SharePost - Private Stocks

I found another place to buy and sell private stock - SharesPost. They also have the nice feature of listing the stocks they deal in, without you needing to register or log in.

S&P Highest Yields

Like a nice dividend?  These stocks have the highest yields of the S&P 500.  (EPS1 is this year's estimated earnings, EPS2 is next year.) Not that they are necessarily a good investment, just saying.

Ticker Price EPS1 EPS2 Div Name Yield PBI $13.87 $2.08 $1.95 $1.49 Pitney Bowes Inc. 10.74% RRD $10.82 $1.81 $1.84 $1.04 R.R. Donnelley & 9.61% DO $59.12 $4.22 $5.20 $3.50 Diamond Offshore 5.92% AVP $16.12 $1.02 $1.19 $0.92 Avon Products, In 5.71% POM $19.43 $1.24 $1.31 $1.08 PEPCO Holdings In 5.56% PBCT $11.43 $0.77 $0.90 $0.63 People's United F 5.55% LEG $20.43 $1.31 $1.57 $1.11 Leggett & Platt, 5.43% HCBK $5.98 $0.57 $0.54 $0.32 Hudson City Banco 5.35% RAI $41.12 $2.95 $3.17 $2.18 Reynolds American 5.30% HCN $55.18 $3.61 $3.93 $2.91 Health Care REIT, 5.27%

Downloading Yahoo! data

One of the things I like best about Yahoo! Finance is the ability to download data from it to a spreadsheet.  Here's a page of tips on downloading Yahoo! data. As an example, I prepared this table of data from today, showing the lowest Price/Earnings ratio among S&P 500 stocks, based on estimated earnings for this year and the latest quoted price.

Ticker  Price      EPS    Name                 P/E
FSLR   $12.28    $4.08    First Solar, Inc.    3.0
HIG    $16.10    $3.63    Hartford Financia    4.4
LNC    $19.34    $4.11    Lincoln National     4.7
GT      $9.44    $1.96    Goodyear Tire & R    4.8
BBY    $18.22    $3.62    Best Buy Co., Inc    5.0
HPQ    $21.06    $4.07    Hewlett-Packard C    5.2
MET    $27.82    $5.22    MetLife, Inc. Com    5.3
CLF    $45.74    $8.40    Cliffs Natural Re    5.4
TSO    $22.17    $4.06    Tesoro Corporatio    5.5
VLO    $20.37    $3.72    Valero Energy Cor    5.5

Yahoo! Finance

My favorite site for (free) stock market data is Yahoo! Finance.  It's really complete and well organized, one of Yahoo's best services.  Type in a ticket symbol to get a quote and the quote page has a menu on the left of all sorts of information. The reports I find most useful are Summary, Profile, Key Statistics and Analyst Estimates.

Name change

I've decided to rename this blog.  The word "Fundamentalist" is most often associated with religion and not the stock market, so it was confusing.  I hope the new title better reflects what I'm writing about.

SecondMarket.com

All this Facebook publicity that I've been reading included a mention of secondmarket.com.  This website lets you buy and sell stock in companies before they go public.  You do have to be fairly wealthy and knowledgeable about the stock market to participate.  I happen to have some private stock in a company that I worked for in the 1980s, still private, so this may be a way to cash out.  Other folks used it to buy Facebook before it went public.  Interesting resource, in any case.

Out of curiosity, I ran my models to see at what price I would be a buyer of Facebook.  Works out to about $2 a share - ha!

Stop Loss Orders

The flash crash of 2010 was bad for me. I had a stock with a large profit, that I was losing enthusiasm for, but felt it still might go up.  So instead of selling, I put in a stop loss order about 20% below the market, thinking that if there were further appreciation, I would get it, and if it started drifting downward I would at least get out before all my profits were lost.  A trailing stop strategy like this is good for high flyers - just keep bumping up your stop order as the stock goes higher and higher.

But what happened on May 6 undid all that.  Like many other stocks, mine plunged way down for a while, stopping me out, and then closed near where it opened.  My feeling is that the stop no longer worked because the specialists and market makers who used to not let things like this happen, are no longer there.  There's just the order book and it may be thin. On the flip side, a far off the market G.T.C. limit order starts to look attractive.

Now the S.E.C. is on the job and they have insisted on "circuit breakers" that halt trading in these situations.  A little too late for my trade.

Facebook IPO

The much-hyped Facebook IPO is the sort of thing I hope I have learned to avoid.  Sure it may go up and sure it may be a fad like MySpace and Friendster.  It's a gamble, a speculation.  So easy to get burned.  Revenues last year were $1 billion and "they" are talking about a $100 billion valuation, i.e. a P/E of 100.  Yikes!

Going with the crowd is often a good strategy in life, but not in the stock market. Not what I would call an investment.

That little-known stock AAPL

Apple (AAPL) is the largest stock by market capitalization, and probably the most talked about common stock these days.  Quarterly earnings were announced last week and they were very good.  It's had a few days to settle down now, time to see how it looks as a value stock.

AAPL $584
Est. earnings 2012 $46.87
Est, earnings 2013 $53.93
Book value: $109.63
Dividend: currently 0 but have announced a $10.60 annual dividend for later this year

Looks good to me!  A price/earnings ratio of 12, expected growth, and a return on investment of 45%.  My five year projection shows a price of $2,100 while collecting $112 in dividends.

Colgate-Palmolive: Another good one

Here's a blast from the past: Colgate-Palmolive (ticker: CL).  My stocks are starting to look like the Nifty Fifty from half a century ago.  Here are the stats:

Price: $99
Dividend: $2.48
Est. EPS this year: $5.40
Est. EPS next year: $5.90
Book value: $4.95

Not so much a growth story, more of a blue chip that pays out nearly half of income in dividends.  But look at the return on equity: they make more each year than is invested in the company.  What a fine business!

My projections show a future (5-year) price of $486 while collecting $35 in dividends.  And you use their products every day.

IBM

IBM, trading at about $200 a share lately, is one of the stocks I have liked for some time and still like today.  Their earnings report came out a couple of days ago, showing earnings up 7% and flat revenues. The story is that IBM is transitioning from a hardware company to a business services company, the latter being more profitable.  IBM continues to be successful managing big data and providing IT services to big companies.  It's a fine business and only getting bigger.

Look at the numbers:  IBM has a book value of $17.31 a share, according to Yahoo! Finance, and 2012 earnings are estimated to be $14.92.  That's a fine profit engine, a return on equity of 71%.  The stock pays a $3 dividend and reinvests the rest back in the company, where it will get that nice return.  When I project out the growth for five years, I find an estimated future price of over $1,200 a share, while collecting fifty bucks or so in dividends.  So yeah, I like it: salute to Big Blue.

Retirement: WWII Generation Doing OK

My parents' generation seems to be doing OK financially in retirement. Mostly widows in their 80s and 90s now, their expenditures are pretty modest: no house payments (mortgage long ago paid off), drive maybe 3000 miles a year, if at all, property taxes $1500 a year or so. Of course, they have to pay for electricity, telephone and heat like everyone else, and a gardener to do the yard, but it doesn't add up to that much - nor do they eat all that much! They don't travel often, and then it's just to visit the grandkids. Medicare covers the doctor bills.

Social security more than covers their expenses, and they have investment income as well. The question I get most often is: where should I invest my money - it's piling up in the checking account. Of course, the sage advice is to put it in something super secure, because you're not going to earn it back if you lose it at your age. But they like to take a flyer in the stock market - better odds than gambling, that's for sure, and it's interesting tracking the stock prices day to day. Seems like the biggest risk is having to move to a nursing home, esp. in case of Alzheimer's. Some have insurance for that, as Medicare doesn't cover it.

Bonds and beyond

I've finally settled on a strategy for my "bond" money (money not tied to common stocks and paying interest/dividends). It's based on using ETFs instead of bond funds - easier to trade and track methinks. So here it is:

50% VCSH (Vanguard Short Term Corporate)
25% TIPS (iShares Inflation-protected Treasuries)
25% Money market fund

Inflation is quite low now, but I worry about it because the national debt keeps growing by leaps and bounds. There's only four ways out: default, raise taxes, cut spending, inflate. I'm thinking the last of these will be the choice of the powers that be, and my three investment choices should keep their value during inflationary times.