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The Stingy News Weekly (05/15/2011)


"there are all kinds of wonderful new inventions that give you nothing as owners except the opportunity to spend a lot more money in a business that's still going to be lousy. The money still won't come to you. All of the advantages from great improvements are going to flow through to the customers."
- Charlie Munger


Stingy Links

Fair-trade coffee fix
"Today, on World Fair Trade Day, we have something else to feel guilty about. That fair-trade cup of coffee we savour may not only fail to ease the lot of poor farmers, it may actually help to impoverish them, according to a study out recently from Germany's University of Hohenheim."


Rules for Fools
"Some occupations clearly need to be licensed. Nobody wants to unleash amateur doctors and dentists on the public, or untrained tattoo artists for that matter. But, as the Wall Street Journal has doggedly pointed out, America’s Licence Raj has extended its tentacles into occupations that pose no plausible threat to health or safety—occupations, moreover, that are governed by considerations of taste rather than anything that can be objectively measured by licensing authorities. The list of jobs that require licences in some states already sounds like something from Monty Python—florists, handymen, wrestlers, tour guides, frozen-dessert sellers, firework operatives, second-hand booksellers and, of course, interior designers—but it will become sillier still if ambitious cat-groomers and dog-walkers get their way."


Fantastic pieces of journalism
"Awards season in journalism is almost over: David Brooks has long since handed out the Sidneys, the Pulitzer Prizes have been issued, and the National Magazine Award finalists find out who won next week. Throughout 2010, I kept my own running list of exceptional nonfiction for the Best of Journalism newsletter I publish. The result is my third annual Best Of Journalism Awards - America's only nonfiction writing prize judged entirely by me. I couldn't read every worthy piece published last year. But everything that follows is worthy of wider attention."


GM's profits a huge net loss for taxpayers
"No, the question was not whether GM could make a profit after a bankruptcy that stiffed most of its creditors and shed the most grotesque burdens of its legacy costs, nor whether giving companies money will make them more profitable. The question is whether it was worth it to the taxpayer to burn $10-20 billion in order to give the company another shot at life. To put that in perspective, GM had about 75,000 hourly workers before the bankruptcy. We could have given each of them a cool $250,000 and still come out well ahead compared to the ultimate cost of the bailout including the tax breaks--and over $100,000 a piece if we just wanted to break even against our losses on the common stock."


More denial
"Muddling through and hoping for the best is the strategy but it ain't going to work. The Greeks won't wear it (there's another national strike today) the markets won't wear it (three year Greek bond yields are nearly 25%) and German voters won't wear it either."


Closet indexing, fees, and performance
"Mutual fund investors face a basic choice between actively-managed funds and index funds with lower expenses. However, the prevalence of indexing is rare in most countries. Rather, actively managed funds in many countries engage in “closet indexing,” choosing portfolios that closely match their declared benchmark. The degree of explicit indexing in a country is negatively related to fees, while “closet indexing” is positively associated with fees and negatively with performance. The most actively managed funds charge higher fees but outperform their benchmarks after expenses. The degree of indexing and the ability of active managers to outperform are both associated with competition and fees."


Demographic changes and financial markets
"We find surprisingly powerful results when we apply the same technique for exploring the links between demography and capital markets returns, net of the strong and well-documented effects of valuation and yield levels. Stocks perform best when the roster of people age 35-59 is particularly large, and when the roster of people age 45-64 is fast-growing. Bonds follow a similar pattern, with an age-shift: they’re best when the roster of people age 50-69 is growing quickly. We carry out three different forms of robustness checks, each of which provides statistical significance in different ways: applying different country weights, testing alternative demographic variables, and confirming GDP results on out-of-sample countries."


Botox and beancounting
"Take public-sector debt. The definition used in Washington, DC, is “federal government debt held by the public”, which stood at 62% of GDP at the end of 2010. But if you instead use Europe’s preferred measure—general government gross debt, which also includes the borrowing of state and local governments and Treasury securities held by other government bodies, such as the Social Security Trust Fund—it jumps to 92% of GDP (see left-hand chart). That is on a par with Portugal’s level of public debt."


Get back to work Warren
"Steve Carell’s Office character, Michael Scott, left the show this season, and it looks like producers are pulling out all the stops to keep up the show’s ratings. Guest appearances by Jim Carey, Ray Romano, James Spader, Catherine Tate, Ricky Gervais and Will Arnett have already been announced, but the addition of legendary capitalist Warren Buffett may blow them all out of the water."


Three cheers for the cheapeners
"A feature of innovation is that the greatest impact of a new idea comes not when the light bulb goes on over the geek's head, but when the resulting technology eventually becomes cheap enough for many people to use — perhaps decades later. The first plane at Kitty Hawk had zero impact on the world economy, but budget airlines have a huge impact the first computer was a curiosity, but cheap laptops changed the world."


What bourbon street taught me
"I can’t believe it – the goldbugs/silverbugs were right – The Dollar is dead. “Kid Dynamite,” you ask, “WTF are you talking about? You’ve been saying that the Metal Heads are being a bit irrational in their declaration of the New Monetary Regime – what changed?” Indeed, I HAD been saying that, but then I did some empirical research – some feet-to-the-ground old fashioned channel checks in the most primal of places, one of the hardest hit cities in the country: Bourbon Street on New Orleans. What I found was shocking – The Dollar is NOT the currency of choice. Alas, the silverbugs weren’t entirely correct, as silver was not the money of the future in New Orleans. Rather: beads were. I kid you not. Plastic beads."



DOW 30 Value Screens

High Dividend Yield StocksP/EP/BP/SP/DYield
AT&T (T)55355
Verizon (VZ)13555
Merck (MRK)14155
Pfizer (PFE)14255
Johnson & Johnson (JNJ)32155
Kraft (KFT)15455
Intel (INTC)43144
Procter & Gamble (PG)23244
General Electric (GE)34444
Chevron (CVX)54444
Notes | More Info...


Value Ratio StocksP/EP/BP/SP/DVR
AT&T (T)55351.66
Travelers (TRV)55433.28
Chevron (CVX)54443.31
Intel (INTC)43143.53
Microsoft (MSFT)52133.97
JP Morgan Chase (JPM)55324.17
Johnson & Johnson (JNJ)32154.44
Coca-Cola (KO)41134.69
Wal-Mart (WMT)43534.80
EI DuPont (DD)31344.93
Notes | More Info...


Graham-Lite StocksP/EP/BP/DG$dG$(%)
Travelers (TRV)55397.9257.10
JP Morgan Chase (JPM)55265.4851.74
AT&T (T)55538.6323.00
Chevron (CVX)544112.359.73
Hewlett-Packard (HPQ)43140.620.51
Notes | More Info...


Top US StocksYieldV.R.Graham
AT&T (T)YYY
Chevron (CVX)YYY
Intel (INTC)YY
JP Morgan Chase (JPM)YY
Johnson & Johnson (JNJ)YY
Travelers (TRV)YY
Coca-Cola (KO)Y
EI DuPont (DD)Y
General Electric (GE)Y
Hewlett-Packard (HPQ)Y
Kraft (KFT)Y
Merck (MRK)Y
Microsoft (MSFT)Y
Pfizer (PFE)Y
Procter & Gamble (PG)Y
Verizon (VZ)Y
Wal-Mart (WMT)Y
Notes...



S&P/TSX60 Value Screens

High Dividend Yield StocksP/EP/BP/SP/DYield
Transalta (TA)44455
BCE (BCE)33455
Sun Life (SLF)55555
Bank of Montreal (BMO)54355
Shaw Comm Cl.B (SJR.B)21355
Husky Energy (HSE)34455
Telus (T)43455
CIBC (CM)42355
Power Corp (POW)44555
TransCanada (TRP)23255
Notes | More Info...


Value Ratio StocksP/EP/BP/SP/DVR
Sun Life (SLF)55552.25
Transalta (TA)44452.38
Bank of Montreal (BMO)54352.58
BCE (BCE)33452.96
CIBC (CM)42353.17
Rogers Comm Cl.B (RCI.B)41443.39
Telus (T)43453.54
National Bank (NA)53343.65
Power Corp (POW)44553.69
Husky Energy (HSE)34453.85
Notes | More Info...


Graham-Lite StocksP/EP/BP/DG$dG$(%)
Sun Life (SLF)55544.7248.19
Nexen (NXY)55130.0338.38
Inmet Mining (IMN)54186.0335.79
Magna (MG)55363.4930.94
Canadian Tire (CTC.A)55379.0126.66
Research in Motion (RIM)52046.5110.95
Transalta (TA)44522.486.69
Kinross Gold (K)35114.676.20
Brookfield A.M. (BAM.A)45232.985.45
Bank of Montreal (BMO)54562.012.12
Power Corp (POW)44528.661.06
Notes | More Info...


Top Canadian StocksYieldV.R.Graham
Bank of Montreal (BMO)YYY
Power Corp (POW)YYY
Sun Life (SLF)YYY
Transalta (TA)YYY
BCE (BCE)YY
CIBC (CM)YY
Husky Energy (HSE)YY
Telus (T)YY
Brookfield A.M. (BAM.A)Y
Canadian Tire (CTC.A)Y
Inmet Mining (IMN)Y
Kinross Gold (K)Y
Magna (MG)Y
National Bank (NA)Y
Nexen (NXY)Y
Research in Motion (RIM)Y
Rogers Comm Cl.B (RCI.B)Y
Shaw Comm Cl.B (SJR.B)Y
TransCanada (TRP)Y
Notes...



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Disclaimers: Consult with a qualified investment adviser before trading. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, financial advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. More...