Contrary opinion wins iTulip "Stock Market this Summer" poll.

[Jim Nickerson]

This poll was begun 5/20/06. The results http://www.itulip.com/cgi-bin/vote.cgi?view=1148142339 with 496 voting were: 8% rise, 30% level off, and 61% crash and burn.

But then here is a headline today 9/29/06 from MarketWatch:

Dow set for best third quarter in over 11 years
Research In Motion gains 20% on earnings, outlook; consumer sentiment lifts

http://www.marketwatch.com/News/Stor...o&dist=myyahoo

Then if one looks at the most recent iTulip poll for The Market this Fall http://www.itulip.com/cgi-bin/vote.cgi?web=1157730428 with 441 voting the results were:12% rise, 25% level off, and 61% crash and burn.

The summer quarter's results seems to say a lot in favor of contrarianism.

Oops, later headline says biggest jump in just 9 years. http://news.yahoo.com/s/nm/20060929/...s_stocks_dc_71

[FRED]

Re: Contrary opinion wins iTulip "Stock Market this Summer" poll.

This poll was begun 5/20/06. The results http://www.itulip.com/cgi-bin/vote.cgi?view=1148142339 with 496 voting were: 8% rise, 30% level off, and 61% crash and burn.

But then here is a headline today 9/29/06 from MarketWatch:

Dow set for best third quarter in over 11 years
Research In Motion gains 20% on earnings, outlook; consumer sentiment lifts

http://www.marketwatch.com/News/Stor...o&dist=myyahoo

Then if one looks at the most recent iTulip poll for The Market this Fall http://www.itulip.com/cgi-bin/vote.cgi?web=1157730428 with 441 voting the results were:12% rise, 25% level off, and 61% crash and burn.

The summer quarter's results seems to say a lot in favor of contrarianism.

Oops, later headline says biggest jump in just 9 years. http://news.yahoo.com/s/nm/20060929/...s_stocks_dc_71

the fall ain't over yet... let's see how we do in oct/nov... and this vote was dead on.

http://www.itulip.com/cgi-bin/vote.cgi?view=1150217465

[DemonD]

Re: Contrary opinion wins iTulip "Stock Market this Summer" poll.

I'd like to introduce myself to the community with this post. I was one who voted that the stock market would rise this fall, AND i believe in backing up the truck at 550 for gold.

I've been lurking here pretty much since the site re-opened earlier in the year, and appreciate all the advice and analysis (although admittedly I don't understand 75% or more of the charts you guys put up).

I find every point of view valid, but rumors of the stock market crashing by the end of 2006 I think are premature, with the one caveat being no major terrorist or governemnt sponsored attacks happening. I will admit that is a major if, but in the short term I personally am not building a bomb shelter and hoarding gold and silver.

However, while I see a great job of a lot of macro indicators, when you look at the movement of the individual securities on the stock market of the past year, there are some fundamental micro reasons within individual companies (that I see anyway) that are leading the Dow and quality stocks higher. Corporate profits are exploding, and stock buybacks returned 116 billion dollars to shareholders in Q2 2006 alone, according to this report:

http://www2.standardandpoors.com/spf...6_buybacks.pdf

excerpt
"According to Standard & Poor’s, buyback activity within the index began to pickup during the fourth quarter of 2004 and has continued to grow in both the size of the buybacks and the number of participating companies. Over the past seven quarters, S&P 500 issues have spent over $630 billion on buybacks with half of the issues posting fewer shares now then they did seven quarters ago. In addition, companies are now spending as much on stock buybacks as they are on Capital Expenditures. “The impact of the share count reduction was a significant boost to earnings-pershare for over 20% of the issues in the S&P 500 during the second quarter,” adds Silverblatt."

I will admit that I feel comfortable with the micro fundamentals of companies and general stock indices (as this is how I've made fairly nice profits early in my investing career starting with a basic s&p500 fund back in May of 2003), and I'm here to learn how these macro factors will impact finances in the future.

As far as being contrarian, is it contrarian to be bullish on the stock market in a community of people who are bearish? I see the stock market flattening out or maybe going up just a bit until 2007, or at least until elections and the market manipulation of oil stops and goes back up to the 70 and above level.

Slightly OT intro statement: Look forward to continued communication and feedback from itulip (I will admit I read the site every day and am completely addicted to what I feel is a mostly realistic approach to not just the world of finance, but the world in general. It may be my bias but "realism" is different from contrarianism, and that is what I find appealing here.)

[jk]

Re: Contrary opinion wins iTulip "Stock Market this Summer" poll.

a lot of buybacks are to offset [backdated?] options, so in essence are a transfer from owners to management. [perhaps someone has some numbers?]

[bart]

Re: Contrary opinion wins iTulip "Stock Market this Summer" poll.

I'd like to introduce myself to the community with this post. I was one who voted that the stock market would rise this fall, AND i believe in backing up the truck at 550 for gold.

I've been lurking here pretty much since the site re-opened earlier in the year, and appreciate all the advice and analysis (although admittedly I don't understand 75% or more of the charts you guys put up).

...

Welcome DemonD, and kudos for correctly calling both stocks and gold.

Would you please just jump in and ask when you don't get some chart (especially if its mine ;))? I'm sure you're not the only one.

Of course, I also strongly encourage anyone to use a glossary or dictionary too (and I can almost hear the groans from here ;)) - there are many good ones on the web like Investor Words or my own. Literally less than three years ago, I could barely give a definition for "money" - learning the specialized terminology was what at root has opened the door to allow me to have what understanding I have now. I'll get down off my soapbox now...


I personally have been surprised many times that I wasn't being as clear as I thought I was on a chart, and it helps me on future efforts too. I'm just a retired guy (from both the computer and photo industries) who just got aggravated with all the BS, and started putting up my own charts and thoughts and best guesses after a few friends asked me to, and not a pro like EJ and others from iTulip itself.

[DemonD]

Re: Contrary opinion wins iTulip "Stock Market this Summer" poll.

JK - in the PDF report standard and poor states that in Q2 2006...

"The record $116 billion in buybacks is the result of over 40% of the S&P 500 companies reducing their share count during the second quarter,”"

...40% of companies reduced share count in Q2, so while I understand there is a lot of hairiness with stock options granting and then buybacks unfairly compensating management, there is hard data by S&P that these buybacks did return some shareholder value on a micro level. I did read you guys talking about all the unethical things that happen in terms of stock options grants, and to be honest, I think it's a difficult issue that I'm not sure we'll ever have a good answer on. However, for the current periods in question, I tend to have faith in Standard & Poor's data. We'd have to sift through all the individual 10Q's and 10k's to figure out the REAL story, but I usually only do that with securities I own or am seriously considering purchasing (right now less than 10 individual stocks). Well now that I've put it out there let me go find the recent 10Q for my biggest market cap stock...

Okay, disclosure: I'm long Wal Mart. Here is what I found in terms of stock buybacks on their most recent 10Q (from edgar online http://yahoo.brand.edgar-online.com/...0012&Type=HTML ):

Purchase of Company stock

Six months ended July 31st (amount in millions):
2006 - 0
2005 - 3,580


And here is a statement based on dividends and repurchases:

"Company Stock Repurchase Program and Common Stock Dividends

From time to time, we repurchase shares of our common stock under a $10.0 billion share repurchase program authorized by our Board of Directors in September 2004. No shares of our common stock were repurchased under this program in the first half of fiscal 2007. During the first half of fiscal 2006, we repurchased $3.6 billion of shares under this program. At July 31, 2006, approximately $6.1 billion of additional shares may be repurchased under our program.

There is no expiration date for or other restriction limiting the period over which we can make our share repurchases under the program, which will expire only when and if we have repurchased $10.0 billion of our shares under the program. Under the program, repurchased shares are constructively retired and returned to unissued status. We consider several factors in determining when to make share repurchases, including among other things, our current cash needs, our ratio of debt to total capitalization, our cost of borrowings and the market price of our common stock.

In March 2006, we announced that we had increased the annual dividend on our common stock by 11.7% to $0.67 per share. The fiscal 2007 dividend is payable in four equal quarterly installments on April 3, June 5, and September 5, 2006 and January 2, 2007 to holders of record on March 17, May 19, August 18 and December 15, 2006, respectively. We have increased our dividend every year since our first declared dividend in March 1974."

Quick calculation, 3.6 billion/50/share = 72 million shares retired, and edgar also states that wal mart currently has 61 million stock options unexercised, and 9 million were exercised total in that time period. So as of July 31 2006, 72-9= 63 million shares have been "retired" with a potential 61 million to be exercised. At the absolute worst 2 million shares have been taken off the market, and as of July 31 there are 63 million less actual shares of walmart than there were 2 years ago.

This is just one company I own, and it is an example of one of the micro indicators of why I believe individual securities have been going up. I believe a lot of companies are doing this (look at S&P report), and also with SOX there is more trust in the actual numbers companies are putting out nowadays.

I'm sorry I'm not putting up any charts... I guess I'm just not a chart guy. I'm more of a table and numbers and equations guy. But to answer JK, I understand your pessimism, but the data that I'm looking at on my end looks good for more of a bull argument than a bear argument short term for stocks.

If you are looking for more macroeconomic indicators, I'm sorry, that's not my strength at this point... if there are any other hard numbers you are looking for, I can do my best to find them and bring them here.

[Jim Nickerson]

Re: Contrary opinion wins iTulip "Stock Market this Summer" poll.

DemonD,

What no charts!!! Get out of here. Just joshing of course, charts are not necessary, if you find a good one and want to post it copy the url and put [img] before the url and [/img] at the end. Somewhere all that is explained; works the same as the link you put in for the PDF.

I am sure that it was a thoughtless over sight above when you wrote "faith" about S&P reports, that was an oversight wasn't it?

Correct word and safe thinking about things to do with US stock markets should be "confidence" if that is at what you arrive, but never "faith." Faith is reserved for the US Bonar and your god.

Good work, DemonD.

[DemonD]

Re: Contrary opinion wins iTulip "Stock Market this Summer" poll.

Jim, I stand corrected - I do have "confidence" in the reported information.

Sort of an aside question - are we encouraged to talk about personal experiences here? I tend to learn best by example, both my own and others; also I feel like I'm sitting in the belly of the beast in terms of the RE bubble and cost of living and mortgage insanity here in Los Angeles and would love to relate what I see around me.

[Jim Nickerson]

Re: Contrary opinion wins iTulip "Stock Market this Summer" poll.

Jim, I stand corrected - I do have "confidence" in the reported information.

Sort of an aside question - are we encouraged to talk about personal experiences here? I tend to learn best by example, both my own and others; also I feel like I'm sitting in the belly of the beast in terms of the RE bubble and cost of living and mortgage insanity here in Los Angeles and would love to relate what I see around me.

Demon,

I think you can say anything you wish as long as it isn't racist, etc.

Put it down.