The Peridot Capitalist

I have heard it twice on CNBC already this morning, and the market has not even opened yet. For some reason people are claiming that since the market is up more than 20% from its lows that we have entered a new bull market. This idea that any rise of at least 20% constitutes a bull market is just plain silly. If a stock falls from $10 to $1 and rebounds to $1.20 it’s a new bull market? Oh, please! Sorry folks, but there is no bull market in stocks, or oil, or anything else that has been crushed in recent months but has recouped a small portion of the losses.

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After a near 40% decline in the broad market in 2008, there are tremendous bargains for investors willing to commit capital when the headlines are dismal. With the spread between treasury bond yields and equity dividend yields the widest since the 1950’s (the S&P 500 pays 3.1% versus the 10-year bond yield at 2.1%), dividends [...]

Last weekend’s issue of Barron’s highlighted a money manager’s bullish stance on shares of luxury retailer Saks (SKS). The stock is up more than 10% since then, and now fetches $4.50 per share. The manager in question believes Saks has normalized earnings potential of 50 to 60 cents per share, which he thinks will translate [...]

As more and more news comes out about Bernie Madoff and how he managed to defraud many very smart people out of billions of dollars, it is useful to ask a simple question; what should we learn from what happened? From my perch the answer is very basic.
The few people who avoided Madoff’s funds did [...]

Shortly after the U.S. government lent the Big Three $17.4 billion, we learned Monday that an additional $6 billion of taxpayer money is headed to GMAC, the large General Motors finance arm. Where will this money go? Well, GMAC said Tuesday that it will immediately resume automobile financing for “a broader spectrum of U.S. customers.” [...]

As you may have already read in Business Week’s 2009 Investment Outlook issue (dated 12/29-1/5), I highlighted the recently formed Anheuser-Busch InBev (AHBIF) as a potentially attractive bargain pick. Despite various other mergers failing to get done in the current credit environment, Belgium’s InBev paid $52 billion in cash to acquire Anheuser-Busch. Fearing that borrowing [...]

The annual Business Week Investment Outlook issue (dated 12/29-1/5) is out and I was asked to contribute a bargain investment idea from the currently depressed market. My pick (on page 58) was Anheuser-Busch InBev. I am on vacation through 12/27 but I will write about this newly created beer giant in more detail when [...]

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To get an idea of how bad the high yield debt market is right now, one need only look at what price El Paso (EP) had to pay this week to issue $500 million worth of senior notes. El Paso is a solid company and should not have trouble selling debt. Their hybrid business model; [...]

It is going to be very difficult for the U.S. economy to turn a significant corner without a housing market that is at least stable. Amazingly, the housing situation has not improved much at all during 2008, even as builders halt new construction and slash prices on newly built inventory. Increases in foreclosures have completely negated [...]