Financial Almanac

This is the Financial Almanac for Monday, February 7, 2011.

4-Minute Podcast Episode
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It’s the birthday of industrialist John Deere, born 1804 in Rutland, Vermont into a blacksmithing family. He entered the trade himself in 1825, married in 1827, and fathered nine children. After settling in Grand Detour, Illinois, he noticed that cast-iron plows had trouble pushing through the tough prairie soil of Illinois. He remembered polishing needles for his father’s blacksmithing business by running them through sand to help them sew through soft leather, and wondered if the same technique could help plows cut through soil — and discovered that it could.

He made a polished-steel plow in 1838, sold it to a neighbor farmer who told others of his success with it, and within three years Deere was making about 100 plows per year. His reputation for quality took hold. He once said, “I will never put my name on a product that does not have in it the best that is in me.” That was the beginning of what is today Deere & Co, symbol DE, closed last Friday at $93 after a remarkable 69-percent rise from $55 just last July.

One year ago, David C. Wright, managing director of Sierra Investment Management in Santa Monica, CA, told the New York Times that a late-January sell-off could have been a sign that the market was priced for perfection. He said, “Investors have already priced in everything we can hope for in terms of an economic and profit recovery.” In the year since then to now, the S&P 500 gained 24 percent.

We face a similarly cautious mood in financial media today. Over the weekend, Michael Santoli wrote in Barron’s that strong manufacturing data speak to “a re-accelerating corporate economy, accompanied by abiding confidence that Fed policy will remain generous — a Fed priming a pump that just won’t stop gushing.” He called it, “An equity-friendly setup for now, until the talk turns to whether better economic numbers will become the enemy and an invitation to a less-pliant Fed.”

Here’s a stock for today, courtesy of The Kelly Letter, online at jasonkelly.com: Abbott Laboratories, symbol ABT, closed Friday at $46, down from $54 in October to the same area where it found a bottom last June and embarked on a 17-percent gain in the following four months. Abbott has raised its dividend for the past 38 years and currently sports a 3.7-percent dividend yield.

From Sano, Japan, I’m Jason Kelly saying observe the world, find what makes it better, and profit from your discoveries.

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