I just want to lay claim to a word I coined in the middle of the night:
- To project that the future will be less prosperous than the present.
So Canon Stock Has Biggest Gain in 2 Years on Digital Camera Sales according to Bloomberg. Not bad. In Tokyo, Canon ended at ¥8,300. $1 = ¥117.38 at the moment, which should mean Canon would trade at $70.67 or so in New York. It actually ended at $71.32, so there seems to be a small "Japan premium" built into the NYSE price. Perhaps that is because the market agrees with Bill Gross that the dollar is headed down—against the Yen in particular.
Naturally, it makes sense to ask if Canon is now overvalued. Quicken's DCF model suggests that the company needs to grow 6.3% over the next 10 years in order to justify its current price when discounted against the S&P 500's long term rate. Even if Canon doesn't expand into new markets, I think 6-7% growth is very likely. And if new products do succeed, 10+% growth should be possible.
I discovered an error with the spreadsheet I used to generate my investment returns. It turns out I hadn't adjusted the S&P 500 index price for some of my purchases. The effect was to make the Benchmark column wrong:
Stock Opened Price Closed Price Annualized Benchmark Oracle 6/24/02 8 5/28/03 13.35 67.05% -9.94% Major Automotive 2/28/06 1.75 3/29/06 1.90 144.21% -11.13% Oracle 6/24/02 8 4/4/06 13.84 14.99% 6.80% Canon 12/9/03 45 4/4/06 68.56 19.04% 2.19% Canon 12/1/04 49.66 4/4/06 68.56 26.38% 5.34% Select Comfort 2/9/05 19.95 4/4/06 39.80 80.44% 6.60% Berkshire (B) 1/31/06 2920 4/4/06 3001 8.29% 2.57%
Now I'm 100% both on absolute and relative terms. Obviously this was a pleasant surprize. Even better, I've been tracking my time-weighted internal rate of return and my IRA is earning about 20% annualized. Since I've held a lot of cash earning less than 4% most of that time, I feel pretty confident in my ability to make good investments over time. If anything, I ought to be making more trades.
It's sort of sad, but Maxco, Inc. Announces Abandonment of Proposed Transaction to Terminate SEC Registration. This was the first company I started watching for a possible going private arbitrage opportunity. The lesson is to wait for a definitive proxy.
After selling Major Automotive, I started to wonder how well the other positions in my IRA have faired. After cosidering commissions, my two closed positions are:
Stock Opened Price Closed Price Annualized Benchmark Oracle 6/24/02 8 5/28/03 13.35 67.05% -9.94% Major Automotive 2/28/06 1.75 3/29/06 1.90 144.21% -59.70%
And here are the open positions assuming commissions, dividends, and today's closing price:
Stock Opened Price Closed Price Annualized Benchmark Oracle 6/24/02 8 4/3/06 13.79 14.89% 6.68% Canon 12/9/03 45 4/3/06 67.41 18.20% 2.00% Canon 12/1/04 49.66 4/3/06 67.41 24.85% 20.25% Select Comfort 2/9/05 19.95 4/3/06 39.73 80.41% 24.32% Berkshire (B) 1/31/06 2920 4/3/06 3012 10.78 332.30%
As you can see, all of my investments are currently in the black and I'm 6 of 7 against the S&P 500. Obviously this won't hold up in the future.