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!!!

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.

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.

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

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.

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:

• Bruker Corporation
• Reliant Steel
• British Petroleum
• Unilife

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

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

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

- Recommendation: Not Buying

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

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

Portfolio Spring Cleaning...

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

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

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

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

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

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

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

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

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

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

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