2009 March « Enterprising Investor Forum

Triple A Monday, March 16, 2009

Posted by ei-forum in Miscellaneous.
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aaa1 Someone wrote in asking about this but we think others might be interested in the answer too..

There are only 6 companies that are still rated ‘AAA’, following General Electric’s downgrade to ‘AA’ from Standard and Poor’s:

Automatic Data Processing
Berkshire Hathaway
Exxon Mobil
Johnson & Johnson
Microsoft
Pfizer

How many will manage to keep their rating throughout this crisis? We will just have to wait and see…

Take your time… Friday, March 13, 2009

Posted by ei-forum in Investing.
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caution1 As someone just said on CNBC, no one becomes rich by buying on the 4th up day! Despite the fact that it looks like some risk appetite is returning to the market, the Enterprising Investor should have already made his purchases (if the analysis justified to do so), not dive in now!

Most of the buying so far has been due to short covering and most of the fundamental issues affecting the economy and financial markets have not changed this week. Are some of the banks all of a sudden worth almost double the price they were trading for last Friday? Is there less risk? Do we have more clarity on their balance sheets and their exposures? Hmmm…

Keep on doing your homework but we are extremely skeptical of all those market commentators that are saying to get back in and that the time has come to put money back in the markets. We are still adopting a wait and see attitude and would ideally be ready to take some positions we like but unless something fundamental changes in the state of the economy, we are looking to do so at or below 52-week lows.

Have a nice weekend!

Jamie Dimon – Words of Wisdom Thursday, March 12, 2009

Posted by ei-forum in Miscellaneous.
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Unfortunately, we couldn’t post the whole speech but it is definitely worth listen to on CNBC > here.

Finally someone stood up and tried to focus attention on what has to be done and not on what should have been done!

He spoke out against the constant vilification of corporate America, the need to create a systemic risk regulator and define/implement procedures to deal with potential failure of large financial institutions.

The speech is also full of some excellent quotes:

“If we act like a dysfunctional family and we don’t finish these things and we’re forever debating them, I think this will go on for several years,”
“I know mortgage investors may take issue with modifications but they should get over it,”
Etc,..

Here are his closing remarks…

Enjoy!

Eastern Europe about to go Bust? Tuesday, March 10, 2009

Posted by ei-forum in finance.
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Some of this might be a bit controversial but all in all, it is quite interesting. As always, it is important to listen to different points of view…

Some key points:

It appears that Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay or roll over $400bn this year, equal to a third of the region’s GDP… the credit window has slammed shut.
In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story.
Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.
They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data).
and a lot more…

Enjoy!

ETF for troubled times Friday, March 6, 2009

Posted by ei-forum in ETFs.
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world1

We still feel uncomfortable about highlighting specif stocks seeing market conditions and possible unintended ramifications of problems with global financial/insurance conglomerates. At the moment, a lot of companies are very vulnerable to events completely out of their hands and more importantly, that they really cannot foresee.

Having said this, valuations are quite interesting and instead of focusing on how low things can go or when we are going to seen a massive bear-market rally, we prefer to look at an interesting ETF that could be added to your portfolio, thereby minimizing the risk of taking a position in a specific company.

One of the themes we feel is worth considering is inflation. Even though not many commentators are focusing on this, sooner or later we will have to deal with it and investors need to be aware of this.

In order to tackle this, a classical ‘boring’ way to be defensive is to think of utilities and an interesting option is the Vanguard Utilities ETF (VPU) which is trading close to all time lows and offers an attractive dividend yield.

Please read our disclaimer.

Greatest Wealth Destruction Ever? Wednesday, March 4, 2009

Posted by ei-forum in Miscellaneous.
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Erin Brunett and Jim Cramer comment on the current situation and for once, Cramer is not too hyper!

This is not the full interview but it’s quite interesting. They discuss market dynamics, the political situation and the harsh reality which the general public is slowly starting to accept.

Enjoy!

Buffett’s Outlook Monday, March 2, 2009

Posted by ei-forum in Buffett Watch.
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copy-of-buffett As everyone is reporting, Buffett states that he sees the economy “in shambles throughout 2009 — and for that matter, probably well beyond,” …. however, as usual, he remains optimistic and true to his investment philosophy and the fact that he still can’t answer the question on whether the stock market will rise or fall.

He admits that he did some “dumb things” but that does not mean that he will not correct them or make the same mistakes again. He continues to have ample amounts of cash at his disposal which we will be looking to put to work wisely.

Most people are saying that this is the most pessimistic letter ever but this is not surprising seeing the current market condition. Our suspicion is that – due to the REAL uncertainty throughout the globe – Buffett will continue to hedge against the worst buy focusing on money markets and preferred deals until the time comes to step back into the equity markets.

More to come…