Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
Ending Syria’s Nightmare will Take Pressure From Below - 29th Mar 17
Charts That Reveal US Real Employment Status and It’s Not Good - 29th Mar 17
SNP Controlled Scottish Parliament Demands Right for Scotland to Commit Suicide - Indyref2 - 29th Mar 17
USD Gold Myriad of Signs - 28th Mar 17
Ominous Social Trends That Will Shape Our Future - 28th Mar 17
Foundation And Empire: Is Donald Trump The Mule? - 28th Mar 17
Top Ten US Dollar Risks - 27th Mar 17
The Popularity of Gambling and Investing Amongst Students - 27th Mar 17
Is Political Betting on the Rise? - 27th Mar 17
US Stock Market Consolidation Time - 27th Mar 17
Russia Crisis - Maps That Signal Growing Instability and Unrest - 27th Mar 17
Goldman Sachs Backing A Copper Boom In 2017 - 27th Mar 17
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

Baron's Top 10 Stock Picks- A Lesson on Sheepherding

Companies / Investing 2009 Mar 11, 2009 - 03:17 AM GMT

By: Mike_Stathis

Companies

Best Financial Markets Analysis ArticleThe following piece is a response to SA Editor, Racheal Granby's wrap-up of a recent Barron's article titled "Ten Stocks to Hold Long-Term."

Granby writes, "With the Dow off more than 50% from its October 2007 peak, there's rarely been a better time for long-term investors to pick up stocks on the cheap. Barron's puts together a list of ten great stocks to hold for five years or longer."


1) Coca-Cola Femsa ( KOF ): The world's second-largest Coca-Cola bottler is down nearly 60% from its 52-week high, closing at $27.67 on Friday. But the company is well-run and continues to grow. It had a healthy $650M of cash as of late February, and bulls think double-digit growth could return by the end of 2010.

My Commentary: I wouldn't touch it unless the dividend was much higher. It makes no sense in this market.

2) Microsoft ( MSFT ): At a recent $15.27, the company's P/E ratio is less than nine based on estimates for this year's earnings. Microsoft is 'a gigantic cash machine' and its dividend yield of 3% beats last week's quote for 10-year Treasury bonds.

My Commentary: I might pick it up in the single digits. Obviously the author has no idea the trouble MSFT is in.

3) ACE Limited ( ACE ): One of the largest global players in the property-casualty field, ACE "is very strong financially, and they have weathered the current environment quite well with a strong balance sheet," says Institutional Capital's Jerry Senser. ACE stands to gain AIG marketshare and talent, and Senser sees high-single-digit growth next year.

My Commentary: Property Casualty? No thanks. Good luck with this one. This sector simply has too much risk.

4) Wynn Resorts ( WYNN ) : Despite a heavy debt load, the company carries $1.1B in cash, providing it some breathing room. Under the assumption that the world will go on and people will still want entertainment, there's plenty of upside potential for Wynn's casinos and resorts.

My Commentary: Do I really need to say anything? Come on.

5) EMC Corp. ( EMC ): The company is well-positioned to take advantage of the growing corporate need to store and protect data. Although the recession will hurt, EMC's profit outlook seems reasonable; analysts expect EPS of $0.91, up from $0.77 in 2008.

My Commentary: I might pick some up at $7 but I certainly wouldn't rate it as a top 10.

6) Cerner ( CERN ): The firm builds and runs data systems, many used to store medical records - a field that could see tremendous growth. Jeff Coons, of Manning & Napier Advisors, thinks the stock is worth $50+ vs. its recent $36.72.

My Commentary: Did the Barron's author ask Coons how much his firm holds? “Could see tremendous growth” doesn't sound like a top 10 great stock to me. How about you? Come back and have a look when it goes to $20.

7) WellPoint ( WLP ): The managed-care company has roughly half its health-insurance business in administering plans for businesses, rather than taking underwriting risk. As a result, earnings are more predictable than some of its peers. Shares could produce annual returns in the mid-to-high teens for the next few years.

My Commentary: It's clear this guy is only pushing the stock because Buffett bought it. I like UNH much more on valuation. But what Buffett does is irrelevant. In fact, if you followed Buffett last year, you're can't be too happy.

8) Google ( GOOG ): Investors who worry about advertising during a recession should accept that to the extent companies are advertising, they're doing so online. Google stands to benefit from the long-term trend of ads moving to the internet. Another plus: Google has zero debt.

My Commentary: GOOG might be a good one once it falls below $100. If you buy it higher than that you are a sucker. Ad revenues are falling like a rock and GOOG isn't diversified as of yet.

9) eBay ( EBAY ): The firm has lots of cash and a strong brand name. The company is also doing everything it can to minimize counterfeit problems, and has strong competitive advantages.

My Commentary: Even the sheep realize this one is a dog. eBay will soon start paying a cash dividend to compensate for its indefinite slower growth.

10) CVS Caremark ( CVS ): The company expanded its retail pharmacy business with its acquisition of Longs Drug Stores for $2.9B. CVS's pharmacy-benefit management business should get a boost from companies' increased efforts to control health care costs.

My Commentary: You're a little late here. The PBMs are going to get hit hard with healthcare reform. This is going to collapse the ridiculous mark-ups charged by pharmacies, that is unless healthcare lobbyists have their way with Obama.

So what's the lesson of this piece? First, Barron's is a complete WASTE OF TIME. Second, you'll notice that Barron's gets quoted by other sites because it's read by a lot of people. This generates the illusion of validity. In reality, it creates a sheep mentality. Of course, that's just my opinion. Always remember this. Journalists are just that. At best, they are skilled in journalism. In reality, it's very hard to find truly skilled journalists. It's even harder to find journalists who aren't driven by misaligned agendas. They have no idea about investments so they rely on others. The problem is that journalists rely on financial professional that have their own agendas, like fund managers, analysts, etc.

Ultimately, journalists covering the economy or the stock market focus on material in a way that encourages the financial industry to spend more money buying ads. The end result is that they rarely deliver value to their audience. So you're better off not wasting time on what they write. The same applies to the Wall Street Journal, Forbes, Fortune and all of the others. I've never subscribed to any financial publications, yet I've managed to do pretty well over the years. If you want to be a successful investor you need to detach yourself from the sheep mentality generated by the media.

Maybe you don't agree. If so, it's likely you don't understand how the media works. If you don't recognize their games by now, either you haven't been paying attention, or else you're certain to remain a sheep indefinitely. If so, don't feel bad because virtually all of Wall Street professionals are sheep as well. The only difference is that they are higher up on the food chain. So they make money regardless, usually at your expense.

Coming in a week (hopefully) is my new website, www.avaresearch.com. Be sure to bookmark it. I will be opening up subscriptions for non-professional investors on a limited, first-come basis.

2

By Mike Stathis
mike@apexva.com

Copyright © 2009. All Rights Reserved. Mike Stathis.

Mike Stathis is the Managing Principal of Apex Venture Advisors , a business and investment intelligence firm serving the needs of venture firms, corporations and hedge funds on a variety of projects. Mike's work in the private markets includes valuation analysis, deal structuring, and business strategy. In the public markets he has assisted hedge funds with investment strategy, valuation analysis, market forecasting, risk management, and distressed securities analysis. Prior to Apex Advisors, Mike worked at UBS and Bear Stearns, focusing on asset management and merchant banking.

The accuracy of his predictions and insights detailed in the 2006 release of America's Financial Apocalypse and Cashing in on the Real Estate Bubble have positioned him as one of America's most insightful and creative financial minds. These books serve as proof that he remains well ahead of the curve, as he continues to position his clients with a unique competitive advantage. His first book, The Startup Company Bible for Entrepreneurs has become required reading for high-tech entrepreneurs, and is used in several business schools as a required text for completion of the MBA program.

Restrictions Against Reproduction: No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the copyright owner and the Publisher. These articles and commentaries cannot be reposted or used in any publications for which there is any revenue generated directly or indirectly. These articles cannot be used to enhance the viewer appeal of any website, including any ad revenue on the website, other than those sites for which specific written permission has been granted. Any such violations are unlawful and violators will be prosecuted in accordance with these laws.

Requests to the Publisher for permission or further information should be sent to info@apexva.com

Books Published
"America's Financial Apocalypse" (Condensed Version)  http://www.amazon.com/...

"Cashing in on the Real Estate Bubble"  http://www.amazon.com/...

"The Startup Company Bible for Entrepreneurs"   http://www.amazon.com...

Disclaimer: All investment commentaries and recommendations herein have been presented for educational purposes, are generic and not meant to serve as individual investment advice, and should not be taken as such. Readers should consult their registered financial representative to determine the suitability of all investment strategies discussed. Without a consideration of each investor's financial profile. The investment strategies herein do not apply to 401(k), IRA or any other tax-deferred retirement accounts due to the limitations of these investment vehicles.

Mike Stathis Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife