40 Million Mistakes: Is your credit report accurate?

This is a rather troublesome piece that 60 Minutes featured a few weeks ago regarding your credit in America.  Mistakes in your credit score occur far more often than one might imagine   But even if you detect the errors, trying to correct them as the piece below explains is a whole different ballgame.

What was enlightening to us is that the credit report/score that you can purchase on your own from one the the 3 major firms, can be vastly different than the one a company uses to determine your credit worthiness.

Jeremy Grantham on Investing in a Low-Growth World

You never know where Jeremy Grantham, head of GMO, quarterly newsletter will appear. This past quarter for Q4 2012 appeared front and center in the editor's section of Barron's.  I have also enclosed a link to a PDF version here located on the GMO website.

As usual Grantham's newsletters are always extremely insightful but can also get quite lengthy.  Below is a few bullet points that we took away from his piece this quarter.

• For there to be a stable equilibrium, assets, including entire corporations in the stock market, must sell at replacement cost. If they were to sell below that, no one would invest and instead would merely buy assets in the marketplace cheaper than they could build themselves until shortages developed and prices rose, eventually back to replacement cost, at which price a corporation would make a fair return on a new investment, etc.
• The history of market returns completely supports this replacement cost view. The fact that growth companies historically have underperformed the market – probably because too much was expected of them and because they were more appealing to clients – was not accepted for decades, but by about the mid-1990s the historical data in favor of "value" stocks began to overwhelm the earlier logically appealing idea that growth should win out. It was clear that "value" or low growth stocks had won for the prior 50 years at least.
• In the meantime for us at GMO it means emphasizing care and maintaining a heightened sense of value discipline, not only in stock selection, as the whole world is once again bid up over fair value in a way so typical of the post 1994 era, but also in forestry and farmland. GMO has investments in those areas too and recognizes the need to sidestep overpricing by emphasizing the nooks and crannies. Fortunately there are more nooks and deeper crannies in forests and farmland than there are in almost any other area, certainly including stocks.
• When one combines the apparent determination and influence of those who do the bullying with the career risk and short-termism of the bullied and the desire of the general public to believe unbelievable good news, these overpricings can go much further and the Fed can win another round or two. That's the problem. A clue to timing would be when we begin to hear more passionate new era arguments: profit margins will always be higher; growth will snap back to 3% for the developed world; and new ones I can't think of … maybe "when the discount rate is this low the Dow should sell at, perhaps, 36,000." In the meantime, prudent managers should be increasingly careful. Same ole, same ole.

2013 Week 7 Performance.....Finishing where we started

Three of the four major indices finished just about where they started this week.  The only diverging index was the broad based Russell 2000 which finished higher by 1%.  The S&P 500 barely kept it's positive weekly winning streak alive for 2013 with a 0.01% gain.

The VIX, which measures volatility finished under 13 which really indicates a subdued markets as far as volatility is concerned.  Although markets were roughly flat for the week, this doesn't mean that there wasn't much movement.  The DJIA had about a 150 point range between it's high and low of the week.

With the mandatory budget cuts only a week week away...again, people are likely just sitting back watching how things are going to play out.  Many of the stocks that did move this week were ones that reported their earnings.

Buffalo Wild Wings BWLD, (a name that we own in the TAMMA Fund and our own personal portfolio) reported strong growth for the quarter and the full year despite the rise in chicken prices.  

• Sally Smith, President and Chief Executive Officer, commented, "We achieved a 37.8% increase in revenue for the fourth quarter as a result of strong same-store sales of 5.8% at company-owned restaurants and 7.4% at franchised locations, 62 additional company-owned locations in 2012, and incremental revenue from our fourteenth fiscal week. For the year, our total revenue exceeded $1 billion, a new milestone for Buffalo Wild Wings! High cost of sales continued in the fourth quarter, offsetting some of the bottom-line benefit of the fourteenth week, resulting in net earnings growth of 22.3% for the fourth quarter and 13.6% for the year."

The stock dropped on the news but rebounded throughout the rest of the week to finished up 1% for the week.

We also noted that we were following Archer Daniels Midland (own in personal account) who reported solid results in the previous week (see here for details).  ADM finished higher in the week by over 4% due to reports that Warren Buffet had taken a stake in the company.

Gold Miner Kinross Gold Corp (own in TAMMA Fund and personal account) finished 4% lower on the week after it reported a wider loss than expected on better than expected revenue.  The concern here is that prices to mine gold are rising faster than anticipated.

These are just a few examples of the names we were keeping a close on eye this week, but bottom line, it is becoming more of a stock pickers market where all stocks are not moving in the same direction either up or down.  Which is a good situation for us at TAMMA.

Initial jobless claims caught our attention this week.  See below the positive commentary by Econoday

• Initial and continuing claims are at their lowest levels of the recovery and are pointing to building strength for job growth. Initial claims fell 27,000 in the February 9 week to a 341,000 level that is nearly 20,000 below the Econoday consensus. The four-week average, at 352,500, is about 10,000 below the month-ago trend which offers an early indication of strength for the February employment report. Next week's report, which will offer data on the survey week of the monthly employment report, will provide a more telling indication.

Another data point we were watching this week was retail sales.  Given the increase in the payroll tax that affects every working American, we surmise that this data source will tell us how big this tax impact is having on people.  The number for January was actually quite decent with the actual number matching the consensus estimate of a gain of 0.1%.  We believe that February and March numbers will be more telling of the tax impact.

The Week Ahead

This is a shortened trading week in the US with markets closed on Monday in observance of President's Day.  The rest of the week has some solid economic data points mostly surrounding the housing market.  The housing recovery does not seem to be loosing any steam.  And as the employment situation continues to gain traction, this could keep the momentum in the housing segment going as well.  We are continuing to hold our own short position of a basket of home builders.  We will likely let this strategy ride until the spring and make a determination then as to it's future.

• Mon - Markets closed for President's Day
• Tue - Housing Market Index
• Wed - Housing Starts, Producer Price Index
• Thu - Consumer Price Index, Jobless Claims, PMI Manufacturing Index Flash, Existing Home Sales, Leading Indicators
• Fri - N/A

Have a great week!

TAMMA Capital - Our Mission

TAMMA Capital LLC is an investment management firm dedicated to being a responsible steward of our clients’ assets, and helping them to achieve their investment and life style goals.

TAMMA’s Strategic Investment Advantage

At TAMMA, we buy individual securities and specialized ETF’s.  TAMMA is less expensive than most mutual funds even though we create a personalized, tailored portfolio for each client.  Our entire focus is on doing what is best for our clients.  In addition, TAMMA

• Personally select assets to build customized client portfolios
• Is an independent RIA which allows for increased flexibility to utilize multiple investment options
• Has the ability to manage all of a client’s investable assets including brokerage, retirement, 401k, and business accounts

The TAMMA Value Chain

TAMMA strives to provide value to individuals and small/medium sized businesses.  Key components include:

• Return on Investment (ROI)
• Peace of Mind
• Quality Network of Professionals
• Turnkey Solutions
• Business Operational Solutions

TAMMA Capital LLC is a Registered Investment Advisor (RIA) in the State of Michigan

Happy Valentine's Day via Ronald Reagan

I had originally posted this piece regarding the personal life of former President Ronald Reagan in September of last year.  I thought that it was very fitting to post again given that today is Valentine's Day.

It has been well documented in a series of letters and books the relationship that President Reagan had with his wife Nancy.  The two shared some type of love and connection that would make any couple envious.

In a letter to his son Michael, the night before he was to marry, the President wrote the following letter courtesy of the website Letters of Note.

• There is no greater happiness for a man than approaching a door at the end of a day knowing someone on the other side of that door is waiting for the sound of his footsteps.

(Source: Reagan: A Life In Letters; Image: Ronald Reagan, via.)