There is an article in Journal called Safe Stocks which is a Smart Money (Magazine?) stock screen. The screen is looking for low beta stocks that zig when the market zags.Among the stocks listed are Zimmer Holdings (ZMH) and WellPoint (WLP). There is a table of stocks and according to that table the beta for Zimmer is zero and for WellPoint it is 0.1, again according to the table in the article.
I specifically did not want to look elsewhere for corroboration. This is more of a sniff test than number crunch. Look at the chart here and forget the table in the article. Do you think these stocks reduce volatility?
The point here is that even if the data from the table in the article is correct, your eyes may tell you something different.
10 comments:
HAH! I'm very familiar with WLP. The stock has been phenomenal up until this year. Two whammo's...one was when there was hand-wringing over medical loss ratios that took out the entire sector(which rebounded with a vengeance) and second, within the last two days, when the fear of the Democrats took over.
A wonderful post to alert folks to perceived safety.
and I have no doubt it will have good times at some point in the future but low octane? Um no.
Funny how healthcare has blown up like it was supposed to but Big Oil hasn't. (So far).
I assume Smartmoney as well as Morningstar like to use 3-yr data for alpha,and beta, etc.This has been the biggest nonsense for selection of stock or fund that you want to buy today. I like what you did by plotting it out and see for yourself. I guess I am a closet chartist!
Today's Kirk Report (blog) has a helpful note regarding Correlation
Trackers (free one @ spdrindex.com,
subscription one at Smart Money).
Jay C.
A lot of Zimmer's volatility recently has to do with the uncertainty over medicare reimbursement for joint replacement. Zimmer (an Indiana company) has had higher pricing power in the joint replacement market because of a superior sales staff and better products. The big spike down in the graph coincided with the Govt's announcing the new medicare reimbursement rules for the next couple of years. Zimmer is going to take a hit in margins if they want to keep market share. I don't know if WLP and ZMH are safe stocks, IMO that concept seems like an oxymoron. Tom in Indy
Roger, two commodity charts are so different. dbc and gsg. Is this due to the latter in deep with oil?
The Nasdaq Composite was higher for much of the day, but ended down 8.93 points, or 0.37%, to 2376.01.
J. Bardt
jbardt@insidertraders.info
bardt-links.com
composition differences? bingo! I try to analyze this sort of thing before buying and in my writing. Looking under the hood is crucial.
Tom in Indy-i'm not sure safe stock has to be an oxy moron but i concede this is subjective.
I have seen a study that shows you can greatly improve your odds of making money from newletter's recommendations by buying only the ones which are rising! Does it sound obvious? Most stock recommendations are based on fundamentals because they are more defendable than technical analysis.
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