Wednesday, March 09, 2011

The Markets Are So Shortsighted

I remember reading a James Stewart article once that claimed that the stock market now has the attention span of a gnat. It is stunning how people love to say "buy and hold" investing is dead. I do not know about that, but I still have faith in value investing, which can take patience.

Your Patience Will Be Rewarded

My son loves to watch Good Eats, which is a cooking show featuring Alton Brown. One of his catch phrases is "your patience will be rewarded", when he suggests the food will taste better, if you cook it more slowly, let it cool properly, marinade overnight etc. The same can easily be said for investing.

Now I am as guilty as many people. With the ease of trading online, the low cost, the constant 24/7 news cycle, it can be difficult to shut it all out and have patience/conviction in your stock picks. It is human nature to want to find people who agree with your thesis.

The example that set me off about the markets was this headline yesterday explaining the rally in Financial stocks:Signs of higher bank dividends lift stocks . Well excuse me, is this really news? I bought USB on September 29th when the headline was that USB had signaled that they would not be increasing their dividend in the next 6 months! That actually caused a drop of about 5% in stock price. That drop was actually my dividend. I knew they were one of the strongest US banks. I knew when dividends were raised (note not if) they would be amongst the first. I could wait the 6 months!

Well, my patience is being rewarded. Almost exactly 6 months later, USB has gone from 21.60 27.75.


I read pieces of the SUPG 10K today ( Documents). Reading the risk factors of any 10k makes one not want to own a stock. Their main revenue generator has until mid 2013 and then will be subject to generic competition. So they have two years to find another revenues stream. That is where a deal with Glaxo Smith Kline comes in. They are jointly developing a cancer drug, that could pay substantial milestones to SUPG. That is a little dicey for my tastes, but I am trying not to be trigger happy.

CSKI Revisited

I have been beating the Chinese RTO drum a bit of late, commenting that while there does exist risk in these firms, that I believe the sell-off has been over done. CSKI made the very simple announcement (China Sky One Medical Announces Conference Call to Discuss Full Year and Fourth Quarter 2010 Results) today that they will be releasing year end earnings shortly. I guess the fact that the auditor has signed off, was enough to pop the stock 23%! Here is how my basket has performed:

Stock 11-Feb today Change
CCME 11.92 13.06 10%
NEP 4.7 5.00 6%
CNET 3.77 3.92 4%
GPRC 2.94 2.93 0%
JGBO 5.49 6.55 19%
NEWN 6.22 5.50 -12%
SCEI 7.02 6.35 -10%
LIWA 10.16 11.51 13%
UTA 7.17 5.71 -20%
CEU 2.23 2.09 -6%
CSKI 4.65 5.71 23%
CMFO 3.76 4.75 26%
CHOP 5.57 5.51 -1%
VALV 5.76 5.77 0%


1 comment:

AndrewsDad said...

Love Alton Brown... look for his scrambled eggs recipe, cook them in a double boiler. Well worth the extra time it takes.