Stock World Weekly: Test Issue
by SWW - May 20th, 2012 5:04 pm
NEW: Ilene is available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here is this week's test version of the latest newsletter. We apologize for some formatting issues that need to be worked out. Please tell us what you think.
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DiggBig Pharma – Where Are We Now?
by Pharmboy - April 28th, 2012 8:49 pm
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
In this article, please revisit an article written two years ago titled, "The Calm Before the Storm." This article focused on the patent cliff that was looming in the pharmaceutical industry, that was later picked up by the New York Times and several other bloggers! Subsequent articles were written about big pharma company's revenue streams, and the pros and cons of of their later stage pipelines. Other articles have also attempted to identify smaller biotechs with the potential to reap big rewards, because these biotechs are possible acquisition candidates by the big pharma companies that need to fill their coffers with new, multi-billion dollar drugs - the so called "blockbusters."
Forbes has an informative article that projects three different revenue scenarios in in the pharmaceutical industry. Forbes's last figure (below) shows what companies will best weather the storm by combining "total company revenues."
In the 'Storm' article, it is noted that pharma growth rates should be growing less or starting to stall into 2014 due to the patent cliffs (see Table 1). A few examples of slow growing revenue streams are (2010 -2011): Pfizer $67.1B to $67.4B; Merck $46B to $48B, JNJ $62B to $62B, and AMGN $15.1 to $15.5. The industry is still ripe for consolidation based upon forward earnings, and the numbers of blockbusters will be dwindling. The industry is taking on more risk in therapy areas that are unmet medical needs, but have fewer patients to treat – thus higher prices will ensue. Monoclonal antibodies (mAb) for cancer and other 'biologics' fit this pricey niche area.
| Company | Drug | Indication | Sales in $B (2009) | Patent Expiration |
| Pfizer/Eisai | Aricept | Alzheimer’s | 1 | 2010 |
| Merck | Cozaar | Hypertension | 3.6 | 2010 |
| Pfizer | Lipitor | Cholesterol | 12.5 | 2011 |
| JnJ | Levaquin | Antibiotic | 1.5 | 2011 |
| Sanofi/BMS | Plavix | Anticoagulant | 9.3 | 2011 |
| AstraZeneca | Seroquel | Antipsychotic | 4.9 | 2011 |
| Lilly | Zyprexa | Antipsychotic | 4.9 | 2011 |
| Merck | Singulair | Asthma | 4.7 |
…
Housing Data: Shiller Unaware Bernankinflation Winning
by ilene - April 25th, 2012 12:02 pm
Housing Data: Shiller Unaware Bernankinflation Winning
Courtesy of Lee Adler of the Wall Street Examiner
Poor Robert Shiller is behind the curve
There were two major housing data releases today. One of them is important. The other was a misleading misdirection play, that is leaving its creator clueless.
Due to its peculiar and excessive smoothing methodology, the housing Case Chiller is always behind the curve. It uses a 3 month average of sale prices closed in the 3 months up to the last reported month, in this case December, January, and February. That means that the data represents the average price of contracts closed over a 3 month period with a time mid point of mid-November. Need I remind you, it is now the end of April. The Case Chiller data represents the market more than 5 months ago.
This would be like the Wall Street Journal reporting only the Down Jones Industrial Average 65 day moving average as of November 16. Really, who gives a crap about what the 3 month average of the Dow was 5 months ago? Do you? I didn’t think so. So why pay attention to the Case Chiller?
This is totally worthless data, yet the media continues to report it as if it means something.
Actually, there was a third release today. The Federal Housing Finance Agency (FHFA aka Foofah) monthly price index was also released today. The Foofah data is not quite as slow. It uses sales only from the last available month which in this case is February. It at least recognized that a turn took place for sales closed in February.
The Conmerce Department released its new home sales data. This is really crappy data because it uses a tiny sample survey that gets revised every month for 5 months until the sample size is statistically significant. That being said, it does have certain advantages, and the revisions have not been so large that they change the absolute direction of the index.
The new home sales price data, while more volatile than the ultrasmooth and useless Case Chiller, uses contract prices from the previous month, not closed sales from two, three or four months ago that went under contract two months before that. It is the most current index of actual contract selling prices, released with a lag of just a month. Trends can be isolated by deriving year to year
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Stock World Weekly: Technically Speaking
by SWW - April 22nd, 2012 4:32 am
NEW: Ilene is available to chat with Members regarding topics presented in SWW, comments are found below each post.
Click here for the latest Stock World Weekly.
Lots of charts this week. Please give us feedback. Thanks! ~ Ilene
Sidoxia’s Investor Hall of Fame
by ilene - April 19th, 2012 8:52 pm
Sidoxia’s Investor Hall of Fame
Courtesy of Wade of Investing Caffeine
Investing Caffeine has profiled many great investors over the months and years, so I thought now would be a great time to compile a “Hall of Fame” summarizing some of the greatest of all-time. Nothing can replace experience, but learning from the greats can only improve your investing results – I’ve benefitted firsthand and so have Sidoxia’s clients. Here is a partial list from the Pantheon of investing greats along with links to the complete articles (special thanks to Kevin Weaver for helping compile):
Phillip Fisher – Author of the must-read classic Common Stocks and Uncommon Profits, he enrolled in college at age 15 and started graduate school at Stanford a few years later, before he dropped out and started his own investment firm in 1931. “If the job has been correctly done when a common stock is purchased, the time to sell it is – almost never.” Not every investment idea made the cut, however he is known to have bought Motorola (MOT) stock in 1955 and held it until his death in 2004 for a massive gain. (READ COMPLETE ARTICLE)
Peter Lynch – Lynch graduated from Boston College in 1965 and earned a Master of Business Administration from the Wharton School of the University of Pennsylvania in 1968. Lynch’s Magellan fund averaged +29% per year from 1977 – 1990 (almost doubling the return of the S&P 500). In 1977, the obscure Magellan Fund started with…
How to Handle an Economic Implosion
by Chart School - April 19th, 2012 4:27 pm
How to Handle an Economic Implosion
Courtesy of Elliott Wave International
I came across some research on the subject of worry. Here's how it was presented:
Things People Worry About:
- things that never happen – 40%
- things which did happen that worrying can't undo – 30%
- needless health worries – 12%
- petty, miscellaneous worries – 10%
- real, legitimate worries – 8%
Of the legitimate worries, half are problems beyond our personal ability to solve. That leaves 4% in the realm of worries people can do something about.
I thought about our gigantic national debt and weak economy. These seem to fit into both subcategories of "real" worries. You can't do much as an individual to solve the nation's debt and economic problems, yet you can prepare for a worsening economic downtrend.
Do we see evidence for an economic turn for the worse?
Well, consider that the evidence is so overwhelming that it took 456 pages of the second edition of Robert Prechter's book, Conquer the Crash, to cover it. And since that book published, Prechter has consistently devoted his monthly Elliott Wave Theorist to the facts and evidence behind his forecast.
Here's a chart from the book that was updated by Elliott Wave International in March 2012:
The downturn from 2008 is critically important, as it shows that after an almost unbroken 60-year climb, the contraction is underway. It surely has much further to go, because it is still a third higher than it was at the outset of the last debt deflation in 1929.
-- The Elliott Wave Financial Forecast, March 2012
The rating agencies are well aware of what the above chart means. You probably know that Standard & Poor's downgraded U.S. debt from the nation's long-standing triple-A to AA+. Now, another rating agency has taken their rating even lower:
Rating firm Egan-Jones cuts its credit rating on the U.S. government to "AA" from "AA+" with a negative watch, citing a lack of progress in cutting the mounting federal debt.
-- CNBC.com, April 5
Robert Prechter's bestseller, Conquer the Crash, provides practical information about what you can do to protect your finances in the coming economic implosion. And right now, Elliott Wave International is offering 8 lessons from Conquer the Crash in a free 42-page report that covers:
- What to do with your pension plan
- How to identify a safe haven
- What you should do if you run a business
…
Stock World Weekly: Resting or Ready to Fall
by SWW - April 15th, 2012 6:12 am
NEW: Ilene is available to chat with Members regarding topics presented in SWW, comments are found below each post.
Click here for the new Stock World Weekly, Resting or Ready to Fall?
Pic by Banksy
Just How Bad Is This Week’s Unemployment Claims Data? Not Bad At All
by ilene - April 12th, 2012 8:56 pm
Just How Bad Is This Week's Unemployment Claims Data? Not Bad At All
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Courtesy of Lee Adler of the Wall Street ExaminerThe mainstream media today reported an increase in initial jobless claims this week to 380,000, an increase of 13,000. This was another huge miss for the consensus of conomists, where the central tendency of expectations was for 359,000 initial claims. The conomic establishment continues to prove its worth week in and week out. The question is whether these people are just clueless or willing instruments of the Wall Street distribution machine. I'll leave that for you to decide. The issue today is whether the number of claims is anything unusual. Does it represent a sign that the economy is weakening?
The media and conomic pundits report claims on a seasonally adjusted basis. That is a fictional number designed to eliminate normal seasonal patterns in the data in order to represent an abstract impressionistic version of a smooth curve for consumption by the masses, which the conomic establishment assumes is too stupid to understand real data. It's a very strange device because it is a simple matter to compare the current performance of the actual number, in other words "reality" with the reality of the same week in past years.
The Labor Department (DOL) does publish the actual number. This is not a survey sample, but an actual compilation of the actual weekly claims, which each of the 50 states submits to the DOL. The DOL warns in the weekly release that the current number is an advance number. The fact that the number is revised up every week is simply a matter of the fact that the initial count is not complete. This is not a survey, and not a sample. It is the actual number reported by the 50 states. The number reported next week will be the final number for this week. The DOL is very clear about this. It reports in today's press release that, "The advance number of actual initial claims under state programs, unadjusted, totaled 381,875 in the week ending April 7, an increase of 62,530 from the previous week. There were 448,029 initial claims in the comparable week in 2011." Highlighting is mine.
Can it be any clearer? The DOL spoon feeds this data to the media and the conomic establishment, and they completely ignore the facts. Rupert the Hacker's Wall Street Urinal posts an article
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It’s All About Jobs
by ilene - April 9th, 2012 4:30 pm
It’s All About Jobs
Courtesy of John Mauldin, Thoughts from the Frontline
Today's employment numbers were decidedly soft, but the unemployment rate went down anyway, and that is about the best you can say. And this being a holiday weekend, it provides us an opportunity to look deep into the employment numbers, while we put off thinking about Spain for at least a week. And who knew that being an unmarried Asian-American in the US was a risk for unemployment? Plus a few other interesting items will make for an interesting letter.
March saw "only" 120,000 jobs created. Expectations were for 200,000 new jobs. It wasn't all that long ago that any positive number would have been seen as good, but with the last six months averaging 200,000 jobs, this was disappointing. It gives force to the worry that once again we could see the employment numbers get soft during the spring and summer. And adding to interest in the topic, the employment numbers will take on a decidedly political tone this summer, as every poll shows that jobs and the economy is the #1 thing on voter's minds. This will be underscored only four days before the presidential election on Tuesday, November 6, as the jobs report for October is scheduled to be released on Friday, November 2. Think that one won't be analyzed more than usual? I keep writing that the current release is adjusted so often that it is hard to see more than a trend in the actual monthly releases, but that will not keep pundits from using the release to support their candidate with all the spin they can muster.
There is reason to believe that today's lower number was partially due to the weather being so good in the earlier part of the year, so that what is usually seasonal employment started earlier than is typical; so it might be better to average the last two months, which is still disappointing in that it barely stays ahead of population growth. At this rate it will be another three years before we get back to new employment highs, and that does not factor in any population growth. And it also assumes there is no recession in the meantime. Given that the US must start at some point to get its budget balanced, there is little hope that more government spending (aka stimulus) is on…
Stock World Weekly: Are the Screws Tightening?
by SWW - April 8th, 2012 7:11 am
NEW: Ilene is available to chat with Members regarding topics presented in SWW, comments are found below each post.
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Pic credit: Banksy
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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