Damn Gina!

Yeah, I had to steal my favorite line from my Urb flashback sitcom "Martin", featuring Martin Lawrence. What does Martin have to do with investing, yeah you guessed it Damn Gina! That's what I say when I get something right but I am too weak to pull the trigger. I have to give some credit to a stock star (not rockstar) friend of mine that goes by "The Great". We were all over the fact that the mortgage world is imploding as we speak. Need proof read a few of my columns that date back to last year when we called the top of the market...need more proof check out American Home Mortgage!!! But I will get back to that story in a minute.

We are here to say DAMN GINA! to the fact that I wanted to:

MAKE MONEY off of the real estate market. Specifically I wanted to SHORT MORTGAGE companies. So I had this convo with "The Great" only 2 days ago and we plotted a master plan to make so dough off of this scenario. The scenario is simple but the buzz from my friends at Fast Money on CNBC is that shorting this sector was old news. But "The Great" mentioned a few great points. The bloodshed has only begun on the books of these real estate companies. They have assets that are deteriorating in value and they can't pay back their damn loans. So our strategy was to pick a few sectors in real estate and get to work SHORTING those stocks, or betting that the value would go down for these stocks. So J. Gotti wanted to take the least risk adverse road possible and I will not guess what stocks will tank I want some certainty.

Urb "Living Legend" lesson of the day: My main man, Warren Buffett says make big bets on highly probably events.

Guessing which real estate stock will tank is like shooting darts. So I want to pick a fund that has exposure to: Mortgages and Homebuilders and short the whole damn sector. Now this is highly likely that the sector will fall over time. So what did I come up with:


(REM) an Exchange Traded Fund that specializes in Mortgage companies

The Damn Gina part -> http://finance.yahoo.com/q?s=rem
REM was down over 9% today

So what have we learned today...go with your gut. And my gut is telling me that the main reason REM tanked today was because of American Home Mortgage fears. This stock is done, finished...beat it, scram. And the kicker is they issued over 50 billion in loans last year and non of them were sub prime. That means, none of their loans were really janky!!!! Janky is a lovely word for horrible. But guess what, most of their loans were Alt -A or almost Janky. And if companies are going bankrupt on loan portfolios that are not even sub prime then we are in big trouble folks. Alt -A loans are going to a lot more almost "normal" home buyers.

So to wrap things up folks I am going out a limb and say if the market hasn't punished the finance companies that specialize in Alt - A loans then its time for us to do it, before the market realizes the obvious. Here is a quick list of companies that I found that specialize in Alt A loans:

Alliance Bancorp - already bankrupt
M+T Bank

Hey if you know any public companies that specialize in these loans, let me know!

Urb Buzz - Reader Response

Thank you my upside down friend for your commentary about the Lindsey Lohan (Lilo) to this post -> http://urbanomics.blogspot.com/2007/07/urb-buzz-july-07.html. I love to debate so here we go:

First you say Lilo is not risky or unreliable. Wrong, she is risky because the cops found COKE on her and all she could say was that she borrowed someone's jeans and that's why drugs were found. Remind me to accidently borrow your jeans when you win the lottery. Unreliable, again she get the top prize because a movie has been put on hold because guess what...Lilo is a train wreck. So yes, before I jump ship I asked myself the same two questions you posed:

1. Does the person still make money - Investors evaluate the time value of money. Roll with me homey...the possibility Lilo will continue to make top dollar in the future is shrinking rapidly.

2. Will her actions affect future profits - Yes, when movie investors - big banks that fund movies, insurance companies that fund movies, and movie goers realize that Lilo is a train wreck the money stops flowing. And supposedly some of the insurance companies are pulling the plug...I know I would.

Finally, I do agree with you and most actors get a second, third and fourth chance...but like stock market crashes people do not quickly forget when they've been burned. And no CEO's drunk driving will not cause a stock to dive, but remember these incidents:

1. Martha Stewart - stock tanks
2. Rigas Family scandal - Adelphia telecommunication company split in pieces and sold
Honorable Mention - World Wrestling Entertainment, traded a little lower when people actually thought Vince McMahon died in one of WWE crazy televised stunts

Notice, big investors are pulling the plug on Michael Vick, Rawlings just canned him, Nike and Reekbok put his products on hold...and he hasn't even been indicted. Why, because the RISK is just to HIGH

get ur URB on

The Dow & Beyonce

See the Dow was up last time I wrote to you guys at Urbanomics. But then like Beyonce's recent concert in Orlando, the Dow Jones Industrial took a tumble down the stairs. The Dow over the course of a few days has plummeted almost 800 points to a low on Friday on 13,265. So of course everyone is jittery, including your boy here at the Urb. But times like this you shouldn't panic but take a look at your portfolio and reassess your positions. One of the things I've consistently heard from some of the smarter investors out there was when the markets peaked at 14K...not to be afraid to take some profits off the table. But don't panic sell, because as quickly as the market goes down its going to go up. And today was a good example of that, most of my big dogs rebounded. Here is a quick summary of how I reassessed my portfolio in the wake of huge market volatility:

Ambassadors Int'l (AMIE) - I know you've heard me talk about this one before. This was one of my early gems that I found over two years ago. It was trading at roughly $13 way back in 2004. Yes, I held on for that long folks! I rode this bad boy through the good and the bad over the years this stock was listed as one of the best to own for 2006 but hit a major roadblock. Momentum and acquistion made this a darling but the fundamentals have shown that they need to materialize their acquistions into good old fashion cash. And with a recent article in Forbes highlighting the fact that its 2006 earnings details negative cash flow. Time to SELL

South Texas Oil Co. (STXX.OB) - I am still a huge fan of STXX but I sold my shares today. With a buy price of around $9.15, I got out of this oil play at roughly a 3% gain. Not bad for let a little over 1.5 months of work. If you are on margin, get out of this low volume stock but I still say stick in STXX for the long haul. Its got a push behind it that I think will send it higher. Get out around the 52 week high for a nice pay day.

The rest of the portfolio, I am holding! Even Radisys and their horrible earnings release which killed up. The only stock in the last year I can think of that is dragging us down. But like The Game said, "It's Okay"...and I'm holding. This will rebound and we will get out with a slight loss as we ride it out!

Peace out~

Urb Buzz --- July '07

Welcome to that ringing that won't leave your ear. I know you think I am talking about those annoying cicadas that were buzzing everywhere you went, but that buzz is Urbanomics in ya ear. The buzz combines my principles of using urbanomics to topics that are to hard to understand.

Topic 1 - Risk vs Reward

I am surprised myself that Lindsey Lohan makes my blog, but urbanomically I have to say something. What oh what is this child doing and why doesn't someone get her some real help. Simply the risk here doesn't match the rewards. If Lindsay was a stock we'd issue a huge sell at this point. Like the stock market you invest in something that is reliable and will appreciate over time. Lohan is far from reliable and she is way to risky. What's unfortunate is this chick is out there still driving and could hurt herself and even worse innocent people out there on the streets. But remember in the stock market a company can keep going as long as it's got the cash to do business. So what do we recommend her at the Urb...pull the plug. Yes its time for all of the parties involved to pull the funds from behind this underperforming stock we know as Lohan. Movie deals, endorsements, product lines, etc need to pick up their tents and move on. Many people forgave the first incident but the second time was a slap in the face. There are outcries against another celebrity and corporate america is almost ready to pull the plug (Nike has put his shoe on hold & he has be ordered not to report to training camp)...yep you guessed it Michael Vick. How about pulling the plug on Lohan's new movie, ohhh wait there may be too much money involved. Time to treat all these raggedy stars the same and sell they hype!

Topic 2 - Movie Night?

Netflix just turned "R" rated. Yes ladies and gents, all you movies watchers probably knew this before I did but I didn't pay attention to the signs. How about the fact that my sister used to rent through Netflix, but I noticed recently a switch back to Blockbuster. Why, because Blockbuster decided to give the farm away and you can rent movies online, but return them to stores for a speedy drop off. Genius move right, not exactly...Blockbuster has to be bleeding cash to pull this strategy off. But until then Netflix will be under pressure because margins are probably razor thin (not to mention that the dummies don't charge you for shipping). And to top if off, Netflix's website was down for most of today...great move when your customers can only go to one place to ORDER movies.

Dow take a Bow

Ok maybe more like a curtain call because the Dow Jow industrials has been on a tear. And for the first time ever, the DJ closed above 14000. It was just 3 months ago where the Dow was at 13000, so to put it simply that was a big move. Has this affected our readers here at Urbanomics...you bet.

Urbanomics Flashback:
I'm taking you back to a 2005 article I wrote. What names have we told you to buy, how about Microsoft which hit a 5 year high Don't believe me check out our article here: http://urbanomics.blogspot.com/2005/09/dynasty.html

Urb Homeruns
Check out this list by typing in the name or ticker in the search toolbar on your upper left hand corner and see for yourself how far they have come.

Avid Technology (AVID)
Collectors Universe (CLCT)
Maximus (MMS)

Urb Recent Picks
Our latest picks are in the black and we are seeing great momentum action
South Texas Oil Company (STXX.OB) - This is a low volume stock so like the rides at Six Flags you've got to hold onto your stomach. We've seen this stock dip to $8.95...do we panic, sorry real playa's don't flinch. This closed today at $9.33 and I am looking for company events to propel this stock over $10.
Radisys (RSYS) - Four business trading days ago this stock was at $12.41 and now they have topped $13. With earnings being released on July 26, I am hoping for a great momentum push next week.

Urb Misses
What did we miss this week: Applied Micro Devices (AMD); Intel, the chipmaker ripped through earnings and AMD would have been a great play today knowing that Intel performed well.

Urb Radar
These stocks are on my radar:
Cabela's (CAB)
Starbucks (SBUX)
Rural/Metro Corp (RURL)

Space Age Pimpin' - Space Age Portfolio

Ok folks time to get your portfolio Space Age Pimpin', well into the next few decades. What does this mean? By following the Space Age Portfolio, readers here at Urbanomics will finally be able to buy stock they are looking to hold long term. As most of you know I am your favorite Urban Economist and that's why you see my boys Eightball and MJG here ->




They were early pioneers in the rap game and I am pioneering the stock investment game with a little bit of Urban flavor. Yeah, I know that my boy Jim Cramer and the guys at Fast Money are pretty cool but they got nothin' on me. My strategy is like my basketball game...very versatile. I generally look for undervalued stocks that will experience some type of near term catalyst that will catapult the stock into a great momentum trade and turnaround story. Want proof, follow my recommendations that have been posted: MMS, CLCT, MOBE, each purchased in the last 6 months with returns over 25%. Need more, I own 2 stocks that will like be bought out this year after merger talks are over: Sallie Mae (SLM) & Cytyc (CYTC). But on to what you want to hear. What about the stocks that will have your back for the long term.

Here goes, the goal of this portfolio will be to pick stocks across a diverse group of industries, that are best in class, and have the opportunity for both price appreciation and income potential. Let's start with my favorite industry so far, OIL. With this group I have to go with ConocoPhillips...yes I am

piggybacking their most recent upgrade by Bank of America and it does hurt that they just disclosed a stock buyback program of roughly 15billion.

ConocoPhillips (COP)


Next, I am going out to one of my long term income potential plays. You will benefit because real estate stock is a REIT and those dividend payments can help grow our portfolio. GGP also operates in two segments retail and master planned communities. So you get retail, land owner, and landlord all in on. Real estate has taken a little bit of a beating so jump on board, now.




General Growth Properties (GGP)




No long write up for this one, because I've already told you why to own it but add this retail player to your portfolio.


Best Buy (BBY)

Wrap up your portfolio with exposure to Utilities. Why?...Because it is too damn hot outside. Man and with this heat wave out there what is every one doing at home turning up the Air Conditioner. And when the A/C goes on, the utility man gets PAID. Ka-Ching. So load up with this exchange traded fund (ETF):



XLU

Money In Bank - Collectors Universe

Lil Scrappy raps "Money In the Bank" but if you read my June 1st Stocks and Locks post (click here -> http://urbanomics.blogspot.com/2007/06/june-week-1-stock-and-lock-picks.html ), you'd think my recommendation Collectors Universe (CLCT) was the one 'collecting'...all the way to the bank. CLCT, which authenticates precious metals, was literally a hidden gem when we found it. It has risen from $13 to settle to just about $14. There were indicators that told me that CLCT still had a way to go and we tipped our hand to the loyal readers here at Urbanomics to buy CLCT. Not only did they already represent a great turnaround play, but I am a firm believer that management was persuaded by activist investors to increase the already healthy dividend in this stock to a level that I have never seen before. The dividend payout was doubled almost overnight. I believe activists knew this, and as I've written before this produced the catalyst that we needed. Smart investors flocked to this stock for the chance to get paid twice:
1. As the stock appreciates
2. As fat dividend checks are paid out

Once, they made this announcement to the public, investors went nuts over this huge dividend payout and for the last two days the stock has appreciated roughly over 7% last Friday and 9.9% today. We collected over 15% in two days!

Here is a quick summary of CLCT's release from the Associated Press:

Collectors Universe Inc., which provides authentication and grading services to dealers of collectibles, diamonds and gemstones, said Friday its board raised the company's quarterly cash dividend to 25 cents per share from 12 cents, previously.

Keep gettin' your Urb on...cause this ain't a game