December, 2012

'it's hard to beat Santa Claus.'

~ Rush Limbaugh, in reference to  the outcome of the presidential election.


Respectfully, I don't see a civil war coming -- I see class warfare a possibility. The Haves vs. the Have-nots.

Not a revolution but a RESTORATION.

Indeed, all it takes is for Atlas to shrug. What are the parasites going to do? Start up replacement industries? Ha! They couldn't if they tried. Those "evil rich people" have enough why not just shutter their businesses, fire everyone, and destroy all the machines and buildings? Just wreck it all.

Leave a sign: "I'm leaving this in the same condition as I found it. It's yours. Good luck. I'm on strike."

~ BB Commentary some of us can relate to....referring to Ayn Rand's  'Atlas Shrugged'.

The Professional Opinion - DJ 15325.58

Bob is a bit concerned that we have not had a significant pullback. A correction is defined as at least 5% to the downside.  Last month he said he was remaining vigilant about valuations and that if he needed to make portfolio changes, he would.

One note of interest is that in his income portfolio there were two mutual funds about 96%  bonds and 4% equities.  He sold these two funds and went 100% bonds.

This month he added in a few blurbs about what to expect communication-wise in such an event.  Sounds to me like we might expect something other than 'for now the portfolio remains fully invested', which was the mantra during the 2008 downturn up until now.


Personally I kind of think he is looking at the resulting turmoil from year end tax selling as a result of our do-nothing government, and the so-called financial cliff which is also hanging out there.  But.....we shall see.   Either way, it is certainly not looking good and...........


Bob may have a point.

Buy Recommendations

None.  Everything is rated as a hold, as is usually the case.

Big Horn Ship
Canadian Bighorn Sheep

Fiscal Cliff
One disadvantage of having a teleprompter in charge is that teleprompters can only read from a script and one cannot negotiate via teleprompter,  and teleprompters are certainly not known for their negotiating skills.

Teleprompter = Foghorn Leghorn - a fair enough analogy for me.

One aspect of falling over the financial cliff that I kind of like, is you know the 49% of Americans who pay no taxes?  Well, it looks like they are going to be paying taxes.  That, I think will inject some true fairness into the overall scheme.  If those who voted for Santa Claus have to give something back,  maybe their perspective as a voter will change.  Here's to wishful thinking.


GARP Investing - Growth at a Reasonable Price


GARP is a strategy I had not heard of before. It is a process of stock selection in which one looks for companies that appear to be undervalued but have a good balance sheet and the potential for growth.  It is a cross between growth and value.

In a bull market, GARP stocks would tend to under perform growth.

In a bear market, GARP stocks would tend to outperform value.

Calculating whether or not a stock is a GARP candidate is determined by dividing the PE by the company's five year projected growth rate (PEG):  PE/PEG
A GARP investor is looking for a value of less than one and a place to find the PEG ratio is Y-Charts.

Take Apple (AAPL) for example:


A PEG ratio of .2248 and prospects for solid growth make this company worth a second look and at $600.00 a share,  Apple may actually be undervalued.

On the other hand, lets have a look at GE:


GE would present some problems for the GARP investor.  A  PEG ratio of one is what we are looking for.  GE's PEG ratio is almost 20 times that.

For me,  with GE's current PE of 15.5 and a yield of over 3%,  I would not personally disregard the stock.....but then I'm not exactly a GARP investor.


I think for me this could be of some value, particularly if I was looking for a stock with some potential for price appreciation in a richly valued environment.

Blackstone (BX) and Jefferies (JEF) - Long Term Gold? - A Revisit (for Jefferies anyway).

Leucadia (LUK), a company I own, had a sizable position in Jefferies until last month.  It decided to buy Jefferies, which percentage-wise would have put me in too much exposure to the stock.  


I sold Jefferies at the spike up  and kept Leucadia.  Sometimes these things happen.


Leucadia is a mini-conglomerate that among other things owns some mighty fine steak and some really good wine.

They now own Jefferies, a decent investment bank.  There is some question about Jefferies bond ratings though.


I'll revisit this in another couple months and see how this pans out.


What we have here is CNBC's
 prophet, seer, revelator - and major PITA.    Detailed Opinion Here

Financial Analyst - NOT

Soothsayer - NOT

Bearer of Practical Financial Advice - Occasional

Man's Worst Nightmare - Maybe......

Having to listen to annuity pitches interspersed with vitamin infomercials  could be worse.
Let's  keep track of just  how well this PITA's  'predictions' pan out for the rest of the year.

2012 Predicted Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Gold $2,000.00 1736.7 1716.28 1671.9 1664.2 1616.9 1604.2 1613.8 1683.4 1771.1

Recession  60% Chance Nope! Nope! Nope! Nope! Nope! Nope! Nope! Nope! Nope! Nope! Nope!
TIPS Current 5yr Yield Home Run - Maybe 0.95% 0.90% -.126% .125% -1.03% -1.00% -1.22 -1.286 -1.46

Northern Canada

Northern Canada - from the archives