Wednesday, March 11, 2009

Birinyi Wants To Remove Dow Jones Losers

Another great idea from Laszlo Birinyi who wants to get rid of all the companies that people were clamoring to be added into the Dow at the last rotation. Laszlo is all about removing Bank Of Countrywide Lynch, GE, Alcoa and GM and adding the companies that have not been hammered (yet) such as Chubb, Visa, Newmont, and Schlumberger. Of course, in two years when these four (and who knows how many others) get to the point where Citi's whopping 20% move only budged 5 points in the DJ50, Laszlo will pull some other big cap companies to replace those. Even better, we should just have a weekly rotation in the DOW so that any company that falls below $50 billion in mkt cap should immediately get thrown into the S&P500 microcap index as punishment.

In the meantime the most "shocking (per CNBC)" headline is that JP Morgan, just like Citi, was also profitable in the past two months. It is good, if a little surprising, to know that both these banks account for their otherwise once-a-quarter-evaluated massive books of Level 2 and Level 3 assets on a daily basis. This kind of instantaneous reporting is phenomenal: we should do away with 10Qs and 10Ks altogether and public companies should just make their general ledger public at market close every day. How about that for added transparency?

Also, for all those who did not read Press Releases, (most notably CNBC) this is not news! JPM announced just this when it cut its dividend on February 23, at which point it said it was profitable for the quarter. It would be amazing for the bank to lose money in the past 14 ultra volatile days. Sphere: Related Content
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Anonymous said...

With that in mind. How could anyone give the Dow any credibility? Oh hum, another game that loves to change rules right in the middle of play.

Anonymous said...

Formula for bank profitability.

The bank seeking profits calls their IT department with orders to develop a program that opens 15 million new fictitious checking accounts at various branches each one getting a $10 deposit(using TARP funds of course). Then the program causes each fictitious account to write 10 checks for $15.

Thats a $30 NSF fee for each account and for each bad check.

Infinite profitable quarters!

Anonymous said...

I would be more impressed if Citibank announced that writedowns would "only" be $10B in 1Q

Hey Vikram , pass around the champagne !!!