Investing Information
| Investing Information |
|
|
Next Investing Topic : Guru Focused: Robert Olstein?s Short Sells - While it is rather rare that value gurus sell stocks short, Robert Olstein has been selling short in his Financial Alert Fund. The accountant-turned fund manager spots values by looking behind the numbers. In the second quarter of 2004, Robert Olstein sold short American Italian Pasta Co. (PLB) at $31. After about 6 months he covered at $20, easily...[ read more]
|
 |
|
Have Analysts Gotten Honest?
It caught my attention when I heard an analyst on a popular financial news program tell investors to sell a stock because too many analysts liked the company, citing the fact that there were no sell ratings. It seemed perfectly logical to me that analysts wouldn't be telling investors to sell 3M (MMM), which has one of the most consistent positive earnings records in the history of the stock markets. But being suspicious of conflicts of interest between brokerage firms and analysts I decided to do a bit of fact checking anyway. While the stock did not have any sell ratings at the time of writing, there were quite a few hold ratings. Now I feel compelled to diverge here and say that the hold rating seems quite illogical to me. If a stock is good enough to hold it's good enough to buy, and vice versa if you wouldn't want to buy it then you shouldn't want to hold on to it either. As it turns out, the average analyst rating for 3M was only slightly and insignificantly better than the average for all stocks in the Dow Jones Industrial Average, of which the company is a component. But what was most interesting about the ratings on Dow components was that, despite numerous and serious legal problems, AIG (AIG) was tied with General Electric (GE) and Du Pont (DD) for the third best rating, only bested by Citigroup (C) and Microsoft (MSFT). AIG was actually more highly recommended by analysts than J.P. Morgan Chase's (JPM) and American Express (AXP). This didn't do much for my confidence in analyst ratings. So I dug a little deeper looking at the more statistically significant S&P 500. What I found was that companies in the index with the worst revenue performance did actually carry more sell ratings than companies with the best performance. At least analysts were using the sell rating, something they seldom did in the past. There was, however, a significant bias towards the neutral 'Hold' rating for all stocks indicating reluctance on the part of analysts to commit to buy and sell recommendations. Mark Mahorney is a freelance financial writer for hire. Mark Mahorney
Related Products For Download: Read Next : Guru Focused: Robert Olstein?s Short SellsWhile it is rather rare that value gurus sell stocks short, Robert Olstein has been selling short in his Financial Alert Fund. The accountant-turned fund manager spots values by looking behind the numbers. In the second quarter of 2004, Robert Olstein sold short American Italian Pasta Co. (PLB) at $31. After about 6 months he covered at $20, easily...
|
|
|
|
RELATED ARTICLES
Beginning Investor - Investment Terms Over the course of the past two months, readers have brought to my attention that there is a steep learning curve for investment terminology. That's why the focus of this month's Beginning Investor column will be investment terminology. The world of finance can be complex. This article doesn't intend to provide an all-encompassing set of definitions, but rather, as a general guide to help you understand the most frequently used financial terms. There's no way we could cover everything - and I'm sure that we wont - but this should clarify some things for those new to investing. This month, we'll be looking at stock-related words in particular. The Perfect Economy? The U.S. economic data reported this week showed strong output growth with tame inflation. Industrial Production expanded at about 1% in June, three times greater than expected, while both the June Consumer and Producer Price Indices were unchanged. Also, the June Capacity Utilization rate rose to 80.0%, and the June Unemployment Rate fell to 5.0%. The June data generally show there is neither strain nor slack in the U.S. economy. Therefore, the U.S. economy is expanding at an optimal rate. Going Offshore For Asset Protection There are a number of key reasons why individuals and businesses consider going offshore for asset protection purposes. Gold; What Type of Gold to Buy Jewelry Profitability And Stock Turn Rate The inventory of the typical store represents the largest single element of its total assets. The sale of goods from this inventory is the merchant's chief source of operating profit. Thus, the way in which this merchandise investment is put to work is of utmost importance in achieving a profitable operation. Online Trading Options Strategies - Rolling Rolling is defined in options online trading as moving a position from one strike to another either vertically in the same month, horizontally to another month or some combination thereof. Options Made Easy and Investor Education - Simple Enough for a 10 yr Old Kid How many of you out there think that the market is performing well? Invest or be Pink Slipped Firing an employee seems to be easier and easier for corporations. Up until now you allowed them to set your clocks. Now its time to fight back! Beat them at their own game. They had your future pegged. Now your certainty is in your own hands. Success Trading for New Traders: What Does Bid and Ask Mean? Do you ever wonder exactly what's going on in the trading pits after you've sent an order to purchase stock? You've no doubt seen market quotes either online or even in the newspaper. Have you noticed that there are always two sets of prices given? What exactly do those mean and where will my order get filled? Let's discuss the basics of the two prices you see. Investors: Avoid These 5 Common Tax Mistakes For many investors, and even some tax professionals, sorting through the complex IRS rules on investment taxes can be a nightmare. Pitfalls abound, and the penalties for even simple mistakes can be severe. As April 15 rolls around, keep the following five common tax mistakes in mind ? and help keep a little more money in your own pocket. It?s Not the Size of Your Bank Account You might think that if you win the lottery or get a huge raise, all your problems will be solved. Sounds logical, right? Well, it might sound logical, but it isn't. Having a bigger bank account will not make all of your problems disappear. Why? Because money is nothing more than a giant magnifying glass. Any problems you have with money only get bigger when you have more of it. There are people who earn $150,000 a year who have huge money problems because they have never learned how money works. POOF goes your RRIF ! Some time ago I attended a seminar where participants were told to burn some money; a reasonably-sized amount of money. You should have heard the gnawing and gnashing of teeth in that room! Step right up, folks, and light it on fire. Come on now. It's only money. Six Principles of Successful Investing 1. Begin investing immediately Is Starting A Business For Me? What To Consider Before Starting A Business Do you have the right temperament? In a Time of Need As I take my leisurely walk with my dog through the older section of the local cemetery, I pause to read the details on the barely legible, weathered headstones. I am fascinated with the dates, for I know each stone has a story to tell, a history of its own time and place, but only enough space for identity. Proceeding up the rolling asphalt pathway, I am led into the new section of the cemetery. It becomes crystal clear as I compare the cemetery's old sections with the new, Americans are living longer. Raising Capital in Today?s ?New Economy? We've helped a number of clients develop business plans and raise capital from "angel" investors, corporate entities and venture capitalists during the last 6-8 years. It's always a daunting process that can be full of pitfalls and require a tremendous amount of work ? but it can be done! Here is some perspective gleaned from years of experience. An Old Dividend Stock Investment Idea, for a New Generation Death and taxes! The certainties of life! And then, of course, there are the mortgage payments, the utility bills, phone bills, the car payments and thirsty automobiles. Add that to the grocery and clothing bills, and there appears to be more then just death and taxes as certainties of life. Stocks: Reduce Risk Yet Maximize Profits It is important to note that every smart investor wants to minimize risk while maximizing profit potential. Yet conventional investment theory tells us that in order to increase returns, you have to increase risk. Investing 101: Risk Terminology - BETA About thirty years ago, statisticians armed with all of their statistical theories began to confront the financial markets. A handful of useful tools emerged that the average investor should be familiar with when they look to purchase stocks. Part II of Day Traders and Swing Traders and Options? Maybe! Before every protective put trade it is possible to calculate your anticipated maximum loss. Use the formula: (stock price minus strike price) plus option price. For example, suppose you will pay $30.00 for your stock, and you want no more than a $3.50 loss on the position. Then you would choose the $27.50 strike put which costs $1.00. Following the formula, you take your stock price ($30.00) and subtract the put's strike price (27.50) which leaves you $2.50. To this $2.50 loss, you then add the amount you spent on the option ($1.00), which gives you a combined, maximum loss of $3.50 for this position. You can set your loss limit by the strike price of the put you buy and the cost of the put. This formula will work every time. Remember, stock loss, (stock price paid - strike price), plus option cost (option price) equals maximum potential position loss.
|
| home | site map |
| © 2006-2007 StockMarketsBlog.com |
