10 May 2002

Posted at 15:48h in The Friday Brief by

“It was the best of times, its was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us . . .”  Charles Dickens – A Tale of Two Cities

The best of times seems like a distant memory in so many ways, particularly as we focus on all the bad news out there and ignore the good that peeks through occasionally.  There’s plenty of ‘darkness’ adding to our confusion, but there are hints of light too.  On Tuesday, Cisco’s Chairman John Chambers spoke of improving business.  His comments and his company’s results sent the markets soaring, as short-sellers covered their bets against optimism and buyers bet that the pessimism might be waning.  If only for a day, optimism was openly discussed and celebrated and the negative took a brief respite. 

03 May 2002

Posted at 15:51h in The Friday Brief by
My wife recently constructed a beautiful labyrinth in our garden.  Labyrinths have been around for thousands of years and are found in almost all religious traditions as well as cultures including Native American, Greek, Celtic and Mayan.  Like Stonehenge and the pyramids, they are magical geometric forms that define sacred space.  When one walks a labyrinth, he meanders back and forth, turning 180 degrees each time he enters a new circuit.  Changes in direction induce shifts in states of awareness. 

26 Apr 2002

Posted at 15:53h in The Friday Brief by
Another word for risk is volatility – specifically negative volatility.  Webster defines volatility as the tendency to vary often or widely, as in price.  Obviously, we worry more when stocks vary downward as they do in bear markets.  April and October are the market's most volatile months.  It is during these months that companies report their first and third calendar quarters.  The first quarter is important as it sets the tone of the year’s earnings expectations.  By October, enough of the year is ‘on the books’ for the company to give a rough idea of what the year will actually look like.  It is a time when ‘confessions’ are made if the company was too optimistic earlier in the year.  It also used to be a time when management expressed excitement if they had an exceptionally good year.  SEC Regulation “Full and Fair Disclosure” has effectively minimized those wildly optimistic statements because of the liability brought if they are not met. 

19 Apr 2002

Posted at 16:01h in The Friday Brief by
Over the past several days, companies have released their calendar first quarter earnings and given their best guesses about near-term prospects.  The actual earnings reports have been in rather stark contrast to the more downbeat management projections for business in the coming quarters.  Earnings reports seem to support the economic recovery, but they are somewhat below earlier expectations.  Thomson Financial/First Call estimates that profits for the S&P 500 companies probably dropped 10.7% in the first three months of 2002, more than the 8.2% drop forecast by analysts at the beginning of March.  On the flip side though, 59% of companies reporting to date have beaten earnings projections, a higher percentage than at any time since 1994: a period when the Fed actively promoted expansion as they do now.