Filed under: Earnings reports, Jones Apparel Group (JNY), Liz Claiborne (LIZ), Polo Ralph Lauren’A’ (RL)

So I’m looking at Liz Claiborne (NYSE: LIZ) and its latest earnings report. I don’t currently have a retailer in my portfolio, so I’m thinking to myself, hey, maybe I’ll want to buy Liz after I check out its latest numbers. Well, that didn’t happen.

Net sales (excluding discontinued operations) dropped 3% for the fourth quarter, and adjusted net income declined dramatically, coming in at $0.20 per diluted share — last year at this time, the metric was over four times as big at $0.94. For the year, net sales dropped over 1% (excluding discontinued operations), and adjusted net income was $1.30 per diluted share — yet another huge drop, considering that Liz Claiborne took in $2.99 per diluted share of adjusted net income in 2006. Oh, and there are other things here that will make any prospective investor shudder — operational cash flow was down, the dividend was stagnant, and the margins weren’t anything to write home about. And comps at some of the company’s stores have been challenged (Juicy Couture, however, did report a strong 25% increase in comparable sales in the fourth quarter).

This was an easy one for me — I’ll stay away from Liz Claiborne. The company, which competes with the likes of Jones Apparel Group (NYSE: JNY) and Polo Ralph Lauren (NYSE: RL), currently exists in the land of strategic reviews, cost reductions, and discontinued operations. I don’t want to travel to such a land with this particular business.

Disclosure: Steven Mallas owns none of the companies mentioned.

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Filed under: Comfort Zone Investing

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he’ll offer advice to investors who are just getting started.

With a seemingly bottomless stock market that has a day or two of great rallies, it’s a good time to review what investing is and what it isn’t, how to start and stay with an investment, and other essentials that help investors weather this storm.

First, investing is not done with any money that you need within a known time period. If you even think you will need a certain amount of money anytime within three years (I prefer to think of five years because of the market’s tendency to overdo everything, bad as well as good), then you don’t want that particular money in the market. Most often, just when you need it, the value of your investment will be down, and you’ll have to take a loss.

Continue reading Comfort Zone Investing: Time to review the basics

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Filed under: Earnings reports, Jones Apparel Group (JNY), Liz Claiborne (LIZ), Polo Ralph Lauren’A’ (RL)

So I’m looking at Liz Claiborne (NYSE: LIZ) and its latest earnings report. I don’t currently have a retailer in my portfolio, so I’m thinking to myself, hey, maybe I’ll want to buy Liz after I check out its latest numbers. Well, that didn’t happen.

Net sales (excluding discontinued operations) dropped 3% for the fourth quarter, and adjusted net income declined dramatically, coming in at $0.20 per diluted share — last year at this time, the metric was over four times as big at $0.94. For the year, net sales dropped over 1% (excluding discontinued operations), and adjusted net income was $1.30 per diluted share — yet another huge drop, considering that Liz Claiborne took in $2.99 per diluted share of adjusted net income in 2006. Oh, and there are other things here that will make any prospective investor shudder — operational cash flow was down, the dividend was stagnant, and the margins weren’t anything to write home about. And comps at some of the company’s stores have been challenged (Juicy Couture, however, did report a strong 25% increase in comparable sales in the fourth quarter).

This was an easy one for me — I’ll stay away from Liz Claiborne. The company, which competes with the likes of Jones Apparel Group (NYSE: JNY) and Polo Ralph Lauren (NYSE: RL), currently exists in the land of strategic reviews, cost reductions, and discontinued operations. I don’t want to travel to such a land with this particular business.

Disclosure: Steven Mallas owns none of the companies mentioned.

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Filed under: JPMorgan Chase (JPM), Lehman Br Holdings (LEH), Bear Stearns Cos (BSC)

What happened this week could be the start of something bad. As the Fed — using JPMorgan Chase & Co. (NYSE: JPM) as its conduit — bailed out The Bear Stearns Companies (NYSE: BSC), I was watching which banks were falling the most in sympathy. Next on the list? Lehman Brothers Holdings Inc. (NYSE: LEH) whose shares lost 14.6% yesterday — a huge drop but nothing compared to Bear Stearns’s 47% decline.

What exactly is going on here? The Wall Street banks hold the cash and securities of corporations, hedge funds and other investors. If a Wall Street bank files for bankruptcy, the bankruptcy process freezes those assets so that the customers can’t get access to them. Thanks to bankruptcy law, the courts get to decide which creditors will get their hands on those assets. The reason Bear Stearns failed is that its customers withdrew their funds so they would not be frozen by bankruptcy.

The Fed stepped in because — as I suggested Thursday — it was faced with a choice of the lesser of two evils. It chose to create a “moral hazard” by bailing out Bear Stearns over letting it fail because it thought the cost of moral hazard was less than the cost of wiping out Bear Stearns shareholders and customers and all the collateral damage (pun intended) that would ensue. So why is Lehman Brothers the next one at risk?

Continue reading Is Lehman Brothers next?

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Filed under: Next big thing, Politics, Commodities, Oil, Recession

With all the hysteria about global warming and the impact that it will have on the globe, I found it quite funny that the National Oceanic and Atmospheric Administration (NOAA) reported yesterday that we just experienced the coldest winter since 2001. Hey Al Gore — how can that be? I remember when I was growing up, in the mid- 1970’s, Newsweek magazine had a cover story about the beginning of the ice age. Amazing what can happen in 25 years. We can go from an ice age, to global warming. Not bad.

According to the NOAA report:

“In the contiguous United States, the average winter temperature was 33.2°F (0.6°C), which was 0.2°F (0.1°C) above the 20th century average - yet still ranks as the coolest since 2001. It was the 54th coolest winter since national records began in 1895. “

Why not ask the Chinese about global warming? They just experience a horribly snowy winter which has been a major cause of inflation. Extreme cold temperatures were the norm this winter. Over the last 150 years or so the global mean temperature has increased by 0.7 degrees Celsius. This small amount of warming is not unusual, and falls well within the range of variation for both warming a cooling.

Continue reading What about global cooling?

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Filed under: Next big thing, Politics, Commodities, Oil, Recession

With all the hysteria about global warming and the impact that it will have on the globe, I found it quite funny that the National Oceanic and Atmospheric Administration (NOAA) reported yesterday that we just experienced the coldest winter since 2001. Hey Al Gore — how can that be? I remember when I was growing up, in the mid- 1970’s, Newsweek magazine had a cover story about the beginning of the ice age. Amazing what can happen in 25 years. We can go from an ice age, to global warming. Not bad.

According to the NOAA report:

“In the contiguous United States, the average winter temperature was 33.2°F (0.6°C), which was 0.2°F (0.1°C) above the 20th century average - yet still ranks as the coolest since 2001. It was the 54th coolest winter since national records began in 1895. “

Why not ask the Chinese about global warming? They just experience a horribly snowy winter which has been a major cause of inflation. Extreme cold temperatures were the norm this winter. Over the last 150 years or so the global mean temperature has increased by 0.7 degrees Celsius. This small amount of warming is not unusual, and falls well within the range of variation for both warming a cooling.

Continue reading What about global cooling?

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Filed under: After the bell, Major movement, Bad news, Industry, Boeing Co (BA), duPont(E.I.)deNemours (DD), Washington Mutual (WM), Genentech Inc (DNA), S and P 500, DJIA, Bear Stearns Cos (BSC), NASDAQ

It was looking like we were about to have a good day at about 8:35 EST this morning after seeing flat CPI. But the day ended up long enough and bad that it feels like that CPI report came out a week ago because it was such a long day.

But today was all about Bear Stearns (NYSE: BSC), and you’ve already heard the news. If you have ever wondered what a run on the bank looks like and what a major institution on verge of implosion looks like, you just saw it today. Bear Stearns closed down over 45% to $30.85 on over 185 million shares. Free marketeers don’t want a bailout.

It’s bad enough out there that even someone out of the National Bureau of Economic Research is worried about a severe recession. If you want any good news on the day, it would be that the market didn’t close on lows and it wasn’t widespread panic falling out into every sector.

• DJIA 11,951.09 (-194.65; -1.60%)
• S&P500 1,288.14 (-27.34; -2.08%)
• NASDAQ 2,212.49 (-51.12; -2.26%)
• 10YR-TBond 3.4210% (-0.113%)
• The VIX closed at 31.16, up 3.87
• List of 52-week lows was a monster long list.

Continue reading Closing Bell: The good news was the closing bell

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Filed under: After the bell, Major movement, Bad news, Industry, Boeing Co (BA), duPont(E.I.)deNemours (DD), Washington Mutual (WM), Genentech Inc (DNA), S and P 500, DJIA, Bear Stearns Cos (BSC), NASDAQ

It was looking like we were about to have a good day at about 8:35 EST this morning after seeing flat CPI. But the day ended up long enough and bad that it feels like that CPI report came out a week ago because it was such a long day.

But today was all about Bear Stearns (NYSE: BSC), and you’ve already heard the news. If you have ever wondered what a run on the bank looks like and what a major institution on verge of implosion looks like, you just saw it today. Bear Stearns closed down over 45% to $30.85 on over 185 million shares. Free marketeers don’t want a bailout.

It’s bad enough out there that even someone out of the National Bureau of Economic Research is worried about a severe recession. If you want any good news on the day, it would be that the market didn’t close on lows and it wasn’t widespread panic falling out into every sector.

• DJIA 11,951.09 (-194.65; -1.60%)
• S&P500 1,288.14 (-27.34; -2.08%)
• NASDAQ 2,212.49 (-51.12; -2.26%)
• 10YR-TBond 3.4210% (-0.113%)
• The VIX closed at 31.16, up 3.87
• List of 52-week lows was a monster long list.

Continue reading Closing Bell: The good news was the closing bell

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Filed under: Economic data, Federal Reserve

The dollar fell to a yet another record-low against the euro Friday and plunged against the world’s other major currencies, as investors shunned U.S. investments ahead of an almost-certain U.S. recession, with likely further interest rate reductions from the U.S. Federal Reserve.

Friday’s trigger event for selling was The Bear Stearns Companies, Inc. (NYSE: BSC) stunning announcement that — less than 10 days after senior management officials called liquidity-crunch rumors ‘absolutely ridiculous’ — it had accepted a 28-day, emergency, secured loan from the U.S. Federal Reserve via JP Morgan Chase & Co. (NYSE: JPM).

The Fed said in a statement that it will “continue to provide liquidity as necessary to promote the orderly functioning of the financial system,” repeating reassurances Federal Reserve Chairman Ben Bernanke has made often since credit problems first surfaced in August 2007. The Fed did not state how large their loan is to Bear Stearns.

Continue reading Dollar falls to record low vs euro on Bear Stearns, credit market woes

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Filed under: Economic data, Federal Reserve

The dollar fell to a yet another record-low against the euro Friday and plunged against the world’s other major currencies, as investors shunned U.S. investments ahead of an almost-certain U.S. recession, with likely further interest rate reductions from the U.S. Federal Reserve.

Friday’s trigger event for selling was The Bear Stearns Companies, Inc. (NYSE: BSC) stunning announcement that — less than 10 days after senior management officials called liquidity-crunch rumors ‘absolutely ridiculous’ — it had accepted a 28-day, emergency, secured loan from the U.S. Federal Reserve via JP Morgan Chase & Co. (NYSE: JPM).

The Fed said in a statement that it will “continue to provide liquidity as necessary to promote the orderly functioning of the financial system,” repeating reassurances Federal Reserve Chairman Ben Bernanke has made often since credit problems first surfaced in August 2007. The Fed did not state how large their loan is to Bear Stearns.

Continue reading Dollar falls to record low vs euro on Bear Stearns, credit market woes

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