Category: Stocks

Real estate prices set to fall farther... Houses, then cars, then credit cards... The latest data on housing is very unpleasant... At the end of the first quarter, nearly 4.4% of the mortgages in the United States were in default, up from less than 4% at the end of last year and up from 2.9% a year ago. Worse, these defaults are concentrated in a few markets, including Puerto Rico (8%), Florida (7%), and Nevada (6.5%).
Defaults are the first stage of the foreclosure process. Rising defaults indicate that foreclosure rates will continue to increase. (The foreclosure rate jumped to 1.39% from 0.58% a year ago.) There is a strong negative correlation between foreclosure rates and recovery values. The more property that must be auctioned, the lower the prices.

According to Moody's, 8.8 million borrowers have mortgages that exceed the value of their homes. As real estate prices fall, the number of these "upside down" borrowers will increase to more than 10 million by the end of next quarter. More and more of these people will simply walk away from their homes, which will continue the cascade of falling home prices.

I wouldn't be surprised to see the average price of a home in the United States fall by 20%-40% before we hit bottom. Most people consider this outcome impossible, but prices have already fallen that much in the worst-hit markets.

Looking at the credit data, it seems people have begun to stop paying their bills in order, from most expensive to least. Houses came first – that's the most expensive bill. Autos came second. (The largest independent auto-finance company lost $300 million last year on its $25 billion auto loan portfolio as defaults rose higher than 7%). What will be next? Credit cards.

Even though the interest rates are sky high on credit-card debt, the minimum payments are small, which is allowing people to keep borrowing. At least for now.

Equifax (a leading credit bureau) reports total credit-card balances increased 8.1% in the first quarter of this year – more than double the previous average rate of growth. Naturally, the steepest increases in credit-card borrowing occurred in the same states where the mortgage crisis is the worst. Credit-card balances rose nearly 15% in the first quarter in California and Florida and more than 20% in Nevada.

Like drug addicts, consumers cannot survive without more and more credit, and they're now turning to the most expensive and unreliable source. They will soon hit bottom.

Now remember the Market antisipates these events 6 months early and the Fed has been doing everything it can to tsave the economy from going into a deep recession or depression. But if a person can't pay his credit cards or mortgage they go bankrupt and the hoouses go up for auction. The Fed is just making sure the banks don't collapse like they did iin 1930 which caused the great depression.

So start looking for bargains as the homebuilders and mortgage companies start to go bankrupt.
The best way is buy KRE and get a 10% yield on your money as you wait for the bottom to be processed. Or if you don't want to loss any money put it in cash at 2.5% and wait for the risks to pass buy then buy KRE. You will pay a higher price then but won't have the risk either.

Question asked on 04/17/2008 at 07:45 AM :: Comments to date: 0

Category: Stocks

I AM SURE GLAD TO SEE THE FIRST QUARTER of 2008 behind us. It seemed as if every couple of days there was more bad economic news. Each announcement was worse than the last. The banks, investment houses, hedge funds, etc. just pumped out the bilges with their financial gray, brown and black water. It didn't matter if the tide was coming in or going out. The whole economic bay seemed to be polluted.
As the quarter unfolded, it became clear that the world's credit system was drifting aimlessly, like a ship sailing with no wind. A lot of business that should have gotten done just did not happen, for lack of funding. Funding went away because risk aversion kicked in with a vengeance, and for a very real reason.
Now GE nad Alcoa report lower than expected earnings and Wall Street is surprised so they take the market down.
Duh!!!!! Things are going to be down because they are reporting earnings from the first quater.
So now is the time to be picking up bargains.
Buy low and sell high. How many of you can do that?

Question asked on 04/11/2008 at 11:33 AM :: Comments to date: 0

Category: Stocks

The opposing forces of inflation and deflation are in the spotlight this spring. Inflation occurs when the government spends more money than it takes in. The economy heats up and prices begin to rise. Deflation becomes dominant when the economy weakens and many businesses fail. Money becomes more valuable and prices begin to fall.
Until recently, rising inflation was the stronger of the two trends. But when the credit crisis started, deflation started to gain the upper hand. Economists are now divided about which monetary situation will prevail over the next few months.
The inflation/deflation question is important because it creates different winners and losers. With inflation, investors can make money if they buy precious metals, commodity stocks, foreign currencies, and other solid assets that go up in price. At the same time, cash slowly loses value.
During deflation, however, prices of most hard assets go down and the value of cash rises. The way to make money is to use increasingly valuable cash to buy high quality assets at steep discounts, and sell them for a profit when prices eventually recover. Some investors are beginning to do just that in a few real estate markets that appear to be oversold.
Longer term, we think inflation will prevail and the price of gold, commodities, and so on, will resume their upward courses. Nearer term, however, we think deflation may create more opportunities for gains. If we are correct, you should have more cash available than you would ordinarily want to hold when interest rates are very low.

Question asked on 04/07/2008 at 06:49 AM :: Comments to date: 0

Category: Stocks

We mentioned on several occasions that investors usually look six to nine months into the future when they are deciding how much to pay for stocks. The higher prices we are seeing now indicate that many investors believe the end of the bear market is coming into view.
As much as we would like to agree with the optimists, we think the credit crunch probably has further to run before the turnaround begins. It is possible that another bank might follow Bear Stearns into the dustbin of history. Some analysts think the whole financial service industry is a house of cards that may fall apart.
We don't agree with the house of cards outlook, but we do think you should stay out of the bidding race that is occurring for most banks and money centers. There is more than a touch of overconfidence creeping into the market now that isn't likely to last. I think the Market will give patient investors better prices in a few weeks.

Question asked on 04/05/2008 at 06:39 AM :: Comments to date: 0

Category: Stocks

A few hopeful stock gains and welcome company announcements don't add up to a credit turnaround. Nevertheless, there are reasons to think the problem is closer to its end than to its beginning.
The key to understanding how the credit crunch might fade away is to ignore the confusing morass of information about subprime mortgages and creative financing. It will just give you a headache.
It's enough to know that when the subprime mess started to come apart, lenders could no longer tell what their loans were worth. Companies that bought the loans were in the same boat. Nor did anybody know how many of the loans they had would be repaid.
Lenders and buyers reacted by saying, 'Nobody will get more money until the uncertainties end.' Bank vaults slammed shut, and everybody from mom & pop contractors to multinational corporations couldn't get the funds they needed. Naturally, the economy started to weaken and the stock market sank.
Now, here's the good news. Despite the losses, most lenders have plenty of cash available. In addition, the Fed will loan banks all the money they need, and at very attractive rates. Once lenders feel confident enough to lend money again, we will see capital move back into the economy. It's another reason we feel that a rebound –when it comes— may be stronger than expected.

Question asked on 04/04/2008 at 06:38 AM :: Comments to date: 0

Category: Stocks

I am blind to the fact that CDE has done nothing. I like the fundamentals of this company.
Most mining companies don't make money. CDE does.
The gold-to-silver price ratio is a tool that every precious metal expert on Earth uses, and for good reason. It currently costs 52 ounces of silver to buy 1 ounce of gold. At the end of the 1978-1980 rally, it took only 17. The average over the past century is around 16, but let's just take 32 as a goal.
What this basically means is silver is lagging gold big time. If the $2,000-plus gold pundits are right, silver should end up at $62 per ounce. That would be a 350% gain…
Now, that’s a pretty bold prediction.We can sure think of how that would affect the Coeur d’Alene (CDE:NYSE) position. This silver miner, as you know, will be the world’s largest in just 12 months. If the numbers above tell you anything, it should be to buy now.
Coeur has taken its own correction lately. It shed 30% since the start of March.
When a correction occurs, there are two kinds of investors: Smart investors who wait it out and, if anything, buy more shares at the bottom…and not-so-smart investors, who buy the whole way up and sell as prices retract. You can imagine which one of these investors makes more money…
Buy on dips CDE and hold on for the big rally this fall.

Question asked on 04/03/2008 at 04:27 PM :: Comments to date: 0

Category: Stocks

(IMOS:NASDAQ) released its fourth-quarter and year-end earnings. Revenue was up 15.8% for 2007 compared with 2006. I am happy to see that the company is still growing its revenue despite pricing pressure in the industry.
More importantly, ChipMOS spent significant money in the fourth quarter to lower its debt, helping to increase shareholder equity in the process. But even with this spending, the company increased its cash situation compared with the third quarter last year.
Shares seem to have put in a bottom and the book value is greater than the market price. I believe the company is on the right track with shareholders in mind.
We can expect to see even larger numbers this year as electronics continue to flood the global economy, which should wake Wall Street from its slumber. Nibble away at IMOS.

Question asked on 03/29/2008 at 04:07 AM :: Comments to date: 0

Category: Stocks

. One or two weeks of weak commodity action is a common occurrence in a bull market shake-out. But as long as the underlying economic fundamentals remain unchanged, you can expect the long-term commodities bull to continue.
The only fundamental change that could possibly end the commodity boom would be a sudden drying up of demand. And the only way that could occur is if a major economic catastrophe arises in the U.S.
I don't see that happening. Rather, last week's action suggests to us the approach of a trough in economic activity (i.e. growth should resume nicely).
That doesn't mean Mr. Bernanke will start raising interest rates soon. Far from it. He still has much work to do to keep the pumps going and prevent our economic ship from sinking below the waves. The difference is that, a few weeks ago, the market seemed to feel that Bernanke's actions would not be enough, and that the economy might soon start to look like the Titanic, post-iceberg.
Now however, the market knows Bernanke is taking his job seriously. We're still sitting low in the water, but the crew is working hard. The pumps are chugging along and the repair effort is certain to succeed.
Buy gold and silver stocks on this correction.

Question asked on 03/27/2008 at 07:05 AM :: Comments to date: 0

Category: Stocks

Dollar holders beware.
Speaking of dollar holders, we read last week that Saudi Arabia’s inflation rate reached a 27-year high of 8.7%. The riyal’s peg to the U.S. dollar is heating up. How can Saudi inflation outpace American inflation (U.S. core rate excluding food and energy at 2.3%) by so much when the currencies remain pegged?
Inflation rates are the outputs of complicated equations. The devastation at Long-Term Capital Management should have taught us that equations, like humans, are often flawed. That was yesterday. Today, we make the structured products. We use increasingly complex financial instruments whose tangible value often depends on the merits of yet another untested equation. Consequently, we have a “credit crisis.”
If we measured the CPI (consumer price index) by 1970s standards, today’s inflation rate would soar from its current levels. Let’s focus on the fact that inflation benefits debtors at the expense of creditors, since debtors can pay back their borrowing in a less valuable currency. And America has plenty of debtors…the U.S. government and homeowners come to mind.
Faced with debilitating recession or destructive inflation, the Fed foists inflation upon us. So we must brace for crippling effects of loose monetary policy. Beware: They often crop up long after the seeds have been planted. We can’t stress this enough.
According to Nathan Lewis, author of Gold: The Once and Future Money :
“Prices in the devaluing country would eventually adjust to the devalued currency. In other words, something that cost $100 (equivalent in value to one ounce of gold) before the devaluation will tend to cost $200 (equivalent to one ounce of gold) afterward. However, the price adjustment process, in practice, can take a very long time to fully play out. Prices for internationally traded commodities will tend to adjust first, typically within a year or so of devaluation. Other prices (medical expenses, rent, education expenses, etc.) can take up to two or three decades to fully adjust. The slowness of adjustment is due in large part to the existence of long-term contracts.”
This “lag effect” should bear some rather harsh long-term consequences. For now, owners of tangible assets (gold, oil and other natural resources) should continue to prosper. Foreign companies with dollar-denominated debt should benefit as well. Votorantim Cellulose (VCP:NYSE) and Cemex (CX:NYSE) come to mind.
But I want to focus on Lundin Mining (LMC:NYSE) . Last Wednesday’s news of a $491.9 million impairment charge related to recent acquisitions sent the share price plummeting. The rise of the euro on world currency markets certainly isn’t helping matters. I still don't worry so much about this charge after a merger if other fundamentals are firmly in place. This company produces good margins and doesn't carry long-term debt (to me, this is key). It has assets that others would most likely gobble up if sold. If this accounting debacle persists, then that's another story. The Lundin family has a real stake. It threw in another $8 million or so of its own cash last year. So I don't see where anyone's interests would be aligned to a major accounting meltdown.
The absence of LT debt is what really puts me at ease over the long term. We’re long-term holders here. The write-down… it's a hit to assets and a hit to equity, no question. But the fundamental business didn’t change. Barring another write-down, the price-to-book today is 0.75.
Quarterly results should mean little to long-term investors. We’re still believers in this company.
About this time in 2002, the rebirth of the tangible assets sector really began. Much of that growth can be directly attributed to the insatiable demand for raw materials that the developing giants -- China and India -- are now experiencing.
These countries are still in the early stages of development. It takes about 30 years to go from an agrarian to an industrial society. China is only one-third of the way. China will continue to import commodities to sustain this enormous transition. India will do the same.
Furthermore, the golden era of stocks (1982-2000) directed capital in about every investing avenue except natural resources and raw materials. Hence, limited demand caused a decrease in available supply.
Today, the entire world can’t get enough copper, zinc, lumber and oil. But bringing on new production takes time. Supply can’t catch up with demand overnight. In fact, it’s going to take quite some time, especially when you throw the consumption potential of India and China (37% of the world’s population) into the mix. Consequently, commodities, the market for the essentials, will remain tight for the foreseeable future.
That bodes well for commodity producers like Lundin.

Question asked on 03/26/2008 at 06:57 AM :: Comments to date: 0

Category: Stocks

What a week in the metals market. On 3/16/08 I said the metals market was gettiing too high and whatch out for a consolidation. Monday the 17th the top of GLD was 100.44 which is gold at 1004.40. Then it fell apart from there.
Thursday it closed at 89.91. Silver dropped even more. The metal stocks are getting sold because they think the top is in the market. It is on a short term basis. So let's start watching for metal stock bargains to load up on for the future.
One such stock to watch is LMC.
Lundin (LMC:nyse) disappointed with a big write-off of its own, sending its shares down 11% on Wednesday. The shares are down 29% for us in a short amount of time. It’s frustrating, because I was right about a rally in base metals -- as copper hit fresh all-time highs recently -- but you wouldn’t know it, owning Lundin.
So what do we do? Do we keep it? Buy more? Or sell it? Let’s think it out…
First, we have to realize the environment we are in. The market took another beating on Wednesday, when Lundin made its announcement. Freeport, the big copper concern, also fell 11%. It was a tough week all around for commodity names. Shares of Canadian Natural (CNQ:nyse) lost 13% for the week. So let’s keep some perspective.
Secondly, the write-off is noncash. It’s not a real loss in the usual sense, because Lundin is actually profitable and generates cash flow. Basically, Lundin paid too much to acquire EuroZinc Mining and Rio Narcea Gold. Management wrote down the value of those assets on its books and took a bath of $492 million. Before those charges, Lundin actually made $55 million in the quarter, which was ahead of the consensus guess. Also for perspective, Lundin’s market cap is about $2.5 billion. Management warned about the write-down early in the year, so it’s not a total surprise, though I think the magnitude is greater than what people thought it would be.
We also have a new CEO in Phil Wright, who wants to clean up everything as quickly as possible and start with a clean slate. We still have an excellent financial condition with no net debt. We still have owner-operators, though they have to step it up and start delivering the goods. Yes, the Lundins have shown a magic touch. I don’t think they suddenly turned stupid. And they are in deep with their own money. So we know they are motivated to get it right.
It doesn’t feel right to sell Lundin here. I’m as upset about the stock as you are. But my rational brain says there is value here. My cooler head says give it some time. If copper prices stay up, Lundin will make a lot of money this year and its self-inflicted wounds won’t matter much. But Lundin has to execute.
I’m going to say pick at it as it bottoms. If you own it, I’d just hold onto what you got. If you don’t own it, you might want to think about taking a shot at it here. It looks like you’re getting a good price. Book value is $10.45.
Lundin should earn $1 per share this year. Estimates have come down based on Lundin’s own guidance on production and because the Street doesn’t believe high copper prices will stick. So the stock trades for only seven times that depressed estimate. Only a few months ago, people thought Lundin would earn $1.25. There is potential for upside surprises. All the bad news seems baked in.
It was also not long ago that the stock was nearly $15. It’s been more than cut in half from its high. I think the Lundins will figure it out and right the ship. But it’s going to take a few quarters for them to earn some credibility again with the Street. They need to start hitting their numbers. I’m betting they will.

Question asked on 03/22/2008 at 06:25 AM :: Comments to date: 0

Category: Stocks

On March 6, banks dragged stocks down to an 18-month low. Industry reports showed foreclosures and late payments rose to the highest level in more than two decades. This helped nudge financial stocks down for the sixth straight day.
No bank was safe from the cold, hard facts. Write-downs at Merrill Lynch, Morgan Stanley and Bear Sterns reached epic proportions. Citigroup, the largest financial name in the United States, led its brethren to lows not seen since almost five years ago.
Much as a rising tide lifts all boats, a fierce riptide can claim many innocent victims. That’s exactly what’s been happening lately. Stocks across the board get smashed right along with the financial sector — even securities that have little or nothing to do with the high-risk exposure linked to subprime loans and other shoddy investment vehicles…
Sure, a meltdown like this can be a bit frightening. But it can also point you in the direction of some amazing opportunities…
There are two sectors that have suffered greatly during the market’s recent throes. Stocks in these sectors have been practically beaten down and left for dead on the side of the road. The average investor — and Wall Street, for that matter — wants little to do with a company involved in both the tech and financial sectors.
But there is one company prepared to break free from the powerful currents of the financial meltdown riptides and swim back safely to shore. This company has grown revenue, profits and profit margins steadily for the past three fiscal years. The banking crisis has dragged this company down to new 52-week lows as the economic outlook for 2008 becomes unclear…
However, you can’t keep a great company down forever. Even with its strong ties to out-of-favor sectors, this stock is ready to make up the 50% it has dropped since November. And it will do it by being the best at providing the essential services that every smart business needs to succeed…
Techs are going to be the new bull start searching.

Question asked on 03/17/2008 at 06:09 AM :: Comments to date: 0

Category: Stocks

The market is in a transition. It has been in a bear since 11/1/07. The top was in that time period.
Remember the decade of 7's, that is the years of the decade that end in seven when the decades year of 2 was a bottom. So this is a long term force of events that make the market behave the way it is. Now the metals are making new highs. They are a result of inflation. That means people buy gold and silver because they finally realize that inflation is here and they want to protect their money. Gold and silver are a store of value.
The fed is doing everything it can since August 16, 2007 to pump up the economy. They don't tell you why but you hear about why in the news eventually. (Subprime mess, Credit ratings, Financial mess, Housing bust etc.)
Money usually takes 6 months to work its way through the economy. Six months from 8/16/07 is Feb 16th, 2008.
But wait the market didn't bottom then. True, there was a double whammy. First the sub-prime mess then the bank fallout. So the bear is being extended and the Fed has been aggressively fueling the fire of inflation trying to get the economy kick started. But by doing that they are pouring more created money after the bad money which is inflatiionary. Gold and silver react to the inflationary forces not predict. The Market does not like inflation therefore down it has gone.
Now what to expect. Gold and silver and even platinum have gone up so quick that they need to rest. The market needs to digest the rise. Consolidation, is the metals market adjusting to the new higher levels. As this happens the stock market thinks that the inflationary forces are stopping and it will start to rise. The stock market will rise here soon but not make new highs. Why because inflation is still here. The metals are setting themselves up for the last big push this fall to start the journey to $2000 gold. So if you are a long term investor hang onto your gold stocks and in 2 years you will be rewarded beyond your beliefs.
Copper was the first metal to make new highs. Platinum was the next to make new highs and it isn't done. Now gold just made new highs this year and silver is way behind. Silver right now is the weakest of the metals.
But right now is they are the cheapest of the metal stocks. For a long term investment silver stocks are the best buy now.

Just look at the patterns of ROY, CDE, AXU which are all sideways patterns, compared to GG.
Remember the pleading I did for you all to buy into gold stocks this last fall. I hope you bought then.
Buy on dips now because the final inflationary blowoff is coming in the next 2 years.

Question asked on 03/16/2008 at 07:39 AM :: Comments to date: 0

Category: Stocks

The Bull market has started. Or has the Bear ended?
Either way the Fed doesn't want to see anymore pain by the American people in the financial area.
So what does that mean. Metal stocks are up even though metals are down.
The metals have to digest the rapid rise before moving on to higher grounds.
Don't lose faith on the metals they will prevail while the financials have to work out their difficulties.

Question asked on 03/11/2008 at 03:33 PM :: Comments to date: 1

Category: precious metals

The US Mint sold 2,170,00 silver eagles and only 26,000 gold eagles in the month of January 2008.
That is 83 times more ounces of silver than Gold.
Silver used to be more plentiful than gold. There were more above ground supplies in silveer than gold.
Today gold is still the demanded currency of the very rich, because look at what the dollar has done lately.
Silver has been used up through modern technology (circuuit boards and computer chips).
Gold jewelry and silver jewelry are still being made and that is still considered above ground supplies as scrap.
Now why do I keep promoting silver over the long term.
Today in round numbers of world inventories of the two metals.
Gold has 5 billion oz of inventory above ground and there is a net increase of 100 million oz a year due to mining and consumption.
Silver has 2 billion oz of inventory above ground and there is a net decrease of 50 million oz a year due to mining and consumption over the last 50 years average.
Now the most industrial metal of the two is silver. There are physical properties to silver that industry can not find a substitute for.
The law of supply and demand will win out eventually and some day the ratiio of gold to silver pricing will continue to narrow. (48 to 1 now)
Back in the old days gold/silver ratio was 32 to one. Therfore if gold stays at 960 per oz then silver will be $30 per oz. But if the silver consumers in industry need to buy the metal to keep printing computer chips and circuuit boards then they don't care what price they pay because they will pass it on to you the consumer.
This is why I am and have been bullish on silver and silver stocks.
Buy CDE, AUY, PAAS, AXU, SLV, SIL. Pick one or all they will go up in time.

Question asked on 03/10/2008 at 07:33 AM :: Comments to date: 0

Category: Stocks

Coeur d’Alene Mines (CDE:NYSE) released its fourth-quarter and year-end earnings numbers last Friday. The company hit its targets of 5 cents per share for the quarter and 15 cents for the year.
Updates are as follows:
 San Bartolome will begin producing at full plant capacity in the next few months
 The 5 new veins at Cerro Bayo will start producing much more as 2008 continues
 The Palmarejo mine in Mexico is still on track for a first-quarter 2009 startup.
The one thing new about the Kensington mine was that the mine has a six-month turnaround time to open.
That would give the company significant exposure to gold by the end of this year, which no one expected. Gold is close to $1,000 per ounce for the first time ever. In the past, CDE’s gold assets were considered too “high cost” to develop. But with prices so high and looking as if they will stay high, the value of CDE’s assets are being rerated by the market…and the fact that silver has broken the $20 per ounce level is not causing any pains, either.
News about Kensington is a huge boost to the potential of the company’s share price.
But Wall Street is in a bear mood so good news will be overlooked for awhile. Hang on for a big move in CDE later on.

Question asked on 03/08/2008 at 07:20 AM :: Comments to date: 0

Category: Stocks

You can calculate investors' buying power easily. The New York Stock Exchange reports the total balance of margin debt and free credit for its member organizations (which are basically the organizations that trade on the NYSE floor). You can calculate buying power by subtracting the total margin of debt on the exchange from the total free credit that is in cash accounts and margin accounts.
Investors are sitting on more buying power than any other time in the history of the data set for the past 16 years.
This is one of the reasons I feel the market will bootom soon.

On the metals front how do you all like your metal stocks now?
There is a blow off but it is only the second wave. That means for the long term hang on to your metals for at least another year and a half.

Question asked on 03/07/2008 at 06:16 AM :: Comments to date: 0

Category: Stocks

Joel Greenblatt wrote a book called The Little Book that Beats the Market. In it, he divulges his "magic formula" – a strategy that, over the last 17 years, has returned 30.8% versus only 12.4% for the S&P 500.
The companies the Magic Formula turns up "are not popular names, and indeed many of them have short-term clouds hanging over their heads. This makes sense, since it explains why they are so cheap."
Greenblatt's website, magicformulainvesting.com, it couldn't be easier to get a list of stocks that meet his Magic Formula criteria. And it's free as well. Finding great investment opportunities is tough... so you want to at least start with a narrowed-down list of possibilities.

Question asked on 03/05/2008 at 03:29 AM :: Comments to date: 0

Category: Stocks

The economy has now been pronounced by the Guru Warren Buffet that we are iin a recession.
Really the economy has been in a recession since August.
The gov't statistics don't show that until now. Data is always a sum of history.
The fed has been working hard to keep this recession from getting bad. It has been pumping money into the system to take care of the credit problems and lowering interest rates to stimulate investments. This is still all causing inflation except in the housing sector.
I said before don't buy until March. Well now is the time to look into buying selected picks as the market goes south.

Wait for the correction to run its course then buy.
Hold onto your metal stocks at least until April.

Question asked on 03/04/2008 at 08:17 AM :: Comments to date: 0

Category: Stocks

"What the greats are doing is easily my all-time favorite hunting ground, and the source of countless good ideas over the years."
Thanks to the Internet, it's relatively easy to find out what the best investors in the world are putting their money into... and it doesn't cost you a thing. Try a site like GuruFocus for example.

Question asked on 03/03/2008 at 03:25 AM :: Comments to date: 0

Category: Stocks

Reread the blog from 2/21/08. The market I thought would crash quuicker but Friday is still a tough day to swallow.
I would not buy anything until the qqqq trade above 44.50.

Question asked on 03/02/2008 at 01:09 PM :: Comments to date: 0

Category: Stocks

The Dow enjoyed a triple-digit gain for most of Tuesday's trading session, only to see that entire gain wiped out in the final hour of trading. This Wednesday formation set a lower high and this is an ominous technical signal. It indicates to me that the Dow will soon be trading below the 12,000 level - and possibly re-testing the January low under 11,750. If this plays out, then we have more than 600 points of downside before re-testing the 2008 lows.
As I have said before this should all take place before March 1st.

Question asked on 02/21/2008 at 04:35 AM :: Comments to date: 0

Category: Stocks

Remember how I wrote about the 7th year cycle top. Well it occurred.
Hope alot of you took my advice and hedged or got out of the market. I know better though. Let me know if you did because you are better off now than alot of other people. I hope you long the metals too.
Now lets look at how long of a correction the market will have.Seasonally the bottom for a 7th-year decline extending into a decade’s 8th year is as follows, the others established final lows on April 2, 1888, March 25, 1898, March 31, 1938, February 14, 1948, March 5, 1968 and March 1, 1978, respectively.
But now an ensuing leg up may have trouble taking off in earnest through much, if not all of the first quarter.
Since the Fed did kick start the interest rate declilne the market respects that and will probably make the Jan 22 low a turning point. But I feel that there is more backing and filling to be done. The bottoms may even be tested but this is an election year and it's not good to have the market tanking in an electiion year.
I predict that the general market will have a turning point in March, almost like 1978.
Inflatiion was strong, the middle east was in turmoil, oil was a precious commodity, it was an election year. There are too many similarities to the history of 1978 that will cause 2008 to be about the same.
Even a Democratic President was elected in 2008. So be careful. Buy Silver and gold stocks.
I like AUY again because it is starting to get some press. Therefore its already in the 2nd major up wave headed for $30 in the next 2 years. Also buy LMC, AXU, CDE, SSRI, GG.

Question asked on 02/12/2008 at 06:30 AM :: Comments to date: 0

Category: Stocks

I know, CDE has done nothing for a year while the rest of the metal stocks are moving higher.
Patience is a virtue but CDE is still a buy. It is the second largest silver miner out there.
Coeur d’Alene Mining Corp. (CDE:NYSE) said it would put its Rochester, Nev., mine up for sale. Even though this may sound like bad news, it actually is good because we find out that Rochester was the major black cloud that hurt the company’s share price.
The company halted its production at this silver- and gold-producing mine because of dwindling reserves. The relatively cheap costs associated with Rochester made it the largest and most important mine for the company over the past few years -- which is why news of the mine’s termination didn’t sit well with shareholders.
However, it’s one of the biggest reasons I jumped on this stock. Rochester historically produced around 5.5 million ounces of silver and 70,000 ounces of gold per year for Coeur. In 2006, that was about 40% of the company's production. That's why investors fled this stock in droves.
What people failed to take into account was that the company has three important mines about to come online in the next year and a half. And after those start producing, no one will even remember Rochester.
Selling the mine would be a huge relief for shareholders. I just had to wait to see if the company would fulfill its goals, and so far, it has.
The recent merger went off without a hitch, and both the Kensington and San Bartolome projects are set to begin producing shortly.
Action to take: Coeur d’Alene Mining Corp. (CDE:NYSE) remains a buy at $4.50 or better .

Question asked on 02/10/2008 at 07:03 AM :: Comments to date: 0

Category: Stocks

Connecticut's Department of Public Utility Control issued final approval to the 16.2 megawatt FuelCell Energy Inc. (FCEL:NASDAQ) project. The project will help Connecticut fulfill the state’s renewable portfolio standards for 800 megawatts of clean power generation by 2020.
Remember, FuelCell shares were riding high until the company initially announced its Connecticut utility contract. The utility commission initially approved 16.2 megawatts for six of the company's fuel cells. But investors were hoping for a bigger contract. The stock took a 22% hit in one day, dropping shares close to $10. Shares are now trading for only $8.44
The Connecticut project will mean an estimated $43 million in potential sales for FuelCell. It also increases the company's backlog by more than 50%. Bottom line: This is an important project, and it will provide important publicity for a potentially industry-changing company.
This is a long term investment.

Question asked on 02/09/2008 at 07:09 AM :: Comments to date: 0

Category: Stocks

“Buy low. Sell high,” is not just an ancient Wall Street saying, it is also the formula that made Henry E. Singleton a fabulously wealthy individual.
Henry Singleton was the co-founder of Teledyne. It was, like Buffett’s Berkshire Hathaway, a conglomerate of many kinds of businesses. Singleton ran the company for many years, from its founding in 1960 through 1986. His story is rich in wisdom on markets and how to beat them.
Warren Buffett says Harry E. Singleton had the best track record of any industrialist in the history of American business. That’s very high praise from a guy who may be the greatest investor of all time.
In his book, Money Masters of Our Time, John Train writes: “The failure of business schools to study men like Singleton is a crime, [Buffett] says. Instead, they hold up as models executives cut from a McKinsey & Co. cookie cutter.”
First, let’s take a quick look at that track record, and then we’ll look at one of the keys to his success — what I call “Singleton’s secret” — and how we can use that insight in our own investing. Teledyne went from $100,000 in profits in 1960 to $238 million in 1986. Shareholders’ equity grew from $2.5 million to over $1.6 billion. Those returns, needless to say, crushed the market over time — by a multiple of nearly four.
But what became Singleton’s signature mark was his pioneering use of the stock buyback. A stock buyback is when a company buys back its own shares.
The wisdom of buybacks is pretty simple…assuming the stock is cheap. As Warren Buffett wrote in his 1980 annual letter, “If a fine business is selling in the marketplace for far less than its intrinsic value, what more certain or more profitable utilization of capital can there be than significant enlargement of the interest of all owners at that bargain price?”
Singleton did this more than anybody. When his stock was high, he used it to buy other businesses. In fact, he bought hundreds of businesses over the years. When his stock was low, he bought stock back.
Today’s CEOs don’t always get the playbook, though. They think regularly buying back stock is a good thing, like paying a regular dividend. They don’t seem to get that it works only if you buy back the stock at cheap prices. Otherwise, you’re just throwing money away. Better to just pay your shareholders a dividend.
During the binge of buybacks we’ve seen in the past few years, companies have often made that mistake. First, look at the chart below and you’ll see the surge in buybacks. It’s pretty clear that corporate chiefs preferred buybacks to dividends in recent years:
Leon Cooperman, an exceptional investor and founder of Omega Advisors, delivered a presentation on Singleton and buybacks at the Value Investing Congress in New York. Cooperman is a real enthusiast of Singleton’s career — a “Singleton junkie,” in his own words. He’s spent a lot of time studying the man and his methods.
Cooperman cited many examples of companies that routinely spend billions buying back their own stock. Unfortunately for those shareholders, the stock prices have subsequently gone down, flushing billions down the proverbial toilet bowl.
The offenders make up a roll call of blue-chip companies: Microsoft, Intel, Lexmark, Masco, Pulte Homes, Circuit City, Chico’s and many more. Countrywide is one of the most egregious recent examples. It spent nearly $2 billion on stock buybacks in the last two years. Countrywide’s stock price has since lost 75% of its value.
James Grant, writing in his newsletter Grant’s Interest Rate Observer, recently wrote about boneheaded buybacks in today’s marketplace. Grant then paid tribute to Singleton when he wrote: “Henry E. Singleton, visionary builder of Teledyne Corp., set establishment tongues wagging by issuing stock at high prices and repurchasing it at low prices. People wondered what he was thinking about. Our postmillennial captains of industry seem not to understand, either.”
But just because most everyone seems to act like they don’t know what they’re doing, it doesn’t mean that there aren’t some companies who get it and wisely buy back stock.
There are a couple of stock buy back companies that know what they are doing.
Two long term investor type stocks are ACAS and LTR.

Question asked on 02/06/2008 at 07:32 AM :: Comments to date: 0

Category: Stocks

There are 2.18 million homes that were vacant and for sale in the 4th quarter. That's 2.8% of all homes. We are edging ever closer to a national average of 12 months supply of homes for sale this spring, with many more home owners who would like to sell simply not bothering to list their home. The good news is that if you want to buy a home, you are likely to find a very willing seller at a very good price. As long as you don't have to sell your home to move on and buy a house.
We are in a recession due to the slowing consumer spending. One caveat. The Bush/congressional plan to air drop $150 billion into the economy should add about 1% of GDP into the economy over the last half of the year, and maybe even this spring if they can get it done fast enough, and that will be a boost to consumer spending.
How many of you have to spend more money on gas and utilities so you have less to spend on consumer items.
So when the government takes the dollars that they take from you and give it back what are you going to buy?
Not much more because the cost of goods keep going up and the debt keeps getting higher. Maybe those that are having trouble will be able to put a dent into a debt collectors demands. The recession must work it's time and pain to get people to be more responsible with their money. Then the economy will start to roll because then people will have money to spend.
The recession started in August of 2007. The Feds have been lowering rates and pumping money. Six months later the economy will be at the bottom of the cycle and in March the economy will start to pick up.
The market still will struggle because it does not like inflation. But inflation is the only way the government can repay the debt with cheaper dollars. If you had a printing press wouldn't you print dollars and spend more?
That's what the politicians do with your money.
We will come out of this recession this spring but the market will stay in a sideways pattern with violent swings up and down for quite awhile.
With inflation buy the hard asset companies and gold and silver stocks on dips.

Question asked on 02/04/2008 at 06:07 AM :: Comments to date: 0

Category: Stocks

With all of this banking mess that will sort itself out eventually the banks have all been painted with the same brush.
If they have exposure to real estate then they were taken to the wood shed and given a good beating.
I found one little bank in Florida that is such a buy I say it is a baby that was thrown out with the bath water.
That Bank is trading at a PE of 2.1 and a book value of $22. The stock on Friday closed at 5.39. Now even if 1/3 of their loans went bad they would still foreclose on the realestate or make other arrangements to salvage their collatoral. This is a long process and will work out. Therefore a value play is at hand so buy a few shares and look for a double in a year.
Oh that bank is BKUNA. Good Luck and spread the word on this baby. You should cash in when it hits $10 in the next 2 months.

Question asked on 01/28/2008 at 06:53 AM :: Comments to date: 0

Category: Stocks

2007 proved to be the worst year for housing in decades, perhaps since the Great Depression, the National Association of Realtors finally admitted Thursday morning.
Existing home sales fell again in December, this time by a more-than-expected 2.2%. Thus, for the whole year, home sales dropped 13% -- the largest annual fall since 1982. What’s more, the median price for a single family home fell 1.8% for the year, to $217,000 -- the first annual decline since the NAR began keeping track in 1968.
Lawrence Yun, the NAR’s chief economist, went on to tell CNN that 2007 was likely the first decline in housing prices for an entire year since the Great Depression.
This is why I say the market will be sideways for awhile.

Question asked on 01/25/2008 at 07:03 AM :: Comments to date: 0

Category: Stocks

The Market has been stimulated by the Fed, the President, and outside foreign investors, mainly oil money.
The market still has problems and will take awhile to digest the down move.
Expect wild swinging days in both directions with a sideways pattern for the next 6 weeks.
Pick up bargains if you want for a long term ride.
Some metal stocks are bargains because what the Fed has done is still inflatiionary and will show up in six months.
LMC, AXU, IAF, CDE, GG, AUY, ROY, SSRI, PAAS, IAG, NG, SWC, are all still good long term buys.

Question asked on 01/24/2008 at 12:51 PM :: Comments to date: 0

Category: Stocks

I want to use football betting as an analogy to the market.

New England is the best team in the National Football League. They were undefeated this season. They may be the best football team of all time.
The Jets are the second worst team in the NFL. They won four games and lost 12. Two of their victories were against Miami, the worst team in the league.
On December 16, the Jets played New England. New England won the game 20-10. But if you'd bet on the Jets, you would have won the bet.
One week later, Miami played against New England. Miami is the worst team in the National Football League. They won one game this season... and lost 15. New England won the game 21-0. But if you'd bet on Miami, you would have won the bet.
The Giants are an average team this year. They won 10 games and lost six in the regular season. On December 29, the Giants played New England. New England won the game 38-35. If you'd bet on the Giants, you would have won that bet, too.
How is it possible that New England won all three games, yet a gambler would have lost his money three times by betting on them?
Here's the explanation:
Leading up to the end of the season, everyone expected New England to have a perfect record. They were the strongest team in the league and were aiming for an undefeated season. So gamblers bet New England would thrash their opponents.
With the public betting so heavily on New England, the bookies had to adjust their lines in favor of the underdogs to balance their books. They gave New England a 20-point handicap against the Jets... a 22-point handicap against Miami... and a 13-point handicap against the Giants.
These handicaps were among the largest I've ever seen in the NFL football markets. Even though they won the games, New England couldn't match these high expectations.
This principle of expectations is the single-most important concept to understand if you're going to profit in the investment markets.
Right now, everyone expects the United States residential property market to perform badly and I will add the banking sector too.
The public sees entire tracts of brand new homes unable to sell. They wonder how they'll ever be able to sell their old house when new ones can't sell at the same price. They see realtors losing their jobs. They see predictions of recession, unemployment, and bankruptcy on television.
The thing is, the stock market bookmakers have already adjusted their handicaps to reflect these expectations...
The iShares Dow Jones US Home Construction ETF is a fund of the companies that build homes and the companies that provide construction materials to the homebuilding industry. Its symbol is ITB.
ITB closed its first day of trading at $50.10 on May 5, 2006. Today, it's at $14.34. That's a 71% decline in less than two years. Another ETF is XHB which has the same pattern.
So the question is, will the future prove to be better or worse than the public expects right now?
I believe the public has overreacted... just like they did with the New England Patriots in the last three weeks of the season. The Feds are injecting liquidity into the system, the politicians are making laws to bail out bankrupt borrowers, and the price of homebuilders now reflects the worst-case scenario in the home-construction industry.
You might think about making a bet on the underdog here. The underdog may still have a terrible season, but I expect you'll profit anyway.
Now let's take the fact as a betting person you bet on New England every game. You wouold have still won 13 out of 16 times. So bottom fishing is a risky bet. The housing industry will rebound but slowly due to the tide is still goiong out with the repercushions in the market from the financial sectors. So wait for another month before you start betting again for a bottom.

Question asked on 01/20/2008 at 07:43 AM :: Comments to date: 0

Category: Stocks

Benjamin Franklin was born in Boston on Jan. 17, 1706.
He was one of the great Father's of our country. He wrote A penny saved is a penny earned. The idea here is to protect your wealth in an era of inflation and resource scarcity.
Early in his life, Benjamin Franklin spent a bitter period of time as an indentured servant. He became well acquainted with scarcity and privation in a colonial economy at the frontier of the British Empire. After gaining his freedom, Franklin went on to become a printer, editor and merchant. (At one point, Franklin had a government contract to print the paper currency of Pennsylvania.) Franklin was also a natural scientist, scholar, writer and inventor -- coming up with an array of things ranging from the lightning rod to the glass harmonica. It was Ben Franklin who came up with many social innovations that we take for granted, such as America’s first lending library and the first volunteer fire department.
And Franklin was a politician, diplomat, philosopher, ambassador and Founding Father of the United States of America. It was Franklin who famously summed up the form of U.S. federal government -- if not its ultimate fate -- as he walked out of the proceedings of the Constitutional Convention of 1787. When asked what sort of government had been established, Franklin replied, “A republic, if you can keep it.” More than two centuries after his death, Franklin is among the most revered and respected figures in American history.
Indeed, Franklin is among the best-known Americans throughout the world. Certainly, Franklin’s intellect and accomplishments are the foundation of his fame. But one aspect of Franklin’s worldwide fame comes from the fact that his image is printed on the U.S. $100 bill. Thus, Ben Franklin is ubiquitous in international trade and commerce.

This monetary aspect of Franklin’s fame is worth bearing in mind. Because it now takes about one of those Franklin $100 bills to purchase one barrel of oil.

And it takes nine of those Franklin $100 bills to purchase an ounce of gold.

Just a year ago, a Ben Franklin $100 bill would buy nearly two barrels of oil, not one. And it took just a bit more than six Ben Franklins to buy that gold coin illustrated above. While we are thinking about it, how much food can you buy this year at the grocery store for the amount indicated on one Ben Franklin? Less than you could last year, right?
What a difference a year makes. Things are changing fast in the world of money. That is, the value of your U.S. currency is declining, while the costs for the things you buy are rising. In a fundamental and philosophical way, it gets back to Ben Franklin’s comment about living in “a republic, if you can keep it.” If your currency is declining in value and the things you want in life are becoming more and more expensive, what can you really do? What does the future hold? At the end of the day, can we maintain that republic?
Gold and Energy
I think it is fair to say that Ben Franklin knew how to adapt to changing times. And you have to have that ability, as well. So let’s discuss a couple of defensive investments in a time of rising prices and declining value of the currency.
Most recently, I recomended NovaGold Resources Inc. (NG: AMEX). NovaGold recently won an important court case in the Ninth Circuit Court of Appeals, (which is why it was knocked down so hard before) upholding its mining permits for a new project near Nome, Alaska. NovaGold is still running final tests on its Nome processing mill, but the company is already mining and stockpiling ore. So NovaGold will be processing and selling gold within a couple of months. Plus, NovaGold is making steady progress on another project at Donlin Creek, Alaska. Donlin Creek is one of the largest undeveloped gold deposits in the world, with nearly 33 million ounces of gold resources measured, indicated and inferred. My view is that in the long term, NovaGold is one of the greatest gold mining stocks you can own. Don’t chase the stock, but build a position.
Action to take: Accumulate shares in NovaGold Resources Inc. (NG: AMEX) up to $11.50 per share. Expect this stock to appreciate significantly in 2008.

Kinross Gold Corp. (KGC: NYSE) Kinross is just now ramping up production from new mine facilities. It will be selling increased gold output into a higher-priced gold market. The profits will flow straight to the bottom line. And this is reflected in the higher stock price. Do you have a position in Kinross? It is not too late. Kinross is selling at over $21 per share, The price-to-earnings ratio is high, but not relative to other well-run gold miners. Kinross is growing its earnings rapidly, so I am raising the “buy” price up to $22 per share.
Action to take: Accumulate Kinross Gold Corp. (KGC: NYSE) up to $22 per share. Use any pullback in the gold price to accumulate shares of this great gold miner.
Now let’s think about the world of energy. You surely know that oil prices have been rising, with oil crossing the $100-per-barrel mark and then retreating. Natural gas has also had a slow, but steady climb in recent weeks, although the vaporous energy source has not climbed in price as dramatically as the rising price for oil.

Chesapeake Energy Corp. (CHK: NYSE) , which is rapidly increasing its output from the Barnett Shale play. Chesapeake has given us a return of almost 40% in just over two years since we added it to the portfolio. Keep in mind that this was during a time of, essentially, stable natural gas prices. So Chesapeake does engage in some element of hedging, but the company must be doing something “right” to be rising in value while its product is selling at a level price. What is that?
First, Chesapeake may be one of the best-run energy companies you can own. The past couple of years were good to Chesapeake, with a phenomenally successful drilling and production program within the heart of the U.S. And the future appears even brighter for this Oklahoma City-based company. Using between 38-40 drilling rigs that it either owns outright or operates under contract, Chesapeake expects to complete -- on average -- a gas well in the Barnett Shale play about every 15 hours through at least 2010 !
Aubrey McClendon, Cheasapeake’s CEO, recently stated that the company plans to continue acquiring leaseholds in Tarrant, Johnson and Dallas counties in Texas. So Chesapeake will be drilling its additional acreage in due course. In 2007, Chesapeake’s gross production from the Barnett Shale was 600 million cubic feet of gas equivalent (400 million cubic feet per day net), compared with 2006 gross production of 250 million cubic feet per day. According to CEO McClendon, “We now will focus on achieving our 2008 gross production exit rate target of 900-1,000 million cubic feet per day.” This is an output increase of over 60%.
Thus, Chesapeake will be increasing gas output, in all likelihood in an environment of rising energy and natural gas prices. Chesapeake stock is currently selling at about $37.00 per share, with a price-to-earnings ratio of about 12. My expectation in 2008 is for Chesapeake to increase gas output and sell it at higher prices. So I am raising the “buy” price for Chesapeake to $38 per share. I believe that this stock could rise to $50 and more during 2008, for a 25% gain.
Action to take: Accumulate Chesapeake Energy Corp. (CHK: NYSE) up to $38 per share. Use any pullback in the price of natural gas to accumulate shares of this great energy company.

Question asked on 01/19/2008 at 06:34 AM :: Comments to date: 0

Category: Stocks

Think of History and what has happened in the markets. Today the fear of a bear market is as it was in any other bear market with problems financially flowing in the press all the time. First it was housing then the ripple to the mortgage and bank industry then to the consumers. All bad news.
After the storm there will be sunshine so what do you do during the bad times hunker down and wait.
I was predicting a top in the market in the year of 7's and it came to pass. A top on 10/31/07.
Now the markets have to digest the problems and get on with life. Wait and save your money to buy later.
The following is an excerpt from Jeff Clark who writes now about whether we are in a bear. A bear is measured from a peak to a bottom. The peak was and we are waiting for the bottom.

"Right now, investors would do well to play dead. Or better yet, avoid the market altogether.
Yes, there are plenty of bargains out there. Lots of good quality companies are trading at single-digit price/earnings ratios. Lots of debt-free stocks are trading just above the cash per share on their balance sheets.

But if we are entering a bear market – I am not yet convinced we are, but it is growing more likely – then cheap stocks will get cheaper. Investors should focus less on finding good, cheap stocks, and focus more on preserving capital.
I'm not suggesting that you can't find stocks that go up in a bear market. You can, and we will. But in the early stages of a bear attack, everything gets hit. Investors are better off playing dead until the bear tires out and wanders away.
Bear markets typically last between six and 18 months. Most of the damage, however, occurs early on. Exercising a little patience right now could be the difference between buying stocks on October 16, 1987 – the trading day before the big crash - and buying them on October 20." By Jeff Clark

I say the long term true bear started in Jan of 2000 and the first major bottom was in October of 2002. Everything else will be sideways until 2012 which will be another major bottom.
After 10/2/02 we have gone upward until 10/31/07. Five years of a Bull, that's a long Bull.
Now we are in a minor bear.

Question asked on 01/17/2008 at 03:48 AM :: Comments to date: 0

Category: Stocks

The big news in financial markets last week was Bank of America’s proposed $4 billion acquisition of Countrywide Financial. Let's call it the pied piper of reckless mortgage-lending practices. It encouraged brokers to push the limits on subprime, interest-only, and negative amortization mortgages. It provided the raw materials for Wall Street’s mortgage-backed security machine. And it now faces a choice between bailout and bankruptcy. Countrywide shareholders are lucky Bank of America is bailing them out.
The same can’t be said for Bank of America. I expect B. of A. shareholders will regret this investment. Rather than buying just a division of Countrywide, or waiting to scrounge through the post-bankruptcy rubble, B. of A. is acquiring it outright. This package includes Countrywide’s assets and liabilities. B. of A. executives believe the low purchase price -- about one-third of Countrywide’s book value -- will compensate them for the risk.
I don’t agree that book value is an accurate gauge of Countrywide’s intrinsic value; a mere 7% drop in Countrywide’s fishy assets would wipe it out completely. Countrywide’s assets ballooned during the housing bubble, having doubled since December 2003.
B. of A. is taking a huge leap of faith that this mortgage portfolio is worth anything close to $80 billion. This portfolio may be hard to value, but if the housing market remains stubbornly weak, it won’t be worth $80 billion much longer.
“Bankruptcy litigation is among a list of potential legal liabilities Bank of America may inherit,” notes today’s Wall Street Journal . “These include inquiries from the Securities and Exchange Commission and several state attorneys general, as well as shareholder lawsuits tied to Countrywide’s financial decline and other class action and individual suits brought by borrowers for alleged abuses by the company.”
Countrywide CEO Angelo Mozilo, already under investigation for his suspiciously well-timed stock sales, has already grabbed his golden parachute. In yet another example of poor oversight by the board of a publicly traded company, Mozilo is expected to receive a severance package measured in the tens of millions of dollars.
On last week’s conference call, Lewis mentioned that he wants Mozilo to stay on until the deal closes. Mozilo, long regarded as a mortgage industry “expert,” should have spent less time working on his famous tan and more time in the office thinking about Countrywide’s balance sheet risk. He squandered shareholder capital on hefty share repurchases when the stock was multiples of its current price -- capital that would have come in handy to survive the current financial hurricane.

The Bank of America/Countrywide deal doesn’t mark a bottom in mortgage finance -- just another gamble with other people’s (i.e., shareholders’) money that it has, or has not.

When it does bottom buy KRE for a long term buy.

Question asked on 01/15/2008 at 06:35 AM :: Comments to date: 0

Category: Stocks

After watching The Final Trade on Friday night I started to recall what is their overall record.
This panel of expert traders are very inteligent and in touch with the market. In fact they are some of the big time money movers of the market. So when they say go defensive because the market is going down they mean get out of small caps and go into large caps with alot of cash so that if there is a major recession the large companies have staying power. It all makes sense.
Last year they were all made to pick their favorite stocks to be in for the year. Not one said gold or silver stocks.
If you had bought just the XAU you would be up 50%, GG up 46%,
I personally don't like to change my investments around just because it is the New year. In fact coming up in the next 4 weeks is the near term bottom of the market. Why do I say that.
First of all on August 16th 2007 there was a bottom in the market. The sub-prime mess hit and something had to be done with that. The general banking giants couldn't contain it anymore so the Fed came to the rescue. The Fed started to help save the day by pumping more money into the economy and lowering the interest rates and we had a rise to new highs in the SPX in October. But the problems were still there. The ripple effect was going to take its toll. Now all the ripples are comiing out and the market is reacting to the negative news. November and December and Jan were negative news months. Everyone was waiting for the Santa rally. Then everyone was wainting for the New Years rally. Thus the intervention by the fed prolonged the market upward bias for about 3 months. Otherwise the market would have bottomed in a bear market scenario just in time of November just like 1987. Greenspan in 1987 waited until there was so much damage that he finally poured the money into the economy and saved the day duriing that month of Nov 87. Today the Fed did it 3 months quicker but the casualties have not been wrung out of the market yet. The spiral down will not be as brutal as 1987 because the fed came iin earliear to give it a boost. But the Fed can not change the markets overall bear and bull direction completely. Only the mass of people can do that.
We have been in a recession since August. Just ask your local business people how business has been. The government collects data and when certain indicators hit certain levels then (the economists) they declare we are in a recession. Then its too late to do anything about your investments because the market is down.
So what to do now. Save your money and wait for Feb to start buying areas of beaten down and value plays with good solid dividends.
The market will start to react with bottoming formations during Feb. On the average the market corrects 25% in a bear market. lasting an average of 4 months.
I feel the market will go to 1320 area and give us a rally from there. This doesn't mean we are screaming to new highs. This means you will hear how terrible the market is and everyone is losing their shirt in the market and then you start to buy some of youor favorite stocks. (Buy low sell High)
Happy timing of your trades. Otherwise wait to buy your long term investments. Hang onto your gold and silver stocks.

Question asked on 01/13/2008 at 07:05 AM :: Comments to date: 0

Category: Stocks

The Market is punishing the banks and all financials unless they are not in the sub-prime mess.
Two stocks that I feel worth watching and buying when you are ready to pull the trigger.
This is the time to pick up bargains.
Think about it. You can put your money in a bank and get 4% for a CD. It's safe and secure until it goes bankrupt.
The government will secure up to $100,000.
Well there is an ETF out there that has about 20 regiional banks in it and yields about 12%.
That ETF is KRE and sells around the $32.00 mark. Buy it and it's like putting your money in the bank. There is no guaranttee but 20 banks are not going to go bankrupt. This is a long term buy and hold. While you hold you will collect 12% plus the chance for appreciation.

Another specific bank is Wachocvia (WB) where you get a 7.5% yield and a great bank giving you 7.5%.

Buy the above 2 and you will make money when it starts to go up along with 12% dividend.

Question asked on 01/11/2008 at 04:02 AM :: Comments to date: 0

Category: Stocks

Reread the 10/25/07 article I wrote.
I made a cardinal sin of trying to bottom fish.
Today I feel this is still a great company to own and I still own it.
I am going to do another double cardinal sin and buy some more at the $11.00 range.
This is a long term value play and when the housing market bottoms this stock will take off.

Question asked on 01/09/2008 at 07:38 AM :: Comments to date: 0

Category: Stocks

There is a beaten-down stock of a great mining firm with unbelievable ore wealth in the ground. And that’s not all. At the end of the day in the mining business, you invest in management. And (NG) - NovaGold’s management is second to none, with Rick Van Nieuwenhuyse at the helm. Now you can buy both the resources and the management, and Rick’s outstanding vision for his company, at a 50% discount. What a deal! Unlike in horseracing, in mining, you should bet on the rider, not the pony. NovaGold is a long-term call on great management and a company that controls world-class resources of copper and gold in Alaska and Canada.
Action to take: Buy NovaGold Resources Inc. (NG: AMEX) up to $11.00 per share. Use any pullbacks to accumulate shares. This stock should double in 2008.

Question asked on 01/08/2008 at 06:30 AM :: Comments to date: 0

Category: agricluture

Investing Safely in this Bull Market Mega-Trend
Well, fortunately it is much easier to invest in agricultural commodities and agricultural companies than it once was. Here are two ways to do it:
Market Vectors Global Agribusiness ETF (MOO) – If you want to achieve wide global diversification among agriculture-related companies, there is no better way to do it than this ETF, with the appropriately named ticker. MOO tracks the DAXglobal Agribusiness Index and holds positions in 40 companies trading on 13 global exchanges.
These companies run the gamut from equipment makers Komatsu and Deere, to seed and fertilizer companies such as Monsanto and Potash, to firms involved in agricultural chemicals, irrigation, food and livestock operations, ethanol and biodiesel, and food distribution.

Buy on any pullbacks
This ETF began trading in September 2007 and gained 39 percent by the end of December. Considering the long-term fundamentals of the agribusiness sector, this is just the beginning of greater gains ahead. But keep in mind that this ETF is stretched to the upside, so it might be a good idea to accumulate on weakness.
PowerShares DB Agriculture (DBA) – There are few ways to invest directly in agricultural commodities without going into the futures markets. But the PowerShares DB Agriculture ETF is one of the best. This ETF provides equally weighted exposure to the four most widely traded “soft” commodities: corn, soybeans, sugar, and wheat.
DBA gained 34 percent in 2007, and with the supplies of these four commodities under long-term pressure from rapidly rising demand, this upward trend should continue in the years to come.
The Train is Leaving the Station ... Are You on Board?
No matter how strong the fundamentals, bull markets don’t move up in a straight line. This one will be no different. There will be certainly be volatility and corrections along the way. But the fundamentals of the supply and demand equation foretell a long-term uptrend.
Do you expect the price of energy to go down in the long run? Do you believe that governments will stop encouraging biofuels? Do you think that the two billion people in China and India will stop eating anytime soon?
If you answered no to these questions, then it is time to build a long-term position in agribusiness companies and food commodities. This mega-trend is on solid ground and the bull market is just beginning.

Question asked on 01/06/2008 at 06:11 AM :: Comments to date: 0

Category: commodities

Most investors are well aware of the existing bull market in precious metals, raw materials, and energy. But there is another aspect of the natural resources bull market that has just begun ... and has gone virtually unnoticed.
I’m talking about the bull market in food and agriculture. This bull market is being driven by the most fundamental concept of economics: supply and demand. Quite simply, the demand for agricultural products is overwhelming the supply. And this imbalance should continue for years to come, regardless of what happens in the broader economy.
For decades, food prices have been declining as scientists developed high-yield plant varieties and farmers implemented the latest improvements in equipment, pest management, and growth-promoting fertilizers. But the days of declining food prices appear to be over.
According to the International Food Policy Research Institute, the world has consumed more grain than we have harvested in seven of the last eight years. Currently, there is only 12 weeks worth of the world’s consumption of wheat and only eight weeks of corn remaining in stockpiles. And demand for these grains is rising by more than 30 million tons per year!
Predictably, this has had an impact on prices. In the past 12 months, corn and wheat prices are both up more than 50 percent, while soybeans, dairy, meat, and poultry are also on the rise. For the three months ending in October 2007, the price of food rose at roughly three times the rate of overall inflation.
Why Demand is Outstripping Supply
There are several key reasons why the demand for food and agricultural products is soaring.
First, the world’s population is exploding. There are simply more mouths to feed. It is estimated that the world’s daily caloric intake will increase from 17 trillion calories per day today to nearly 25 trillion in the next two decades.
But it is not just the number of people that counts. Even more important is what people are eating. As the economies of developing countries grow, the personal wealth of billions of people is also growing. In China, for example, the middle class is expected to grow from 100 million to 700 million people by 2020.
And as living standards improve, one of the first things to change is diet. With the money to buy more than just a plate of rice and cabbage, the populations in developing countries are putting more eggs, dairy, poultry and meat on the table.
So not only is the demand for protein going up, but so is the demand for grain, because more protein consumption requires more grains to feed the animals. In fact, it takes five to seven pounds of grain to produce just one pound of beef or pork.
The World Bank estimates that global grain production will have to climb by 50 percent and meat production by 85 percent to meet the projected global demand in the next 20 years.
Food vs. Fuel
But the increased demand for agricultural products does not just come from the dinner table. The emergence of biofuels has also caused a significant boom in demand.
In the U.S., there are currently more than 130 ethanol refineries that consume 27 percent of the U.S. corn crop, according to the USDA. An additional 80 plants are currently under construction. When all of these facilities are operating, ethanol will account for half of the U.S. corn harvest!
Now combine that number with the 43 percent of the crop that goes to feed livestock. That leaves just seven percent for food products. Talk about a squeeze play.
To add to the supply and demand imbalance, consider that changes in climate and inclement weather have severely decreased crop yields in crucial places. Drought in Canada, China, Europe, and Australia (suffering the worst drought in 1,000 years!) has also put significant pressure on world food supplies.

So what does this all mean?
Well, it means that over the long term, food prices are going up, up, up. That presents an investment opportunity and inflation hedge in itself. But it also means that any companies that help farmers produce more food, and do so more efficiently, will be very profitable investments in the coming decades.
And that will stand, no matter what happens to the global economy. After all, people may cut back on clothes and cars and gadgets, but they won’t stop eating.
And in most countries, with declines in soil fertility, dropping water tables, and competition from urban development, it is proving difficult to increase the amount of land suitable for farming. That means the best solution to the coming food crisis is for farmers to increase the yield they get from their existing land.
All of this translates into substantial long-term opportunities for the companies that grow, harvest, distribute; and service the global food supply.
Continued Tomorrow

Question asked on 01/05/2008 at 02:08 AM :: Comments to date: 0

Category: Stocks

Be careful of bottom picking stocks that are affected by the subprime mess.
As we begin the New Year, remember that much of the fallout from the subprime debacle is scheduled to happen this year. The FDIC estimates that about 1.7 million ARM-type mortgage loans worth $367 billion are scheduled to reset during 2008 and 2009, increasing payments and likely leading to higher foreclosures, bankruptcies and housing-related economic woes.
The Bush Administration, Federal Reserve and major mortgage lenders teamed up together to develop a way to help those who cannot afford the higher payments scheduled for 2008. However, it's not clear that this plan will make much of a dent, and we all know about the law of unintended consequences that may pop up long after the bailout is history.
The FDIC predicts that the subprime bailout will also benefit investors who bought investments secured by subprime mortgages. However, it doesn't seem to do much about the related problem of institutional investors that cannot accurately value these investments because of the uncertainty of eventual repayment. In fact, one expert said that, "Modifying loans too aggressively may harm mortgage-bond investors more than it helps them..." I guess we'll just have to wait and see what happens.
As for the continued effects of the subprime mortgage debacle on the stock markets, the efficient market folks would have us believe that much of this news has already been priced into the market. However, just watch what happens as bad news about subprime loans hits the airwaves, even though the news may consist only of the confirmation of what was predicted to occur. As a result, I expect the subprime debacle to trigger just as much emotional trading in 2008 as it did in 2007.

Question asked on 01/03/2008 at 06:37 AM :: Comments to date: 0

Category: Stocks

I opened an account in December in Option Express.
I haven't been able to explore all of the tools that they give you but right now I would recommend anybody who uses an online broker to look at OXPS.
They are going to give online brokers a headache. They have their act together. With that said I even bought some of their stock at 30.50. I think this stock could go to 45 next year. It is still a new and young growing company.
Get in on the ground floor now.

Question asked on 12/28/2007 at 07:01 AM :: Comments to date: 0

Category: Stocks

The first obvious theme is that the U.S. economy has now passed a major inflexion point. It is becoming increasingly clear that there are severe tradeoffs between economic growth and inflation. Namely, we cannot have one without the other. Inflation will be the penalty for continued growth, and that penalty is now beginning to be felt. It looks like 2008 will end with many fixed income investments showing a negative real return (interest minus inflation). This is a situation we have not seen in more than a generation.
Among the many implications of negative real rates is that real assets now have real advantages, and are likely to really outperform. By definition, real assets are assets whose values rise with inflation. If inflation is defined as cash becoming less valuable, then real assets are the things you will be spending your cash on -- things like food, fuel, and anything made from real materials like metal, timber, and hides.
As an investor, you now have a simple and obvious choice. You can either put your money in interest-bearing cash, such as bank accounts, bonds, or T-bills, in which case you will watch it steadily lose value. Or you can buy real assets which will maintain their value in the face of inflation. In the 1970s, the last time real returns on cash turned negative, we saw bull markets in almost all commodities, just like we have today.
Of course, no discussion of real assets would be complete without gold, an asset we highly recommend for next year and beyond. Many analysts assume that gold simply moves in an inverse relationship to the U.S. dollar, however there is more to it than that. We must point out that, so far this year, gold prices have risen 20%, while the dollar has fallen by only 5-7% against the euro and other currencies (versus some currencies, the dollar has actually risen). So the gains in gold reflect not just the downtrend in the dollar, but also an emerging worldwide inflation. These gains show that investors increasingly feel the need to protect their savings against inflation.
As the current price of oil (over $90 a barrel) indicates, we all need to worry about inflation. The signs continue to appear that OPEC's spare production capacity is little to none. Even if growth slows in 2008, which is likely, it will continue to raise demand for oil, putting higher pressure on supplies. That is clear recipe for inflation. Remember that when oil jumped from $20 to $35, fuel prices were not affected very much, because oil and energy costs as a percentage of the overall economy were very low. Now, however, energy costs are approaching or perhaps past the key point where they equal 10% of the overall economy. That means that from now on, further gains in energy costs will increasingly affect the price of everything.

Question asked on 12/27/2007 at 06:51 AM :: Comments to date: 0

Category: Stocks

As faithful readers will recall my favorite stock in silver was CDE. For some reason my timing is early because I see fundamentals that have influence on the cause and effect of a company's future. Thus I liked CDE. Finally Coeur d’Alene Mines Corp. (CDE) is in the news. CDE officially approved its acquisition with Bolnisi Gold NL and Palmarejo Silver and Gold Corp. This deal makes CDE the largest silver miner in the world. As we wait for that transaction to be completed CDE has released even more good news…
The company announced the commissioning of a new 240 ton-per-day flotation mill. It’s located at the company’s high-grade Martha silver mine in Argentina. To date, the company has produced over 11.5 million ounces of silver from its Martha mine, and this addition will allow the company to process its silver more efficiently. Without a doubt, in our opinion, Coeur is the most undervalued silver play in the market today, and that’s why we are pounding the table about it.
This move will cut its already industry-low cash costs on its silver production. Before this mill, the company had to ship all of its ore from the Martha mine 270 miles to its Chilean mine outside of Cerro Bayo. Talk about increasing fuel-efficiency!
Notice the Big move up in CDE yesterday. This is just the beginning. Take every dime you have set aside for the metals and buy CDE for a 3 year play of tripling your money

Question asked on 12/21/2007 at 07:47 AM :: Comments to date: 0

Category: Stocks

In recent testimony before Congress, Fed Chairman Ben Bernanke implicitly recognized that he’s in that most uncomfortableof spots: between a rock and a hard place. On the one hand, he noted, growth in the current quarter will slow sharply, perhaps to1.5 percent or less. That’s more like stagnation than growth. At the same time, inflation
remains a risk, as a look at a chart of oil, copper, or any other commodity makes plain.
For even more evidence of the inflationary threat, consider the sliding dollar.
There’s a strong relationship between rising commodities and a falling greenback. They spur each other on in a vicious circle that is now starting to gather speed.Under the influence of all these factors, inflation already has started to pick up, and it’s likely to continue to accelerate. While we hope the rise will be gradual, there are no
guarantees.
The one potential remedy would be the kind of medicine Paul Volcker applied so diligently in the late 1970s-early 1980s. That means deliberately engineering a recession. This time, though, the repercussions of a recession could be dire, bringing down the entire world economy. Keep in mind that right now only about $200 billion in bad debts lie behind the current threat to the $13 trillion U.S. economy. If the Fed applied the monetary brakes, that $200 billion would balloon exponentially. We continue to think the risks of stopping inflation far outweigh the risks of tolerating it, and we think the Fed will come to the same conclusion.
In the absence of a recession, the market will likely muddle along even as inflation accelerates. It might even make new highs. But it will continue to be led by real assets such as gold, energy.

Question asked on 12/20/2007 at 04:31 PM :: Comments to date: 0

Category: Stocks

There is an old technology called windmills. But the new technology is large wind mills for electrical generation.
Ther are 2 companies that manufacture the carbon fiber that is used in the blades.
HXL and Zolt make over 80% of the market. HXL supplies the high end market for aero and medical thus they are higher priced. Zolt supplies the lower industrial grade product thus cheaper.
They both can service the middle tier quality applications and that is where the future lies. Energy generation from large wind turbines.
But there is a catch.
Britain wants to build 7,000 wind turbines off its shore. That’s one for every half-mile of shoreline. It would provide enough electricity for all of Britain’s homes. Is it possible? Yes, it is. But there are practical challenges. The supply of wind turbines already can’t keep up with demand. If carried out, Britain’s wind energy program could quickly overwhelm supply, pushing prices higher and no doubt leading to cost overruns.
Then there’s the matter of supplying the critical material for wind turbines. It’s carbon fiber. Some big carbon fiber manufacturers are supplying Boeing and Airbus with this super-strong lightweight material to build their new generation of jets.
But Britain should absolutely not tap into this supply. Aerospace-quality carbon fiber is pricey. Britain wants to use industry-grade, which is much cheaper.
The only problem is that industry-grade carbon fiber is dominated by small manufacturers. It would be a nightmare for Britain to parcel out the supply to a dozen manufacturers with different production schedules, quality standards, and customer support protocols.
There is, however, one manufacturer of industrial-grade carbon fiber that is rapidly expanding manufacturing capacity. Its name is Zoltek (ZOLT), and it’s really the only game in town. ZOLT really is the leader in this area of supply. It's a small cap special situation and has had a good run. Wait for a pull back and buyu it.

Question asked on 12/19/2007 at 05:39 AM :: Comments to date: 0

Category: Stocks

Even though the S&P and the Dow are not even 10% from their highs everyone I talk too have had more than a 10% drop in their portfolio. Maybe a new rotation of stocks are developing. Maybe the money has been flowing out of all the lesser stocks and flowing into the big boys. This is a sign of distribution and is a change of trend. The market is going into the second phase of the major bear market. The first phase started in Mar of 2000 the peak.
Now the big trend has made a second peak and will start to erode each sector as their problems arise.
Inflation is coming harder so the gold and silver markets are the safe haven now.
Watch your favorite metal stock for a bottom and buy some more.

Question asked on 12/18/2007 at 06:44 AM :: Comments to date: 0

Category: Stocks

Whenever there is great volatility and indecisiveness in the directiion there tends to be a change to the trend.
Which way is the market going to go?
I will be funny here and say that I will gaurantee it will go down and it will go up. By the time you have lived another 30 years the market will be at the 100,000 mark on the Dow.
So how do you keep from getting burned. Invest in world corporations that have sound business principles on 95% of your portfolio. Add 5% of your incomoe every year to this portfolio and compound it. When you retire you will have your nest egg.
Now if you are greedy and ambitious you will take risks and win a few and lose a few. Money management is the key to success. Picking the right stocks is luck and skill.
The more you know and the harder you work at productive outcomings the more you will be successful and the ones that are not as successful as you you will call you lucky.
Back to the market, Bernanke is between a rock and a hard place. He can't lower the interest rates anymore because it will cause more inflation. Inflation is finally working it's way into the government statistics. Before you and I felt it but the gov't didn't have the statistics reported proberly to everyday life. They have skewed the stats to keep the Cost of Living down because then they have to pay more out in Social Security payments.
A recession is here but statistics report history so the recession will show up in the stats later. Then thats when the market will bottom just like 2002.
I personally don't think the S&P will make a significant bull run for at least 6 months or even longer so you can keep dollar averaging and know that some day the market will be coming back strong.

Question asked on 12/15/2007 at 10:06 AM :: Comments to date: 0

Category: Stocks

As China urbanizes, its diet improves. This fact might seem counter-intuitive, especially given the romantic notion Westerners have of country living. For example, Farmer Ping leaves the fresh air and pure water of the country for the pollution and crowding of the city in order to make more money. You would think that the big city diet of frozen dinners and ready-to-eat foods could never match the nutritional value of the farm-fresh victuals associated with country living. The facts, however, tell a different story. The Chinese urbanite now gets two-thirds of his nutrition from meat proteins and vegetables. Ping’s cousin back on the farm still gets two-thirds of his calories from grains.
The Chinese are eating more meat and other proteins as their wealth increases. United Nations data indicate that annual per capita meat consumption in China grew from 20 kilograms in 1985 to over 50 kilograms in 2000. Per capita chicken consumption has more than tripled between 1990-2005, but is still at only about half the average of all Asian nations and only one-third of the amount consumed daily in the developed world. Per capita beef consumption is up nearly 10-fold from 1990-2005, but still below the Asia average and less than half that of the developed world. As beef and chicken gain in popularity, pork intake has declined in relative terms; yet per capita pork consumption has nearly doubled since 1990.
Farms or Factories
In recent years, China has done a decent job of feeding 20% of the world’s population with only 10% of the world’s farmland. This may no longer be the case, as protein demands continue to grow. A recent report from JPMorgan highlights some of the challenges facing China’s self-sufficiency regarding grain and protein production.
To create meat protein, you need grain. Demand for livestock feed exerts constant pressure on China’s grain supply as an increasingly affluent population consumes more meat, eggs and dairy products. It takes 7 kilograms (kg.) of grain to produce 1 kg. of beef and about 2 kg. of grain to produce 1 kg. of chicken. Recent biofuel initiatives are another incremental source of demand. Combined, these factors are straining China’s ability to remain self-sufficient in grain production.
While grain demand rises, China’s supply of farmland shrinks. An expanding industrial base continues to encroach on tillable acres. Available arable land has receded from 130 million hectares in 1996 to 122 million hectares in 2006. Excessive use of chemical fertilizers and pesticides has contaminated nearly 25% of the country's arable land.
China must also contend with a very limited water supply. The country’s per capita water supply is just a quarter of the global average. To that limited supply of water, add the relative inefficiency of irrigation practices. China requires two tons of water to produce one kilogram of grain. This is three times the water Western countries use to produce a kilogram.
Finally, Chinese agricultural interests need to contend with one hard economic fact: A thousand tons of water can produce one ton of wheat with a market value of roughly $250. Chinese factories can create, on average, $14,000 of goods with the same amount of water. If you owned the water, whom would you want as a customer?
Bring Home the Bacon, and Be Quick About It
With ever larger cities encroaching on cropland and increasingly scarce supplies of potable water for irrigation, China will need to make some hard decisions about how to best meet consumers’ demands for more protein. One logical solution would be to import more feedstock grain. Farmers could then switch agricultural production from grains to more labor-intensive cash crops such as fruits and vegetables. Another solution would be to import more meat. As recently as 2003, imported meats accounted for only 3.5% of consumption.
As Chinese policymakers wrangle with the macro issues of how best to acquire more meat proteins for their 1.3 billion constituents, Chinese corporations will have to figure out how best to deliver the goods. Not only are the Chinese (as well as the rest of the Asian world) eating better, they are also in a hurry to do so. According to a recent ACNielsen study, the Chinese are the second most frequent buyers of ready-to-eat meals in the world, behind only Thais and slightly ahead of Taiwanese and Malaysians. Quality control and branding will be more important to consumers should this trend continue.
When analyzing this phenomenon you can see that there are many direct and indirect ways to invest in the Asian protein demand surge. Whether it is commodity futures, stocks of companies involved, or the Chinese meat industry itself, there is money to be made.

Question asked on 12/06/2007 at 04:28 AM :: Comments to date: 0

Category: Stocks

A long term play for the Energy market, for the raw materials market, for the technical side and for your well being for financial success is CCJ.
Everyone can read the fundamentals on this so read them if you are not familiar with the company.
But from a technical stand point we are in a correction phase of the energy market and the stock market.
Look at a 5 year chart on CCJ. It has had a correction from this spring and is being consolidated around the 40 level. Old highs make new lows. The 100 week moving average is a support lilne for the stock.
You have time to cherry pick this stock because the oil market (energy) is correcting now.
You can buy now and hold. You can wait to pick it up at 40.75. If there is a quick dip buy it at 39.5.
The best way to buy it is to buy some at 42.5 then some at 43.5 then at 45 so you can sit on it as it goes to 60 in the next 2 years.

Question asked on 12/05/2007 at 06:44 AM :: Comments to date: 0

Category: Stocks

The market has bottomed on the day before Thanksgiving.
The fed has decided to lower the discount rate again to keep the economy going.
The dollar has tanked to help keep the exports going.
Bush has signed an appropriations bill to expand the budget for the military which will stimulate the economy.
All the above are bullish for the future. The Market predicts the future and people invest in what they bellieve will be good. They sell on history when news breaks about somethiing negative. The sub-prime mess with the housing market has all been historical, people have been selling and now the economy is hurting. This means the bottom is in and you should wait for another correction to start jumping in to the market. Use the low of November as a stopping point in case my crystal ball is wrong.

The metals will make a correction too due to the change of heart on the market. This change could be a 50% correction then the forces of inflation will push the metals right back up. In fact GG has almmost had a 50% correction. Buy more GG on another beginniing of a rally in the metals.

Question asked on 12/03/2007 at 06:07 AM :: Comments to date: 0

Category: Stocks

The market is at one of the most critical junctures of the year, as the threat of a bear market is looming larger than in the past. From a technical perspective, the S&P 500 index (SPX) is trying to break below its 20-month moving average, currently at 1,410. This is the technical line of demarcation between a bull and bear market.

Fueling the weakness behind the potential move into bear territory are more fundamental breakdowns than the market has had to face in years. Inflation is colliding with a slowdown in growth (that’s called stagflation), there’s continued turmoil in arguably the most important sector (financials), the housing market continues to implode, and consumer strength remains in doubt.
There are four stages to any rally, whether it’s in a stock, sector, or the market. A rally starts with the first stage - despair. That’s right, something as gloomy as despair kicks off a rally. We’ve all heard the term “the market climbs a wall of worry.” Well, the wall is tallest when there appears to be no light at the end of the tunnel. When investors have thrown in the towel. When you can almost hear a collective groan as investors look at a chart. This is “Stage One Despair.”
Why does this mark the point at which a rally will kick in? Well, if investors hate stocks, it’s likely that they’ve sold them. Most are familiar with the term “oversold,” or a point where a stock is technically due for a bounce. The same theory applies to investor behavior.
When despair has reached a climactic level, it signals that investors have likely exhausted all of their potential selling pressure. This means that the risk/reward balance has shifted away from risk, as there are fewer participants left to sell. Put simply, just as you can get the best seats in a theater when it’s empty, you can find the best deals on stocks when investors have left the market due to their despair.
We gauge whether despair has set in by monitoring sentiment indicators such as investor polls, options activity, analyst recommendations, short interest, and media buzz, among others.
Right now, pessimism is not at the climactic levels we’ve seen at past market bottom. Specifically, most indicators are not as negative as what we saw at the August bottom. The CBOE Volatility Index (VIX) monitors the Street’s behavior toward stocks which will provide you with what is likely to be the best buying signal you’ll see in the next six months. It’s not quite there yet. So you’ll just have to be patient.

Gold and silver are correcting now. Remember the economy is being rescued by Bernake. So that means demand for raw goods will continue and the inflation fires will start up again after the first of the year.

Question asked on 12/02/2007 at 06:20 AM :: Comments to date: 0

Category: Stocks

The Market is digesting the sub prime mess with the banks. This mess is what caused the market to bottom in August . Now the banks are starting to write off the loan mess and it is starting to work itself out iin the market. This will take more time a small Santa Claus rally will try to move the market upward but the inflatiion factor will keep a lid on it. Do not get suckered in thinking this is the bootom.
Now in special situations we may trade ( versus invest) a bounce of the banking sector. Since the whole banking sector is being dumped due to the big banks getting to deep into the sub prime mess there are potential buys out there for good trades. One of these situations is WB.
The Bullish Percent Index is a great means of gauging whether a sector is overbought or oversold. Historically, anytime this indicator nears 35 for a given sector, it's oversold and ready to rally.
The S&P Financial Sector is under extreme selling pressure at the moment. In the past, anytime the Bullish Percent Index has neared these levels, finance has rallied strongly soon after.
Now is the time to bet on a rally in finance. We've seen several CEOs step down, major analyst downgrades, and billions in write-offs. The worst-case scenario is already discounted into these stocks: The sector is so oversold that even bad news is not pushing it any further. In Bank of America's case, the stock even rallied on terrible news.

Top 5 Insider Buys:
1.Wachovia (NYSE: WB)
2.Priceline (Nasdaq: PCLN)
3.Inventiv Health (Nasdaq: VTIV)
4.American International Group (NYSE: AIG)
5.American Express (NYSE: AXP)

Top 5 Insider Sells:
1.Intel (Nasdaq: INTC)
2.Hologic (Nasdaq: HOLX)
3.CME Group (NYSE: CME)
4.Hess (NYSE: HES)
5.Oracle (Nasdaq: ORCL)

This bank has already disclosed the full damage it took on the mortgage meltdown: $2.7 billion and an additional $500 million to $600 million related to bad loans in its mortgage loan portfolio. To be clear, this total amount is smaller than what Bank of America and Citigroup recently marked down in the last quarter alone.
Like the other major banks, this company's shares have bottomed out: The day it disclosed the full losses – November 9 – shares didn't budge. In fact, they rallied almost 10% in the next two days.
Everyone's already discounted the worst in this bank's stock. It's received six analyst downgrades in the last month and a half.
It's the cheapest of the major banks. At current prices, you've got the once-in-a-decade opportunity to safely lock in a 6.4% yield.
And it's the only major bank with insider buying. In the last week, insiders have bought $9.8 billion worth of stock.
On November 13, independent director Lanty Smith bought $3.8 million worth of stock. Lanty's been with the company since 1987. He bought on the cheap – the exact day shares hit a four-year low. That same day, the bank's chief risk officer Donald Truslow bought $542,000 worth of stock.
Two days later, Smith was back buying another $1.5 million worth of stock. In two purchases, Smith bought more stock than he had in the preceding three years.
On Monday of this past week, CEO and board chairman Ken Thompson bought $3.9 million worth of stock.
Among these three, you've got a combined 78 years worth of experience at the company buying nearly $10 million in stock in one week. These guys know this business. And they're loading up big time.
I'm talking about Wachovia Corp. (NYSE: WB).
I'm sure you're familiar with Wachovia's business. The bank engages in everything you associate with big banks: lending, deposits, etc. Rather than going into all of these business segments, I want to focus on the roles of two of the insiders who bought Wachovia's stock. Each of them and their respective purchases present a particular insight to Wachovia's situation.
The Least Subprime Exposure of Any Major Bank
Don Truslow's been with Wachovia since 1980. He's been chief risk officer since 2001. The means that Truslow's head should roll given Wachovia's involvement in the subprime debacle… or should it?
At 0.19%, Wachovia's net charge-off ratio – the percentage of loans that have been written off as bad debt in relation to total loans – is the lowest of the big five U.S. banks.
BankNet Charge-Off Ratio
Wachovia 0.19%
Bank of America 0.80%
Wells Fargo 1.01%
JPMorgan 1.07%
Citigroup 1.36%

And except for Bank of America, Wachovia has the least amount of nonperforming assets as a percent of total loans. "Nonperforming assets" is a technical term Wall Street uses to say that an asset is doubtful and likely to need writing off. You can think of nonperforming assets as "potential junk." The fact that Wachovia has little of these relative to its total loan portfolio says essentially, "We don't own much junk."
All of this adds up to one thing: Wachovia is a bank that minimized its risk regarding bad loans and mortgages. This aversion to risk is explicit in the bank's adjustable-rate mortgage (ARM) lending segment, the business segment that has come back to haunt mortgage lenders the most.
Wachovia is the only major bank to do all of its ARM underwriting in house. When the bank made an ARM mortgage, collateral was always involved. In other words, Wachovia avoided the no-income no-asset verification (NINA) loans that lend borrowers money without requiring collateral. With NINA loans, banks didn't even have to verify the income or net worth of borrowers. For these reasons, NINA loans are commonly called "liar loans."
Wachovia avoided the risk that many other banks took on by staying away from NINA loans entirely.
And the loan-to-value ratio – basically the percent of the mortgage that is covered by the bank – is 71%. Put another way, Wachovia's ARM borrowers put a 29% down payment on their mortgages. This beats Citigroup's average loan to value of 79% (its borrowers only own 21%).
Finally, Wachovia has the smallest subprime-related exposure of the big banks. As of October 31, the bank had $2.7 billion in net exposure to the subprime mess. Add in $763 million in exposure to other portions of the credit market, and you've got a total potential write-down of $3.4 billion. This is nothing to celebrate, but it's drastically smaller than Citigroup's $15 billion and Bank of America's $11 billion. Wachovia's subprime exposure relative to market cap is 4%. Bank of America's is 5%. Citigroup's is 10%.
Wachovia is the least at risk of the big banks. So it's not surprising that its chief risk officer, Don Truslow, has put $542,000 of his own money into Wachovia's stock.
The Biggest Dividends of Any Major U.S. Bank
Like Truslow, Wachovia CEO Ken Thompson has been with the company a long time, 31 years to be exact. He's been CEO since 2000. He oversaw Wachovia's merger with First Union bank. That move established Wachovia as one of the largest banks in the U.S., with 13 million households and businesses as customers.
Thompson took over as CEO in 2000. The American Customer Satisfaction Index has ranked Wachovia No. 1 in customer satisfaction among banks every year since 2001. Under Thompson's watch, Wachovia has more than doubled its revenues. More significantly, the bank has undergone a massive increase in profitability. Earnings have grown nearly fivefold. Both operating and net margins have doubled.
Of course, 2000-2007 were great years for finance stocks in general. Banks make money on the spread between the interest they pay on deposits and the interest they make on loans. Easy money flowed from the Federal Reserve's spigot starting in 2001. Banks were paying out low interest rates… and making a killing.

George Soros is betting on a recovery in distressed mortgage lender Countrywide Financial (NYSE: CFC). Soros established a new position worth $44 million in the company last quarter. Soros joins Arnold Schneider, Tom Gayner, Richard Pzena, and Wally Weitz – a veritable who's who of investing – in establishing a position in CFC.

However, Wachovia grew at a spectacular rate, even in the context of the largest financial boom of the last 15 years. From 2001-2007, Wachovia increased its number of household customers at an annual rate of 350,000 per year. It's also seen the highest amount of deposits per new branch per month of the major banks: $1,493. Bank of America – the second best – pulls in $1,267.
Much of these profits have been returned to shareholders via Wachovia's massive dividends. From 2001-2007, the bank's dividend has increased 167%. And unlike Citigroup, there are no rumors of Wachovia lowering its dividend. In fact, Wachovia raised its dividend 14% in August. It maintained this payout in October.
Currently, Wachovia yields 6.4%. And Ken Thompson is buying big. On November 17, he bought 100,000 shares of Wachovia's stock valued at $3.9 million. The purchase represents an 11% increase in Thompson's holdings.
Besides Truslow and Thompson, Wachovia's lead independent director, Lanty Smith, has bought $5.3 million worth of Wachovia's stock in the last two weeks. Smith has served on Wachovia's board since 1987. Like Thompson and Truslow, he's a career executive at the bank. And he's bought more Wachovia stock in the last two weeks than he has in the last three years.
Wachovia currently trades at eight times earnings. It's the cheapest of the major banks. It also has the least exposure to subprime risk. And it's the only major bank with insider buying.
Best of all, the worst-case scenario is already discounted into its stock. The recent write-downs didn't even phase Wachovia shares. If we buy Wachovia now, I expect we'll see a quick 10%-15% pop in share price in the next month and a half. Again, the entire finance sector is way oversold. The Bullish Percent Index is at historic lows – a sign that has preceded strong rallies in the past.
Action to take: Buy Wachovia Corp. (NYSE: WB)
Action to take: Buy the WB December 42.5 calls (WBLV)

Question asked on 11/25/2007 at 07:05 AM :: Comments to date: 0

Category: Stocks

On average for each of the dozen crises [going back to World War II], the market was up 36%
one year after the low point, and 44% after two years.” So if the market bottoms on the sub-prime crisis then the market will do well once the bottom is in.
Right now though we are in the downside of the market and we must be patient for the bottom to be made.

Question asked on 11/23/2007 at 06:26 AM :: Comments to date: 0

Category: Stocks

On average for each of the dozen crises [going back to World War II], the market was up 36%
one year after the low point, and 44% after two years.” So if the market bottoms on the sub-prime crisis then the market will do well once the bottom is in.
Ri