Published July 28th, 2007
in Portfolio - Updates (all).
The euphoria of the DOW closing over 14,000 seems like ancient history. In the six trading days since, the market has gone into free fall. Triple digit down days has become the norm. Last Friday’s 149 point loss was a victory compared to this week’s 226, 311 and 208 point losses on Tuesday, Thursday and Friday. Three months of gains wiped out, vanished, gone.
Countrywide Financial Corporation (CFC), the largest mortgage lender in the U.S., kicked off the party when it announced that it was taking a huge charge as it prepared for the possibility of more people failing to make their mortgage payments. Get this - they didn’t blame the usual suspect subprime slime (loans given to borrowers with poor credit histories). The company stated the rise in credit-related costs was primarily related to its investments in prime home equity loans. These are loans to people with solid credit profiles.
Countrywide’s conference call to discuss this mess went on for three hours. These calls are usually only an hour. The longer they talked the more the market fell. I found the following quite troubling. Continue reading ‘Week in Review 7/27/07 – Stocks Pummeled’
Published July 22nd, 2007
in Portfolio - Updates (all).
The DOW closed at 14,000 on Thursday for the first time in history only to sell off 150 points the next day. Subprime woes took some of the blame, but disappointing earnings were the true story. Intel kicked the week off with a stink bomb. Revenue and earnings were in line with expectations, but profit margins were down. On Thursday and Friday, the eggs continued to be laid by Google, Microsoft, and Caterpillar. It was just a pathetic start to earnings season. For the week, the DOW, S&P 500 and NASDAQ were down -0.4%, -1.2% and -0.7% respectively. In the midst of this carnage, the semiconductor index (SOX) was up 1.3%.
A few weeks ago, I was excited as the Grand Daddy of semiconductor stocks - Intel broke out to new highs. I was excited not because I own Intel, but because higher prices would bring new money to the market. Intel and others of that ilk are still sentimental favorites, but the money is being made in the new kids on the block. SanDisk maker of flash memory for devices such as the Apple’s iPod and iPhone led the SOX to a positive close this week. As long as the SOX hold up, I am not nearly as bearish as many turned on Friday.
Continue reading ‘Week in Review 7/20/07 – DOW 14000, If Only For One Day’
Published July 18th, 2007
in Absolute Must Reads and Trading School.
Wall Street has been advocating diversification forever. I have my cynical reasons why, but that’s a story for a different day. However, in certain sectors diversification is necessary. Gold mining is a great example. I have been trading these stocks for a number of years. Apparently a 10-15% meltdown, when least expected, is part of a gold miner’s DNA. On the flip side, since the industry is consolidating 20-30% pops to the upside are not uncommon either.
Many analysts suggest buying at least 10 stocks to sufficiently protect your self in highly volatile sectors. Thus, commissions could become excessive if trading multiple sectors in a small account. Mutual Funds were the first vehicles designed to provide sufficient diversification at a reasonable cost. Exchange Traded Funds (ETF) are Wall Street’s latest incarnation and have become extremely popular. Their fees are often lower than mutual funds and offer some trading advantages over mutual funds. ETFs are great, but I contend that the next best thing is already here with basket trading.
Continue reading ‘Using Basket Trading to Get Ahead of the Herd’
Published July 15th, 2007
in Economics.
I get more hits on my site for the term “Ron Paul” than any other by 5X. Strange for a financial website - maybe not since money and politics are so interrelated. If you don’t believe me just look at the amount of wealth that was destroyed by the “bone-headed” move the Canadian government made in November. By imposing a new tax on income trusts billions of dollars vanished in thin air.
Ron Paul is definitely the Rodney Dangerfield of this upcoming election. He gets absolutely no respect. I was cracking up after I think the second Republican debate. The FOX commentators couldn’t believe that he was winning their Internet polls. They attributed it to the Internet savvy crowd stuffing the ballots. Well how do they explain this? In the second quarter, Ron Paul is reporting that he has 2.4 million cash on hand. That is more money than former “front-runner” John McCain.
Continue reading ‘Ron Paul Gets No Respect’
Published July 14th, 2007
in Portfolio - Updates (all).
The DOW 14,000 watch begins this week. It was only a few months ago (February) that it looked like we were going to crash down through 12,000. How the tides have turned? The bears had their heads handed to them on Thursday as the DOW spike up 284 points. It was the largest one day move since October 2002.
Larry Kudlow of CNBC’s Kudlow and Company loves to have Doug Kass (a perma-bear) on his show on days like Thursday. Kass seems like a really nice guy, but he has been wrong about the market for a long time. To a certain degree, I agree with Kass. I think that the market is ahead of itself and due for a slow down. However, it doesn’t matter what I think. The market is going to do what it does and my job is to react to the market.
The general market was led again by the SOX up 3.0% for the week. This bodes well as the most powerfully rallies are typically led by the semis. The other indices fell in line - DOW, S&P 500 and NASDAQ were up 2.2%, 1.4%, and 1.5% respectively. Commodities were not to be outdone - Gold, Silver, and Oil were up 1.9%, 2.8% and 1.8% respectively for the week.
Look for some fireworks next week as Intel, Google, Caterpillar and a host of others release their earnings. The semis are heating up. The commodities are still hot. I am expecting to see a lot of Kass over the second half of the year.
How did The Time & Money Group portfolios do this week?
- Fab 4 6.4%
- BBO 6.9%
- BRIC 4.0%
- Real Money 4.1%
- TBS 4.4%
- MDs Ag Play 0.3%
More follows for Friends of TTaMG
Published July 13th, 2007
in Time & Money News.
FOLIOfn is an innovative online broker that has been in business since 1988. Just like any other brokerage firm it is possible to trade securities in the standard manner, but their claim to fame is their unique FOLIO basket trading feature. This allows you to buy, modify and sell whole portfolios in a single transaction.
Do you have $10,000 that you would like to invest equally across 10 stocks? At the push of button, FOLIOfn will determine how many shares of each stock (including fractional shares) can be purchased. Simply push another button and the trade is executed. No need to enter and execute 10 individual trades. Not only does it save you time, but by not having to pay all of those individual commissions - it saves you money.
If you have read any of my previous articles, you know that I am a huge advocate of basket trading. The Big Build-Out (BBO), which has been my most successful portfolio over the last two years, is traded as a basket.
Continue reading ‘Basket Trading with FOLIOfn’
The government’s big ethanol push is driving up the prices of everything including a night at the movies. I just heard on the news that the price of popcorn has increased due to higher corn prices as more corn is being used to produce ethanol. It is time to think like an investor and put a hedge in place to offset rising prices at the grocery store as well as the movie theater. Purchase a few of these agriculture stocks and not only will it make up for higher prices, but it will put a few extra bucks in your pocket.
Our survey begins with the Capital Goods & Services sector - home of Farming Machinery giant Deere Company. Deere is a household name, but have you heard of CNH Global NV (CNH)? The company is based in Amsterdam, the Netherlands. It manufactures and distributes agricultural and construction equipment worldwide. The company generates $13B in revenue - making it about half the size of Deere. As the saying goes, good things come in small packages as the market has bid it up 90% year to date. Continue reading ‘100 Stocks to Combat Rising Food Prices’
Published July 11th, 2007
in Investing - General.
I have been sold on soft commodities (corn, wheat, soybeans, etc.) since reading Jim Roger’s “Hot Commodities” a few years ago. However, his preferred implementation is through futures or commodity index funds. Neither is of interest to me. So, when CNBC Fast Money’s Eric Bolling provided an update of his Ag Play on June 15th – I was all ears.
I have been leveraging oil as well as precious and base metals through companies that produce and service those industries for years. So, Bolling’s play of Monsanto Company (MON), a seed producer, Agrium Inc. (AGU), a fertilizer supplier, Bunge Limited (BG), a grain and seed processor and Deere (DE), a farming equipment company was consistent with my existing strategies.
Continue reading ‘The Best Stock Plays to Capitalize on the Soft Commodity Boom’
Published July 7th, 2007
in Portfolio - Updates (all).
Sell in May and go away is one of many sayings on Wall Street. It has been proven in several studies that gains from November through April are typically better than May through October. It’s somewhat understandable. Would you rather spend time on the beach during the summer or on the trading floor? That reasoning may not be as applicable anymore as it’s possible to trade from the beach.
Trading from the beach was the right move this past week. Although volume was low due to the mid-week holiday, the market performed nicely. For the week, DOW, S&P 500 and NASDAQ were up 1.5%, 1.8%, and 2.4% respectively. As I noted a few weeks ago, Intel’s breakout bodes well for the overall market. Robust market rallies are usually led by the semiconductors and the SOX didn’t disappoint – putting in a 2.7% week.
A rally in the broad market is cool, but the bulk of my money is in commodity related stocks and that’s what I really care about. Commodities shined: Oil 3.0%, Copper 4.1%, Silver 2.3%. Gold lagged which has become par for the course. However, gold stocks rallied big time up 6.9% for the week. Gold stocks usually lead bullion. This could be the start of some fire works.
How did TTaMG portfolios do this week?
- Fab 4 8.4%
- BBO 6.0%
- Real Money 5.9%
- BRIC 5.5%
- TBS 4.1%
- MDs Ag Play 3.2%
more follows for Friends of TTaMG
Published July 6th, 2007
in Investing - General.
As gas prices continue going up, the debates are getting more emotional. About a month ago I had an interesting discussion or should I say argument about escalating gas prices. My “friend” adamantly put the blame on the oil companies. My argument about a few billion new entrants into the global economy creating supply/demand imbalances fell on deaf ears.
Regardless of the cause, there is absolutely nothing you or I can do about the price the oil. I have stopped worrying over things that are out of my control. I prefer looking for the opportunity in the crisis. The formula for investors is simple, increased revenue with relatively fixed expenses generates outsized profits. Buying stock in such companies offset rising prices at the pump, grocery stores or anywhere else.
Continue reading ‘Outraged at Oil Companies, but Not Chicken Farmers?’
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