FTSE100 @ 6352.7, +22.21 (+0.35%)
OK, so markets have subsequently taken a breather and found themselves wanting somewhat.
But, whilst economic recovery continues to be viewed as fragile, the current concern seems to be that markets might have to fend for themselves a little more without the crutch of central bank stimulus.
For myself, I would suggest the sooner the better as the dependency on artificial cashflows breeds complacency rather than competition and performance improvement.
Similarly this can be seen in the behaviour of some borrowers in this current environment, where some just won't take the opportunity to change behaviours, preferring dependency to independence and fully expecting assistance to come from somewhere in order to maintain their unrealistic lifestyle expectations.
But, that aside, there is still the strong view that there are invest able funds out there, waiting on the sidelines, both in companies and in managed funds waiting for opportunities to present themselves as company cashflows continue to strengthen and recent stock market performance attracts investors back into markets again.
Slight concern for me that the next phase in markets may coincide with a need to invest should economic demand start to increase and new "fledgling" markets open.
That being the case, it might be that company forecasts will disappoint in the short term but that strategic investment should only enhance prospects in the medium to longer term for those companies that are well managed and have a well thought out strategy.
In light of my view that markets are dominated by a short term interest, I will be an interested observer of analysts, and investment views that appear to respond adversely to what appears to me to be normal and expected ie. sell these companies for others with better short term prospects and so on and so forth in an ever diminishing cycle.
Would that deter some companies from investing in a longer term strategy, just to keep analysts and city views positive in the short term? I hope not.
But, in terms of this next phase, I can see it happening already in such as Vodafone with the introduction of 4G, but also in other industries where the traditional customer base moves online (supermarkets), or in tangible industries like manufacturing and construction where new plant and equipment, new technology, and land comes back into growth plans, along with a review of inventories and working capital.
The downturn should have presented companies with opportunities to make efficiency savings in preparation for recovery so that the yield from working capital can be maximised as demand increases.
And its those companies that can adapt quicker and gear up to increased demand that might yet achieve new higher levels of cashflow and profitability in the coming years.
But if companies can't gear up to increasing demand cashflows and profits will plateau; if they have to invest, profits will dip in the short term; and if they haven't made efficiency improvements then profits and cashflow will drop off as the demand for greater working capital absorbs cash and/or increases borrowings.
As ever, an increasing demand for capital to invest might end up coinciding with increasing interest rates so foresight is required.
Even more risky but tempting for seemingly asset rich companies would be expansion through acquisition which brings its own risks given valuation premiums, and existing goodwill.
This can then be followed by integration problems compounded by cultural issues.
And, worryingly this can be a particularly tempting option when new management comes in, but not always executed with the company's and shareholders interests in mind.
So, as ever its these well managed companies, with clear, logical strategies that I want to look out for.
If I can spot the signs of course!
Although I would hope that at least some of the signs would be in the companies that I already look for!
Showing posts with label Market commentary. Show all posts
Showing posts with label Market commentary. Show all posts
Tuesday, 18 June 2013
Thursday, 23 May 2013
FTSE's fragile confidence.
FTSE 100 @ 6707.45, -132.82 (-1.94%)
Well that was a speedbump.
Chinese factory output and US Federal Reserve concerns.
Doesn't take much for the short term profiteers to cash in does it.
Related article links:
http://www.sharecast.com: London open: Fed concerns, poor Chinese data spark sell-off
Well that was a speedbump.
Chinese factory output and US Federal Reserve concerns.
Doesn't take much for the short term profiteers to cash in does it.
Related article links:
http://www.sharecast.com: London open: Fed concerns, poor Chinese data spark sell-off
Friday, 4 January 2013
New Portfolio highs as markets romp on
FTSE 100 @ 6089.84, +42.50 (+0.70%)
DJIA @ 13435.21, +43.85 (+0.33%)
NASDAQ100 @ 2724.49, -7.77 (-0.28%)
Wow, what a start to the New Year with the FTSE100 pushing beyond 6000, and my portfolio scaling new all time highs on each of the last 3 days.
It currently stands a healthy 3.6% up from my December 2012: Portfolio Update (2012 Year-end).
A dividend dropping in from Rolls-Royce (my first of 2013), also managed to sprinkle a bit more sparkle onto things.
Lots of encouraging momentum building for some of my holdings as well, with IG (broker notes), BP (Transocean settlement), Tesco (Xmas trading?), and Rolls-Royce (defence contracts), jumping in the last few days.
It would be nice if every day could be like this last 3, totally unrealistic of course, but I can at least enjoy it until reality bites again.
Apple @ $527.00, -$15.10 (-2.78%)
Unfortunately, my most recent purchase of Apple (Apple shares: For a Few Dollars More!), has not joined in the party, and is under pressure again today which in turn puts pressure on the NASDAQ.
The pressure is coming from analysts notes suggesting that going forward, Samsung's wider and deeper range of handsets might see it increase its share of the smartphone market at a faster rate than Apple, 35% v 33%.
After first speculating about potential supply chain shortages affecting sales in the key run-up to Christmas, it now looks like the health and future prosperity of Apple is going to be an ongoing debate beyond this next quarterly update as analysts turn their attention to the new quarter now beginning and the possible reduction of orders onto the supply chain.
Earlier posts:
- December 2012: Portfolio Update (2012 Year-end).
- Apple shares: For a Few Dollars More!
DJIA @ 13435.21, +43.85 (+0.33%)
NASDAQ100 @ 2724.49, -7.77 (-0.28%)
Wow, what a start to the New Year with the FTSE100 pushing beyond 6000, and my portfolio scaling new all time highs on each of the last 3 days.
It currently stands a healthy 3.6% up from my December 2012: Portfolio Update (2012 Year-end).
A dividend dropping in from Rolls-Royce (my first of 2013), also managed to sprinkle a bit more sparkle onto things.
Lots of encouraging momentum building for some of my holdings as well, with IG (broker notes), BP (Transocean settlement), Tesco (Xmas trading?), and Rolls-Royce (defence contracts), jumping in the last few days.
It would be nice if every day could be like this last 3, totally unrealistic of course, but I can at least enjoy it until reality bites again.
Apple @ $527.00, -$15.10 (-2.78%)
Unfortunately, my most recent purchase of Apple (Apple shares: For a Few Dollars More!), has not joined in the party, and is under pressure again today which in turn puts pressure on the NASDAQ.
The pressure is coming from analysts notes suggesting that going forward, Samsung's wider and deeper range of handsets might see it increase its share of the smartphone market at a faster rate than Apple, 35% v 33%.
After first speculating about potential supply chain shortages affecting sales in the key run-up to Christmas, it now looks like the health and future prosperity of Apple is going to be an ongoing debate beyond this next quarterly update as analysts turn their attention to the new quarter now beginning and the possible reduction of orders onto the supply chain.
Earlier posts:
- December 2012: Portfolio Update (2012 Year-end).
- Apple shares: For a Few Dollars More!
Monday, 3 December 2012
November 2012: Portfolio Update
Well, at one stage, November almost saw my portfolio leap off its own fiscal cliff as it dived around 4% (from peak to trough) to hit an intra-month low of around -2% before bouncing again to finish up by 1.83% at the month end.
Fair to say it proved to be a test of the emotions with stop-start negotiations over the impending "fiscal cliff", partnering similarly conflicted negotiations over future EU budget proposals, and Greece's delayed bail-out tranche.
Of the 3 only Greece achieved a temporary lifeline with the release of a 3rd tranche of bailout funds and an extension to its debt reduction timeline. Unfortunately, one can only yawn and wait for the next chapter in this lengthening odyssey.
Elsewhere, George Osborne, the UK's Chancellor of the Exchequer, announced Mark Carney as the next Governor of the Bank of England come June 2013 when the current Governor steps down (The Bank of England: There's a new Sheriff in town!).
Back to my portfolio though and the swing from highs to lows to highs has also, as one would expect, afflicted the individual shares in my portfolio with Aviva, BAE, and R-R moving ahead by 5.73%, 4.84%, and 4.21% but, at the other extreme BG, Microsoft, and Vodafone, finished November down by -6.80%, -6.25%, and -4.22%.
Ex. dividends also had an impact of sorts with Apple, BP, Microsoft, Vodafone, and National Grid all trading without the right to the current dividend.
Fortunately, with R-R and Aviva representing more than 44% of my portfolio their movement was enough to take the portfolio forward despite the falls elsewhere.
And, completing their own circle of life, six dividends were received and added back into the porfolio, one of which was a particularly healthy windfall from Aviva.
So lots and lots of disappointing trading updates and veiled profit warnings coming through at the moment with BG and Microsoft taking heavy beatings as a result of their own updates.
As mentioned the end result of all these shenanigans on my portfolio is a 1.83% gain in the month, as well as 16.79% in the year to date.
As to the FTSE100, the index managed an equally useful gain of 1.45% in the month but, without the benefit of dividends (FTSE 100 ex. dividends and National Grid highs.), is up a more modest 5.29% year to date.
What happens next appears to hinge entirely on the currently impending US budget cuts and tax increases, that are due to be implemented in Jan 2013, and have collectively come to be known as the "fiscal cliff".
In the short term at least, it seems to be the one thing in the whole wide world that will determine the next direction in world markets
Excepting another European state collapsing under the weight of its own debt of course.
Which is entirely possible when you look at the circumstances behind the relatively small state of Cyprus as it closes in on a bailout of around EU23bn (http://www.bbc.co.uk: Cyprus makes progress over rescue deal with creditors).
EU23bn might not seem large in the context of the EU's problems but it is apparently equivalent to 100% of Cyprus's GDP.
And it all comes as a consequence of its Eu29bn (160% of GDP) exposure to Greece mainly through lending by 2 of its banks. The subsequent "haircut" appears to be what has done the damage.
Shoring the banks and disconnecting this potential domino effect is exactly the kind of firewall that the EU needs to have put in place through its collection of acronym titled funds but has yet to sufficiently convince that it has done so.
But that saga aside (until the next summit/toppling domino), the US fiscal cliff looks like it will dominate market sentiment until January, one way or another.
My portfolio does have a rolling bandwagon of dividends to come in through December though, which will provide a little support.
And, dividend wise, January is a month to look forward to (if markets haven't jumped off the cliff by then), with my 2 largest holdings, R-R and NG, both delivering their interim dividends which will be enough to secure me a second investable tranche early in the New Year.
In the meantime lets hope Santa brings a sturdy handrail to put around the top of that fiscal cliff.
Links to Portfolio updates:
- October 2012: Portfolio Update (The Long Haul).
Fair to say it proved to be a test of the emotions with stop-start negotiations over the impending "fiscal cliff", partnering similarly conflicted negotiations over future EU budget proposals, and Greece's delayed bail-out tranche.
Of the 3 only Greece achieved a temporary lifeline with the release of a 3rd tranche of bailout funds and an extension to its debt reduction timeline. Unfortunately, one can only yawn and wait for the next chapter in this lengthening odyssey.
Elsewhere, George Osborne, the UK's Chancellor of the Exchequer, announced Mark Carney as the next Governor of the Bank of England come June 2013 when the current Governor steps down (The Bank of England: There's a new Sheriff in town!).
Back to my portfolio though and the swing from highs to lows to highs has also, as one would expect, afflicted the individual shares in my portfolio with Aviva, BAE, and R-R moving ahead by 5.73%, 4.84%, and 4.21% but, at the other extreme BG, Microsoft, and Vodafone, finished November down by -6.80%, -6.25%, and -4.22%.
Ex. dividends also had an impact of sorts with Apple, BP, Microsoft, Vodafone, and National Grid all trading without the right to the current dividend.
Fortunately, with R-R and Aviva representing more than 44% of my portfolio their movement was enough to take the portfolio forward despite the falls elsewhere.
And, completing their own circle of life, six dividends were received and added back into the porfolio, one of which was a particularly healthy windfall from Aviva.
| Merchant Adventurer's Index | ||||||||
| Forecast | 1 month | YTD | 23 mth | |||||
| Price | % holding | Div. yield | % gain | % gain | % gain | |||
| R-R | 875.50p | 32.75% | 2.20% | 4.21% | 19.29% | 42.94% | ||
| National Grid | 704.50p | 17.24% | 5.82% | -0.28% | 12.72% | 27.40% | ||
| Aviva | 350.40p | 11.45% | 7.44% | 5.73% | 15.94% | 3.71% | ||
| BP | 431.55p | 5.25% | 4.93% | -2.65% | -5.01% | -5.72% | ||
| Apple ** | $584.98 | 5.19% | 1.33% | -0.99% | 40.15% | 72.61% | ||
| IG Group | 423.30p | 4.24% | 5.40% | -2.80% | -7.52% | -11.30% | ||
| William Hill | 337.20p | 3.50% | 3.32% | -0.24% | 66.27% | 97.54% | ||
| General Electric ** | $21.13 | 2.39% | 2.75% | 0.81% | 14.48% | 34.92% | ||
| Centrica | 325.60p | 2.27% | 5.03% | 0.46% | 12.55% | -1.81% | ||
| SSE | 1425.00p | 2.19% | 5.90% | -1.59% | 10.38% | 16.33% | ||
| Microsoft ** | $26.59 | 1.90% | 2.85% | -6.25% | -0.61% | -7.24% | ||
| Morrisons | 268.70p | 1.88% | 4.39% | 0.30% | -17.63% | 0.41% | ||
| BAE Systems | 327.30p | 1.82% | 5.95% | 4.84% | 14.80% | -0.82% | ||
| Vodafone | 161.15p | 1.74% | 7.07% | -4.22% | -9.92% | 0.01% | ||
| BG Group | 1069.50p | 1.74% | 1.51% | -6.80% | -22.30% | -17.48% | ||
| Tesco | 325.05p | 1.44% | 4.56% | 1.63% | -19.43% | -18.52% | ||
| Cash | 3.03% | 0.00% | ||||||
| 100.00% | 4.02% | |||||||
| 1 Month | YTD | 23 mth | ||||||
| Virtual Portfolio gain (incl. Dividends) | ||||||||
| - 1 month gain 1616.66 - | 1646.20 | 1.83% | ||||||
| - YTD gain 1409.55 - | 1646.20 | 16.79% | ||||||
| - 23 month gain 1264.20 - | 1646.20 | 30.22% | ||||||
| - 35 month gain 1000.00 - | 1646.20 | 64.62% | ||||||
| FTSE gain (excl. Dividends) | ||||||||
| - 1 month gain 5782.7 - | 5866.82 | 1.45% | ||||||
| - YTD gain 5572.28 - | 5866.82 | 5.29% | ||||||
| - 23 month gain 5971.01 - | 5866.82 | -1.74% | ||||||
| - 35 month gain 5412.88 - | 5866.82 | 8.39% | ||||||
| Transactions: | ||||||||
| 01/11/2012 | Div | Gen. Electric @ 8.96p per share | ||||||
| 05/11/2012 | Div | Morrisons @ 3.49p per share | ||||||
| 14/11/2012 | Div | Centrica @ 4.62p per share | ||||||
| 16/11/2012 | Div | Aviva @ 10p per share | ||||||
| 22/11/2012 | Div | Apple @ £1.4181 per share (est) | ||||||
| 30/11/2012 | Div | BAE @ 7.5p per share | ||||||
| Notes: | ||||||||
| * US Dividends are adjusted for exchange rate and 15% withholding tax | ||||||||
| ** Sterling : Dollar exchange rate = £1: $1.6013 as at 30/11/12 | ||||||||
So lots and lots of disappointing trading updates and veiled profit warnings coming through at the moment with BG and Microsoft taking heavy beatings as a result of their own updates.
As mentioned the end result of all these shenanigans on my portfolio is a 1.83% gain in the month, as well as 16.79% in the year to date.
As to the FTSE100, the index managed an equally useful gain of 1.45% in the month but, without the benefit of dividends (FTSE 100 ex. dividends and National Grid highs.), is up a more modest 5.29% year to date.
 |
| Click to enlarge, close to return |
What happens next appears to hinge entirely on the currently impending US budget cuts and tax increases, that are due to be implemented in Jan 2013, and have collectively come to be known as the "fiscal cliff".
In the short term at least, it seems to be the one thing in the whole wide world that will determine the next direction in world markets
Excepting another European state collapsing under the weight of its own debt of course.
Which is entirely possible when you look at the circumstances behind the relatively small state of Cyprus as it closes in on a bailout of around EU23bn (http://www.bbc.co.uk: Cyprus makes progress over rescue deal with creditors).
EU23bn might not seem large in the context of the EU's problems but it is apparently equivalent to 100% of Cyprus's GDP.
And it all comes as a consequence of its Eu29bn (160% of GDP) exposure to Greece mainly through lending by 2 of its banks. The subsequent "haircut" appears to be what has done the damage.
Shoring the banks and disconnecting this potential domino effect is exactly the kind of firewall that the EU needs to have put in place through its collection of acronym titled funds but has yet to sufficiently convince that it has done so.
But that saga aside (until the next summit/toppling domino), the US fiscal cliff looks like it will dominate market sentiment until January, one way or another.
My portfolio does have a rolling bandwagon of dividends to come in through December though, which will provide a little support.
And, dividend wise, January is a month to look forward to (if markets haven't jumped off the cliff by then), with my 2 largest holdings, R-R and NG, both delivering their interim dividends which will be enough to secure me a second investable tranche early in the New Year.
In the meantime lets hope Santa brings a sturdy handrail to put around the top of that fiscal cliff.
Links to Portfolio updates:
- October 2012: Portfolio Update (The Long Haul).
Monday, 26 November 2012
FTSE 100 ex. dividends and National Grid highs.
National Grid @ 716.32, +5.32 (+0.007%).
I noticed that National Grid notched up a new 52 week intra-day high this morning ahead of the shares trading ex. the 14.49p dividend on Wednesday.
Interesting to see as well that the FTSE100 could lose 2.49 points on Wednesday as National Grid (2.08), Amec (0.14), Johnson Mathey (0.13), and Tate & Lyle (0.14), all trade without their respective dividend entitlements.
But, as you can see, the biggest contributor to the 2.49 is National Grid due to the size of the company (by capitalisation), its divided yield, and its relative weighting in the FTSE100.
I find it useful to note the impact of dividends (a return of capital), on an index constructed on the relative capitalisations of 100 (or so) companies.
I say that because when listening to negative comments around the FTSE100, inevitably the comment comes up about the FTSE trading sideways for a period. For example, the FTSE100 today is around 5789 as I look at it.
If I was to look back at the 28 November last year it stood at 5552.29.
So with the index now standing at 5789 (5552.29), we can see that it has moved ahead by 4.26% over 12 months.
Casting the net for information a little further I see that the iShares (nothing to do with Cupertino in this case), FTSE100 Exchange Traded Fund trades at around 578p (http://uk.ishares.com: iShares FTSE 100 (ISF).).
578p v 5789 (actual FTSE) is close enough in numeric similarity (give or take a decimal place), and you should also be able to see from the chart below (that compares the movement of the ETF with the actual FTSE100 index over 1 year), that the ETF does an extremely good job of achieving its objective of mirroring the FTSE 100.
The discrepancies come from things like transaction charges, management charges, and timing, or inertia (the fact that the fund can only respond after an event depending upon its declared policy).
For example as the FTSE declares changes to the line up of the index then the fund will respond accordingly but the exact timing, entry, and exit prices of individual share may differ from the datum prices used by the FTSE.
So recognising that the ETF is a fairly accurate mirror of the FTSE100 it must also do one more thing and that is..... issue dividends.
It is after all holding the same 100 companies, some of which yield dividends
And over the last 12 months the ETF has issued quarterly dividends as follows: 2.66p; 7.44p; 4.56p; and 5.61p.
20.27p in total.
20.27p divided by the current 578p = 3.51% which is amazingly close to the 3.51% distribution yield published on the information page for this ETF (http://uk.ishares.com: iShares FTSE 100 (ISF).).
So taking this mirrored yield and applying it back to the FTSE then at 5789 (approx.), we can assume that the FTSE has also yielded 3.51% over the last 12 months. As mentioned, they both hold the same 100 companies after all.
3.51% of 5789 is 203.19 points which means that if these dividends hadn't been distributed then the FTSE 100 would actually be at 5992.19!
Going back to the 12 month performance of 5992.19 / 5552.29, then the FTSE 100 would actually be (or is actually!), showing an increase of 7.92% which is just about the oft quoted historical average.
Putting the FTSE100's actual gain to one side, 203.19 points is a sizeable gain in itself and when distributed tax free to basic rate taxpayers stands comparison with anything coming out of our so called savings institutions today.
But despite this income and the opportunity for capital gain, the hurdle for any would be investor remains the risk to capital. This is where realism, acceptance, understanding, and diversification come in to ensure that a suitable level of risk management is in place.
There are also other facets to consider in any comparison, like inflation, and I would still suggest that, where possible, companies balance pricing models in line with inflation whereas very few savings accounts seem to match/better inflation. Real inflation anyway, not the knocked up CPI that the last lot came up with.
And, that being the case then company profits (and shares), stand a better chance of protecting capital against inflation, than savings accounts will on their own.
But savings accounts do have their place in any, and all investment strategies as they also provide a form of diversification as well as easy access to day to day and rainy day funds.
But I'm digressing on my digressing. I started out looking at National Grid and anticipating its ex. dividend status on Wednesday before running off on a tangent of how ex.dividends on Wednesday could affect the FTSE and then how the FTSE100's performance over a period is also affected by dividends.
What I will say is that a significant piece of my current thinking and strategy is how best to make use of these dividends, specifically re-investing them (if you don't need the income of course).
And, as it is for the FTSE100 on Wednesday, so it is with my portfolio that National Grid is the biggest contributor to my cause with the dividend alone contributing around 1% to my portfolio each year regardless of the FTSE's volatility (October 2012: Portfolio Update (The Long Haul).)
National Grid dividend @ 14.49p per share
- 28 Nov. ex.dividend
- 16 Jan. payment date
Related links:
- Chart courtesy of Digitallook
- http://uk.ishares.com: iShares FTSE 100 (ISF)
Related posts:
- October 2012: Portfolio Update (The Long Haul)
I noticed that National Grid notched up a new 52 week intra-day high this morning ahead of the shares trading ex. the 14.49p dividend on Wednesday.
Interesting to see as well that the FTSE100 could lose 2.49 points on Wednesday as National Grid (2.08), Amec (0.14), Johnson Mathey (0.13), and Tate & Lyle (0.14), all trade without their respective dividend entitlements.
But, as you can see, the biggest contributor to the 2.49 is National Grid due to the size of the company (by capitalisation), its divided yield, and its relative weighting in the FTSE100.
I find it useful to note the impact of dividends (a return of capital), on an index constructed on the relative capitalisations of 100 (or so) companies.
I say that because when listening to negative comments around the FTSE100, inevitably the comment comes up about the FTSE trading sideways for a period. For example, the FTSE100 today is around 5789 as I look at it.
If I was to look back at the 28 November last year it stood at 5552.29.
So with the index now standing at 5789 (5552.29), we can see that it has moved ahead by 4.26% over 12 months.
Casting the net for information a little further I see that the iShares (nothing to do with Cupertino in this case), FTSE100 Exchange Traded Fund trades at around 578p (http://uk.ishares.com: iShares FTSE 100 (ISF).).
578p v 5789 (actual FTSE) is close enough in numeric similarity (give or take a decimal place), and you should also be able to see from the chart below (that compares the movement of the ETF with the actual FTSE100 index over 1 year), that the ETF does an extremely good job of achieving its objective of mirroring the FTSE 100.
 |
| Chart courtesy of Digitallook. Click to enlarge, close to return. |
For example as the FTSE declares changes to the line up of the index then the fund will respond accordingly but the exact timing, entry, and exit prices of individual share may differ from the datum prices used by the FTSE.
So recognising that the ETF is a fairly accurate mirror of the FTSE100 it must also do one more thing and that is..... issue dividends.
It is after all holding the same 100 companies, some of which yield dividends
And over the last 12 months the ETF has issued quarterly dividends as follows: 2.66p; 7.44p; 4.56p; and 5.61p.
20.27p in total.
20.27p divided by the current 578p = 3.51% which is amazingly close to the 3.51% distribution yield published on the information page for this ETF (http://uk.ishares.com: iShares FTSE 100 (ISF).).
So taking this mirrored yield and applying it back to the FTSE then at 5789 (approx.), we can assume that the FTSE has also yielded 3.51% over the last 12 months. As mentioned, they both hold the same 100 companies after all.
3.51% of 5789 is 203.19 points which means that if these dividends hadn't been distributed then the FTSE 100 would actually be at 5992.19!
Going back to the 12 month performance of 5992.19 / 5552.29, then the FTSE 100 would actually be (or is actually!), showing an increase of 7.92% which is just about the oft quoted historical average.
Putting the FTSE100's actual gain to one side, 203.19 points is a sizeable gain in itself and when distributed tax free to basic rate taxpayers stands comparison with anything coming out of our so called savings institutions today.
But despite this income and the opportunity for capital gain, the hurdle for any would be investor remains the risk to capital. This is where realism, acceptance, understanding, and diversification come in to ensure that a suitable level of risk management is in place.
There are also other facets to consider in any comparison, like inflation, and I would still suggest that, where possible, companies balance pricing models in line with inflation whereas very few savings accounts seem to match/better inflation. Real inflation anyway, not the knocked up CPI that the last lot came up with.
And, that being the case then company profits (and shares), stand a better chance of protecting capital against inflation, than savings accounts will on their own.
But savings accounts do have their place in any, and all investment strategies as they also provide a form of diversification as well as easy access to day to day and rainy day funds.
But I'm digressing on my digressing. I started out looking at National Grid and anticipating its ex. dividend status on Wednesday before running off on a tangent of how ex.dividends on Wednesday could affect the FTSE and then how the FTSE100's performance over a period is also affected by dividends.
What I will say is that a significant piece of my current thinking and strategy is how best to make use of these dividends, specifically re-investing them (if you don't need the income of course).
And, as it is for the FTSE100 on Wednesday, so it is with my portfolio that National Grid is the biggest contributor to my cause with the dividend alone contributing around 1% to my portfolio each year regardless of the FTSE's volatility (October 2012: Portfolio Update (The Long Haul).)
National Grid dividend @ 14.49p per share
- 28 Nov. ex.dividend
- 16 Jan. payment date
Related links:
- Chart courtesy of Digitallook
- http://uk.ishares.com: iShares FTSE 100 (ISF)
Related posts:
- October 2012: Portfolio Update (The Long Haul)
Sunday, 25 November 2012
FTSE100 @ 5819.44, +213.85 (+3.81%): That was the week that was
FTSE100 @ 5819.44, +213.85 (+3.81% on the week).
Another week and another EU summit ends without agreement. This time on the touchy subject of EU budgets and contributions for the next seven years.
Thankfully the week started out on the front foot with a little optimism from across the pond, that the US political machine might yet find a compromise over its impending fiscal cliff.
What followed was a sprinkle of recognition that employment data and US housing data were actually better than one might have imagined given talk of double dips etc.
The baton was then handed back to Europe as the US celebrated thanksgiving which, thankfully wasn't dropped ahead of the huge retail optimism ahead of America's Black Friday sales which, unofficially at least, seems to signal the run-up to Christmas for America's retail giants.
All told the FTSE 100 managed a 213 point/3.81% rise in the week with over half of that coming during Monday's 132 point rise which started a 5 day sequence of higher closes that was almost enough to drag it back to the 5884.9 at which the FTSE100 closed on the 5 November.
A more confident week then which has also done its best to confound and outfox me when I fully expected to be dipping into the market only to watch BP slipping out of my grasp as I looked to bottom fish the market on some of my holdings.
But I am still left with IG, Vodafone, Tesco, Apple and BAE currently floundering.
You will no doubt notice that four (five including BP), are dividend biased choices, and one, Apple which has a capital gain objective given its recent fall from $700, new product launches, and Christmas within sight. Christmas is likely to yield another record quarter for Apple, although it remains to be seen what level of record quarter will be enough to satisfy analysts.
But given a slightly less murky understanding of its path to recovery, BP would have been my first choice though as, despite there still being a legal case to answer for, the company looks more than capable of capital recovery and dividend growth as the liabilities against its cashflow diminish.
I expect that as details of the EU summit continue to emerge, and be speculated upon, that markets will struggle to maintain last weeks surprising exuberance though.
Flip a coin, heads the FTSE goes up, tails it goes down!
Another week and another EU summit ends without agreement. This time on the touchy subject of EU budgets and contributions for the next seven years.
Thankfully the week started out on the front foot with a little optimism from across the pond, that the US political machine might yet find a compromise over its impending fiscal cliff.
What followed was a sprinkle of recognition that employment data and US housing data were actually better than one might have imagined given talk of double dips etc.
The baton was then handed back to Europe as the US celebrated thanksgiving which, thankfully wasn't dropped ahead of the huge retail optimism ahead of America's Black Friday sales which, unofficially at least, seems to signal the run-up to Christmas for America's retail giants.
All told the FTSE 100 managed a 213 point/3.81% rise in the week with over half of that coming during Monday's 132 point rise which started a 5 day sequence of higher closes that was almost enough to drag it back to the 5884.9 at which the FTSE100 closed on the 5 November.
A more confident week then which has also done its best to confound and outfox me when I fully expected to be dipping into the market only to watch BP slipping out of my grasp as I looked to bottom fish the market on some of my holdings.
But I am still left with IG, Vodafone, Tesco, Apple and BAE currently floundering.
You will no doubt notice that four (five including BP), are dividend biased choices, and one, Apple which has a capital gain objective given its recent fall from $700, new product launches, and Christmas within sight. Christmas is likely to yield another record quarter for Apple, although it remains to be seen what level of record quarter will be enough to satisfy analysts.
But given a slightly less murky understanding of its path to recovery, BP would have been my first choice though as, despite there still being a legal case to answer for, the company looks more than capable of capital recovery and dividend growth as the liabilities against its cashflow diminish.
I expect that as details of the EU summit continue to emerge, and be speculated upon, that markets will struggle to maintain last weeks surprising exuberance though.
Flip a coin, heads the FTSE goes up, tails it goes down!
Monday, 19 November 2012
Musings: FTSE rise, recent falls and fiscal cliffs.
FTSE100 @ 5662.25, +56.66 (1.07%)
Not sure what to make of this morning's bounce on the FTSE other than to say it throws another spanner at my efforts to add to my portfolio by making a seemingly cheap price "slightly" less cheap. This will have very little bearing on the long term but: cake, having, and eating comes to mind!
Although, to be fair selecting is also turning into a chore as more and more candidates drop into an attractive price range albeit with their own dark webs of future forecasts being spun by analysts.
Is there no end to the economic gloom!
But at least it looks like their might be some logic to the recent sell-off in the US (which doesn't suggest others should lamely follow though), and that is the stock market related implications stemming from the unwinding of the Bush era tax cuts in yet another legacy of self interest which has long since been capitalised on.
The most interesting ones (or not as the case may be), being an increase to Capital Gains Tax and Dividend Tax (or withholding tax in my portfolio's case).
With the uncertainty over Capital Gains Tax rates, market reporters seem to be hinting tentatively that a proportion of the recent sell-off might actually be a case of locking in profits ahead of any as yet unconfirmed increases to the rate of CGT.
Actually seems logical.
This thinking also seems to have been applied to Apple, given its meteoric rise, as a partial explanation for some of the continued recent falls ie. locking in profits.
Is now the right time to buy, who knows. No one I know anyway.
But at least you would be buying in the knowledge that most stocks are cheaper than they have been in the last few months, some comfortably so.
So on that basis I still think it very likely that I will make an addition or top up to my portfolio soon.
My biggest problems will be indecision and not having enough funds to buy everything I want to.
As things stand currently, November is looking like being a very disappointing month for my portfolio with current falls in excess of 2% from October's close.
But at least the dividends are continuing to roll in with GE (finally), Morrison's, Centrica, and Aviva having coughed up so far this month, and Apple and BAe still to come.
In addition, Apple, BP, Microsoft, National Grid, and Vodafone, have gone, or are due to trade ex-dividend this month.
Which basically means that I now have visibility of my next invest-able size tranche of funds.
Roll up, roll up for the Magical Dividend Tour!
Related post links:
- October 2012: Portfolio Update (The Long Haul).
Not sure what to make of this morning's bounce on the FTSE other than to say it throws another spanner at my efforts to add to my portfolio by making a seemingly cheap price "slightly" less cheap. This will have very little bearing on the long term but: cake, having, and eating comes to mind!
Although, to be fair selecting is also turning into a chore as more and more candidates drop into an attractive price range albeit with their own dark webs of future forecasts being spun by analysts.
Is there no end to the economic gloom!
But at least it looks like their might be some logic to the recent sell-off in the US (which doesn't suggest others should lamely follow though), and that is the stock market related implications stemming from the unwinding of the Bush era tax cuts in yet another legacy of self interest which has long since been capitalised on.
The most interesting ones (or not as the case may be), being an increase to Capital Gains Tax and Dividend Tax (or withholding tax in my portfolio's case).
With the uncertainty over Capital Gains Tax rates, market reporters seem to be hinting tentatively that a proportion of the recent sell-off might actually be a case of locking in profits ahead of any as yet unconfirmed increases to the rate of CGT.
Actually seems logical.
This thinking also seems to have been applied to Apple, given its meteoric rise, as a partial explanation for some of the continued recent falls ie. locking in profits.
Is now the right time to buy, who knows. No one I know anyway.
But at least you would be buying in the knowledge that most stocks are cheaper than they have been in the last few months, some comfortably so.
So on that basis I still think it very likely that I will make an addition or top up to my portfolio soon.
My biggest problems will be indecision and not having enough funds to buy everything I want to.
As things stand currently, November is looking like being a very disappointing month for my portfolio with current falls in excess of 2% from October's close.
But at least the dividends are continuing to roll in with GE (finally), Morrison's, Centrica, and Aviva having coughed up so far this month, and Apple and BAe still to come.
In addition, Apple, BP, Microsoft, National Grid, and Vodafone, have gone, or are due to trade ex-dividend this month.
Which basically means that I now have visibility of my next invest-able size tranche of funds.
| Ex Div. | Company and payout | Due date |
| Tesco @ 4.63p per share | 21-Dec. | |
| BAE @ 7.8p per share | 30-Nov | |
| R-R @ 7.6p per share | 04-Jan. | |
| William Hill @ 3.4p per share Apple @ $2.65 per share BP @ 9c per share | 07-Dec. 15-Nov 21-Dec | |
21 Nov | Microsoft 23c per share Vodafone @ 3.27p per share | 13-Dec 06 Feb |
| 28 Nov | Nat. Grid @ 14.49p per share | 16 Jan |
Roll up, roll up for the Magical Dividend Tour!
Related post links:
- October 2012: Portfolio Update (The Long Haul).
Monday, 12 November 2012
Markets move up! Markets move down?
Markets (and myself), took a bit of a proverbial, and psychological, towelling last week, amidst concerns about lemmings and fiscal cliffs, trojan horses, and alphabet soup (EU GDP).
And whilst these are genuine concerns, from which you can suggest that they are rightly being accounted for, none of them are new, and questions the sense of logic that prompted markets to rise in the first place before coming back down, and then some.
Strangely, markets started to move ahead as the uncertainty surrounding the next President of the United States of America, appeared to lessen as polls pointed towards the incumbent Barack Obama.
As recently as election day itself the DJIA was moving up with such as United Technologies driving them (U.S. Stocks Stage Election Day Rally; DJIA Notches Triple-Digit Gain!).
And I've purposely picked United Technologies, which rose 2.7% on election day, because as a large US employer, and a conglomerate who's interests include defence, it surely wouldn't be affected by tax rises and cuts in "defence" spending would it?
Forearmed with this knowledge, and putting European woes aside for a minute, why then did markets drop dramatically once the uncertainty became a certainty as President Barack Obama made his victory tweet and returned to the Whitehouse.
Almost upon the last letter of his historic tweet (1 million retweets), US index futures were indicating the probability of a 100 point fall in the DJIA as speculator attention moved once again to the impending fiscal cliff of tax rises and spending cuts in January.
100 points up, and a 100 points down.
None of this is breaking news though.
But if markets hadn't moved up then it would not have seemed such a dramatic fall which once again raises the question of short term market moves and who benefits.
For a small private investor such as myself it can drive you mad and is probably the biggest barrier to anyone thinking of investing in shares as it creates such a dramatic image of risk.
As to European GDP figures, shhh, its a secret but did you know there has been a recession and rising unemployment in Europe which might lead to lower output!
Ah, so you did know, I bet you didn't know that Greece has problems though and, despite agreeing to tax rises and budget cuts, can't seem to implement them all.
There does not seem to be the will in Greek leadership to turn the country around whilst it is being spoon-fed and trained by the EU.
Greece really needs to be left alone to fix itself as that is the only way by which they will accept the unpalatable decisions and support them.
I wonder when the case will be heard in the European Court of Human Rights that Greece is being put upon by its northern neighbours?
My Portfolio seems to be full of potential bad news at the moment as well, with Apple dropping amidst speculated supply chain constraints (its struggling to meet pent up demand!!!), and future dividend concerns across National Grid, Vodafone, and Aviva.
The latter, which I was concerned to read about in the Telegraph's Questor column (Sunday share tips: Aviva, Staffline, G4S), where the columnist reports that analysts expect a cut next year. Funny that this has not filtered through into consensus forecasts yet?
Some analysts do then and some don't, hence the consensus, or average.
But, worryingly there is a change of language here, despite the Chairman seeming to understand its importance to shareholders and suggesting it would be a last resort if the steps identified to shore up the company's capital position don't come to fruition.
I wonder how much is speculated and how much is leaked to give shareholders time to acclimatize themselves to expecting a cut?
More uncertainty then.
And, apparently we are no longer shopping at Morrison and Tesco's either, and BG Group can't get at its gas yet.
On BG Group, it is annoying that, according to internet sources, on the 7th September, the COO Martin Houston apparently sold 56,034 shares at 1269.07p, raising £711,111.25 ahead of the hastily brought forward Halloween statement that prompted a 20% fall in the share price.
Of course, as the Chief Operating Officer and an Executive Director, he would not have any foreknowledge of business performance or production delays, would he?
I'd like to think it's just a co-incidence.
On the subject of supermarkets though, why don't they stop giving us piles of paper to carry around and just cut the prices in store?
Morrison's also need to stop trying to catch the ship, its sailed.
The niche for Morrison's label clothing must be small. The stores aren't large enough so it must surely cost more to set-up and market than it will realise anytime soon.
Its a worry when new management teams come in and want to make a mark by spending the family silver.
Find me a supermarket whose mission statement is "to sell good quality groceries at the right price in an attractive environment (with car parking spaces large enough that my car doors won't keep getting bashed)".
The last bit is me being grumpy but is still a factor in where I choose to shop.
But Morrison's have finally taken the one step forward, to keep pace with rivals, that they should have taken years ago though, and thats to extend their opening hours.
Anyway, I've caught a cold in more ways than one so you might be able to tell that I am feeling a bit grumpier than usual.
And that being the case I will sign off now.
Related article links:
- http://online.wsj.com: U.S. Stocks Stage Election Day Rally; DJIA Notches Triple-Digit Gain
- http://www.sharecast.com: Sunday share tips: Aviva, Staffline, G4S
And whilst these are genuine concerns, from which you can suggest that they are rightly being accounted for, none of them are new, and questions the sense of logic that prompted markets to rise in the first place before coming back down, and then some.
Strangely, markets started to move ahead as the uncertainty surrounding the next President of the United States of America, appeared to lessen as polls pointed towards the incumbent Barack Obama.
As recently as election day itself the DJIA was moving up with such as United Technologies driving them (U.S. Stocks Stage Election Day Rally; DJIA Notches Triple-Digit Gain!).
And I've purposely picked United Technologies, which rose 2.7% on election day, because as a large US employer, and a conglomerate who's interests include defence, it surely wouldn't be affected by tax rises and cuts in "defence" spending would it?
Forearmed with this knowledge, and putting European woes aside for a minute, why then did markets drop dramatically once the uncertainty became a certainty as President Barack Obama made his victory tweet and returned to the Whitehouse.
Almost upon the last letter of his historic tweet (1 million retweets), US index futures were indicating the probability of a 100 point fall in the DJIA as speculator attention moved once again to the impending fiscal cliff of tax rises and spending cuts in January.
100 points up, and a 100 points down.
None of this is breaking news though.
But if markets hadn't moved up then it would not have seemed such a dramatic fall which once again raises the question of short term market moves and who benefits.
For a small private investor such as myself it can drive you mad and is probably the biggest barrier to anyone thinking of investing in shares as it creates such a dramatic image of risk.
As to European GDP figures, shhh, its a secret but did you know there has been a recession and rising unemployment in Europe which might lead to lower output!
Ah, so you did know, I bet you didn't know that Greece has problems though and, despite agreeing to tax rises and budget cuts, can't seem to implement them all.
There does not seem to be the will in Greek leadership to turn the country around whilst it is being spoon-fed and trained by the EU.
Greece really needs to be left alone to fix itself as that is the only way by which they will accept the unpalatable decisions and support them.
I wonder when the case will be heard in the European Court of Human Rights that Greece is being put upon by its northern neighbours?
My Portfolio seems to be full of potential bad news at the moment as well, with Apple dropping amidst speculated supply chain constraints (its struggling to meet pent up demand!!!), and future dividend concerns across National Grid, Vodafone, and Aviva.
The latter, which I was concerned to read about in the Telegraph's Questor column (Sunday share tips: Aviva, Staffline, G4S), where the columnist reports that analysts expect a cut next year. Funny that this has not filtered through into consensus forecasts yet?
Some analysts do then and some don't, hence the consensus, or average.
But, worryingly there is a change of language here, despite the Chairman seeming to understand its importance to shareholders and suggesting it would be a last resort if the steps identified to shore up the company's capital position don't come to fruition.
I wonder how much is speculated and how much is leaked to give shareholders time to acclimatize themselves to expecting a cut?
More uncertainty then.
And, apparently we are no longer shopping at Morrison and Tesco's either, and BG Group can't get at its gas yet.
On BG Group, it is annoying that, according to internet sources, on the 7th September, the COO Martin Houston apparently sold 56,034 shares at 1269.07p, raising £711,111.25 ahead of the hastily brought forward Halloween statement that prompted a 20% fall in the share price.
Of course, as the Chief Operating Officer and an Executive Director, he would not have any foreknowledge of business performance or production delays, would he?
I'd like to think it's just a co-incidence.
On the subject of supermarkets though, why don't they stop giving us piles of paper to carry around and just cut the prices in store?
Morrison's also need to stop trying to catch the ship, its sailed.
The niche for Morrison's label clothing must be small. The stores aren't large enough so it must surely cost more to set-up and market than it will realise anytime soon.
Its a worry when new management teams come in and want to make a mark by spending the family silver.
Find me a supermarket whose mission statement is "to sell good quality groceries at the right price in an attractive environment (with car parking spaces large enough that my car doors won't keep getting bashed)".
The last bit is me being grumpy but is still a factor in where I choose to shop.
But Morrison's have finally taken the one step forward, to keep pace with rivals, that they should have taken years ago though, and thats to extend their opening hours.
Anyway, I've caught a cold in more ways than one so you might be able to tell that I am feeling a bit grumpier than usual.
And that being the case I will sign off now.
Related article links:
- http://online.wsj.com: U.S. Stocks Stage Election Day Rally; DJIA Notches Triple-Digit Gain
- http://www.sharecast.com: Sunday share tips: Aviva, Staffline, G4S
Wednesday, 24 October 2012
Nervous markets react to earnings misses.
FTSE100 @ 5804.78, +6.87 (+0.1%)
DJIA @ 13120.59,+18.06 (+0.1%)
Markets certainly testing nerves at the moment but despite what has felt like a painful few days with a 3%, or so, hit to my portfolio the FTSE continues to be above/around 5800 and the Dow Jones is currently above 13000 so the impact on the indices still appears negligible.
Surprise, surprise that Europe is back on the agenda and the forthcoming US fiscal cliff is in focus as the Presidential election moves towards a conclusion.
The icing on the cake (despite weeks of warnings), is that company earnings have disappointed with a number of US heavyweights not meeting all aspects of analysts expectations the biggest disappointment of which came from Google (Google "groan" (not Chrome), as shares suspended on trading update.), which, unfortunately was the centrepiece of a debacle involving the early release of information without the benefit of company support.
This foot shooting miss and early release triggered an almost immediate 10% fall in the share price followed by suspension.
Circling in the shadows is the 25 year old spectre of Black Monday with journalists earning their crust by wheeling out the many similarities (if you really want to dig for them, of course), with today's market environment.
I did learn something new though as I didn't realise that, back in 1987 over the weekend that preceeded Black Monday, US warships shelled an Iranian oil platform which certainly wouldn't have helped frayed nerves.
Back to today though, and it might be that markets calibrate themselves further but I am not looking to react to it. Being cynical in my old age I still think that there are many interested parties who actively seek the trading opportunities that this volatility and nervousness can create.
The very active ex dividend and payment dates affecting my portfolio (September 2012: Portfolio Update.), also helps to give me a sense that it is still moving forward despite the market noise.
Tesco and BAE have gone ex. div. already this month, IG paid out yesterday, R-R and William Hill went ex. dividend today, and GE payout tomorrow.
Thats a couple of payouts this month and 3 more ex.divs added to the "pipeline".
So patience, and finger crossing on my part that the steady rewards will continue.
Related post links:
- Google "groan" (not Chrome), as shares suspended on trading update.
- September 2012: Portfolio Update.
DJIA @ 13120.59,+18.06 (+0.1%)
Markets certainly testing nerves at the moment but despite what has felt like a painful few days with a 3%, or so, hit to my portfolio the FTSE continues to be above/around 5800 and the Dow Jones is currently above 13000 so the impact on the indices still appears negligible.
Surprise, surprise that Europe is back on the agenda and the forthcoming US fiscal cliff is in focus as the Presidential election moves towards a conclusion.
The icing on the cake (despite weeks of warnings), is that company earnings have disappointed with a number of US heavyweights not meeting all aspects of analysts expectations the biggest disappointment of which came from Google (Google "groan" (not Chrome), as shares suspended on trading update.), which, unfortunately was the centrepiece of a debacle involving the early release of information without the benefit of company support.
This foot shooting miss and early release triggered an almost immediate 10% fall in the share price followed by suspension.
Circling in the shadows is the 25 year old spectre of Black Monday with journalists earning their crust by wheeling out the many similarities (if you really want to dig for them, of course), with today's market environment.
I did learn something new though as I didn't realise that, back in 1987 over the weekend that preceeded Black Monday, US warships shelled an Iranian oil platform which certainly wouldn't have helped frayed nerves.
Back to today though, and it might be that markets calibrate themselves further but I am not looking to react to it. Being cynical in my old age I still think that there are many interested parties who actively seek the trading opportunities that this volatility and nervousness can create.
The very active ex dividend and payment dates affecting my portfolio (September 2012: Portfolio Update.), also helps to give me a sense that it is still moving forward despite the market noise.
Tesco and BAE have gone ex. div. already this month, IG paid out yesterday, R-R and William Hill went ex. dividend today, and GE payout tomorrow.
Thats a couple of payouts this month and 3 more ex.divs added to the "pipeline".
So patience, and finger crossing on my part that the steady rewards will continue.
Related post links:
- Google "groan" (not Chrome), as shares suspended on trading update.
- September 2012: Portfolio Update.
Thursday, 18 October 2012
Google "groan" (not Chrome), as shares suspended on trading update.
NASDAQ @ 2744.17, -31.45 (-1.13)
Google @ $695, -$60.49 (-8.01%)
Bizarre, unheard of, and "by mistake".
It appears that Google has mistakenly declared its quarterly performance early as opposed to after the bell as planned and commonly seen with US companies.
The results outlined 3rd quarter earnings of $9.03 per share which was substantially short of analysts forecasts of $10.65.
This produced a significant fall of around 10% in the share price prior to its shares being suspended at around 12:50 until 3:20 New York time (Google shares suspended as premature results stun Wall Street), and then recovering slightly to close 8.01% down
Such a fall on such a share tied a big albatross around the NASDAQ which has itself closed more than 1% down.
Reports suggest that search and advertising revenues have suffered with users possibly bypassing Google for Amazon/App searches on Mobile devices (Google's results miss analyst forecasts: reaction). The company's acquisition of Motorola is also taking time to absorb with costs up around 71% (Google shares suspended as premature results stun Wall Street).
There is also a growing privacy and property issue to contend with as we accelerate towards a connected, cloud supported future.
Still the company remains the dominant search engine and with Chrome, Android, Cloud technology, and Motorola, Google continues to look like it can influence, shape and be at the heart of an internet and wireless dominated future.
But, its also worth noting that this is probably the 3rd big miss by Google in the last 2 years, as the company "invests" in capacity, innovation, and capability (occasionally at the short term expense of margins), but the shares have always recovered to new highs so it will be interesting to see if the same trick can be pulled off again. A further 10% and the shares might present another buying opportunity based on its previous bouncebackability.
Related article links:
- http://www.telegraph.co.uk: Google shares suspended as premature results stun Wall Street
- http://www.bbc.co.uk: Google shares suspended after profit results error
- http://www.telegraph.co.uk: Google results: mobile phones at the root of profit challenges
- http://www.telegraph.co.uk: Google's results miss analyst forecasts: reaction
Earlier Posts:
- Is Android a reason to invest in Google?
- Market valuations and Google's $12.5bn bid for Motorola.
Google @ $695, -$60.49 (-8.01%)
Bizarre, unheard of, and "by mistake".
It appears that Google has mistakenly declared its quarterly performance early as opposed to after the bell as planned and commonly seen with US companies.
The results outlined 3rd quarter earnings of $9.03 per share which was substantially short of analysts forecasts of $10.65.
This produced a significant fall of around 10% in the share price prior to its shares being suspended at around 12:50 until 3:20 New York time (Google shares suspended as premature results stun Wall Street), and then recovering slightly to close 8.01% down
Such a fall on such a share tied a big albatross around the NASDAQ which has itself closed more than 1% down.
Reports suggest that search and advertising revenues have suffered with users possibly bypassing Google for Amazon/App searches on Mobile devices (Google's results miss analyst forecasts: reaction). The company's acquisition of Motorola is also taking time to absorb with costs up around 71% (Google shares suspended as premature results stun Wall Street).
There is also a growing privacy and property issue to contend with as we accelerate towards a connected, cloud supported future.
Still the company remains the dominant search engine and with Chrome, Android, Cloud technology, and Motorola, Google continues to look like it can influence, shape and be at the heart of an internet and wireless dominated future.
But, its also worth noting that this is probably the 3rd big miss by Google in the last 2 years, as the company "invests" in capacity, innovation, and capability (occasionally at the short term expense of margins), but the shares have always recovered to new highs so it will be interesting to see if the same trick can be pulled off again. A further 10% and the shares might present another buying opportunity based on its previous bouncebackability.
Related article links:
- http://www.telegraph.co.uk: Google shares suspended as premature results stun Wall Street
- http://www.bbc.co.uk: Google shares suspended after profit results error
- http://www.telegraph.co.uk: Google results: mobile phones at the root of profit challenges
- http://www.telegraph.co.uk: Google's results miss analyst forecasts: reaction
Earlier Posts:
- Is Android a reason to invest in Google?
- Market valuations and Google's $12.5bn bid for Motorola.
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