Conflicts of Interest

BCM clients are well-aware of the many conflicts of interests that financial services firms can potentially have with their clients. An article recently published in The New York Times (via Bloomberg) shows a perfect example of how a supposedly prestigious Wall Street firm is no exception. Conflicts can arise when a firm is being paid or compensated to … Continue reading Conflicts of Interest →

Selling Covered Calls

A guest post by Christian Amsberry. You may have heard the terms “selling covered calls” or "covered call writing." This strategy allows someone who owns stock to sell someone else the right to buy the stock at a predetermined price on or before a predetermined date. This right to buy is commonly known as a … Continue reading Selling Covered Calls →

Treading Together

2011 was a tumultuous year, we experienced everything from the nuclear disaster in Japan to a revolution in Egypt. While U.S. stocks were as volatile as the times, the S&P 500 ended up right where it started and returned 0% for the year. According to the stock market, we have gone nowhere for the past 12 months. Judging by … Continue reading Treading Together →

Wheat in Euroland

Over the past year, there's no doubt that Europe has dominated the headlines of the world's financial news - and for good reason too. With one country after another falling victim to the "bond vigilantes," the Eurozone's very existence is being called into question. As investors small and large look for an exit, anything that smells of the region is … Continue reading Wheat in Euroland →

CSCO Revisited

With reference to my post about Cisco in August, I think it's time to ring the register. I still think Cisco is a solid company, and CSCO the stock may not be done with its rally. However, having just ended the trading day at $18.64, I think it's close enough to my $19 fair value estimate. From the August 10th … Continue reading CSCO Revisited →

Herd on the Street

Going into 2011, analysts up and down Wall Street were calling for stocks to outperform bonds. As of October 31st, U.S. stocks are down 2.6% year to date. Meanwhile, U.S. bonds are up 7.01% over the same period. Figure 1 shows the change in prices for the S&P 500 and the Barclay's Aggregate year to date. … Continue reading Herd on the Street →

Old Euro Dogs

This morning Euro Zone policymakers announced an agreement where certain private investors (mainly banks and insurance companies) would take 50% haircuts on their holdings of Greek debt. This is basically a managed default. And though it runs totally contrary to what policymakers were promising earlier this year (aka that Greece would not default), it really should have been expected. Back … Continue reading Old Euro Dogs →

Twist and Shout

The markets are quivering in anticipation of what the Federal Reserve may or may not announce later today. The consensus is that it will decide on implementing "Operation Twist." In this situation, the Fed would maintain short-term rates while reaching out to lower long-term rates, effectively "twisting" the yield curve. The idea is that lowering long-term rates will encourage borrowing, spending, and investment. However, … Continue reading Twist and Shout →

Between the Lines

All year long, corporate earnings have been the rationale for lower stock market valuations. Typically, the arguments go something like "earnings are strong... earnings are increasing... earnings are making new highs." And while those things are true, nobody is talking about where the earnings are coming from. Fortunately, there are some seasoned-pros, like Jeremy Grantham at GMO, who read between the lines and are … Continue reading Between the Lines →

Just Looking

This is going to be a busy week for economic data, and maybe for the markets as well. Consumer confidence, FOMC minutes, the ISM, and the employment report will all be released over the next few days. Given that various economic indicators have been implying that the economy is heading towards recession, this fresh set of information will be closely watched. Special attention … Continue reading Just Looking →

Bernanke Put

The markets seem to be hoping that good ol' helicopter Ben will come through with another round of quantitative easing (QE) tomorrow. Doing so would extend the legacy of the "Greespan Put" and probably ignite a speculative risk-on rally. Analysts like Dave Rosenberg and Bill McBride have pointed out how equity markets seem to be dancing around the Fed's QE activities, shown for … Continue reading Bernanke Put →

Battered but not Broken

Given that it does, in fact, look like the "kitchen sink" is being tossed out the window, I thought I'd provide an example of something I consider to be a reasonable opportunity. Cisco Systems (CSCO) designs, manufactures and sells products and services related to networking and information technology in general. Over the past year, CSCO stock has … Continue reading Battered but not Broken →