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?

Video: Debt to Equity Swaps Explained

Even if you're not a bondholder and only buy stocks, this could affect you. So read this carefully.

While looking for something else, I stumbled across this video. (Isn't that how most of us find our BEST stuff...when we're really not looking for it?)

This video is narrated by Paddy Hirsch, which I don't know who he is truthfully, but he has a neat sounding English accent (or something similar). That just nearly guarantees us folks here in the US will assume that he's smart.

Luckily, he seems to be right on the money.

In this video (under 7 minutes), he explains how the Debt-to-Equity swaps work:

Hirsch uses an airplane to describe the order of who gets paid first in the event of a bankruptcy and how debt-to-equity swaps work.

Below, I try to explain this concept and use an example to clarify it.

My 16 Predictions for 2011 (and Beyond)

Happy New Year!

I know that this picture doesn't have anything to do with investing, but I think it's a cute picture. I have a soft spot for things that make me smile.

You didn't click to hear me explain my picture, you want to know my predictions (maybe not MY predictions but just predictions in general).

So without making you wait any longer, here are MY predictions for 2011 and beyond:

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.

Stock Market: Am I the only one excited by this sale?

The stock market is going DOWN!

Isn't that awesome?

If you've been following my blog, you'll realize that I'm NOT being sarcastic about this.

What's wrong with Ford (F)?

This is craziness.

I get that the entire market is sliding. There are concerns about Greece's economy and the riots associated with the country's forced cutbacks to address that.

Ford (F) posted over $2 BILLION dollars of profit. They increased their year-to-year sales this past month over 30%. They have a fuel-efficient car that's ready for today's market. They haven't lost their Mustang. They still have their leader, who has shown great direction for the company and seems to be an expert at getting his own people to follow him in that direction.

So why has the stock dropped ridiculously during the past few days?

Did Ford ever expect this? Did we?

A year ago, if someone told us that Ford (F) would announce a profit of over $2 Billion AND the stock would drop over 5% on that same day, what would YOU have said? Oh yeah, GM and Chrysler would file bankruptcy, and Toyota (TM) would have all sorts of highly publicized recall issues...AND Ford's share of the market would jump considerably....Stock DOWN over 5%.

What would you say?

Toyota: Is this stock stupid, or am I?

I don't get it.

Toyota (TM) keeps getting bad news. Their accelerator petal sticks (not always but often enough to make the news circuit). They replace the defective parts...with parts that are still defective. They seem to "hide" information.

Yet their stock keeps rising.

Buying the Stock Based on the Product--not its Price: Toyota

I know someone who bought Toyota (TM) a couple of weeks ago.

I remember telling this person that I was looking to possibly buy TM--IF they dropped to the low 60's, if not fully drop into the 50's. During the past 1-1/2 years or so, they've been struggling with higher recall levels than usual. However, their PR has been taking HUGE hits since this whole accelerator sticking (made by supplier CTX), causing a lot of accidents.