Monday, April 20, 2009

Finance @ A Glance: Sixty Seconds Stock Synopsis Pt. 3

**In an ongoing weekly series, The Ant & Mike Show brings you the financial perspective of esteemed financial and accounting analyst, Ernest R. Fair. The Ant & Mike Show is going to help get you through this recession! **

The Dow ended up 109 pts on Wednesday and closed at 8029 pts. The market seems to have hit some resistance at 8000. I believe investors still remain cautious and concerned about tepid economic growth in the US. What does that mean for us? It means we should probably remain a bit cautious also. Although, the time to buy land is when there is blood in the streets. I’ve looking for a pop in the casino stocks, particularly, LVS and MGM. There has been talk over the past months about bankruptcy for these two stocks, but I think that the upside may be worth the risk. If you look at the 52 week highs on these two stocks, they were both above $60 approximately one year ago. They both are currently trading in the $5 and $6 range, respectively. All tourism is taking a hit this year, so I don’t expect earnings to turn around within the current year. If one, or both of them, can make it through this recession, they could see significant increases. Both stocks are trading below book value per share. A simple calculation of book value per share is stockholders equity (from the balance sheet) divided by total shares outstanding (usually located on the balance sheet). Book value per share is a representation of a fair price to pay for a stock. So if you compare your book value per share vs. the current stock market price, then you can determine if you are getting a bargain or paying a premium for the stock in question. Book value per share is just one example of the technical tools discussed by Warren Buffett’s market theories. This week I will go on to discuss the 4 major financial statements and what information they provide to investors.

If you have any specific questions you want me to address directly, make sure to comment. Last week I had a comment that referenced Fidelity 401ks. My employer uses Fidelity. The best fund I have seen in my plan is the FBR Focus fund (FBRVX). Before this past year, it had an average annual return of 18% and I believe it is exactly the type of fund that Warren Buffett would invest in.

-E.R.Fair

Ernest R. Fair (M.S., B.A.) is a successful financial analyst, seasoned accountant and burgeoning author. As Fair prepares for the release of his debut financial self help guide, he will be sharing his insights with The Ant & Mike Show readers. Be sure to comment and if you want to reach out to Ernest with a detailed question, contact him at ernest@theantandmikeshow.com

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