Thursday, May 20, 2010

Before reading, please see the disclaimer in the 'About Me' section.

The Wilshire 5000 closed at 11,170.00, down from 11,560.00, or 6.84%, since my post on 5/8/10. The Wilshire 5000 has now crossed below the 200-day moving average 2.06% to the downside.  I see this as neutral news, and am looking for the correction to take us a bit lower still.

The Investor's Intelligence Survey was released on Thursday night. This week's reading was 43.8% BULLS, and 24.7% BEARS, for a spread of 19.1%. This is in comparison to a reading of 56.0% BULLS, and 18.7% BEARS, for a spread of 36.0% on May 4th.  I am looking for the BULL reading to cross below 40.0% next week.  Given the chart located here, I would see this as a buying opportunity.

The Volatility Index closed Friday at 45.79, up from 40.95 back on May 8th. This is the third week in a row that we have seen the VIX trade above 35.

Now for the portfolio...
1) Verizon at $27.76, down 14.45% for the year, inclusive of dividends.  As this stock falls, the yield is only rising.  If I were in the business of buying on the way down with this "imaginary portfolio", I would be adding to my position as we speak

2) AT&T closed at $26.00, down .99% for the year, inclusive of dividends.

3) GE closed at $16.26, up by 8.14% for the year, inclusive of dividends.  I see GE's recent move down as another buying sign.

4) TBT, the doubleshort U.S. Treasury ETF closed at $38.81, down by 22.19% since my buy.  Given where we are in the market and the worldwide economy, I suspect the Fed is going to keep rates low for quite some time, thus keeping this ETF down for quite some time.  I will ponder moving out of this position in the time ahead.

5) FXP, the doubleshort China ETF, closed at $48.24, up by 10.96% since my buy, and after a 1:5 reverse split.  I suspect this one is not done moving higher.

6) GOOD closed at $14.63, up by 8.23% since my buy, including the reinvestment of a dividends.  Like I said previously, I think this stock yielding greater than 10% is a gift, and will be buying some in my retirement account in the next week or so.

7) NLY closed at $15.34, down by 10.77% since my buy, inclusive of a reinvested dividends

8) AAPL closed at $237.76 up by 22.71% since my buy.  In more Apple rumor news, some analyst just put a $330 price target on this puppy.  We'll see how that pans out.

9) January '12 Citigroup Calls closed at $.29, down by 34.09% since my buy.  I am still very bullish on Citi, especially since it is now trading well below it's tangible book value.  Historically, this has been a great place to buy.  I am looking for all financials to pop after the European thing settles, and financial reform is passed which brings me to....


10)  GS.  I said a while back I would buy around the $136 level, and I am doing so today with 7 shares at $136.10.  This rounds out my ten slot portfolio, and I am interested to see how I weather the storm in the months ahead.

Overall, the portfolio is up by 2.47% (-2.47% for the DOW Dogs), versus -2.85% for the Wilshire 5000. The current basket of eight stocks that I am currently invested in, including dividends, is down 3.21% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 5.32% outperform.

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Saturday, May 8, 2010

TIMBERRRRRRRRRRR!!!! Portfolio Update 5/8/10

Before reading, please see the disclaimer in the 'About Me' section.

The Wilshire 5000 closed at 11,560.00, down from 12,408.90, or 6.84%, since my post on 5/2/10. The Wilshire 5000 is now only 2.04% above it's 200-day moving average. 

The Investor's Intelligence Survey was released on Thursday night. This week's reading was 56.0% BULLS, and 18.7% BEARS, for a spread of 36.0%. This is in comparison to a reading of 54.0% BULLS, and 18.0% BEARS, for a spread of 37.3% on April 27th.  I have not seen levels this high since I started keeping a spreadsheet of data back in December.  It will be interesting to see what next weeks reading comes in at, because I can guarantee it won't be this high on the BULL side.

The Volatility Index closed Friday at 40.95, up from 22.05 back on April 30th. According to my handy chart, we have not seen levels this high since roughly May of 2009, right after the market bottomed in early March of 2009.

Unless you have been living under a rock, or have been hiking in the backwoods of Canada, you know that the market fell off a cliff this week on fears of Europe, the Euro, and whatever other story the media can drum up.  Historically, the 200-day moving average has been a pretty important barometer of where the market can and will go.  It will be interesting to see in the next week or so how things shake out, and whether or not the market breaks this support level.  From what I have been listening to and reading, a correction of 15 - 20% seems like a reasonable possibility.  That would take the market to at least the 10,834 (per the analysis by Van-Eck Tillman).  I would be ok with this, as should everybody else with money on the sidelines.  The fundamentals in America are improving, and the possibility of a Greek failure is way overblown.  Greece has the 28th largest economy in terms of GDP, or as I heard on CNBC the other day, roughly the size of Michigan.



Now for the portfolio...
1) Verizon at $28.19, down 13.13% for the year, inclusive of dividends.  As this stock falls, the yield is only rising.  It's also interesting that this stock has been appearing on my DOW DOGS screen since late last year.  This, along with JNJ, are the only stocks currently appearing on that screen.

2) AT&T closed at $26.22, down .15% for the year, inclusive of dividends.

3) GE closed at $16.88, up by 12.27% for the year, inclusive of dividends.

4) TBT, the doubleshort U.S. Treasury ETF closed at $41.32, down by 17.16% since my buy.

5) FXP, the doubleshort China ETF, closed at $46.31, up by 6.52% since my buy, and after a 1:5 reverse split.

6) GOOD closed at $15.88, up by 17.47% since my buy, including the reinvestment of a dividends.  Good traded down in the $15 range on Thursday and Friday, bringing the yield back close to 10%.  If you got a chance to get in at that level, or if you get a chance in the next week or two, I think it's a gift.

7) NLY closed at $15.80, down by 8.09% since my buy, inclusive of a reinvested dividends

8) AAPL closed at $235.86, up by 21.73% since my buy.  I heard a trader say yesterday it is not outside the realm of possibility that this stock trades down near $200 near term.  That would also be a gift, look out for such an occurrence.

9) January '12 Citigroup Calls closed at $.37, down by 15.91% since my buy.  Should have waited another week or two to buy these, but no regrets here.  I estimate that by January 2012 Citigroup should be earning at least $1 per share, and a stock price of $7.50 puts the PE at 7.5.  This is cheap compared to banks like US Bank, Bank of America, and all the rest.  This is a long-term trade, and something to be patient with.

Overall, the portfolio is up by 6.03% (-.37% for the DOW Dogs), versus 0.54% for the Wilshire 5000. The current basket of eight stocks that I am currently invested in, including dividends, is up 0.43% year-to-date. The spread between my performance and the overall market (Wilshire 5000) has increased to 5.49%.

As of right now, I am still waiting for Goldman Sacks (GS) to trade down to the $135 level.  If it does so, I will most likely be a buyer.  Goldman closed down below $145, which people a lot smarter than I are saying is an important technical level.  We will wait and see.

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Sunday, May 2, 2010

How Democracies Fall

This was sent to me recently.  I found it interesting, and decided to re-post it here.



About the time our original 13 states adopted their new constitution, Alexander Tyler, a Scottish history professor at the University of Edinburgh, had this to say about the fall of the Athenian Republic some 2,000 years prior:

“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government.  A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury.  From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.”

“The average age of the world’s greatest civilizations from the beginning of history, has been about 200 years.  During those 200 years, these nations always progressed through the following sequence:

1)         From bondage to spiritual faith;
2)         From spiritual faith to great courage;
3)         From courage to liberty;
4)         From liberty to abundance;
5)         From abundance to complacency;
6)         From complacency to apathy;
7)         From apathy to dependence;
8)         From dependence back into bondage.”

Professor Joseph Olson of Hamline University School of Law, St. Paul, Minnesota, points out that some interesting facts concerning the 2000 presidential election:
1)         Population of counties won by: Gore: 127 million; Bush: 143 million;
2)         Square miles of land won by: Gore: 580,000; Bush: 2,427,000;
3)         States won by: Gore: 19; Bush 29;
4)         Murder rate per 100,000 residents in counties won by: Gore: 13.2; Bush: 2.1

Professor Olson adds: “In aggregate, the map of the territory Bush won was mostly the land owned by the tax-paying citizens of this great country.  Gore’s territory mostly encompassed those citizens living in government-owned tenements living off government welfare.”

Olson believes the United States is now somewhere between the “complacency & apathy” phase of Professor Tyler’s definition of democracy, with some 40 percent of the nation’s population already having reached the “governmental dependency” phase.



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Portfolio Update 5/2/10

Before reading, please see the disclaimer in the 'About Me' section.
The Wilshire 5000 closed at 12,408.90, down from
12,693.00, or 2.23%, since my post on 4/26/10. The Wilshire 5000 is now only 10.09% above it's 200-day moving average.

The Investor's Intelligence Survey was released on Thursday night. This week's reading was 54.0% BULLS, and 18.0% BEARS, for a spread of 36.0%. This is in comparison to a reading of 53.3% BULLS, and 17.4% BEARS, for a spread of 35.9% on April 20th.

The Volatility Index closed Friday at 22.05, up from 17.47
back on April 26th.  We saw the VIX trade above the 20 level a few times this week, which we have not seen for quite some time.

Now for the portfolio...
1) Verizon at $28.90, down 10.94% for the year, inclusive of dividends.  


2) AT&T closed at $26.26, up .42% for the year, inclusive of dividends. 

3) GE closed at $18.86, up by 25.44% for the year, inclusive of dividends.

4) TBT, the doubleshort U.S. Treasury ETF closed at $45.16, down by 9.46% since my buy.

5) FXP, the doubleshort China ETF, closed at $40.93, down by 5.85% since my buy, and after a 1:5 reverse split which occurred a few weeks back.

6) GOOD closed at $16.20, up by 19.84% since my buy, including the reinvestment of a dividends. 


7) NLY closed at $16.95, down by 1.40% since my buy, inclusive of a reinvested dividends


8) AAPL closed at $261.90, up by 35.17% since my buy.

Overall, the portfolio is up by 10.90% (6.13% for the DOW Dogs), versus 7.93% for the Wilshire 5000. The current basket of eight stocks that I am currently invested in, including dividends, is up 6.59% year-to-date. The spread between my performance and the overall market (Wilshire 5000) has increased to 2.97%. 

As of right now, I am going to get back into Citigroup (C).  I am going to buy the January 2012 $7.50 calls for $.44.  I am going to buy 22 calls, which will control 2,200 shares.  I like the long-term outlook for Citi, and the financial sector as a whole.  It's a sight for sore eyes now that the market has given a discount on a lot of these names, mostly due to the Golden Slacks scandal.  

Speaking of Goldman Sachs (GS), if Goldman trades down near $135/share, I will be adding that name to once again fill all ten slots of the portfolio.  Stay tuned.

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About Me

DISCLAIMER: I started this blog as a way for people to exchange ideas relating to investing and finance, primarily. I am in no way a professional in these areas, merely a student of the financial world. The thoughts expressed on these pages have no connection to my employer in any way. Anybody reading this blog should do so with caution, exercise their own judgment, and do their own due diligence on any financial undertaking. About Me: I reside in New Jersey with my wife and my two dogs. I have a B.S. degree in Accounting with a minor in Finance, as well as an MBA in Accounting. Currently, I am employed as a forensic accountant, and am pursuing my CPA designation. I love the stock market, and picking stocks. I spend a great deal of time analyzing market data, as well as individual names.

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