Showing posts from October, 2007

Tech Wreck

We've had ongoing weakness in profits for much of the technology sector so far this reporting season. But the sound of all the earnings misses has been drowned out by a handful of rapidly-growing companies with high multiples and even higher expectations. Jim Cramer of CNBC infamy has dubbed them the Four Horsemen. GOOG, RIMM and AAPL produced big numbers to feed the Nasdaq frenzy but the 4th horseman stumbled badly after the close today.

AMZN delivered strong revenue growth and beat profit expectations slightly - which was fine. Then they dropped a bombshell with their guidance.

Operating income is expected to be between $221 million and $291 million, or grow between 12% and 48% compared with fourth quarter 2006.First problem is the range is wide enough to drive a truck through. That tells you they have no real idea what is going to happen - rarely a good sign. Second problem is that expected EPS growth for 4Q is 100% year over year. At the top of their guidance, they only fall …

Special News Bulletin

Hello Avid Readers-

On October 20th, 2007 the 1998 Mercedes C280 of which this site is dedicated to was officially saved. This blog is dedicated to this event with....

The Top 5 Reasons Why the W202 Mercedes Kicks Ass!

1. The Bloodline
The W202's bloodline is quite prestigious. Before the W202 came into fruitation, the car's predecessor was the 190E. This car is number 10 on a recent Top 10 Greatest Mercedes' List 2.3-16 (1983) Mercedes 190E 2.3-16 The W201 series was introduced in 1982 to sit below the E-Class range and was quickly dubbed the 'Baby Benz'. By Mercedes own admission the car was 'massively over-engineered', the company spent £600 million on its development. That hewn from solid quality did mean the car wasn’t a fireball however. To remedy this Mercedes called in the wizards from Cosworth to breathe on the basic 2.3-litre four cylinder engine. Thanks to double overhead cams…

Reserves, Profits and Multiples

One of the key problems with valuation in the stock market today is the difficulty of determining actual profits are trying to compare the numbers that are reported to previous years where different standards were used. Many bulls have tried to tell me that I should buy because the S&P 500 is selling at a P/E of only 16x 2008 earnings. Well, there are a ton of problems with that statement so let's just cover the fatal flaws.

First, I don't know what 2008 earnings are going to be and neither do they. They are using a guess as the denominator to get that multiple. The number we do have is the historical reported numbers and based on that the multiple is 18x, significantly higher.

Second, 18x is very expensive and even 16x is far from cheap. 16x would be a normal peak multiple over the business cycle. 18x would be extreme territory normally. During the 20th century, the P/E for the S&P 500 has exceeded 18x on a sustained basis 3 times: the late 1920s, the mid 1960s and the …

The Top 5 Differences Between German and Italian Cars

Cars, like women (minus the whole crazy aspect), vary when they are from different parts of the world. For example, the general perception with American cars is that, like the nation's populace, grow exponentially every year in terms of gas guzzling and power. Thinking along these lines, The Autoblog presents the Differences Between German and Italian Cars.

1. Italian Cars cannot be pushed to their limit.
Apparently, you can beat a German car like a red-headed stepchild and the sicko will beg for more.They are masochists, just begging for more pain. On the other hand, Italian cars are like Paris Hilton on The Simple Life- You put it to work, it bitches and moans, breaks a nail (or a clutch) and calls it a day. Winner- German

These two pictures are one in the same

2. Italian Cars are Sexier
Well, there is a reason that these Ferraris cannot be pushed- they are too friggin' beautiful to drive. You wouldn't put a supermodel (that you owned and paid 100,000k for nonetheless) to ru…

Why SaveMyBenz hates Volvos

We hate Volvos. Now, with that out of our way, here is why.

1. Volvo's Engines are Mechanical Freakshows
Five Cylinder engines are not natural. Engines should be in divisible by twos- 4 Cylinder, V6, V8, V12. None of this T5 bullshit. What the hell?! Manufacters claim that a 5 is inherinatly smoother than a 4, but c'mon. Frankie the Mechanic does not want to work on a Swedish 5 when he can work on more orthodox engine with six friggin' cylinders. Anywho...Volvos are the anti-savemybenz brand...and Top Gear, with their various destruction of Volvo Estate Wagons seems to agree. (Youtube Top Gear and Volvo for my case in point. Besides their use of 5 cylinder engines.

2. They are a disgrace to their Viking Heritage.
Volvo is as badass as Melissa Etheridge. Their ancestors however...are the Vikings. Yea...the guys lead by Thor... with his Hammer of the Gods. In our minds, the Swedes of yesteryear didn't give a flying fuck about safety, because they are too busy trying to res…

Global Reversal

It's been a few weeks and there's been a bit of excitement surrounding the Fed. But from an economic and credit standpoint, it's largely "sound and fury, signifying nothing." Risk spreads are still wide, lots of high-grade and few low-grade bonds are being issued, market rates (all but the shortest maturities) are higher not lower. Sure, stock markets are rallying on the promise of inflation but the Fed may not be able to deliver, especially since only the Bank of Japan is using the same playbook.

If you look closely, the recent past is very similar to the 1970s. We have rising inflation everywhere, though masked this time using statistical manipulation in the First World. Inflationary credit excess driving unsustainable demand for all kinds of stuff. This benefits rising industrial exporters (Japan then, China now) and commodities producers (OPEC, Chile, Brazil, Canada, Australia, Texas, Alberta and various African nations). We experienced a co-ordinated global b…