Published March 17th, 2008
in Investing - General.
It is getting uglier and uglier. Bear Stearns (BSC) a major Wall Street investment bank nearly filed for bankruptcy this weekend. In a fire sale, J.P. Morgan with backing from the Fed bought Bear Stearns for $2 per share. Bear Stearns closed at $30 per share on Friday. A little over a year ago, January 2007, Bear Stearns traded at $170 per share.
It is simply amazing how much wealth is being lost during this “financial mess.” Billionaire investor Joesph Lewis is light about a billion bucks since his ill-timed investment in Bear late last year. That will sting a little, but he will be OK. However, there are many regular folks at Bear Stearns who are in the red zone (0-5 years from retirement). Their retirements have been delayed, significantly modified or simply won’t happen.
The reason for this blog is that I know many people who have substantial assets tied up in their company’s options and stock programs. Like they say, a recession is when your neighbor gets laid off - a depression is when you get laid off. I am not sure what they say when your retirement gets wiped out, but it “ain’t” good.
Diversify. Diversify. Diversify.
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Friends of TTaMG have been maneuvering quite well during this market turmoil. As of 3/14/08, our Real Money Portfolio is up 8.5% v. -12.8% for the S&P 500.
Check out a sample report and then become a Friend of TTaMG.
Published August 12th, 2007
in Investing - General.
The DOW triggered by a French Bank citing U.S subprime mortgage issues free falls 380 points and two homebuilders Beazer Homes (BZH) and Hovnanian Enterprises (HOV) go up 10%. Often stocks up on down market days are signalling good news ahead. What kind of news could be on the horizon for homebuilders? Maybe they will set a record for the most unsold homes in history.
I don’t know how it is in your town, but in mine new houses are still going up left and right. Hello homebuilder CEOs - stop building houses. How about taking an economics course. There is this new concept called supply and demand that you should learn about.
Obviously the stocks weren’t up on good news, but were up on some bizarre behavior by quantitative hedge funds. According to an article in the Wall Street Journal, “Behind the Stock Market’s Zigzag,” quantitative funds are funds that rely on computer models to pick which stocks to bet on and which to bet against. They have been liquidating positions to raise cash. They sold stocks they liked forcing prices lower. For the stocks they sold short, the opposite occurred; to exit those positions, they were forced to buy.
“A massive unwinding is occurring,” says Tim Krochuck, managing director of GRT Capital Partners. Buying and selling by hedge funds are “pushing those crummy names higher, and pushing the names you like lower.” Do you think these are the same computers telling the homebuilders to keep building houses?
Believe it or not there are roomfuls of Ph.Ds writing the computer models for these quant funds. This is sorta like revenge of the nerds.
Published August 10th, 2007
in Investing - General.
A couple of nights ago I was shooting the breeze with a guy on the 19th hole and he mentioned to me that he owned Intel (INTC). The memories from 2000 are finally starting to fade, so I don’t twitch as much when people mention technology stocks. He said that he had purchased Intel at $36. I knew that it was selling around $24, but had no idea that it hadn’t seen $36 since January 2001. Has buy and hold worked for anyone other than Warren Buffett? I abandoned it after almost being wiped out during the internet implosion.
On the August 9th show, the CNBC Fast Money traders discussed strategies on how to manage in such volatile markets (video here). Eric Bolling doesn’t like selling in down markets, but prefers to put hedges in place. Jeff Macke suggests selling until you can sleep. No one said not to worry because the market averages 10% annually over time. Matter of fact, the next time you hear that spiel put your hand on your wallet and run.
Continue reading ‘Leave Buy and Hold to the Billionaires’
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 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?’
On Thursday, June 15, the Admiral, Eric Bolling, of CNBC’s Fast Money, presented an update to his Agricultural Stock trade (Ag Play). To capitalize on the trend of higher commodity prices allowing farmers to spend more money on new equipment, higher yielding seeds and better fertilizers – he constructed a four stock portfolio.
The stocks are 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. I have been trading energy as well as precious and base metal stocks for a number of years. The idea of playing soft commodities via the stock market was quite appealing. I wrote about it in “Eric Bolling’s Agriculture Stock Play: Is it Too Late?”
Continue reading ‘How I Made Eric Bolling’s Agricultural Stock Play My Own’
My jaw hit the ground last week when Eric Bolling, of CNBC’s Fast Money, stated that his agriculture play was up 59% year to date. It hit the floor a second time when he mentioned how he was playing the sector. I have been trading commodity stocks for awhile, primarily gold, energy and base metal producers. The soft commodities (coffee, sugar, grains) have caught my attention on occasion. However, I couldn’t figure out how to trade them via the stock market and I wasn’t interested in the futures market.
Jim Rogers stirred my interest a few years ago when I read his book “Hot Commodities.” He made it quite clear that we are in the midst of bull market in all “real things” not only oil, natural gas, and metals, but also wheat, corn, soybeans, etc. However, Rogers cut his teeth as a commodity trader. He believes that the best way to participate is to buy the underlying commodity (futures) or a commodity index fund. Since futures are not for me and mutual funds are right up there with watching paint dry, his book didn’t provide any implementation insight that I could leverage. Continue reading ‘Eric Bolling’s Agriculture Stock Play: Is it Too Late?’
I am sure that many of you watch or have watched CNBC’s Mad Money with Jim Cramer. Personally I think the screaming and boo-yaas are a little much, but I do watch it on occasion. I like Fast Money much better - it comes on a couple hours later. I am quite honored, because it looks like old Cramer has been sniffing around my blog looking for ideas 
Back in the glory days Intel (INTC), Cisco (CSCO), Dell (DELL) and Microsoft (MSFT) were known as the four horseman. They were the “go to” stocks. Owning them were like having your own money tree. However, they have all taken it on the chin since then - Intel and Cisco are down 71% and 67% respectively from their high points in 2000, while Dell and Microsoft are down 54% and 49% respectively since 1999.
Last week Cramer announced his new “four horsemen” of technology: Apple (AAPL), Research in Motion (RIMM), Google (GOOG) and Amazon (AMZN). Two of those names, Apple and Research in Motion, are the members of my recently formed The Big Spend portfolio. Interestingly Cramer and I converged on those names using two completely different approaches, but our conclusions are the same. These stocks have the potential to significantly outperform the market and are in the midst of secular (long term) moves. It’s time to get on board.
Published June 9th, 2007
in Investing - General.
Rising bond yields and the stock market don’t mix. That was the story this week as the 10 year bond approached 5.25% sending the stock market reeling. Here is a great introductory article that explains the inter-relationships.
Source: Financial Sense Online
by Andy Sutton
First, let us also make clear the role of the Fed and financial markets in the determination of interest rates. When interest rates and the Fed are mentioned, they are referring to very short term rates, in particular the rates that banks charge each other for overnight loans. When we talk about longer-term rates, these are set by the bond market. Bonds are traded in a fashion similar to stocks. Their price and yield are inversely proportional. If the price of a bond goes down, the yield rises and vice versa. Bonds of varying maturities up to 30 years are available for purchase. The yields of these various instruments make up what is referred to as the yield curve.
Bond prices have a direct impact on mortgage rates. The Fed doesn’t control mortgage rates directly through changes in the discount or overnight rates. The Fed can act clandestinely to ‘work the yield curve’, however. Higher yield rates on bonds have a profound impact on mortgage rates. The headlines have told the story in recent weeks as mortgage rates have continued to trickle higher. Obviously, this is going to create some problems. For a while, cheap loans have fueled the housing market and through it, consumer spending in the form of equity withdrawals. As rates rise, we are going to see a constriction in these loans and we’ve already been through what the results of this will be. The ramifications could prove to be very negative for the housing market, consumer spending and the economy in general. Note that GDP in the US is at a stall rate despite massive growth in the M3 monetary aggregate. In terms of inflation, the monetary authorities don’t seem to be getting as much economic bang for their fiat bucks.
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