May, 2010

"If you do your research, develop a plan and refrain from emotional decisions, the stock market can be profitable and it certainly isn't gambling.

"But if you're trading on margin, asking a Google discussion board for advice or freaking out over a 5% drop after a 40% run, you should
really just go to Vegas.

"At least there will be free drinks and low-cut dresses. "

~The Traveler 

The Professional Opinion

S&P 500 Index: 1186.69

Leading off with the LEI,  the LEI continues its longest winning streak since 2005.   The six month growth rate of the LEI now stands at slightly over 5%, which translates to an annual rate of 10% or so.

The prospect of  increasing the job numbers is still the big question mark and will remain on of the major keys to increasing organic growth.  Recent job numbers have been encouraging but unemployment is still very high.  We need to start putting people back to work.
The specter of wage inflation is definitely not raising its head anytime soon.

Some other statistics:

Capacity Utilization:  Up
Productivity: Up
Retail Sales: Robust
Spring Season Retail Sales:  Up
Housing Starts:  Improved
Building Permits - Excellent
CPI - Up .1%
YOY Inflation:  2.3%
Stock Valuation:  Quite Reasonable.
Loan Demand:  Sluggish
Bank Lending Policies:  Tight


The economy is turning around so stay fully invested and buy on the dips.

Powerpoint Gone Wild
To help the US military understand war logistics in Afghanistan, these gomers were paid somewhere around $20,000,000 to produce this spectacle.  The full sized version is here.

Note:  This may be an urban legend but I rather doubt it considering $12,000 toilet seats and all.........

Personal Portfolio
I've done it!

I made back all the losses since that high in 2007 plus some.  

Now what.......

I think I will let everything gel for a while, except maybe sell DHI if they really run on blow-out earnings.  That stock is good for trading.  It fluctuates quite a bit.

I certainly won't be buying anything Euro-Related. Greece, Portugal and Spain are in trouble and I wonder if they are going to be the first dominoes to fall. The countries that did not opt in for the  Euro are looking pretty smart.

I wonder if after this experience, if the New World Order,
One World Currency crowd in these United States are going to have a change of heart.  

Probably not.  Hasn't shut up the global warming idiots even after their so-called research was exposed as fraud.


Personal Portfolio

Just when things were going swimmingly well, we hit for lack of a better term, a speed bump....

Goldman Sachs

"The civil lawsuit is the biggest crisis in years for Goldman, which emerged from the global financial meltdown as Wall Street's most influential bank.

It is also a huge test for Chief Executive Lloyd Blankfein, who has faced a firestorm of criticism over the bank's pay and business practices, and it comes as lawmakers in Washington debate sweeping reform of financial industry regulation.

The case has also ensnared John Paulson, a hedge fund investor whose firm Paulson & Co made billions of dollars by betting the nation's housing market would crash. This included an estimated $1 billion from the transaction detailed in the SEC lawsuit, which the agency said cost other investors more than $1 billion.

Fabrice Tourre, a Goldman vice president who the SEC said was mainly responsible for creating the questionable mortgage product, known as ABACUS, was also charged with fraud."

The resulting consternation on Wall Street caused investors to immediately panic and sell off everything which resulted in a 126 point loss for the Dow, financials leading the way.

I do find it suspicious that the announcement was made during the financial reform debates and I would not put it past this administration to do just that for political gain.  This reminds me the the IRS making high profile examples every couple years to keep the little people in check.  


And then came April 30 and another announcement of a criminal probe.  I do believe this is a buying opportunity.  
I'll be looking at this on May 3.


The killing I was previously making on Citigroup got halved.  What to do, what to do. Panic and sell over a 5.2% drop in share price?  

I don't think so. 

For whatever reason, MBI was actually making new highs so I sold that and used the proceeds to buy more Citi at attractive lows.  The theory was to hold until Citi reported earnings the following Monday which I thought would be better than expected or at least not as bad as the so-called analysts thought.  This seemed to be the prevailing trend.

I held and ended up selling all for about 37% profit. .  Not a bad month.

I don't really see Citi moving up much more from here until they get rid of their gazillion shares and the government gets out of the banking business. 


Huntington Bancshares actually turned a profit for the quarter and the stock popped nicely.  Key Bank significantly narrowed its losses which also caused a considerable up tick.  Other regional banks followed.  I hope one or two of you were able to take advantage of my earlier prognostications regarding regional banks.

The disadvantage of this is that financial stocks have become 18% of the overall portfolio, which is way too high. Have to start taking some more profits here one of these days, go to cash and wait for the teleprompter to open its mouth again, cratering the stock market.  That would be a good time to do a little more diversification.

Speaking of  Diversification:


For the past six months I've been looking around for a natural gas transmission and exploration stock to hold on to and I keep circling back to El Paso Corporation.


The company is continuing to build out and I think the price, PE and size of the company are attractive for purchase. 

Here is their latest information package.


DHI actually reported a profit for the quarter and  the stock jumped as high as $15.44 as a result.  Didn't stay there for very long.  

This is an example of when to use a stop.  

I trade in and out of this stock because it swings enough to make it worth while.  I first noticed the dramatic move at $15.32 and it was moving down. I decided to put in a stop at $15.25 because I thought it was going to continue to move lower and it did, and I got stopped out.  

I uses stops very sparingly because it's too easy to get stopped out on a hiccup.

What works well for me is wait a week or to for the teleprompter to take to the air waves, shoot off its mouth and trash the markets, which in turn causes a knee-jerk reaction and another buying opportunity.

Roth Conversions - They may not be all they're cracked up to be.

If you begin hearing numerous new ads on the radio or TV for anything financial and the wonders this product can do for you,  be very skeptical.

Before you do anything, talk to a CPA or Enrolled Agent about the effects of such a conversion. The adviser should be fee based.  Pay for an hour or two of his time.

Brokers as a rule, are not CPAs or Enrolled Agents.

Don't regard anyone on the end of a 1-800 number from a radio ad as anything more than a pitchman.

Some Considerations if you wish to go from Conventional IRA to Roth:

1.  Will such a move push you into a higher tax bracket?

2.  Do you have enough time left to make up for the incredible tax hit that may befall you?

3.  Why are you doing it - to benefit yourself or to benefit heirs?

4.  Is anyone encouraging you to do this (brokers, cold callers, insurance agents)?

5.  You should not have to pay anyone other than government taxes, and lots of them, to make the switch. Is anyone offering to do this for you for a fee?

6.  Is anyone suggesting you place your Roth IRA  inside an annuity? If so, Run.  Don't Walk.

7.  Is anyone suggesting you replace your present low cost conventional IRA with a high cost broker-sold Roth IRA that limits you to a high cost, front-end loaded broker sold family of mutual funds?

8.  Is anyone recommending you replace your IRA with a Roth specializing in Gold or any other commodity?

......A few things to think about.

April 22 2010 Snow Storm

For those of you who don't believe it snows in Nevada.  In late April.