Friday, October 23

Amazon Results Defy Recession

Online Stock Trading - Amazon's Revenue Soars

Amazon's share price is up 20% today after they announced Q3 earnings that were way beyond analysts' forecasts. The shares were up over 14% in after-hours trading yesterday. Back in February we mentioned here that Amazon's numbers were likely to be good ! See - Amazon Kindle Mania Amazon Kindle 2 Ebook Reader

Amazon reported net sales of $5.45bn with net profit up 68% to $199m- 45 cents per share against Wall Street aforecasts of 33 cents per share.

One of the reasons for these good numbers was the Kindle ebook reader which has become Amazon's "number one best-selling item both in unit sales and dollars".

Tom Szkutak, CFO said that revenues in 2008 Q3 suffered weaker sales after September's Wall Street crash.

Amazon saw higher sales growth in its international sites the UK, Germany, Japan, France and China than in the US and Canada.

North America sales rose 23% from Q3 last year, whereas international sales rose 33%. International sales now represent 47% of total revenues.

Amazon also announced that there will be a "Kindle for PC" available soon so you can download best-sellers straight to your PC for $9.99 - booksellers are not too happy about this. For more information see Kindle for PC.

The Kindle Ebook Reader will also soon be available in a UK version.

A Kindle would be make a fine Christmas present for people who need or like to read a lot of books, newspapers and magazines and Amazon will be more than pleased to sell you a Kindle here - Kindle Ebook Reader

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Monday, October 19

Joel Greenblatt Formula Investing

Online Stock Trading - Formula Investing by Joel Greenblatt

Back in 2005 Joel Greenblatt, Columbia Business School professor, investor for 25 years, and founder of hedge fund firm Gotham Capital, wrote The Little Book That Beats the Market aimed at helping beginners to stocks and shares beat the market. The aim of the book was to tell people how to make money online stock trading in terms that his kids could understand, as he puts it : "I figured if I could teach them how to make money for themselves, then I would be giving them a great gift."

To get the good returns he promises, Greenblatt applies a formula that works if you have faith and patience. In many respects Greenblatt's formula is similar to the value investing strategy of Warren Buffett : "Invest in good companies when they are cheap."

Greenblatt claims that his formula has beaten the stock market for nearly twenty years, saying that 1988 to 2004, the high-return/low-price stocks of 30 of the largest 2,500 companies had annual returns of almost 23%.

Sounds good, so how do you find these stocks? Well it is actually quite simple. "If you just stick to buying good companies (ones that have a high return on capital) and to buying those companies only at bargain prices (at prices that give you a high earnings yield), you can achieve investment returns that beat the pants off even the best investment professionals."

What is even more simple is that Joel Grenblatt has a website Magic Formula Investing which finds the stocks for you! You just need to register for free and you get access to his stock picker tool that will select the companies for you.

For individual investors he recommends getting a basket of 20 or 30 top stocks over the course of a year and says that you should turn them over on a strict schedule, depending on performance. There is no mention of any minimum amount you need to invest.

But bear in mind this is long-term investing, over "shorter" periods, often years, the formula may not work. So you may have to wait up to five years. One problem encountered is that if your stocks underperform the market for the first two years then there is the temptation to dump the formula, but Greenblatt says you have got to stick with it.

The book, on the other hand, won't take you five years to read, you can get through it in two hours. It may even be available as an e-book one day ! And you can learn a lot direct from an expert about bonds, stock and shares and prices, return on capital, earnings yields etc....

For those who can't be bothered doing the work Greenblatt has recently launched a website - Formula Investing - where he will do the investing for you if you prefer. You need a minimum of $25,000 to open an account.

On his website he expains that there are six steps to stock market investing success with his formula
  1. Stocks are ranked daily using 2 criteria: Return on Capital and Earnings Yield which are combined to create a list of top-ranked stocks.
  2. Stocks in financial services and utilities, and smaller companies, are generally removed along with any company with incomplete data.
  3. A portfolio of at least 20 stocks is bought.
  4. The portfolio should be held for approximately 1 year to allow for after-tax returns considerations. Any losses should be taken just before the 1 year anniversary, any gains are taken right after the 1 year anniversary.
  5. The portfolio should be sold after 1 year and a new portfolio should be purchased.
  6. Data shows that following this process for a minimum of 3 years appears to allow the system to work correctly irrespective of typical market fluctuations.
So, there you have it, if you can invest for the long-term Joel Greenblatt's freely available formula is certainly worth a look on his Magic Formula Investing website or his new Formual Investing service - or you can buy the book for around $13 - The Little Book That Beats the Market (Little Books. Big Profits).
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Stock Market Today

Saturday, October 17

Raj Rajaratnam Insider Dealing Arrest

Online Stock Trading - Raj Rajaratnam Arrest for Insider Dealing

Insider dealing in stocks and shares is illegal, but that doesn't stop people doing it of course. Many people believe that there is a lot of insider dealing that goes undiscovered and unpunished, but on Friday the FBI made a very high profile arrest in front of live TV cameras of Sri Lankan born billionaire Raj Rajaratnam, founder of hedge fund firm Galleon Group. Either they are trying to prove that they are finally doing something about insider dealing or they are trying to send a message to other Wall Street traders that they should be very careful about what they are getting involved in.

No doubt the message got across and there may be some very nervous traders wondering if they are going to be next.

The Justice Department has said it will use the kind of electronic surveillance measures normally reserved for organized crime, drug syndicates and terrorist organizations. It is understood that investigators had used wiretaps to build their case against Rajaratnam and ex-directors of a Bear Stearns Cos. hedge fund.

Former prosecutor Robert Mintz said “What’s very unusual is that the case is built on wiretaps. You need very specific and timely evidence of criminal activity before a judge is going to let you go up on a wiretap.”

Rajaratnam faces 13 fraud and conspiracy counts, some of them carrying 20-year maximum sentences.

Others also arrested were :-
Rajiv Goel, a director in strategic investments at Intel Capital,
Anil Kumar, a director at McKinsey & Co.,
Robert Moffat an executive at IBM Corp.
Danielle Chiesi and Mark Kurland - former officials at Bear Stearns Asset Management affiliated with the firm’s New Castle Partners, which was responsible for around $1 billion. According to prosecutors this is the biggest insider trading case involving hedge funds.

US Attorney Preet Bharara said “The defendants operated in a world of, you scratch my back, I’ll scratch your back,”

Rajaratnam’s bail was set at at $100 million, secured by $20 million in assets and guaranteed by his wife and four others. Rajaratnam, is not allowed to travel more than 110 miles from New York City.

Prosectuors asked for Rajaratnam to be held in jail pending his trial, claiming that he had “enormous incentive” to flee back to his homeland Sri Lanka, and also said that there is additional evidence. More charges against Rajaratnam may be forthcoming and the case as described as “overwhelming.”

Defense attorney Jim Walden said prosecutors are misconstruing the evidence and that the case against Rajaratnam isn’t as strong as they claim.

Chiesi's attorney Alan Kaufman said that his client was “shocked” at her arrest yesterday and will plead innocent. Kurland’s and Moffett’s attorneys also said their clients aren’t guilty.

Anil Kumar also emphatically denies the charges.

Rajaratnam and his firm are alleged to have earned from $17 million to $18 million from the fraud. He may also have become aware he was being investigated. Rajaratnam is said to have told an acquaintance he believed a former Galleon employee was wearing a “wire.” Rajaratnam also bought a ticket to London on October 14.

The SEC has also sued Rajaratnam for alleged insider trading, and said he didn’t deserve his reputation for “genius trading strategies” or “astute study of company fundamentals or marketplace trends.”

Rajaratnam graduated from the University of Pennsylvania’s Wharton School, and according to Forbes is the 559th richest person in the world, with a net worth of $1.3 billion.

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Friday, October 16

Best Mortgage Deals

Online Stock Trading - Best Mortgage Refinancing Deals

[IPDATE : Google is apparently planning a move into the UK property market by listing properties for estate agents for free - see remortgage deals link below.]

Mortgages, and now also home refinancing, are rarely out of the news here in the UK, where house prices are still ridiculously high compared to average wages despite the 2 year credit crunch, and where the only people making decent money are people specializing in trivia, people who kick or hit balls round fields and banking CEOs who pay themselves enormous bonuses.

If you are looking to buy a home or move home then you will want to know which are the best mortgage or remortgage deals - first you should check out our previous post on remortgaging - after that you can have a look at the top 20 mortgage and remorgage deals put together by Christina Jordan at lovemoney (ex. Motley Fool) -

If you are a first-time buyer you need to bear in mind that Stamp Duty tax-free threshold will be reduced from £175,000 to £125,000 at the end of this year 2009. Lenders may therefore be expecting a rush and coming up with some attractive mortgage deals as a result.

It is worth point out that there are lots of reductions that have been made but the best mortgage deals are available to people with large deposits or equity, although the best rates from Woolwich, Abbey and Nationwide are available at 70% LTV (loan to value), not 60% LTV as previously.

This means of course that you still need 30% upfront, although the Nationwide is offering loans at 95% LTV.

As I don't want to rain on someone else's parade, to see the top 20 mortgage deals see lovemoney link.

Related posts : Remortgage Deals

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Wednesday, October 7

Stocks and Shares Candlesticks Piercing Pattern

Stocks and Shares - Candlesticks Piercing Pattern

For online stock trading it is important to understand at laest the basics of technical analysis and stock market charts. The Piercing pattern in candlesticks stock charting is described as a bullish reversal pattern. This means that it occurs at the bottom of a downtrend and shows a reversal an a possible move upwards in prices. It does not occur after an uptrend or a sideways trend.

The first candle has a red body and the second candle has a green body. In the second time period prices gap down below the real body of the first candle, this is even better if it is below the shadow as well as the body of the first candle.

The second candle must then close above the mid point of the first candle. Confirmation is if the price trades above the high of the second candle. Sometimes the pattern fails so make sure you set stops.

The first candle was bearish, continuing the downtrend, the second candle gaps down but then the bulls get control and drive prices back up. As a result some bears may start covering positions and bulls gain more confidence. The key point is that the price must close above the mid way point of the first candle.

Candle addition is a powerful sign and by adding together the red and green candles we obtain a red hammer at the bottom of a downtrend which is a a bullish reversal pattern.
Other candlestick charts patterns : Dark Cloud Cover - Harami - Doji
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Friday, October 2

US Unemployment Worse Than Expected

Stocks and Shares - Poor Unemployment Numbers Spook the Markets

U.S. job losses as seen in the non-farm payrolls were really disappointing, worse than expected at 263,000 jobs lost in September. The unemployment rate has risen again to 9.8%, fuelling fears that the weak labor market could undermine economic recovery.

The unemployment rate is the highest since June 1983 and payrolls have dropped for 21 consecutive months.

The average conseus by analysts was for non-farm payrolls to drop 180,000 in September.

Job losses for July and August were revisd to show 13,000 more jobs lost than reported.

High unemployment is stilll worrying although the economy started growing in Q3.

Since December 2007, the number of unemployed has risen by 7.6 million to 15.1 million, i.e. it has doubled. While the decline in payrolls has moderated from early this year, companies are still not hiring on a wide scale, likely waiting for a signal that the economic recovery is sustainable.

Art Cashin on CNBC said we are at a critical juncture - those who look at Elliott waves see a possible serious correction on the cards - others see the possibility of a new upleg - Art Cashin says he is in the 'confused' camp and that the next 3 days will be important. He was particularly worried by the numbers of average hours worked each week, which are bad - not a good sign.

Support on the S&P is seen at 1000 - it is expected to open at 1015. The DOW fell 200 points yesterday and the futures indicate an opening around 100 lower.

There are lots of people who are expecting a crash in Oatober - see Stock Market Crash Next Month - and Stock Market Crash for Beginners


Stock Market Today

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Thursday, October 1

Online Share Dealing Newspaper Tips

Online Share Dealing - Thursday Newspaper and Magazine Stocks and Shares Tips

SHARES MAGAZINE

Share Tips

Buy Westminster Group at 38p
Buy Petra Diamonds at 67.25p

Updates

Hold Clapham House
Take profit at Hargreaves Services, Young & Co's Brewery and Powerflute.

Takeover targets: Cello, Aegis, Anglo American, Legal & General, Mouchel Group, Meggitt, Smith and Nephew, NetCall, Tomkins and SSL International.

Oil and gas exploration

Buy Coastal Energy, Hardy Oil & Gas, Desire Petroleum, Volga Gas, Faroe Petroleum, Sterling Energy, Cove Energy and Tullow Oil.

Sector report

Buy Petropavlovsk, Medusa Mining and Chaarat Gold

FINANCIAL TIMES

Apple's decision to make the iPhone available in the UK through Vodafone and Orange is bad news for Nokia

Shire hit by analyst's patents alert hits
Monitise strong on talk of a deal with Visa

The Times
Tempus - Share Tips


Hold Smiths Group
Wichford a high-risk buy
Buy Renewable Energy on weakness

Comment

Adam Applegarth (he of the Northern Rock debacle) becomes Senior Adviser at Apollo Management.

Rumours of the day - Wolseley up 55p to £15.06 after JPMorgan said group is potential takeover target. Other potential targets include G4S.

Bet of the day: Domino's Pizza - the trading update will be closely watched today. DP has aggressive expansion plans, aiming at 1,000 stores in the UK by 2017.

Tiddler to watch - Hyder Consulting - The recession has not been plain sailing, but shares in Hyder Consulting rose 40p to 290p after it forecast H1 results towards the top end of what the City expects, helped by strong overseas businesses. Panmure Gordon raised its 2010 eps forecast by 11%.

Daily Telegraph
Questor Share Tips


Buy FirstGroup
Hold Galiform.

Comment

Cadbury: Kraft willprobably sweeten its offer
National Australia Bank could be circling Legal & General

The Independent
Investment Share Tips


Buy Man Group
Buy ASOS
Hold St Modwen Properties.

Daily Express

Victoria Oil & Gas could issue positive legal update

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Technical analysis using Japanese candlesticks - see stock charts for beginners
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