Today was a good lesson on the benefits of diversification. Even though Frontier Airlines (FRNT) got slammed due to a downgrade from Goldman Sachs, our Buy List not only closed higher, but edged out the S&P 500.

For the record, Frontier fell 7.3% to $7.91 a share. The S&P 500 gained 0.28% and our Buy List rose 0.39%. Not a bad day. We were helped by strong gains from Zimmer Holdings (ZMH), Progressive (PGR) and Commerce Bancorp (CBH).

Commerce rose despite issuing an earnings warning. What caused the stock to climb?

Perhaps the stock rose due to Jim Cramer’s article “<

It’s mid-December and that means it’s time for two things—effeminate claymation elves and the Nasdaq 100 (^NDX) rebalancing. For now, let’s focus on the latter.

This year, the gatekeepers of the Nasdaq 100 have decided to add 12 new stocks, while 12 current members have been voted off the island. The tribe has spoken. And in Wall Streetistan, this tribe speaks very loudly.

If you’re not familiar with the Nasdaq 100, it’s hard to overemphasize how important it is. To quote Reuters:

There are 22 U.S. mutual funds and nine international funds linked to the index, which also serves as a benchmark for some 400 related options, futures and other products.

The Nasdaq 100 index is vital to traders. It’s represented by the Mac Daddy of all ETFs, the Sarboxed In
at 2005-12-12 18:19:44

In the current New Yorker, James Surowiecki defends Sarbanes-Oxley. I enjoy Surowiecki’s writing, especially his recent book, “The Wisdom of Crowds.” My problem, however, is that his article doesn’t defend the law itself, in fact Surowiecki calls it “decidedly flawed,” but he defends the law due to its good intentions.

Surowiecki writes that fraud was “becoming endemic” on Wall Street, and that there were “nearly a thousand earnings re-statements” between 1997 and 2002. But an earnings restatement isn’t an admission of fraud. Under current accounting rules, a company can legally—and I might add, ethically—report wildly different earnings for a given quarter. The reason accounting rules are so complex is be

AP:

Greenspan Warns on Federal Budget Deficits

Times Online:

Greenspan warns of US threat to global trade

Reuters:

Greenspan warns of spending, trade risks

AP:

Greenspan warns of investment fallout

UPI:

Alan Greenspan warns of fiscal peril

Internet:

Case: Break Up Time Warner
at 2005-12-12 18:19:43

In today’s Washington Post, Steve Case argues for breaking up Time Warner (TWX):

This past July, having concluded that integration would never happen, I proposed to the company's board that it was time to "liberate" and split the conglomerate into four freestanding companies -- Time Warner Cable, Time Warner Entertainment, Time Inc. and AOL -- each with its own strategy, stock, balance sheet, management team and board.

units would benefit from the separation. Time Warner Cable would be better positioned to compete effectively against aggressive communications companies like Verizon and the new AT&T -- and it would lose little in being divorced from the Time Warner movie and television companies, as few benefits have ever materialized from having Time Warner Cable and Turner Broadca

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