Forecasts beat the market

It seems bloggers had mixed feelings regarding President Obama’s speech last night. Some argued he was still to vague while others pointed out he is focusing on the right domestic issues. But the market had one feeling: down, down, down. This morning the DOW dropped almost 150 points only to recover in the last half of the day to become positive by 8 points. The Treasury also announced that the nations biggest banks will be granted immediate access to the $700 billion rescue fund.

While I’ve been on my McDonald’s high horse lately, PredictWallStreet published a forecast today for MCD. After seeing how choppy the market has been the past few days, the forecast direction was expected. PredictWallStreet forecasts are generated using patented algorithms that are run on prediction data and historical databases containing millions of predictions. Each day a set of unique forecasts is published on the site before the market opens. Between May 24, 2007 and December 31, 2008, PredictWallStreet published 1445 forecasts. Calculations of the forecasts profitability are based on the difference between the opening and close price for that security and a 2% stop loss. To evaluate performances, PredictWallStreet applies the same methodology to the Spdr S&P 500 (SPY).

The forecasts had a return of 41.4% while the SPY dropped 58.4%! During the 2008 financial meltdown, PredictWallStreet forecasts yielded positive profit potentials even though the market was behaving bearishly too! Take a look at the white paper here to see graphs and a better explanation under PredictWallStreet Publications.

So after looking at the forecast for MCD, I made my prediction accordingly. Sentiment is coming down for McDonald’s and becoming more bearish even though the majority of predictors have predicted up today.

In other news, Microsoft’s CEO Steve Ballmer told analysts that he was still interested in striking up a search deal with Yahoo! Whenever the subject comes up, this is usually Ballmer’s reply. The response usually helps boosts Yahoo!’s (YHOO) price for a bit and this is exactly what it did yesterday. So it’s not surprising that Yahoo! is down today after the news subsided. I predicted down today for YHOO. Sentiment is becoming more bearish. Even though YHOO is finally above the terrible ten price, Carol Bartz is going to need to introduce something to restore faith in Yahoo! investors.

Delicious
Digg
Facebook
Stumble It!

Market UP on hopes recession ends this year

This morning Bernanke told Congress the “recession might end this year” and that the banks may not be nationalized. The news brought relief to many investors worrying about the banking industry and helped lift the Dow and SP500 this morning from their Monday lows. Investors are also patiently awaiting Obama’s speech this evening hoping he will provide details on his plan to stabilize and stimulate the economy. And how exactly he plans to repair the banking system without bank nationalization. Oh and nevermind Obama’s fleet of 28 new Marine One helicopters that will cost almost $11.2 billion. I imagine after being slammed for this one by McCain he will have some explaining to do.

Just checking in on the two companies I wrote about yesterday…McDonald’s (MCD) is up today almost 2% but still not breaking that 55 mark. And Starbucks (SBUX) is up today over 4%. Like I said yesterday, I really think their is more room for movement with Starbucks. See my last post to see what I’m referring too.

PredictWallStreet published several forecasts today. Of the five companies forecasted, only Wells Fargo & Co (WFC) is forecasted to close down. I want to investigate this a little further so I click on WFC to check out their sentiment and what other predictors think of WFC. Wells Fargo is up today but I made my prediction for down based on the forecast, which have been beating the market in the last year (To read how they have beat the market click here). So it looks as if 82% of predictors predicted WFC to close up today. Looking at the one month sentiment button under the Sentiment Tab shows sentiment looks pretty neutral but could possible tick up in the weeks to come. I also want to look at the Accuray>Star Performers for WFC. The 3 and 2-star predictors have predicted up while the more accurate 4-star predictors are split in their predictions. Looking at all that information, I’m going to keep my down prediction. I think WFC is up today mainly on hype of Bernankes comments and optimism that the banks won’t be nationalized. But more importantly, we’ll see how people are feeling tomorrow AFTER Obama’s speech.

Delicious
Digg
Facebook
Stumble It!

Would you rather: MCD or SBUX?

A game of “Would you Rather” is about as iconic to juvenile parties as spin the bottle. While the usual questions involve picking to sever some limb or eat an grotesque item, what about a “Would you Rather” that pays homage to two institutions as iconic in American culture as the game itself? An interesting article was published this morning by Pew Research Center that included a curious survey question: “Would you rather live in a place with more McDonald’s or more Starbucks?”

The answer may seem obvious to some. McDonald’s won by 43% to 35% in a telephone survey among a nationally representative sample. Digging deeper into the numbers, Americans manage to validate just about every stereotype one could think of for different demographics. It’s not surprising that Starbucks lost by only one point to McDonald’s in the group of women. Liberals also really like their coffee-13% more than they do Big Macs. It is also interesting to note that education and income went hand in hand when choosing between the two.

So another question would be “Would you rather own MCD or SBUX?”

McDonald’s (MCD) is one of the few companies right now reporting positive numbers of any kind. In this economic meltdown, McDonald’s has been able to distinguish itself as a cheap dining alternative and the numbers show they are doing it successfully: Sales were up in Asia 10%, in Europe 7% and even 5% in the U.S. What do investors think about MCD? 85% of predictors at PredictWallStreet predicted MCD would close up. Looking at the one month sentiment graph, sentiment seems to be sinking to become somewhat bearish. The price is also falling. The market in general has had a really bad day, worse than usual, so it’s expected it would bring most stocks down. Just looking at the date on PredictWallStreet though I can see that investors seem to be optimistic about MCD regardless of what the price/market is doing.

Starbucks (SBUX) just introduced their instant coffee brand Via to mixed reviews. As I said in my last post I think it’s a great idea, but its actual impact could be small as the instant coffee market is likely small. There has been a lot of speculation about spending at Starbucks declining, but comparing January 08 spending to January 09, average monthly spending was up 24% according to Geezeo users. Investors don’t seem to be feeling good about Starbucks though. At PredictWallStreet, 83% of predictors predicted SBUX would close down-almost the exact opposite of MCD. Sentiment is heading to become extremely bearish as well. It appears that investors have a lot less faith in Starbucks and are feeling pretty pessimistic.

I guess I’m not really going to make any sort of formal conclusion on which is better because I realize there are so many other aspects to take into account than just looking at sentiment. I think it depends what kind of scope you have here. MCD is expensive compared to SBUX, and I’m not sure how much of a rebound is really left in there stock. But they have a strong company that has proved it can weather an economic storm. SBUX is pretty cheap, and I would think normally there would be lots of room here for the price to move up but Starbucks is a luxury item. And $4 “luxury” lattes are the first to get cut in a recession. It’s hard to say how long people will stop buying lattes for because it’s hard to say the economy has even hit a bottom. If I was in it for a very, very long run, I guess my pick would be SBUX because of it’s price now, its future potential, and because when things do get better, that mochachocha latte will be their waiting for its coffee lover to come back. You can say the same about McDonald’s, but they are also close to the top of their ladder. I wonder how much further up there is to climb. When ( I know this is a long when) the economy gets better and people have more cash in their pocket, how many of those people will continue to eat at McDonald’s?

Disclaimer: I hold no interest in either McDonald’s Corp. or Starbucks Corporation. I am not a financial adviser. Talk to a professional before making any investment decisions. Nothing in this blog should be considered advice or a recommendation.

Delicious
Digg
Facebook
Stumble It!

.

Facebook Apologies, Starbucks goes Instant

I like to think that pictures that I upload from my camera on to my profile are still in fact my property. But last week, Facebook was trying to tell me something different, along with its 175 million other users. It was a change the average college-goer would of left unnoticed, for how often, if ever, do we read the Terms of Use on any one of the countless internet persona’s we accumulate? Last week Facebook’s Terms of Service changed as fast (and stealthy) as you can de-tag Thursday nights (or Friday’s, Saturdays and Sunday’s) pictures. The TOS used to say when you closed your account, you basically took any rights to the original content you uploaded with you. But not anymore. Their TOS now reads, in lots of legal jargon, that if you do choose to remove your content off the site aka close your account , the Company may still retain achieved copies of your User Content. And yes, that includes those pictures of you eating pancakes off your kitchen floor in a princess costume.

But after countless protest groups and blogs popped up on the Web, Facebook has apologetically removed the new clause on their Terms of Service and given you the right back to your stuff. And while I personallly felt attacked by their infringement on my personal property/debauchery, I realized the apology note that popped up in my profile this morning was not actually VIP treatment from Mark Zuckerberg, but a network wide note. Anyway, apology accepted. Thanks for my stuff back, FB.

This morning, President Obama released the details of his $75 billion mortgage relief plan. It is meant to stabilize the housing market and reduce foreclosures for responsible homeowners who qualify. In an hope to revive the economy, the revealing of the plan has done little for the market, although stocks are modestly higher than yesterday. The Dow is up a few points, as well as The Standard & Poor’s 500 and Nasdaq. Opponents of the bill argue it’s mostly a missed opportunity and giant waste of money, while proponents are confident that doing nothing would of proved worse.

In Apple news, Apple (AAPL) saw a decline in year-over year sales of the Mac and iPod in January. Mac units fell 6% and iPod units fell 14%. As I browse around other blogs and financial sites, I had noticed a lot of Apple fans professing their die hard faith in the company and their belief that Apple was indeed recession proof and that sales will not decline because of Apple’s target consumer group. While Apple has certainly fared better than most (if not all) companies in our economy, I take these numbers as a sign that nothing and no one is safe from the impacts of the recession. I wanted to see how investors took these numbers and it looks like sentiment is becoming more bullish. Apple is down today about half a point. My guess is that investors are still optimistic about Apple mainly because everyone is seeing losses right now, but Apple isn’t seeing that much. So, I have actually predicted UP today for Apple, although we’ll see how this goes tomorrow.

Starbucks has introduced their new take home instant coffee packets called Via. Some analysts are saying this is weakening their brand and image but I personally think its a great idea. For some, the price of Starbucks is not so much a deterrent as the time that it takes to enter a store. Instant coffee that I can make at home would save me tons of time without having to compromise taste, as Starbucks promises it tastes just as good as their in-store brew. Also, for people who already make coffee at home, this may entice them to upgrade. As any young adult (or college kid who makes coffee in their apartment) sometimes Folgers just isn’t gonna cut it. You get to bring the brand home. For some, this is a reputation they want. I think Starbucks has made an excellent move in adapting to our changing economy. Those who don’t change will not survive. Starbucks (SBUX) investors seem to be a little weary and hesitant of their new move, as sentiment is currently heading down to become bearish. But SBUX is only down half a point today and I think that once investors and consumers alike realize Starbucks is simply innovating to evolve as a company they may become more bullish.

Delicious
Digg
Facebook
Stumble It!

Stimulus: The next question

The stimulus bill has been signed. More importantly, will it work?

Whether you like it or not, the main question now is how will it effect the country? There is no doubt it will, but to what extent its effects are felt at is the most pressing of questions. Some opponents are calling it a mini New Deal, which will only help prolong the depression, like FDR’s did in the 30’s. While I don’t know too many details about the bill itself, I can’t imagine it not creating employment opportunities. The infrastructure spending and medical research grants have no choice but to create jobs. And while the bill is certainly not perfect, I think its clear that doing nothing and letting the market work itself out is not gonna speed up its recovery. We know were screwed, but how long can we afford to be? The Dow fell to 7552 points today. Sentiment for Dow was bearish.

In other interesting market news, just last week Sirius XM (SIRI) was talking about filing bankruptcy as the company had millions of dollars of debt to pay back soon. But this week it seems SIRI is whistling to a different tune. The company has been rescued by John Malone’s Liberty Media Corporation (LMDIA). Liberty Media Corp will invest $530 million in loans in SIRI and receives 40% equity interest in the company. The loans will be made in a two part payment. While this is certainly great news, it must not be forgotten that SIRI’s massive amount debt still exists. If SIRI can see some cash flow however, they can put some of that debt to rest. Either way, many investors who have been holding onto SIRI are excited. SIRI had an amazing 532 predictions on PredictWallStreet. 86% of those predictors predicted that SIRI would close up. Sentiment for SIRI has also surged. Looking at the one month sentiment graph you can see that just last week sentiment was extremely bearish in the red zone and has suddenly shot up into the extremely bullish zone Tuesday. Looking at SIRI’s Accuracy, all rated Star Performers have predicted SIRI will close up. Judging from this information, I think its pretty obvious that my personal prediction would be UP as well. Clearly investors have regained their optimism in this company. Hopefully it is enough to hold SIRI up for awhile and they can report some positive numbers in the quarter to come.

Delicious
Digg
Facebook
Stumble It!

Stimulus Plan, Version 9858372

One day it’s 800 billion, the next is 900 and now it’s 789. I must admit, it’s a little confusing to follow the stimulus bills countless drafts. This morning, however, lawmakers announced their agreement on $789 billion stimulus plan to be signed by President Obama that is designed to create 3.5 million jobs. So how did Wall Street take the news? Stocks turned higher this morning but slowly began to lower in the afternoon, the Dow is still below 8000. Investors are eager for any measure that the economy is going to recover and it shows in their sentiment. This real-time sentiment meter shows bullish sentiment for the Dow, Nasdaq and SP500. Looks like investors are optimistic about the effects of the stimulus plan helping the economy.

It’s been quite a day for Research In Motion (RIMM). After being downgraded by analysts their price dropped 16%. Fortunately, RIMM is in a stable financial position but investors are worried about them selling more lower margin phones and less higher margin phones. With a price drop that steep you would expect to see sentiment drop but it actually is turned up and is heading to become more bullish. Is this price drop simply an overreaction of the market? The highest rated Star Performers on the widget under the Accuracy tab are split in the directions they predicted for RIMM but 4-star and 3-star predictors all predicted up. I had originally predicted down on RIMM thinking their was no way they could recover from a drop that big but after looking at sentiment and the Star Performers predictions, I think I may go with the wisdom of the crowd and see how that plays out.

I really haven’t thought about Sirius XM (SIRI) a lot lately, mostly because of their lackluster performance after the merge of the two companies. But after seeing them on the Top 15 Companies that Might Not Survive 2009 list I wanted to take a look at where they are at. It was kinda hard to stay involved watching a company who’s price was literally a penny at one point. There are rumors Sirius XM is preparing to file bankruptcy (not surprised, these rumors surfaced in December) and speculation that a potential partnership deal could be in the pipeline with Echostar CEO Charles Ergen. If Sirius does file bankruptcy it will be a huge loss not only to shareholders but to CEO Mel Karmazin who invested $2.7million in Sirius. There are over 306 predictions right now on SIRI at PredictWallStreet! 59% of users think SIRI will close up. Sentiment is extremely bullish right now and has been for the past week. The highest rated predictors under the Accuracy tab have all predicted UP. So how is that with all this positive signals, the stock still managed to close down today 51%? Well, mostly likely because one giant negative signal most likely overshadowed these: Chapter 11. I guess the sayings true, big tree fall hard. Or something like that…I get my idioms confused as a result of a mother who used them every other sentence.

Delicious
Digg
Facebook
Stumble It!

Amazon: Optimisitc or Unrealistic?

Hello friends! Hope everyone had a nice, rainy weekend. Looks like we finally had a positive week in the market. And while I’ve learned to never get too excited on good news these days as it’s usually fleeting fast, I will take a moment to relish in this one positive article. Ahhh.

Amazon has been getting a lot of attention lately for being this amazing bargain. It’s critics say its overvalued. I say who the heck owns a Kindle? While Amazon hasn’t exactly released figures on the sale of the Kindle, every analyst and journalist likes to point to the Kindle’s success as a piece of the Amazon success puzzle. Yet, I have never seen one in real life. I’ve never even heard of people talk about them in real life. I doubt half my friends know what they are and would most likely laugh when I told them what and how expensive it is. But I digress. I would be cautious of Amazon. AMZN is expected to earn $1.48 in 2009 and $1.90 in 2010, a growth rate 28% . That number seems highly optimistic in a recession, especially when old super stars like GOOG, AAPL and RIMM are expected to see 15% earnings growth in 2010. It’s no doubt Amazon looks attractive right now. They closed up today and sentiment was bearish last week but appears to be becoming more bullish. Im curious to see how this lasts as more and more bloggers seems to be bashing AMZN’s valuation. The highest rated predictor on Amazon has actually predicted UP while the other less accurate predictors have predicted down, interestingly. You can find this under the Accuracy>Star Performers tab.

All those people loosing their jobs, are they really signing onto Amazon to spend their diminishing paychecks on CD’s, movies, and the Kindle 2?

What is that Mr. Buffett? I can’t quite hear you. Oh ya “Be fearful when others are greedy and greedy when others are fearful.”

Delicious
Digg
Facebook
Stumble It!

Home is the place to be and NFLX has got you covered

Well, I’m just going to be honest. I’ve had a terrible past two weeks on predicting stocks. Maybe it’s the weather, maybe I’m feeling stressed, but whatever it is, I just can’t seem to get it right. I have hit a Prediction Block. And so I’ve been thinking how to overcome this and after evaluating several ideas I’ve come to the conclusion that the best thing to do is to keep predicting, but on less stocks and only the few that I really know and love. I’ll also be taking more advantage of the Change Prediction button. Often times I find a make a prediction but after looking at the data given in the widget I find I actually feel the opposite way I predicted.

The market is up today, not too shabby, not too great. Wait, just kidding! I refreshed my finance page and the DOW is now down 26 points. Just when you think you catch a break. Stocks are apparently fluctuating on news from the Institute for Supply Management that the nation’s service sector shrank less in January than it did in December. Regardless, it’s the fourth straight month business activity in the industry has declined. President Obama also imposed a dramatic cap on senior executive pay for the financial institutions receiving federal bailout money that are in the worst shape. Obama states Americans are angered by “executive’s being rewarded for failure.” Finally someone is listening.

I was reading some articles about industries that have the most potential during the recession and one particularly caught my eye; movies. This seems obvious now after thinking about it too. A typical family outing could cost upwards of $50.00. Most movie tickets are between $9-12.50. Mom, dad and two kids and you’re looking at about 50 bucks, not to mention concession snacks and lets just throw in gas it took you to get there. While its not an outrageous number, family outings and entrainment expenses add up. And why wouldn’t you substitute for a cheaper alternative when itss so accessible? Clearly staying at home to watch a movie rental isn’t a new experience, but it is a definitely an option that more families will be choosing now. But forget Blockbuster (BBI), a new wave of home movie rentals has surfaced and NetFlix (NFLX) is at the frontier of that. NetFlix not only realized this opportunity, but perfected the model. The most expensive subscription service is about $15.00 a month and NetFilx now offers streaming videos included in the subscription so you can watch any movie you want at home even quicker over your TV or PC for no additional costs.

NetFlix (NFLX) has seen a ton of customer growth and profit growth. Right now about 10 million homes have subscriptions. The stock has been getting a lot of press lately as its price has been gaining for awhile. It’s creeping up close on Blockbusters market share too. If NFLX can have another quarter of profitability, a lot more people are going to start paying attention to this stock. There appears to be much potential. Checking them out on PredictWallStreet, 67% of predictors predicted up for them today and NFLX did close up at $36.85. Sentiment has crept up too and is becoming more bullish as investors take notice of this stock. Under the Accuracy tab’s Star Performers, they are only rated 3-star performers who all predicted up. I would imagine that there will become more experts on this stock as it slowly gains more attention.

Delicious
Digg
Facebook
Stumble It!

Not So Happy Ever After

The happiest place on Earth might not be so happy ever after. Walt Disney Co. reported a 32% decline in quarterly profits and missed targets today. Disney said it’s tough times in the recession: Disney movie studio lost 26% in revenue due to a weak lineup of home video’s. CEO Robert Iger blamed their losses on an increasing ability of consumers to access videos online. As business’s like Netflix have made watching movies more accessible, people are able to more selective with the little time they have. Iger pointed out that he doesn’t think the state of the economy attributed to the changes in Disney but rather some other aspect that influenced consumer behavior that they plan to address as soon as possible.

I decided to check Walt Disney Co. on PredictWallStreet. The ticker symbol is DIS. It was interesting to see the poll results. 63% of predictors had predicted up on Disney today. Looking at sentiment and then the 1 month chart, sentiment appears to be heading upwards and almost becoming bullish. The Accuracy tab shows me the Star performers. Even more interestingly the most accurate predictor who is rated 5-stars predicted up today as well as the other 3 and 2 star predictors. So it looks as if all indicators are saying that DIS will close up. I am confused by this because well, didn’t they just report bad news? Didn’t they just report they lost 32% in quarterly profits? And while I agree with Iger to some point that they have issues to address regarding consumer behavior, I think its almost negligent for him to say the economy hasn’t attributed to these changes. In case you haven’t noticed, EVERYONE has been effected by the economy and your Disney magic is of no use here. Sorry, Mickey. If anyone can shed some light onto this situation and why sentiment is the way it is, that would be great! Perhaps such feelings just haven’t been reflected in price and sentiment quite yet…

In other news, UPS jumped today as its shares closed at 45.57. The company reported a a profit of 83 cents per share in its fourth quarter. It barely missed analysts estimates which were 85 cents per share. UPS plans to cut costs by freezing management salaries and spending its 401(k) program. Those seem like some pretty drastic measures that I’m sure employees are not too happy about but companies must cut costs where they can right now. Sentiment for UPS is on its way up into the bullish territory as investors most likely become more optimistic after it announced it’s cost cutting plans. The PredictWallStreet poll shows 70% of predictors predicted up for UPS today. I remain bullish on them as they were extremely close to their estimates and are moving in the right direction to meet them next quarter.

Delicious
Digg
Facebook
Stumble It!

Post Super Bowl Post…get it?

I always look forward to Super Bowl Sunday and I don’t even like football. I like the food and the drinks and the friends, not so much the game. There is something nice and oddly relieving about drinking and eating chip dip in the middle of the day, all day, and not feeling guilty about it at all. I loved Bruce Springsteen’s half time show as much as the next old guy, but I do miss those more scandalous, pop sensational acts pre-Janet Jackson’s wardrobe malfunction debacle.

The Dow closed below 8,000 this morning. Yikes! Tech shares were higher as industrials fell lower. The economic stimulus proposal is now in front of the Senate along with a plan to give more aids to banks. Also, negative numbers surfaced as more layoffs were reported and January looked even gloomier than before. The sentiment meter at PredictWallStreet showed mostly bearish sentiment for Nasdaq, Dow and SP 500.

Dell (DELL) is reported to be in the process of making their own smart phone prototypes right now, one with a touch screen and one with a keyboard. While other bloggers are posing this as competition to the iPhone, I hardly think so. Some of the major cell phone carriers have already tried that…and pretty unsuccessfully. I’m not sure how a DELL is going to approach this but I am curious to see it. If it looks anything like their laptops, we can expect something clunky and grey. The rumors did nothing for DELL today as they were down 2%. Sentiment is slowly becoming more bearish. Looking at the star performers on PredictWallStreet I can see the 3 and 2 star performers predicted UP. Since a lower star rating means these predictors were less consistent in their correct predictions, I can also look at this in a opposite way. If the lowest rated predictors are predicting UP, I may think it reasonable to predict DOWN, the opposite way they are predicting since they have been less accurate in their predictions.

Furthermore, checking up on my usual favorites (AAPL, RIMM, GOOG, etc.) I noticed I was doing a lot of down predicting. The market was just too bad today for me to feel any sort of optimism. But a diamond in the rough, I always feel there is potential in RIMM. A good article was posted here. Essentially, RIMM does indeed have potential, but you must know how to control the risk. RIMM has always been volatile and experiences fluctuations like crazy but if you’re smart and use a stop loss and price target, there could be some gain here. RIMM actually close up today, one of the few stocks that did. Contrarily, their sentiment is becoming more bearish. The 3 and 2 star predictors had predicted UP for RIMM so perhaps this people are becoming better affiliated with the stock. In my opionion, its always good to look at both sentiment and accuracy and whether or not there were predictions from 4 or 5 star rated predictors.

Hope ya’ll enjoyed your Super Bowl weekend, I’ll be seeing you at the gym.

Delicious
Digg
Facebook
Stumble It!