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The Stingy News Weekly (10/09/2011)


"There are two times in a man's life when he should not speculate - when he can't afford it and when he can."
- Mark Twain


Stingy Links

King of the mountain
"What about the future? In the next six months, the deflation from late 2008 will shortly drop out of our three-year rates. CPI is up by 7% over the past 30 months, which works out to 2.3% per year. If we add our 2% adjustment to create more of an applesto- apples comparison with history, “true” inflation is above 4% and the “true” real interest rate is very low, around –2%. At these levels, the normal Shiller P/E ratio would be 13 times our 10-year average earnings, which takes us below 800 on the S&P 500 Index."


A Short History of the Income Tax
"The other pernicious consequence of the separate corporate and personal income taxes has been a field day for demagogues and the misguided to claim that the rich are not paying their 'fair share.' Warren Buffett recently claimed that he had paid only $6.9 million in taxes last year. But Berkshire Hathaway, of which Mr. Buffett owns 30%, paid $5.6 billion in corporate income taxes. Were Berkshire Hathaway a Subchapter S corporation and exempt from corporate income taxes, Mr. Buffett's personal tax bill would have been 231 times higher, at $1.6 billion. Just as in the late 19th century, the tax code is now hopelessly arbitrary and unfair. It requires a complete overhaul."


The half-a-trillion hole
"However US local government funds continue to use the assumed rate of return to discount their liabilities, even as 8% looks more and more chimerical. I have struggled to convince readers of the madness of this approach, so I will try to channel Warren Buffett (in spite of having one-tenth of his brains and one-thousandth of his intellectual credibility). If a promise to make a series of future payments isn't a debt, what is it? If a debt shouldn't be recorded on the balance sheet at cost, how should it be recorded?"


Grandparents scam
"Last week my 83-year old mother almost became a victim of the “grandparent scam.” She picked up the phone and the caller said he was her grandson. When she asked if it was Charles, my son, the caller said yes. Mom sometimes has trouble hearing on the telephone, but she said it sounded just like him. As we later found out, he gave her the classic story. He said he had an accident with a rental car in Montreal and was in jail. He said needed $4,000 wired via Western Union to his court-appointed lawyer to be released and provided a name. The caller asked my mother not to call either my husband or I as we would be too upset. ..."


Why envy dominates greed
"Economists agree that no reasonable risk metric predicts returns within or between any asset class, but always suggest that just implies risk, like fine wine, is very subtle. This is because we know there is a risk premium, because given our conception of utility (increasing at a decreasing rate), there must be a risk premium. Like telling the Journal of Marxist Studies that 'class' is not the best lens to view behavior, telling economists that self interest is primarily envy, not consumption, is simply too dismissive of the foundations they find so compelling to their calling all that human capital is tied to mastery of work that may not work, but at least currently there's hope that another tweak might turn these highly rigorous models into seminal, important work."


Want lower fund fees? Vote with your wallet.
"Finance Minister Jim Flaherty has asked the Senate National Finance Committee to examine why prices of many retail goods continue to be higher than in the U.S. while the Canadian dollar has been at (or near) par with the U.S. dollar for a year or more. Just over a week ago, FAIR Canada called on Flaherty to add mutual fund management expense ratios to that list of retail goods. I have a great deal of respect for FAIR. Given that investor advocacy isn’t a high-paying job - it pays nothing, sometimes less - FAIR is a much-needed organization. But I think their request and fee comparison miss the mark."



DOW 30 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
AT&T (T)5435
Verizon (VZ)2345
Merck (MRK)1425
Pfizer (PFE)1425
EI DuPont (DD)4245
General Electric (GE)3535
Intel (INTC)4314
Johnson & Johnson (JNJ)2214
Kraft (KFT)1434
Travelers (TRV)5554
Notes | More Info...


Low Price/Earnings StocksP/EP/BP/SYield
Hewlett-Packard (HPQ)5552
JP Morgan Chase (JPM)5533
Chevron (CVX)5444
AT&T (T)5435
Travelers (TRV)5554
Exxon Mobil (XOM)4342
Microsoft (MSFT)4112
Intel (INTC)4314
Alcoa (AA)4551
American Express (AXP)4221
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
AT&T (T)54351.37
JP Morgan Chase (JPM)55332.01
Chevron (CVX)54442.49
Intel (INTC)43142.71
Travelers (TRV)55542.76
EI DuPont (DD)42452.97
Verizon (VZ)23453.01
General Electric (GE)35353.15
Hewlett-Packard (HPQ)55523.17
Exxon Mobil (XOM)43423.79
Notes | More Info...


US Stock SummaryYieldP/EV.R.
AT&T (T)YYY
Intel (INTC)YYY
Travelers (TRV)YYY
Chevron (CVX)YY
EI DuPont (DD)YY
Exxon Mobil (XOM)YY
General Electric (GE)YY
Hewlett-Packard (HPQ)YY
JP Morgan Chase (JPM)YY
Verizon (VZ)YY
Alcoa (AA)Y
American Express (AXP)Y
Johnson & Johnson (JNJ)Y
Kraft (KFT)Y
Merck (MRK)Y
Microsoft (MSFT)Y
Pfizer (PFE)Y
Notes...



S&P/TSX60 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
Enerplus (ERF)1415
Penn West Petroleum (PWT)3525
Sun Life Financial (SLF)5555
Canadian Oil Sands (COS)5225
Husky Energy (HSE)4445
BCE Inc. (BCE)2245
TransAlta (TA)1335
ARC Resources (ARX)1315
Bank of Montreal (BMO)4435
CIBC (CM)4235
Notes | More Info...


Low Price/Earnings StocksP/EP/BP/SYield
Research In Motion (RIM)5450
Magna (MG)5553
Inmet Mining (IMN)5521
Nexen (NXY)5541
Brookfield (BAM.A)5542
Bombardier (BBD.B)5153
Sun Life Financial (SLF)5555
Canadian Oil Sands (COS)5225
Iamgold (IMG)5211
Agrium (AGU)5351
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
Sun Life Financial (SLF)55551.33
Canadian Oil Sands (COS)52251.42
Penn West Petroleum (PWT)35251.88
Husky Energy (HSE)44452.04
Bank of Montreal (BMO)44352.18
CIBC (CM)42352.25
Power Corp of Canada (POW)44552.26
Enerplus (ERF)14152.30
National Bank (NA)53342.42
Magna (MG)55532.54
Notes | More Info...


Canadian Stock SummaryYieldP/EV.R.
Canadian Oil Sands (COS)YYY
Sun Life Financial (SLF)YYY
Bank of Montreal (BMO)YY
CIBC (CM)YY
Enerplus (ERF)YY
Husky Energy (HSE)YY
Magna (MG)YY
Penn West Petroleum (PWT)YY
ARC Resources (ARX)Y
Agrium (AGU)Y
BCE Inc. (BCE)Y
Bombardier (BBD.B)Y
Brookfield (BAM.A)Y
Iamgold (IMG)Y
Inmet Mining (IMN)Y
National Bank (NA)Y
Nexen (NXY)Y
Power Corp of Canada (POW)Y
Research In Motion (RIM)Y
TransAlta (TA)Y
Notes...



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