The clock is ticking away the time before the year ends and I have only begun to sort out the possibilities. In Part 1 of this series, I discussed breaking up my potential picks into three categories: contender, on the fence, and out of the running until the 10 stocks have been identified.
Four contenders have been considered so far: American Eagle Outfitters (AEO), Anadarko Petroleum (APC), Anglo American ADR (AAUKY) and Diageo plc (DEO).
Six more are included in today's review: EZCorp Inc. (EZPW), General Electric Company (GE), Wells Fargo & Company (WFC), Annaly Capital Management ( NLY), Intuitive Surgical Inc (ISRG) plus Berkshire Hathaway (BRK.B). These include the remaining five from 2009 and one more familiar to most investors.
The market continues to befuddle the bears as the third quarter earnings and stock prices continued to move in a positive direction.
During this period Washington has taken charge of the auto industry and helped prop it up with the "cash-for-clunkers" program. They continue to subsidize the real estate market with first-time home buyers incentives, and very low interest rates. The banks are being refueled by the Federal Reserve with interest rates as low as zero, while all the time currency stability has been sacrificed. This has driven gold prices to new highs.
This is the third review of my 2009 stock picks through September 30 (see: Chasing Value: 9 picks for 2009 -- APC, GE, ISRG, WFC and more). This years picks have annihilated index comparisons, so much so that I must attribute some of my good fortune to luck. However, I do believe the original reasoning was sound and the outlier nature of the gains certainly a result of an oversold market living in fear.
"Banks had taken a brutal beating over the last two years was brutal; the S&P Sector SPDR Financials dropped 72.0% from its high last September to its low in March," notes Brandon Clay.
"The painful declines in bank stocks appear to have stopped for now, as bank stocks have exploded off the March lows. As we've observed, financials have 'friends in high places.'
"Banks in general are showing promise as credit becomes easier. There's still a long way to go for complete recovery, but the trend is pointing up.
Money market accounts and certificates of deposit are safe, but they provide very little return on your investment. This fact, and the invigorated stock market, provoked one of my bankers, Dobrinka, at the local Santa Monica Wells Fargo branch, to ask for advice on how I would invest $25,000 if I was just starting out.
This is a common question although the starting point in terms of cash varies. It certainly makes a difference how old the person is, their general knowledge about investing and finance, and the particulars of their financial statement.
Here is what I suggested sticking to regular themes I have written about before and broadly speaking would be a conservative approach emphasizing safety, diversity, liquidity, dividends and the potential for growth far exceeding cash in the mattress or in a money market account. I also think that it is important for beginners to educate themselves so my suggestions include an educational aspect.
Where on earth can you buy things on sale for less than bargain prices?
Imagine that you were shopping for a nice shirt, or watch, or bicycle and you have been tracking the prices all year (or ten) and the thing finally goes on sale. You drive to the store and while you are in transit, unknown to you, the store manager puts a half price sticker on the item. You would be overjoyed with glee! To buy something at half the price you already thought was a bargain -- that would be amazing!
The fact is that this year the stock market has provided that opportunity. This year for the first time in most of our lives, you were able to do that to a degree that we have not witnessed before and have only read about.
After a nine-week stock market rally it is time to tally up the winners and losers. In a market where almost everything gained, there must eventually be separation between those that went with the flow and those that had something to show.
The financial stocks, with the help of the government, were able to show some positive earnings. The banks do raise the suspicion that this is a case of "managing the numbers". The government has helped them along by "reshaping" some accounting rules and giving them advance warning (and leaking to the public) of the results of its stress testing. Until now, they have gone with the flow as the hardest hit stocks and rallied the most.
I have written many times in the past year about Wells Fargo (NYSE: WFC) and since it is up another 23.66% today, I'd like to come back to it. As an investor I have done more than just blab (or blog) about it. I have been loading up on the stock, acquiring shares at $12.00 when the bears were ruling the market only a short time ago -- a very short time ago!
In the last month, Wells is up an amazing 48.41%, and that for the safest bank in the United States. The stock closed today at $24.25, up $4.64.
In addition to buying the stock, I have been playing with naked put options at multiple levels. The extreme negativity in the market created a huge opportunity, so much so that I wrote Chasing Value: Will we be eating out of trash cans? which includes a discussion of naked put options.
Oil is moving higher today with the overall markets, as Wall Street has been seeing hints that things are starting to turn around. Part of the reason for the optimism has come in the form of strong earnings this week from Ruby Tuesday (NYSE: RT) and Bed Bath & Beyond (NASDAQ: BBBY). If restaurants and retailers are seeing things start to rebound, its a good sign for the overall economy, and a sign that people are out there driving their cars around, which helps boost oil prices.
Wells Fargo (NYSE: WFC) is set to report earnings on April 22, but the bank stated this morning that it expects to report first-quarter income of nearly $3 billion. WFC's preliminary first-quarter earnings are 55 cents per share, compared to 60 cents per share a year ago. These figures are after "preferred dividends," which include $372 million in dividends paid to the government - these charges are taken into account.
The early reports of earnings of 55 cents per share are far better than the consensus estimate for 31 cents per share. WFC added that total revenue for the quarter should be $20 billion.
In one of my previous blogs: Is the stock market spring loaded? I coined the phrase Lightspeed Inflationin reference to the rate at which the government was able to dilute our currency. It is time we stopped referring to the government's over spending as "running the printing presses".
We have reached a point, given our maximum note size of $100, that we would actually be better off if the government did have to print the money. Now they can just add whatever amount they want to the balance sheet electronically.
Imagine that someone showed up at your door and insisted you take a loan from them, a loan that you didn't ask for and didn't want.
Then, a few months later, the person who lent you the money showed up at your door and told you that you would be subjected to mandatory "stress tests" and insisted on a role in managing how you run your financial affairs.
You'd probably be mad as hell, and that's exactly how Wells Fargo (NYSE: WFC) chairman Richard Kovacevich is feeling.
According to Global Finance, which will publish its analysis, "World's 50 Safest Banks" in its April issue, international banks dominate the rankings, which show the effects of the sub-prime mortgage meltdown and credit crisis brought on by large Wall Street players. San Francisco-based Wells Fargo is the top-rated U.S. bank at No. 21. European banks now dominate the rankings, with only four U.S. banks among the listing.
This morning, Wells Fargo (NYSE: WFC) announced what it terms a "very difficult decision." Wells Fargo decided to cut its quarterly dividend to 5 cents per share from 34 cents per share, saving $5 billion in the process. WFC also believes that the move will help the company reimburse the government for its recent investment in the firm.
WFC's CEO John Stumpf stated in a press release, "The actions we're taking every day ... are the right thing to do in any event for our shareholders, customers, and team members ... these actions will help us repay the government's investment at the earliest practical date."
Yesterday there was hope. Obama had just endorsed stocks for the long-term, China predicted 8% growth, and the markets staged a rather large trading rally. But it turned out to be just that: a trading rally, and a small one to boot. The lower-than-expected jobless claims and not as bad retail numbers failed to cause any follow-through buying as China's great new package was really not much more than we already knew. Yep, this was just the recipe for a great flush-out for equity investors.
While most banks are slashing dividends and looking to raise capital, Wells Fargo (NYSE: WFC) actually raised its dividend in the third quarter of 2008. That's been a boon to the company's stock price. Sure, it's trading at less than one-third of its 52-week high, but it isn't on the precipice of collapse like its competitors are.
But the Wall Street Journalsays (subscription required) that the company should cut its dividend: "Wells's stock yields over 10%. Dividends, which cost $4.31 billion last year, deplete capital. Wells's ratios are hardly impressive as it is, and look anything but bulletproof in the face of rising credit losses and huge economic uncertainty."
The clock is ticking away the time before the year ends and I have only begun to sort out the possibilities. In Part 1 of this series, I discussed breaking up my potential picks into three categories: contender, on the fence, and out of the running until the 10 stocks have been identified.
The market continues to befuddle the bears as the third quarter earnings and stock prices continued to move in a positive direction. 
"Banks had taken a brutal beating over the last two years was brutal; the S&P Sector SPDR Financials dropped 72.0% from its high last September to its low in March," notes 
Money market accounts and certificates of deposit are safe, but they provide very little return on your investment. This fact, and the invigorated stock market, provoked one of my bankers, Dobrinka, at the local Santa Monica Wells Fargo branch, to ask for advice on how I would invest $25,000 if I was just starting out.
Where on earth can you buy things on sale for less than bargain prices?
After a nine-week stock market rally it is time to tally up the winners and losers. In a market where almost everything gained, there must eventually be separation between those that went with the flow and those that had something to show.
I have written many times in the past year about 
As investors start to believe that the worst of the current recession is already behind us, they are turning their attention to oil, and today have 
Wells Fargo
In one of my previous blogs: 
Imagine that someone showed up at your door and insisted you take a loan from them, a loan that you didn't ask for and didn't want.
It is being reported today in the 
Yesterday there was hope. Obama had just 
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