SWB moved to a new high on nearly three times average volume (on an otherwise very ugly day). I refuse to make a crack about a jump in handgun sales coinciding with a market top.

Smith & Wesson Holding Corporation, through its wholly owned subsidiary, Smith & Wesson Corp., manufactures handguns, law enforcement products, and firearm safety/security products. It also provides shooter protection, knives, apparel, footwear, and other accessory lines. The company was founded by Horace Smith and Daniel B. Wesson in 1852. Smith & Wesson is based in Springfield, Massachusetts.

Back to a shortened Notable New Highs list. The New Lows are much more interesting: Homebuilders and Newspapers fill the list.

I really enjoy Songlines, the new album from The Derek Trucks Band. (Anyone who names an album after a Bruce Chatwin book is OK with me.)

The roots and the fruits of The Derek Trucks Band are manifest in the breadth and scope of Songlines, which premieres several brand-new DTB compositions including the Hammond organ-driven “I’ll Find My Way,” the spiritually yearning “This Sky,” and the hypnotic instrumental “Mahjoun,” while acknowledging a wide range of influences — including American avant-garde jazz (Rahsaan Roland Kirk’s “Volunteered Slavery”), traditional acoustic slide blues (”Crow Jane”), 700-year-old Pakistani Qawwali music (Nusrat Fateh Ali Khan’s “Sahib Teri Bandi/Maki Madni”), and Jamaican reggae (Toots Hibbert’s “Sailing On”).

Here’s the lead track: Volunteered Slavery (2.5MB mp3) Let me know what you think.

Both the Volatility Index (VIX) and ISE Sentiment Index spiked higher in the last two weeks. This sets up a “buy” above last week’s high. If the buy fails then we’ll know the recent top is significant. My media survey is showing very little pessimism, which makes me think that buying this dip is fraught with danger.

Of course when The Economist puts a bear on its cover, we’re pretty much guaranteed a nice rally. Always remember that gauging sentiment is an art not a science.

Hollywood bypassing critics and print as digital gets hotter, by David Carr

After years of trying to rise above the clutter of releases by increasing print advertising, and enriching newspapers in the process, the movie industry cut back newspaper advertising last year. It fell $60 million compared with the previous year, its first decline in five years.

It fell $60 million compared to what? $120 million? $240 million? Give me the previous year’s number so I can figure the percentage decline! Sheesh.

The good news is my Jimi arrived in the mail yesterday. The bad news is the cadre who searched my mail broke the flap of the Jimi by forcing it open. This is one of the downsides of living in an authoritarian state.

When I was a student at the Hopkins Center in Nanjing, an American professor there received a winter coat in the mail. The coat had been sliced to ribbons and when he opened the carefully re-sealed package it “exploded” and he was covered in down feathers. That was a memorable sight.

FPA Capital Fund Annual Report

Robert Rodriguez is an investor I respect and follow closely.

Your Fund’s liquidity level rose to nearly 44% at March 31, 2006, which held back its performance … During the year, we added to several of the Fund’s holdings on price weakness. Unfortunately, these periods have been few and far between.

Portfolio liquidity is at a record level since we began managing your Fund in July 1984. This elevated liquidity level is not a statement that we feel the stock market is going to decline imminently, but rather that we are finding it difficult to uncover sufficient investment opportunities that meet our valuation requirements.

We have always written that we consider the level of liquidity to be the residual of investment opportunities. As an example, the value screen that I have used for many years recently identified only 73 names, close to the record low of 47, out of a universe of 9,440 in the Compustat database. This screen included stocks with market capitalizations between $150 million and $3 billion. Of the 73 names, 53 were between $150 million and $1 billion. When I expanded the screen to include stocks with market capitalizations up to $20 billion, only 20 additional companies were identified. Finally, below $150 million, 97 companies were identified.

What these results convey to us is that between market capitalizations of $1 billion and $20 billion, the market’s valuation landscape is very flat. Only when you get into very small market caps and micro caps do a greater number of companies begin to be identified. Most of these companies are not viable investment candidates for us, primarily because of their lack of stock trading liquidity.

The results of this screen are a far cry from the output that we got in late 1998, early 1999 and 1994. The stock market’s flat valuation landscape is proving to be a challenge for us in the rational deployment of your capital.

time saved

time saved

Live fast and prosper, by Sinclair Stewart

A profile of Canadian block trader/salesman Mike Wekerle.

“The average person, when they trade, they ride their losers and sell their winners,” he says. “You’re hopeful that maybe the losers come back. The winners go up 20 cents and you’re happy, and you get out. The losers, you keep feeding. That’s human nature. The best traders cut their losses and ride their winners. It’s a very hard discipline to get into.”

- via Paul Kedrosky -

Asia’s English readers miss in-depth media, by Vaudine England

The Far Eastern Economic Review ended its life as a weekly newsmagazine in October 2004; Asiaweek died in December 2001. Both were full-color weeklies with highly regarded networks of correspondents across Asia.

The owners of The Far Eastern Economic Review and Asiaweek - Dow Jones and Time Warner, respectively - blame an advertising slump for the troubles of the two magazines. Many readers, however, felt that the publications, both of which were long based in Hong Kong, had lost their vitality after being bought by U.S. media companies. The Far Eastern Economic Review still exists in name as a Dow Jones publication, but it has been transformed into a monthly along the lines of the bimonthly magazine Foreign Affairs.

The best part of Barron’s this week was this Letter to the Editor by Zvi J. Doron of
Pittsburgh:

Your May 8 issue carried a classified ad for a “streamlined critical pay position” at the Internal Revenue System, to help revamp that agency’s data systems.

The job title alone — Deputy Associate Chief Information Officer (CIO) For Enterprise Operations Modernization and Information Technology Services (MITS) — took 15 words, including two acronyms; the ad itself ran close to 500 words, including such bureaucratic gems as “efficient competency based uniform operating environment,” “stakeholders,” “mission-critical” and “enterprise system management operation”.

If this is what passes in the IRS for “streamlined,” is it any wonder that its data systems have been performing so miserably? And does anyone really believe that someone attracted by the language of this classified ad would be the right person to fix those systems?