Extreme shares and extreme moves
Posted on April 16, 2009 by Richard Beddard
Filed Under Companies, Investing, Markets |
In practice:
Naked PE shares on the move
Keith Anderson emailed me this afternoon, saying:
Nobody rings you up and tells you that the market has just turned. So here you are…
The inventor of the Naked PE is watching his portfolios of extremely cheap companies very carefully. The prices of three of the six companies in his list last November have risen sharply since.
- Barratt has trebled in price
- So has DSG, and…
- Taylor Wimpey is now seven times the price it was in November.
Followers of the Naked PE series will know that cataclysmic falls have been more usual over the last few years and that Keith prefers to wait, often for a couple of years, before buying shares on the list.
He says:
I have today taken initial positions in Taylor Wimpey and DSG, because it is now two years since their price started collapsing (so if they were going to go bust they would probably have done so by now) and they have recently gone up through the 50-week moving average. I missed the boat on Barratt – I should have bought when they went up through the MA at about 110p but they are already 50% higher. That’s what comes of not trawling through the charts in my watch list regularly enough.
I don’t share Keith’s optimism about the stockmarket, although I recognise it’s cheap, but I’m hopeful some of his Naked PE portfolios will be profitable in our May update and that would be very good news for contrarian investors.
In theory:
A cognitive fog descends across the City
SmartMoney Magazine interviews Irving Kahn, Walter Schloss and Seth Glickenhaus, three stock pros who survived the Great Depression and still run investing companies now. They don’t think we’re facing the 1930’s all over again.
IT/media guru Alan Patrick switches off “all comms” over the Easter Weekend and discovers the World hasn’t changed much. The media, he says, specialises in “Now! Big! Risk! Fear!” Because it gets our caveman juices flowing, but you don’t actually need to worry about most of this stuff.
Ken Fisher says every story ever about faked accounts, including those involving Bernard Madoff and Allen Stanford, combines custody with risk taking so don’t put your money in the hands of your adviser.
Richard Posner says profit maximisation is rational, so we can’t blame bankers for bringing the economy down. He says it again, criticising Robert Shiller’s new book, Animal Spirits (written with George Akerlof).
Gillian Tett describes the “cognitive fog”, extreme uncertainty, shared by millions of enterprises around the world as the financial sector pulls in its horns.
Pension rules give companies too much freedom to understate their future liabilities, says the FT. ITV’s reported deficit is £178m yet it would cost £1.8bn to sell the pension to a third party and wipe the liability from its balance sheet.
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