Dividends
Edited by Toddi Gutner
THE MARKETS
January Effect?
There may be hope for stocks
January stock market trading activity has often been used to predict the rest of the year. The First-Five-Days-In-January Indicator is bullish, based on the 3.4% gain in the five trading days of 2003, says The Stock Trader's Almanac. That contradicts another Almanac favorite, the January indicator, which holds that as the stock market goes in January, so it goes for the year. That measure, which has erred in just four years since 1950, was bearish, given the 2.6% decline for the month. Still, publisher Jeffrey Hirsch thinks the January indicator isn't accurate because "war fears are depressing the market." Looking for a tiebreaker? The Super Bowl indicator, popularized by market maven Robert Stovall, says stocks will prosper when an NFC team wins. So Tampa Bay's victory over Oakland is bullish. This indicator has been on the money over 80% of the time.
FOOD
Cheese Wiz
There's grilled American cheese on white bread, and then there are the hot cheese sandwiches baker Nancy Silverton makes only on Thursday nights at her Los Angeles eatery, Campanile. One combines baked ricotta, slow-roasted roma tomatoes, pesto, and glazed onions on sourdough. For other ideas, check out the new Nancy Silverton's Sandwich Book (Knopf, $24.95).
GADGET
Light Ball
Heads up, golfers: When you're on the 16th hole and dusk is upon you, try using Sun Products Twilight Tracer (800 933-7825). When hit, this ball flashes bright red for up to six minutes--enough time for you to locate your shot on the darkened fairways. Sun says the Tracer ($13.95 each, $27.95 for three), which has 40 hours of battery life, generates the same distance and spin as the leading balls.
STOCKS
Analyst Analysis
Just because you can't trust stock analysts' recommendations doesn't mean they're worthless, a recent study concludes. After analyzing 55,000 stock ratings from 1985 through 1998, Emory University finance professor Narasimhan Jegadeesh found that changes in the consensus Buy, Hold, or Sell rating are often more useful in predicting future stock performance than the rating itself.
Jegadeesh's study showed that a ratings upgrade has an immediate impact on a stock's shares. Stock prices rose an average of 2.34% over the three days after a ratings upgrade, if the shift preceded an earnings announcement, and 1.45% if the shift succeeded it. A similar pattern was found for downgrades, only in reverse.
Jegadeesh also found that analyst predictions were the most accurate for beaten-down "value stocks" with low price-to-earnings and price-to-book ratios. "Analysts tend to rate glamour stocks more favorably," he says. "When they go against that tendency and recommend an unpopular stock, they're more accurate."
By Lewis Braham
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Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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