The Curse of the Dow Trading Range

Interesting article.

"In 1966, the great Dow bull peaked at a general market P/E of 24.1. After trading sideways for 17 years, the Dow 30 ultimately reached half fair value in March 1982, with general markets trading at 7.0x earnings, which happened to herald the very birth of one of the greatest 17-year bull market cycles in history. In 2000, the next great Dow bull peaked at a far higher general market P/E of 44.2. It may indeed again take 17 years in total, about 14 more years, for the earnings of the US stock market to catch-up with astronomical stock prices and lay solid fundamental foundations for the next major Dow 30 bull market."

Unmanned Aerial Vehicles in Defense Budget

United Industrial Corp (UIC, $18.97 on 2/3/2004) - This company has two subsidiaries: Detroit Stoker, which supplies industrial energy equipment, and AAI Corp, which develops unmanned aerial vehicles (Shadow UAV) and other air defense systems.

As per the US Dept of Defense, the proposed defense budget for fiscal 2005 contemplates products like AAI Corp develops:

"Unmanned aerial vehicles continue to receive a great deal of budgetary attention. The Air Force plans to buy four Global Hawk aircraft at $359.7 million. In addition, the service will put $336.2 million into continued Global Hawk research.

The Air Force would buy nine Predator UAV systems for $146.5 million, and the Army would procure four Shadow UAV systems for $42 million.

The unmanned combat aerial vehicle – a joint program with the Air Force, Navy and Defense Advanced Research Projects Agency – will receive $710.4 million in research and development monies. Overall unmanned vehicle research will receive almost $2 billion under the proposal."

UIC $18.97 on 2/3/2004

Taser Shorts Stunned Again

The stock trades for about 140 times its 2003 per-share earnings of $1.07 and about 121 times the 2004 full-year earnings estimate of $1.21 a share. In a related statistic, more than half the company's float is short interest, a circumstance that has repeatedly caused big gains in the stock in the absence of catastrophic earnings news.

Taser's tiny float of about 2.2 million shares exacerbates the short squeeze.