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DailyFinance.com has a great article on the new jobs outlook for the US that was reviewed by BloggingStocks.  I think that they only thing that is missing is the acknowledgement that is nearly impossible to get zero unemployment.  In fact, it would probably be bad for the economy to have zero unemployment!

What is the perfect unemployment rate? Ask 10 economists and you will likely get 12 answers.  Most of them will likely say a number between 4-7%. When the country gets below about 4% then entry level jobs become quite expensive and inflation is almost guaranteed to happen. Once you are above 7% then the country starts to feel real pain in that large ticket items are harder to purchase.

We are currently just under 10%, that means we are about 25-30% above our optimum level. While this is not great, it does have a significant advantage for those industries and businesses that rely on a large workforce to create product.

As the unemployment rate drops, pay a bit more attention to stocks of companies that create bigger ticket items (e.g. automobiles, planes, vacations, computers, homes). As long as the unemployment is a bit high, be careful of those big ticket items and look for companies that make low cost items or items of necessity or need a large, cheap workforce (restaurants, grocery, food production).

While I have not reviewed Kroger [stckqut]KR[/stckqut] on this site, it is a good example of a company that will slightly benefit from high unemployment or at least not be hurt as dramatically as others like Ford [stckqut]F[/stckqut]. Kroger recently released a fairly strong quarterly earnings report.

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Zac Bissonnette over at Blogging Stocks has an article about Sardar Biglari of Steak ‘n Shake trying to emulate Warren Buffet and Berkshire Hathaway. He starts off the story with “done an admirable job of turning around operations at Steak ‘n Shake” which I have a hard time accepting.

By nearly every measure that matters for me to be confident in a company, SNS is bad.  I haven’t bothered to do an analysis of the company because they are at the bottom of every scale that I measure them on. In fact, as a company the only way they could score less is to not be profitable! Rather than do a reverse stock split to bump the price up to the hundreds, they should spend time running a business that is growing and profitable. While their revenue trend isn’t terrible, their earnings growth is a sin! I don’t invest in companies that cannot figure out how to grow.

Here are the first few thoughts that Zac shared. Click through to read the rest.

Sardar Biglari has done an admirable job of turning around operations at Steak ‘n Shake (SNS), but over the past few months, he’s made a few less-than-subtle efforts to imitate his idol Warren Buffett.

Back in December, he announced that he would do a 1-for-20 reverse split of the stock to boost the share price over $300 and “dissuade speculators.” “We are attempting to eliminate those who erroneously think that it is easier for a $10 stock to go to $20 than a $200 one to go to $400,” he wrote in a letter to shareholders.

The New York Post has called him a “wannabe Warren.” Last month he made headlines when he announced that he would be changing the name of the company to Biglari Holdings. C.L. King analyst Michael W. Gallo wrote that “While progress over the last couple of quarters has been encouraging, we believe the key determinant of value creation going forward will be the success of Steak ‘n Shake in transitioning into a conglomerate-like holding company similar to the Berkshire Hathaway model.”

Editor’s update: On April 8, 2010, Steak ‘n Shake changed its name to Biglari Holdings. I am not going to change the article as written but I am adding the tag for Biglari Holdings [stckqut]bh[/stckqut] so that readers can track this company. The stock symbol SNS no longer is associated with Steak ‘n Shake nor Biglari Holdings.

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Greg Sushinsky over at Investopedia had an article discussing the fundamentals of Potash.  I still think that POT [stckqut]POT[/stckqut] is a Good company and a good investment so I stand by my analysis of the numbers on February 15 but Greg has some interesting analysis that is worth reading.

Below is the first part of the article but you can click through here to read the entire opinion.

Potash Corp. (NYSE:POT) of Saskatchewan has seen its stock rise from a close of $104.49 per share to just over $115 per share last week. The fertilizer company’s stock has traded between $63.65 and $126.47 per share in the last 52-weeks. But is the stock a good buy on fundamentals?

A Dust Bubble Scattered?
A quick review of the last couple of years in the agriculture business found a startling commodity bubble in fertilizer. Not so long ago – 2008 in fact – Potash Corp. earned $11 a share for its fiscal year, but earnings fell to $3.25 a share in fiscal 2009. Prices for potash fertilizer had run up from a relatively stable $100 per ton in 2003-2004 to its current price of approximately $580. Potash Corp.’s stock price reflected these changes, as it shot from under $30 a share to the low $200s during the boom.

The Stock’s Fundamentals
The boom price in the $200s saw Potash Corp. trading at a PE of roughly 20. Now the multiple is about 35 times earnings, at over five times book value and an almost punitive dividend.

How about forward earnings? The company is calling for $4 to $5 earnings in 2010, less than the $6 analysts had expected. The forward multiple on this outlook would put the PE at 23 to 28.75, still pricey in a market where historical PEs have gone awry since the spate of negative earnings.

More important, this multiple exceeds the 20 PE multiple Potash Corp. carried at even its fullest earnings. So on the face of it, fundamental investors might want to simply say the stock is overvalued right now at its $115 market price. But things are not so simple.

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I just read a great interview with Doug Kass of Seabreeze Partners.  The interview is on Benzinga.com. I thought the following quote was the most relevant as it completely agrees with my basic investing philosophy as well as the philosophy of my upcoming book.

Q: What is one paradigm that aspiring traders or investors must adhere to or understand in order to find success?

A: There are five basic tenets to investing success that I would give to any trader or investor:

  1. Stop your losses and let your profits run.
  2. Don’t use leverage.
  3. Be diversified.
  4. Always remember that it is better to lose opportunity than lose capital.
  5. Don’t forget #1!

You can read the entire interview here.

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I have heard various versions of this over the years. I am not proposing that you use this legend as a way to invest your money. In fact, quite the opposite, you should only invest best on solid analysis of the company and have some mathematically pure methods of estimating the pricing points. However, with the game today, it is fun to think about this.

I don’t know what the outcome of today’s game will truly bring. The Indianapolis Colts are one of the oldest teams in professional football as they were originally part of the NFL as the Baltimore Colts. This lineage says that they should be a NFC team but today they represent the AFC. The Saints are an expansion team and have always been in the NFC. So with the legend, they would both be considered NFC teams – so maybe the bull market is a sure thing!

I think that I know some mutual fund managers that have not predicted the market as well as this technique though!

I picked this up over at Snopes.com.  You can go there to read more about what they said.

Want to know if the bulls or bears will be rampaging through the market this year? Popular wisdom says look to the Super Bowl for the answer because a seemingly startling correlation appears to exist between who wins the big game and how the market will perform in that calendar year. According to the “Super Bowl Indicator,” a triumphant team from the old American Football League (now the American Football Conference, or AFC) foreshadows a down market, but a winner from the old NFL (now the National Football Conference, or NFC) means dust off your red cape, because the bulls are coming.

The Super Bowl Indicator (SBI) has been on the money 32 years out of 40, which represents a success rate of 80%.1 Between 1967 and 1997 it was accurate 28 times out of 31 (a better than 90% average); it then hit the skids, going 0-4 between 1998 and 2001, but rebounded by being correct 4 years out of 5 between 2002 and 2007.2

Due to league expansion, franchise moves, and conference shifts, the SBI has posed some interpretive problems in recent years as fewer and few Super Bowls pit former AFL teams against old-line NFL teams. Both the 2003 and 2004 championship games featured post-merger expansion teams (the Tampa Bay Buccaneers and Carolina Panthers) and the 2007 contest was waged between two original NFL teams (the Colts and the Bears).