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From time to time something appears in the information maelstrom that is of almost irreplaceable value to anyone who is genuinely interested in educating themselves about markets. The December 2008 issue of Portfolio magazine contains such an article. Written by Michael Lewis (the guy who wrote "Liar's Poker"), the piece I read today is excellent. Everybody ought to read it - it is entertaining too (excerpts below are good, but they aren't the best bits).
In it, he shares part of his story, but he also speaks to several very good analysts. What you find about these folks is that they are interesting people to begin with, and they made their mark by making their calls with conviction and without regard for what their colleagues thought (either of the call, or of them personally) .
Meredith Whitney gets discussed, but the really interesting stuff is how she got her training with a guy called Eisman. I flatter myself perhaps, but two things reminded me of your beloved GT...
He’s sort of a prick in a way, but he’s smart and honest and fearless
and
The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else.
And when he discussed a SELL call on a popular stock he covered:
"I put a sell rating on the thing because it was a piece of shit,” Eisman says. “I didn’t know that you weren’t supposed to put a sell rating on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should".
In his research report was the line
‘The Lomas Financial Corp. is a perfectly hedged financial institution: It loses money in every conceivable interest-rate environment.’
Another super quote (I don't want to spoil it for you... you really do have to read it)...
“You have to understand,” Eisman says in his defense, “I did subprime first. I lived with the worst first. These guys lied to infinity. What I learned from that experience was that Wall Street didn’t give a shit what it sold.”
Seriously - if you do not read anything else today, you have to read the Portfolio piece. Is it online (free) at this link.
And now on to the Dumb Money At Work market...
Major Market Indices
After surging in the first quarter of an hour, the 'fade trade' hypothesis again worked like a charm. By the close the broad market had given back every bit of the opening surge, with the All Ordinaries (XAO) dropping 8.4 points (0.24%), finishing at 3468.1 points.
The index hit an intraday high of 3545.3 at 10:16 am, while the low for the day was 3459.3 - set at 3:23 pm Sydney time - an 80-point bath for those who dove in based on the US market's gain.
Total volume traded on the ASX was 1.14bn units, 10.7% below its 10-day average of 1.28bn shares.The ASX's daily listing of all stocks included 999 different 3-letter FPO's which traded (i.e., had non-zero trade volume). Of these, 291 issues rose, with volume in rising issues totalling 494.1m units; there were 463 declining stocks, which traded aggregate declining volume of 553.4m shares.
Of the 488 All Ordinaries components, 149 rose while 238 fell. Volume was tilted in favour of the losers by a margin of 1.3:1, with 349.16m shares traded in gainers while 460.71m shares traded in the day's losers.
The Index that forms the cash basis for the SPI Futures - the S&P/ASX 200 (XJO) - fell mildly, losing 1.4 points (0.04%), closing out the session at 3532.4 points.
| Name | Close | +/-(%) |
|---|---|---|
| All Ordinaries | 3468.10 | -8.40 (0.2%) |
| ASX 20 | 2136.20 | 6.00 (0.3%) |
| ASX 50 | 3586.10 | 4.10 (0.1%) |
| ASX 100 | 2918.70 | 1.70 (0.1%) |
| ASX 200 | 3532.40 | -1.40 (0.0%) |
| ASX 300 | 3512.70 | -2.00 (0.1%) |
| ASX Mid-Cap 50 | 3159.20 | -12.50 (0.4%) |
| ASX Small Ordinaries | 1574.40 | -23.20 (1.5%) |
The "heavy hitters" of the Australian market - the ASX 20 Leaders (XTL) - advanced by under a percent, adding 6 points (0.28%), closing out the session at 2136.2 points.
Among the 20 big guns, the outcome favoured the upside, but only just - the 11 advancing stocks just triumphed over the losers. The stocks which make up the index traded a total of 133.32m units; 11 index components rose, with rising volume amounting to 55.34m shares, while the 9 decliners had volume traded totalling 77.98m units. The major percentage gainers within the index were
- National Australia Bank (NAB), +$0.87 (4.68%) to $19.46 on volume of 6.9 million shares;
- QBE Insurance Group (QBE), +$1.11 (4.68%) to $24.84 on volume of 10 million shares;
- Suncorp-Metway. (SUN), +$0.32 (4.09%) to $8.15 on volume of 2.9 million shares;
- Brambles (BXB), +$0.23 (3.28%) to $7.25 on volume of 4.4 million shares; and
- Westpac Banking Corporation (WBC), +$0.44 (2.67%) to $16.94 on volume of 8.2 million shares.
On the less salubrious side of the big-cap fence, the following stocks were the worst-performed within the index:
- Rio Tinto (RIO), -$4.3 (11.68%) to $32.50 on volume of 14.5 million shares;
- Westfield Group (WDC), -$0.46 (3.38%) to $13.14 on volume of 6.9 million shares;
- Wesfarmers (WES), -$0.59 (3.38%) to $16.85 on volume of 2.3 million shares;
- Newcrest Mining (NCM), -$0.86 (3.37%) to $24.65 on volume of 1.6 million shares; and
- AMP (AMP), -$0.06 (1.14%) to $5.20 on volume of 6.8 million shares.
The ASX Small Ordinaries (XSO) fared much worse than the big-caps, dropping 23.2 points (1.45%), closing out the session at 1574.4 points.
The 208 stocks which make up the index traded a total of 267.06m units: volume in the 61 gainers totalling 73.47m shares, with trade totalling 174.73m units in the index's 118 declining components. The major percentage gainers within the index were- Rubicon America Trust (RAT), +$0.01 (55.56%) to $0.01 on volume of 1.9 million shares;
- Wattyl (WYL), +$0.08 (14.04%) to $0.65 on volume of 67.9 thousand shares;
- NRW Holdings (NWH), +$0.03 (13.89%) to $0.21 on volume of 14.1 million shares;
- Australian Education Trust (AEU), +$0.02 (8.82%) to $0.19 on volume of 228.7 thousand shares; and
- Straits Resources (SRL), +$0.07 (8.43%) to $0.90 on volume of 6.2 million shares.
In the red-zone of the little-stock index, the following list represents the biggest downers (in terms of percentage decline):
- Timbercorp (TIM), -$0.04 (25.93%) to $0.10 on volume of 4 million shares;
- HFA Holdings (HFA), -$0.03 (20.8%) to $0.10 on volume of 3.9 million shares;
- Rubicon Japan Trust (RJT), -$0 (20%) to $0.01 on volume of 2 million shares;
- Albidon (ALB), -$0.02 (20%) to $0.10 on volume of 6.9 million shares; and
- CBH Resources (CBH), -$0.01 (18.18%) to $0.04 on volume of 1.5 million shares.
Index Changes
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| XAO | All Ordinaries | 3468.1 | -8.4 | -0.24 | 868.2m |
| XFL | ASX 50 | 3586.1 | 4.1 | 0.11 | 270.4m |
| XJO | ASX 200 | 3532.4 | -1.4 | -0.04 | 768.5m |
| XKO | ASX 300 | 3512.7 | -2 | -0.06 | 827.1m |
| XMD | ASX Mid-Cap 50 | 3159.2 | -12.5 | -0.39 | 303.2m |
| XSO | ASX Small Ordinaries | 1574.4 | -23.2 | -1.45 | 253.5m |
| XTL | ASX 20 | 2136.2 | 6 | 0.28 | 129.9m |
| XTO | ASX 100 | 2918.7 | 1.7 | 0.06 | 573.6m |
Market Breadth
| ASX20 | XTO | XJO | XAO | XSO | Market | |
|---|---|---|---|---|---|---|
| Advances | 11 | 42 | 72 | 149 | 61 | 291 |
| Declines | 10 | 52 | 116 | 238 | 118 | 463 |
| Advancing Volume | 55.3m | 274.2m | 332.4m | 349.2m | 73.5m | 494.1m |
| Declining Volume | 78m | 280.2m | 396.6m | 460.7m | 174.7m | 553.4m |
GICS Industry Indices
Among the 11 industry indices, 3 registered an advance for the session, the remaining 8 lost ground.
The best performing index was Financials ex Property Trusts (XXJ), which added 96.2 points (2.56%) to 3858.8 points. The 27 stocks which make up the index traded a total of 113.89m units; 16 index components rose, with rising volume amounting to 91.58m shares, while the 9 decliners had volume traded totalling 20.43m units. The major percentage gainers within the index were
- Babcock & Brown (BNB), +$0.14 (56%) to $0.39 on volume of 41.5 million shares;
- Sunland Group (SDG), +$0.05 (6%) to $0.80 on volume of 712.3 thousand shares;
- National Australia Bank (NAB), +$0.87 (4.68%) to $19.46 on volume of 6.9 million shares;
- QBE Insurance Group (QBE), +$1.11 (4.68%) to $24.84 on volume of 10 million shares; and
- AXA Asia Pacific Holdings (AXA), +$0.18 (4.27%) to $4.40 on volume of 1.7 million shares.
Second in the index leadership stakes was Information Technology (XIJ), which gained 9.2 points (2.47%) to 381 points. This index only contains 2 stocks; they traded a total of 2.86m units today. The lone rising index component had volume amounting to 2.34m shares, while the sole declining stock traded 0.53m units. The gainer:
- Computershare (CPU), +$0.22 (3.35%) to $6.79 on volume of 2.3 million shares.
The bronze medal for today goes to Industrials (XNJ), which climbed 5.8 points (0.19%) to 3011.2 points. The 32 stocks which make up the index traded a total of 115.52m units; 13 index components rose, with rising volume amounting to 50.66m shares, while the 18 decliners had volume traded totalling 64.65m units. The major percentage gainers within the index were
- NRW Holdings (NWH), +$0.03 (13.89%) to $0.21 on volume of 14.1 million shares;
- Transfield Services (TSE), +$0.17 (9.66%) to $1.93 on volume of 6.6 million shares;
- Macquarie Airports (MAP), +$0.11 (5.29%) to $2.09 on volume of 2.8 million shares;
- Brambles (BXB), +$0.23 (3.28%) to $7.25 on volume of 4.4 million shares; and
- CSR (CSR), +$0.03 (2.27%) to $1.35 on volume of 7.7 million shares.
The worst-performed index for the session was Materials (XMJ), which dipped 179.4 points (2.27%) to 7726.8 points. The 45 stocks which make up the index traded a total of 179.81m units; The 35 decliners had volume traded totalling 154.8m units, and 8 index components rose, with rising volume amounting to 24.24m shares, The major percentage decliners within the index were
- Kagara Zinc (KZL), -$0.06 (13.04%) to $0.40 on volume of 1.2 million shares;
- Great Southern (GTP), -$0.02 (12.12%) to $0.15 on volume of 1.5 million shares;
- RIO Tinto (RIO), -$4.3 (11.68%) to $32.50 on volume of 14.5 million shares;
- Kingsgate Consolidated (KCN), -$0.3 (11.54%) to $2.30 on volume of 286.7 thousand shares; and
- Mount Gibson Iron (MGX), -$0.03 (10.71%) to $0.25 on volume of 14.2 million shares.
Just missing out on the wooden spoon was Property Trusts (XPJ), which slid 20.8 points (2.24%) to 906.6 points. The 21 stocks which make up the index traded a total of 132.52m units; The 9 decliners had volume traded totalling 57.74m units, and 5 index components rose, with rising volume amounting to 50.02m shares, The major percentage decliners within the index were
- Tishman Speyer Office Fund (TSO), -$0.04 (17.78%) to $0.19 on volume of 2 million shares;
- Babcock&Brown Japan Property Trust (BJT), -$0.03 (7.69%) to $0.36 on volume of 1.7 million shares;
- Goodman Group (GMG), -$0.06 (6.7%) to $0.84 on volume of 9 million shares;
- Abacus Property Group (ABP), -$0.02 (6.25%) to $0.23 on volume of 3.6 million shares; and
- GPT Group (GPT), -$0.04 (4.19%) to $0.80 on volume of 14.4 million shares.
Third-to-last amongst the sector indices was Utilities (XUJ), which slid 33.4 points (0.78%) to 4259.1 points. The 11 stocks which make up the index traded a total of 73.28m units; The 5 decliners had volume traded totalling 9.52m units, and 4 index components rose, with rising volume amounting to 60.23m shares, The major percentage decliners within the index were
- Spark Infrastructure Group (SKI), -$0.06 (4.18%) to $1.26 on volume of 2.3 million shares;
- Energy World Corporation Ltd (EWC), -$0.01 (3.64%) to $0.27 on volume of 2.2 million shares;
- Sp Ausnet (SPN), -$0.02 (1.46%) to $1.02 on volume of 3.2 million shares;
- APA Group (APA), -$0.03 (1.18%) to $2.52 on volume of 720.1 thousand shares; and
- AGL Energy (AGK), -$0.09 (0.59%) to $15.23 on volume of 1 million shares.
Sector Indices
| Code | GICS Sector | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| XXJ | Financials ex Property Trusts | 3858.8 | 96.2 | 2.56 | 114m |
| XIJ | Information Technology | 381 | 9.2 | 2.47 | 3m |
| XNJ | Industrials | 3011.2 | 5.8 | 0.19 | 116m |
| XHJ | Healthcare | 8092.4 | -6.1 | -0.08 | 12m |
| XDJ | Consumer Discretionary | 1110.9 | -4.6 | -0.41 | 53m |
| XTJ | Telecommunications | 1372.7 | -5.8 | -0.42 | 23m |
| XSJ | Consumer Staples | 6060.8 | -45.2 | -0.74 | 29m |
| XEJ | Energy | 11408.3 | -87.1 | -0.76 | 40m |
| XUJ | Utilities | 4259.1 | -33.4 | -0.78 | 73m |
| XPJ | Property Trusts | 906.6 | -20.8 | -2.24 | 133m |
| XMJ | Materials | 7726.8 | -179.4 | -2.27 | 180m |
All Ordinaries Major Movers
All Ords Volume Leaders
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| BBI | Babcock & Brown Infrastructure Group | 0.10 | 0.01 | 8.89 | 45.4m |
| BNB | Babcock & Brown | 0.39 | 0.14 | 56 | 41.5m |
| DXS | Dexus Property Group | 0.85 | 0.01 | 0.6 | 39.1m |
| PNA | PanAust Ltd | 0.12 | -0.01 | -4 | 26.5m |
| BLY | Boart Longyear | 0.19 | -0.03 | -13.64 | 22.2m |
All Ords Percentage Gainers
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| BNB | Babcock & Brown | 0.39 | 0.14 | 56 | 41.5m |
| RAT | Rubicon America Trust | 0.01 | 0.01 | 55.56 | 1.9m |
| PBD | Port Bouvard | 0.30 | 0.07 | 27.66 | 12.5k |
| CEG | CEC Group | 0.18 | 0.03 | 16.13 | 19.8k |
| KBC | KeyBridge Capital | 0.12 | 0.02 | 15 | 25k |
All Ords Percentage Losers
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| TIM | Timbercorp | 0.10 | -0.04 | -25.93 | 4m |
| ALD | Allied Gold | 0.22 | -0.07 | -24.14 | 517.4k |
| HFA | HFA Holdings | 0.10 | -0.03 | -20.8 | 3.9m |
| RJT | Rubicon Japan Trust | 0.01 | 0.00 | -20 | 2m |
| ALB | Albidon | 0.10 | -0.02 | -20 | 6.9m |
