money

May 2009

"Ah, the fruits of a society where the sense of morality has been replaced with a swollen sense of  entitlement. I hope people are starting to wake up. Anyone with half a brain should be watching in horror as the current administration is trying to  take us down this Socialist road to hell. No matter how many times it has been tried, Socialism does not, and will not work. "

~ D Mangus.
The Professional Opinion

DJIA Index: 8168.12

The stock market is attractive for purchase during periods of weakness.  Interest rates are expected to remain low and inflation is expected to remain well under control.  An expected earnings recover in 2010 should push the S&P 500 into the 1000-1100 range.
Real GDP growth would come in at 2-3%

Bob thinks the final closing lows for this cyclical bear were registered in the ides of March and that now we are in the beginning stages of a cyclical bull market and this will carry into next year.  If all this happens, you should expect to see large gains to the upside.

The Leading Index of Economic Indicators has not improved much at all but this index should improve during the summer season.  When these indicators improve, economic activity should also start picking up.

Consumers and their ability to consume is critical to an economic recovery because consumer spending accounts for 70% of all economic activity. Tax breaks and other forms of stimulus should help this situation.  That, in conjunction with reducing the backlog
of housing to the point that new homes need to be constructed again,  also needs to happen.

Real GDP growth is expected to improve slightly in the third and fourth quarters of this year.  A modest contraction during this second quarter is not out of the realm of reasonable expectation.

"Looking at the present market situation, we believe we are in the second cyclical bull market of the secular bear mega trend that began in March of 2000, as measured by the S&P 500 index.  We expect the market to make excellent progress into next year. This is the reason we are maintaining a fully invested position in our model portfolios.  We continue to rate the market attractive for purchase on weakness."

Individual Issues:

For the first time in years,  Bob has added a new stock to the list - SUNCOR (SU).  I am familiar with that one.  He views this as a hedge for protecting the portfolio against rising oil prices in the future.  He emphasizes that individual stocks should comprise no more than 4% of an equity portfolio.

DIA, IWV, SPY and VTI are all rated buy during periods of weakness.

Summary:

Stay fully invested and add to your positions during periods of weakness.

 
Monterrey Bay Aquarium

Frogs at the Monterrey Bay Aquarium

Personal Portfolio
YTD
Our community organizer did little damage to the portfolio this month - too busy out on a worldwide apology tour for the United States being the United States.  A sad state of affairs.

There is still a lot of potential for tremendous damage if  government actually starts trying to implement Cap and Trade legislation.  
The first steps down that road of insanity were released late in the afternoon on a Friday a couple weeks ago.  
If I was to speculate,  I would say the massive tax increases headed our way if Cap and Trade gets out the barn door  would be used to finance something like the takeover of  the health care system and change it into some kind of  socialized, equality for all service like the Brits and Cannucks are so proud of.

If that isn't bad enough, how about the moronic comments stating the automobile industry needs to start producing engines capable of running a much higher ethanol to gasoline blend.  Terrific,  that's just what the auto industry needs  - another mandate.  

I wonder if any of those legislators ever bothered to ask around to see what high ratios of ethanol to gas does to conventional engines over time.  

I know...........Rhetorical Question.

With that in mind, if I was looking for a stock that just might do well as a result of all this.......think ADM.

Personal Portfolio
April was a very good month.

Standard Pacific (SPF)

Standard Pacific Homes
Standard Pacific generated a 100% profit for the month.  Not bad. I sold the position and then picked up bit more later on. Masco (MAS) is showing signs of life so I think it will pay to keep some of this really cheap stuff.  When housing does turn around, the cheap stuff might not be so cheap anymore.


Clearwire Corp (CLWR)

Clearwire
I used some of the SPF proceeds to pick up Clearwire.  My thought on this is that if Sprint comes out with better than expected numbers and Palm remains strong,  Clearwire might benefit.  A couple snippets:

Snippet1

Snippet 2

Huntsman  (HUN)

Huntsman
What's not to like about Huntsman these days.  I ended up having to sell some of the position to keep the allocations down to a more reasonable percentage.  This is looking to go 100% in short order too.

BGS Foods (BGF)
BGS Foods

BGS Foods

I've been quite pleased with BGS.  Reinvesting their dividends in new shares.  Their first quarter profit actually rose and all in all, they are doing ok.

Closing Comments
No other comments except to say that if you have never visited Carmel California,  take advantage of the winter rates currently offered. Steep discounts are hard to pass up.  Check out Point Lobos if you haven't been there.  Well worth the effort.  So is the Monterrey Bay Aquarium........and don't miss their new Sea Horse exhibit.

Jellyfish at the Monterrey Bay Aquarium