Not only is this the dullest market in generations, it is also the phoniest ever.
To illustrated just how desperate the big money traders (the only traders remaining) are for the largesse of the Federal Reserve, without whose risk-free money the stock markets would have closed down roughly two years ago, a recap of the day's trading is in order.
In the final half hour of trading yesterday, the Dow fell about 55 points. At the open today, the same index lopped off another 65 points in the opening minutes of trading. That's when Ben Bernanke primed up the printing press and bought back $2.5 billion of Treasuries from the corrupt, greedy, insolvent banks that have ruined the US economy.
Immediately, the Dow was back to the unchanged mark for the day, wiping out the early losses. The rest of the session was spent with the computers trading pennies in a tight range of 50 Dow points. To say that the markets are drifting aimlessly would be to miss the point that the Fed is force-feeding liquidity into the system. Truly, without the Federal Reserve priming the pump, stocks would be as dead as doornails, which, to some degree, is already the case.
Of course, there are those among us who still believe that the stock market is fair and unbiased, that there's no manipulation and that the small investor can still do well. These people apparently believe that unicorns can fly and the Easter Bunny brings candy to kids.
One adage of the market is that there's no free lunch, though that probably doesn't include banksters and insiders. For the rest of us, a look at price-earnings ratios might be instructive.
In a normal market, a reasonable P/E would be around 12-15. In raging bull markets, a touch above that, but in bear markets single digits are the norm, and there's no doubt that we're still in a bear market despite the convoluted efforts of the market riggers to make us believe otherwise.
I looked at some of the more popular names that routinely are recommended by pundits, analysts and brokers. Here's what I found to be their price-earnings ratios, using trailing earnings (prior four quarters). Caterpillar (CAT), 25.53; IBM (IBM), 12.72; AT&T (T), 12.52; McDonald's (MCD), 17.58; Apple (AAPL), 19.87; Intel (INTC), Chevron (CVX), 10.24; Bank of America (BAC), 51.36.
There's just a small cross-section of US stocks, which, from the looks of it, seem to be at least fully valued, though one has to ask why Bank of America is carrying a P/E three to four times it's historic norm. Does anyone think it's a good buy at this price, that they'll begin earning $4 and $5 per annum any time soon? Pretty doubtful. There's a lot of money that's headed for a rat hole in BAC.
Dow 11,169.46, +5.41 (0.05%)
NASDAQ 2,497.29, +6.44 (0.26%)
S&P 500 1,185.64, +0.02 (0.00%)
NYSE Composite 7,530.80, -15.58 (0.21%)
Declining issues beat advancers, 3453-2978. New Highs: 376; New Lows: 48. Volume was putrid.
NASDAQ Volume 1,935,497,500
NYSE Volume 4,679,565,500
Commodities, other than silver, didn't move very much. Oil gained 3 cents, to $82.55. Gold fell 30 cents, to 1,338.60. Silver, on serious allegations of price manipulation by short-sellers (banks, mostly JP Morgan), gained 29 cents, to $23.83.
Showing posts with label pennies. Show all posts
Showing posts with label pennies. Show all posts
Tuesday, October 26, 2010
Tuesday, January 12, 2010
Two-Cent Pennies
How did your stocks do today? Did they follow the general path lower, or were you one of the enlightened who was smart enough - or lucky enough - to buy the right stocks at the right time. From an investment point-of-view, today was a good day to buy. Always buy on down days and sell on up days, if you can.
That's how the stock market works - in reverse. You almost have to be counter-counter intuitive to make money trading stocks, although, if you have enough dough, like Warren Buffett, for instance, you buy whole companies, or at least significant enough stakes in those companies that you get a seat on the board and have a say in how the company is actually run.
Buffett's management style is pretty hands-off, unless the man wants something specific. He's a smart, seasoned buyer of companies, putting his money to work at firms which meet his strict criteria. Low profit margins? Out. Unproven technology? Out. Inexperienced management team? Out. We should all be so disciplined and successful, but we're not, mostly because we require more bang for our bucks. Trying to make money with a billion dollars is a lot easier than making good lettuce with $100,000.
Most people have some money in speculative ventures, more in "safe" investments, and probably very little in dividend-producing companies, which are usually the best of breed, by the way. Buffett's companies all return dividends. That used to be the mantra. Now it's "trading, playing and going all in." Wall Street has the little guy by the short hairs, but not old, wise Warren. That's why he's rich and you're not.
Anyway, stocks were off their gains today, putting to rest a swell winning streak on the S&P (5 days? 6? Who cares?)
Dow 10,626.43, -37.56 (0.35%)
NASDAQ 2,282.31, -30.10 (1.30%)
S&P 500 1,136.18, -10.80 (0.94%)
NYSE Composite 7,370.48, -78.57 (1.05%)
Losers beat winners, 4795-1728, almost 3:1, so if you're one of the regular folk, you probably got beaten down today. Doesn't feel very good, does it? If that money was in cash, you'd still have it all. But, you want to play the market, so speculate away and watch your kid's college fund or your own retirement saunter off further into the distance.
There were 299 new highs and just 36 new lows. I've been saying that the highs were close to topping out, and yesterday, they did, with over 900 issues making new tops. Looks like we're in for a downhill ride from here. Watch what happens this earnings season. Money will be heading out of stocks either just before they release their 4th quarter and full year data, or directly afterwards. Whether their reports are good or bad, big money will be looking to lock in profits. Stocks, over the next three weeks in particular, are not going to be good investments.
NYSE Volume 5,231,147,500
NASDAQ Volume 2,268,025,250
This is a great time to be in gold or silver, as is any time. Here's a question? How much of your portfolio is in actual gold or silver? Not an EFT - those are for suckers - but actual phycial gold and/or silver coins, bars, high-end jewelry that can be easily converted to cash at a moment's notice. 25%, 15%, 10%, none? Most people have less than 1% in physical precious metals, and that's a real shame, because, well, gold's up something like 400% in the past 6 years and silver has appreciated nicely as well.
There's a reason for that. It's because paper money and stocks are sometimes worth less today than yesterday. As far as commodities are concerned, gold fell $22.00, to $1,129.30, while silver dropped 34 cents, to $18.36. Oil slipped $1.73, to $80.79. It's still overpriced. But gold and silver just seem to keep going higher. If investors ever get a whiff of inflation (there isn't any, right now), silver is likely to double in two year's time. Gold will probably do as well if not better. People love gold, and there isn't much of it around.
Getting to the title of this post, when is a penny worth 2 cents?
The answer is pretty simple: When the penny in question was minted between 1909 and 1982 (with the exception of 1943, when steel was used in place of copper) and copper is priced above $3.10/pound (rough estimate). Right now, pennies from those dates (95% copper) are worth 2.2 cents in melt value. So, if you can find somebody who will pay you fair value, you can double your money on your old pennies. You can check on how much old pennies are worth here. And if your pennies happen to be from prior to 1959, they're called "wheaties" after the wheat stamping on the backs, before we started putting an image of the Lincoln Memorial on the back of pennies. They're worth even more, because people like and collect them.
You can get an idea of what "wheaties" are worth, here. Expect those prices to rise.
So, if somebody mentions the old adage, a penny saved is a penny earned, you can smile wryly, knowing that it's now 2 cents, and maybe more.
That's how the stock market works - in reverse. You almost have to be counter-counter intuitive to make money trading stocks, although, if you have enough dough, like Warren Buffett, for instance, you buy whole companies, or at least significant enough stakes in those companies that you get a seat on the board and have a say in how the company is actually run.
Buffett's management style is pretty hands-off, unless the man wants something specific. He's a smart, seasoned buyer of companies, putting his money to work at firms which meet his strict criteria. Low profit margins? Out. Unproven technology? Out. Inexperienced management team? Out. We should all be so disciplined and successful, but we're not, mostly because we require more bang for our bucks. Trying to make money with a billion dollars is a lot easier than making good lettuce with $100,000.
Most people have some money in speculative ventures, more in "safe" investments, and probably very little in dividend-producing companies, which are usually the best of breed, by the way. Buffett's companies all return dividends. That used to be the mantra. Now it's "trading, playing and going all in." Wall Street has the little guy by the short hairs, but not old, wise Warren. That's why he's rich and you're not.
Anyway, stocks were off their gains today, putting to rest a swell winning streak on the S&P (5 days? 6? Who cares?)
Dow 10,626.43, -37.56 (0.35%)
NASDAQ 2,282.31, -30.10 (1.30%)
S&P 500 1,136.18, -10.80 (0.94%)
NYSE Composite 7,370.48, -78.57 (1.05%)
Losers beat winners, 4795-1728, almost 3:1, so if you're one of the regular folk, you probably got beaten down today. Doesn't feel very good, does it? If that money was in cash, you'd still have it all. But, you want to play the market, so speculate away and watch your kid's college fund or your own retirement saunter off further into the distance.
There were 299 new highs and just 36 new lows. I've been saying that the highs were close to topping out, and yesterday, they did, with over 900 issues making new tops. Looks like we're in for a downhill ride from here. Watch what happens this earnings season. Money will be heading out of stocks either just before they release their 4th quarter and full year data, or directly afterwards. Whether their reports are good or bad, big money will be looking to lock in profits. Stocks, over the next three weeks in particular, are not going to be good investments.
NYSE Volume 5,231,147,500
NASDAQ Volume 2,268,025,250
This is a great time to be in gold or silver, as is any time. Here's a question? How much of your portfolio is in actual gold or silver? Not an EFT - those are for suckers - but actual phycial gold and/or silver coins, bars, high-end jewelry that can be easily converted to cash at a moment's notice. 25%, 15%, 10%, none? Most people have less than 1% in physical precious metals, and that's a real shame, because, well, gold's up something like 400% in the past 6 years and silver has appreciated nicely as well.
There's a reason for that. It's because paper money and stocks are sometimes worth less today than yesterday. As far as commodities are concerned, gold fell $22.00, to $1,129.30, while silver dropped 34 cents, to $18.36. Oil slipped $1.73, to $80.79. It's still overpriced. But gold and silver just seem to keep going higher. If investors ever get a whiff of inflation (there isn't any, right now), silver is likely to double in two year's time. Gold will probably do as well if not better. People love gold, and there isn't much of it around.
Getting to the title of this post, when is a penny worth 2 cents?
The answer is pretty simple: When the penny in question was minted between 1909 and 1982 (with the exception of 1943, when steel was used in place of copper) and copper is priced above $3.10/pound (rough estimate). Right now, pennies from those dates (95% copper) are worth 2.2 cents in melt value. So, if you can find somebody who will pay you fair value, you can double your money on your old pennies. You can check on how much old pennies are worth here. And if your pennies happen to be from prior to 1959, they're called "wheaties" after the wheat stamping on the backs, before we started putting an image of the Lincoln Memorial on the back of pennies. They're worth even more, because people like and collect them.
You can get an idea of what "wheaties" are worth, here. Expect those prices to rise.
So, if somebody mentions the old adage, a penny saved is a penny earned, you can smile wryly, knowing that it's now 2 cents, and maybe more.
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