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Stingy News Quarterly
2010: Q1 Q2
2009: Q1 Q2 Q3 Q4
2008: Q1 Q2 Q3 Q4
2007: Q1 Q2 Q3 Q4
2006: Q1 Q2 Q3 Q4
2005: Q1 Q2 Q3 Q4
2004: Q1 Q2 Q3 Q4
2003: Q1 Q2 Q3 Q4
2002: Q1 Q2 Q3 Q4
2001: Q1 Q2 Q3 Q4
Stingy News Weekly
2010
06: 06 13
05: 02 09 16 23 30
04: 04 11 18 25
03: 07 14 21 28
02: 07 14 21 28
01: 03 10 17 24 31
2009
12: 06 13 20 27
11: 01 08 15 22 29
10: 04 11 18 25
09: 06 13 20 27
08: 09 16 23 30
07: 05 12 19 26 31
06: 07 14 21 28
05: 03 10 17 24 31
04: 05 12 19 26
03: 01 08 15 22 29
02: 01 08 15 22
01: 04 11 18 25
2008
12: 07 14 21 28
11: 02 09 16 23 30
10: 05 12 19 26
09: 07 14 21 28
08: 01 10 17 24 31
07: 06 13 20 27
06: 01 08 15 22 29
05: 04 11 18 25
04: 06 13 20 27
03: 02 09 16 23 30
02: 03 10 17 24
01: 06 13 20 27
Dan's Reports
Perspective on the bear
Dilution excessive
Fund fees revisited
T class funds
Bonds vs. bond funds
Bear market protectors
Investing in bonds
Ignore bonds at your peril
Coping with change
Future of trust funds
Dilution trumps
Are fees excessive?
Performance anxiety
Top advisory model?
81-106 a step back
Poor fund classifications
Pension shortfall
A longer-term report card
Information overload
About Dan
Privacy Policy
"Success in investing doesn't correlate with I.Q. once you're above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing." - Warren Buffett Stingy Links http://www.stingyinvestor.com/SI/articles/articlearchive.shtml The new deal didn't always work http://www.nytimes.com/2008/11/23/business/23view.html?_r=2 "Many people are looking back to the Great Depression and the New Deal for answers to our problems. But while we can learn important lessons from this period, they're not always the ones taught in school." Some ETFs fall short on pricing http://online.wsj.com/article/SB122723379809546887.html "For the thinly traded ETFs, many of the most problematic trades seem to take place moments after the market opens. For example: On Nov. 14, an investor sold 500 shares of First Trust S&P REIT Index ETF for $8.18 -- about 12% below the value of the fund's underlying holdings -- at two seconds past 9:30 a.m. EST. Three minutes later, 1,000 shares sold at a price about 3% below. By 10 a.m. the discount had settled to about 1%." S&P 500 index: now more poor, less standard http://www.tradersnarrative.com/sp-500-index-now-more-poor-less-standard-2087.html "Every once in a while the committee faces a rare situation where a large portion of the S&P 500 Index does not meet one or more requirement they have outlined. Usually the simply ignore it and hope that it just goes away on its own." Diminishing ratios, booming yields http://ftalphaville.ft.com/blog/2008/11/21/18554/diminishing-ratios-booming-yields-great-opportunity/ "With all the carnage in the markets, perhaps it's no surprised P/E ratios are on the decline. What's impressive is by how much." Individual investor stock allocations http://www.ritholtz.com/blog/2008/11/individual-investor-stock-allocations/ "Here's a terrific sentiment read: the amount of money individuals have exposed to equities relative to their historical average. The chart below shows equity allocations by individual investors above and below their normal 21 year mean allocation to stocks (the 21-year mean allocation to stocks is typically 60%). The present reading puts us 15% under the 21-year historical mean." The Treasury once again can borrow for free http://blogs.cfr.org/setser/2008/11/20/not-a-good-sign-the-treasury-once-again-can-borrow-for-free/ "Ok, the Treasury can not borrow for free. Three month Treasury bills, according to Bloomberg, yield something like 2 basis points." The case for buying oil stocks http://money.cnn.com/2008/11/20/news/companies/okeefe_oil_stocks.fortune/index.htm?postversion=2008112104 "Last week, the Paris-based International Energy Agency released its World Energy Outlook 2008 - a 578-page book full of future supply, demand, and price estimates which this year also included an eagerly-awaited study of 800 of the world's largest oil fields. Here's the executive summary: Buy oil stocks." The next crisis -- Africa http://www.washingtontimes.com/news/2008/nov/20/the-next-crisis/ "The recent drop in oil and other commodity prices makes it almost a certainty that some unstable commodity-exporting nations will reach a crisis stage in the next few months. The only question is, which countries are likely to erupt first?" Did hated speculators lower oil prices? http://www.ibdeditorial.com/IBDArticles.aspx?id=311987362260113 "Whither the speculators? They were this summer's front-page news, the subject of congressional hearings, editorials and nightly newscasts. The claimed culprits of oil's price rise, everyone fell over themselves to be tougher on them." Hank, let me help you help this great country http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKn.A9dgoN8k "By giving money to bankers who have made many stupid loans you have made life harder for bankers who have never made stupid loans. By aiding the dumb banks you prevent the smart ones from replacing them. It may be that just now smart bankers are the last thing we need -- but one day they may come in handy, and so we should do what we can to keep them from getting discouraged. Here's where I come in: I'm not a banker of any kind, but a mere writer. My little literary enterprise can absorb many billions of taxpayer dollars without consequence to the banking industry, or even to U.S. gross domestic literary output. If anything, other writers would have an opportunity to write more, as I, busy managing my new pile of cash, will naturally have no time to write." Patient Capital Q3 http://www.patientcapital.com/newsletters/newsletter-2008-09.pdf "The next several quarters are likely to be quite difficult but out of these difficulties will emerge the opportunity to create portfolios of great businesses that will offer the potential for a substantial return over the next five years. For the first time in a long time we are starting to feel excited about the returns available to the prudent and patient investor!" It's time to buy http://www.forbes.com/forbes/2008/1208/178.html "First, do not flee the market by selling your quality stocks. Yes, it's the worst bear market since 2000--02, and stocks are trading at valuations not seen in decades, but equities will come back. Second, because credit is subject to unpredictable crunches and it's impossible to guess when this bear will end, don't buy on margin. Third, don't hold shares of companies that will need cash to expand or refinance. There is a good chance they won't be able to borrow." Treasury yields drop to record lows http://www.bloomberg.com/apps/news?pid=20601087&sid=aGUkS.u1AtNI&refer=home "Treasury yields declined to record lows, with two-year notes dropping below 1 percent for the first time, as global stocks slumped and a deepening recession drove investors to the safest assets. Yields on two- and five-year notes and 30-year bonds dropped to the least since the Treasury began regular issuance of the securities. Ten-year note yields touched the lowest since 2003 after yesterday's release of the minutes of last month's Federal Reserve meeting showed policy makers expect the economy to contract through the middle of 2009 and more interest-rate cuts may be needed to counter deflation." A sea of unwanted imports http://www.nytimes.com/2008/11/19/business/economy/19ports.html?_r=1&oref=slogin "Gleaming new Mercedes cars roll one by one out of a huge container ship here and onto a pier. Ordinarily the cars would be loaded on trucks within hours, destined for dealerships around the country. But these are not ordinary times. For now, the port itself is the destination. Unwelcome by dealers and buyers, thousands of cars worth tens of millions of dollars are being warehoused on increasingly crowded port property." The new order http://accruedint.blogspot.com/2008/11/new-order.html "That marginal buyer is gone, and isn't likely to come back any time in the foreseeable future. Admittedly, it isn't as though leverage is being pushed to zero in the fixed income markets, but haircuts (i.e., the amount of margin that must be posted) are now such that levered buyers cannot force efficiency. Take something simple like Fannie Mae 5-year bullet bonds. Should have a very small spread versus Treasuries given the government backing of the GSEs, but instead the spread is currently around 1.45%. It seems like an arbitrage. But in order for an actual arbitrager to realize a decent IRR on the trade, it probably needs to be leveraged 20x or so. Now maybe one can actually get that amount of leverage versus Agency collateral, but what happens if the trade initially goes against you? The potential margin calls would kill you. Its a difficult arbitrage to actually realize." Complex and pricey http://www.canadiancapitalist.com/2008/11/19/ishares-portfolio-builder-etfs-complex-and-pricey "The fund holds a motley collection of 21 ETFs and fully three make up less than 1% of the portfolio. Compare the complexity of this fund with the simplicity of the ING Streetwise Balanced Fund, which has 40% in bonds and 60% split equally among Canadian, U.S. and other developed markets." We're not dead yet http://www.iimagazine.com/Articles/2044845/TODAY/We%27re_Not_Dead_Yet_.html "In our opinion someone who says quant equity investing has no future is basically saying that value and momentum will no longer work to pick investments. As we noted above we can see where people get this idea. Many investors using these strategies have had poor recent performance, and it.s clear that these strategies are no longer a secret. Although we can't 'prove' that quant investing has a future, we can demonstrate that quant strategies have had a successful long-term past - and that their recent performance is not inconsistent with this track record." Just say no to Detroit http://online.wsj.com/article/SB122669746125629365.html "Over the past decade, the capital destruction by GM has been breathtaking, on a greater scale than documented by Mr. Jensen for the 1980s. GM has invested $310 billion in its business between 1998 and 2007. The total depreciation of GM's physical plant during this period was $128 billion, meaning that a net $182 billion of society's capital has been pumped into GM over the past decade -- a waste of about $1.5 billion per month of national savings. The story at Ford has not been as adverse but is still disheartening, as Ford has invested $155 billion and consumed $8 billion net of depreciation since 1998." The perils of efficiency http://www.newyorker.com/talk/financial/2008/11/24/081124ta_talk_surowiecki "The logic behind these reforms was simple: the market would allocate resources more efficiently than government, leading to greater productivity. Farmers, instead of growing subsidized maize and wheat at high cost, could concentrate on cash crops, like cashews and chocolate, and use the money they made to buy staple foods. If a country couldn't compete in the global economy, production would migrate to countries that could. It was also assumed that, once governments stepped out of the way, private investment would flood into agriculture, boosting performance. And international aid seemed a more efficient way of relieving food crises than relying on countries to maintain surpluses and food-security programs, which are wasteful and costly." Tip Sheet http://www.stingyinvestor.com/SI/strategy/tipsheet.shtml A Lost Decade http://www.ndir.com/SI/strategy/tipsheet/11-20-2008-A-Lost-Decade.shtml Fully two thirds of the stocks in the Dow Jones Industrial Average are now trading below prices first seen more than a decade ago. A Median Market http://www.ndir.com/SI/strategy/tipsheet/11-19-2008-A-Median-Market.shtml The market is littered with attractive stocks based on median market statistics. SPIVA Spin http://www.ndir.com/SI/strategy/tipsheet/11-14-2008-SPIVA-Spin.shtml The Standard & Poor's Indices Versus Active Funds (SPIVA) scorecard for the most recent quarter (Q3 2008) out. As usual, some fund categories did well compared to the index, others not so much. DOW 30 Value Screens http://www.stingyinvestor.com/SI/strategy.shtml High Dividend Yield Stocks P/E P/B P/S P/D Yield ============================================ === === === === ===== Citigroup (C) 0 5 4 5 5 Bank of America (BAC) 3 5 3 5 5 General Electric (GE) 5 4 3 5 5 Pfizer (PFE) 3 4 1 5 5 Alcoa (AA) 5 5 5 5 5 EI DuPont (DD) 5 3 4 4 4 JP Morgan Chase (JPM) 2 5 2 4 4 Verizon (VZ) 1 4 3 4 4 AT&T (T) 2 4 2 4 4 Merck (MRK) 2 2 2 4 4 More Info: http://www.stingyinvestor.com/SI/strategy/dogs.shtml Value Ratio Stocks P/E P/B P/S P/D VR ============================================ === === === === ===== Alcoa (AA) 5 5 5 5 0.5 General Electric (GE) 5 4 3 5 0.7 Bank of America (BAC) 3 5 3 5 0.8 EI DuPont (DD) 5 3 4 4 0.9 Caterpillar (CAT) 5 3 5 4 1.1 Pfizer (PFE) 3 4 1 5 1.2 JP Morgan Chase (JPM) 2 5 2 4 1.5 American Express (AXP) 5 4 4 3 1.7 AT&T (T) 2 4 2 4 1.7 Merck (MRK) 2 2 2 4 1.8 More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml Graham Stocks P/E P/B P/D G$ dG$(%) ======================================== === === === ====== ====== Alcoa (AA) 5 5 5 29.94 254.70 Bank of America (BAC) 3 5 5 28.67 149.98 JP Morgan Chase (JPM) 2 5 4 44.43 95.55 General Electric (GE) 5 4 5 22.86 62.96 American Express (AXP) 5 4 3 27.38 46.52 Walt Disney (DIS) 4 5 1 30.54 44.62 EI DuPont (DD) 5 3 4 32.95 43.06 Caterpillar (CAT) 5 3 4 47.13 35.93 Chevron (CVX) 4 3 3 92.51 31.23 AT&T (T) 2 4 4 31.01 23.11 Pfizer (PFE) 3 4 5 18.55 18.36 Home Depot (HD) 3 3 3 22.29 15.55 Kraft (KFT) 2 4 3 29.68 11.74 Intel (INTC) 3 3 3 13.94 6.31 United Technologies (UTX) 3 3 2 49.29 5.61 Verizon (VZ) 1 4 4 29.31 2.97 More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml S&P/TSX60 Value Screens http://www.stingyinvestor.com/SI/strategy.shtml High Dividend Yield Stocks P/E P/B P/S P/C P/D Yield* ======================================= === === === === === ====== Teck Cominco Limited (TCK.B) 5 5 5 5 5 5 Biovail (BVF) 1 4 2 4 5 5 Bank of Montreal (BMO) 3 4 2 1 5 5 CIBC (CM) 0 3 1 4 5 5 National Bank of Canada (NA) 2 3 2 4 5 5 Husky Energy (HSE) 4 2 3 3 5 5 Sun Life (SLF) 3 4 4 2 5 5 Bank of Nova Scotia (BNS) 3 2 2 1 5 5 Toronto Dominion Bank (TD) 3 4 2 2 5 5 Manulife (MFC) 4 4 4 4 4 4 More Info: http://www.stingyinvestor.com/SI/strategy/dogs.shtml Value Ratio Stocks P/E P/B P/S P/C P/D VR ======================================== === === === === === ===== Teck Cominco Limited (TCK.B) 5 5 5 5 5 0.0 First Quantum Minerals Ltd. (FM) 5 5 4 5 3 0.3 Nova (NCX) 5 5 5 5 4 0.3 Petro Canada (PCA) 5 5 4 4 3 0.7 Husky Energy (HSE) 4 2 3 3 5 0.8 Bank of Montreal (BMO) 3 4 2 1 5 1.0 Encana (ECA) 5 4 3 3 4 1.1 Biovail (BVF) 1 4 2 4 5 1.2 Bank of Nova Scotia (BNS) 3 2 2 1 5 1.3 Toronto Dominion Bank (TD) 3 4 2 2 5 1.3 More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml Graham Stocks P/E P/B P/D G$ dG$(%) ======================================== === === === ====== ====== Teck Cominco Limited (TCK.B) 5 5 5 40.09 786.97 First Quantum Minerals Ltd. (FM) 5 5 3 100.65 579.58 Nova (NCX) 5 5 4 43.65 442.18 Inmet Mining (IMN) 5 5 1 71.60 362.56 Petro Canada (PCA) 5 5 3 81.82 263.80 Agrium (AGU) 5 4 1 96.49 183.89 Talisman Energy (TLM) 5 4 2 25.47 177.14 Magna Cl.A (MG.A) 2 5 3 76.00 136.02 Yamana Gold Inc. (YRI) 3 5 3 12.30 127.74 Nexen Inc. (NXY) 5 3 1 35.29 108.68 Encana (ECA) 5 4 4 99.82 105.14 Canadian Pacific Rail (CP) 4 4 3 64.86 76.93 Canadian Tire (CTC.A) 4 4 2 67.51 76.73 Canadian Natural Resources (CNQ) 4 3 1 71.52 71.88 Suncor Energy (SU) 4 3 1 35.28 71.08 Sun Life (SLF) 3 4 5 35.84 65.84 Manulife (MFC) 4 4 4 29.44 59.67 Toronto Dominion Bank (TD) 3 4 5 65.69 59.06 Bank of Montreal (BMO) 3 4 5 49.60 53.02 Husky Energy (HSE) 4 2 5 45.17 50.63 Brookfield A.M. (BAM.A) 3 3 4 22.74 42.50 MDS Inc. (MDS) 1 5 0 12.04 40.16 National Bank of Canada (NA) 2 3 5 45.92 32.02 Bank of Nova Scotia (BNS) 3 2 5 39.91 27.72 Bombardier Cl.B (BBD.B) 4 2 2 5.23 27.35 BCE (BCE) 3 2 0 40.93 18.46 Telus (T) 3 2 4 43.92 18.16 TransCanada (TRP) 2 2 4 35.68 11.68 CN Railway (CNR) 3 2 2 47.00 11.42 Royal Bank (RY) 2 2 4 40.12 9.98 Barrick Gold (ABX) 2 3 2 38.46 8.34 Potash Corporation (POT) 4 1 1 83.40 7.25 Cameco (CCO) 2 2 2 17.00 1.84 Enbridge (ENB) 3 1 3 36.84 1.56 Biovail (BVF) 1 4 5 9.57 0.36 More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml *Notes: http://www.stingyinvestor.com/SI/strategy/notes.shtml Switch to the HTML version if the tables aren't formatted properly. http://www.stingyinvestor.com/cgi-bin/email.cgi Books for Stingy Investors Common Stocks and Uncommon Profits by Philip A. Fisher Fisher takes a qualitative view of stocks and stresses the importance of intangible aspects of a firm with heavy emphasis on research and human capital. He also falls into the focused camp of investors who buy only a few carefully selected stocks and hold them for long periods. As Warren Buffett's second favourite book on investing, Common Stocks and Uncommon Profits is a must read for students of the market. Amazon Link: http://www.amazon.ca/exec/obidos/ASIN/0471445509/ Stock Research From Dan Hallett & Associates The Rothery Report http://www.rotheryreport.com/ The Rothery Report provides research on select deep-value stocks in North America. Discover overlooked and undervalued stocks in quarterly investment reports which provide detailed analysis of Canadian and U.S. stocks. Weekly email news and additional updates keep subscribers informed about new opportunities and developments. Rothery Report Performance (03/31/2001 to 09/30/2008) Average Capital Gain Average Holding Period 36.2% 2.4 Years Learn More http://www.rotheryreport.com/store/store.shtml Subscribe Today http://www.rotheryreport.com/store/order.shtml If you'd like to suggest The Stingy News to a friend, please point them to: http://www.stingyinvestor.com/cgi-bin/email.cgi Please visit the StingyInvestor website at http://www.stingyinvestor.com To (un)subscribe please use our email centre at http://www.stingyinvestor.com/cgi-bin/email.cgi Email comments or questions to info@stingyinvestor.com Refer to legal & conflict of interest disclaimers at http://www.stingyinvestor.com/SI/legal.shtml Privacy Policy http://www.ndir.com/SI/legal/privacy.shtml We do not rent or sell our email list to third parties. ISSN 1499-2795 Copyright Dan Hallett and Associates Inc., 2008. All rights reserved. The securities mentioned in this report are not appropriate for all investors. Consult your professional investment advisor before making any investment decision. While all reasonable effort is made to ensure the accuracy of information and data contained herein, accuracy can not be guaranteed. Past performance is not a good predictor of future performance. Results are not guaranteed and we assume no liability whatsoever for any material losses that may occur. No compensation for suggesting particular securities or financial advisors is solicited or accepted. The information in this newsletter, and in its related website, is not intended to be, nor does it constitute, financial advice or recommendations. Investing in stocks can be risky and may result in substantial losses. A Dan Hallett and Associates Inc.(DH&A) publication. DH&A is registered as Investment Counsel in the province of Ontario. DH&A, or related-parties may have an interest in the securities mentioned.
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A Dan Hallett and Associates Inc. publication. Norm Rothery, Ph.D., CFA, is the Chief Investment Strategist at Dan Hallett and Associates Inc. (DH&A) and the founder of StingyInvestor.com. DH&A is registered as Investment Counsel in the province of Ontario. Norm, DH&A, or related-parties may have an interest in the securities mentioned. More...