Stock Analysis Just Like Sports

Welcome back! Actually, that was a message for me.

Truthfully, I didn't think anyone was reading this...so I stopped spending my time writing posts to this blog. (Plus, I've been working on other projects.)

A thought occurred to me last night.

As I read or listen to sports predictions, it amazes me how often things replay themselves--including people's analysis of sports events as they unfold.

For basketball and hockey, it's playoff season. So there is all sorts of analysis. A lot of this analysis tends to be extreme.

Every year, teams will play best-of-seven series. The format (usually) is that the higher ranked seed gets to play their first two (2) games at home. The next two games are played at the other team's (lower seeded team's) home arena.

At some point during the playoffs, the home team wins the first two games.

To me, that seems pretty logical. They were ranked to be the "better" team, and they had the more favorable conditions of playing at their home stadium in front of friendly fans.

However, every year, you see sportswriters doom the lower seeded team, even though they have not played a home game, yet. A lot of the fans follow in the jubilation or panic--depending which team they want to win.

There are plenty of times when a team loses the first two away (non-home) games, but they eventually win the playoff series. You'd never guess that by the headlines that people write.

What do sports playoffs have to do with the stock market?

Quick Analysis: BP P.L.C. (BP)

BP: BP P.L.C.

Oil drilling, refining, and transporting, and it markets and sells gasoline retail.

Recent Range: $27/share – $78/share (Current Price: 44.17, as of close of 12/31/10)
Price/Sales (P/S) = 0.46 (0.86, Industry)
Price/Book (P/B) = 1.55 (1.80)
Gross Margin = 4.3% (27.4%)
Pre-Tax Margin = -2.3% (+11.0%)
Debt/Equity Ratio = 0.45 (0.29)
Current Ratio = 1.0 (1.2)
Return on Equity = -5.3% (+14.3%)
Return on Assets = -1.9% (+7.4%)

Analysis: This company was really a great buy a couple of months ago, but I still think there is more room to grow here.

A New Year - Same Old Tax Tricks

As the year closes, many of us take time to reflect our thoughts. In fact, often this time of the years brings more thought than action, especially with the nostalgia of years past and the intention of our newest New Year's resolutions.

Within the stock market, however, some people are very active.

This might be true, anyway, but I'm referring to one specific thing.

TAXES.

I never have any proof, but it seems to me that the price of many stocks are mildly to strongly affected by taxes.

I see four (4) main things playing this time of year.