of the girls to school is a net positive for the cats, as neither pair of ladies has much use for the other.  Another factor to consider is the high grass in the backyard.  The Mowing Man hasn’t mowed it in almost four weeks because he’s waiting on a replacement mower, and it’s getting to be quite the wildlife preserve.  This favors Marisa (MOLX +4.8%) more directly—and indeed she left a mouse on the front walk for me on Tuesday—but the market may be thinking more long-term.  If Lulu parks her ample behind in Brinky’s room all day, every day, and Marisa gets eaten by a snake in the backyard, who has gotten the better end of the deal then?
  • Icarus (FLOW +15.3%), Winston (HWD +10.7%), and Zondro  (ZQK +7.7%).  Before the Lehman bankruptcy in September 2008, the assumption underpinning the stock market values of many troubled financial firms was a belief that the government wouldn’t allow one of the big boys to fail, given their indecipherable network of counterparties and the unquantifiable systemic contagion that would accompany a default.  By March of the following year, the market was pricing in widespread failure if not comprehensive nationalization of the entire banking system.  If Lehman could fail, then anyone could fail.  If you understood the greed-fear dynamic that dominates the market during periods of great upheaval, you weren’t surprised in the least when the realization that the goliaths could be slain morphed rapidly into the belief that every single one of them would be.  In retrospect, it was as wrong-headed to believe that every bank would fail as to believe that none would.  Was Citigroup ever worth the $50+ per share it fetched (pre-split) in 2007?  Certainly not.  But neither was it worth less than $1, the level where it bottomed in March of 2009.  It seems now that Icarus and, to a lesser extent, Zondro and Winston, have been similarly mispriced (down 35%, 25%, and 22%, respectively, in two months prior to this week).  While no dog amongst these three is a Randy—the J.P. Morgan of dogs—none is a Lehman.  Or in this case, a Saffy.
  • Brinkley (BCO) +9.5%.  Brinky has been flat-out awful for the last two days, and yet his stock performance—especially today—has been nothing short of awesome.  Katie has speculated that he’s teething again, as he’s been stuck on just two bottom front teeth for a while now.  Based on his caterwauling during the two hours leading up to his afternoon nap, I’d say we’re not looking at teeth so much as tusks.  Would that be awful, or would it be awesome?  I bet you can guess where I come down.
  • Mario the Younger (SUP +9.8%) and Katie (CATY +7.1%).  As close as brother and sister are, they rarely trade in tandem.  But this week Katie mentioned in passing that she was going to be getting the Entertainment Weekly Fall Preview issue, and that can only mean it’s time for the return of new, bad teenage dramas.  Soon any and all extra room on our DVR—and in our lives—will be gone.  Note also that the market has also made it clear which of the two siblings will take greater girlish delight in the return of 90210 and its odious ilk.

Decliners

  • Wilson (WILC -0.9%) didn’t move higher with the other dogs because, of course, he’s really a fragile teenage girl in a dog’s body.
  • Zero (FRZ) -3.7%.  We witnessed big rebounds this week from beleaguered Team Charlotte members Justin (WOLF +8.0%) and Miss Eponymous herself (ICE +6.7%)  Of course, Nicole B. had no rebounding to do, and still she tacked on a few basis points.  But not Zero.  It’s as though the market wanted him to keep his managerial position.  And after all, why not?  Why shouldn’t he keep it?  Hasn’t Chicago done fairly well by him, at least from a professional standpoint?  The market will need to be convinced that leaving now, or soon, is the best course for Zero; absent something definitive and accretive, he should continue to lag his teammates.  At the very least, Justin should chip him off some of that Jennifer Aniston-babydaddy money.  I bet it was Zero who introduced them anyway.
  • Lucas (LEI) -4.3%.  The best thing about middle school is that it only lasts three years, except, probably, in Wytheville.  Do they even have middle school in Wytheville?  Probably they just send the kids to high school right out of fifth grade.  After all, why should skeevy mustachioed upperclassmen have to wait until the girls turn twelve to date them?  If you can put on a dress, you pass the test.  (Imagine the ghost of Johnnie Cochran nodding approvingly.)
Name Ticker 8/26/2011 Change
Brinkley BCO $24.25 +2.11
Charlotte ICE $112.09 +7.04
Dustin DST $45.51 +1.84
Icarus FLOW $2.64 +0.35
Jenny LEN $13.58 +0.86
Justin WOLF $2.57 +0.19
Katie CATY $12.36 +0.82
Lee MSTR $114.76 +8.84
Lee LEE $0.72 +0.01
Lisa LSI $6.76 +0.47
Lucas LEI $1.78 -0.08
Lulu LULU $52.31 +6.31
Marcus MCS $9.49 +1.46
Mario T.E. PBY $9.14 +0.56
Mario T.Y. SUP $15.87 +1.42
Marisa MOLX $20.29 +0.93
Nicole B. NI $20.54 +0.30
Nicole L. COL $47.48 +2.23
Reagan REGN $55.81 +1.44
Ruby RBY $3.96 +0.10
Wilson WILC $5.65 -0.05
Winston HWD $14.37 +1.39
Zero FRZ $1.80 -0.07
Zondro ZQK $3.79 +0.27
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1 Comment »

  1. After the second sentence of my write-up, I stopped understanding the words you were using. I also don’t have any idea why I would advance this week. I mean, I did set a record this evening in an iPhone game, but I was playing it to stop my brain from killing itself. I’m a little obsessed with and stressed about school right now. And the other major event of the week is that Jodi Ann’s dad is in the hospital, where he’ll probably be through Monday, when a hurricane appears to be planning to ruin my trip to Chicago. Maybe it’s the Indian food I just ate? It was really good, and Jodi and I are watching “Community” while we sit here in food stupors. We’re also reading The Hunger Games together (Katie’s blog sold me), and it’s pretty good. I think there’s mint ice cream upstairs. Other than that, I’m having an existential breakdown, and the prospect of starting school in a week and a half makes me want to murder myself. Also, all of those good things appear to be happening today. Would that apply to next week? If so, then I’m going to have to call shenanigans on the family hyper-sigil. I would have accepted a 50% decline, or perhaps a shift in my stock value from numbers to a strange and portentous glyph, but not an advance. The universe is just rubbing my brain’s failure into my brain’s face, and that is bully behavior.

    Comment by Marcus — August 26, 2011 @ 22:13 | Reply


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