As regular readers know, we had been regularly sharing 'hand drawn' charts on key market indices for the past five years at least at the site formerly known as Jesse's Charts. We've had to stop doing this and switch to the pre-packaged Stockcharts.com format because eSignal bought Quote.com, which provided the base for our charting. They were determined to add improvements few wanted while discarding key features and functions (such as stability) to which most had become accustomed.
Such is the way of modern American business management, of which Vista and MS Office 2007 are two other sterling examples. Have these fellows ever heard of the phrase "If it ain't broke don't fix it?" Apparently not. Microsoft is particularly annoying and hard to work with as a demi-monopoly that is not afraid to really screw things up trying to gain some advantage over their customers. In that way they are similar to other hotbeds of inbred thinking and incompetent execution, such as the Bush II Administration.
With considerable annoying hand work we were able to update a few of the old charts. Whether we continue this, or do something else, is another matter. But for now, here they are.
A word of caution, the present financial managers of the US seem hell bent on getting their way in the short term, with the long term be damned. Please keep that in mind if you participate in the market fun and games, and try not to get hurt fighting what *could* turn out to be another attempt to inflate one bubble to fight another's collapse.
Watching the charts is worthwhile not to "predict" where things are going, but rather to help keep your bearings when so many others seem to lose their memory and their mental equilibrium, thrashing from one extreme to another. We get a chuckle reading the many predictions people put up on the web, and the way in which they come back and crow about any correct predictions while carefully ignoring their mistakes. The first they tend to carve in marble, and the latter are written in the sand.
24 April 2008
A Few Charts in our 'Babson Style'
23 April 2008
Bill Miller of Legg Mason Calls a Bottom (Hello Bottom? Please God, a Bottom!)
Thomson Financial News
Legg Mason Value Trust's Bill Miller forecasts 'worst is behind us'
04.23.08, 2:51 PM ET
SAN FRANCISCO (Thomson Financial) - Legg Mason Inc.'s Bill Miller, portfolio manager of Legg Mason Value Trust mutual fund, on Wednesday issued his first-quarter investment commentary to shareholders, projecting that the credit panic ended with the collapse of Bear Stearns.
'For planning purposes, here is my forecast: I think we will do better from here on, and that by far the worst is behind us,' Miller wrote. 'If spreads continue to come in, the write-offs at the big financials will end, and we may even have some write-ups in the second half instead of write-downs'
Miller noted that the wild card is commodities. (Another wild card might be the fund redemptions and margin calls Legg Mason Value Trust is getting as it hits 26 year lows. Bill's stuck now, he's got to keep going forward and hope for the best or call it a day. - Jesse)
'If commodities break, or even just stop their relentless rise, equity markets should do well,' he wrote. 'If they continue to move steadily higher, they have the potential to destabilize the global economy. We are already seeing unrest in many countries due to the soaring prices of rice and other grains.'
The weak dollar is another culprit of the commodity cycle, Miller said. However, he noted that the stage is set for 'what should be an improving environment for investors in stocks and in spread credit products. (Yes, things are looking just great. He's full steam ahead into the heart of a perfect financial storm like the skipper of the Andrea Gail - Jesse)
'Our portfolio, in my opinion, is in excellent shape, despite, or more accurately because of, its performance,' Miller said. 'Prices have declined substantially more than business values.'
Legg Mason Fund Hits 26 Year Low - Washington Post - April 5, 2008
The fund's top 10 holdings as of March 31 are Amazon.com Inc. at 6.5%, AES Corp. at 6.4%, JPMorgan Chase and Co. at 5%, Aetna Inc. at 4.9%, UnitedHealth Group Inc. at 4.5%, Yahoo Inc. at 4.4%, eBay Inc. at 4.2%, General Electric Co. at 4%, Sears Holding Corp. at 4%, and Federal Home Loan Mortgage Corp. at 3.5%.
The Legg Mason Value Trust dropped 19.7% in the quarter, compared with a loss of 9.4% for the S&P 500.
Shares of Baltimore-based Legg Mason were up 55 cents, or almost 1%, at $58.62.
Katherine Hunt
Legg Mason's Bill Miller Says 'The Worst is Over' - Forbes
We were going to give Bill the Pigman of the Week Award but the pigs started to complain.
US Financials Slump As Bond Insurer Ambac Hit by Fresh Subprime Losses
Ambac shares hit after $3bn loss warning
By Aline van Duyn and Stacy-Marie Ishmael in New York
Wednesday Apr 23 2008 12:50
Financial Times
Ambac Financial (NYSE:ABK) lost more than a third of its stock market value on Wednesday as the bond insurer warned that potential losses related to mortgage-backed securities could reach more than $3bn, vastly more than expected.
The company's ability to retain its crucial triple A credit ratings is again under question amid concerns that credit ratings agencies may require Ambac to raise a new round of fresh capital. (The fact that they even have it is the equivalent of a financial blasphemy in taking the name of creditworthiness in vain - Jesse)
Tamara Kravec, analyst at Bank of America, said: "It is realistic to assume that Ambac could fall short of ratings agency capital requirements.
"Concerns over the prospects for new business and a cloud of uncertainty over the magnitude of future potential [mortgage] losses will likely continue to put pressure on the shares."
Shares in Ambac fell to their lowest level. By midday in New York, the shares were down 35 per cent to $3.90. MBIA (NYSE:MBI) , the biggest bond insurer, was also hit, and its shares fell nearly 24 per cent to $10.15.
The potential knock-on effects of downgrades have caused concerns for regulators and banks. Bonds worth more than $1,000bn are guaranteed by Ambac and MBIA, and these could be downgraded if they lose their triple A ratings.
Ambac raised $1.5bn in capital last month, just in time to stave off cuts to its triple A ratings by Moody's Investors Service and Standard & Poor's. Fitch Ratings has cut Ambac's rating to double A, and all the agencies have a "negative outlook" for the group.
Ambac's first-quarter net loss of $1.7bn, or $11.69 a share, compared with a net income of $213m, or $2.04 a share, in the same period a year ago. Analysts polled by Thomson Financial forecast a loss of $1.51 a share in the first quarter.
The bond insurer incurred $940.4m in losses on collateralised debt obligations backed primarily by residential mortgages, and a total mark-to-market loss on credit derivative exposures of $1.7bn. CDOs are pools of debts that are sliced into tranches of varying risks and returns.
Ambac, which said it had been "severely impacted" by sharp declines in the value of mortgage securities, will also reserve $1bn to provide against further losses on these securities.
Michael Callen, interim chief executive of Ambac, admitted that "earlier expectations have turned out to be optimistic".
He said it was still not possible to be certain how large losses on mortgage-backed assets would be, amid continuing high levels of foreclosures across the US.
The uncertainty over the bond insurer's health and strategic direction has undermined its core business - guaranteeing debt issued by lower-rated municipalities, such as schools and local governments.
Ambac's shares had already lost more than 90 per cent of their value before the results.
Mr Callen said "the capital raised and strategic business actions taken during the quarter will enable us to get beyond this credit market."
Ambac Financial Hit By Subprime Losses
