Father's Day is this Sunday. If you're looking for something special for your old man, take a gander at our annual "Stocks for Dad" special.
Check 'em out, and then come back for Thursday's and Friday's stocks. Who knows, maybe you'll find something better than another tie for Dad!
In today's Motley Fool Take:
- A Bad Case of Bullishness
- Motley Fool Newsletters
- Freddie Mac Under Attack
- Quote of Note
- The Spam Police
- Discussion Board of the Day: Nokia
- Quick Takes: Eli Lilly, Boston Scientific, Federal Reserve
- And Finally...
A Bad Case of Bullishness
You may read elsewhere today about a very negative indicator for the U.S. stock market. It seems it has been 12 years since the level of bearishness among financial newsletter writers has been this low, and that's a bad sign. The problem is, this is practically useless information for the vast majority of investors.
A survey conducted for the Investors Intelligence newsletter by a group called Chartcraft shows "22% of the 110 forecasters in the company's database were bearish, while 53.4% were bullish, and 24.2% were neutral." That low level of bearishness, according to Chartcraft, is a negative contrarian indicator because when overall sentiment swings one way, the market tends to swing the other.
That's certainly interesting information, and there's also some element of truth in it. But what can we do with this knowledge? Nothing, really. No one that I know of has been able to successfully and consistently trade in and out of the market using these or any indicators. I'll use this opportunity to quote Vanguard founder John Bogle on market timing: "After nearly fifty years in the business, I do not know of anybody who has done it successfully and consistently. I do not even know anybody who knows anybody who has done it successfully and consistently."
Even the Investors Intelligence press release detailing the survey's findings quotes one newsletter writer as saying, "It would be a lot easier to get instantly rich if these rules were always accurate."
In addition, remember that the market is made up of individual stocks, and even when it's heading down there will be some quality companies that are heading up. As Bill Mann writes today, "Those who are concerned about what 'the market' is doing are more likely to be completely unprepared for the next menace."
Motley Fool Newsletters
We have a couple of newsletter products of our own that we're proud of -- Motley Fool Stock Advisor and Hidden Gems -- mainly because they focus on individual companies and ferreting out long-term value, and not short-term market swings. Check 'em out.
Freddie Mac Under Attack
The water's getting hotter for Freddie Mac
As we discussed Monday, the quasi-governmental agency sent its president and COO, David Glenn, packing, claiming that he wasn't cooperating with an internal investigation into its accounting practices. Its CEO and CFO also resigned on the same day. Now, the Securities and Exchange Commission is launching a formal probe and the U.S. attorney's office is also investigating Freddie Mac's accounting.
The troubles surfaced back in January when the company announced that it would restate the past three years' results on the advice of its new auditor, PriceWaterhouseCoopers. The new auditors didn't agree with the company's accounting for derivatives -- treatment that flew just fine with the old auditors (who else?) at Arthur Andersen.
It appears that Freddie Mac may have been managing results through a "cookie jar" scheme to keep revenues and earnings floating along at specific levels. By understating earnings in certain quarters (and so far it has been determined that the company did understate earnings), Freddie Mac could set aside reserves for future use when it might have an off quarter.
This charge, which The Wall Street Journal said was a part of the SEC's formal investigation, would broaden the issue beyond just Freddie Mac's derivative accounting treatment, and that could spell real trouble. It's one thing to honestly screw up how you account for derivatives. It's another entirely to do it with the intention of understating earnings now while shoring up earnings in the future.
Congress doesn't want to miss any of the action, either. Rep. Richard H. Baker (R-La.) announced yesterday that he will chair a subcommittee hearing into Freddie Mac's accounting and regulatory oversight. Rep. Billy Tauzin (R-La.), chair of the House Energy and Commerce Committee, is also considering a hearing into Freddie Mac's recent top management shuffle.
Freddie Mac is by nature a politicized investment. With Congress, the SEC, and federal investigators involved, this mess is going to take a while to play out.
Quote of Note
"Be not simply good, but good for something." -- Henry David Thoreau
The Spam Police
In the past three minutes, you've probably been offered a chance to reduce your mortgage rate, buy prescription medication online, enlarge an appendage of your body, cleanse your colon, become debt free, and, yes, even to learn how best to spam others. Please, stop the insanity.
It likely won't surprise you to hear that the dreaded spam message now accounts for nearly 50% of all email traffic, and that number is steadily climbing.
Fortunately, the Federal Trade Commission gave notice today that they want to take the fight to the spammers. The FTC is seeking more authority from Congress in order to provide for "more effective investigative and enforcement tools" and beef up "continuing law enforcement efforts."
There's also potential relief on other fronts. Several legislators have been firing off anti-spam bills like, well, spam, and hope to get something passed this summer. On the spam-filtering front, more and more companies are coming up with tools to shed unwanted mail.
Then there are firms like Microsoft
We can only hope Congress will also provide for increased summary executions. At any rate, perhaps we'll finally see some relief from the endless barrage of emails from the wife of some rebel leader in dire need of our bank account numbers.
Discussion Board of the Day: Nokia
Scapegoats for financial shortcomings abound, but Texas Instruments
Shares of Eli Lilly
More fuel for a possible interest rate cut late this month? The Federal Reserve says much of the country's economic growth since the end of the war in Iraq has been "sluggish, subpar or subdued." In a report released today, the agency says, "The unwinding of war-related concerns appears to have provided some lift to business and consumer confidence, but most reports suggested that the effect has not been dramatic."
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- A Stock for Dad -- La-Z-Boy: If Dad likes bargains and relaxation, this stock's for him.
- The Previous Menace: What does Mayan mythology have to do with investing?
- Krispy Kreme's Sweet Spot: CEO Scott Livengood on Krispy Kreme's customers and the price of a glazed doughnut.
- The Price of Procrastination: Robert Brokamp counts the ways he's dawdled away his dollars.
- In Fool's School, women and investing. Take advantage of resources galore.
Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Kate Southerland, Dayana Yochim