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Droppin’ & Poppin’ with the Crash

January 21, 2010 Leave a comment

Oops!

I predicted a nice rally this week.

WRONG!

I even thought Citi would surpass expectations and blow the market away.

WRONG

The stock actually went up Tuesday morning but dropped hard yesterday and today.

Shucks. If this market has seen its worst two-day drop since October, what the heck am I so happy about?

Valuation, baby.

You know what the difference between cheap and frugal is?

Cheap means you only buy things by the look of the price. If it’s too high, you won’t buy.

Frugal means you spend your money wisely, buying only when you see great value in something.

Sure, I’m a little loopy but I absolutely love the market losing nearly 400 points this week so far.

Why?

Well, why not? See, I don’t pay attention to numbers much, at least not what the media and all the financial websites are dishing out. Don’t think I never take the numbers into consideration but I just don’t flip out or give too much of my focus to them.

Numbers change. A lot. They change so much they’re out of every single investor’s control. Whether or not they’re right or wrong doesn’t matter as it still comes down to the companies and their values.

Goldman Sachs (GS) posts great numbers and it drops hard after Obama announces new regulation rules for the banks. Goldman has been whacked before and it got killed again. But all that means is maybe you should pick up some shares and watch yourself profit.

And don’t forget all the gold stocks that have lost a good portion of their profits in the last month. Today would seem like a lovely time to pick up ABX, AEM, AUY, FCX, GG and NEM.

Not only that but we saw Apple (AAPL) jump more than $9 Tuesday and it loses almost all of it Wednesday and Thursday. They report Monday, have an announcement coming up next Wednesday with Steve Jobs rumored to be the speaker. Um, doesn’t Apple look enticing at $208.

With the market acting volatile as it has over the last two years, it’s impossible to predict what’s definitely going to occur. Heck, Apple could even disappoint on Monday and end its amazing run of increasing earnings reports for what seems to be a hundred quarters in a row.

If that happens, the stock will probably fall pretty hard which means you may want to sell, right? Actually, it’d probably be a wonderful time to buy even more with the Tablet on the way.

As long as the market stays about 10000, I think we’ll be okay and the pullback is actually healthy. Stocks could have had an exaggerated run but only the stocks for companies that don’t have great numbers. For those with cash and good books, the pullback feels like a great opportunity to me.

Don’t believe anyone or anything you hear on television or read on the internet. All of these people are paid to do a job and they’ll do it no matter if they’re bearish or bullish, spinning their opinions in the direction of the position they’ve taken.

In conclusion, I think the decline in the markets this week and and parts of last week are a little overblown and ripe for making some profits. In fact, I believe we’ll see another small rally starting after today’s closing bell when Google reports. I purchased some shares in this morning ahead of what I expect to be a good report. Again, I could be completely wrong but I’ll take my chances and play ball.

Will you?

*Author owns positions in Citi, Yamana Gold, Apple and Google

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A Crappy New Year or a Happy New Year?

January 18, 2010 Leave a comment

So, which one will it be, investor?

According to little old me, I’ve got some ideas and thoughts on what could make 2010 a crappy new year as well as what could make it a happy new year.

Why 2010 could be a crappy new year:

  • If there are more corporate crooks out there (and I suppose there are) that haven’t been caught or have prevented their crap from hitting the fan thus far, this could be the year their doodoo does hit the fan…and will become a problem for the rest of us
  • The housing market tanks badly once again when those who own two properties become financially strapped and can’t afford to pay for both of them. Oh, and this will be on top of all those who already can’t pay for one house.
  • Unemployment hits 12% (which means it’s more like 20%). This would really suck, especially since we’ve seen it slowing down a little. A number like this would create a resentful and miserable view of our country from the eyes of the average American.
  • Dick Cheney, not even in office, says something that really pisses someone off (Iran, possibly?) and it starts World War 3. And yes, I do believe Cheney is so surly and obnoxious that he himself could cause WWIII.
  • Another hurricane destroys part of the gulf in a horrible sequel to Katrina.
  • Too many investors listen to the so-called “experts” and buy investments they’re hyping up that most people know absolutely nothing about (this is just part of the inevitable “herd effect” but some years the herd is larger than others so here’s hoping the herd stays small as it did in ’09)
  • The Dow drops below 10000 and doesn’t regain its footing in the five digit range.
  • China ain’t all it’s cracked up to be and people who invested tons of money in the Middle Kingdom lose those tons of money.

Why it could be a happy new year:

  • The optimists are correct and the stock market continues ticking upward past the 11000 range and beyond.
  • Unemployment keeps dipping and leaves the 10% mark in its rear view mirror for a long, long time.
  • The housing market gets better and better with mostly positive news throughout the year (specifically: foreclosures drop hard, people start buying homes again and office buildings fill up their vacancies.
  • Tech gives the market another year of great returns with the usual suspects such as Apple and Google leading the way.
  • Consumers start buying a lot more stuff than they were buying last year.
  • More mergers and acquisitions turn Mr. Market into Mr. Happy.
  • The dollar gets back some of its muscle.
  • Fiat turns Chrysler into something worth a crap and starts putting out vehicles that actually look they might be worth driving.
  • Ford continues pushing ahead as the leading American car manufacturer and the Fusion keeps selling well.
  • Exxon Mobil, Apple, Google, Disney, Coca Cola and McDonald’s team up to form MOUNT OLYMPUS INC.¬† and declares it will be taking over the world starting in 2011. They buy every company that exists on the planet, erase the world’s debt and the market never sees a day in the red again. They also take over the federal reserve and seize control of the country’s money¬† (my ultra-ridiculous long shot prediction).
  • The gaming world returns with a vengeance with Activision becoming the undisputed king of video games, once and for all.
  • Sony’s earnings start gaining steam on the heels of better sales from the cheaper Playstation 3.
  • Earnings season shows that there is, indeed, a recovery a’comin’!
  • Citi and Bank of America give a positive earnings report. These two financial giants have gotten slammed by so many people you wonder if anyone outside of those companies is even on their side.
  • Google DOES say “nay” to China’s censorship policies regarding the internet and dances away from the Middle Kingdom (By the way, “Middle Kingdom” is the best nickname out there for a country, isn’t it?)
  • The four-day week following Martin Luther King’s birthday (that would be today) unleashes a fury on the bears as Citi, BofA, Google, IBM and others report stellar earnings.
  • The Apple Tablet is as good as it’s cracked up to be and proves that great products will still sell no matter the economical environment.

Anyways, I’m hoping for a Happy New Year and I’ll leave you with my one crazy, ridiculous prediction for this earnings quarter:

Tomorrow, Tuesday January 19, 2010, Citi (yes, I know I’m crazy) will beat analysts expectations and start a nice rally that continues through the week.

The Final Week & Happy New Year

December 21, 2009 Leave a comment

There could be a Santa Claus rally upon us in the stock market.

Maybe, maybe not.

Volatility still rules the financial markets so don’t believe anybody’s claim that there’s a “strong” chance of a blissful rally to end out the year.

However, there could definitely be one that puts a giant smile on your face. Just, do me a favor and do your homework before listening to the experts.

Stocks that look jolly between now and into the beginning of 2010.

PEP – PepsiCo

12/18/09 – $59.29/share

ROE (return on equity) – 33.17% in 2009

If it drops below $58, buy this baby. It should push itself upward in the first quarter of 2010 and definitely for Q2 after all the college football bowl games and NFL playoffs and Super Bowl are played out. Sales of all soft drinks usually spike around this time of year.

ADY – American Dairy, Inc.

12/18/09 – $20.34/share

ROE – 16.42% in 2009

This company has good numbers and seems ready to jump from its current price due to the high probability that milk will be more expensive in the first half of 2010. I think it’s a good commodity play in terms of stocks and higher milk prices.

JEC – Jacobs Engineering Group

12/18/2009 – 37.74/share

ROE – 16.42% in 2009

While this is a riskier bet, I like JEC a lot going into 2010 and beyond. However, I’m predicting a lot more government infrastructure projects to begin which is where Jacobs should get a healthy load of work from government contracts. Some would say this industry is hazardous for investors but I say JEC is undervalued and ripe for the taking.

HQS – HQ Sustainable Maritime Industries, Inc.

12/18/09 – $6.42/share

ROE – 13.84

I must admit this stock is frustrating for me, personally. I’ve purchased HQS at close to $9/share before and had to sell when it dropped. I will never recommend this stock again above $8 but at $6.50 with good books, it’s hard to pass on. Purely speculative here but I’m sticking with the tilapia farmers and feeling optimistic about the stock moving to the $8-9 range within a few months.

*Author owns shares of ADY and JEC but not PEP or HQS.

Today Against Tomorrow

December 20, 2009 1 comment

So, was the sky really falling?

I ask because last November, it appeared like nothing would ever get better. Great Depression: The Sequel was one of the worst bogeymen this nation, and the entire world, had ever seen. It scared us then, making us piss in our pants. Today, we’re still scared although we’re not wetting our pants quite as bad anymore.

Today, the market will never recover ever, ever again. Not in a million years.

Tomorrow, it jumps up 200 points.

Today, the swine flu is a pandemic.

EVERYBODY LOCK YOUR DOORS WASH YOUR HANDS A GAZILLION TIMES A DAY

Tomorrow, the swine flu has infected many people who don’t even have to go to the doctor to treat it.

Today, we have no healthcare.

Tomorrow, universal healthcare?

Was The Sky Really Falling?

December 19, 2009 Leave a comment

Dow Jones Industrial Average (DJIA) – 10385.48

Standard & Poor’s 500 (S&P 500) – 1162

Nasdaq Composite (NAS) – 2034.56

Any idea where those numbers come from? Those were the market numbers exactly five years ago on November 10. Is it any wonder that these numbers are just a little bit higher than November 10, 2009’s market finish. Why am I referencing market numbers from five years ago? At that time, these numbers were good. These days, the numbers aren’t necessarily good, they’re generally just up for debate.

Because the Dow Jones has peaked above 14000 in 2007, today’s (12/18/09) finish of 10328 is pretty mild. But if you look at where the market was ten months ago, today’s number is pretty rosy. Exactly one year ago today, the sky was falling on the world. America was screwed, the market crashed, George Dubya Bush was destroying the galaxy and the American people were paying for it.

Was the sky really falling?