By: Clark A. Kendall
The quarter in brief. The opening quarter of 2010 can be summed up in four words: so far, so good. Despite murmurs warning us of a correction, a double dip recession, and a tepid recovery with sustained high unemployment, stocks were red hot. It was a quarter in which major healthcare reforms became law, the dollar made a comeback, the housing market lagged, and the global economy revved up its collective engines. Despite murmurs and warnings that the recovery was going to be weak and prolonged, it was a very positive time for investors.
The quarter in brief. The opening quarter of 2010 can be summed up in four words: so far, so good. Despite murmurs warning us of a correction, a double dip recession, and a tepid recovery with sustained high unemployment, stocks were red hot. It was a quarter in which major healthcare reforms became law, the dollar made a comeback, the housing market lagged, and the global economy revved up its collective engines. Despite murmurs and warnings that the recovery was going to be weak and prolonged, it was a very positive time for investors.
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History Shows the Markets Recover Quickly
The stock market is amazingly resilient. You might be surprised at how fast the stock market can change … for the better. Let’s look at how the market has recovered remarkably – and quickly – from some notable downturns.
2008-2009. The collapse of the subprime mortgage markets triggered a recession and made 2008 the poorest year for stocks since 1931. The Dow Jones Industrial Average fell 10% in June 2008 and dropped 10% again in October 2008, losing 19.12% for the year. On March 9, 2009, the major U.S. indices closed at 12-year lows with the S&P 500 at 676.53.
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Monte Carlo Simulation -- Rolling the Dice on Returns
By: Paola Saenz
When a man walks into a casino in Monte Carlo and rolls a pair of die at the craps table, he has a 1 in 36 chance (62=36) of the dice lying face up in any particular combination. He knows this because each of the six sides of each die -- if the casino is a fair house -- has an equal chance of turning face up.
Financial markets and the economy have far more variables than a six-sided die. Instead of only six potential outcomes that have an equal chance of happening, investing has a myriad of possibilities and outcomes. Furthermore, each possibility has a wide range of chances of occurring.
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OBAMA-CARE” -– Separating Facts from Myth
Confusing doesn’t even begin to describe healthcare reform. Throughout the very long debate over health care reform, a great deal of misinformation (spurred by presumption or misunderstanding) was circulating. Additionally, many changes and alterations to the legislation were made along the way. At this point, some of the arguments your friends, neighbors or co-workers continue to debate don’t even factor into the legislation signed by President Obama. Let’s examine the most commonly asked questions related to the Affordable Health Care for America Act?
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GARP Portfolio
The GARP portfolio’s primary focus and strategy is to own companies with unique products and services that are growing revenues and earnings faster than the overall market. We believe these companies will have long-term superior relative and absolute performance.
Revenue and earnings for the GARP portfolio continue to be very strong. The GARP portfolio’s weighted revenue and earnings grew at 7.1% and 62.9% over the past 12 months respectively, compared to the S&P 500’s revenue decline of 2.9% and earnings growth of 12.5%. From a valuation prospective, the GARP portfolio is trading at only 14.8 times 12-month forward earnings, which again is favorable as compared to the S&P 500 which trades at 16.9 times forward earnings. We feel our GARP portfolio should be trading at a premium on a relative valuation basis.
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Stock Selections
Bucyrus International Inc. (BUCY - $65.99)
Bucyrus International, Inc. (Bucyrus) is a designer and manufacturer of mining equipment for the extraction of coal, copper, oil sands, iron ore and other minerals in mining centers throughout the world. In addition to the manufacture of original equipment, Bucyrus also provides the aftermarket replacement parts and service for this equipment.
Open Text Corporation (OTEX - $47.47)
Open Text Corporation (Open Text) is an independent company providing enterprise content management (ECM) software solutions. The Company’s ECM software products help its customers to manage their critical business content, including version revisions and compliance with regulatory requirements. Its Open Text ECM Suite enables corporations to manage traditional forms of content, such as images, office documents, graphics and drawings, as well as to manage electronic content, including Web pages, e-mail and video.
Assured Guaranty Ltd. (AGO - $21.97)
Assured Guaranty Ltd. (AGO) is a holding company that provides, through its operating subsidiaries, credit protection products to the public finance, infrastructure and structured finance markets in the United States, as well as internationally. AGO operates in four segments: financial guaranty direct, financial guaranty reinsurance, mortgage guaranty and other. The Company primarily conducts its business, through subsidiaries located in the United States, Europe and Bermuda.
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