Tuesday, June 30, 2009

Why I Don't Like Sime Darby Now



Sime Darby with the new management, and the merged entity as the biggest plantations company in the world, has stepped into a new era of management. And sad to say, its been a "C-" in the report card.

a) Sime Darby would usually make up the top 5 of any rankings on management. The recent FinanceAsia survey on Best Managed Company, Sime Darby
habuk pun tarak... apa macam ni? I mean, for Sime Darby NOT to even make the top 10, something must be very wrong, it cannot be that ALL people are colluding to fuck with you. To be fair, Sime Darby still ranked well in corporate social responsibility and corporate governance sub categories.
Best managed company Votes
1) Public Bank 36
2) CIMB 28
3) IOI Corp 15
4) YTL 12
5) Axiata (TMI) 11
6) Digi 10
7) SP Setia 9
8) Genting 8
9) Media Prima 7

b)
TheLabu Affair & The IJN coup attempt - Analysts and industry executives do not think that Malaysia needs two airports located within 10km of each other.


KLIA has some 3,290ha for aeronautical activities, which allows for four satellite buildings to be built around the main terminal. Currently, only one has been built.

The IJN affair was even more unscrupulous, it was so obvious its the land that Sime was eyeing. Sime Darby has lost the plot when it comes to deciding who to go to bed with. It seems that no one is thinking of how Sime Darby will appear to the public and investors - imagine if you are a concert promoter, whether you bring on Amy Grant or go with Amy Winehouse has a lot of differing consequences.
It seems that Sime's only concern is that "well, if we get this one, we will make tons of money", "screw what the public thinks", "screw what the fucking masterplan is", "screw what the government is thinking, all is negotiable one la" ... That is the kind of feeling I get, and I am sure many others will be perceiving that way of Sime Darby's new era.

c) Investors will accord a premium if management is consistent, clear, strategically composed and adds value. The new management is simply clumsy (jumping into this and that project with abandon), arrogant (fuck care what people may think, its the "we are so big, who the fuck should we care, even the government must give me face" attitude), unscrupulous (I mean seriously, IJN???... how can you make money WITHOUT patients being charged more than they are NOW???), increasingly heartless (pun intended), callous (look at the grouses by many of the employees of the merged plantation firms), manipulative (re: regurgitate previous grouses by employees), ruthless and predatory Sime Darby.

d) Yes, predatory is the key word, does that suit what Sime Darby is trying to achieve
? Just look at the merged plantation units under Sime Darby. The level of discontent among them is still very high. So many capable staff have left the company already. If the staff from the merged entities were treated as equal, if they were respected for their contributions and eased into the overall Sime Darby's culture ... why would they leave, some may leave anyway, but not in the numbers we have seen over the past 12 months. Look at the projects they bidded for, they way they went about it.

Why I don't like Sime Darby has little to do with their fundamentals (well, I wouldn't be buying Sime on fundamentals even now... conglomerates ALWAYS under perform during a recovery stage ... too big, too many fingers in too many pies, uneven recovery, needs huge liqudity to move, etc..). When the soul of a company is tainted, not much good can come out of it, just 'accidents and mishaps' waiting to happen.


Well, there goes my chance to be employed by Sime Darby. If I may pass one word for management and the board to meditate and mull on, its this word: HUMILITY ... think of how the company came about, what made it great, the contributions of the many employees at the many merged units, ...


p/s photos: Zhang Jing Chu


GDP Country Growth Rates For 2009



Below is an interesting piece from Bespoke Research tabulating the expected GDP growth rates for 2009. Only China and India are expected to register positive year on year expansion. The rest are in various stages of contraction. What's interesting is the BRICs are doing very well relatively, with the exception of Russia, mainly due to its own undoing, excessive reliance on resources exports and not enough investments into infrastructure and services.

The other interesting point is that resource rich countries do not have it so bad, in fact they are among the better performers.

Below are the 2009 estimated GDP growth for 21 countries. As shown, only China and India are expected to actually grow in 2009, while the other countries are expected to contract. China's 2009 GDP growth estimate is at 7.66%, while India's is at 4%. The US is closer to the top of the list than the bottom with an estimate of -2.49%. It ranks only behind Canada among other G-7 countries. Japan and Germany are expected to see the biggest contraction in GDP in 2009 at -6.61% and -6.06% respectively. The UK is at -3.74%, Russia is at -2.77%, and France is at -2.75%.



Est2009gdp



p/s photos: Reon Kadena

150 Years For Madoff






































Is a crime a crime, or the severity dependent on the amount that was "fraudulently obtained" by the perpetrator? Court rulings have maintained that the sum of money lost is a primary factor. Another factor has to be how many people were defrauded or affected? If Madoff had bilked the US Treasury for the same amount, somehow I don't think the media would make such a big hoo-hah over the case. Collective mob anger (which is understandable and justified) do sway the severity of the crime. So, if you are going to 'steal money', steal from one party only, or at least try to minimise the number of affected parties.


Sentenced to 150 years in prison on Monday, Bernard L. Madoff, the convicted Ponzi schemer, got one of the nation’s most severe sentences ever handed out in a white-collar crime case.

In recent years, some of the most notorious financial miscreants have received sentences of about 15 to 30 years. Below, a graphical look at of some of the longest prison terms for financial fraud, including sentences for former executives at WorldCom, Enron and the hedge fund Bayou Group.


At the relatively low end of the spectrum is Phillip R. Bennett who was 59 when he was sentenced to 16 years in prison for his role in the financial cover-up that eventually led to the collapse of the commodities brokerage Refco and about $1.5 billion in investor losses. Mr. Bennett, who had been Refco’s chief executive, previously pleaded guilty to 20 crimes, including conspiracy to commit securities fraud.


At the high end is Lance K. Poulsen, the founder of National Century Financial Enterprises, who in March received a 30 year prison sentence — one of the nation’s harshest for a white-collar crime. Mr. Poulsen was convicted of leading a $2.9 billion fraud that brought down National Century and triggered the bankruptcy filings of about 275 health care institutions.


“Mr. Poulsen is an architect of a fraud of such magnitude that it would make sophisticated financial analysts shudder,” the judge said in handing down the sentence.

Bar chart


Source: The New York Times; Google Charts


p/s photos: Yu Yamada


Monday, June 29, 2009

China's Liquidity Traps & Benefits



China has been ramping up lending over the last 7 months. Yes, it was with good intentions. Yes, it was actual lending not just for show. Yes, banks in China were "asked" to do their bit to lend aggressively. While there is a lot of good to have money circulating around, it will also weigh down on those borrowing on the "unqualified" end of the spectrum, people who willing take on more debt than they should. Its a mini time bomb. No, it will not implode yet. What the figures below shows to me is that China's equity markets will have a major run up right through the end of 2009. When you pump in so much liquidity, there are very few places for it to surface. We may see a combustion effect only maybe in the second half of 2010.

China's credit card debt that was at least six months overdue rose 133.1 percent year on year in the first quarter to 4.97 billion yuan (727.67 million U.S. dollars), the People's Bank of China, or the central bank. Debt overdue by six months or more accounted for 3 percent of the total outstanding credit card debt at the end of March, or 0.6percentage point more than in the same period last year, the report said.

It warned of potential risks of the increasing overdue credit card debt as financial institutions expanded their credit card business. As of March 31, Chinese banks had issued more than 150 million credit cards, or 0.11 card per person, up 42.9 percent year on year. But Chinese consumers still have relatively few credit cards, compared with 4.39 per person in the United States and 0.95 in Brazil. Outstanding credit card loans rose 87.6 percent year-on-year to165.86 billion yuan at the end of March.







New bank loans in China will exceed 1 trillion yuan (US$146 billion) and may top 1.2 trillion yuan this month as the regulator expressed its concern over irresponsible lending, according to a newspaper report.

This month's figure may be the third-highest this year after March's and January's, the China Securities Journal reported yesterday, citing people it didn't identify. That would also represent a sharp jump from May's 664.5 billion yuan.

The news, coming in the wake of the central bank's remark on Thursday that it will stick to an appropriately loose monetary policy to support economic growth, sent bank shares higher yesterday on expectations of better profit.

Shanghai Pudong Development Bank gained 3.79 percent to 22.98 yuan while the Industrial and Commercial Bank of China, the country's biggest lender, rose 2.02 percent to 5.55 yuan, easily outperforming the key Shanghai Composite Index.

Earlier this week, the China Banking Regulatory Commission demanded that lenders avoid a sudden jump in loans at the end of each month and each quarter, a move used by domestic banks to meet internal targets.

The regulator told lenders to ensure the money is channeled to the right sectors such as small businesses to help stimulate the economy, and to monitor capital flow into the stock and property markets.

This month's lending surge was mainly fueled by mortgage loans and funding of government projects, the Journal said.

The new bank loans in the first five months of the year have reached 5.84 trillion yuan, more than last year's total and exceeding the government's target of 5 trillion yuan for this year.


p/s photos: Zhou Weitong



The Future Of Movies Is Bleak If This Continues


As displayed above, "rants & raves"... this is a rant. If you look at the highest grossing movies to date in the U.S. this year, Pixar's Up is #1 at $250m. The #2 film of the year is Star Trek, coming in at $246m so far. Plus an extra $123m abroad. Transformers: Revenge of the Fallen has grossed $200m in 5 days. Foreign gross so far is $80m.

The rest of the top ten grossing films to date this year:

Monsters vs. Aliens - $195m
The Hangover - $183m
X-Men Origins: Wolverine - $177m
Night at the Museum 2 - $163m
Fast & Furious 4 - $155m
Angels & Demons - $130m
Terminator Salvation - $121m

My rant is looking at the list, are we going to be seeing only computer graphics ladened movies from here on. Movie studios will study the list and will plonk good money on sure things, i.e. more CGIs. CGIs are great, but let's have a better spread. Heck, in the end its the voice over guys and dolls who should be raking in the money. You and I know very well that the bulk of the movies cited will never win Best Picture even if its the most heart warming story ever told, or even if its the funniest. Movies is not about just the story - its about the acting, the collaboration of experts and craftsmen in wardrobe, cinematography, music, lighting, editing, the interaction and chemistry between actors, etc...

Toy Story or Ninotchka, Ice Age or When Harry Met Sally, Speed Racer or the Midnight Cowboy, Transformers or Twelve Angry Men, X-Men or The Exorcist ... more balance please or we will lose the plot on making great movies, we will end up with nerds churning out pleasurable shock-hits-wow-hits every 15 seconds on the screen type of movie, which in the end is like a 1 hour rollercoaster ride rather than a genuine movie. The instant gratification factor, the "can we fucking turn this into a computer game" factor... why is movie making shifting this way? Can we stop it, should we stop it?


p/s photo: Stefanie Sun

Why People Still Listen To Cramer & Kudlow


Yes, its true unfortunately. The article by New Scientist confirms my suspicions.

Humans prefer cockiness to expertise:
Ever wondered why the pundits who failed to predict the current economic crisis are still being paid for their opinions? It's a consequence of the way human psychology works in a free market, according to a study of how people's self-confidence affects the way others respond to their advice.

The research, by Don Moore of Carnegie Mellon University in Pittsburgh, Pennsylvania, shows that we prefer advice from a confident source, even to the point that we are willing to forgive a poor track record. Moore argues that in competitive situations, this can drive those offering advice to increasingly exaggerate how sure they are. And it spells bad news for scientists who try to be honest about gaps in their knowledge.

In Moore's experiment, volunteers were given cash for correctly guessing the weight of people from their photographs. In each of the eight rounds of the study, the guessers bought advice from one of four other volunteers. The guessers could see in advance how confident each of these advisers was (see table), but not which weights they had opted for.

From the start, the more confident advisers found more buyers for their advice, and this caused the advisers to give answers that were more and more precise as the game progressed. This escalation in precision disappeared when guessers simply had to choose whether or not to buy the advice of a single adviser. In the later rounds, guessers tended to avoid advisers who had been wrong previously, but this effect was more than outweighed by the bias towards confidence.

The findings add weight to the idea that if offering expert opinion is your stock-in-trade, it pays to appear confident. Describing his work at an Association for Psychological Science meeting in San Francisco last month, Moore said that following the advice of the most confident person often makes sense, as there is evidence that precision and expertise do tend to go hand in hand. For example, people give a narrower range of answers when asked about subjects with which they are more familiar (Organizational Behavior and Human Decision Processes, vol 107, p179).

There are times, however, when this link breaks down. With complex but politicised subjects such as global warming, for example, scientific experts who stress uncertainties lose out to activists or lobbyists with a more emphatic message.

So if honest advice risks being ignored, what is a responsible scientific adviser to do? "It's an excellent question, and I'm not sure that I have a great answer," says Moore.


p/s photos: Kou Shibasaki

Sunday, June 28, 2009

Update On Marketocracy Portfolio







Fund Performance for salvadordali's Mutual Fund
left curve fund rankings right curve


For the six month period ending March 31, 2009 your fund outperformed 97.8% of the other funds on our site. Your forum and other privileges are based on this ranking


My portfolio was started on 1st August 2008. Marketocracy lets you manage a virtual portfolio of $1M in a simulated trading environment, allowing you to track your performance accurately and compare your fund management skills to other investors and professional fund managers. Yes, they do take into account transaction cost as well. If your track record turns out to be one of the best, you could be hired to help manage a real fund at Marketocracy. It's a great place to learn, and a great place to prove your talent. They also have important rules to ensure that you are running an actual investing portfolio and not just sitting on cash:
  • No position can exceed 25% of your total portfolio value.
  • Half your portfolio must be comprised of positions under 10% each.
  • Your cash position isn't limited by this guideline, although you must be 65% invested
My fund was smartly called SMF, or Salvador Mutual Fund (no, not the foul language acronyms you are thinking). So far so good, although the first couple of months was iffy. SMF fund performance in orange colour.

The main objective of the fund is to beat the S&P 500. For the past 6 months ended 28 June, the S&P 500 has gained 6.76% (previously 1.33%) while my fund has gained 63.3% (previously 51.1%). There are usually rules which dictate that you must be at least 65% invested at all time, and your aim is to beat the index. If you can consistently beat the index, you should be golden. If you look at the turnover rates, I have increased the trading activity over the past two months as I think the recovery is still volatile and is more suited to be traded.

modern portfolio theory, you basically aim to beat the index, based on the premise that:


over the long run stocks offer superior returns


hence if you consistently beat the index, over the long run, you should have superior returns


graph of fund vs. market indexes


recent returns vs. major indexes right curve
MTD QTD YTD
SMF 0.42% 46.16% 53.80%
S&P 500 0.14% 15.86% 3.10%
DOW -0.73% 10.90% -3.85%
Nasdaq 3.60% 20.26% 16.56%


recent returns right curve
RETURNS
Last Week -0.18%
Last Month 5.41%
Last 3 Months 42.76%
Last 6 Months 63.67%












S&P500 RETURNS
Last Week -0.21%
Last Month 3.08%
Last 3 Months 13.30%
Last 6 Months 6.76%












RETURNS VS S&P500
Last Week 0.03%
Last Month 2.33%
Last 3 Months 29.45%
Last 6 Months 56.91%












left curve alpha/beta vs. S&P500 right curve
Alpha 54.37%
Beta 1.26
R-Squared 0.84
left curve turnover right curve
Last Month 36.12%
Last 3 Months 188.85%
Last 6 Months 292.71%


Symbol Price Shares Value Portion of Fund Gains Current Return
BAC $12.75 6,000 $76,500.00 6.90% $36,593.22 42.46%
STT $48.33 2,500 $120,825.00 10.90% $41,368.54 40.97% Details
ACTG $7.60 16,000 $121,600.00 10.97% $37,791.79 30.62% Details
QSII $56.47 1,500 $84,705.00 7.64% $16,267.77 13.56% Details
SXE $32.35 3,000 $97,050.00 8.76% $9,089.54 10.33% Details MIDDLE
MGM $6.78 14,000 $94,920.00 8.56% $5,124.78 5.71%
WFR $17.96 6,000 $107,760.00 9.72% $1,996.56 1.89%
F $5.61 30,000 $168,300.00 15.19% -$1,475.01 -0.87%
JEC $41.37 1,500 $62,055.00 5.60% -$645.73 -1.03%
AIG $1.46 50,000 $73,000.00 6.59% -$1,269.20 -1.71% Details
BDD $8.48 11,000 $93,280.00 8.42% -$5,221.13 -5.30% Details


p/s photos: Fukuda Saki

Saturday, June 27, 2009

Just Another Star?



I don't really want to post another posting just cause he is no longer with us. I think most people will reflect on how his life for the past 20 years have been inundated by accusations that were never proven. Too many greedy people thinking he was an easy target to extort money from.

I kind of grew up with MJ's music. I still remember how amazed I was when he came out with two of best pop albums ever - Off The Wall and Thriller. Any artiste would be proud and would have been regarded as a superstar with just one of the two albums to their credit.

He was misunderstood, had a terrible childhood, a teenager that never had a chance to grow up properly. He was a victim of circumstances and all that should never taint his super-star-dom.

I hope many will come out to say the truth and clarify the untruths about MJ. I cannot believe he was 50. I have to say that the greatest musical influence and talent for the last 50 years would have the Beatles at the top and MJ as a close second.

MJ's albums shot up the updated Bestsellers albums list almost immediately on the new. Its absolutely appropriate.

Bestsellers

Music
Updated hourly
Michael Jackson1. 2 days in the top 100
Michael Jackson 25th Anniversary of Thriller
~ Michael Jackson
$19.98 $12.99
Off the2. 2 days in the top 100
Off the Wall
~ Michael Jackson
$11.98 $7.97
Bad 3. 2 days in the top 100
Bad
~ Michael Jackson
$11.98 $7.97
Michael Jackson4. 2 days in the top 100
Michael Jackson: The Ultimate Collection
~ Michael Jackson
$59.98 $34.97
Number Ones5. 2 days in the top 100
Number Ones
~ Michael Jackson
$16.97 $9.97
Dangerous 6. 2 days in the top 100
Dangerous
~ Michael Jackson
$11.98 $7.97
The Essential7. Ranking has gone up in the past 24 hours 2 days in the top 100
The Essential Michael Jackson
~ Michael Jackson
$24.98 $14.97
The Ultimate8. 2 days in the top 100
The Ultimate Collection
~ Jackson 5
$13.98 $10.97
Michael Jackson9. Ranking has gone down in the past 24 hours 2 days in the top 100
Michael Jackson - Vol. 1-Greatest Hits History
~ Michael Jackson
$13.98 $8.97
Invincible 10. 2 days in the top 100
Invincible
~ Michael Jackson
$11.98




"... empty clothes that drape and fall on empty chairs ... never thought you'd leave, until you went ..."

I pray that you will be in a better place where your soul continues to shine and the burdens and worries are finally lifted from your shoulders.

Jackson queries cause Google meltdown

June 27, 2009 - 9:44AM

A deluge of search queries for Michael Jackson led Google News, the news aggregator of web search engine Google, to initially believe it was under attack, the internet giant said.

Google, in a blog post on the company website on Friday, said that "millions and millions" of people around the world begin searching for news about the pop star on Thursday as reports emerged about his hospitalisation and death.

It rated the "hotness" of Jackson-related searches as "volcanic".

"The spike in searches related to Michael Jackson was so big that Google News initially mistook it for an automated attack," Google said.

"As a result, for about 25 minutes yesterday, when some people searched Google News they saw a 'We're sorry' page before finding the articles they were looking for," it said.

The "We're sorry" page tells users their query "looks similar to automated requests from a computer virus or spyware application" and forces them to type in a series of squiggly characters before it will process their request.

Popular micro-blogging service Twitter also suffered a slowdown in performance on Thursday as users exchanged thousands of messages per minute about Jackson's death at the age of 50.

Web portal AOL said its AIM instant messaging service was down for about 40 minutes.

Yahoo! said the news area on its front page received five times its normal traffic and its front page story "Michael Jackson rushed to hospital" was its "highest clicking story" ever with 800,000 clicks within 10 minutes.


Friday, June 26, 2009

Equities: Breakout Or Fakeout?



Equities: Breakout Or Fakeout?
U.S. equities are playing catch-up to the appreciation in many
other risky assets, although they still have a long way to go
to reach their mid-September 2008 levels (i.e. pre-Lehman).


The S&P 500 climbed above its 200-day moving average last week.
The psychological impact of slicing through this technical barrier
could convert many bears to a more bullish persuasion. At this
point in past cycles, sentiment had usually become more optimistic
than is currently the case. It is remarkable that after a nearly 50%
rise in share prices from the low, the number of bulls in the trading
pits remains so low. Consequently, there are good odds that the
index will continue to grind higher as economic confidence is slowly
restored and investor conviction in a sustained profit recovery climbs.
Still, it is important to keep in mind that this cycle is very different
because the U.S. is in a balance sheet recession and suffers from
questionable asset quality, rather than an income statement
problem stemming from higher interest rates. In terms of economic
variables, only the ISM new orders index is following a typical post
-bear market rally path. Employment conditions are worse (albeit
layoff announcements have rolled over and the pace of job
shedding has slowed) and house prices are much weaker. This
reflects the unique nature of the downturn and overall financial
deleveraging.

Bottom line: Equities have more upside, although the recovery
may be more muted than in past cycles and more narrowly-based.

The History of the Middle Finger & "Fuck You"


This may be the most often used word in the English language, probably after the word "the". But how many of us know the origin of the words "fuck you". Culture and history are intertwined and can explain how things are the way they are today. Teenagers reading this can share the origin of "fuck you" with their parents the next time they get reprimanded for using the phrase - once you can explain the history to your parents, its not so bad. Somehow I think the story is true because I have read and heard many times before about 'giving him the bird' - which I thought was silly although that had overt nasty overtones. Now it all makes sense.

The History of the Middle Finger & "Fuck You"

Well, now......here’s something I never knew before, and now that I know it, I feel compelled to send it on to my more intelligent friends in the hope that they, too, will feel edified. Isn't history more fun when you know something about it?

Before the Battle of Agincourt in 1415, the French, anticipating victory over the English, proposed to cut off the middle finger of all captured English soldiers. Without the middle finger, it would be impossible to draw the renowned English longbow; and therefore, they would be incapable of fighting in the future. This famous English longbow was made of the native English Yew tree, and the act of drawing the longbow was known as 'plucking the yew' (or 'pluck yew').

Much to the bewilderment of the French, the English won a major upset and began mocking the French by waving their middle fingers at the defeated French, saying, “See, we can still pluck yew!” Since 'pluck yew' is rather difficult to say, the difficult consonant cluster at the beginning has gradually changed to a labio-dentals fricative F', and thus the words often used in conjunction with the one-finger-salute! It is also because of the pheasant feathers on the arrows used with the longbow that the symbolic gesture is known as 'giving the bird.'




Current PE Ratios Comparison & Buffett's Latest Interview



In a recent interview with Warren Buffett:

On whether he will cash out of Goldman Sachs:
No, no, no. I will keep those Goldman warrants right through their full -- they've got four and a quarter years or so to run. But I think we'll make a lot of money out of those.
On the possibility of the United States losing its AAA Rating:
As long as you're issuing money and you're issuing debt in your own currency, you can print money. The U.S. -- no, I think we will have a AAA for not only as long as I live, but as long as you live, which is more important.

On whether unemployment will continue to rise:
It’s going higher—business has not bounced back. We have not come off the bottom yet. It will work out in the end. Since 1776 it’s been a mistake to bet against America . America solves its problems. How soon, nobody knows. But we have not come off the bottom yet. And it will work out in the end.
On inflation in the United States :
What we’re doing raises the probability significantly of very significant inflation down the road—not this year or next year or the year after that, but we’ve taken actions and they were appropriate actions… it will have consequences and nobody knows exactly what they will be and how effective we will be at draining a system we’ve been flooding, but the probability of significant inflation has gone up.

---------------------------------------------

Bespoke came up with the current P/E ratios for these countries. Please note that its current ratios and not forward ratios. Below is a chart showing these valuations. As shown, Russia currently has the lowest P/E ratio at 6, followed by Italy (10) and France (11). At 14, the US is more attractive based on its P/E ratio than most countries. Taiwan has the highest P/E at 60, and the UK is surprisingly bad at 34. It's valuation is worse than China's. Germany also has a very high P/E ratio at 27. Malaysia's is at a fair 18x.

Countrypes625



p/s photos: Reon Kadena

Thursday, June 25, 2009

Insiders' Selling & Beating Warren Buffett At His Own Game


There are plenty of investors who monitor the buying and selling by company insiders, i.e. senior management and substantial shareholders. There were two major waves of buying by insiders, in November last year and March this year, and they have proven to be very astute in timing the markets. Now insiders have been net sellers for 14 consecutive weeks. That might not be as bearish an indicator because the length of time is a lot longer than usual, indicating that this time the insiders could be wrong. Secondly, the fact that the net selling is so prolonged may hint at more long term institutional and private funds are re-entering the markets. Even insiders cannot always be right.

Insiders are selling their company shares at a pace not seen in two years, providing further evidence that the recent stock-market rally may be coming to an end.

Insiders of S&P 500 companies have now been net sellers for 14 consecutive weeks, according to research firm InsiderScore.com. That marks the longest stretch since June 2007, which was just a few months before credit markets started shutting down and a bear market for U.S. stocks began.

Stock purchases by highly placed executives, such as chief executives and chief financial officers, has been a bullish metric in the past, suggesting a broad market rally was imminent. A wave of buying last November and early March each came right before more than a month’s worth of stock-market rallies.

But company executives have shifted from buying binges to selling splurges, suggesting insiders are questioning the recent three-month rally that has seen major indexes increase at least 30%. Insiders are collectively making a valuation call that their stocks have become too expensive compared to earnings expectations as the second quarter comes to an end, according to Ben Silverman, director of research at InsiderScore.com.

“Certainly within the insider community there’s some questioning of whether evaluations have peaked and whether this bull run is going to come to an end,” Silverman said.

Stocks experienced broad-based selling on Monday as the Dow Jones Industrial Average was recently down 169 points at 8371, adding to last week’s 3% drop.

With less than two weeks left in the quarter, Silverman said insider activity should start slowing down as companies generally close trading windows approximately a week before the quarter ends.

-------------------------------------

This article is even more interesting. You can actually beat Warren Buffett at his own game. How? Well, some of his stock picks are now much much cheaper than at the time when Buffett bought them. He is still holding onto them, indicating that he still likes them. His views echoed his belief in his picks. He does not seem to be cutting any of his positions anytime soon. You can buy Conoco Phillips at HALF the price Buffett paid for.


You can buy Johnson & Johnson at $55 or 12% lower than Buffett's entry price of $65. How about US Bancorp, which Buffett paid $31, you can buy today and boast over lunch that you got in some 45% cheaper. ... And get this, Buffett is still adding to the positions mentioned above even as we speak... that means they are still good.


Of course I jest, Buffett is never a market timer, he could not care less whether he bought at the low or near the lows. All he is concerned is that he bought at value, and he knows that it will be worth a lot more sometime into the future.


Buffett_DV_20090624081253.jpgBloomberg

Can you beat Warren Buffett at his own game? Despite the recent equities rally, some of Buffett’s favorite issues look pretty affordable at the moment:

Mr. Buffett liked oil giant ConocoPhillips (COP) enough to invest $7 billion in the stock through the end of last year, at an average price of $82.55, according to the Berkshire Hathaway annual report. Anyone buying today can get it for about $41.

Mr. Buffett has conceded an “unforced error” in buying this oil stock when oil prices were booming. But that doesn’t mean he has given up on it. In his last comments on the subject a few months ago, he reiterated his belief that demand for energy would remain strong. At current prices ConocoPhillips is about 13 times this year’s forecast earnings, but analysts predict that will drop to a cheap 7 times in 2010. That’s because they believe oil and gas prices will rebound.

He bought Johnson & Johnson at about $62 a share: It’s now about $55, or 12 times likely earnings, yielding 3.5%. He had also invested about $4.3 billion in food company Kraft, at around $33 a share. It’s now around $25, 13 times likely earnings and boosting a hefty 4.7% yield. He had also invested $2.3 billion in US Bancorp at an average price of about $31. Today’s it’s $17. (Mr. Buffett has added to his positions in both Johnson & Johnson and U.S. Bancorp since.)


p/s photos: Kama