3/25/2006 newsletter
*** Market
Market is flat for the week, waiting for FED meeting next week. The market was uneasy at first, but then pretty much expected to see anther quarter point hike on interest rate. Lucent and Alcatel (Franch Telecom) merged to form a 30 bil company with US side (mighty Ms. Russo) controlling the company (friends at LU may be safe for a while). Both companies are struggling, hoping the alliance will regain their past glory. Will this be another "blind leads blind" case? Since this deal is structured as Alcatel acquiring Lucent, this deal can be seen as SP500 dumping Lucent. Google will be added to SP500 on Monday. Finally the IPO found its exit strategy.
My portfolio is volatile this week due to NYX and crude oil price. On the surface, NYX's PE=90 seems very expensive (Google's valuation can not be blamed compared to NYX's). We will see if NYX lives up to that expectation. (The kind of game Mr. Thain plays is quite hard to understand.) BG is sold. I hesitate to sell PCAR. It is a strong company, but the stock does not seem to go anywhere soon.
Big bummer Microsoft, and bad luck me. I was trying to load a few large caps since they look so cheap. So I decided to buy a little bit of Microsoft and Intel as value investors. Who knows the next day Microsoft announced Windows Vista delay and pissed everybody off. The Division VP was fired the day after. What a bummer! The obnoxious Jim Crammer even said, "Who cares about Microsoft any more these days" because its stock has not been going anywhere for 3 years and one product delay after another...
However, technically speaking, the wide flat converging stock price at low level is actually very attractive. And you know all the speculators are out due to one bad news after another and no profit opportunity on both long and short sides. Who is buying it? Intel is a simple technical play, betting $20 is a possible support. It is so cheap. But I am not uninformed, I know Intel is losing to AMD since S&P is broadcasting this bad news to the world. I even read it in a GNU MFP benchmark report before I read S&P report.
I read this JP Morgan CEO story. Very interesting guy...
http://money.cnn.com/magazines/fortune/fortune_archive/2006/04/03/8373068/index.htm?source=yahoo_quote
March time is always the peak of Merck's stock price. Why? Bonus/Stock option. I got some raise and some stock options ($36). But it is priced at the highest level since Vioxx debacle. We will see if Merck can break into $40's. Otherwise, these options are useless... As I mentioned, the stock repurchase is almost certain to lift price, as long as there is no other setback, like Vista.
http://www.berkshirehathaway.com/letters/1985.html
I happened to have a chance to read Buffett's 1985 letter (refered by my Six Sigma book). And I stumbled into another essay on executive pay on stock option. It appears that CEO and Corp HR is not much better than the story of an accountant, the trusted steward, secretly transferring money from his master's account into his own account, little by little. At the same time CEO is portraited an image of heroic visionary, so called "leadership" or even "savorship" -- as long as you do not look at how their compensation are structured. Depending on which side you stand, this "weakness" may not be a bad thing (considering if you are ascending to senior management, of course the more perk the better). Unfortunately things just got really bad these days... Many of them are not far from crooks, very intelligent ones though (like the recent UMDNJ case)... Alas, what a world!
--Steve
Market is flat for the week, waiting for FED meeting next week. The market was uneasy at first, but then pretty much expected to see anther quarter point hike on interest rate. Lucent and Alcatel (Franch Telecom) merged to form a 30 bil company with US side (mighty Ms. Russo) controlling the company (friends at LU may be safe for a while). Both companies are struggling, hoping the alliance will regain their past glory. Will this be another "blind leads blind" case? Since this deal is structured as Alcatel acquiring Lucent, this deal can be seen as SP500 dumping Lucent. Google will be added to SP500 on Monday. Finally the IPO found its exit strategy.
My portfolio is volatile this week due to NYX and crude oil price. On the surface, NYX's PE=90 seems very expensive (Google's valuation can not be blamed compared to NYX's). We will see if NYX lives up to that expectation. (The kind of game Mr. Thain plays is quite hard to understand.) BG is sold. I hesitate to sell PCAR. It is a strong company, but the stock does not seem to go anywhere soon.
Big bummer Microsoft, and bad luck me. I was trying to load a few large caps since they look so cheap. So I decided to buy a little bit of Microsoft and Intel as value investors. Who knows the next day Microsoft announced Windows Vista delay and pissed everybody off. The Division VP was fired the day after. What a bummer! The obnoxious Jim Crammer even said, "Who cares about Microsoft any more these days" because its stock has not been going anywhere for 3 years and one product delay after another...
However, technically speaking, the wide flat converging stock price at low level is actually very attractive. And you know all the speculators are out due to one bad news after another and no profit opportunity on both long and short sides. Who is buying it? Intel is a simple technical play, betting $20 is a possible support. It is so cheap. But I am not uninformed, I know Intel is losing to AMD since S&P is broadcasting this bad news to the world. I even read it in a GNU MFP benchmark report before I read S&P report.
I read this JP Morgan CEO story. Very interesting guy...
http://money.cnn.com/magazines/fortune/fortune_archive/2006/04/03/8373068/index.htm?source=yahoo_quote
March time is always the peak of Merck's stock price. Why? Bonus/Stock option. I got some raise and some stock options ($36). But it is priced at the highest level since Vioxx debacle. We will see if Merck can break into $40's. Otherwise, these options are useless... As I mentioned, the stock repurchase is almost certain to lift price, as long as there is no other setback, like Vista.
http://www.berkshirehathaway.com/letters/1985.html
I happened to have a chance to read Buffett's 1985 letter (refered by my Six Sigma book). And I stumbled into another essay on executive pay on stock option. It appears that CEO and Corp HR is not much better than the story of an accountant, the trusted steward, secretly transferring money from his master's account into his own account, little by little. At the same time CEO is portraited an image of heroic visionary, so called "leadership" or even "savorship" -- as long as you do not look at how their compensation are structured. Depending on which side you stand, this "weakness" may not be a bad thing (considering if you are ascending to senior management, of course the more perk the better). Unfortunately things just got really bad these days... Many of them are not far from crooks, very intelligent ones though (like the recent UMDNJ case)... Alas, what a world!
--Steve
posted by Steve at 5:09 PM
<< Home