Lioness Associates, Inc.

Economic & Corporate Risk/Yield Reports

October 30, 2012  -- Risk/Yield Update for 2012

Refer to Reading Graphs for information on interpretation of the graphs.

While the CRM 2012 Delta Core/Transient graph has a transient peak in both September and October of 2012, since it is based on transient factors, it is not able to move past the previous high earlier in the year.  The Core peaks again in December of 2012 along with a Transient peak and this could be a period when the stock moves past it's high of the year.  Note, the timing here is difficult as the "fiscal cliff" could start some making investors jittery and they end up backing out of the market instead of investing.  The earnings are due out late November and that could be a catalyst to push prices higher.


July 11, 2012  -- (CRM) Risk/Yield for 2012 has been noted as being over-valued lately (see article) but, in comparison to Amazon's PE,'s PE is still relatively tame (well, maybe a tad extravagant).

Looking at the CRM 2012 Risk/Yield graph, the January to March 2012 period was noted by a heavier presence in the yield portion of the graph (above 0).  The summer months have less activity with a slightly heavier presence in the Risk portion of the graph during July 2012.  The end of the year has a heavier presence in the Yield portion of the graph. 

The CRM 2012 Delta Core/Transient graph illustrates that both core and transient factors are mostly in yield during the year.  The transient slightly dips into risk in April 2012 which coincided with the "wilting of the buying frenzy" and in July which is occurring at the present time and will most likely indicate a "hesitation to buy".  The core has stayed in Yield until the July period and is slightly dipping into risk and stays there until October period.  The initial core movement into risk is also occurring at the same time that the US economy is still somewhat unsteady which is during the July and August period of 2012 (see home page for graph).

Which brings us back to whether is overvalued - maybe the best answer is that value is relative and it comes down to what someone is willing to pay.  In this case, investors are willing to pay a PE of 60+ for whereas for Apple (or Oracle), they are only willing to pay a PE of 15 or so.   



Disclosure as of 7/11/2012 - (CRM) is not part of our portfolio at this time.