Seeking Alpha by Adding Beta

I watched President Obama's 2nd State of Union speech of members of congress. Overall it was good speech. Nothing spectacular but good confidence building speech. President tried to define this generation's  "Sputnik" moment but did not get same level of excitement which he must have expected. His overall focus on jobs, clean energy, education and tax reforms was indicative of his priorities for next two years. No more big policy initiatives like health-care bill. Being pragmatist, he took voters message and changed the course of his presidency. After watching him, I am pretty confident that he would win 2nd term ! Fed as expected announced to keep QEII on and interest rates low for extended period. No surprise there. With an acknowledgment to recovery gaining momentum and commodity prices rising, it is opening the door for first interest rate hike towards end of year. If GDP growth for last quarter and next two quarters come close to 3.5%, I won't be surprised ...

JP Morgan started the earnings season with a big bang - it earned over $17 Billion in 2010 ($4.8 Billion in Q4 itself). This is just after 2 years when many of these banks were teetering on verge of vanishing or falling under government control. This bodes well for earnings due from other banks in next two weeks. What are the catalysts for this earnings boost  which is expected to be over 30% compared to Q42009 across banking sector ? Here are my thoughts: Say thanks to Ben for keeping interest rates at historically low rates for extended period. When banks can borrow below 1% and give loans anywhere between 4-10%, that's big spread giving major boost to earnings. This "golden" period would continue for another 2-3 quarters since Ben (Bernanke) has promised to keep rates low till unemployment shows significant progress (read below 8%) Banks have become very picky when issuing loans or mortgages. The amount of documentations they are requesting during refinance has sw...

Happy new year to all my readers ! It is your feedback (as comments as well as in person) kept me going with my almost weekly blog. It helps me personally to articulate my thoughts and also make personal investment decisions - thanks to all of you ! Year 2010 is over. It's time to reflect on past year and get ready for new year. Let's start with how my recommendations in 2010 did. If you are regular reader of my blog, along with my commentary on markets, politics, economics and occasionally on other events (like World Cup), I have made stock recommendations in almost every post with target buy prices. Assuming one does around $1000 investment in those recommendations at target buy prices, the portfolio would have returned approx. 17.77% for year 2010. Though it is not as stellar as last year's performance of 80%  , it still beat S&P by 5%. Not bad considering till Nov, it was lagging S&P by couple of percentage points. Here are top 3 winners and losers of l...