90% of S&P 500 stocks are higher this year, closing in on the 2003 record

The number of winning stocks this year is approaching a 10-year peak, writes Howard Silverblatt, senior analyst at S&P Dow Jones Indices. You’d have to go back to 1980 for the previous record. Here’s what Howard is sending to his email subscribers:

You Take My Breadth Away

           …  Year-to-date 451 of the S&P 500 issues are up (47 down), which on an annual basis is the best since 458 issues increased in 2003.  The 2003 number is also a record high from 1980, when my data series starts.  The number is significant since it shows the depth of the recovery.  In the late 1990s, the market aggregates became dominated by technology, which grew on ‘faith’ and ‘hits’, as compared to sales and cash-flow.  In 1998, the market returned 26.67%, yet only 57.8% of the issues were up, and in 1999, the market grew 19.53%, but less than half, 48.2% of the issues, were up.  For the 2013 year-to-date, 90.2% of the issues are higher, with the market aggregate up 23.39%; 270 issues are above that aggregate, with 140 issues up at least 40%.  Surely a significant number of people are seeing large gains, and surely many are not, since they remain out of the market.

            … Chasing returns is not a good reason to invest, but when enough do it the short-term impact is more buying and higher prices. Which we may be getting close to if the market stays anywhere near its current level.

(fyi – Friday set two new official highs, intraday of 1759.82, and a close of 1759.77)


A rare glimpse into the private life of a top Wall Street strategist; going beyond the blah-blah of experts

Savita Subramanian, mom, and head of quant and equity strategy, BoA Merrill Lynch

Last week, I finally got on the phone with Savita Subramanian, head of quant and equity strategy for Bank of America Merrill Lynch. The Street has been abuzz with her bullish comments on the stock market. I wanted to get a feel for her market insights, which are based in part on an indicator that shows her peers are so bearish that it’s time to become bullish.

At the end of the interview, the conversation turned somewhat personal. We went from the laser focus of professionals to working moms, juggling work, kids, and whatever else may have once been part of our personal lives. She mentioned that given everything she knows about markets, she was thinking about investing in stocks for her six-month-old’s education fund.

Over the years, I’ve spoken to plenty of proud dads about their kids and family. But it always feels a little different talking to another working mom; there’s a special camaraderie that comes from the unique challenges we share. And when Savita talked about her son and the college fund, I knew I was hearing something very special and real. Sometimes as reporters and readers we see these expert recommendations fly by, and they feel pretty impersonal, like moves on a chessboard that don’t have any real import. But when you hear a mother saying this is how I am saving for my child — that’s an endorsement above and beyond the usual blather on Wall Street.

Read the story here.

Where shall me meet again?

It’s been an amazing time with True/Slant. The past 16 months have been intense, terrifying and wonderful.  But first things first: Thank you to the T/S crew, a gracious, supportive, and inspiring team who created a wonderful community of writers.

Thanks to Lewis D’Vorkin  for the vision; to Andrea Spiegel and Coates Bateman for bringing me in and for unfailing encouragement and patience; to Michael Roston, the headline doctor and blogosphere tutor; and to Steve McNally and David Cautin for the behind-the-scenes work that kept the site going. And a big thank-you to my colleagues, readers and commenters who took the time to keep the conversation going. Where shall we meet again?

A few thoughts before moving on.

True/Slant was born at a pretty crazy time — the economy was crumbling and news organizations were shutting down, cutting staff, looking ways to save money. In early 2009, The Atlantic published an essay that posited The New York Times could fail in only a few months — a shocking thought because it suddenly seemed possible.

That’s just about the moment I decided it was time to re-enter journalism after spending the better part of a decade caring for our two boys.

My husband thought I was nuts. He’s not wrong. If wages are generally unchanged in the past decade for most Americans, they have fallen dramatically for freelance journalists. But I believe this is a temporary stage. (I have to.) The economic model is far from finished; CraigsList, the Internet — they have done their damage. And what they left undone, the Great Recession took care of. But I don’t believe that’s the end of the story by any stretch. Newspapers were a byproduct of the industrial revolution; it was a great ride. The Digital Era has temporarily killed the economic model for journalists, but as we speak I am hopeful that in the next few years, that will change because I suspect we are only mid-revolution. Efforts like T/S are part of that. Big thinkers are throwing out new ideas all the time. If as a society we do value journalism, then I feel confident that we will solve the problem of paying for what we need.

T/S began with the notion of entrepreneurial journalism. It sounded different but as it turns out some things never change. My husband has always said that good reporters are like mini-businesspeople scoping out their beats, carving territory, trying to make a name for themselves. They aren’t particularly good at working for other people or filing things in triplicate. So true.

To me the more fundamental shift in the new journalism revolves around the relationship between reader and writer; between the news subject and the news collector; between source and reporter. We are so much more connected to one another; the competition is more intense to attract and discover one another. The Internet ups the ante on everything; now a byline is a brand. Stories or content are products. Everyone is a reporter.

I confess, sometimes the terms chafe.

But then there’s the excitement of being part of something new and changing; being part of something you can influence. Revolution, if you can survive it, is a heady time.

When I launched this blog I thought that all the upheaval of the financial crisis would bring us to a new Wall Street. I’m less inclined to believe that. It’s fitting that this phase of the blog close with the recent signing of the financial regulatory overhaul bill. It’s a lot of nothing punctuated with a something or two. All in 2300 pages.

One of my early posts focused on AIG and a confidential PowerPoint presentation begging for another round of taxpayer money. This was a few months after the terrifying final quarter of 2008– the quarter when Lehman went under and the Dow plunged more than 700 points in a single day. At the time, the regulators reasoned that the system couldn’t stand another Lehman-like shock. The handouts were unavoidable. But were they?

We’ll never know. In that AIG piece, I took a close look at the language in the PowerPoint, which was clearly designed to scare more money out of taxpayers. The language was vague, ominous, terrifying — it was the monster under the bed.

Opaque language powerfully masked horrible changes in the way we were making decisions about how we lived, invested, and spent money.  Many homebuyers didn’t understand what they were signing when they borrowed  from unscrupulous lenders; careless investors didn’t truly understand what they were buying when they put money into complex mortgage-backed assets; credit rating agencies didn’t understand what they were rating; and everyone screamed, fright-movie-style, if you don’t save us, we will all die. Because the details were so opaque, no one was really sure if that was true or not. The muddiness hid just how clueless we were. The words were muddy because so were our thoughts.

Going forward I hope to write more about the language of Wall Street and its regulators. The language they use effectively slams the door on anyone who isn’t a member of the club. A  little more plain English may prove more potent than 2300 pages of legalese in helping everyone say, hey, this isn’t what we should be doing.

T/S is coming to a close as it was first conceived but many of the basic ideas that drove the site will be re-invigorating Forbes, a venerable brand from another time. On July 31, I will be transferring this blog to NanceFinance; for most of August I will be on vacation, though expect to contribute to financial publications periodically. Please follow me on Twitter to keep tabs on my plans for the fall.

I look forward to continuing the conversation. Your digital space or mine?

Nantucket's two worlds

Last year, after reading a story about the depressed vacation home market in Nantucket, I considered bidding on a mega-property up for absolute auction — no minimum bid. Little did I know that the Colgan family in New Jersey would also respond as I did too the New York Times piece. The tale of their purchase of a distressed property is a telling anecdote for Nantucket real estate, which I write about more deeply in a lead story for Fortune.com today and in a brief item last week for Barron’s.

Everyone likes to write about the hot properties. And my stories touch on some trophy properties — like the recent contract for the estate of ex-Goldman Sachs honcho Jon Winkelried. (The property was reportedly signed for close to $29 million, an island record.) But the Fortune.com feature focuses on the year-round residents, who are still picking up the pieces from Wall Street real estate’s binge in the first part of the decade.

The family consortium I assembled to bid on the Second Glance never even got to first base last year; the auctioneer convinced us that the bargains I envisioned were illusory. And in the case of that one property, she was right. It went for more than $5 million. (You can read those stories here and here). But the Colgans were much shrewder and dogged bargain hunters than we were. To think, we could have been neighbors.

This item on the backstory to Nantucket home sales wouldn’t be complete without a shout out to former T/S contributor Paul Smalera, now a senior editor at Fortune.com. He was a pleasure to work with.

Here’s the story of two worlds  on Nantucket — Wall Street, where fortunes are turning around fast, and everyone else.

FORTUNE — In the past decade, Nantucket Island has served as a barometer for the fortunes of Wall Street. The glass cracked after years of unsustainable pressures. But almost by magic, the barometer is rising once more even as something new and unexpected has come to the summer paradise: foreclosures, short sales, failed auctions, and a skinnier municipal budget. And while financiers can cut and run, it’s the locals who are being hardest hit.

“It’s two different markets,” says Brian Sullivan, a broker for Maury People Sothebys. There’s Wall Street, and everyone else. You can see that on Yahoo’s;s real estate listing for distressed properties on Nantucket: nearly two-thirds are listed for under $1 million, the price sector dominated by the island’s 12,000 year-round residents. But the banks have basically turned their backs on small borrowers, so anyone who does want to buy will have a hard time getting a loan. “They want to lend to people borrowing $1.5 million and up,” says Sullivan.

via Millionaire foreclosures on Nantucket – Jul. 19, 2010.

Meme alert: Ratings agencies as victims

NEW YORK - MAY 5: New York State Attorney Gene...

Image by Getty Images via Daylife

It must be an election year. Andrew Cuomo is working overtime, expanding his probe of financial hanky-panky on Wall Street, apparently to come to the rescue of its co-conspirators victims:

The New York attorney general has started an investigation of eight banks to determine whether they provided misleading information to rating agencies in order to inflate the grades of certain mortgage securities, according to two people with knowledge of the investigation.

via Cuomo Is Said to Question Banks’ Influence on Ratings – NYTimes.com.

The rating agencies served as the handmaidens to Wall Street firms slapping triple-A ratings on mortgage-based derivative deals faster than you can shout, “Next!” Imprimaturs from Standard & Poor’s and Moody’s (major stakeholder: Warren Buffett) enabled many municipalities and pensions seeking top-rated  investments to buy collateralized debt obligations (CDOs) that later turned out to be drek.

Apparently the rating agencies were so busy taking fees from Wall Street that they didn’t have time to check for duping, duplicity, or just plain daffiness. Last month, an anonymous source explained to the Times:

“If you dug into it, if you had the time, you would see errors that magically favored the banker,” said one former ratings executive, who like other former employees, asked not to be identified, given the controversy surrounding the industry. “If they had the time, they would fix it, but we were so overwhelmed.”

And here’s further evidence of victimhood: Turncoats who presumably distracted former colleagues from The Truth. Goldman Sachs (the firm America loves to hate the most) wooed and won Shin Yukawa, a former Fitch Ratings employee, by offering a million dollar package, the Times explains. Three others bolted to sell-side firms. And if that weren’t proof enough, Yukawa worked on the Abacus 2007-AC1 deal at the heart of the SEC and criminal probes into Goldman. And we thought the “fab Fabrice” was behind that deal. Apparently he had help.

I would like to know from you, dear readers, what you think our friend Andrew Cuomo is up to. What benefit is there to the presumptive Democratic candidate for NY State governor in re-casting the ratings agencies as victims in the CDO blow-ups? Is it because the rating agencies were exempt from liability for wrong-headed ratings decisions? Is it because he knows, as former head of the Housing and Urban Department, that it’s all too possible to make bad credit decisions? Memory refresher: Back in the late 1990s early aughts, Cuomo championed extending FHA-backed loans to people who couldn’t really afford to buy homes. Was he duped back then as well?

No avoiding bagels, cream cheese and taxes

handhbagelsIn New York, there are three things you can’t avoid: bagels, cream cheese, and taxes.

And Helmer Toro, owner of the most well-known bagelry in the city, is learning the hard way that when you substitute taxes-lite for the real thing, the barristers who brunch on numbers won’t be fooled. Today the NY Post reports that the Manhattan DA has charged the H&H Bagel owner in a $400,000 tax cheat scam. He has pled not-guilty to the allegations which could result in a jail sentence of up to 15 years and cost him $1.2 million.

Some of the money Toro allegedly stole the old-fashioned way: He simply pocketed $369,318 withheld from employee paychecks for state taxes. Nice. Picking the pockets of truck drivers, cashiers on 80th Street and Broadway, and the bagel makers on West 46th Street who stand over vast vats of boiling water to prepare the city’s daily dose of 80,000 bagels. It’s so much more vivid than Wall Street bankers mis-pricing credit default swaps. I like a story in which you can see who allegedly stole from whom; you don’t need one of those amazing NYTimes graphics that vibrate with numbers and swirl with arrows to show the ebb and flow of ill-gotten gains.

The DA also alleges that Toro cheated the state of another $33,000 through phony-baloney legal maneuverings. Six times he allegedly created shell businesses with new corporation documents so he could pay a special low rate on unemployment insurance taxes — available only to new businesses. “This is the first prosecution of unemployment-insurance tax-rate manipulation in the country,” state Labor Commissioner Patricia Smith told the NY Post.

This is not Toro’s first encounter with the law: The Daily News notes that earlier this year the Upper West Side store was shut for six months for nonpayment of taxes.

Truth be told, I’m no big fan of H&H Bagels. I’m not surprised that the Seinfeld show featured them — they’re a lot of nothing (doughy, not crusty the way a bagel should be) and way overpriced — $1.40 each. And then there’s this: Late one night on West 80th Street, many years ago, I witnessed a dog urinate on a rolling rack of bagels waiting to be packed for delivery. I didn’t know how metaphoric that moment might be.

Trader allegedly tried to eat his words to avoid SEC

The feds nabbed more bad guys today on Wall Street. Not the ones who cost us more than 7 million jobs or trillions of dollars in losses. Those guys are still  at large. No, today, the Securities and Exchange Commission announced with much fanfare that they had nabbed a bunch of guys who allegedly profited about $40 million on improper trading. So many bad guys, so little time.

The men charged at least were colorful — almost as entertaining as the executives who carelessly slammed the economy. There’s a guy dubbed Octopussy. And another one who takes a bite out of his cell phone. It’s like an undiscovered script from Get Smart: Maxwell wakes up one morning convinced that he is James Bond. Here, undoctored, is what happened in the non-too purple prose of Robert Khuzami, enforcement director at the SEC:

Arthur Cutillo, through his friend and fellow attorney Jason Goldfarb, tipped the inside information to a Wall Street trader named Zvi Goffer, who was referred to as “Octopussy” – as in the James Bond movie – because of his reputation for having arms in so many sources of inside information.Goffer would promptly tip the other traders we charge today, at times going to such extraordinary lengths to cover his tracks that he used disposable cell phones.

He gave one of his tippees a disposable cell phone that had two programmed phone numbers labeled “you” and “me.”

After the insider trading was complete, Goffer destroyed the disposable cell phone by removing the SIM card, biting it, and breaking the phone in half.

He threw away half of the phone, and then instructed his tippee to dispose of the other half.

Needless to say, these antics might be appropriate in a James Bond movie.

But Get Smart is the better comparison. And here for your viewing pleasure, the first episode in which we meet Maxwell Smart, his shoe phone (it’s a dial, not push button) and it rings and rings during a concert — much to the surprise and confusion of everyone around him. Now how prescient is that for a show produced in 1965?

[youtubevid id=”VEWmn8p_OoA”]