<![CDATA[Raymond Bordogna - Generating Alpha Blog]]>Fri, 18 May 2012 09:22:27 -0500Weebly<![CDATA[Increase in Odd Lot Sales Cloud Indicate Stock Peak]]>Tue, 15 May 2012 15:46:26 -0500http://www.raymondbordogna.com/7/post/2012/05/increase-in-odd-lot-sales-cloud-indicate-stock-peak.htmlAccording to The Ultimate Guide to Trading ETFs (Dion, 2011):  When "odd number of shares" begin to trade more frequently, it's a sign that more retail (individual) investors are buying a stock and has been correlated with marking the top in a stock.  ]]><![CDATA[Interesting Data Point: Gas Price Effect on US Equity Market]]>Sun, 06 May 2012 06:39:14 -0500http://www.raymondbordogna.com/7/post/2012/05/interesting-data-point-gas-price-effect-on-us-equity-market.htmlNed Davis Research indicates that rate of change in gas prices is a critical factor stock investors's outlook:  when prices at the pump rise more than 30% within a year stocks often slide. Conversely, when gas prices have decreased over a 12 month period, the S.& P. 500 has averaged an increase of about 13%.

Interestingly, in early May 2011 a gas averaged $3.96, which was about 35% percent higher than May 2010. In 2012, gas has averaged $3.83 per gallon which is less expensive than a year ago.  Hence, one might conclude that stocks might avoid the "sell in May" condition.
Source(s):  Ned Davis Research, NYT]]><![CDATA[Interesting Data Point: Domestic Bias in U.S. Investors' Portfolios]]>Sat, 05 May 2012 11:36:17 -0500http://www.raymondbordogna.com/7/post/2012/05/interesting-data-point-domestic-bias-in-us-investors-portfolios.htmlIn 2005, U.S. individual investors had 87.2 percent of their equity allocation in domestic stocks despite the fact that the US constitues just 43% of the global equity market. 
Source:  Behavioral Finance: Investors, Corporations and Markets, NY Times (May 2012)]]><![CDATA[Interesting Data Point: Treasury Yield Curve Predicting Economic Growth]]>Tue, 22 Dec 2009 13:55:49 -0500http://www.raymondbordogna.com/7/post/2009/12/interesting-data-point-treasury-yield-curve-predicting-economic-growth.htmlThe Treasury yield curve widened to a record, 2.81% amid signs the U.S. economy is strengthening.
Source(s):  WSJ, iStockAnalyst.com]]><![CDATA[Interesting Data Point: Treasury Yields in 2010]]>Mon, 21 Dec 2009 19:00:25 -0500http://www.raymondbordogna.com/7/post/2009/12/interesting-data-point-treasury-yields-in-2010.htmlData according to today’s Wall St. Journal survey of various Treasury primary dealers:
§  Forecast for 2-year yield to rise to 1.825% by the end of 2010; current = 0.799%
§  Forecast for 10-year note will yield 4.125%; current = 3.548%.
§  In June 2007, before the credit crunch, the 10-year yield traded above 5.3%.
§  However, the forecast 10-year note’s yield is near past 5-year average (4.1%)
§  YTD, Treasury’s have lost 2%
§  High-yield, high-risk corporate bonds are 2009’s best performing fixed income asset with a return of 57% YTD

Why will bond yields rise?
§  Better economic outlook
§  Fed expected to raise federal funds rate since holding them near zero since December 2008.
§  Large debt issuance by the Treasury, which is forecast to raise $1.4 trillion in the current fiscal year that started in October after selling $1.786 trillion in fiscal 2009]]><![CDATA[The Bottom Line: Consider Going Long with the Dollar in 2010]]>Sun, 20 Dec 2009 14:09:00 -0500http://www.raymondbordogna.com/7/post/2009/12/the-bottom-line-consider-going-long-with-the-dollar-in-2010.html§  The dollar is looking better on a relative basis – see the US Dollar Index (USDX)
§  Euro is declining as “PIIGs” component of euro is experiencing credit perception issues (Portugual, Ireland, Italy and Greece)
§  60%:  Euro is about 60% of USDX
§  US Dollar Outlook:  Its technical features appear strong although long term its fundamental are weak due to the US deficit picture

Bottom Line:  Consider an investment in UUP, an ETF that is dollar bullish via futures contracts.  ]]><![CDATA[Strategic Brilliance or Blunder: Toys “R” Us and Zhu Zhu]]>Sun, 20 Dec 2009 12:34:23 -0500http://www.raymondbordogna.com/7/post/2009/12/strategic-brilliance-or-blunder-toys-r-us-and-zhu-zhu.htmlToys “R” Us data:
§  Wal-Mart replaced Toys “R” Us as the largest US toy seller more than a decade ago
§  Toys “R” Us’ strategy is not to compete on price but to compete on service and selection, including high-end toy products (via it’s F.A.O Schwarz acquisition)
§  849:  U.S. Toys “R” Us and Babies “R” Us
§  700:  International stores

Strategic Brilliance or Blunder:  Brilliance
§  Introduced to Zhu Zhu Pets (fake hamsters) at the Hong Kong Toys and Games Fair in 2008
§  Key competitive move #1:  Determined market response
§  Key competitive move #2:  Determined how to make the Zhu Zhu the 09 Christmas story
§  Key competitive move #3:  In August 2009, placed large order with Zhu Zhu Pets maker (Cepia, an Australian firm) in preparation for Christmas 2009 shopping season

Source(s):  NYT]]><![CDATA[The Bottom Line: Potential Investment Ideas for 2010]]>Sun, 20 Dec 2009 08:49:39 -0500http://www.raymondbordogna.com/7/post/2009/12/the-bottom-line-2010-potential-investment-ideas.htmlS&P 500 has recorded one of the most powerful stock rallies ever since 3/9/09:
§  676.5:  S&P low recorded on March 9, 2009
§  1102.47:  S&P price as of December 18, 2009
§  62.9%:  S&P 500 return since March 9, 2009 low which is one of the most powerful rallies on record
§  22%:  YTD S&P 500 stock market return

Other trends according to Barron’s:
§  15 million job seekers
§  5 million vacant apartments
§  Economy running at 71% capacity, versus a four-decade average of 81%, will hold wages and prices down.
§  GDP declined 6.4% in 1Q09 but increased 2.8% in 3Q09 - a 9.2% swing
§  Anticipated 2009 S&P 500 Operating Earnings:  $61.33
§  Forecasted 2009 S&P 500 EPS = $76 (24% increase)

Where do we go from here?
Investment professionals have varied views:
§  According to Barron’s, "forecasts for gross-domestic-product growth lie between 2.3% and 4%, well below the average 6% rate of economic expansion historically seen in the year following a recession."
§  20% return:  some investment professional forecast a target for the S.& P. 500 in the range of 1300 to 1350 by the end of 2010, or about 20 percent from Friday’s close
§  10% decline: many investment professionals predict a short term market decline of more than 10 percent
§  25% decline:  some predict a decline in the range of 20 or 25 percent
§  Up and then down Market:  S&P 500 increasing to 1300 before it slides to 1250
§  Interest Rates increase:  many believe that the central banks, fearing inflation will raise rates in the Spring of 2010, which will negatively impact stocks
§  Avoid Treasuries:  since interests will rise, bond prices will fall.  Thus, many forecasters are avoiding the Treasury market
§  Market leaders:  consumer staples, health care, technology and industrial shares should take leadership (from financial stocks) in 2010
§  Stock Picker’s Market in 2010:  big gains won’t be seen in ETFs and Mutual funds as many investors are leveraging these as opposed to individual stocks.  Industry leaders should do well:  Apple, Goldman, Oshkosh, Green Mountain
§  International Markets Lead the Way in 2010:  foreign markets valuations are much lower than the US
§  Treasury yields are poised to climb higher in 2010, with the median forecast calling for the 10-year note to touch 4.125%.
§  Contrarian View:  The pessimistic case is an easier one to digest as it’s focused on our current situation.  However, the market looks forward.

The Bottom Line(s):
§  Dollar-cost average into State Street Global Advisors’ S&P500 (SPY)
§  Protect against the downside with S&P Index ETF with options  (SH)
§  “Double Short” the market with a leveraged Index ETF (SDS)
§  Avoid Treasuries
§  Short Treasures (TBF)
§  Invest in market leaders such as Apple
§  Invest in foreign markets ETF (ishares = EFA) or mutual fund (Vanguard’s VGTSX)

Source(s):  NYT, Birinyi Associates, ETF Trend Playing Handbook, Barron's.com, Google.com
Picture
S&P 500 12 18 2009
]]><![CDATA[Interesting Data Point: Google’s SaaS is trending upwards]]>Sat, 19 Dec 2009 16:30:47 -0500http://www.raymondbordogna.com/7/post/2009/12/interesting-data-point-googles-saas-is-trending-upwards.htmlInteresting December 2009 data re: Goggle’s primary SaaS:  Google Apps below. 
§  3:  Google’s Apps business is 3 years old
§  $750M:  Google’s App business 2009 revenue
§  2M: # of businesses using Google Apps
§  $19B: Microsoft’s 2009 office suite revenue
§  $22B:  Google’s 2009 revenue
§  60%: Google’s share of online advertising market
§  1k:  # of Google employees working on enterprise products, largely Apps.
§  $19B: Microsoft’s 2009 office suite revenue
§  4/1/04:  Gmail released to the world
Source(s):  Forbes, WSJ, Google.com ]]><![CDATA[Interesting Data Point: U.S. Economic Numbers ]]>Sat, 19 Dec 2009 15:34:57 -0500http://www.raymondbordogna.com/7/post/2009/12/interesting-data-point-us-economic-numbers.html§  2.8%:  GDP expanded 2.8% in 3Q09 vs. contracting 6.4% in 1Q09
§  7.2M:  U.S. economy has lost 7.2 million jobs
§  10%:  November 2009 unemployment #  
§  17:  Following the previous recession which concluded in November 2001, companies continued to slash payrolls for 17 of the next 21 months
§  11k:  # of payroll jobs lost in November which was the smallest decline since late 2007
§  474k:  first-time unemployment 4 week moving average
§  86%:  business services’ share of job market (vs. manufacturing jobs)
§  $237.6B:  the amount (30%) of rescue package money ($787B) invested in the economy since February 2009

Labor-market recovery cycle:
1.      Less people are terminated as businesses find solid footing.  What is the latest “first-time unemployment” number?
2.      When demand increases, business productivity increases.  What is the latest productivity number?
3.      When new growth is evident, more part-time workers are hired.  What is the latest temporary job number?
4.      In a growing economy, full-time positions are plentiful.   What is the unemployment rate?

Forecasts are typically incorrect:
Often too optimistic at the top, forecasts (and investors) are also frequently too pessimistic at the bottom.
§  In July 2007 forecasters said that housing prices wouldn’t decline.   
§  In May 2009 forecasters said the economy would grow at about a 1 percent rate in the second half of 2009. That’s likely to be off by a factor of three. 
Source(s):  Newsweek, Bureau of Labor Statistics, Business Roundtable]]>