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Beating Expectations


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#1 wndysrf

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Posted 05 February 2003 - 04:54 PM

Mark’s Market Commentary – February 5, 2003

As expected, CSCO came in with its usual “beat by 2 pennies” earnings announcement, with the press release stating that pro-forma earnings were up excluding airball Internet investment writeoffs but including EPS jamming with stock repurchases and excluding stock options expenses but including 90% gross margins by selling previously written off inventories, etc. etc.

Anybody tired of these “beat the street” earnings games?

It’s really no different than those Los Angeles “Do Me At Lunch” blind dating agency introductions.

“Mark, I would like you to meet Maria for lunch. She’s of average height, has a slender figure, and an athletic body.”

Right away, with that introduction, I expected the worst. Another one of those average girls, a little too heavy, a little odd-shaped, and a little boring to talk to.

When I finally met Maria, her appearance surprisingly “beat” the matchmaker’s estimates. She was actually somewhat attractive, thanks to some pro-forma adjustments:

Conversation went well, excluding her unpredictable mood swings, but including the “pick me up” speedball she took two hours before our lunch date.

Her breasts looked better than expected, including “special items” like extra padding in her Wonderbra pushup, and the cable knit sweater with the vertical lines to enhanced their appearance. Excluding, of course, the post-menstrual shrinkage which would inevitably happen in a few days.

Her weight also beat estimates, including the crash bulimia Ex-lax diet she engaged in the night before, but excluding the regular periodic bouts of chocolate binging which has been accelerating with the ongoing bear market in her general attractiveness.

Ever notice how these Thompson First Call matchmakers are always lowering estimates, so all the candidates “beat expectations”? And why is it that every introduction contains an excuse? Including this artificial item and excluding that problem?

Why can’t these girls have no maintenance personalities, excellent figures, and no diet problems without all the “non-recurring” adjustments, fixes, and patches?

But every now and then I get lucky with one with a “permanent fix”, like a boob job. I works temporarily. Better than nothing. Kind of like adopting some kind of trick accounting program which allows you to “beat estimates’ indefinitely until the treatment becomes too toxic.

Then the SEC investigator shows up.

While the second largest hedge fund on the planet (AIG) was getting hammered yesterday, the largest hedge fund (GE) was digging itself even deeper into a grave by buying more financial bubble assets:

“GE agreed to buy the consumer finance business of Abbey National PLC for $1.39 billion, one of GE Capital’s largest consumer finance acquisitions. The deal includes First National’s sales finance business, which provides consumer credit at retail stores as well as its home-improvement loan unit.”

As usual, GE overpaid for this deal, as The Wall Struck Journal reports that “Abbey National was able to garner a sale price above most market expectations.”

Over the past decade, GE Capital has boosted its European operations from $8 billion to $60 billion. GE Capital, at $480 billion in assets, is the largest nonbank financial institution in the world.

Translation:

As a key top player in the Multilevel Marketing Pyramid, GE Capital is growing frustrated at the pyramid’s ability to recruit more members into the Borrow and Consume Matrix. Therefore, rather than rely on other Pyramid participants to pull their own weight, GE Capital has decided to purchase Pyramid Players outright so they can convert them to the “GE Way” and adopt the “pedal to the metal” approach to credit creation, balance sheet expansion, and the use of derivatives to offload risk. As one of the largest players with the most at stake in keeping the Pyramid growing, GE decided to start offering buyout premiums to other participants in order to keep the weaker players in the game, “hoping” that they too will in fact be rescued with some kind of buyout offer.


In the meantime, corporate CEO’s continue to rank in first place in the Capitalstool Market Timing Awards.

Found in the WSJ Insider Trading Spotlight:

Angelo Mozillo finally emerged from his tanning bed to call his broker and tell him to offload 20,000 shares of CFC at $56 on January 30, near the exact high.

Symantec (SYMC) officers are also starting to offload aroung the $46 - $47 area.

Remember that big short squeeze on Adtran (ADTN)? The CEO conveniently dumped $8.5 million of shares at the $35 area between January 24 and January 28.

Relentless selling continues at EBAY, QCOM, and AMGN. That’s no surprise, since these are the most overvalued and overbloated members of the NDX, still trading at over 10x sales after 34 months of bear market declines.

I noticed that the selling has stopped at COCO and APOL. That means a crash in these stocks is imminent.

Today’s action was textbook. The 3:00am futures jam appeared on schedule. The “massive intervention” by the BOJ put some flying bids under the U.S. Peso, which was ready to collapse. By the open, the futures were up 10 points from the morning lows.

After the opening gap up, we went down to fill the gap and then the Program Robot Buy Orders came in. That was enough to send the indexes into a wild frenzy with a +1100 TICK, with most of the Supermodels getting 3% moves in 10 minutes.

Then we had the selloff/consolidation where the HeatMappers were buying, and then another +1200 TICK launch higher as desperate fund managers were anxious not to be left out of the most advertised War Rally of all time.

Of course, there is really no buying power left, since all fund managers are currently loaded up in tech stocks financed by Bank of America Prime Brokerage on margin.

Notice that after 18 months, the Enron disaster continues to expand. El Paso was smoked by 24% today and was actually downgraded to a Sell by one house. Yet the Riverboaters are still buying tech.

So we quickly collapsed in the afternoon, probably due to some European selling. The Europeans must be totally astonished, witnessing the longest running MTV Spring Break episode of all time here in the States, knowing that a couple of bio attacks and/or some mysterious assassinations here would bring a quick end to the ongoing Borrow and Spend Rave Party.

Buddha sums it up this way:

“At least the Germans are not in denial and are admitting to the inevitability of common contraction and the double dip recession. I believe their market has already violated the October lows. Guess where our market is headed? Eventually the denial machine that works overtime daily in Amerikanna will have to confess to the double dip recession. Four out of 5 recessions always double dip.”

“The Matrix realizes this and has been furiously pumping money and lies into a bloated carcass of wind, foul gases and Death Star equities in a typically arrogant attempt to deny reality. Once reality knocks it will be retail consumers who are left holding the bag anyway. For now the last stand at the Alamo is to prop hapless consumers on the battlements while Houston, Crockett and Bowie attempt to secretly dig their way out via underground passageways. Its only a question of time before the walls get overwhelmed by hordes of Santa Ana short sellers, Chinese gold hoarders, and other enemies of the Al Green Regime.”

“All things which expand recklessly and foolishly will eventually contract and seek restitution in historical regression to below the mean average. Meaning in short that after an orgy of pies, cakes, cream fillers, T-bones, sausage, pasta and Velveeta Cheese, chased down by keg loads of cheap Bud and Carlo Rossi, there is only one way out. A long and painful term of gas, bloating, public flatulence, uncontrollable diarrhea, bounts of acid burning Reflux, insulin shock, later life diabetes and progressive Irritable Bowl Syndrone ending in the final solution: The Al Green autographed Colonoscopy Bag.”

The volume on the broad market spike today was pathetic, satisfying another failed breakout and another low volume retest of last week’s 1.8 billion hysteria spike.

Most of the Supermodels tried to escape from the Depression Chamber to make a run for Victoria’s Secret but were quickly round-tripped back to where they started.

The QQQ’s got a short covering volume shot in the morning, but huge selling volume came in during the afternoon.

Needless to say, lots of Riverboaters playing equity options, gold, the U.S. Peso, Euros, and all the rest were cleaned out today.

Right now, we are on track to follow a symmetrical decline on the S & P which matches the slow ascent from January 1995 to February 1997. That means “death by a thousand cuts” for the next 18 months. Some days we will gap up on the open and sell off. Other days we will open lower, and grind up. But the general path will be a 30 degree slope to the downside, with some brief waterfalls, followed by some meek bear rallies. What does that mean? Probably more selling in tech, retail, and the banks. But some unexpected strength will show up in other sectors, like gold, oil, natural gas, and some commodity stocks to soften the broad market decline.

Position Summary:

New half short on QCOM at $37.
Quarter short on SYMC at $47.

Heavy insider selling on QCOM, but just starting on SYMC.

Watching bear flag on LOW, hoping for $36 or so, or an immediate breakoff.

We are 60% short, 32% long, 8% cash.

Half Short:

MBI at $50
KLAC at $41
CYMI at $39
NVLS at $35
INTC at $18
MSFT at $56
WHR at $56
INTU at $49
AMGN at $53
CSCO at $14
ORCL at $12
DELL at $25
SBUX at $23
QCOM at $37

Quarter Short:

FRE at $68
LEN at $56
COCO at $40
NCEN at $28
CFC at $55
SYMC at $47

Half Long:

GG at $11
HL at $4.55
BGO at $1.31
PAAS at $5
DROOY at $3.35
GLG at $9
GSS at $1.72
WHT at $1.05
KGC at $2.35
HMY at $16
PigMen Proprietary Trading Desk

The Weimar Run: Bullphoria!!!!

#2 machinehead

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Posted 05 February 2003 - 05:10 PM

Today's market had all the dynamism of a piece of day-old dog-doo decomposing on the driveway.

Once again, somebody bought more than 100,000 equity puts in the final half hour, driving up the put-call ratio from 0.79 to 1.02 at the close. Merrill Lynch lapping up more QQQ puts to hedge another hoper/dipper triple-leveraged derivative issue? Doubtless the story will emerge soon.
"GOLD -- it's not just for misers anymore."

"Dollahs -- fire-starters for the K-wave winter." - Drano

"Three humps and a dump." - anotherone, 21 SEP 2004

"No gold was harmed in the making of this movie." - Bizarro Greenspan

[i]"Da Track. Da place where Morons bet on Animals Controlled by Criminals."
- our jickiss

#3 Ned38

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Posted 05 February 2003 - 05:14 PM

Hats off to ya mark

Funniest thing I've read in a long time


“All things which expand recklessly and foolishly will eventually contract and seek restitution in historical regression to below the mean average. Meaning in short that after an orgy of pies, cakes, cream fillers, T-bones, sausage, pasta and Velveeta Cheese, chased down by keg loads of cheap Bud and Carlo Rossi, there is only one way out. A long and painful term of gas, bloating, public flatulence, uncontrollable diarrhea, bounts of acid burning Reflux, insulin shock, later life diabetes and progressive Irritable Bowl Syndrone ending in the final solution: The Al Green autographed Colonoscopy Bag.”

#4 PileDriver

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Posted 05 February 2003 - 05:15 PM

Dear Patsies,

Thank you very much for all your money. It was very generous of you to just give it away. Once again, thank you very much.

Regards,

PD

P.S. instead of buying worthless tech trash, you could opt to just wire me the money. I'll email you my bank account routing number.

#5 Flaming Turds

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Posted 05 February 2003 - 05:17 PM

4 out of 5 of pile drivers picks that I tried to short were unavailable lol. I shorted QCOM instead. Nice to see teamwork around here hehehe.

Hey Buddha where can I preorder one of The Al Green autographed Colonoscopy Bags?

#6 Hypertiger

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Posted 05 February 2003 - 05:22 PM

I think I will buy a baseball bat and fill it with screws and shear the ends off... So I can "beat" the estimates...
"We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money (at the request of the consumer) we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." --Robert H. Hemphill, Atlanta Federal Reserve Bank,1938...

#7 mjkst27

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Posted 05 February 2003 - 05:38 PM

I think I will buy a baseball bat and fill it with screws and shear the ends off... So I can "beat" the estimates...

can't say you don't have a vivid imagination :P

#8 MrHanky

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Posted 05 February 2003 - 05:52 PM

that was be far the funniest and truthfull thing ever put in print!! :D :lol:

I think I just pissed myself

there is no way better to laugh your ass off then reading the truth!

It did get a bit scary when we took out 8100 on the upside today,especially when I bought qqq puts 15 minutes before it happened.I never thought we would drop that much this afternoon,but I'll take it.

if you look through the intraday posts i said"I hope the market ends down 200 points to teach these people a lesson".we did not drop that much,but many on the long side were handed there head this afternoon.

thanks mark,absolutely by far the best ever! B)

Nothing


#9 ShamPoo

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Posted 05 February 2003 - 05:57 PM

Damn funny stuff Mark and B,

Got this

http://biz.yahoo.com/cc/5/26475.html

off IDS today and listened to the call. Mark, you should hear it. Also funny but in a different way. Listen so you know you are not the only one seeing what is dead ahead.

#10 ConfusedAss

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Posted 05 February 2003 - 06:02 PM

Check out the price of gold -- is this the "Kramer" effect mentioned by b4 on the intra day?? :(

#11 MrHanky

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Posted 05 February 2003 - 06:09 PM

Check out the price of gold -- is this the "Kramer" effect mentioned by b4 on the intra day?? :(

anything cramer owns is toast(90% of the time)...look at aol,his favorite stock getting absolutely pummeled another 5% today.


I never owned gold,but I think it needs to consolidate for a while before it makes it's next move.today actually could just be a shakeout for a major move up...who knows.

just knowing he likes it would make me nervous :unsure: ...lol

Nothing


#12 PileDriver

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Posted 05 February 2003 - 06:18 PM

another one of Creamer's favs is SWKS.

I rode that bitch almost into the ground last Spring for some major coin. Bwhahahaha.

If I weren't loaded up already I'd short it again. Its a PD candidate.

Its a major league POC that likes to do one thing and one thing only - go DOWN!

#13 MrHanky

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Posted 05 February 2003 - 06:21 PM

another thing that sucks for gold is that crapvision has that little gold bug in the corner of the screen with the pog.

I know gold will go higher...i think it needs some time to shake out the crapvision viewers.

Nothing


#14 3Martinis

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Posted 05 February 2003 - 06:24 PM

*hic*

Crammer...baaahhh... he'll be on and off the horse 30 times before it's over.

I love this gold action. It's a healthy, snorting, back filling, raging shiny freak. You can live a year of emotion in one overnight session....

Ride high with a fistful of dynamite.... If my liver doesn't get me, a $50 overnight correction will...hehe*hic*he

*hic*

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Posted 05 February 2003 - 06:24 PM

I did the 30 day free trial years ago but, I still get this stuff on my e-mail at work. Didn't read it. Never do. It might screw up my investing but, I thought the headline is perfect. Da Boyz screwed up this afternoon. They can no longer keep it up.

TheStreet.com Market Report: Market Rethinks Powell Briefing

I can just hear Scrub saying,
"Al, you got a lot a splainin to do.
Ha! Ha! Ha! :P





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