Ticker Sense

What is Working in 2012?

With the first month of the year in the books, we thought we would examine the best strategy so far in 2012 as a potential guide for the rest of the year.  To help us in this regard, we present at right our S&P 500 performance matrix. 

The matrix uses nine criteria (note that each criterion is independent of the other).  Stocks are sorted by each criteria (P/E, 2011 performance, yield, etc.), divided into ten groups of fifty, and then the performance of each group is calculated.

In January the worst strategy was to own the 50 stocks with the highest dividend yield at the start of 2012.  That group of fifty, on average, lost 1.03%.  Perhaps not so coincidentally, that was the best strategy in 2011.¹  The best performing strategy in January was to buy the stocks that were the worst performers last year.

¹"What Worked in 2011?".Birinyi Associates, Inc.12-S-02.1/3/12

Watch Birinyi's Kevin Pleines on CNBC Discussing a Possible "Golden Cross"

 

January 30th Blogger Sentiment Poll

Blogger Sentiment Poll Participants:                   

24/7 Wall St (N) The Aleph Blog (+) Biiwii (-) Bruce Krasting  BullBear Trading  Carl Futia (+) Dash of Insight (+) Dividend Growth Investor (+) Elliot Wave Lives On (+) Expected Returns (+) Fallond Stock Picks (+) Global Economic Intersection (N) GEI – Investing Blog (N) Humble Student of the Markets (N) In the Money  Learning Curve (-) MaoXian  Night Owl Trader (+) The Mess That Greenspan Made  Oil Trader’s Blog  Peridot Capitalist (-) Prometheus Market Insight  Quant Investor (N) Shanky’s Tech Blog (-) Short Takes  Smart Money Tracker (N) StockAdvisors.com  Traders-Talk (-) ValuePlays  VIX and More (N) Wall St. Cheat Sheet  Wall Street Folly  Wishing Wealth (+) Zentrader (+)

Equalweighted S&P 500 Outperforming

Entering 2012 we read much about how 2012 would be the year of the large / mega cap stocks, how they are at the lowest valuation in many years and in many instances they pay significant dividends.  While many mega caps have performed well this year, the equal weighted S&P (an index where every stock has the same weight regardless of size) is ahead of the weighted S&P.  We would also note that the 50 largest stocks in the S&P 500 at the start of the year are up 4.1% while the fifty smallest stocks are up more than double that: 9.7%.

To us this suggests that picking stocks matters more than grouping stocks into artificial segments, such as mega cap or low P/E or high P/E.

How Do We Do It?... Stock Picking

We have just published our February newsletter and are happy to report that all three portfolios are up on the year with the Growth portfolio up over 7%.  We are often asked how we do it.  The answer is simple: stock picking.  While the focus today is on ETFs, sectors and macro opinions we prefer the "model T" approach, which is old fashion stock picking.  And to those that argue that stock picking is harder today than at any point in the past, because of the increase in correlation among assets, we would point out that despite the S&P 500 still being under its April 29, 2011 high there are 192 stocks in the index that are higher now than they were in April 2011.  For those that know where to look the opportunities are there.

Apple: How Good Was It?

Apple reported a record $13.1 billion in net income in their first quarter earnings report.    That gives AAPL the 2nd most profitable quarter of any S&P 500 member since 2000.  Only Exxon Mobil (XOM) has earned more (in their 3rd quarter 2008 report of $13.4 billion).   Prior to Apple's report last night, XOM had been the only S&P 500 member to earn over $10 billion in a single quarter.

The Street's Reaction to Apple's Blowout Quarter

Sometimes it is difficult to find a negtive comment from analysts covering AAPL.  There are 57 sell-side analysts covering the stock (as tracked by Bloomberg). 51 "buys," 5 "holds" and 1 "sell".  After Apple reported very positve earnings, sales and guidance yesterday, 29 firms have raised their price target so far this morning. 

The average 12-month price target of all the analysts covering the stock has risen to $562 from $517.  With AAPL trading at $457 in the pre-market, the consensus target would equate to a 23% gain the from current level.

Read Laszlo Birinyi's Column in the Financial Times

Read Laszlo's column to be pubished in tomorrow's paper: ETFs Can Lead to Lazy Stockpicking.

January 23rd Blogger Sentiment Poll

Blogger Sentiment Poll Participants:                  

24/7 Wall St (-) The Aleph Blog (+) Biiwii (-) Bruce Krasting  BullBear Trading  Carl Futia (+) Dash of Insight (+) Dividend Growth Investor  Elliot Wave Lives On (+) Expected Returns  Fallond Stock Picks (+) Global Economic Intersection (N) GEI – Investing Blog (-) Humble Student of the Markets (N) In the Money  Learning Curve (-) MaoXian  Night Owl Trader  The Mess That Greenspan Made  Oil Trader’s Blog  Peridot Capitalist (-) Prometheus Market Insight  Quant Investor (N) Shanky’s Tech Blog (-) Short Takes  Smart Money Tracker (-) StockAdvisors.com  Traders-Talk (-) ValuePlays  VIX and More (N) Wall St. Cheat Sheet  Wall Street Folly  Wishing Wealth (+) Zentrader (+)

Google Earnings After the Close Today

GOOG is scheduled to report earnings after the close today.  Historically they have reported between 4:00 and 4:15.  The current analyst consensus for Google's 4Q EPS is $10.50 which equates to 34% growth from one year ago.  GOOG has beaten earnings estimates 77% of the time since it went public in 2005.

Health Care and Materials are at "Extreme Overbought" Levels

The S&P 500 is 2.2% above the upper bound of its trading envelope and "overbought."  Except for staples and utilities, all other sectors are also "overbought."  Health care and materials are within 2% of their most extended level over the past twelve months. 

January 17th Blogger Sentiment Poll

Blogger Sentiment Poll Participants:

24/7 Wall St (N) The Aleph Blog  Biiwii  Bruce Krasting  BullBear Trading  Carl Futia (+) Dash of Insight (+) Dividend Growth Investor (+) Elliot Wave Lives On (N) Expected Returns (-) Fallond Stock Picks (-) Global Economic Intersection (N) GEI – Investing Blog (-) Humble Student of the Markets (N) In the Money  Learning Curve (+) MaoXian  Night Owl Trader  The Mess That Greenspan Made  Oil Trader’s Blog  Peridot Capitalist (-) Prometheus Market Insight  Quant Investor (N) Shanky’s Tech Blog (-) Short Takes (-) Smart Money Tracker (-) StockAdvisors.com  Traders-Talk  ValuePlays  VIX and More (N) Wall St. Cheat Sheet  Wall Street Folly  Wishing Wealth  Zentrader (+)