31 CHARTS TO RESTORE YOUR FAITH IN HUMANITY
Matt Ball linked me to these. War is down, democracy’s up, slavery’s down, leisure’s up, illiteracy’s out, we’re shooting each other less, living longer . . .
Yes, yes, I know: but take a look. All the more reason for us to keep pressing forward, investing in an ever brighter future instead of throwing ourselves off a self-defeating austerity cliff.
THE CASE FOR STOCKS
Matthew Yglesias’s view, earlier this month in Slate:
With the S&P 500 at levels that haven’t been reached since the go-go days of the late-1990s, there’s talk of 2013 being the new 1999. Joshua Brown devastates that comparison in a lengthy post, but the core of it is right here:
Here’s a very rudimentary but essential thing to be aware of – in 1999 the S&P finished at 1469, earned 53 bucks per share, and paid out $16 in dividends. These are nominal figures, not adjusted for inflation.
The 2013 S&P 500 is earning double that amount – over $100 per share. The index will also be paying out double the dividend this year, more than $30 per share, and returning even more cash with record-setting share repurchases.
So that’s the fundamentals. Earnings are double what they were, and dividends have doubled accordingly. It’s a very different market. Gillian Tett, who I normally think is one of the most reliable financial journalists around, recently pooh-poohed current share prices as based on unsustainable central bank interventions. This seems to me to be superficially correct but fundamentally mistaken. What is true is that had the Federal Reserve implemented tighter monetary policy over the past two years, share prices would be much lower today than they are. But under the Fed’s status quo policies, inflation has been below target and unemployment has been high. There’s a strong case money’s been too tight, and zero case that money’s been too loose. Looking forward, you get much the same situation. If the FOMC implements new tight money policies at its next meeting, that will, indeed, crush the market. And that’s something investors should consider. But why would the Fed implement tight money policies with unemployment high and inflation low? Are they deranged sociopaths?
A little blithe, perhaps. But this is definitely not 1999.
Delaware’s Supreme Court affirmed much of the lower court’s ruling against SIGA. Yet the stock rose in after-hours trading.
A large institutional holder: “In my opinion SIGA has a much stronger position now because the Chancery Judge [to whom the case has now been remanded to reassess damages] is limited to how much he can award Pharmathene. Yes SIGA is liable; but I think a large expectancy award is highly unlikely.”
Jim Leff: “I’m not a lawyer, but here’s my read: The precedent-setting approach that yielded the bizarre split-the-baby decision has been overturned. Damages will be assessed with a more rational approach. At the time of the alleged breach, SIGA was a small company with an unproven drug of uncertain potential. Only from the perspective of the current day does Pharmathene deserve billions from this. Damages should be assessed based according to conditions at the time. So I see this is a mild win for SIGA (repeat: I am not a lawyer).”
He goes on to say that even in a worst-case scenario, if the Chancery judge still slams SIGA, there should still be tons of profits from the smallpox drug to go around — and the decision only applies to that drug, not to the pipeline of other drugs under development, which may have value as well.
“The thing to remember is they have an outstanding product, well-recognized by the scientific community. This was never an exuberance play, there’s value here — a safe/effective drug in late stage development and a contract in hand — which is more than you can say for 95% of biotech plays. Due to the legal (and other) clouds, SIGA’s been undervalued even for the worst case scenario (which accounts for the 20% uptick in after-hours trading).”
Here is the company’s own press release.
If you bought shares with money you could truly afford to lose — as by now I am certain that you did — hang on.
Have a great Memorial Day, as we honor those far braver than I could ever be.
Quote of the Day
A penny saved may be a penny earned, but it's one boring penny. A penny invested, on the other hand, bounces around. It gets bigger one day, smaller the next. A bit player in the drama of global finance, that penny buys a guy a balcony seat in the theater of macroeconomics.~Susan Stewart
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