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The Stingy News Weekly (01/02/2011)


"I'd be a bum on the street with a tin cup if the markets were efficient"
- Warren Buffett


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Bug Hunting Contest
"Join us on a hunt for bugs, typos, and other errors for a chance to win a new book."


The virtue of simplicity
"'Complexity isn't necessarily a good thing when it comes to picking stocks,' he says. 'The real challenge is sticking to the stocks you like and not getting scared out of them if they don't work out immediately.'"


Stingy Links

The jobs crisis
"Why have new jobs been so hard to come by? One view blames cyclical economic factors: at times when everyone is cautious about spending, companies are slow to expand capacity and take on more workers. But another, more skeptical account has emerged, which argues that a big part of the problem is a mismatch between the jobs that are available and the skills that people have. According to this view, many of the jobs that existed before the recession (in home building, for example) are gone for good, and the people who held those jobs don’t have the skills needed to work in other fields. A big chunk of current unemployment, the argument goes, is therefore structural, not cyclical: resurgent demand won’t make it go away. Though this may sound like an academic argument, its consequences are all too real. If the problem is a lack of demand, policies that boost demand—fiscal stimulus, aggressive monetary policy—will help. But if unemployment is mainly structural there’s little we can do about it: we just need to wait for the market to sort things out, which is going to take a while."


Have You Ever Tried to Sell a Diamond?
"The diamond invention is far more than a monopoly for fixing diamond prices it is a mechanism for converting tiny crystals of carbon into universally recognized tokens of wealth, power, and romance. To achieve this goal, De Beers had to control demand as well as supply. Both women and men had to be made to perceive diamonds not as marketable precious stones but as an inseparable part of courtship and married life. To stabilize the market, De Beers had to endow these stones with a sentiment that would inhibit the public from ever reselling them. The illusion had to be created that diamonds were forever -- 'forever' in the sense that they should never be resold."


Why a Budget Is Like a Diet
"As a species, humans are notoriously poor at following through with their plans. Sticking to a budget — a dirty word even among many financial planners, who prefer the more euphemistic 'spending plan' — feels too much like dieting. And we often fail at both for the same reasons: too much focus on the restrictions, not enough on fun. So it's not surprising when people end up bingeing later, more than making up for dollars not spent or calories not consumed."


It’s When You Start And Finish
"But historical averages can vary widely depending on their starting and ending points. For example, averages that start before the 1929 crash are substantially different from those that start after it, and Mr. Easterling felt that choosing a single date was arbitrary. In response, he created the chart above, which shows annualized returns based on thousands of possible combinations of market entry and exit."


The downfall
"Next time you go to an AGM, if you think there is cause for concern, ask the CEO during the QandA if management could leave the room for 15 minutes because you have a few questions to ask the independent directors concerning executive compensation, and point out that it would not be appropriate for management to be present for such a discussion. Don’t be afraid. The meeting is for you, the shareholder. If the CEO gets defensive, that might be taken as a bad sign. If the independent directors get defensive, that could be taken as a really bad sign, because it would suggest that, in their hearts, they don’t represent shareholders at all."


The Truth Wears Off
"Although many scientific ideas generate conflicting results and suffer from falling effect sizes, they continue to get cited in the textbooks and drive standard medical practice. Why? Because these ideas seem true. Because they make sense. Because we can’t bear to let them go. And this is why the decline effect is so troubling. Not because it reveals the human fallibility of science, in which data are tweaked and beliefs shape perceptions. (Such shortcomings aren’t surprising, at least for scientists.) And not because it reveals that many of our most exciting theories are fleeting fads and will soon be rejected. (That idea has been around since Thomas Kuhn.) The decline effect is troubling because it reminds us how difficult it is to prove anything. We like to pretend that our experiments define the truth for us. But that’s often not the case. Just because an idea is true doesn’t mean it can be proved. And just because an idea can be proved doesn’t mean it’s true."


Dogs could have their day in 2011
"Michael O’Higgins is the first to admit that the Dogs of the Dow strategy has fallen on hard times as a stock-picking technique. “I’d say it’s very unpopular right now,” he said. “In the investment world, if something hasn’t worked for a year or two, they damn it.”"


The power of vulnerability
"Brene Brown studies human connection -- our ability to empathize, belong, love. In a poignant, funny talk at TEDxHouston, she shares a deep insight from her research, one that sent her on a personal quest to know herself as well as to understand humanity"


The disposable academic
"There is an oversupply of PhDs. Although a doctorate is designed as training for a job in academia, the number of PhD positions is unrelated to the number of job openings. Meanwhile, business leaders complain about shortages of high-level skills, suggesting PhDs are not teaching the right things. The fiercest critics compare research doctorates to Ponzi or pyramid schemes."



DOW 30 Value Screens

High Dividend Yield StocksP/EP/BP/SP/DYield
AT&T (T)55355
Verizon (VZ)13555
Pfizer (PFE)14255
Merck (MRK)34255
Kraft (KFT)45455
Johnson & Johnson (JNJ)42144
EI DuPont (DD)32344
Chevron (CVX)54444
McDonald's (MCD)21144
General Electric (GE)14444
Notes | More Info...


Value Ratio StocksP/EP/BP/SP/DVR
AT&T (T)55351.35
Travelers (TRV)55433.02
Merck (MRK)34253.32
Kraft (KFT)45453.38
Chevron (CVX)54443.41
Johnson & Johnson (JNJ)42143.63
Intel (INTC)53143.79
EI DuPont (DD)32344.48
Pfizer (PFE)14254.99
Microsoft (MSFT)41125.23
Notes | More Info...


Graham-Lite StocksP/EP/BP/DG$dG$(%)
Travelers (TRV)55397.2874.62
JP Morgan Chase (JPM)45158.5337.98
AT&T (T)55539.8935.76
Kraft (KFT)45534.108.21
Chevron (CVX)54497.727.09
Notes | More Info...


Top US StocksYieldV.R.Graham
AT&T (T)YYY
Chevron (CVX)YYY
Kraft (KFT)YYY
EI DuPont (DD)YY
Johnson & Johnson (JNJ)YY
Merck (MRK)YY
Pfizer (PFE)YY
Travelers (TRV)YY
General Electric (GE)Y
Intel (INTC)Y
JP Morgan Chase (JPM)Y
McDonald's (MCD)Y
Microsoft (MSFT)Y
Verizon (VZ)Y
Notes...



S&P/TSX60 Value Screens

High Dividend Yield StocksP/EP/BP/SP/DYield
Transalta (TA)25455
BCE (BCE)43455
Bank of Montreal (BMO)54355
Sun Life (SLF)55555
Telus (T)43455
Husky Energy (HSE)34455
CIBC (CM)52355
Power Corp (POW)35555
TransCanada (TRP)24255
Shaw Comm Cl.B (SJR.B)31255
Notes | More Info...


Value Ratio StocksP/EP/BP/SP/DVR
Bank of Montreal (BMO)54352.40
Sun Life (SLF)55552.67
BCE (BCE)43452.91
National Bank (NA)53343.00
CIBC (CM)52353.02
Telus (T)43453.27
Transalta (TA)25453.54
Encana (ECA)55343.65
Rogers Comm Cl.B (RCI.B)51443.71
Royal Bank (RY)43244.19
Notes | More Info...


Graham-Lite StocksP/EP/BP/DG$dG$(%)
Encana (ECA)55439.7736.73
Sun Life (SLF)55539.2530.36
Nexen (NXY)55129.1527.86
Bank of Montreal (BMO)54560.956.04
Canadian Tire (CTC.A)45370.122.83
National Bank (NA)53469.411.30
Notes | More Info...


Top Canadian StocksYieldV.R.Graham
Bank of Montreal (BMO)YYY
Sun Life (SLF)YYY
BCE (BCE)YY
CIBC (CM)YY
Encana (ECA)YY
National Bank (NA)YY
Telus (T)YY
Transalta (TA)YY
Canadian Tire (CTC.A)Y
Husky Energy (HSE)Y
Nexen (NXY)Y
Power Corp (POW)Y
Rogers Comm Cl.B (RCI.B)Y
Royal Bank (RY)Y
Shaw Comm Cl.B (SJR.B)Y
TransCanada (TRP)Y
Notes...



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