Thursday, February 27, 2003

Just a word on dividends... well, a few words. Stocks which offer dividend payments to shareholders are generally viewed as solid, and with President Bush's recent offer to cut the double taxation on dividends - essentially proposing to have dividend income taxed as ordinary income instead of as a capital gain - many people are looking at stocks which offer dividends.

Recently, however, we've been seeing a rash of dividend reductions by these companies - most of them large and aging. This trend will probably continue as these same companies have huge pension costs to deal with, so they must find a source for additional capital and the easiest place to find extra cash is to cut the dividend payment.

Bear in mind that as a stock's share price decline the dividend yield increases, so if you see a company offering a dividend yield of more than 4%, it's likely that the share price will decline or the company will cut the dividend. It's not a pretty picture in equities.

CNBC, the mother of all stock hype, never ceases to amaze on the bullish side. At 8:30 this morning, they reported the durable goods report, which came in with a healthy 3.3% increase for January. Jubilation! The economy is moving forward! At the very same moment the weekly new unemployment claims report came out and was UNREPORTED on CNBC. Why? Maybe because the number of new unemployment claims for the prior week was 417K, while the experts were expecting a number in the range of 370K. More unemployment claims, unabated, week after week, which the government and CNBC do not want you to know about. As long as the number of new claims remain in the 400K per week range, there will be NO RECOVERY. There is no such thing as a jobless recovery.

Wednesday, February 26, 2003

The DJIA closed just above 7800 today. There's been no volume for quite some time, due, I believe, to general malaise in the markets. Stocks are not good buys, many are overvalued. One I am particularly fond of is Marvel (MVL), which is the parent of Marvel comic books and also licenses their characters for movies like the current hit, DAREDEVIL and previous films, X-Men and Spider-Man. Marvel has plans for The Hulk and X-Men 2.0 this summer. The stock has doubled in price over the past 6-8 months, but looks like a huge winner. Carrying a forward p/e of roughly 25, it looks like a bargain, especially if they beat expectations, which I believe they will by a wide margin.