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.
Wednesday, December 29, 2010
Monday, December 20, 2010
Dec 21 2010: Technology Stock Recommendation
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
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...
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
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
Thursday, December 09, 2010
American International Group (AIG)
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.
~ 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??
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.
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.
Sunday, November 21, 2010
QE2 is like a Pay Per View Fight...
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
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
Saturday, November 06, 2010
All that Glitters...Might be Gold, Silver, Platinum, and Palladium
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:
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
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)
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
Tuesday, October 05, 2010
Iron Mountain
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.
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.
Friday, October 01, 2010
Like its Dynamite
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
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
Wednesday, September 29, 2010
Semi Ain't So...
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.
~ 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.
Friday, September 24, 2010
3RD Quarter 2010 - Asset Allocation Reminder
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:
2) Deflation can be a drag and inflation eats at your money. To protect against this:
3) QE Pt2 would continue to push rates down and makes bonds look like they have weak rates of returns:
4) The economy growing so slow means that nobody is unhappy, so that leads to my last tip:
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...
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!!!
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
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.
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.
Tuesday, September 07, 2010
I've got to have my VOXX...
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.
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.
Wednesday, August 25, 2010
Which Bad Word is it...
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
Wednesday, August 04, 2010
The Assessment...
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.
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.
Sunday, June 06, 2010
Should I Buy These Stocks ~ May 2010
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:
- 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
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
- 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
Tuesday, May 18, 2010
Portfolio Spring Cleaning...
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:
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
Sunday, April 25, 2010
Back to Business...
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
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
Saturday, April 24, 2010
Homebuying 101 ~ Tour Baby Tour
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.
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:
Wednesday, February 17, 2010
SCRABBLE...
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)
Boston Scientific (BSX)
CIT Group (CIT)
Becton Dickinson (BDX)
Corrections Corp of America (CXW)
Citrix (CTXS)
Wells Fargo (WFC)
Republic Services (RSG)
Saturday, February 13, 2010
Legg Mason...Do they have a Legg to stand on?
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
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
Sunday, February 07, 2010
Superbowl Investing Tip ~ Invest in What You Know
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.
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
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.
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.
Friday, February 05, 2010
You've Got Mail: Trade a Recall
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.
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.
Monday, February 01, 2010
How Low Can Mortgage Rates Go...
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.
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.
Sunday, January 10, 2010
Economic Indicators ~ (Dec '09) Monthly Job Numbers
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):
- 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.
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 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.
Wednesday, January 06, 2010
Week 1 ~ 2010
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:
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.
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