URBANOMICS

JOBS, Company Watch - JOE, BKS, LULU, NFLX

2012-01-12T23:16:00.001-06:00

January 9, 2012

JOBS BY THE NUMBERS

If you weren’t paying attention, some important data wasreleased this week. The US LaborDepartment released the number of jobs that were gained/lost in the previousmonth. Drum roll…companies hired 200,000employees in December and the famous unemployment rate dropped to 8.5%. If you aren’t familiar with the numbers thisis POSITIVE in my book. The reasons are:(1) More people have been getting jobs and this has been consistently happeningsince last summer, (2) The jobs are being added across small, medium, and largecompanies, and (3) Jobless claims (i.e., people filing unemployment claims) arefalling. In case you were followingalong at home, the number usually has to be over 125,000 to signify that jobsare being added.

We want more jobs, I want more jobs, and we should expectthat are federal, state, schools, and citizens will do and try everything tocontinue to get this number to a level that allows our country to grow andpeople to work consistently. So pleasewhen we watch debates or listen to the evening news keep that in perspectivethat without jobs a lot of other things seem pretty trivial.

COMPANY WATCH – St.Joes Company (NYSE: JOE) / Barnes & Noble (NYSE: BKS)

St. Joes Company – This stock is a great example of trustingyour instinct. I like the prospects oftaking a contrarian, or against the grain, stand on some investments. JOE was one of those companies that I thoughtis a better investment than owning home builders. My thesis is you get to own land and that hasan intrinsic value that should hold its worth in economic downturns like theones we’ve suffered. Well to make a longstory short, I believe I had the right thesis however I never expected therewas going to be such a dispute as to what the true value of the land is. David Einhorn made a compelling case as towhy the value of the land St. Joes held wasn’t worth what St. Joes was claimingand the stock has fallen sharply. WELL,finally there appears to be some upside to the stock. I’ve noticed that some analysts have upgradedtheir outlook based on future growth prospects. The development of land in the Panama City area, the recent developmentof an international airport, and recent cost cutting measures are signs thatthey might be moving in the right direction.

Price: $14.67

Barnes and Noble – I am a sucker for stocks on the declineand Barnes and Noble is showing up on my radar. The other day is droppedroughly 20% on news that they were changing their future outlook lower. That is never good and investors let themhave it. BKS even mentioned makingchanges such as spinning of their NOOK business.

Price: $11.65

COMPANY WATCH - Lululemon athletica (NASDAQ: LULU) / Netfilx (NASDAQ: NFLX)

Lululemon – I’ve had my eye on LULU for quite some timenow. This stock has been a high flierand it you don’t know they make money by selling $100 dollar yoga pants. Yoga, it’s all the craze for people withmoney and to show of that dough they buy expensive pants to get their work outon. Well LULU had come under somepressure and the stock dropped a bit. Iam a stock hater here! And because I like things on the cheap I want LULU tofall further before I begin buying. Imay not be able to get that opportunity because LULU seems to go one directionand that’s up.

Price: $53.44

Netflix – Quick note, I trashed it on the way down and Ilove a good rebound. NFLX, at the lowsof $70 is attractive to me. It’srebounded strongly and they recently talked about expanding furtherinternationally.

Price: $98.18

Happy New Years

2012-01-01T19:17:00.000-06:00

Happy New Years from URBANOMICS

I wanted to wish everyone a Happy New Years. To all the first time investors, part-time investors, or people interested in their financial well being: Welcome to the site that explains everything financial in an easy to understand format. We have it all covered from how to check your credit for free, tax advice, and where to invest in the complex stock market.

YEAR IN REVIEW

2011, what a year! Urbanomics welcomed 2011 but we had a slight grimace on our face the whole time. At the beginning of the year, we felt like it was going to be a tough road aheadfor the American economy because we were coming off of the effects of a huge financialand economic crisis. There was not muchclarity so we played our card close to our chests and stayed with themes like:DIVIDENDS, COMMODITIES, and VALUE. You’llnotice I even began the year by selling a number of winners that we picked upin 2010. It’s fun looking back and remembering all that we went through andeven smiling at some of the positions that were big winners and losers. Here were some of the themes that played out in 2011:

- Closed positions on AIG: This was a great callbecause we watched AIG tumble from $55, where we exited, to lows this year ofmid $20s.

o http://urbanomics.blogspot.com/2011/01/update-no-aig-warrants.html

- Call of the YEAR: In response to a reader, weanalyzed Netflix and Applied Micro Devices and nailed it.

o http://urbanomics.blogspot.com/2011/01/questions-on-technology-stocks.html

- Stock PICK of the YEAR: International Coal (ICO)had a great year and was up big over 258%

o http://urbanomics.blogspot.com/2011/01/track-please.html

o http://urbanomics.blogspot.com/2011/05/close-position-international-coal-group.html

- Worst PICK of the Year: St. Joe Company, easilytook this award. There was a compelling reason to stay away but I didn’t heedthe warning. Reminder, don’t bet against David Eihorn (famed hedge fund investor and poker player):

o http://urbanomics.blogspot.com/2011/02/risk-on-orexigen-st-joe-company.html

- Best TREND identified this YEAR: We identified the momentum of money moving into Pharmaceutical stocks. This lead to a few premium alerts.

o http://urbanomics.blogspot.com/2011/05/notes-from-matix-april-download-pt-ii.html

- The art of the REVEAL: Read about a premium pick thathad a great year, AVEO Pharmaceuticals.

o http://urbanomics.blogspot.com/2011/10/1st-quarter-premium-stock-alert.html

- Finally, this year I tried to keep you on top ofthe debt crisis, rising and falling prices in OIL, the continued rise of GOLD, crazy American Tax policy,the troubles in Europe, and so many different topics that are relevant to whatyou do every single day.

Start the New Year off right by getting a premium subscription to our Quarterly Stock Alerts. This is a great way to learn to invest and make some money at an affordable price.

3rd & 4th Quarter Premium Alerts

2011-12-12T22:16:00.002-06:00

Due to my recent travels I was very late in posting my 3rd quarter premium alerts. So this post includes alerts for 7 new stocks.

The third and fourth quarter of 2011 produced seven stocks that Urbanomics paid subscribers will have access to review. These stocks are consistent with sectors or value plays which I believe should outperform in the current economic environment.

3RD QUARTER STOCK ALERTS

1st Premium Pick
STOCK: ******
BASIC MATERIALS
OIL and NATURAL GAS
TIP: This stock pumps premier gas for profits.

2nd Premium Pick

STOCK: ******
TECHNOLOGY
APPLICATION SOFTWARE
TIP: This tech stock continues to innovate outside of the box.

3rd Premium Pick
STOCK: ******
FINANCIAL
REGIONAL BANKS
TIP: This stock's cash flows in waves.

4th Premium Pick
STOCK: ******
SERVICES
ENTERTAINMENT - DIVERSIFIED
TIP: This services stock may know more about you than you think.

4TH QUARTER STOCK ALERTS

1st Premium Pick

STOCK: ******
BASIC MATERIALS
GOLD
TIP: ??

2nd Premium Pick

STOCK: ******
TECHNOLOGY
TIP: This technology stock is a Silicon Valley staple.

3rd Premium Pick
STOCK: ******
FINANCIAL
LIFE INSURANCE
TIP: ??

Note: This is an alert that this was triggered for URBANOMICS Alert Subscribers. Please email for access to subscription based contents.

Thanksgiving - Plenty to Be Thankful For

2011-11-29T17:15:00.001-06:00

First, I would like to apologize for the pause in posting of my thoughts, articles, and trades. The last month has been very fast paced with lots going on. I was in Vegas for training and learned the latest developments in the banking industry. Then I was off to London to actually do some work. I did get some time to enjoy the weekend in Vegas and celebrate my birthday...let's hope I'm getting wiser with age. Here is a rundown of what's going on and specifically what to be thankful for:

Family
First off I'm thankful for family. I liked to pause and take a moment for my cousin Richard O. Faulkner Jr who passed away in a tragic car accident. We love you Rick and may your soul rest in peace.

Congress
There have been a number of articles out lately on Congress and there expensive habits. Its turns out that Congress may be thankful for their positions of power this time of the year. With an approval rating of single digits in some polls, you'd think they start to work together to deflect the heat and get things done. Nope, I think they would rather dodge the heat and continue to rake in the dough. Here were some surprising stats about the people representing you:
~ 11% of our congressmen have an estimated net worth of $9 million or more. That's 57 members
~ 250 members are actual millionaires

I'm not a hater, so I don't mind if you've got a lot of cash. However, as stories surface that some congressmen have traded stocks that may have helped them accumulate this wealth then I get nervous. I look at their positions and wonder if there isn't a potential for conflict of interest. See the 60 Minutes show for their reporting on this topic. It just makes you wonder if there is too much financial temptation and can they truly represent the average American.

Wealthy Congress:
http://www.usatoday.com/news/washington/story/2011-11-15/congress-wealthy-1/51216626/1

Congress & Insider Trading:
http://www.cbsnews.com/8301-18560_162-57323527/congress-trading-stock-on-inside-information/

Markets
I and many others are thankful that the markets are actually well above where we thought it would be. The Dow is over 12000 and the SP is above 1200 and these are respectable levels with all the things going on in the world. The ride to get here has been very volatile so I hope you don't have motion sickness. I am still negative on the overall markets because there is too many loose ends not tied up. Think the Euro and the shuffling of leaders, the Super Committee not getting anything done, the Arab Spring...which is now the Arab Winter, and now you have the populist anger that is spreading across the country and world. Occupy Wall Street, the uprisings in the Arab countries and the strikes in London are real and they are real people voicing their disapproval of how things are going. The stock market has often been swinging day to day, and you can find it up 2% one day then down 3% the next and that's not good. So stay with the tried and true and look for great companies that are paying you as we ride this out. We call them dividend paying stocks, and you'll see that I've written about them often this year.

Economy
Again, I'm not a hater so I want to give some credit where it may be due. Who ultimately gets the credit will be debated but the economic picture appears to be getting better. A recent jobs number came out and the number of jobs created for the last month was 206,000 I believe. This is great news and the unemployment rate dropped to 8.6%. While we may not like what goes on in the back room, I am thankful for the President, Congress, and the business community and hope they keep doing things that get us back to work.
13F Filings

Peeling Back the Details on Taxes in America...

2011-10-21T20:18:00.002-05:00

Excerpt taken from the Wall Street Journal:

According to a letter Mr. Buffett sent to a Republican congressman on Tuesday, the Berkshire Hathaway Inc. chairman and chief executive disclosed that he made almost $63 million last year, yet paid less than $7 million in federal income tax.

Mr. Buffett long has urged lawmakers to raise income-tax rates on the wealthiest, arguing that his secretary paid a higher effective rate than he did last year.

Please head to the Wall Street Journal to read the rest of this article and the details about how different income levels are taxed. Click below:

Buffett Pays Less Taxes Than His Secretary!

I'm curious, on what people's thoughts are on his disclosure about the tax disparity. It makes me want to think long and hard about becoming a full time investor as the benefits of deductions and less income being taxed could be pretty nice. Please post your thoughts.

1st Quarter Premium Stock Alert (Revealed)

2011-10-14T10:26:00.003-05:00

If you recall in February of this year, I released my first premium subscription alert. At the time, I posted an update that gave you a hint into the industry, sector, and specifically the product that this company develops. The update provided you with the following hints about the stock I was adding to my portfolio:

STOCK: ******
HEALTHCARE
BIOTECHNOLOGY & DRUGS
TIP: Ribbon
Link: http://urbanomics.blogspot.com/2011/02/february-2011-biotechnology-premium.html

If you'd like to find out which stock was picked up by subscribers to the premium service, please continue on and get a complete view of the stock and the performance since the alert went out.

STOCK: AVEO PHARMACEUTICALS, INC
PROFILE DESCRIPTION (as provided by YAHOO Finance):
http://finance.yahoo.com/q/pr?s=AVEO+Profile

Sector:	Healthcare
Industry:	Biotechnology

Business Summary

AVEO Pharmaceuticals, Inc., a biopharmaceutical company, engages in the discovery and development of cancer therapeutics. The companys lead product candidate, Tivozanib (AV-951), is a novel, highly potent and selective oral inhibitor of the vascular endothelial growth factor, or VEGF, receptors 1, 2, and 3. It is also leading the clinical development of AV-299, which includes conducting multiple Phase I clinical trials and preparing for the conduct of multiple Phase II clinical trials.

Note: The TIP, "RIBBON" was a reference to the cancer producing drugs they develop.

Potential Purchase:
On February 16, this stock closed the day at $13.88 (this is when date I alerted premium subscribers I'm adding the stock)
Potential Sell:
- On July 11, this stock closed at $20.74 (this is the highest point of the stock for the year so far)
- Your Return: 49%
- Today (October 13), this stock traded up to $17.09 (the price you could still sell it for today)
- Your Return: 23%

I have realized over time that the there is one thing that you have to try and get right and that is the PRICE WHERE YOU BUY...and that's in any market (good or bad). Everyone has an opinion on a stock, but do they tell you what is the price range they are buying the stock and what supports that. My alerts attempt to do that. Enjoy, Urbanomics

Market Recession or Rally??

2011-10-12T22:14:00.000-05:00

Rally or Recession...

Roughly about a week ago we all were a little queasy after viewing our portfolios and 401K accounts. The economic picture in the US and in Europe made us all nervous and sent the markets in a spiral downward. The levels we briefly hit were low, so low that it nearly reached a 20% drop from the peak of where the market were earlier this year. This dubious drop is typically referred to as a 'Bear Market'. Since April, the markets have dropped about 17% from its levels at that time and have been rocky since then. Sooo are we back and is this RALLY for REAL??? Well you may not like what history says about 'Bear Markets'! Bear Markets are often marked with quick bursts of large gains like we've started to see last week and into this week. Why the roller coaster ride, maybe its because we (e.g. investors) have no clue each day which direction we think the markets are heading. And if we are clueless, history has often indicated that reality will often set in and then begins to turn back down.

URB Brief Notes:

- Netflix fumbles and backtracks. They drop separate websites, keep the high pricing and continue to disappoint.

- Sprint tumbles on news that costs are rising. Not to mention they aren't selling the I Phone 4S, which was just released...just the I Phone 4. I haven't seen David Einhorn bolt from his position so hold tight and double down off the 52 week low.

- I'll be releasing my latest quarterly alerts shortly, an interesting bunch.

Are You Prepared For a Slowdown?

2011-10-03T22:51:00.000-05:00

If you're like me, you've probably been keeping a close eye on the wallet nowadays. I wanna believe that things are getting better but I need proof. Unfortunately, part of my everyday routine is to search for clues to as to when the economy is going to get better and I didn't like what I heard. I was listening to an economist named Lakshman Achutan and he had some interesting data to share last week. He is predicting that America is heading into a recession after analyzing different indicators on the direction of our economy. This is just one view of things, however; I would definitely take the time to be cautious until things get a little bit brighter. Click the link to see the video:

RECESSION IS COMING

Economic Outlook, YAHOO, All Talk, & Netflix...

2011-09-21T21:11:00.000-05:00

Urbanomics Outlook on the Economy
Here is my outlook on the economy. The economy is like a leaky faucet, slowly dripping. If you review the last few months, the data supporting jobs and economic growth have been bad kind of like when your faucet is clogged up. But every now and then you get a surprise and a few gushes come out and occasionally the economic numbers have had a few surprises. But if you put it all together the economy continues to be a very slow drip for a population of Americans that are thirsty for jobs and an economic rebound to our investments, 401K portfolios, real estate, and lifestyles.

Do You Yahoo?
I know I do. I use Yahoo all the time. Yahoo is my home page, my email service and also my source for fantasy football. But even with all these reasons they are having trouble keeping up with the big boys of technology (Google, Amazon, Ebay). They are even used as a verb, no one ever asks whether you ‘Yahooed’ something! Well it may be time to circle the wagon on this old reliable tech company. We have a little help in stirring the pot. Dan Loeb, founder of the hedge fund Third Point sent a scathing letter to Yahoo’s Board and then kindly reminded them that he now owns a roughly 5% stake in the company. Here at Urbanomics we are fans of investors that stir the pot and when it happens at unloved companies like Yahoo we get excited.

All Talk…
I guess I’m going on record again to reiterate how much the investment community has stopped talking about stocks and strategies like value, growth, and dividends. It seems like we’ve almost stopped investing and now just blame the government for everything. While the government does create an environment for us all to operate in, it is still up to all of us (as individuals and corporations) to be compromise and get things done. And there definitely has not been an attitude of compromise. So of course if I were to play President, Senate, & Congress for a day, I would consider the following measures to stimulate the economy. First policy consideration:

German-Style Unemployment Benefits – An unemployment system that works with corporations when they are going to employ mass layoffs. The corporations keep the employees on staff (short work) at a reduced hours which helps the company stay productive and the economy humming and reduces long-term unemployment.

More to come on if I were a politician for a day…

Netflix
Nextflix is in play again. They have made some bold changes to their service offering that many consumer are not too happy about. They have split the company into the two parts:

1. The DVD service is now called Quickster
2. The streaming service will retain the name Netflix

Our real life example is this doesn't appear too well thought out. It's a hassle and a frantic push to migrate consumers over to the streaming service. The content is not appealing enough to justify the inflating price and I just wish that when the stock was well above $300 I went with my gut and initiated my short. I often said I wasn't a believer, but it doesn't matter if you don't pull the trigger. Stay tuned...

The Market's Continuous Drop...

2011-08-08T23:46:00.000-05:00

I've been listening to some smart investors talk about how to invest in an environment like this. These theories vary and this helps me shape my frame of reference. It allows me to hear how bankers, investors, and politicians think and then I can ground some of that in reality because I can probably tell what's going on with the everyday person better than they might experience.

Right now we are in rapidly changing times in the US, some parts of the world and of course in the stock market. The stock market has been violently gyrating and for the last few weeks it has been decidedly lower. The smart money will tell you not to panic and while I subscribe to this theory it can be very difficult. The economy is weak and some are reporting the increasing risk of a double dip recession. For me, I go with my gut feeling and I have stayed consistent that too many Americans are hurting for anyone to be blindly buying stocks. I agree that certain actions along the way have helped to stimulate the economy but not enough has been done to help alleviate the areas that the average citizen is being hampered by. I believe the economy will continue to be fragile until: 1) Jobs return in a consistent fashion 2) Debt levels for the average American must get rightsized, and 3) Housing burdens for the average person become less of a constant drag on people and their local economies. I'm not happy with the fact that are politicians can't stay focused on some of these core issues that are plaguing us today and make this their top priority. So I will remind you to not get fooled by their gimmicks of last minute deal-making and understand that this slow painful decline will continue until they address the real problems at hand.

I do wish I had sounded a louder alarm because I've noticed that many big investors had recently been hedging their bets and protecting themselves if things got bad. And as you can see they got bad in a hurry. I think my approach will not change from the points I've been highlighting from the beginning of the year, and that is this is the YEAR OF DEFENSE. See the following articles to learn what we've been doing to stay defensive in these uncertain markets:

See "Defense from an Unpredictable Market":

I like the move in metal stocks (i.e., gold, silver) and miners because the DEBT BURDENS in Europe and the United States are forcing governments to implement austerity measures which will deflate their economies. Legendary investors like George Soros have typically increased their positions in Gold to hedge or protect against deflation.

http://urbanomics.blogspot.com/2011/07/ipos-little-defense-chinas-all-star.html

See "Double Dip??"

The economy may be suffering from a really bad hangover that was worse than we originally thought. Financial stocks, housing stocks, and high levels of consumer debt make you wonder if we've learned anything at all from the 2008 crisis. I just don't have the feeling that we are out of the woods yet and I've been cautious for quite awhile.

http://urbanomics.blogspot.com/2011/07/new-tech-titans-double-dips-dont-label.html

See "What's Up With The Economy"

http://urbanomics.blogspot.com/2011/06/whats-up-with-economy-deficit.html

See " Anything to Short?"

Early in the month, I listened a little closer to someone mentioning it may be time to short Consumer Stocks and Retailers and the best way may be through the ETF, RTH. This may have been Doug Kass and it sounds good but boy I have to admit I am a little nervous about shorting stocks in this environment. I think this call has its merits as we continue to find out that the economy is weaker that most people would like us to believe. The economic numbers have been mixed and while I wanna be in front of this trade...I'm not signing up for it just yet until I see key indicators like GDP and unemployment turn.

http://urbanomics.blogspot.com/2011/05/notes-from-matrix-april-download-pt-i.html#more

IPOs, A Little Defense, & China's All Star Team...

2011-07-27T21:53:00.001-05:00

Initial Public Offerings (IPO)
Guess what's back in vogue, the wild rush of buying an IPO. This is usually reserved to investors who are highly coveted, so usually not you and me. However, a little unknown tip is that you can call your brokerage firm and ask if there is a process for you to sign-up or participate in IPOs. You might be surprised that some of your favorite companies and their products have recently gone public. Check out these IPOs:

Zillow (Nasdaq: Z) - real estate website
Dunkin' Brands (Nasdaq: DNKN) - donut and coffee shop
Teavana (NYSE: TEA) - maker of specialty tea
Francesca's Holdings (Nasdaq: FRAN) - women's fashion
Skullcandy (Nasdaq: SKUL) - headphone maker of stylish headphones geared towards a young crowd

Defense from an Unpredictable Market
I am still defensive as my research in the last quarter has led me primarily to health care, basic material (i.e., metals, mining,etc), and technology stocks. I continue to read about activities in the health care sector such as promising progress on HIV/AIDS. Gilead Sciences recently ran studies where drugs taken daily can stop an uninfected person from contracting HIV. There has also been some advances in cancer research. I really like the small and mid sized companies in this sector as acquisitions and partnerships are on the rise as large health care stocks need to grow their business. I like the move in metal stocks (i.e., gold, silver) and miners because the DEBT BURDENS in Europe and the United States are forcing governments to implement austerity measures which will deflate their economies. Legendary investors like George Soros have typically increased their positions in Gold to hedge or protect against deflation.

China's All Star Team
Baidu (Nasdaq: BIDU) -This is known as the Chinese version of Google. As if that wasn't enough, they are buying stakes in travel sites (Qunar) and recently inked a deal with major record labels to offer a streaming music for a fee.
Sina Weibo (Nasdaq: SINA) - This is know as the Chinese version of Twitter. They are aiming high and hope to offer services similar to Facebook in China.
Renren (NYSE:RENN) - This is known as the Chinese version of Facebook.
China Mobile (NYSE: CHL) - This company is looking to link up with Apple to market I-Phones in China.

Many of these firms have already taken off but keep an eye of these all-stars because your portfolio will outperform if they can dominate their industries like their American counterparts. I'll conclude with how I'm playing the markets. I'm still holding my current positions and loving the fact that a few of them are paying dividends which is like a free quarterly check that can be reinvested into the same stock or kept for later. I also believe that metals, miner, dividend, health care, and technology are my favorite places to be right now.

New Tech Titans, Double Dips, & Don't Label Me...

2011-07-13T19:15:00.001-05:00

New Tech Titans

The technology field is definitely active as social networking, gaming, movies, and music continue to seamlessly weave themselves into our daily lives. It's time to refresh your memory on the new tech titans on the block. First off, Facebook leads the charge with their recent announcement of new features: (1) group chat, (2) new designs, & (3) video chat. Many people can't wait for the day this stock IPO's or goes public. Next is Google, who is offering Google+ a competing social network site and chomping at the bit for more targeted advertising. And then there is the simplicity of Netflix. Netflix is now streaming throughout many homes on a regular basis and they are betting that you will stick around even as they raise prices. Sorry to break the news but Netflix prices are going up for everyone...will you pay up?

Other hot technology firms are Linked In, Pandora, Zynga, Square, and others which are changing the way we interact, watch movies, and listen to music. Then we have Groupon which could be potentially be valued ar roughly $20 Billion dollars when they IPO, or become a public company. The question often asked is “Do You Remember The Technology Bubble?” and is it happening all over again. I do believe that some of these firms are legit, but I think a few won't be as popular as they are today. Stay tuned for further posts as I tackle which technology stocks will survive the digital renaissance.

Double Dip??

The economy may be suffering from a really bad hangover that was worse than we originally thought. Financial stocks, housing stocks, and high levels of consumer debt make you wonder if we've learned anything at all from the 2008 crisis. I just don't have the feeling that we are out of the woods yet and I've been cautious for quite awhile. I don't think I am alone anymore as there have been rumbling about more stimulus...is there Quantitative Easing on the horizon, well the Fed might think so. Can you say QE3

Old High Growth or New Low Value

While the economy is whipsawing back and forth, I'm looking for value is some very unlikely places! I have been keeping an eye on some bellweather stocks of the past that have traditionally been high flyers. But we have to remember that just because they were once great doesn't mean they will always be great, even if it looks like they trade for a discount. But I've got my eye on Best Buy, Yahoo, Cisco, Applied Materials, American International Group and Sotheby's. I don't want a dog with fleas but if these old gems can sparkle again I may be as happy as a woman in a jewelery store.

As usual I keep my eye on the trends and economic events happening out there. These developments are more than just fun facts they tend to shape politics, lives, and where the investment dollars are and will start flowing.

Meet Me @ The Gas Pump...It's Going Down

2011-06-26T13:51:00.000-05:00

Literally, it may be time to meet at the gas station because the prices are finally going down. When I thought about gas prices I obviously had the rap song "It's Going Down", by Yung Joc in my head. It's been going down to the tune of 21 STRAIGHT DAYS with an average price around the country now at $3.60. Yes I said to the tune...I can get that song outta my head.

Why is this happening??

Economy
Well, start by taking a look at my last post written almost a month ago that outlined how high gas prices and not enough job creation hurts an economy. If prices stay high for too long it begins to change the way people do things. Remember Yung Joc said, "Meet me in the Mall, Meet me in the Club...it's going down"...well when gas prices stay high people start cutting back on buying gas and going to those spots. As more and more people cut back, carpool, take public transportation or just travel less, the demand for gas will continue to fall and so will the prices.

Over-Speculation
The other reason is there have been some high profile prosecutions recently of traders who were manipulating oil markets which has an impact on gas. These traders can at times make the supply or demand greater or less than what the real market demand is for oil and when the fools are removed from the equation it helps to bring gas prices down.

Oil Reserves
Lastly, the US government just released barrels of oil from a strategic reserve that is maintained for emergency situations. This was a coordinated effort of 28 countries around the world to release oil from emergency stashes in an effort to begin reducing the price and impact high gas is having on the global economy. The group of 28, also known as International Energy Agency (IEA), has taken these steps only three other times in history.

How to Invest - Stay defensive at this point - Dividends, Healthcare, and Energy

What's Up With The Economy, The Deficit...

2011-06-03T08:37:00.000-05:00

That is a really good question, "What's Up With the Economy?"! The best analogy is the economy is sorta like a really nice business train that is slowly chugging along and starting to lose passengers at each stop. I think this is an accurate picture because the data is definitely mixed, showing corporate businesses are doing quite well and chugging along, like the train. The passengers being lost at each stop are comparable to middle-class Americans that are being negatively impacted by: 1) high gas & food prices, 2) declining housing prices, 3) still high unemployment numbers. And the biggest problem is JOBS, JOBS, JOBS, or the lack thereof. Jobs are so critical because they give Americans confidence that the economy is getting better when they see their neighbors getting up and going to work, coming home with bags of groceries, and investing in their homes. So who is focusing on getting more Americans jobs? That's the question that needs to be asked of everyone from the president and his administration, to your senators, then your local congressmen, and also of the companies that are doing well. Every moment should be spent on turning the dismal job scenario around and we've seen our politicians come up with some solutions but not nearly enough. The formula is not that difficult as it usually comes down to stimulating Americans and stimulating the companies who are tasked with hiring more Americans. Its a shame the debate in Washington is whittled down to spending versus tax cuts, but that has been the case. Last time I checked both scenarios cost taxpayers money but are needed to bring this economy back to life.

What does this have to do with the DEFICIT?? In my opinion, there is very little connection between the economy and the deficit. All this talk about deficits is a distraction in Washington and it shows that Congress has a difficult time separating short term needs which is to continue to stimulate the economy through job creation and then their long term goals of deficit reduction. Some argue that because Congress is doing nothing, that the Federal Reserve should actually do more (because one of their mandates is to help improve jobs). However, there have been a lot of complaints about the Fed and they are now in an unlikely position to try to do more to stimulate the economy.

This is very very important because when I invest I have to think of risks, and the bigger risk may be the economy spiraling back down! We all need to wake up, and people need to start focusing on JOBS. The jobs number came out first thing this morning and they were very disappointing! I've been writing for the last few months that my personal portfolio is comprised of cautiously optimistic stocks, other may call them defensive. I want to hold stocks that will benefit even when the economy is not doing well. Please read through the older posts but they have included stocks in these sectors: Commodities (Oil, Gas, Gold,), Dividend, Technology, and Emerging Markets. Whatever policies you may believe, we can all agree it is important that Americans get back on their feet and get back to work. And I think whoever begins to HIRE Americans should be CELEBRATED whether it is the government or if it is the corporation down the street. Until this happens, I can't in full faith tell you to start buying stocks indiscriminately. Stay tuned

2nd Quarter 2011: 3 PREMIUM STOCK ALERTS

2011-06-01T23:19:00.000-05:00

The second quarter of 2011 has produced three stocks that Urbanomics subcribers will have access to review. These stocks are consistent with sectors that I believe should outperform in the current economic environment.

1st Premium Pick
STOCK: ******
BASIC MATERIALS
OIL & NATURAL GAS
TIP: This oil & gas play has planned big changes coming by the end of the year. Look for it to double, literally!

Click here for the other two premium alerts.

2nd Premium Pick
STOCK: ******
BASIC MATERIALS
GOLD
TIP: This company mines for gold, and its once it your portfolio it will definitely be one to envy!

3rd Premium Pick
STOCK: ******
TECHNOLOGY
NETWORKING & COMMUNICATION DEVICES
TIP: This company will be dialing for profits with its fixed line and mobile technology!

Note: This is an alert that this was triggered for URBANOMICS Alert Subscribers. Please email for access to subscription based contents.

CLOSE POSITION - International Coal Group (ICO)

2011-05-25T22:18:00.000-05:00

I have an announcement to make. My stock tracking portfolio will be closing its postion in International Coal Group, Inc. (NYSE: ICO). This position netted roughly 258% over a one year period.

The reason why I'm closing the position is Arch Coal, Inc. (NYSE: ACI) has decided to acquire International Coal Group, Inc. (NYSE: ICO) for $14.60 per share. I have to admit that this deal was first announced on May 2, 2011 and since then ICO has hovered at a 52 week high of $14.52. With nothing else to gain, I will close the position in the portfolio. Note: Your portfolio would hold this stock until the deal is completed and there would not be a need to sell the stock like I am in my tracking tool.

For timely updates and alerts, please choose to follow these posts in your inbox.

Housing – When will the comeback story be written?

2011-05-20T18:05:00.000-05:00

I look at the giant housing market here in the US like a prized fighter that has seen better days. The complacency is easy to see when you compare it to other fighters (like Canada) who’ve trained harder and set higher standards, such as requiring 20-30% down payments. However, all good prize fighters don’t stay down too long and eventually bounce back. I still think that the US housing market needs to see improvement in areas such as jobs and foreclosures but this fighter is getting its feet back underneath him. As usual, I’ll remind you to not listen to the Wall Street hype men out there who are always trumpeting that everything is great in housing, look where that would have put us 2-3 years ago. You have to always do our own research! I have not done a large amount of research but I think the housing market will make a comeback similar to LL Cool J’s return on ‘Mama Said Knock You Out’. His famous opening lines on that track were: “Don’t call it a comeback; I’ve been here for years”. Month after month, I recall mental notes and try to catch themes that are occurring. In March, I wrote a post that included a bullet point on how I am oddly finding a positive spin on what many see as a very negative stat. Click here for those March Notes. I follow up that post with new information that just came out for April which continues to highlight housing starts and permits are falling. Why is this bad piece of information, good? I’ll keep it simple, I’m not waving the buy signals but this is a positive step in the right direction, because fewer houses being built means we can continue to clear the overhang of existing homes out there and one day get back to normal.
Who’s Got My Back…maybe David Tepper
David Tepper may be with me as I start to review some of his latest holdings. Mr. Tepper is a well known investor who founded hedge fund, Appaloosa Management. His Wall Street credentials are legit and his $55 Million dollar donation to have Carnegie Mellon name its business school after him is just one example of his success. Tepper every quarter has to file documents disclosing which stocks that he owns and here is a summary of some of the surprising housing related stocks he now owns as of last quarter:

PulteGroup (NYSE: PHM) – 1.6M+ shares
D.R. Horton (NYSE: DHI) – 1.3M+ shares
Beazer Homes (NYSE: BZH) – 1.3M+ shares
Masco Corp. (NYSE: MAS) – 394K shares
Ryland Group, Inc (NYSE: RYL) – 198K shares

While large to the average investor, in reality this is a small stake for Mr. Tepper as all these shares add up to about $55M. While this is not a knockout of an endorsement for housing, it very well could mean we are in the first round of a prize fighter returning.

Notes from the Matix - April Download Pt II

2011-05-09T19:41:00.009-05:00

Pharma
Pharma is short for pharmaceuticals and this has traditionally been an industry that I have shied away from as I’ve tried my best to incorporate a rule that I have learned from Warren Buffett and Peter Lynch awhile ago: Invest In Things That You Know

This is at odds at times with the strategy that I’ve been harnessing over time and that’s being a MACROVALUEQUANT. Often, my screens lead me select a stock that I believe has positive momentum (QUANT) and I further weed out these stocks if they are not trading at a low valuation (VALUE) and support my general view on what industries and sectors should do well in the current global economic environment (MACRO). My screens recently led me to 2 pharma stocks (See Pharma Premium Alerts Post) and I was very reluctant to nibble at the bait.
So far I've been building a position which has been supported by some additional comments that have caused me to give the Pharma sector a second look. The pharma industry is changing as patent expirations continues occur, revenue decreases will weigh on the industry. I am taking a lot from this simple statement because it could represent a shift in the current economics of this industry. I believe the stocks that will benefit from this type of shift are small and mid cap pharma stocks with great drug products. These stocks represent high risk, high reward opportunities for the companies developing the drugs. Also big pharma and drug stocks will likely look to acquire these smaller companies as their revenues decrease due to lost patents or they'll look to establish partnerships that have lucrative milestone-based goals.

Housing Double Dip
I was intrigued by a new investment product that could be marketed as a Home Protection Investment. This product is similar to buying a local investment contract that worth 1 to 3 percent of the value of your home. The investor gets a payout when they go to sell their home. If the local home market index falls the investor makes money through the investment. An important thing to note is its not where you lose money on your home but rather if the market index saw depreciation over that time period you would see a payout.

Netflix
I have been so wrong about this stock that I’m not going to bother to try to be right. I saw Whitney Tilson eat his own words and back off this stock and my mama didn’t raise a fool. They recently signed a deal with Miramax and Viacom and that should continue to buoy the stock. I recently heard an interview with the Netflix CEO and the strategy isn’t compelling…its pretty simple! The key he mentioned is the race to content and the faster they can get content deals done the larger advantage they have over their competitors. It sounds like many other services where being the first mover is of critical importance.

Oil Prices, Sky High
About a week ago oil was pushing everyone to the brink of disbelief. If it had kept going at its recent pace, I’m sure Chicago would have seen $5 a gallon (we’re at $4.60 right now)! The economy is inching higher as the employment numbers continue to improve, HOWEVER the price of gas could be the HAMMER that tips us back down. I’d like to reference numbers provided by Craig Johnson, president of Customer Growth Partners on CNBC (article: Killer Combo of High Gas, Food Prices at Key Tipping Point):
“Of the six US recessions since 1970, all but the "9-11 year 2001 recession" have been linked to—of not triggered by—energy prices that crossed the 6 percent of personal consumption expenditures, he said. (During the shallow 2001 recession, energy prices had risen to about 5 percent of spending, which is higher than the long-term 4 percent share.)”

This was after he noted that gas prices have surpassed 6 percent of spending.

May Alert - NOBLE ENERGY

2011-05-05T08:51:00.004-05:00

NOBLE ENERGY (NBL : NYSE) - An alert was triggered for NOBLE ENERGY. NBL has recently traded at $86.95, and this is an entry level that interests URBANOMICS

Note: This is an alert that this was triggered for URBANOMICS Alert Subscribers. This is a one-time free viewing of an alert that is viewable to subscribers.

Portfolio Update

2011-05-04T19:07:00.003-05:00

Radisys (NASDAQ: RSYS)
As you all know I have owned this stock for a long long time. This is my second time around so search older posts for my writings. I am more positive about the direction its heading after yesterday's earnings call.
Recently I wrote that a large shareholder had joined the board and for me this is a positive catalyst. If you recall the shareholder felt RSYS could do a number of things such as offer a dividend or look for acquisitions with a nice cash position its been building.

Notes from RSYS earnings announcement:

Earnings beat expectations
Announced an ACQUISITION of Continuous Computing
Named a new CEO, who has a strong track record

There were a number of very positive things from the most recent earnings call. RSYS margins have been average at best, around roughly 30%, and the acquisition allowed them to get a company with higher margins, around 50%. This also brings new customers in a fast growing sector (3G & 4G wireless infrastructure). I also took the news that the company achieved ITAR compliance and allows for further growth in the military and defense market. The other two items that were positive are 1) the adding of business or a business partner in China and 2) a CEO with experience leading a high growth company that was taken over

Artificial Life (ALIF, ALIFE)
This stock has had a strange run. It is your VERY high risk, potentially high reward stock. This stock plunged when they dropped their accounting firm (like a bad habit). They were punished as I and investors feared that another company could be potentially cooking the books. It didn't help when a law firm stated they would be suing ALIFE for misleading investors. This stock easily dropped over 50% but you can't panic. In a matter of a few weeks the company has hired new and reputable accountants (BDO), challenged the lawsuit, and just today the lawsuit by the legal firm was rescinded. This turn of events has caused the stock to rebound from a low of $33c and now running up to $62c.

Notes from the Matrix - April Download Pt I

2011-05-01T19:00:00.011-05:00

I know its a little late but it is about that time to download thoughts that have been swirling in my head (usually typed into my phone) for the month of APRIL. As I mentioned in the past, I've noticed a not so subtle shift in my investing habits and it has been a huge thirst for data! I think that in periods like this where the direction of the economy, country and the world are not so clear cut, everyone saturates the internet, tv, and newspapers with there different view points of how it will all play out. For me this amounts to a lot of noise. And noise for a MACROVALUEQUANT (not sure what this means, run a quick search for previous posts) can be good and bad, but mainly its time consuming. Its time consuming because I think investing and being wrong about these events may be worse than not investing at all. This gets us back to that VALUE concept and my need to want to have conviction that I am entering into an investment at a point where there is significant value to be gained.

But enough of my ramblings and onto the themes and concepts that I've dialed into the most this month, starting with the oldest dated notes:
Anything to Short? - Early in the month, I listened a little closer to someone mentioning it may be time to short Consumer Stocks and Retailers and the best way may be through the ETF, RTH. This may have been Doug Kass and it sounds good but boy I have to admit I am a little nervous about shorting stocks in this environment. I think this call has its merits as we continue to find out that the economy is weaker that most people would like us to believe. The economic numbers have been mixed and while I wanna be in front of this trade...I'm not signing up for it just yet until I see key indicators like GDP and unemployment turn. Further, the discussion from the most recent Federal Reserve meeting didn't leave me to believe the 'punch bowl' is being pulled away...all they've confirmed is they don't see the need for ordering up more punch (i.e., QE3)

I'm All In (We're Moving) - I also noticed that during turbulent times everyone plays a mean game of poker. Listening to Corporate America is like watching a good round of Texas Hold'em. I find it interesting that companies have raised the idea of going all in on the idea of moving their corporate headquarters from one state to another...AND even changing where they are domiciled in response to State, Federal, or Country tax laws. Here in Chicago, there were initial gripes from Catepillar about the state taxes and how it would consider moving because of them. How funny, it was all over the news until a few days or weeks later the media finally focused on other relevant facts. One that I found interesting, was all the states (Wisconsin, Indiana) wooing Chicago/Illinois companies actually have higher corporate tax rates even after Illinois most recent hike. Next is Barclays claim that it may move from London to the good ole USA and possibly domicile in New York in response to UK's tax changes. How funny, all the politicians here were complaining about how anti-competitive the US will be due its corporate tax rates, but its odd that companies think they may fare better by moving here. Finally, there were John Chambers strong remarks on 60 Minutes about how high the US tax rates are and that is why he and many he and many other technology companies have significant portions of their businesses in countries like Ireland. How funny, I wonder if anyone needs to remind John that Ireland, his model example, is the letter "I" in the acronym PIGS as in Portugal, Ireland, Greece, and Spain. With the exception of Spain all other countries have needed a bailout from the European Union...so again tell me again John if Ireland has their tax structure so right, why has their economy and government got everything else so wrong. Could it be the lax regulatory system there that allowed all of the banks to incur serious debt and implode the economy...I guess the grass is greener.

These two points were taken from one day's worth of notes, but this helps conceptualize whether I truly think its time to start shorting stocks or certain sectors. I personally need to see more data, and trends that show the economy is regressing. I've listed my two keep data points I am tuning into above and I am also focusing in on language from the Fed. The last is what to make of things people debate, like taxes. I won't get into the politics of things but when you hear everyone speak it kinda sounds like the grass is always greener...so that you can get your way...I"M ALL IN.

This way part I. Stay tuned for more

Competing Interests...

2011-04-06T23:40:00.006-05:00

The current economic environment and its effects over the last few years has made the competing interests of various groups more pronounced during these times. This is why I wanted to write a post about competing interests. Recently, I was reading about the self interests of people as it relates to the low interest rates, which have been rock bottom for a long time now. I was surprised when I learned that savers and risk adverse people (think older adults nearing retirement) are not too excited about the prolonged low interest rates which are not earning them much money on their safe assets in their savings and retirement accounts. Even though the general thought is low interest rates are helpful in stabilizing and spurring growth in the economy, some competing interests say enough is enough. They are saying this because they would prefer to go back to living off higher interest rates. As I begin my data dump of thoughts for the month of April, I find myself torn like many of the elderly who likely want the economy to do well but want their interest income to jump back to life.
The competing interests (or information) I have been tuned into are the mixed economic data that has been coming in. I have been dialing into economic data more and more and assume that is the same thing the Federal Reserve is attempting to do as they make key decisions about things like interest rates. My personal view is the numbers that I am seeing are like a bipolar diagnosis from the doctor. Recently you can see that domestically jobs numbers are improving, companies are on acquisitions sprees, and Quantitative easing has likely lead to markets moving higher. On the other side, the competing data highlights that domestic housing is double dipping and consumers are pinched as oil and food continue to skyrocket up in costs, and international countries (think China, Europe, etc) are raising interest rates or asking for bailouts (see Portugal).

Conclusion: Right now, I can't believe that my initial thoughts are to stay the course with no major changes to the portfolio that I've recommended in the past. I am currently favoring stocks and dividend paying companies are a primary focus. I would definitely say that some of the assets that you own should be "non-dollar denominated" assets like Ray Dalio mentioned and commodities (think oil, gold, silver, etc) are a solid bet. This gives me exposure to assets (stocks & commodities) benefiting from a slightly growing economy & QE and assets (think commodities) that may benefit from the fear trade or inflation down the road.

Roger that!

Female Health Company (FHCO)

2011-03-22T21:32:00.003-05:00

The Female Health Company (NASDAQ: FHCO) is a recent example of the alerts that are submitted to readers signing up. It is roughly up over 10% since it was identified. This was a free alert provided to anyone playing along at home in the last few weeks.

Enjoy ~ Urbanomics

March Matrix Notes

2011-03-22T19:13:00.009-05:00

I could do a follow up on why I'm a MACROVALUEQUANT, but who has time, its time to unload my thoughts and unplug from the matrix. I do a lot of reading on the train and listening to the radio and have started taking notes. In the past few weeks, I've tuned into the following discussions and readings:

Ray Dalio (find his discussion on CNBC)
Mr Dalio is the hedge fund titan who runs Bridgewater Associates and rarely makes tv appearances (I heard). After a few moments of defending his unusual methods running his firm, the man behind the world's largest hedge fund was very open about the cycle of leveraging and deleveraging and where the US is at in its cycle after the crisis. He talked about the following subjects:

He noted US Equities are cheap and will benefit from currency devaluations
The money flows will benefit equities
Portfolios are not properly weighted, too much in dollar denominated currencies
Gold is a currency that many are underweight
Stimulus will last through the 4th quarter, and private credit growth will be needed

Dr. Tan (Wall Street Journal)

Dr. Tan, head of Singapore's soverign wealth fund sees US growth well above the average economist surveyed by the WSJ. He went on to say that American's aren't as optimistic about their outlook as foreigners are of their future. Contrary to many average folk, he sees the risk of inflation low due to the slack in the US economy. But take note, his outlook shifts to an increased risk of deflationary pressure if oil spikes above $100. He went on to talk about the importance of rebuilding America's physical infrastructure and secondary schools.

Stimulus

A few people continue to note that the Federal Reserve will be ending Quantatative Easing this year. The outlook could shift dramatically at that point because the stimulus did what it was supposed to do, act as a bridge until the markets got healthy and the private sector could take over. However, the thing is will the private markets be able to infuse as much jolt into the economy as the Fed was able too??

Bonds

Much has been discussed about bonds and Pimco's exit of the bond market...well kinda. They are fond of long term bonds. And it may make sense to look at foreign bonds which could have higher yields as emerging markets have seen an increase in their assets due to the commodities boom.

Japan Reconstruction

The next most talked about subject is Japan. First off, we should remember that the situation is difficult to believe and our prayers will need to be with all the people in Japan as they continue to rebound from a serious nuclear situation. Many economists are already talking about the impact of this type of disaster...Japan reconstruction spending will be good for equities and over time the Yen will weaken. We've seen the Japanese stocks move sharply and I would continue to watch these stocks as money will likely continue to flow into funds like the EWJ, the Japanese ETF.

Amazon & Taxes

I never spend much time thinking about the great business model of Amazon and how it became one of the lowest cost provider of goods. The simple answer is taxes, Amazon benefits from a loophole it identified and it is not required to collect taxes on goods sold where it doesn't have a physical retail presence. Amazon is under attack as more states strapped for cash will look to find all possible revenue sources...like Amazon. See Illinois's recent law to tax Amazon.

Surprise Takeaways

Housing starts fell 22% in Feburary, these were really low numbers that caught many by surprise as dismal readings.

US equity markets have the highest profit margins in over 18 years.

-----------------------------------------------------------------------------------------------
My takeaway has remained consistent in the New Year. I believe like most that QE2 has provided the juice for stocks which have doubled in the last few years.

I think you have to still sell some of your winners. High corporate profit margins (highest in 18 years) mean the likelihood this stock rally party may come to a screeching halt is increasing.
Keep the search on for strong yields - Dividends, Foreign Bonds (New consideration)
Maintain exposure to non-denominated currencies as noted by Mr. Dalio (Gold, food and metals that are actually used to make things)
Believe in US equities but understand that OIL IS ABOVE $100, this is a REAL potential for deflationary impact - Dr. Tan
And housing may have begun to hit a bottom...if housing starts continue to fall, then this begin to put the housing market in an equilibrium.

Oil - The Game Changer

2011-03-10T12:35:00.005-06:00

This phrase is often used in sports to describe one person that can change the outcome of a game. In many investor's opinion, Saudi Arabia is the country that is a game changer when it comes to oil. You are already aware of the unrest in Northern Africa and the Middle East and this has caused oil to spike (yes, also some speculation by greedy investors has also led to the spike). Many say that the spike would be even larger!!!...if Saudi Arabia was to see the same type of unrest. This piece of news was just broken:
The Associated Press out of Cairo has reported that a witness is indicating that Saudi police have potentially fired on people attending a rally in the eastern part of Saudi Arabia.

Play close attention to this because it is the game changer. Already you are seeing:

Oil moving higher (note: it was moving sharply lower today)
Gold rebounding (note:it was a losing ground today)
Currency Moves

Dollar moving down
Swiss moving up
Yen moving up

Stocks down to session lows

If Saudi Arabia experiences serious unrest you will see a sharp move to safety. These points outlined above will continue to be trades that occur because Saudi Arabia was the only 'stable' supplier in the region that indicated they would pick up the world's demand due to pipelines being shutdown in Libya.

MacroValueQuant

2011-03-08T21:14:00.003-06:00

Why I am a MacroValueQuant
I can tell that I take trading too seriously because I have named my strategy. I couldn’t really describe it many years ago when I first started but I know that it has changed over time. The reason why I describe it as a MACROVALUEQUANT is because it represents a combination of what I slowly have morphed into. The first part of my anagram is MACRO, which describes my growing focus on truly understanding macroeconomics or the working of national economies. So I spend a large part of my reading and listening to stats about the US economy and even global economies. I truly believe that this is a strong approach when evaluating stocks because it gives you a lay of the land. So if you flashback over the past few years, I believe my investing alerts are more likely to be successful if I have better sense of the possible economic scenarios stocks face in the US. A few timely examples of MACRO events that were helpful to be aware of were the housing crisis and the financial crunch. The goal can be either to direct investments to areas that may benefit the most or to simply identify times where it is best to preserve capital.

QUANT represents my love affair with all things quantitative. Purdue University gets a little (okay a lot of) credit for the great mathematical emphasis on quant and statistical analysis. I’ve come to appreciate analytical models and scenarios that may produce highly probable events over time. I remember when I first learned about the January effect and the inefficiencies that exist at times in the efficient market theory. Some of these inefficiencies are due to human nature, things like fear and greed, and a quant approach can help alert when opportunities are available to benefit or stay away from.

VALUE helps to determine whether or not a stock is cheap. I truly have personally experienced not much good can come from buying something overvalued…stocks included. I don’t even really like buying many things at their normal value and prefer discounts and ‘margins of safety’.

So to summarize MACRO helps me find the most likely sectors and industries to benefit from. QUANT screens alert me of opportunities. And VALUE helps me verify that when I buy an alert, I am buying most of my stocks at a discount.
MACRO find of the Month:
If you get the opportunity check out a rare but great interview by Ray Dalio, the manager of the world’s largest hedge fund. He shared some great insights and is an interesting economic thinker. He was recently on CNBC and his interview pointed out the following themes:

• US equities are cheap
• Currency devaluations lead to cheap US equities
• Capital flows will also benefit equities
• Portfolios contain too much dollar denominated currencies

Stay tuned to find out how these themes, help shape my thoughts.

Going Mobile...

2011-03-01T23:39:00.003-06:00

The goal of most companies is to go global. But this post is about the benefits of going MOBILE. MOBILE devices are rearranging the way we speak, think, and do business. I have much more to write on this topic but here is my starting team so far.

American Tower (AMT)
Verifone Systems (PAY)
NXP Semiconductors (NXPI)

Stay tuned for why mobile devices are sending the retail and banking industry into overdrive.

St. Joe's - Board Change Announced

2011-02-28T23:34:00.002-06:00

St. Joe's Company has announced the CEO is stepping down, effective immediately. While having solid management in place is important, this could be the catalyst needed to reorganize this huge real estate company. If you look at a chart for St. Joe's you have seen this stock drop from highs in the $80s to definitely seeing the lows. I would have loved to muster up the courage and buy in the stock in the teens but I was a little nervous at that point. This cost me some percentage points but I'd like to think that at least we see pieces shifting that will cause this company to continue to move in the right direction with hopefully now a more limited downside. This is still a high risk high reward trade, as REAL ESTATE, FLORIDA, changing your Quarterly Reporting date, and big bettors are all going against the company. And my analogy for the day is, I hope the Florida (orange) squeeze is on, as that alone can move this stock in the right direction.

Training Day...Alerts

2011-02-28T22:20:00.007-06:00

Come take a ride with me on your first day, just like rookie cop Ethan Hawke took a ride with Denzel...whips I mean Alonzo Harris. See in both of our worlds street justice reigns. In Training Day, Alonzo let his brand of street justice play out until he gets burned. In my world of investing, Wall Street enacts its own brand of street justice. You can get a cheap thrill by not doing your homework and buying the flavor of the month stock. Sometimes you'll win but you don't wanna lose...and get burned like Mr. Harris.

To help you transition into this tough game of investing I'll take you on a Walk down Walk Street. We are gonna ride because its not a race, its actually hours and hours of research to find deeply valued plays that have explosive potential. I believe in my process and hope to share some of these deep values with you. Email me to begin receiving alerts so that you can follow along while being your own boss by picking your own selections.

Here is a quick summary of my most recent Alerts:
I have repeatedly indicated that I have two premium picks that I am really positive on. They both have been explosive already and strangely enough my screen has me entering into the BIOTECHNOLOGY sector.

Stock 1: *****
Notes: I first reported this stock moved up nicely and then subsequently it has fallen back to the levels of when I was first alerted to it. It has shown great promise in clinical trials, other companies are seeing potential and analysts remain bullish on this stock.

Stock 2: *******
Notes: Oddly this alert moved up sharply like the first recommendation did. It appears to be due to a recent announcement that investors approved of. This stock is running and with a recent double digit run up I will share this alert but have to further analyze if their is adequate safety in buying the stock at these levels.

Weekly Screen Results
3 Stock Alerts
I wanted to focus on three stock alerts that popped up on my screen. I would focus on these three plays because they are in the Oil and Gas Exploration sector and I think the fundamentals of oil will (unfortunately) remain strong. Bad at the pump, but if we can profit in different ways...then let's do it.

Trade Deadline...

2011-02-23T19:26:00.004-06:00

If you follow sports there is always a part of the season where the right to trade a player from one team to another comes to a close, this is the 'trade deadline'. And in the NBA this year its come with some big names on the trading block. Carmelo Anthony to the New York Knicks and Deron Williams to the New Jersey Nets sounds like these franchises are solidifying their rosters with serious talent.

Its time to solidify our roster of stocks with as many 'Melo's and Deron's as possible because turbulence is starting to set in on the markets. Many people forget when investing that you must really consider the entire global landscape these days. Listening to the news for a few seconds leads to a crash course in countries like Tunisia, Egypt, Bahrain, Libya...and then flickers of concern with names like Saudi Arabia, Israel, Iran. The unrest in these countries is the main reason why you must solidify your roster with serious talent.

I have been expecting a pullback for sometime but its always difficult to tell when it may occur. The economy is chugging along but there are still mixed data signals telling us the coast is not close to being clear. Unemployment, housing prices dropping back to historic lows, gas prices, and quantitative easing all make me uneasy. The catalyst of the pullback may oddly enough be Tunisia!! So its time to evaluate the roster and TRADE:

~ Trade your stud who's maximized their talent.
~ Trade your players who are not panning out.
~ Accumulate money to acquire the biggest stud out there (i.e., Lebron James)

I took the following actions:
~ Sold (or traded) Iron Mountain (IRM) shares for the roughly 30% gain accumulated in the last few months. This is a stud I wanted to take profits of before they reported earnings & before this pull back eats my profits.

~ Sold (or traded) Republic Services(RSG) shares for the roughly 5% gain accumulated in the last few months. This is a stud I wanted to take profits of before this pull back eats my profits. I hope to reacquire this prospect later.

~ I will buy a few Lebron James...starting with my 2 premium screen alert stocks. And keep the extra cash (or dry powder) for a rainy day

FEBRUARY 2011: BIOTECHNOLOGY PREMIUM SCREEN

2011-02-16T09:37:00.005-06:00

STOCK: ******
HEALTHCARE
BIOTECHNOLOGY & DRUGS
TIP: Ribbon

Please email for access to subscription based contents.

Risk On: Orexigen, St. Joe Company

2011-02-08T21:49:00.005-06:00

I will start off by saying that my view of the economy is very MIXED. I will get into the reasons the next time around. Here are a few more free picks because these are very risky plays and I want to document my theory here. I have one premium pick posted a few weeks ago that is doing quite well. Please contact me for gaining access to my premium picks.

OREXIGEN (OREX): I hope you like this call! After this stock got hammered, I called for a 'NIBBLE' in my last post. I parsed through a ton of data on both sides of how the FDA approval would play out and I ended up with the right conclusion. The proof was in the pudding of the FDA panel advisers meeting at the end of last year. This panel advises the FDA and while they approved Orexigen, it was a narrow approval vote and the theme was that there were concerns with elevated heart readings of patients. As I mentioned before, the FDA had to pull a previous diet drug from shelves due to cardiac concerns and I have a strong feeling that they didn't want to make the same mistake again (duh). Hence, the FDA voted to not APPROVE the drug, but called for more studies.

HOWEVER, the reason I call for a nibble of this stock at the 52 week low of $2.47 is because of the probability. The probability is likely that this drug won't die. Its comprised of two drugs that have already received FDA approvals separately. That means there is a chance for a few different outcomes:
~ More testing until even FDA approval
~ Sale of existing drug to another company that can use the technology

These outcomes led me to recommend a gamble on OREX. Since then I believe its been up 44% in a few days.

St. Joe Company (JOE): JOE continues my love of all stocks controversial. I am not sure why the 'Risk On' trades are of interest to me at this point but I want to make sure that I capture it here in my posts and some of the reasons why. JOE is a tough stock to recommend because it has a LOVE/HATE story line going on. Real estate companies and prime Florida locations makes its a darling, but the downfall of all real estate across the country has many thinking its on its last leg. The story drags on amongst investment titans. This stock is loved by famed mutual fund manager, Bruck Berkowitz, and hated by hedge fund genius David Einhorn. So the reason why I picked up a few shares the other day is because of a few reasons simple to probably only me.

REASONS I LIKE JOE:
~ Valuation: Many (wink:Einhorn) have hinted at valuation troubles lurking. I used to subscribe to this school of thought until the financial crisis taught me, there is a valuation crisis only if you can't get access to capital. Once banks got infused, they didn't have to write down every asset, they could afford to wait.

My opinion is JOE will not have to value its property at these historic lows...they can wait it out

~ Catalyst: Institutional love. This stock is attracting some big players, Bruce and I believe BlackRock on one side and of course Einhorn on the Other.

My opinion is JOE will benefit from its largest shareholders actively attempting to make this company more efficient and profitable. The don't have time to play and Bruce owns 29% of the damn stock...can you say his voice will be heard. And it has been, he's been out pumping up the stock recently, check CNBC.

~ Short Squeeze: This last one may be dumb, but everyone and their mom jumped on the Einhorn bandwagon and started SHORTING the stock. If either of my first two points prove to be correct the shares should jump as short sellers get squeezed out of betting this stock will go down. They will have to buy their shares back and...TA DA the stock rises.

Now the stock on Monday was up between 8-10% but I still bought because I think this is just the beginning of a beaten down stock with a serious plot...think Young & the Restless.
Pick up shares around $29 and anywhere below. I had to settle for $29.30 right before the close of Monday after I learned that morning listening to CNBC that Bruce it trying to get himself the Chairman spot and his business partner Mr. Fernandez the Vice Chairman spot. Can you say catalyst for change! Say goodbye to the scrubs on the board, there is a new sheriff in town. Any news like this and you will have buyers jumping on a beat down stock and short selling feeling the squeeze.

Disclosure: I own shares of St. Joes Company

Positive Earning and all to important Approvals...

2011-02-02T08:27:00.005-06:00

I will first start off with Orexigen (OREX). The did not get the coveted FDA Board approval for Contrave, their weight loss drug. I was watching closely as many people made calculated bets on which way this all too important approval would go. I think the best write up was from an article on Seeking Alpha which outlines the cases for this drug to not get approved right away. It outlined points from the 2010 panel, not board, meeting which outlined that many doctors on the panel and board are concerned about the elevated readings blood pressure in people that were part of the phase III testing. Glad I read that article because I almost pulled the trigger. Oddly enough I think their may be an opportunity now that the stock was slammed by over 72% to the downside after the closing bell. It was from roughly $9 to a 52 week low of $2.47. If you've got ice in your veins because of the blizzard. Nibble here on Orexigen because again there is an all to important thesis out there about this stock. It was known in the FDA panel review that they already thought more monitoring of patients would need to be done based on patient data. This along with the comments from panel members should have been taken into consideration as the FDA was not looked in a favorable light due to the last approved diet drug that had to be pulled from the market. There is clearly a high hurdle rate that must be met for diet drugs. But at these levels for a drug that made it through Phase III with fairly good efficacy tests should be looked at closely.

Baidu (BIDU) - I've been watching this stock and the earnings were better than expected. Now is way above where I want to acquire but remember this is the Google of China, and there is serious value to be had.

Radisys (RSYS) - Finally, they reported better than expected earnings. We will need more quarters of this for the stock to keep rising.

Its A Blizzard In Chicago...

2011-02-02T00:53:00.002-06:00

It is literally white out conditions here in Chicago and I now know what a true blizzard looks and feels like. And like the snow, I'll tell you that its tough to see through the market right now. I am impressed with the run the market has been on and it has broken through the all too important psychological barrier of 12,000 on the Dow Jones Industrial Average. I am cautious as most of the stocks that I am analyzing appear priced for perfection. And the hardest thing to do sometimes is to be idle and have a little dry powder.

Here are a few stocks I am keeping an eye on but even they are pushing higher very quickly. Here are a few selections for free, but remember I usually like a little safety before I enter the position:

EXAR Corp (EXAR)
American Superconductor (AMSC)

Close Position: CIT, AIG

2011-01-28T22:57:00.003-06:00

Now that my tracking tool is working again I can update when I anticipate closing certain recommendations from the past.

American International Group (AIG) - As you recall, I already recommended closing this position and I blame AIG on the confusing warrant situation. You remember we exited at roughly $55 a share. Due to the lack of availability in my tracking tool, it will unfortunately show that the position was closed much lower.

CIT Group (CIT) - This pick was from the middle of last year. You'll notice the trend with these trades is we believe in the policies of the Federal Government and many of the early investments they made we built positions in these companies. It is tough but you try to anticipate the turning point where the downside risk is no longer falling dramatically. Time to ring the register on CIT.

Also take a look at last roughly 20 picks that were closed, only 4 closed negatively. Not a bad trend.

Track Please...

2011-01-28T22:43:00.003-06:00

Check Please is a popular show here in Chicago that finds local restaurants that most people aren't too familiar and tells you all the reasons why you should stop by.

This post is called Track Please, because I am alerting you that it appears that my tracking tool located on the side of the page is finally back up and running. This is important because it allows me to visualize my performance over time after I have written and recommended various stocks.

Take the opportunity to review the performance of the last 10 or so picks. Here is a short snapshot of a few picks:

CSE: 42%
ICO: 112%
WFC: 18%

Update: No AIG Warrants

2011-01-23T14:56:00.003-06:00

Here is a quick update, AIG warrants are confusing. If you used the strategy that I posted you will not receive AIG warrants. Although most of the investing community believed that you needed to be a shareholder on record as of Jan 13, 2011, this was not the case. It turns out there was more hidden language than was originally believed on the warrants. I've learned that there was additional language located in the "tax" section of an SEC filing that indicated that you would have needed to have held your shares until Jan 19th.

So I feel stronger about our exit of AIG even though we didn't receive any warrants. We sold at the top of the range and that was well worth it when comparing the other alternative which is:

~ Still holding shares which dropped to $43 and the rights to a small amount of warrants in the future.

My feeling is when we hit our rock bottom price on AIG again, we can rebuy at a later point. I will repost where I think that is but for now let's use our last buying point as our benchmark for reentry.

Peace

I Got a Warrant...for AIG

2011-01-19T15:05:00.002-06:00

Just a quick post for folks playing along at home. I won’t give you my thesis but my take is its time to take our huge profits in AIG. We recommended it here when it was unpopular in the $30s and I’ve taken my position off the table. My simple reasoning is that you should have stayed in the stock until Jan 13, 2011 when they issued warrants to shareholders on record. These warrants will allow shareholders to buy the stock at $45, whenever we want for UP TO 10 YEARS!!!

After that Jan 13th, sell the stock because they are beginning a recapitalization program. To me this is just a fancy term meaning they have to pay the US Government (technically Treasury) back. To do this AIG will take the US Treasury’s preferred shares and convert that into 1.7 billion shares of common stock. This will dilute OUR shares and likely drive the stock DOWN into the low $40 range. More new shares means my shares are now a smaller amount of the whole pie...people don't like that. That's why AIG is giving you warrants to stick around or comeback.

This is why I sold on Jan 14 and locked in those juicy profits. I hope to receive warrants because I was a shareholder as of Jan 13. I anticipate the stock price dropping and I will have to mark a new entry point on when I want to buy back into AIG which will eventually be a company free of government money in the near future. In the meantime I will still have warrants for the next 10 years that allow me to buy this story back in the event it takes off. (Kinda like a break in case of emergency that the stock took off w/o you)

Wish me luck and let’s hope this works. I will keep you posted on the warrants. And now I am wondering if this stock is available to be shorted on the ride down.

Questions on Technology Stocks

2011-01-19T14:43:00.003-06:00

I wanted to post my high level thoughts on three technology stocks that I was asked to consider.

Applied Micro Devices (NYSE: AMD) - I am nervous about this stock because they’ve never been able to get over the hump. I tempted to call them a dog with fleas. There is reason to be concerned as the Board of Directors (BOD) canned the CEO because they thought he wasn't built for the next wave in the PC industry… tablets. It is mind boggling that the CEO may not steer the company in the right direction. How hard is the chip sector to understand, smaller devices (phones, tablets, netbooks) is the direction to go.

URB Recommendation – Pass on this pup

Coinstar (NASDAQ: CSTR) - I have really liked this stock for quite a few years now. This one qualifies as one that got away because I liked it back when it was in the $20 range. I won’t take any credit because a friend who is very loyal to Motley Fool uncovered this gem awhile back and has held ever since. Not many realize they are the brains behind Redbox, which everyone seems to be familiar with. There stock recently fell (roughly 25%), I believe out of concern that the company was being squeezed on their margins.

URB Recommendation – Need more research to identify buying opportunity

Netflix (NASDAQ: NFLX) – I learned from my Napster days if it’s so simple and convenient for people to adopt, then it will be a hit. And Netflix definitely qualifies for this category. I have not used the service but they took off and never looked back. This story definitely qualifies as one that I left get away and I’ve been watching closely. I don’t necessarily like what I see at this point: Plump valuation, hedge funds taking the opposite position, and new competitors popping up everyday. I see this now as a crowded space. They are facing new competition from Hulu, Apple TV, Google TV, DVR's, Redbox, etc.

URB Warning – The Chief Financial Officer (CFO) recently quit, which is strange?!?! Also, when the hedge funds came out shorting and talking bad about the company…the CEO responded….ODD, as CEO don’t you have anything better to do?!?!?

URB Recommendation – More tempted to short this stock, but don’t feel bad about doing nuthin!

It's A Long Way Up the Mountain: Iron Mountain

2010-12-29T12:44:00.003-06:00

Iron Mountain (NYSE: IRM) was a recent recommendation that we've highlighted. Look back (using the search bar) at previous posts and you will see that we watched this stock as it violently fell to new lows and eventually hit a 52 week low, its lowest point for the year. We swooped in during these turbulent times and made solid calls to buy this stock as it was nearing a these lows and as we felt there was enough of a safety margin to begin buying. Once bought you must remember one of our fond URB Lessons Learned:

URB LESSON LEARNED ~ Monitor your holdings for underlying data that either 'supports' or 'rejects' your reason for buying the stock.

If there is evidence to reject your reasons for buying the stock, then while is hard to part ways you must dump the stock.

Recent Data from Iron Mountain:

~ Quarterly Dividend was raised 200% from 6c to a whopping 18.5c!!
~ Recommended by a well know investment analysis firm
~ The most recent earnings beat the estimate of Wall Street...and this has been the recent trend
~ And they have raised future earnings expectations. My experience is firms don't do this unless they believe those numbers will be reached

The dividend increase and the rise in future earnings are excellent signs to support our recommendation.

Dec 21 2010: Technology Stock Recommendation

2010-12-20T22:39:00.003-06:00

There is a technology stock that has shown up on my radar for some time. I often do my research and wait until it hits my price targets that I think are critical. Because any stock may be worth a BUY at the right PRICE.

I'm transitioning to my new format where I will alert you all here of the recommendation. And then I will release the stock at a later time after I've had an opportunity to reach out to any that sign up for my new service. Stay Tuned!!!

Stock: ******
Technology
Software and Programming
Small-Cap
Hint: Penny Stock that appreciates the IPhone

Santa Claus Rally...

2010-12-20T21:35:00.004-06:00

This rally came too early to be called a Santa Claus rally this year!! To have a quick flashback you will recall that we recommended increasing our holdings of stocks to take advantage of certain actions earlier in the year like Quantitative Easing (QE). Looking back, I agreed with the thoughts of many other investors and economists that it was time to move up in the risk spectrum. At that time, I believe QE would negatively impact bonds and favorably impact stocks. Our picks ranged from: 1. Dividend Stocks 2. Commodities 3. Large Cap 4. Our Usual --Down and Out Stock w/ Great Upside Potential.

Urb Lessons Learned: Keep some skin in the game on speculative stories that perform well.

This year I learned to trust my instincts but I wasn't consistent with my usual strategy of keeping a little bit of a well performing stock. The following stocks fit our Down and Out Stocks w/ Solid Upside, however we sold early and didn't keep any to enjoy this even more of the upside:

~ Boston Scientific (BSX): Bought this down and out and eventually accumulated this stock at a dollar cost average of $6.20s. Looking back we sold this stock around $7 and now it boasts an asking price of $7.82. Things that make you go hmmm.

~ Audiovox (VOXX): This consumer technology play was a solid call after it clear our down and out strategy with great upside. Consumers are coming back and they make the great Xmas devices that are on people's wishlist. Bought around 6.40s, sold around $6.8os because I got jittery and this stock now trades around $8.45!!! Wow

This reinforces my lesson learned in 2010, keep some in the game, you'll regret it less later!

Here is a look at other nice calls since our shift away from bonds:

~ American International Group (AIG): Gone from $30s to $50s and it looks like the upside is just beginning. This was part of our down and out call, no dividend so the upside needs to be significant

~ Collectors Universe (CLCT): Maintained our position here from levels that range from $ 4 to 9 bucks. This stocks boasts a healthy dividend payout of 32.5 cents a share and keeps the income stream coming in. Management has cash so the dividend looks solid. And the ride up to the $14-15 dollar level has given us nice appreciation.

~ Iron Mountain (IRM): This stock is a quiet surprise because its seen good upside very quickly. Roughly a 20+% move, this was a down and out stock that boasted good dividends.

~ Republic Services (RSG): Waste management has never looked so sexy. I personally think this stock was battered for tough reasons, which gave us a great entry point and this stocks has a dividend.

~ Oracle (ORCL): I don't write often about this stock because I have never sold it since in 1999 or 2000. Yes, I have loyally owned it for 10 years. I never owned a lot and perplexed as to why I never bought more but its now gives out a small dividend which allows me to reinvent in ORCL.

UNDERPERFORMERS for 2010

~ Radisys (RSYS): The reason why this stock is listed in the underperform section because it hasn't gone down but its basically DONE NOTHING! If you don't believe me, check out my dog and largest shareholder David Nierenberg's letter to RSYS: Letter

Note: Please read this letter. Nierenberg has asked RSYS to take a number of steps to improve the stock price. It appears that RSYS just announced one of those actions, however it comes on the heels of RSYS trimming its 4th Quarter Outlook.

STAY TUNED FOR 2011

American International Group (AIG)

2010-12-09T21:14:00.003-06:00

On a positive note today, we saw the shares of AIG rocket up 14%! As you have noted, we have recommended and are still bullish on AIG. The skinny:

~ AIG plans to repay the Federal Bank of New York

~ AIG is selling key assets, like their Asian life insurance, unit to drum up cash for repaying their loans

~ The market is reacting positively because it begins the process the US Treasury converting their shares to common stock

~ On the heels on GM, it LOOKS more feasible that the government may find receptive investors that want to snap up shares on a possible turnaround story

While there is still more room for this stock to run up, we have had a nice move here. I think with the developments highlighted above, this will DEFINITELY be a mainstay for my portfolio going forward with strategic buys going forward.

Tax Cuts...Yes or No??

2010-12-09T20:37:00.004-06:00

I am a market guy but I must write here in this article that I am surprised about how often every issue that the administration embarks on is severely attacked. The rule of thumb is you have reached a good level of compromise on Wall Street or in Washington when you pass a bill that has both sides of the debate a little unhappy. So my perspective of the Tax Cut debate is simple. We've officially reached the level where we have too many whiners and not enough leaders. Especially ones that will tell the truth. In my opinion, President Obama has done a decent job of navigating the water of a highly politicized atmosphere and prime example are the tax cuts.

This deal and its timing are both solid! First both people on the left and on the right are complaining, check. Second, unfortunately since you can't believe the moving lips of many in Washington listen to outside people. I'll listen to Mohamed El-Erian, CEO of Pimco, who has a great perspective on the markets. He points out that the market is headed in the right direction and even increases his overall outlook for next year, DUE to the actions of the White House. The tax cuts are extended for every for the next 2 years and while that may not be the smartest move for the deficit, the KEY element for also extending the cuts for the top 2% (which is what the Republicans want) was getting a series of main street and business tax cuts that STIMULATE the US economy going forward. Tag on the extension of unemployment benefits and this may truly be a multi -pronged jolt that our economy needs to beef up growth. Look at the reaction of the markets...they are responding well hope, now lets hope us folks on main street feel the shock. To be fair, he notes two main themes are the results of a higher outlook:

Fiscal Policy - This would be actions led by President Obama on tax cuts, which contain many parts that will stimulate our weak economy.

Monetary Policy - This would be the Fed's QE2 money printing policy which juices the markets.

This is a great move by President Obama to turn the political posturing into an economical bang for our economy.

QE2 is like a Pay Per View Fight...

2010-11-21T21:13:00.005-06:00

Quantitative Easing part 2 (or QE2) is the Federal Reserves attempt to stimulate the economy through the printing and purchase of roughly $600 Billion dollar's in bonds. The Fed has two primary responsibilities and that is achieving maximum employment and price stability. So we've all been watching closely as I'm personally curious as to how this latest experiment will turn out. Of course, if you're the Fed you probably don't want to hear me calling it an experiment. This is why the discussion of the Fed's actions have been much like a prize fight. There are many economists that have pulled out the punching bags and are calling the Fed's actions a waste of money, devalues the dollar, and wishful thinking. Oddly, the Fed has openly punched back and noted that their actions are to jump start a stagnating economy which continues to lead to high unemployment and very low inflation.

Well the Fed's buying has begun and I have honestly been paying attention to the war of words a little too much. I got a little jittery as their has been more volatility over the last few weeks and I got to portfolio watching. But at the end of the day, I believe the Fed will get what they are looking for and that is more velocity. I think the move is actually to get the average investor that has been hedged (like me) or burned (like many) to move from their large bond positions back into stocks. As you have seen my writings here I believe that this is the gradual approach to take. I don't think you go crazy and just remove your bond positions but you begin to reallocate away from this great trade over the past few years. The other thing that may happen with more money in circulation is higher inflation. Well I doubt that will have a serious immediate action because if you're still thinking like me I am waiting for retailers to continue to drop their prices or they aren't getting my dollars. If I have this perception, many others do and the threat of inflation is real but not coming right away. Note...if it does we are slowing building a portfolio that has exposure to TIPS and commodities which will do well against inflationary pressures.

Note: This article was started in Nov and finalized on Dec 09

All that Glitters...Might be Gold, Silver, Platinum, and Palladium

2010-11-06T21:06:00.005-05:00

I have to admit I am big on Glitter right now. And I am not referring to Mariah Carey, who may have done an album and movie with the same title. I'm taking about the glitter of shiny metals. You know the metals that coined the phrase Bling Bling in the hiphop world. Don't believe me check out the old Cash Money Record artist BG who had a huge song that turned this phrase mainstream.

But back to my purpose for writing this article. My goal is to point out that it appears we have been fairly right about the direction of the economy and how it keeps chugging along. This is a slow and steady chug that has been scary because at times it feels like we could fall back to those dreadful days of 2008 & 2009. I struggled back then with identifying exactly how to setup and reallocate my portfolio for the future. If you recall I was in the camp that the economy was really bad and I even made the drastic decision to pull the string on all risky and mediocore stocks in your portfolio. The fact is they never should have been there but thats another story for another day. My guess back then was to increase your exposure to the following investments:

~ Gold (through ETFs)
~ Treasury Inflation Protection Securities (commonly known as TIPS)
~ Dividends

Well it was arguably a good call back then but the hard part for me was actually finding out the best ways to take advantage of this strategy. I have been very slow outside of identifying the obvious which is through ETFs. So I am going to place more of an emphasis on the identifying which stocks can help fulfill this strategy.

These asset classes are important because the Federal Reserve is acting to stimulate the economy which is suffering from limited core price appreciation (inflation) and job losses (9.6% unemployment, 17+% underemployed). Because politicians won't stimulate the economy the Fed realizes that someone must. They shouldn't be the only game in town because they don't have all of the tools...like say calling for a tax cuts or passing a huge infrasture bill. So their best solution is to flood the economy with CASH. This does a few of things:
1. Makes holding safe cash investments less desireable; stocks and riskier assets will rise
2. Supposed to make banks lend more because interest rates will be low and attractive
3. Make American made goods cheaper and easier to export as the DOLLAR loses value

Where I plan on exploring:

Hard Assets - Not just Gold but silver, platinum, palladium, real estate tend to rise in value and the dollar loses its value. These are stocks I will be exploring more of:

Glitter ETF (GLTR) - Gold, Silver, Platinum, Palladium
Barrick Gold (ABX)
ENSCO (ESV)
Cheasapeake (CHK)
Agnico Eagle Mines (AEM)
Mariner Energy (ME)
Ultra Petroleum (UP)
Interoil (IOC)
Platinum Groups Metals (PLG)
Plains Exploration (PXP)
Gold ETF (GLD)
Gold Miners ETF (GDX)
Petrobras (PBR)
Suncor (SU)
NovaGold (NG)
Cobalt International Energy (CIE)
PetroHawk (HK)
Abraxas Petroleum (AXAS)
Vale (VALE)
Allied Nevada Gold (AMV)
Exxon Mobil (XOM)
Gammon Gold (GRS)
Minefinders (MFN)
ATP Oil & Gas (ATPG)

TIPS - no change here, this was a good call and inflation, while low now, should increase. Don't believe me check the FED minutes where they outright said they are looking for higher rates
Dividends - I like the recent stocks CLCT, IRM, RSG, EPD and other solid dividend plays.

As you can see I've got some work to do to find value for the future. Peace

Iron Mountain

2010-10-05T10:22:00.003-05:00

Iron Mountain (NYSE: IRM) - You may not know much about this company but in the financial services world they are the guy that you call to do the dirty work. You know the uncool stuff like carrying high technology server tapes off-site and shredding of key corporate documents. Regulators often look and require these types of activities and small and medium size firms...and a number of large ones turn to Iron Mountain.

IRM - New Recommended Price Point: $20.25
It's hit a low of 20.06 so it is definitely time to accumulate. Lastly they have initiated a share buy-back which is typically great for shareholders. The stock took a hit today on this news so I have some more research to do...Its hard to argue someone believe the money could be used better.

Like its Dynamite

2010-10-01T11:02:00.004-05:00

If you haven't heard the song Dynamite by Taio Cruz you have got to check it out. Great song and it describes how our picks have been lately. My goal is to hopefully post more but write less. In this turbulent market, I think we have the right strategy for investors: wait for huge discounts in stocks and don't be foolish... take gains where they make sense. I try to frequently summarize recent picks and give status updates on older picks:

American International Group (NYSE:AIG) - I am trying to track down the most recent post of AIG. If my tracker is finally up and running I will look to see when I bought the shares. AIG was a pick that practically hit me in the head. I had a hard time recommending this stock but to be honest I listened to Bill Gross awhile back who said buy what the US Government is buying. I will write more later, as to my opinion on why this would be the case with stocks that are basically owned by Uncle Sam.
Disclosure: I own share of AIG

Boston Scientific (NYSE:BSX) - Not a stock for weak stomach. But this company has made an acquisition and bounced high recently on publication about their defibrilator devices. This is one where I would continue to buy on dips. Dollar cost average in and be patient and this company is in a restructuring mode.
Disclosure: I own shares of BSX

Exar Corp (NASDAQ:EXAR) - Appears to have found a nice floor around the 52 week low mark. This could have good upside from here. Moving nicely already.

Audiovox (NADSAQ:VOXX) - Moving above recommend price.

Theravance (NASDAQ:THRX) - This one was a really solid call. It ripped up from recommended level after positive news based on FDA comments.

I also written recently about these stocks and continue to see solid upside going forward:

Iron Mountain (NYSE:IRM) Up very nicely from recommended price. I watched this closely and there was a chance to buy this stock at an even further discount around the $20.80 and above. Doing well so far.

Comcast - Note there are two tickers for this company. Its up over the recommended price. I will write more about the difference in a new post.

Long-Term Stocks:
I love these names and they continue do very well:
Enterprise Partners (EPD)
Radisys (RSYS)
Disclosure: I own shares of RSYS
Collectors Universe (CLCT)
Disclosure: I own shares of CLCT
Visa (V)
Disclosure: I own share of V

Semi Ain't So...

2010-09-29T08:54:00.003-05:00

Yeah say it ain't so. My love affair with semiconductor stocks continues. In using my technical analysis screen, the next stock I am looking to recommend is Exar Corp (NASDAQ: EXAR). This is another integrate circuit semiconductor stock very similar to my Radisys selection. Stay tuned for a detailed analysis but for now:

~ Resistance: Near 52 week low levels
~ Bullish on sector: Technology
~ Catalyst: Technical support at recommended price points

I would add this to my Urbanomics Tracker, provided by socialpicks.com, however they appear to still be having technical difficulties.

Recommended Price Points: Accumulate shares in the range of $5.59-5.71. Look for pullbacks to build in a margin of safety.

3RD Quarter 2010 - Asset Allocation Reminder

2010-09-24T18:24:00.006-05:00

A simple tip I can give any reader is to sign up for reminders that alert you to evaluate your investment portfolio each quarter. A while back I set up this option and I just received my 401K email reminder for this quarter. This was timely because it was soon followed by a question from a friend asking me to assist with their 401k portfolio evaluation.

So as I do every quarter, I will give you a quick update on the state of the markets. I haven't often been rendered with little to say but that's how I feel about this market right now. The data that the market is signaling is very mixed and one could say perplexing. If you don't believe me just follow the stock analysts on TV, the administration's economic team, or Ben Bernanke and the Federal Reserve. For each one of these groups, there is sharp disagreement on whether we are headed for a second dip into a recession or showing signs of growth after one of the worst recessions in history. Its gotten so heavily debated the primary topic in all these circles is whether there should be Quantitative Easing (QE) Pt.2 or a second stimulus effort. I won't go into grave detail but QE as it is nicknamed means that the Federal Reserve will take actions that "PUMP" more money into the economy. The likely predicted outcome may be interest rates dropping further which in turn is supposed to jump start demand for refinancing and loans for other activities (but many banks aren't lending). The Federal Reserve takes an action like this if they believe that the US economy is headed back into a recession or simply just growing too slowly to heal properly. This is why you see the administration attempting to pass "stimulus" type bills to help the economy, such as the most recent 'Small Business Tax Credit Bill' that was passed recently.

In short here is my opinion on the state of the markets and how you should arrange your portfolio accordingly.

State of the Markets

1) The Federal Reserve has been revising their growth outlook of the economy and signs are confirming growth, BUT SLUGGISH GROWTH

2) Right now I truly believe we are facing some disinflation or decline in prices. Think, how many people are holding off on purchasing something or getting a loan because they continually believe prices are going to fall. This is deflation and can be a drag to the economy...

3) The likelihood is that the Fed will implement QE Pt2 later this year because of the slow growth and this could lead to a further decline in rates. However, we should be aware that the the long-term outcome of pumping all this money has to be inflation down the line...which lead to the US Dollars value declining.

4) There is growth in the economy, however because it's such a bad situation not many people on main street will notice. Look, the stock market has been climbing higher and September was the best month on record since 1939, (yup since the Great Depression).

How to Arrange Your Investments & 401K Portfolios

1) If the Fed is forecasting slowing growth, we need to get "PAID" until things get better:

Ensure you have a Dividend Yield Fund selected

2) Deflation can be a drag and inflation eats at your money. To protect against this:

Select Treasury Inflation Protected Securities aka TIPS (if available to you)
Select a Commodity Fund to participate in Gold, Oil, Gas, etc

3) QE Pt2 would continue to push rates down and makes bonds look like they have weak rates of returns:

Re-Balance bond gains made and starting putting them into stock funds (buy on pullbacks)...with a priority to dividend and technology stocks

4) The economy growing so slow means that nobody is unhappy, so that leads to my last tip:

Re-balance bond gains into international stocks and emerging markets.

Potential Allocation Breakout

60% Stocks - Dividend Fund, Large Cap/Growth Fund, International Fund (Equally)

40% Bonds - Short Term Bonds, Treasury Inflation Protection Securities (Equally)

A look back in time...

2010-09-24T15:58:00.008-05:00

I've been following the ups and downs of the markets the last few months and what's interesting about my analysis is I don't really feel like much has changed. It has to be the most perplexing thing in the world for me now in my over 10 years of personal investing. It's perplexing because things are changing (slightly) and for the market we've seen its slow ascent higher. But I still think the market sucks. There is a lot of downside risk and I STILL like Commodities, Technology, Wireless.

I am clearing through my papers and I was looking of the habits of investing for success. The purpose of this blog was to capture the main theme of that write up and that was to keep a diary, a virtual diary in my example. The things to try and remember to do are:

~ Review your holdings (probably not daily)
~ Remember you portfolio includes all your accounts: Stocks, 401K, and IRA accounts do matter and they make up your complete portfolio
~ Pick how you want to measure your success: Success can vary from investor to investor so what defines whether you're up...a percentage, a target goal, etc
~ Start keeping track

I hope these tools go a long way into to helping you build your own portfolio. For me I do these things and really don't review my portfolio very frequently. I care about how they are trading but I don't get to concerned on their moves up or down. A great example was when we bought Burlington Northern Santa Fe. If you go back to when this stock was first recommended you will see why I thought it was important and at what prices I thought it was attractive. By taking notes, I still remember I liked this stock in the mid 70s because I believed that one of the positive things to take away from where the economy was at the time was the importance in commodities and the shift in emerging markets needing those commodities. I kept up with things but often didn't watch its swings. Its hard to wait but the odd thing was when Burlington finally got bought out at over $100 a share it was my friend that called me and alerted me of what had happened...I didn't know right away.

Here are a few examples of stocks that we've recommended over time and waited and watched them pay off as the fundamentals developed:

Supertel (SPPR) - I originally bought this in 2005 when it was known at Humphrey Hospitality. In researching my blog this was sold roughly 3 years later for around a 60% increase.

Cytyc (CYTC)- One of my all time favorite stocks, they were one of the first stocks I recommended and one of the first that I owned to get bought out. Bought at $17 and held until they got bought out in the $40s I believe.

Ambassadors International (AMIE) - This one was a stock that didn't move much for a long time I bought in 2004 for $13. I wrote an article 3 years later finally selling after I recall it hitting a peak of $32 and coming back down and settling in the mid 20s.

OIL - My call to buy oil stocks back in 2005 in my inaugural post was fitting. Who would have known the ride this commodity was going to be on going forward. Oil Post

Clayton Williams (CWEI) - Based on my call in oil, this was the a stock bought at $42 and this went all the up into the $100s. This took years to develop but what a ride.

Collectors Universe (CLCT) - Here is the final and prime reason to not let go of a good thing. CLCT is not the best stock I've owned over time, but it was the most stressful one to own. I have owned this stock since 2007. CLCT POST The story behind this stock and why I still own is because of fundamentals. This stock was paying a healthy dividend $.20c a quarter back then and helped me build up my war chest. When the decline of 2008 hit this stock plummeted to $4 when management cut the dividend. The only thing that stopped me from taking a huge loss was reading the financial report that was put out by the company. The newly appointed CEO (because the company booted the last one) outlined that the company could afford to still issue a dividend however it is prudent to hold the cash during tough times. So I waited and waited through the darkest period in the market and true to his word they brought the dividend back when the stock was around $6 a share. So I was essentially buying the stock each quarter with the dividends and lowering the cost of what I had bought the stock in. So today even with the stock standing at mid $13s a share we are seeing a 25% increase.

This is why its important to take notes.

Now it is even more important to remember your blunders and boy have I had a few in my past. The easiest one I can remember is:

Zhone Technologies - I rode this stock from $1.10 to the $1.40s. Then the fundamentals fell and I waited to long. This cost me a bunch as I never sold until this stock hit .70c! Ouch, they didn't get approval to sell in a region in Europe which they thought they had locked down. So this taught me be careful with penny stocks and they are volatile and their business can swing based on contracts.

Not Shorting Housing - This would have made me a legend if I knew about shorting back in the day. This post proves why you should write down your thoughts...my first call on housing and I didn't nothing about it: Housing

Rite Aid (RAD): Just a horrible pick and I'm glad to notice that I wrote about getting out of this position and putting my capital to better use. Ha to bad that cash went to Zhone Tech. LOL

NOT Buying Apple (AAPL) - I wrote a piece on this based on a reader question, and never followed my own advice.

BUYING ETFs - I will write here. Do not buy ETFs as an investment. I would only use these purely as hedges in your portfolio. They are difficult securities to own due to their calculations and just because oil is going up doesn't mean the ETF is going to do up also. Also, anything super levered (Banks x3) is just not smart!!! Repeat do not buy unless you are hedging your portfolio!!!

London Report - Mind the Gap

2010-09-24T14:56:00.003-05:00

I was out of the country for a few weeks and had the opportunity to spend it in London, United Kingdom. I still suffer from currency conversion shock as my dollar doesn't get me a lot of British Pounds (GBP). Here is an example of what $100 dollars gets you in GBP --> 62GBP. Yeah my average meal was probably in between 25-40GBP so let's just say London ain't cheap. However, this is a must visit location for soooooo many reasons. This is a very socially, historically, and economically sensitive country and I learned a lot while I was across the pond. Here are my few examples of each:

Socially - I ran into a number of instances where I saw the social consciousness of the people on display. In a restaurant, the group next to me had excess food they could not finish, and decided to give it to a homeless person sleeping on the street. I also really enjoyed buying groceries in the UK as the food had more information on its label, tended to be made from freshly grown products, and locally provided.

Historically - I loved the fact that the major museums were on display for free. It was a deeply enriching experience as I visited the British National Museum and saw the contributions and evolution of man from the Egyption, Assyrian, and Greek cultures. I also visited Tate Modern and saw many beautiful works of art including a number of Warhol paintings.

Economically - I was reminded of the need for government to play a strong role to incent people both negatively and positively to do things for the good of all. The infrastructure for public transportation is excellent and they incent people to use them as there are cameras situated throughout the city that capture all plates to charge people for a congestion tax. By moving people to a well maintained public transportation system I found that I got more exercise each day as I walked to and from the train station and to the office once we reached our destination. There is also a push to have people bike to their destinations and bikes can be rented and returned as certain locations and appears to be another strong policy. I also learned of a ticket policy used in Finland (I believe) that implements the fine based on your income. So if you are caught speeding, a person making more money will be fined at a higher value than someone making less. The story I was told mentioned that the CEO of Nokia (who is very rich) was once fined $50,000 for a ticket.

I used these points of my trip as an example of things that we can possibly learn from and see which ones make sense here in America. We already have toll roads but there are new policies being used around the world that we can experiment with. There is a debate in the thoughts of how we take care of our people, roads, schools, and health will continue to be discussed as we come up with new and thoughtful ways of doing those things.

I've got to have my VOXX...

2010-09-07T14:52:00.002-05:00

I am writing this post as a quick update for a couple of reasons. One, I am headed out of the country for a bit, and two my Urbanomics Tracker site, socialpicks is down more often that I would care for.

So I am posting information here that documents when I would have picked up the shares. I received an alert for the following stock:

AUDIOVOX CORP (NASDAQ: VOXX) - Price Point 6.64

I should have some more information for you in the future. But this isn't much of a surprise as technology and natural resources have been a few of my favorites. They are industries that continue to grow or show the ability to pay us as we wait for better economic times.

Which Bad Word is it...

2010-08-25T09:50:00.003-05:00

It was interesting how a few months ago; the talk of the town was inflation. The massive amounts of dollars being pumped into the economy was a lifesaver but many experts also predicted this would lead to inflation down the road. A short description of inflation is the rise in a basket of staple consumer goods due to the fact that it takes more dollars to buy those goods. It kinda makes sense, there is more money out there, therefore; more dollars will be needed in the future. Experts have also tacked on the fact that it the Federal Reserve has dropped interest rates to the point of "It can’t go any lower". The funny thing is that both of these points are exactly right and inflation and interest rates have not risen. WHY??

Because of the other nasty word that’s been surfacing…DEFLATION. This is the decline in value of goods, because there is not enough money circulating throughout the economy. This may be more accurate at this point because of:

DEMAND – there is less demand for consumer goods, costs drop to keep people buying
VELOCITY – Banks are not lending and this means money is not changing hands…the velocity is not circulating the money
SAVINGS – Consumers are saving more money…the savings rate is 6.4% and rising. We are also demanding more and more deals (i.e., LOWER PRICES) see the heighten interest in sites like Groupon, Slickdeals, coupon sites, etc
HIRING – Companies are turning a profit, but hiring has not returned. Productivity is high, temp workers are common…but all out hiring has not been seen.

This is my list of stocks that I've wanted to purchase. Some at the recommendation of key analysts or experts and others because I like the technicals observed:

POTASH - a little late on this one now that it has run up on takeover talks.

HPQ - 40.20

RRR - 6.76

IRM - 21.68

BAC - 13

RF - 6.67

CMCSK 15.90

The Assessment...

2010-08-04T21:06:00.002-05:00

Its time for me to chime in and give you my assessment. We are more than half way through 2010 and its been an interesting ride. I can thank Lebron James for keeping me glued to the television a little bit more than usual. And I will admit that I didn't think it could financially get done...going to Miami that is and forming the Big 3 with Wade and Bosh. This move all of a sudden places Miami in playoff contention right?? Well we'll see because Orlando is still a good team and those Celtics keep signing veteran players. Shaq is the latest addition to Boston and now is Boston officially the Big 4?? I guess the questions keep coming, is Brett Favre staying or going. Wow this story sounds familiar, and it still seems like he doesn't know. So I don't have an assessment on these sport questions but I do have an assessment on the market.

Since the economic downturn, I have been more interested in market events and I been forming themes that may lead to investing decisions. This is traditionally against what I do, but its more fun that just looking at quantitative indicators. So here is my assessment:

~ Jobs, Jobs, Jobs: There is a lot of confusing information out there but it appears that the job situation is trending in a positive direction. It is very slow and we are not even close to turning a corner but the number are off of the all-time lows. This is the most critical part to the recovery and I am still not sold that we are turning a corner. There is a very odd trend that is forming and its: Companies are making and holding onto their cash, and Consumers are strapped for cash

~ Shock Value: I think that people are still jittery because its been hard to catch a break. In general, we all want to hear and see good news but we just haven't been able to get it. I think the wars, the oil spill, politicians fighting, immigration, etc have all been important issues but serve as distractions from getting people stabilized.

~ Trading Ranges: Lastly, I believe that because our politicians can't rally around effort after effort that will spur job growth, people will still feel uneasy. So oddly enough I think it makes sense to trade defensively and hold onto only core holdings. I think it makes sense to look at the ranges that stocks are currently trading in and take advantage of buying in on sharp dips and selling or even shorting stocks trading at the top of their range. I think most stocks will not be aggressively raising their guidance because I frankly don't believe the demand is there. This will keep most stocks trading in a range that could allow us to make some cash and we wait for our core holdings to outperform the rest.

Should I Buy These Stocks ~ May 2010

2010-06-06T10:36:00.002-05:00

I hope that my efforts both here on the web and in person begin to slowly impact the way that people think about some of the daily decisions they make in a different light. As you know, my reasoning tends to have an economical twist to it..."If it don't make dollars, it don't make sense". And the outcome doesn't always have to involve money, but it does need to make sense to you and the people you care about.

So I am glad whenever friends and readers ask me about the economy or in this case to analyze a few stocks they are interested in buying. So in this round I received four stocks from a close friend who works in real estate. Here were the stocks he presented:

Bruker Corporation
Reliant Steel
British Petroleum
Unilife

Bruker Corp (NASDAQ: BRKR) - Biotech toolmaker (X-ray, MRI,etc)
- Barrons Article, "Biotech toolmaker Bruker Corp's shares could climb as business and the economy improves this year, financial weekly Barron's said. The paper reported in its April 12 edition that Bruker shares could rise from a current $15.20 to $18 as its sales rise 10 percent a year -- twice as fast as its rivals."

- I really like the medical device segment. I have written about these types of companies and think they have room especially with the recent changes in health care. I would reference my reviews of Boston Scientific
- Recommendation: This meets some of my screening criteria, nice call. BUY @ $13.91 – 14.08

Reliant Steel (NYSE: RS) – Steel Maker
- Steel is a solid play if you are a believer that the economy, more importantly the world economy is stabilizing and rebounding. I personally and not fully sold. A good chunk of steel would need to be bolstered by China and they may be reigning in a hot economy over there. Manufacturing and real estate are at divergent ends and you may need both (i.e., signs of a growing to really buy this play)
- Dissapointing Outlook: http://www.thestreet.com/_yahoo/story/10733603/1/reliance-steels-outlook-disappoints.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

- Recommendation: Not Buying

British Petroleum (BP) – Oil
- I like your enthusiasm here and slowly over the years have played the contrarian play more than any other. Buying the guy that’s down and out or that got clobbered by some negative news. Need a recent example, Boston Scientific got hammered by the FDA and I waited then bought after the story played out. The difference is this story hasn’t played out and the government needs a whooping boy and BP is it. No one is happy about what’s going on in the Gulf, even the oil lovers down in the Gulf!
- Recommendation: I personally would wait until a little more news comes out. I think it may be safe to buy at the 52 week low levels of $44, because a 7% dividend is paying you to wait for this stock to rebound. But your downside risk still exists big time…which could lead to a dividend cut and no one likes that.

Unilife – Medical Devices
- I like this sector don’t like this stock. In 5 minutes outside of the sector they are in I can’t find a reason to love this stock. Being a contrarian, I tend to want to buy these guys because it looks like they been beat down…like they stole something. But I can’t do it:
- Negative news (got sour around Apr) and changing of management and board members tells me something wasn’t going right.
- Recommendation: I personally would not buy this company, even if it was with your money. LMAO

Portfolio Spring Cleaning...

2010-05-18T22:04:00.003-05:00

It is technically still spring, right? I know judging from the mid 50 degree weather here in Chicago that this seems about right! Although I have been really busy I am starting to understand my investing habits a little. I think I tend to get more interested in the markets when volatility begins to pick up. This could be it or maybe I am finally drinking my own Kool-Aid and using the volatility to find deeply discounted bargains. Well, lets hope its the latter because I have been tuning in alot more lately. I continue to write about the extraordinary run that we've been on lately. It started earlier in the year when one of our largest holdings was liquidated due to a buyout of Burlington Northern Santa Fe (NYSE: BNI). I felt good here because we owned this position for almost two years, and held strong (thanks to the dividend) through the downturn and watched the company get bought out by Berkshire Hathaway.

Next, we've seen positive moves in the stocks we screened so diligently during the market downturn and decided to keep. I've gone with a concentrated portfolio and this has served well since the market stabilized. Besides BNI, my concentrated portfolio includes:

Radisys Corporation (NASDAQ: RSYS) - Largest Position
BNI - Second largest, liquidated
Collectors Universe (NASDAQ: CLCT) Now second largest position.
Visa (NYSE: V) - Liquidated most of this position for a nice gain; Still retain a minor position
Boston Scientific (NYSE: BSX) - New, small position

I'll keep beating the drum on RSYS as it went from $4 to now $10. It was a rough ride but we should be seeing some upside as they outsource their production model and grow with new products.

Collectors Universe is easily my second largest holding and has been on an outright tear and we owe thanks to new management cutting costs and reimplementing the dividend. This has brought investors searching for yield running to this stock. It has seen a run also from $4 to now roughly $14 bucks. A recent increase in the dividend yield now it paying out a whooping 30c a share!!! This healthy dividend allows me to continue to grow ownership in the country.

Visa was a classic buy during the downturn as we began accumulating a large amount of shares at roughly the IPO price. This was a no-brainer as the downside risk could not have been much lower than the levels that analysts had expected for a public offering. So at one point V was my fourth largest position behind RSYS, BNI and CLCT, because I had a conviction that V wouldn't slip much further. After a nice return, I sold most of V but retained a small portion which I still hold.

URB Update: Visa is experiencing some downside risk in their stock due to some recent legislation. The CEO recently spoke about the amendments passed in the Senate and the affects they could have. Being in the industry I need to better understand what's in the potential amendment but it seems like there could be some additional regulation around the "interchange" or swipe fees that are paid by merchants. I do believe this could have the most impact in their bottom line because this is how they make their money on a per transaction basis. I think investors are concerned with this and with the fact that a major part of the amendment is limiting the fees around debit and even credit transactions. This part would only impact V if their issues see a significant decrease in volume.

My recommendation is to wait for this legislation to play out. V and other networks will not be impacted as much as issuers are. Keep the stock if you own it and use the dividend to accumulate more of a position. I will be keeping the small position that I own, however for the tracking portfolio I will take some profits.

Boston Scientific - I like this sector but my research shows that there may be too much risk involved in holding this stock. I may look to stay in this sector by finding a stronger company that offers a dividend.

I am exhausted but here are the stocks that I am still watching:

Energy Partners
Legg Mason
Becton Dickinson
CapitalSource
Theravance
ViaSat
ADC Telecommunications
Solar Capital

Back to Business...

2010-04-25T10:53:00.003-05:00

If you haven't been paying attention lately it has definitely been back to business on Wall Street. Quietly the markets have roared up and surpassed the levels before the great recession of our times, started. We are roughly hovering around Dow 11000 and I am still interested because good companies are recovering and making money. If you go back in time, you will remember that I mentioned the good times will begin to roll again however we need to be better stop pickers this time around. In the past few years, we could afford to buy almost anything and watch it go up. Now we've learned that this is no longer the case a good pickers will be rewarded. I am not a great stock picker so I will say good and that is why I went through that cleansing period. I said if you don't see a stock as a long term hold and can't bear waiting for it to recover through the difficult times then get rid of it. And that what we did, now I would have loved to go back and hold on to my Microsoft holdings but besides that I was pleased with my focused results.

My main holdings continue to be:

Radisys - my largest position with is up fairly nicely. Since the hitting lows in the 4s this stock along with many others has rebounded and is roughly in the 9-10 range.

Collector's Universe my second largest position is poised and looking very strong. It has surprised be and scared me a bit by bouncing off of levels in the 4s and surprising coming in around $14 lately. I followed the advice of the greats and really read through their filings and statements when things were bad. As I've written in the past, they have a good representation of outside investors who have kept the company honest. They shedded non-performing parts of the business...the gem grading business if I recall and maintained their bread and butter...authentication of stuff. They also instituted expense saving processes and cut the dividend which hurt and sent investors scrambling away. But reading through the filing showed me they could continue to make the payments but wanted to reserve the cash to make it through the storm. And that they did, and when they reannounced a short while ago that they were bringing back their 25c dividend things were rolling for this company. Earnings looked good and I was buying more shares through my dividend reinvestment program. Now my holdings are going up even more and they are soaring. They just announced an increase in dividends which is bringing in more investors and we are loving it. Dividends have been increased to 30c and this company looks to be in a great position. I will need to be careful here but we are easily profitable on this trade and making steady dividends each quarter.

Burlington Northern - This is no longer a holding as we made a healthy return after the company was bought out and taken private.

I watching the usual suspects in my watch portfolio:

Legg Mason (LM)
Boston Scientific (BSX)
...and a few new ones:
ViaSat (VST)
Theravance (THX)

Keep u posted, Peace

Homebuying 101 ~ Tour Baby Tour

2010-04-24T08:32:00.008-05:00

Before you begin, you may want to read my previous post on homebuying:
http://urbanomics.blogspot.com/2009/08/my-reality-show-homebuyer-101-searching.html

I have now equipped you with a list of things that are great to get you started and these should really be used. Speaking honestly, you don't need to do any of these things if money is not an option. But because I treat real estate just like I do stocks then we will be looking at this investment as a long-term buy that must have upside potentional and there is a large margin of safety built in to protect my downside risk.

So what I did was I took the criteria listed out and began scouring the internet. I needed to suffer from 'sticker shock' and this was my first realization that I wasn't going to have everything that I wished for...without some sort of sacrifice. For me, it came down to not compromising on my must have features within the unit: SPACE, GARAGE, NOT FIXER UPPER. So I started by using Realtor.com to enter all of my needs and wants into their search engine for the areas I selected. So you may have to run a few different searches but this is critical because it shows you want the current listing prices are for the areas. I used this to begin to identify areas that are affordable. Remember, we have already limited our list to areas that are relatively safe, close to mass transportation, grocery stores, bars, the lake, etc.

URBANOMICS TIP ~ I then created a spreadsheet and documented all fo the properties that I could afford based on my pre-approved amount.

I visited these homes because they created a baseline of what I thought I wanted on paper. Here is where your Real Estate Agent comes into play. Now we must find an agent, interview them, and have them schedule tours for us if their is not an open house. I told the first agent what I was looking for after intreviewing him with list of questions and quickly was told, "You aren't going to get what you're looking for in you in that price range". Since I had previously been scouring the net on my own, I knew that he had a strong opinion to what type of property he wanted to put me in and true enough I kicked him to the curb a few weeks later. The second agent gave me his reservations also about how difficult it was going to be, but he schedule some homes to prove his point of what was out there.

Urbanomis Tip 2 ~ To show my agent I was a team player, I sent him a few of my houses I found on my own and we toured during that same trip.

To quickly summarize, the tour was great as they pick you up and drive you around and point out all of these great details that you never knew. And when viewing 4-8 properties in a day you may get house overload and this is where a camera is very important. So I was able to see my list in person and make adjustments because some things you have to see and feel to know how you may react...like layouts. Do you like an open layout, or separate rooms for kitchen and dining? These are the types of things I was confronted with. The tour went well but I found myself a little jaded, the homes my agent picked were a little shabby and while I probably was hitting 50% on my picks the ones we all loved including my agent were from my list (go figure). Over the next few months I started realizing that my research was finding great homes that I absolutely thought were great. Here is a quick snapshot of some of my finds:

Stay tuned to find out more about these properties.

Please use this link to find the last post on my homebuying experience:

http://urbanomics.blogspot.com/2009/08/my-reality-show-homebuyer-101-searching.html

SCRABBLE...

2010-02-17T21:47:00.006-06:00

Currently, we are in a market that is swinging up and down. So instead of guessing which letter to put in your portfolio I would suggest an alphabet soup of stocks that are being snapped up by veteran investors. Here are a few on my short list:

Boston Scientific (BSX)

CIT Group (CIT)

Becton Dickinson (BDX)

Corrections Corp of America (CXW)

Citrix (CTXS)

Wells Fargo (WFC)

Republic Services (RSG)

Legg Mason...Do they have a Legg to stand on?

2010-02-13T16:50:00.003-06:00

Like Fifty Cent said, "I've been patiently waiting for a track to explode on". Well my game isn't music, its stock picking. And I am glad I was patient. I saw some indicators that would have lead me to purchase Legg Mason (NYSE: LM) between 28 on up. I admit I haven't been following individual securities lately but I was very suprised to see LM’s recent decline after it began picking up steam towards the end of last year (see the charts). The catalyst (for the decline) after some quick analysis was the recent quarterly earnings report. For financial firms, these meetings have caused serious havoc to the stock prices. The stock is now under both its 50 and 200 day moving averages. I am going to assume that this means new support levels will need to be established and all those investors that bought a few months ago will need to cost average down. But in order for them to buy in again at these lower a level they need to believers in what Legg Mason does and that’s asset management. Yep, these guys make their money investing in the damn stock market (Sigh).

Here is a quick rundown of the Pros:

- Good indicators show support for the stock
- Bill Miller is a fund manager that historically has had a great track record. He finds great companies and holds onto them for a long duration
- The stock has broken through its technical moving day averages, which could lead to additional support needed from investors
- I believe that I read that retirement portfolio outflows have stabilized, likely due to the run-up in the economy since last March
- I have the basic belief that the Federal Reserve won’t turn the spigot off too soon, which should keep the economy from “double-dipping”

Here is a quick rundown of the Cons:

- The stock broke through its technical moving day averages which could lead to investors cutting their losses…why would they cut their losses see the next bullet
- Although Bill Miller is the man, his fund consists of a large number of financial institutions…arguably one of the most volatile sectors right now
- The economy, which is still teetering could send the funds managed by Legg Mason lower

Superbowl Investing Tip ~ Invest in What You Know

2010-02-07T15:04:00.003-06:00

This simple tip comes from the mastermind, Peter Lynch. I am completely engrossed in this strategy but rarely put it into existence and it has cost me dearly. It is so simple sometimes that we overlook the power of our own consumption and what it means. Here are some solid stocks where I have used their service and in some instances I keep returning. And if I would have bought the stock I would a very happy man.

Dominos (NYSE: DPZ) - Lets take this pizza chain. I decided to buy pizza and because I consider myself tech savvy I wanted to place the order over the internet. So I decided to use Dominos new site and technology to place and monitor my order. For someone like me, this was great to create my own pizza with toppings, see the price as I made it, and know how long it would take to expect a delivery or to go in and pick up my pizza. I did this over 2 or three months ago and had such a positive experience that I would definitely buy my pizza that way again. To read about Dominos new site and technology check out these articles from the Wall Street Journal and the website 'Storefrontbacktalk' for more information:

http://online.wsj.com/article/SB10001424052748704779704574552080042033284.html

http://www.storefrontbacktalk.com/e-commerce/dominos-gets-e-commerce-creative/

Amazon.com Inc. (NASDAQ:AMZN) - To be honest I love the fact that I know when I shop on their website that I am getting quality products at the best prices out there. My holiday shopping is quick and easy and the one thing I know is a money maker is shipping and handling, because we all have impulses and will pay more to have our goods quicker.

Wal-Mart Stores Inc. (NYSE: WMT) The last company I will right about is Walmart. I go out of my way to shop and buy products online at this store because they truly care about service and offer me the lowest prices out there. In this economy I don't want to have to think about who is giving me the best deal...I know already WMT will deliver. And I truly believe their website and site to store capability will continue to allow shopper convenience like it did for me when I found my Playstation3 bundle package there at a price that could not be matched.

SuperBowl Sunday Predictions

2010-02-07T14:50:00.004-06:00

My predictions for this game are easy. I think the New Orleans Saints will come marching in on a wave of energy and make it an exciting game. The seasoned vets known as the Indianapolis Colts will regain the upper hand and gallop to the finish line. I love the Colts, and being that I am from Indianapolis, its a slightly biased prediction. I am proud of my boys in blue and no city deserves to be forgotten in this game.

I hope that we can remember that this is just a game and many things need to be done to bring our economies back and our vibrant cities. These two teams are perfect examples of that. Indianapolis is definitely a working class city in a state has been decimated by manufacturing jobs being lost. I am a testament to the brain drain of Indiana with great college educational institutions, but with limited jobs to keep natives in state. When you can boast about the likes of Purdue, Indiana Univ, and Notre Dame to just name a few, this state should be churning out companies, products and innovation. New Orleans and the lower ninth ward deserve not to be forgotten either. After suffering from a natural disaster that ravaged the coast, this city should a beacon for how we all need to rally around each other. A victory will be much needed for both cities and more importantly lets hope that we don't forget their stories when the game ends and a champion is crowned.

You've Got Mail: Trade a Recall

2010-02-05T09:37:00.001-06:00

I used to have a phrase that I would use when I felt like I was getting a good deal. I would say “Who Could Ask for Anything More……. Toyota”. This was the old tag line from old commercials that won me and millions of Americans over for this Japanese automaker. But my point for this simple post was to give an example of keeping your ear to the streets. After following the reports, this trade was easy to sniff out. I placed a NEGATIVE rating on Toyota Motors (TM) shares when the rumors came out that they were going to be halting production. Not only have they halted production but more rumors are coming out recalls and problems with their different models and car lines.

Stay tuned I have a post that I have been sitting on for awhile. Oddly enough it started with me thinking about the situation of interestingly large group of Americans who still have a job, can easily pay their bills, but happen to be underwater on their mortgages. Should you stay, should you go and what to do if you are in this situation…some say the moral thing, but I was wondering if there is another option. Stay tuned for Urbanomics 101 and my interesting take of how you should calculate your next move.

How Low Can Mortgage Rates Go...

2010-02-01T23:19:00.004-06:00

Its interesting as I look back almost a year ago... we wondered how low the mortgage rate environment could go. A year ago I remember following a CNBC article that quoted a market expert who said the 30 year mortgage rate would fall to nearly 4 percent!!! Its safe to say that we didn't hit that historic mark on the 30 year rate but as we dropped under 5 percent there were days when we wondered.

History books will go back and reflect on this time period and wonder whether the monetary policies by the Federal Reserve were helpful. The policy used by the Fed was commonly called monetary or quantitative easing and involved their buying of mortgage backed assets in large amounts to keep pushing down the rates. In turn, by depressing rates you attempt to spur economic activity in a housing market that was on its death bed. The overall goal is and was to put a floor on the troublesome housing market and now it appears its working. Home prices now appear to be stabilizing but a few things appear to be forming like clouds that will predict the direction of rates.

The first is the admission by the Fed that they will stop by mortgaged back assets by the end of March. This will begin to have an immediate impact on rates. I would anticipate that rate inch up from there and they will then move up further on the potential that the Fed may raise interest rates by the end of the year.

So look for rates to move up in April, possibly hampering the stabilization seen recently in housing. But you wonder if the government has already anticipated that. The timing of newly communicated program look to spur one last effort in demand before rates begin to creep up. Here is a quick summary of programs (new and improved):

- Home Affordable Mortgage Program - new requirements to have documents before you get the modifications

- The FHA allows investors who "FLIP" homes to buy FHA homes in a bid to offer remodeled homes to first time home buyers. With pricing guidelines included this should keep prices affordable

- Fannie Mae is offering new incentives to home buyers. 3.5% in assistance can be used for closing costs or brand new appliances and only for owner occupants.

Economic Indicators ~ (Dec '09) Monthly Job Numbers

2010-01-10T13:31:00.002-06:00

The Labor Department's monthly jobs numbers are out and everyone on Wall Street and in the federal government have been waiting on these figures. FYI, for us regular folks in the city and in the burbs these numbers that came out this week are a summary of the previous month ...so the numbers that were announced this month are DECEMBER's unemployment numbers. The government also takes the time to go back and revise the number they've reported for the previous months. The numbers continue to paint a mixed bag with more negatives than positives at this point. I've highlighted the negatives in RED and the positives in GREEN.

December’s Unemployment Numbers are out. Here are the points based on numbers from the different surveys:

- The actual unemployment job loss number is – 85K for December. This is not what was expected because the estimated number from experts was to see a loss of roughly -10K or even a slightly positive number. So this number was worse than expected.

- The Household Survey has the number of unemployed persons at 15.3 million and the unemployment rate at 10%. Here is the breakdown among working groups (amazing when you see the actual numbers):

Adult men (10.2 percent),
Adult women (8.2 percent),
Teenagers (27.1 percent),
Whites (9.0 percent),
Blacks (16.2 percent),
Hispanics (12.9 percent),
Asians (8.4 percent)

- The number of long-term unemployed (longer than 27 weeks) continues to rise.

- The number of people counted in the labor force is declining. This is strange because the stock market & GDP (economy) has been increasing. This is almost a sure sign that the unemployment rate will be rising this year to likely 10.5 to 11%. The experts say this is because the labor force will increase (not decrease) as the economy gets better and when those (dropped out) people are back and looking, they will be counted and the unemployment rates will increase.
- The number of part time, marginally looking, and now discouraged workers increased.

- The areas where jobs are increasing are Healthcare and Temporary help services. Temp employment has risen by 166,000. This is a good sign as companies usually bring temp and contract jobs back first.

Here are the revisions to October and November:

October - revised from -110K down to -127K
December - revised from -11K up to +4K

I stumbled onto the actual site where the Labor Department releases its employment numbers and that site will be posted in my favorites.

Week 1 ~ 2010

2010-01-06T22:01:00.003-06:00

Here are a few things making some news this week:

Buying a Car – If buying a car, take a look at discontinued brands. General Motor’s Saturn and Pontiac brands may serve up some great discounts because they will soon no longer cease to exist. The real question may eventually be finding parts for any brands that will be discontinued, but if you read the consumer reviews and can find a reliable model this investment may be a good bet. If you don’t need the discontinued deal of the century, then take another look at Ford brand cars. For has resurrected itself from the dead and improved its car offerings and has grown in market share over the last year.

Throw Some Dimension’s on It – The D’s I am talking about are “DIMENSIONAL”. Here are a few reasons why movies and TV are going from 2D to 3D. Now I personally saw Avatar in 3D and now want to see it in 3D and in IMAX, why I guess because bigger is always better. If you are not noticing, the media industry is moving to 3D and this is no accident. It started with them testing us, with movies that were throwing objects at us…as I heard My Bloody Valentine and Final Destination did. Then they used it for fun films and now blockbuster biggies like Avatar. 3D is not only going to be hitting the big screen it will also be right there in your homes. Yes, the television industry wants to offer you 3D TV’s in the near future and even the station’s like ESPN have announced they will be offering certain games in 3D. The other reason I have heard that 3D is on the rise in the movie industry is to reduce piracy. Now this may make a lot of sense as this industry has been looking for the white knight answer of reducing movie piracy. It may be a great reason that Avatar, which will go down as one of the biggest movies in history is mainly being released in 3D. I truly believe it is because the movie is new and made with revolutionary detail. But I could also see the registers ringing (all the way to the bank) if one of the biggest movies of all time cannot be easily copied. I am now wondering if it is truly a better experience for watching TV and movies?? I imagine the experience will change slightly over time, but I am not sure if I would prefer to slip on my special 3D glasses if that were a requirement every time.

An Early 2010 Gift List:

GOOGLE NEXUS ONE – Google just entered the device market and is now making a phone, well sort of. The Google phone, Nexus One, is being made by HTC but is Google’s phone. One of the unique features Google will give you and me is the right to stick with our cell phone company if we like them. Most phones nowadays tell you to switch to an exclusive carrier; however, Google is going to offer its phone in a format that can work with YOUR carrier. Yes the phone is considered ‘Unlocked’, a feature that is common internationally but not here in the US. That usually explains the price, because your carrier is not helping you with the price and you aren’t locked into long –term contracts. (3.7 inch screen, 5.1 megapixel and $529 unlocked)

AMAZON KINDLE, TABLET PC’S – The first is the new e-reader device. For a generation of people that have grown up reading on screens this is the holy grail of eliminating night lights bookmarks. I am already used to downloading and it seems easy to download my books and go. For me this would be great on the train and if I can (download) and read the Wall Street Journal or web articles then I may never part with this thing. I am not sure what all formats it reads but who needs books. The Apple Tablet PC also made the list for all of the new PCs that are thin, light and will allow you to write on the screen. Yes, like you are writing on a piece of paper, hence the name tablet. Can you imagine how much paper and I didn’t even think of myself as much of a tree hugger.

TATA NANO – Tata, the Indian car manufacturer may actually set its sight on the US sooner than later. And I can fulfill my dream of adding a car to my Xmas list. For the whooping price of $2500 you can own a new vehicle. Now all I need to do is to get 100 friends to hold the gift cards and go in on purchasing me a car that will never have problems finding a parking spot in Chicago.

Can The Banks Signal The Economy's Direction??...

2009-12-17T21:04:00.008-06:00

The major banks {Bank of America, JP Morgan Chase, etc) that issue credit to people like you and I, are reporting numbers that will help us understand what people are doing (or not doing) with their debt lately. A good number of the banks reported that chargeoffs are on the rise again. Charge0ffs measure the number of accounts that no longer have the ability to pay off the debt that they've spent. This can happen for a number of reasons and be a sudden occurrence but usually charge0ffs are the end result of the cardholder being delinquent and not paying minimum amounts off for their credit balances. For example, I may chargeoff because I declared bankruptcy, made some type of settlement agreement with the bank, or after a long period of time (7mos) the bank determines that I will not be paying my debt off. So the fact that there are more of these situations occurring is not not a good thing. In general, the banks chargeoff levels mirror the rate of unemployment which is understandable. The one thing this trend tells me is that it appears to be more likely that once a cardholder starts to become delinquent they usually stay that way until the bank writes them off (after 7mos) and determines that they won't get their money back.

If people aren't making good on their existing debts then that means their available credit is shrinking and I go back to my example that indicates the consumer will be pulling back or not making new purchases because they don't have any more room on their cards. This means that most purchases need to come from cash and that is hard to come buy nowadays. Does this signal another leg down for the economy...its hard not to think that we've come too far too fast.

Now before you go and think that I have nothing positive to say, there was some good news. Most of the banks reported that the number of people going delinquent is declining slightly. So its seems like the key will be for the banks to do everything in their power to keep people making those minimum payments.

See the attached link for a view of the "Lifecycle of a Deliquent Card Account" (provided by creditcards.com):
http://www.creditcards.com/credit-card-news/life-cycle-delinquent-debt-1265.php

And the reaction of one credit card issuer is to charge very high interest rates, see the what a 79% interest rate looks like here:
http://www.creditcards.com/credit-card-news/first-premier-79-rate-fees-credit-card-1265.php

My Take On Things

2009-12-17T20:06:00.003-06:00

My goal today for posting is similar to Nike’s slogan of “Just Do It”. I am just going to write and pretty much relay what’s on my mind. As you can tell from the gap in my postings, this has been a busy last few months. I have been impacted by many of the things that all Americans are facing with the downturn in the economy. Job loss has hit close to home and impacted my family members, I am working more hours and seem to be stressed out more, and time seems to keep ticking in the back of my head like one of those old grandfather clocks. Literally (because I reside in the Midwest) and figuratively, its grey outside and it appears that a year ago I was looking into the abyss of what I truly believe is the closest thing that we will experience in our lifetimes to an economic depression. And my goal is not to be depressing, but to keep it real. So I am going to flashback and flashforward in this posting on where I believe our economy WAS and where I truly believe things stand TODAY as it relates to my life. This hopefully will hit home to you and help you understand how all of the things that we hear, read, and see…such as the big Wall Street bonuses, TARP, cash for clunkers and the homebuyer’s tax credit are ALL RELATED but from a regular guy’s perspective like mine (and yours).

Where the Economy Was ~
Depending on how far we go back (let’s say 2.5 years ago), there was jubilation amongst everyone. I seemed to be eating out everyday, throwing bring your own booze ‘BYOB’ events at different restaurants and traveling to either Vegas or South Beach at least twice a year. And I never thought to ask why but before it used to be a small trip between me and my friends that managed their finances well (fiscally conservative) and then it blossomed to the guys that didn’t always manage their finances but who could now make the trip. And I never thought much about the phenomenon but our trip of almost 10 people for a sun filled trip to Miami could have been an indicator of things to come. Where did everyone get the money (steady jobs, bonuses, easy credit) to be able to go all of a sudden…especially when a round of Patron in S. Beach cost each person over 80 bucks??? I didn’t think about that at the time but the other event I did find strange was home buying activities in Chicago. I recall a few years back that everyone was asking me when I was going to buy. So I stuck my toe in the water and found out that buying a home in Chicago was easily going to cost me almost 3x as much as it did in Indiana. And on my average joe salary the numbers didn’t match up??? So what did I do…I BLOGGED about this phenomenon over and over and some people got it, while many others didn’t (see http://urbanomics.blogspot.com/2006/02/huff-puff-blow-houses-down.html . My only mistake with housing was assuming that most of the inventory was being bought by speculative investors with deep pockets, but read on because the investors were average people like you and I caught up in the frenzy…of flipping houses and retiring early. But what I didn’t see was the tsunami effect that was to come of too much easy debt to buy houses and obtain loans, credit cards, etc. I didn’t watch TV outside of sports and the occasional Law and Order episode. If I would have clicked a little bit further I would have known that there were new shows cropping about how to “FLIP That House”, “Buying Tons of Property with Lines of Credit”, and I appreciate Suze Orman’s segment of “Can I Afford It”. I wasn’t in tune to the fact that the nation was building a culture of people that were just buying things with no regards as to whether they could afford it. My rule of thumb is if you have to call into a show to ask whether you can afford something then you probably should not be buying it! And to be fair these tv shows should show both sides by doing a “Where are They Know” segment: helping us understand how long those flippers had to hold that property before they ran out of money or were foreclosed on and their dreams where swept away. That would have been Real TV and not just the happy story of flip every home and make a minimum of $35-50K of each flip in no time.

I don’t know what kicked things off but the house of cards crumbled. Was it finally that the market ran out of easy buyers and found the one’s like me that asked “How Can I Afford This” or “Why Are You Giving Me So Much Debt”? There must have been a peak when the banks realized that the uninformed buyers were running out OR that we had stretched them too thin. Who could keep up with inflated mortgages, debt to furnish this gigantic house, and debt to finance their new life of upgrades (i.e., cars, clothes, dinners, vacations). I am guessing the first realization came as banks began HALTING credit lines à No more borrowing against your home (Home Equity Lines of Credit) and no more extensions for your credit card which has reached it limits. So guess what this halting of initial credit does, it crimps our lifestyles and people stop making extravagant purchases. My first clue was the Recreational Vehicle (RV) market and their predictions of a slowdown. Think this is the ultimate purchase for people with excess money a lavish vehicle to travel around in and still feel at home. Then most people stopped spending on themselves and stopped buying clothing, jewelry, cars, and holiday trips to warm places. This pullback caused all these industries – Retail, RV, auto, transportation to start to cut jobs to match the lack of demand. And hell breaks loose when anyone (but especially overextended people) starts to loose a job. Why, because there is a mountain above your head of things to pay. Let’s start naming them: mortgage/rent, car bills, utilities, credit card, school loans, insurance, and medical bills. And when jobs are cut across entire social classes you begin to realize that even rich people have huge mortgages, autos, boats, vacation properties to keep up with.

For me and my family, the downturn in the economy hit hard and hit fast. It rattled our conservative little family because our family’s employment history represents the entire workforce via construction, legal, business, technology, healthcare, and education. And the first shoe to drop was the construction section and we had a member of our family unemployed. I began writing even further that this wasn’t your normal recession and not to drink the Kool-Aid from all the people on Wall Street like Larry Kudlow who told you to keep waiting for the goldilocks rally that never came as the Dow Jones Industrials dropped from 10K to below 7K. This recession was hitting college educated people in growth fields like construction. And I didn’t believe the hype when they were telling you that this is where capitalism kicks in and the great trickle down effect of rich people spending money would bring us back see http://urbanomics.blogspot.com/2008/03/hey-i-cant-swimand-neither-can-wall.html . This time I wrote it seems different, because this was not like other bubbles and it wasn’t just people on the lower end of the social spectrum being hit with job losses or their dollar not stretching as far. But what they didn’t realize what that the folks of every class where being impacted because everyone was trying to keep up with the next level up.

If you recall, I wrote about conservation and a prudent evaluation of your entire financial landscape. Reassess everything and get rid of excess debt (see http://urbanomics.blogspot.com/2008/07/mystery-market.html & http://urbanomics.blogspot.com/2008/05/hot-topics-oil-housing-economy.html ). For me, I had caught the bug slightly and often bought stocks on margin…what a mistake that was. When you use someone else’s money and the value of your investment goes down, not only do you have to pay them back in full but with interest. So in some ways I felt want the homeowner or credit card borrower was going through. I don’t want to sell while the value was dropping and ohhh great…money has to come out of my bank account to get rid of this extra debt. This prompted me to start taking my lunch to work, and going out less, and shopping less…and buying groceries. There were no vacations this year except for weddings and family get togethers. And that’s when I thought about what would turn this economy around…I didn’t know then but I summed up my hunch saying that it would take a mix of things to stimulate people from “pulling back” (see http://urbanomics.blogspot.com/2008/10/bailout-what-this-means-to-you-plus.html) And I remember saying let’s help the people that have pulled back on spending and can pull no further and need help with daily responsibilities. And while I was right then, I missed the fact that all the temporary band-aids (tax cuts, clunker) only work for so long… and the ultimate area of assistance has always been with JOBS. If there are no jobs, this pull back continues…because while again others may use the phrase “90% of Americans are still working and therefore consuming” they may be a little bit out of touch with the real world. The real world knows that its more that 10% unemployment and it also knows that many of the “90%” are like me and don’t and won’t consume much until things start looking better for the people around us.

And for my flashforward ~ To be continued

My Reality Show: Homebuyer 101 ~ Searching for a Home

2009-08-20T21:37:00.005-05:00

So far my reality show is in full swing. Click this link to find the first 3 rules to home buying. Remember to check your credit, get pre-approved, and save for your down payment. First 3 Rules

Once I complete the first 3 rules, I set out to search for my house of dreams. Here are the steps to make sure your ready to find your dream house:

1. Practice Before The Real Thing - This is the first step in your reality check as a home buyer. Before waisting your time and stressing your agent out, practice finding the home of your dreams on your own and see what your pre-approved amount gets you in many different neighborhoods. The web is a great tool for pr acting with specialty sites and sites that tap into all Multiple Listing Service (MLS) listed homes. For Chicago, here are the sites I practiced with:
Dreamtown.com
Trulia.com
Zillow.com
Realtor.com ***
chicagotribune.com (Real Estate section)
Redfin.com ***

*** These sites helped me get the most accurate information

2. Narrow Your Search - Its time to narrow your search by more than just price. Choose the following: Preferred Locations, Total Price, Must Have Features. Here is mine:

Preferred Locations -
Here is a listing of all Chicago neighborhoods: http://www.chicagohome.com/neighborhoodMasterList.cfm

Most of the North Side: (Irving Park, Avondale, Roscoe Village, Logan Square, Bucktown, Wicker Park, St. Ben’s, North Center, Rogers Park, Lakeview, Lincoln Square, Albany Park, Lincoln Park, Uptown, Edgewater, Portage Park, Ravenswood)

South Side (Hyde Park, Kenwood, UIC)

Total Price - Know two key things about the price: 1. List Price, 2. Monthly Payment Price

List Price - The total amount you want to spend. This will impact your down payment.
Monthly Payment Price - Also estimate your total monthly budget which should include the mortgage payments, taxes, association fees...and be aware of insurance costs.

Must Have Options

Property Types: Primary - Duplex, Townhome, Single Family Home
Square Feet - At least 1600
Bed Rooms - At least 2
Bathrooms - At least 2
Balcony/patio/deck
Closet space
Washer/Dryer in unit
Central air or separate unit in each room
High ceilings
Intercom/Security/Buzzer Door Entrance or Locked Fence
Good parking situation
Access to Transportation
Grocery/food/stores
Hardwood
Kitchen - Stainless Steel Package, Update Cabinets
Bathroom - Updated Features

3. Get Professional Help, Choose an Agent

My personal opinion is that if you are well informed your agent is helpful but not vital. Don't be afraid to find your home on your own and then just rely on the agent to show you the property (and then help you close the deal). I would explore a growing breed of agencies that allow you to use a powerful site to 'Narrow Your Search' and choose the properties that meet your criteria...on your own. The catch for you doing all that work is the agency will split the COMMISSION with you. Check out sites in Chicago like Redfin.com and ZipRealty.com. I learned through my experience that a traditional agent will do the exact same thing, however, they put in your 'Narrow Your Search' criteria for you and then you choose the properties that look interesting.

I used Redfin and enjoyed their service. However, I went with a traditional agent because Redfin doesn't focus on short sales...a type of distressed property I was leaning towards. Look for agent that lives works and surrounds in the city for at least 5 years. They have seen highs and lows in the economy.

If you choose a traditional agent, create a questionnaire to grill your potential candidates (yes, they are working for you):
~ Is this your full-time job?
~ Are you familiar with distressed properties (foreclosures & short sales)?
~ Where were you last five deals?
~ Who else will be working with me?
~ Will you show me ALL properties available for sale?
~ When am I committed to working with you?
~ Has a client ever filed a complaint?
~ How are you paid?

4. Tour The Homes - Schedule roughly 4-6 homes in a session. This is a good amount that will allow you to remember each property. I recommend taking a camera with you when touring homes. This was the best tool because I remembered so much more.

What's in My New Fave Five Portfolio

2009-08-15T20:41:00.004-05:00

Well if I had my T-Mobile Sidekick I would be dialing up these stocks in my Fave Five list. After reading my previous post you see that I am looking to build a base with longer term plays that will offer protection and growth. Stocks like TIP, EPD, and GE are for the long road because they protection you from inflation, provide a nice dividend, and offer large cap value...respectively.

I became to write about clarity and the activity that I am seeing in the markets allows me to return to my screening process. A process that allows me to rely on quantitative data analysis and less on my emotions. Here are my picks and the my views of what the data tells me.

My FAVE FIVE for August with price points:

Interactive Brokers (NasdaqGS: IBKR) - This may be my favorite pick this month. I would be a heavy accumulator between $18.15 -18.60. Also any points when they dip below $19.12 I would start nibbling at the stock. I like the activity in the stock market which allows this company to garner more fees and I am bullish on the fact that they market themselves as a low cost fee servicer.

Americredit (NYSE: ACF) - I am pleased that this stock came up screen. At 16.94, I would be a buyer of this automobile finance contract purchaser and servicer. I believe 'Cash for Clunkers' will be a huge benefit to this company and the proof is in a recent discussion on CNBC with the AutoNation CEO. He directly attributed the program with bringing buyers with good credit scores into showrooms.

Bank of America (NYSE: BAC) This one is simple. Everyone and there mama is buying into BAC and I told you before I don't go against smart money. It came up on my screen and further research shows industry hedge fund smart guys like Peltz, Jana Hedge fund, Dan Loeb and my current favorite John Paulson are jumping on to this train. Take Paulson, my dog owns 168 Million shares. Hmmm, is that enough to make you think twice! I'm struggling with a price point but I'd love to see a small pullback to pick this stock up @ 15.96

Becton Dickinson (NYSE: BDX) - This one is simple. Even though I like Paulson, I am a bigger fan of Warren Buffet. He steered me right with Burlington Northern and now he's on board with BDX. Jump on the wagon @ $65.49

Pfizer (NYSE: PFE) - This was not uncovered by my screen but I like the activity around PFE. This was added at the last minute and switched with my honorable mention Boston Sci. As I was researching PFE, I learned that the management has indicated a plan to raise the dividend by 25% by the end of the year. I can dig that!

Honorable Mention Fave Fives:

Rait Financial (NYSE: RAS) - I have to give you a 'penny stock'. RAS hits my screen and should be picked up at $2! The only problem is that it took off the other day to the tune of 29%. Well you win some and you lose some.
Boston Scientific (NYSE: BSX) - This gets the dubious number six on my list. It got replaced by an older maybe more responsible friend PFE. But grab BSX @ $11.06.

Urbanomics ~ Portfolio Plays

2009-08-08T20:25:00.002-05:00

It has been a busy summer for me. As you can see from my updates I have been consumed with trying to buy a home. Lately, I have increased my number of posts and this could probably means one thing. CLARITY
I won't admit that it is a perfectly clear picture as to what may be coming down the road but I would say that I have a better feel as to how things may continue to play out.

My personal belief is that this rally is a bear market rally. I will admit that it is a rally nonetheless and you can't try to go against the trend. See a post that I wrote away back about sticking with the trend: Bad Banks Will Rally. So here are a quick summary of my points:

- The goverment's combination of TARP, stimulus, and incentives (Cash for Clunkers, Homebuyer Tax Credit) have been the right recipe to bring the economy from lifelining.
- Unemployment continues to be the thorn in the side of an economic recovery. As a person that is near to the streets, this and foreclosures are the most important issues.
- The economic data is starting to trend up and when you've hit the bottom there is only one direction to go. We've seen gas, homebuilders, banks, credit card delinquencies, and even unemployment start to tick up

After considering these points, I believe that things are getting better but very SLOWLY. I understand that unemployment is a lagging indicator but I think things are different this time. High umemployement, which I believe will continue to rise...is a problem to a primarily service driven economy. This will be a drain on most American businesses ranging from restaurants, homebuilders, banks, etc. I believe businesses have benefited immensely and are recovering but I think the everyday person is struggling to adjust to the NEW NORMAL. The new normal for businesses mean that cost cutting efforts will continue for long while and hiring will not come back as new revenues will be hard to come by. I think that this is an "incentive" driven rally and a pullback is soon to come because nothing has really changed. Money has been pumped to save starving business but not many industries have really been punished for their actions which got us here. This is the fundamental back drop of moral hazard...no one has learned their lesson. If you need proof, then just look act the actions of the big banks once they got out from underneath TARP. I believe the waste and excesses have not been rung out of the system and the average person on main street is left holding the bag. That bag results in job losses, delinquencies, debt, possibly higher taxes, and UNCERTAINTY. I now bring my lunch and limit my Patron shots due to this uncertaintly. So here is my portfolio which reflects an uncertain world that appears to be getting a little bit clearer:

Stocks based on my view of the ecomony:

TIP - Treasury Inflation Protection EFT; inflation will be coming and this is where the smart money is parking some of their stash
DUG - Ultrashort Oil; if you read above, when the economy improves so does the price of Oil. But high oil is not good for this struggling economy
GE - General Electric; an industry stallworth that should rebound, especially since GE Finance won't be the undoing of this company
BBY - Best Buy; this is where I like to shop and now that Circuit City became a casuality of this economy its more pie for Best Buy (hey that rhymes)
GLD - A Gold ETF; this is an inflation protection move.

Stocks based on my screening:

EPD - Enterprise Partners; this is a natural gas pipeline company that has an outstanding dividend and it prime position it commodities move higher
IBKR - Interactive Brokers; asset managers and investment banks that are still around are benefit from the volatility and new business
GLW - Corning; this maker of LCD displays will stand to benefit as flat screens continue tobe the 'it' thing to buy. I can't wait to get my 52 inch bad boy

Junk Your Clunker...

2009-08-07T09:12:00.003-05:00

I previewed the details of this program awhile back. Cash for Clunkers has been a huge success for the automotive industry and they just got extended another lifeline. The Congress approved another $2 Billion dollar measure that will allow the program to continue. If you still have questions about junking your clunker see the official site here:

Car Allowance Rebate System: http://www.cars.gov/

My Reality Show: Homebuying 101

2009-08-03T19:56:00.005-05:00

My online reality show is probably the slowest show that you've followed in awhile, but hey its still running! If you recall, my show started with trying to determine if the stimulus bill really had any stimulus to it??? So I read through some of sweet parts of the bill to see if they could get a penny pincher like me off the sidelines and contributing to a deteriorating economy. The one part of the bill that immediately attracted me what the Homebuyer Tax Credit. Yes, welcome, first time homebuyers like me. I searched high and low and I'm sometimes surprised at the lack of direct information provided to help you through what is a huge huge purchase. So far here are the rules to help you finance the purchase of your next home:

Rule 1: From a previous post, you learned to CLEAN UP YOUR CREDIT. Click here to learn about how to view your credit for free ---> Free Credit Check

Rule 2: Find a reputable bank or mortgage broker who will pull up your credit and give you a Pre-Approval amount based on your gross income and outstanding debt levels (i.e., credit card balances, car loan, student loans, etc). Knowing "How Much Home You Can Afford" is critical! My rule of thumb is try not to spend more than 80% of what your Pre-Approval amount is. If you haven't received your Pre-Approval use this rule of thumb, don't spend more than 40% of your net monthly paycheck. Remember net = take home pay. This rule prepares you for a few things things that you may still want to spend money on like: the ability to still save/contribute to your retirement, afford new expenses, and still have a life.

Rule 3: SAVE, SAVE, SAVE for at least of a 10% Down Payment. This will be a huge step in determining if you are really ready to commit to buying a home. For instance, the average condominium (in my book) is roughly $300,000. This means you need to come up with $30,000 as a down payment!!!!

Tricks up my sleeve:

- A trick to Rule #1 is to contest all questionable items on your credit report with support and in writing. The nice thing is contesting your credit history can be done online.

- The trick to Rule #2 is to follow my "Rule of Thumb" notes above. Budget for less and you will be able to sleep easier at night.

- And my last trick! For Rule#3, consider or ask if the home you are looking into qualifies for a FHA Loan. This loan is government sponsored and only requires you to put 3.5% Down!!!

Stayed tuned on how to begin your house search...

Urbanomics Market Update - June 20th

2009-06-20T12:05:00.004-05:00

Urbanomics Market Update
~the update for people that don’t watch the “stock channel”

GAS, the last time I wrote my update I predicted gas prices were going to rise and boy did they take off. As of a couple of days ago, the price of gas at the pump has risen for 50 (this is not a typo) straight days!! AAA, noted recently that the nationwide price average is around $2.679 and every state is joining in this party at the pump. Since I was sport on with my last analysis I will include my most recent prediction on the direction of gas.

Gas Prediction: My thoughts are that gas will start to top out at these levels. The fundamentals of economy just can’t support gas at these levels…people will take other measures as they did last year to ease this costly burden. At the right price, I would look to make an investment that gas begins to drop.

STOCK MARKET, this week the stock market was down roughly 3%! You may think that there are a few signs that things may be improving but I would not be running to join the crowd. Be afraid because a number of experts are betting that the rally is running out of steam just as the everyday investor is starting to pump money back into their investment portfolios, mutual funds, and retirement portfolios. My prediction won’t change…so check out my write up from last time below.

Market Prediction: if you had peeked at the stock market you might have seen that it has been doing really well in the last couple of months. If you feel like you missed the party…DON’T. The reasons vary as to why it was moving up rapidly (like people spending their tax checks at the beginning of the year) but it probably won’t continue going up so quickly much more. This is my opinion but the economic data doesn’t lie. The data recently released says:
- Consumers are saving and not spending money
- Housing foreclosures are on the rise again (And rates continue to rise!)
- Unemployment continues to reach record monthly numbers (Unemployment dipped last month and is on the rise again!)

WHAT TO EXPECT NEXT,

Cash for Clunkers – The Congress just passed a bill known on the streets as “Cash for Clunkers”. It probably took a cue from Germany which has passed a wildly popular strategy in their country. This bill was going to be hard to argue against as it helps boost a lagging industry, cleans up the environment, and lowers the consumer’s bills. The bill requires you to buy a car that is more fuel efficient that your last car and you will get a voucher of up to $4500 to make this switch. The real name of the program and a link to the website can be found here: www.ConsumerAssistanceToRecycleAndSaveProgram.org
Or try the auto industry’s site aimed at promoting the bill:www.CashForClunkersHeadquarters.com

Home Buyer Tax Credit – A new proposal is moving around the senate to INCREASE the existing tax credit. Senator Johnny Isakson of Georgia is the brains behind this new proposal which want to raise the existing $8000 credit to $15000!!! The other changes are this bill would be for ALL homebuyers in contrast with the last which was just for first time buyers. The other change would be to eliminate the income limits which are currently capped at $75000.

Prediction: My opinion is this will have some trouble passing through Washington. At a time when Wall Street and the Real Estate industry have lost our trust, this bill will raise too many questions about who is really benefitting from the latest home tax credit. By removing the income limit and opening it up to anyone this could potentially benefit wealthy homeowners and property investors…two groups who may need the least assistance out there and have the least amount of trust out there.

HOUSING, things still look uncertain for this part of the market.
- A new wave of foreclosures are still set to hit the market
- The tax credit deadline is looming
- Rising interest rates are not positive for consumers

Urbanomics Market Update ~ May 15

2009-05-15T13:35:00.003-05:00

Urbanomics Market Update
~the update for people that don’t watch the “stock channel”

GAS, the price of a barrel of oil (better know as gas you put in your car) continues to rise, so this means that the cost you pay at the pump will be rising also. I know you want to know why, and all I can tell you is that has to do with the season, speculation, and investors betting the economy is turning around.

STOCK MARKET, if you had peeked at the stock market you might have seen that it has been doing really well in the last couple of months. If you feel like you missed the party…DON’T. The reasons vary as to why it was moving up rapid (like people spending their tax checks) but it probably won’t continue going up so quickly much more. This is my opinion but the economic data doesn’t lie. The data recently released says:

Consumers are saving and not spending money
Housing foreclosures are on the rise again
Unemployment continues to reach record monthly numbers

WHAT TO EXPECT NEXT, the talk around the investing water coolers is the next shoe to drop is the realization that the Credit Card and Commercial Real Estate industries are hurting. In a nutshell, unemployment is bad for consumers who stop paying their credit card bills and a recession is bad for businesses that stop paying for the buildings they use. Both of these problems affect banks and real estate companies which have hundreds of billions of dollars at risk.

DOES THE STIMULUS WORK, surprisingly the answer might be yes. The stimulus plan appears to be working with estimates stating that roughly a billion dollars a day has been released in the first 80 days, I will let you do the math ($80B). And states representatives have indicated that they are putting the money to work quickly. For example, I was shocked by the potential numbers noted by the state of Texas, which says they estimate that 69,000 jobs will be saved or created through the implementation of stimulus money for transportation projects.

HOUSING, number from two key sources, the National Association of Realtors & RealtyTrac (foreclosure experts) are out.

Home Prices fell 14% since this time last year (Largest decline ever)
First-time homebuyers accounted for HALF of all new sales
“Distressed” (foreclosures and short sales) accounted for HALF of all transactions
Foreclosures filing up 32% from a year ago (RealtyTrac record)
1 in every 374 housing units received a foreclosure notice

Industry Predictions: Housing may not return to normal until 2010, until then BUYERS are running the show

Genworth Financial, Genuinely A Mistake

2009-04-13T22:45:00.003-05:00

This may have been a strategic move on Genworth Financial's part to not become a bank holding company due to all the restrictions being imposed by the government...but I think I will note that they may be strategic idiots for missing a very big opportunity to become a holding company as a savings and loans institution. This would have given them access to the Federal Reserve free flowing, cheap capital!! What else can we add to the list of things to take away from this strategic company. How about the ability to be eligible for the Treasury's purchase program and now they can't complete the acquisition of Interbank. So I won't pile anything else on this company, because all this news just broke and I take a calculated gamble here and say that this stock will get punished for its...how should I say strategically dumb move. SHORT GNW

I imagine that news will create a negative morning for GNW which will give us some time to determine what is a good exit point by researching whether this move has ANY possible upside for this company.

Banks Rally on Wells Fargo...Don't Believe It

2009-04-09T12:50:00.006-05:00

My response is don't believe the hype of the banks! I know in my last post I told you to take advantage of the banks and buy FAS which is a fund that gives you 3x the normal returns of owning a basket full of bank stocks. This has worked out perfectly as FAS was recommended on April 2nd and if we use the price at the close of the stock market, you would have purchased them around 6.42. My recommendation is to sell FAS today and pocket a big gains in only a matter of seven days. I hope you enjoyed the ride up, the stock closed @ 8.74!!!

Play Defense!!! Here are my reasons why you should stay cautious of the banking sector.

First, the entire sectored rallied on just Wells Fargo (WFC) and let me remind you that every bank isn't built the exact same way WFC is!!!!

- One of biggest reasons why WFC is doing well and the other banks may not is WFC does not have an extensive consumer credit loan portfolio!!! Yep WFC doesn't have to worry about the risks associated with battered consumers who can't pay off their plastic.

- Second, just listen to the CFO, Howard Atkins who openly mention the huge profits can directly be attributed to large writedowns on Wachovia's bad loans. Wells Fargo is probably an exception that every other bank may not be able to replicate. A huge write-down do to their acquisition of Wachovia and a first quarter provision isn't in the cards (no pun intended) for most of the other banks.

So how to play the Fake Bank Rally:

- Start with the bad apples like Capital One (COF) They just got the big smack down by Moody's and Fitch Ratings who downgraded the stock due to the expectation of rising credit costs.

- How about American Express (AXP) and the fact that their default rate was leading the industry. WOW, now I would be slower here to pull the trigger because two firms just upgraded their shares...from basically Don't Touch to Think about it...Maybe

- Finally I am not a believer in Citigroup as their are being propped up by the government

Where Did Your Toxic Assets Go, Mr. Bank...

2009-04-02T08:58:00.002-05:00

That's the question for an accounting group that sets up standards for companies reporting financial information. They have a standard that determines how to account for assets on companies books. Well today they decided to give companies more room when valuing these assets, and this could give a big lift to those banks we have grown to hate.

The group is called the Financial Accounting Standards Board and they are supposed to be independent when establishing these rules. But it appears they may have caved to the pressures of Congress and Wall Street when it came to political pressure around the somewhat unpopular rule.

The rule, called mark-to-market, is supposed to increase transparency for investors because we can see what these assets are valued by today's standards. But the problem some critics say is what happens when the market tanks (like it has been) and their is NO VALUE. Well, what happens is the financial statements of the banks become horrible.

My Opinion - Keep the rule because it provides transparency and uncovers assets that are beginning to decline in value. But as the rule has been adjusted I won't cry I will just buy and that is the BANKS for a short period of time. The assets are still bad on the banks books the difference is now they don't have to tell is they are!!!!

BUY: Direxion Shares Financial Bull 3x Ticker: (FAS) - This gives you 3x the returns for the banks going up. But just buy a little cause it will take you for a crazy ride!

File Taxes for Free...

2009-03-24T20:47:00.004-05:00

If you are a procrastinator like me its about that time to do your taxes. If you are wondering how to save a little bit of change and want some help filing your taxes, check out the list of software companies that have partnered with the federal government to help you file for free:

http://www.irs.gov/efile/article/0,,id=118986,00.html

Use the following websites to get discounts/promotions at TurboTax:

T. Rowe Price - http://individual.troweprice.com/public/Retail/Planning-&-Research/Tax-Planning/TurboTax-Discounts

Scottrade - www.scottrade.com (See the tax preparation section)

Fidelity - http://personal.fidelity.com/planning/tax/tax_content.shtml.cvsr?refhp=pr&ut=A22

Wall Street - When is Toxic Good?...

2009-03-23T13:21:00.005-05:00

The resounding answer to this question is when you don't have to hold the toxic stuff anymore. That appears to be the solution to the problems plaguing America's banking system, which is clogged with these non-trading pools of mortgages that are usually packaged together to be sold off to investors. (Note: Other assets can be packaged together and sold off...like credit cards debt, however for this discussion we will just focus on mortgages)

The investors who usually bought these packages of assets lost faith in them and ran away and the market just dried up. So the assets began selling for less and less and the banks soon became stuck with these assets that "currently" had little to no value. But here is the tricky part for most people to understand: These assets could have value some day if the economy stabilizes.
So what the government is attempting to do is bring all the key players bank to the table and make it worth everyones while. Here are the players and how they will benefit:

Banks - They benefit, if and when they get these assets that "currently" have little value off of their books
Investors (Private Firms) - They benefit by being able to buy these assets again at reasonable prices, because they provide consistent income
Government - They benefit if both the Banks and Investors come together and hold hands again and start trading these assets again. It will help to stabilize the banks and assist in stabilizing the economy

How the Government plans on doing it:

The stock market is on the rise today because the government has officially unleashed its plan to loan $1 Trillion dollars to private firms(investors) who will share in the costs to find a price and buy these toxic assets from banks and split both the profits and losses around these assets.
This gets all the major players involved again and could change the way Wall Street looks at the banks.

Urb Thoughts:
I think that this plan is a well put together solution to the troubling problem around toxic assets. Ironically it helps and hurts the banks but overall it helps the banks and I will explain why. This hurts the banks because "one day" these assets will have value and they will miss out some of those gains but the biggest plus is getting these toxic assets off of their books. And in my opinion, once these assets are off the books, the banks should have no excuse to not make money. They are borrowing money and pay next to nothing for these dollars because the rate at which banks are being charged is at historic lows (Fed Funds Rate)...its between 0 and .025%!!! I could make money if I was borrowing money at these levels. Now the explosive part is all those bad assets that were sagging down their balance sheets will be sold off...this definitely puts the banks in a better position. The one thing to note is that as banks sell off these assets they will have to take a write-down and earnings for the next few quarters may not be pretty but LONG-TERM the banks may be the best BUY of the century.

I'm not sure how I will play this but I will gain some exposure to:

Direxion Financial Bull 3X Shares (FAS)

Also adding the banks that I belive have the best ability to survive will be key:

Wells Fargo (WFC)
JP MorganChase (JPM)
Bank of America (BAC)

Wall Street - The PULSE

2009-03-19T21:09:00.003-05:00

Hey everybody I am back to hit you with a quick post to keep you in the loop with what's going on in the stock market. By now, I know the average person is paying attention on a daily basis because I get a weekly call from my sister asking me about why things are falling or more importantly what should I be doing with my money. And if you recall when you don't hear much from me I am usually doing one thing and that's reading. I am constantly reading about what everyone has to write and listening to what everyone has to say...to get a feel of the market's temperature. How can you do this?!?! Well simply start by tuning in here as often as you can to get a pulse, not always daily but a frequent pulse as to what may be changing out there. And if you get tired of reading, check out CNBC's homepage and select the VIDEO tab for very frequent video posting of their on air show.

Wall Street's Pulse - Awhile back I compared Wall Street to a prized fighter that was down and out, maybe like one of my favorite fighters Roy Jones Jr. The latest prognosis is still not that good...the patient needs help getting up in the ring right now and the count keeps going to about 8 (get to 10 and the fight is over). For those of you that don't know what a knockout blow is for Wall Street, well its would be a depression. And the trainers right now are the Obama Administration, The Treasury Department, and The Federal Reserve. They are constantly looking at the fighter, checking its vitals, and assessing how to help him keep fighting. But right now the vitals of Wall Street do not look good:

Unemployment numbers continue to rise and have now been estimated to reach over 10% within the next year or so.
Companies continue to cut jobs left and right and give not so rosy outlooks for the rest of 2009
Consumer Savings rates were above 5%, which is at levels that we haven't seen in a long time!
Retail Sales numbers are barely off their lows, which means people ain't buying!
The consumer and companies are still having difficulty getting access to capital.

Investors (who are like the fans in the stands) have sobered up to these realities and almost given up on the fighter, but the trainers keep working. And their work seems to be helping the fighter get a little bit better:

Banks are receiving more and more capital
The stimulus plan and housing bills are aimed at helping home owners and generating jobs
There is talk about adjusting mark to market (how banks place a value on assets they own)

What this has done is given the investors a little bit of hope that the fighter may come through and still win the fight. So they have started cheering louder and louder and the fighter has responded. The stock market has rebounded off of its March 9th lows and the banks have come back roaring. But its almost as if the crowd (investors) forgot that the fighter is still hurt and hurt badly. That's why may believe that the stock market is in a BEAR RALLY. This means alot of people think the fighter is healthy but in reality he's not. And soon those cheering fans will see the fighter get knocked down again and they will not cheer as loud.

Now onto what I believe and what I'm doing:

I believe the fighter is still hurt badly which means don't cheer (or buy stocks just yet). I truly believe that safer alternatives are out there and should be evaluated for your portfolio. I still like OWNING CASH, and not doing a whole lot especially in your retirement portfolios...don't be the hero or the only one cheering when the fighter just got knocked down again. Invest in safer alternatives:

Cash
Gold (GLD)
High Yield Corporate Debt (LQD)
Municipal Bonds (TFI)

And if you feel like you need to be in the markets, be careful and be a bottom feeder...the nastiest thing out there. Wait until things gets really bad and nibble on the most beaten down sectors. For instance I do this when the banks look really bad, like when everyone though Citigroup was going out of business and I buy just a little bit of the bank stocks ETF on steroids (FAS)...it gives me 3X the returns of bank stocks, but I bite just a little. And when things start to look like they are on a roll I sell. I don't panic about selling to early because in a few days I start to look for a point to be a top feeder and bet that things will come back down and buy the FAZ, which bets the banks will fall...TIMES 3X! But don't stick around to long in these trades or else you'll be writing me with heartburn as I have often had, but irrational fans sober up eventually.

My Reality Show: Pt.3 Homebuying 101

2009-03-11T21:34:00.003-05:00

The good thing is I've picked the provisions in the stimulus bill that seriously has me thinking about getting me off the coach and spending money again. Now the catch is will I put in the work to get the job done. But my next dilemma is trying to find a step by step help to determine how to buy a house...oops forgot I live in Chicago and should say a condo or townhome.

I hope my steps will will assist anyone who is a first time homebuyer looking for answers.

Step one in my Homebuyer 101 steps:

1. I definitely will be needing a mortgage and my to get me going down the right path I wanna make sure that my credit history is clean and clear. My first goal this past weekend was to search through my credit report and make sure that there isn't any surprises in there. The only strange issue I ran into was that some of my father's credit history was mixed with my but luckily he has been reliable when paying his bills. At this point, take the time to dispute anything on your credit reports that you believe shouldn't be there. I've heard that it's best to submit your disputes in writing but the internet has made it pretty easy to also dispute something online. Don't forget to look at ALL 3 reports from the major credit bureaus,
Experian, TransUnion, and Equifax...because when it comes to a mortgage most banks and brokers pull ALL 3 to get a feel a good feel of your credit history.

The best thing is our work is now easier as the government has passed a rule that allows you and I to have a FREE view of our credit history, once a year...and it can all be done at one website! Please note that there is the only one website that will allow you to do this for free and it is attached here: https://www.annualcreditreport.com/cra/index.jsp

The others websites claim to offer this service but they come at price...so get it done for free.

One in a Zillion...

2009-03-10T22:05:00.002-05:00

One of the coolest things coming to TV maybe ZillionTV. It launched last week (I believe) in a mission to bring the web to your TV. Yeah I know we've heard this theme before maybe this one brings the best of all worlds together. The service will be free to you and me and allows us to easily be able to watch whatever we want because they are best friends with all the big dogs in the media business like Sony, Universal, NBC, Warner Bros, and Disney. So they've got a deal to let us watch anything from new shows, old sports classics, to chick flicks, to the best in Sci-Fi...when we want and how we want (like commercial free). Hmmm imagine that I don't have to pay an arm and a leg for basic shotty cable service....tight!

Wanna see check it out: http://www.zilliontv.tv/

My Reality Show: Pt. 2 First Pick in The Stimulus Bill Draft

2009-03-09T21:15:00.006-05:00

I have decided to announce my first pick in the economic stimulus bill draft! After reviewing the contents of the bill, I realized the Obama administration did some things right in crafting the stimulus bill. For me, there is a provision in the stimulus bill that has the upside of a Lebron James. Yup, there is some first round potential in the First Time Home Buyer Credit. A close second, my Chris Paul pick, was the Higher Education Tax Credit. I tip my hat to the administration because the bill provides just enough incentives for me to help do my part and stimulate the economy. Although I would have loved to take advantage of the original amount, I am glad that $8000 in credits will be available to assist me in possibly buying a place in the expensive city of Chicago. I was surprised after rereading my own post that I had missed the provision on going back to college and the assistance that is provided there. So we'll see but after I get a place...maybe I'll start studying for the GMAT. Now I will likely miss the 2009 credit but I could take advantage of the 2010 credits.

My Reality Show: Pt.1 What's In The Stimulus 4 Me

2009-02-27T13:11:00.005-06:00

I hope that by now you have had an opportunity to read the last few posts to understand some of the high - level aspects of the stimulus bill. Part one of my new reality show is the evaluating what parts of the stimulus bill make sense for me. Here goes my quick analysis of the parts of the bill that peak my interest.

My SWV, "I Get So Weak In the Knees" parts to the bill:

Income Tax: This provision stands to give me and every other single taxpayer, who qualifies, a tax credit of up to $400 in 2009 and 2010.

Unemployment: N/A

Health Insurance: N/A

Social Security: N/A

Car Buyer Tax Deduction: Wish I would have waited a year because the SUV would have been a little bit cheaper this year...but I don't see this tax deduction helping me out.

Pell Grant: N/A

Higher Education Tax Credit: This has seriously got me thinking about graduate school...AGAIN

First-Time Home Buyer Credit: Of all the provisions, this one has me thinking my timing may just be right. The $8,000 first-time homebuyer tax credit, low mortgage rates, and sinking home prices create a mix that may be to tempting to pass up.

Transit Accounts: Outside of last week, I am a pretty loyal Chicago Transit Authority rider and can benefit from the larger pre-tax provision.
Alternative Minimum Tax (AMT): N/A

My Reality Show...

2009-02-19T16:08:00.011-06:00

Now I am no longer a huge fan of the reality television craze as I often pass on keeping up with American Idol, Survivors, Big Brother, The Biggest Loser, The Real World, College Hill or any of the dance shows. However, I am a fan on a new economic reality show that I may personally star in. In true “reality tv” form, it would be all about me and the focus would be to prove or disprove my theory that there is definitely a need for a stimulus bill.

Logic:
My logic was included in a recent post written here at Urbanomics that describes the need for an economic stimulus bill and how it can and should be crafted to help those that can stimulate the economy the fastest. My version of a bill would evaluate most Americans based on different scenarios and the respond to their needs within the bill, accordingly. I have attached a link to the post that described a number of scenarios that are playing out across American households across the US:

http://urbanomics.blogspot.com/2009/02/stimulating-economy.html

Concept:
The scenario that I most represent is: SCENARIO #4

“4. An employed young man is not going to the bar, eating out, or vacationing”
Note: I haven't shaken my weekend bar trips!

My goal is to create a series of posts that will evaluate whether there are provisions (i.e., goodies) in the bill that impact me and also help stimulate the economy. I will document the provisions that affect me and if they really work in the end!

Stimulus Bill and How it Helps U...

2009-02-15T15:24:00.005-06:00

I wrote a previous post describing my thoughts on the overall bill. But I know most of us out there are saying if we are a bailout nation, what contents of the bill will assist me. I have attached two links that detail the main points of the bill that affect most Americans:

http://www.cnbc.com/id/29179184

Highlights: Tax Incentives, Unemployment, Insurance, Social Security, Auto Tax Deduction, Education Tax Credits, 1st Time Home Buyer Credits

First Time Home Buyer Tax Credit

I have been following this development of the bill very closely and as a potential first time home buyer I believe that this will provide an incentive for me to do my part in reviving the economy. I know many others are very interested in the developments of this part of the bill so here are some important details:

http://www.savingtoinvest.com/2009/02/15000-first-home-buyer-tax-credit-in.html

Stimulating the Economy...

2009-02-15T13:40:00.004-06:00

The hardest question I received so far this year is, "Do I agree with the stimulus bill?" It is a very difficult question because we are facing a very tough economy that has a number of different scenarios currently in play. Consider the following scenarios:

1. Young, middle, and old aged people are unemployed
2. A single mother working retail has her hours cut because demand is slowing
3. Governors fear slashing jobs if the state doesn't balance its budget
4. An employed young man is not going to the bar, eating out, or vacationing
5. A young couple with children did everything right but is underwater on their new housing purchase after buying at the height of the real estate market
6. The parents of a well off family of four still lives their daily but are shopping less and saving more than ever do to declining investments and the declining value of their home.

I went to answer this question and tried to address as many of these different scenarios as possible. The realization I quickly came to is there are a FEW small measures that will help everyone and those should be the focus of the government. Here is what I've got to assist in each of these scenarios:

1. Jobs, Immediate Assistance(to pay bills)
2. Jobs (More work hours or new job options), Immediate Assistance(to pay bills)
3. Immediate Assistance (to balance budget, and maintain Jobs)
4. Confidence (in the economy) and Incentive (to spend his hard earned money)
5. Confidence (in the economy) and Extra Help (with underwater mortgage and kid)
6. Confidence (in the economy and Incentive (to spend their hard earned money)

After analyzing these scenarios a true stimulus bill would address the areas that can help the most people. Here is what my stimulus bill would include:

~ Developing Jobs is needed to provide work and options to those in need and improve the confidence in the overall market (Scenarios: 1,2,4,5,6)

Create new jobs through state and federal projects that put people to work
Maintain jobs through by increasing the demand for American goods domestically and internationally

~ Immediate assistance needs to be given to Americans to help buy food, pay for rent/utilities, and help with kids which begins to circulate money back into the economy and builds confidence (Scenarios: 1,2,3,4,5,6)

Food stamps assist will immediate help and will be spent immediately at grocery stores everywhere (circulating money and keeping jobs intact)
Cash to only those that need immediate help with Utilities (No jobs and low income)
Utility and Day Care assistance as an incentive for middle income families to spend money and not hoard any cash given by the government

~ Incentives need to be given to Americans to who have discretionary income which will circulate cash, develop jobs, and improve confidence (Scenarios 4,6,1,2,5)

Housing and Auto Credits will provide incentives to Americans with discretionary income to help revive two major industries
Temporary reduction in sales tax (but will this hurt state budgets)
Tax Cuts will put more money in our pockets but I don't think this measure should be heavily relied upon because it would not cause me to spend the money...rather to save it.

These are the pillars to what I would recommend in a stimulus package. Ironically, I believe that the government has gotten the bill correct but the allocation of the bill is what I believe is out of what. Roughly 80% of the package should have gone towards DEVELOPING JOBS and providing IMMEDIATE ASSISTANCE. The remaining 20% should have focused on providing incentives to those who have been impacted the least but can provide additional help in stimulating the economy.

Twist And Shout...

2009-02-09T22:13:00.003-06:00

The reason why I call this post twist and shout is because I am definitely about to throw my readers for a twist. The twist goes a little something like this:

I have recommended since last September/October that we MOVE all of our positions into Cash, and Cash-like assets (Treasurys,etc). And I mentioned we would hold those positions until we hit a relevant level that may help form a bottom. At this point, with the new Treasury secretary (Tim Geithner) delivering his plan for the banks TOMORROW...AND the Senate finalizing the vote on the stimulus plan TODAY I am under the assumption, that any hint of news (as minimal as it might be), may cause the market to start rallying in anticipation of both announcements. I would increase your exposure to the market however incrementally. At this point no more that MAYBE 25% of your CASH position should be used to take advantage of this situation.

Now here is the TWIST, I am resigned to say that we are purely taking advantage of what will probably go down as a BEAR MARKET RALLY. This simply means that there are pockets, during an economic downturn where the markets need a breather and goes in the opposite direction. And that direction would be UP.

But this will be short-lived and the hard part to determine is how long this BEAR MARKET RALLY will last. I will go out on a limb and say it the market top 9000 to head for the hills as I believe that it will be trading in a range for a long time. I know I continue to deliver news that you may not want to hear but I believe that once we hit those levels the markets will continue to decline until critical things are addressed such as unemployment, foreclosure, and failing banks.

A House of Cards...

2009-01-27T20:45:00.005-06:00

where the numbers keep falling:

The sobering forecasts for the housing foreclosures in the next few years is over roughly 8 million homes. And to give validity to these numbers, the source is as close to the problem as possible...the FDIC, whose responsibility is regulating the nations federal banks. The response from top officials at the FDIC is that programs to reduce the epidemic have been frequently discussed for the last year. However, they have pretty honest in their assessment of these programs so far by admitting that the problem continues to get worse.

The next dilemma is a large number of people, who are staying in their houses, are seeing the prices from that investment sharply dropping. Take the Standard & Poor's/Case-Shiller housing index. This measure the price movements of the 20 largest city and it describes a record 18.2 percent drop in November when compared to the previous year.

As the housing numbers fall, the unemployment numbers rise:

The housing numbers become even more sobering when you take into account that The Labor Department stated that unemployment rates across the states rose sharply in December, and leading the way was Indiana (my home state) and South Carolina with the largest monthly gains.

Now I have receive a few questions that range from:

~ Where does the economy go from here?

~ Will the government stimilus bill work?

~ What does this mean for the stock market, my city, or my job?

I will try to do my best to tackle the problem in a way that is easy to understand in my next few posts. Stay tuned!

Exchange Traded Funds (ETF) Mania...

2009-01-25T14:11:00.005-06:00

There has been a lot of buzz about the ETF industry and the flexibility it gives the average investor of trading like the pros. You can buy or sell short industries and sectors and even multiply the effect of your returns 2x or 3x the daily amount. One ETF that I would like to discuss is Direxion Financial Bear 3x Shares (FAZ)

FAZ seeks to increase the magnitude of a decline in financial stocks by the tune of 3 to 1. When you pick up these shares be ready for the crazy ride you will be on. On any given day this ETF can fluctuate from a difference of over 10 points from the high and low prices of the day! With the banks desparate for the release of the second half of the 700 Billion dollar TARP fund this could continue to fuel FAZ's rise. I see one of two scenarios coming down the pipeline:
1. More investments from the government into financials mean more stock dilution; or
2. A program to get rid of the bad bank assets means huge write-downs for the banks

Use FAZ for no longer than a day as you can end up on a downward slide very quickly. I am already in the red on the timing of this play and will cut my losses short. However, I will intently watch the financial sector and during periods of weaknesses this will definitely be a way to use a little bit of money to maximize your returns.

You Are What U Read...

2009-01-22T22:36:00.004-06:00

Time to play "What the Headlines Tell U"! Again I think reading is definitely fundamental and taking a look at the latest headlines can give you some insight into what's going on in the market and what direction it may be headed. Here are some headlines from today:

Parsons is in as Citigroup's Chairman
GE's earnings results are expected to drop
UK, US having thoughts of nationalizing banks
State Street downgraded
AIG losing key employees
Commercial Real-Estate could begin collapsing
Satyam could be sold
UK Pound hits 23 year low
Cold Weather makes Orange Juice and Nat Gas Prices Rise
Microsoft Earnings to Take a Hit
Dow Gains 280 pts, but at 8200

After going through some of the larger stories of the day. Here is what they mean to me. Citigroup, GE, State Street, and UK & US nationalizing banks all mean that the financial sectors is still heading lower. Note some of these banks received money from the government already through the Troubled Assets Relief Program (TARP). And if there earnings are still dropping then the outlook doesn't appear good.

Microsoft earnings to take a hit cannot be a positive sign for the technology sector. This will affect PC makers, chip makers, and retailers. A mainstay in the home like Microsoft is having softer sales and that can't be a good sign either.

Satyam is exploring options of selling themselves and this further highlights that transparency is needed and greed is bad. This Indian company's CEO managed to distort their earnings for years and billions of dollars were reported incorrectly.

The Dow was up yesterday, however notice the level is at 8200. Let's flashback to my post in November which called for the Dow to fall under 8000...like it did the other day and possibly see some resistance at the 7700 level.

Dow Prediction

Staying the course:

I have purchased the Direxion Financial Bear 3x, (NASDAQ: FAZ) because for a small investment I will be able to mimic the returns of shorting the financial markets...TIMES 3!

With Microsoft sales softening, I think again investors should consider owning the Exchange Traded Funds (ETF):

Proshares Ultrashort Semiconductors (SSG)

Welcome President Barack Obama...

2009-01-22T22:25:00.004-06:00

Please join me in welcoming our 44th President of the United States of America! I am elated that we have a brilliant, young, motivating commander in chief to lead us our country. We must also realize that the odds are not in his favor as the economy continues to purge itself from years of toxic mortgage assets, greedy investment schemes gone wrong and overall lack of confidence. I realized that I too for a brief second thought that the market would forget all of its ills and start fresh, sorta like America is starting anew. However, the market reared its ugly head the day of the inauguration when we witnessed the Dow Jones Industrial Average drop below 8000!

But I am optimistic that a new direction is in store for us all and even the markets. Regulation, transparency, and sharing the economic pie are some of the ingredients that I would serve up during this time of weariness. So President Obama, good luck and if you need any advice...just call.

Been Busy...

2009-01-16T13:33:00.005-06:00

Some would say being right on the money. Well lets look back at over four months ago, when we told you to re-allocate your portfolios because the worst ain't here yet. And what have we seen is that are call is right on. The Dow has continued to plummet to the level I thought we wouldn't hit for awhile. and that is roughly around Dow 8000. This is a compelling moment because months ago I said that I would recommend that we all start inching back into the market, but at this point the news continues to be bad. Just searching articles on the internet you may come across these themes: Banks Need the rest of the TARP Bailout - Citigroup is selling their brokerage unit! - Bank of America is showing signs of cracking Retailers are not looking good. - Even Walmart sales are declining - Circuit City can't find a buyer and is liquidating all their stores!! Unemployment rates continue to rise - GE Capital is set to shed 11000 jobs Downgrades send stocks to their 52week/all-time/all world lows There is no strategy when the headlines read like this. The only thing is to stay the course with the consistent message that we've had before. I repeat I am and have recommended that you are completely out of the stock market and fully allocated to Treasurys and cash assets. This is especially true for your 401K portfolio because it primary purpose is capital preservation...not appreciation. A portion of your portfolio needs to be exposed to the market and I recommend that you have your own trading account where you can DO IT YOURSELF (DIY)...I don't need Bernie Madoff or any other scandalous investors out there losing my money...when I can do that on my own. It this portfolio you should be shorting more that buying things. Find attractive price points (see previous posts on price points) for both buys and shorts:

SHORTS:
- SSG: ETF that shorts the Semiconductor Sector
- KBE: EFT that shorts the Retail Banking Sector
- Also short the retail, and credit sensitive sectors
BUYS: - BBY: Best Buy is primed for increased earnings now that Circuit City is going BANKRUPT
- V: VISA is down towards their Initial Public Offering (IPO) again after being downgraded

I'll be back to update this post later

Is the Stock Market Glass Half...

2009-01-07T22:59:00.003-06:00

Empty or full??? Well if I were looking into what most economists have predicted for 2009 I would take the glass and break it!!! Now I know that isn't the rosiest outlook that you would like to hear but hey I am just being honest. The picture for 2008 wasn't pretty so I find it strange that all of a sudden once again you have so called web and tv stock "pro's" still telling you the coast is clear and head back into stocks just because we change the calendar year.

The strange thing is if you were to call or write in and have these pro's substantiate why they want you to get back in they give you the same tired response (this is my guess):

~ Treasury yields are so low, its time to get out and make some money.
~ Rebounds start 4-6 months before everyone finally recognizes the "recovery" period is happening...don't miss the rally
~ Many evaluations used to evaluate stock prices tell us that stocks are cheaply priced

Now my goal is not to sound pessimistic, but I want to be the voice from the other side that levels the playing field. DON'T MAKE THE SAME MISTAKES YOU DID LAST TIME! Follow the one thing that doesn't lie and that would be the numbers. I am not asking you to be an expert but find relevant information, like the fact that the unemployment numbers come out this week and read articles about those key numbers. I read that unemployment numbers are going to come in around the 690K level for the month of December. I read this and said WOW, I don't really know what this means...but its sounds important. Then I read further and they said the unemployment numbers for November came in around 490K job losses that month. Now I can start guessing what these numbers could mean. It didn't take me long to determine on my own that an increase from November to December has to be a very bad sign and this can be backed up when we read articles last month when people talked about how bad November's numbers were. The last trick is to read more articles that are consistent with this prudent thought that if unemployment continues to rise then the economy will continue to struggle. Seek out these articles over time and start to determine themes that surface around the key numbers that you are researching (i.e., major stories).

I have determined high unemployment is a bad thing. See I keep it simple! And recent headlines that seem highlight high unemployment, a cold winter, and people like you and me not wanting to spend our money on anything. So I take these points and turn them into trades:

Article "Intel warns for the 2nd time on their quarter results" - Confirms that people ain't got money to buy expensive gadgets and computers!
Trade: The easy one is Intel and if they are best in breed all chip stocks will suffer. BUY the ETF: Ultrashort Semiconductors (this is like shorting chip stocks twice...double your bang)

Article "Friday unemployment numbers above 670K) - Confirms job losses are rising
Trade: This one logically tells me more job losses mean that people won't be paying off bills and especially debt! SELL: Companies that sell consumer debt - Banks (Capital One, American Express, Citigroup)

Article "Cold winter across certain regions" - When I'm cold I turn the heat on, and you either got gas or electric! Trade: Natural Gas and utilities may be solid here because people need them in this weather and they traditionally offer steady dividend returns.

StockPicker Highlight:
This year I am playing the headlines...logically of course to spot trends. Look at the results from our bailout article. 3 out of the 4 auto parts makers we bought have risen...not bad.

And shorting Capitol One hasn't proven to be the smartest trade yet but this proves price is an important factor. I still like this trade but if I were to have this in my portfolio I wouldn't short it until it reaches 34.

Stay tuned.

2009...The simple approach to investing this year

2009-01-03T18:49:00.003-06:00

As we bring in the New Year, I have learned how important it is to continually look into the future. 2008 was the year that we all would love to forget even happened from a stock perspective. Oddly enough, most of us would only like to forget the last quarter of the year as my portfolio didn't start its downward spiral until September/October. It was then my blogging activity picked up with a frantic pace and I was constantly tuned into the markets hourly. I can safely say in my brief investing life that I have never been a part of a market where new and relevant information was breaking rapidly throughout the day. I took a drastic approach and recommended that everyone take a defensive approach in their portfolio because I honestly felt the news and the data was taking the market in a negative direction. Looking back this may have been a solid decision and the leading indicators were: 1. The rules were been changed daily which caused volatility and panic; 2. Interpreting market data was critical 3. Some of the largest money managers tipped us off by reallocating their portfolio

Now as we look into 2009 what should we expect. Well the New Year has gotten off to a great start as the Dow Jones Industrial Average has just topped the 9000 mark, levels we haven't seen in awhile. Ironically, following Dec 16 where the Dow Jones again approached 9000 the next 5 five market sessions were downward days and bottomed at around 8400. I have repeatedly mentioned that I believe market history has given us a important level that may market a psychological bottom. I will have to go back and check to see how consistent the numbers that I have noted match with what some experts are now calling the market bottom on November 20th!

So what I am looking to do is gradually get back into the market. Taking the information we discussed above about where the bottom may be, I have recognized that 8400 is going to continue to be an important area where I want to get back into the market. I will be mainly shifting my RETIREMENT portfolio when these target levels are reached. As far as my investment portfolio I think people still need to take a defensive approach. As money has been and will be printed to get us out of this difficult economic time, I don't think things are improving on Main Street. And my gauge is the everyday person that you run into on the street. Simply polling my friends: less and less of them were actually going out and buying expensive party packages this year.

So I still believe shorting the financials whenever they run up, more exposure to bonds (corporate and high yield), less exposure to treasury bill (inflation may start creeping up), and buying oil, gas, and gold.

Stock Tracker Update: I really want the stock tracker to eventually do one of 2 things: 1. Reflect my actual portfolio or 2. Reflect the future stocks I'd like to buy/short... because currently it does neither!

Happy New Years!

2009-01-03T18:48:00.001-06:00

I wanted to wish all a very blessed and prosperous New Year!

Approaching Zero...

2008-12-16T22:45:00.002-06:00

The countdown continues as the Federal Reserve lower the interest rate past most expectations to a level between 0 and .25. This is a strategy that appears to be similar to the one taken by Japan during the economic period that was similar to ours years ago. What does this do to the markets:

It dramatically pushes down the rate of return on a money market fund and Treasury bills. There are very few ways rates in these assets and one is lowering interest rates and the other is the increased buying of rates by the public usually due to economic concerns of the market. If you recall, when I noted that the markets would be experiencing a rough time I sent readers here to these assets mainly due to safety reasons. Now the fed's actions want to force us to put our money to use elsewhere, mainly the stock market because it doesn't make sense to stash them in money markets and T-bills because we won't make any money!

The only things that makes me a little skeptical is that we are experiencing rough economic times and I don't think the average investor will flock to stocks right away. I think there is still alot of fear out there and people will take little to no returns as compared to big losses from holding stocks. The one thing I am now completely bullish on is GOLD, as the fed's action of moving rates to zero is equivalent to pulling out the printing press in the middle of the street and giving money freely to anyone who is asking.

Too Legit To Quit...

2008-12-07T20:33:00.003-06:00

Yeah I am taking it back to the old school and hitting you up with a little MC Hammer. Back in the day, Hammer had a little assistance from his buddy neon Deon Sanders with this anthem To Legit Too Quit. And with the latest bailout money being tossed around for the auto industry it seems like Congress is saying that Ford, GM and Chrysler are to legit (or to big) to quit! And we have stronger evidence this weekend, with a report written by the Wall Street Journal that indicates that the Big 3 get big dough from a bailout plan that is currently in the works. What does this sound like?!? Well it sounds an awful lot like the bailout deal that was struck for financial firms on Wall Street. However, there is a slight difference and that difference is there are definite strings that it appears will be attached to the Big 3. How odd Congress didn't choose to place these same type of strings on the 700Billion dollars that was given to the Wall Street firms but hey who's counting, right!?!

My job is to capitalize on this new development, dubbed the Auto Bailout and figure out how we can make a trade on it. I am going to argue that you may see some of a bounce in Ford and GM's stock but there is still too much risk in investing in these commpanies, because just like AIG, the only financial firm to have signficant strings attached to their bailout deal, strings in your deal mean that the common stockholders get crushed in the process. They get sent to the back of the payment priority line and have nothing to look forward to in owning the stocks for the next few years as the government moves into the pivotal number 1 slot of receiving its payments first. Say goodbye to fat dividend payments to common shareholders. So whats the trade YOU ASK!

I say buy the beaten down auto parts makers!!! BUY: Lear (LEA), TRW Automotives (TRW), Johnson Controls (JCI), and Borg Warner(BWA) because of this reason:

A buy on auto parts manufacturers make sense here because we have a high probability that the auto bailout will be approved. While it is unsure whether the bailout will wipe out shareholder value for GM and Ford...it definitely gives the auto part makers a huge boost in the short term because their worst case scenario, which was priced into the stock, its now of the table because the Big 3 are saved for the time being. In plain English, no bankruptcy means these guys actually survive and that should be great news for the stocks!

And I am adding these bad boys to the STOCK TRACKER to see how this trade would work out.