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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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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.