March 29, 2013
Comment on Model Portfolio activity
We reduced Facebook and sold
Yahoo this week. We are about 20% invested in larger accounts.
Thirty Years ago this week resigned our
partnership at Wayne Hummer and basically went on our own. It has been and
interesting trip and we have our clients’ confidence and trust over the years
to thank for our success.
The world didn’t end when Cypress reopened its
banks and the markets rallied in celebration. Everyone keeps looking for the
next Black Swan (big bad economic event) which probably won’t occur as long as
folks keep looking for it. We remain cautious on the market expecting a
Bulls rise back to 49% with Bears at 19%.
Bullish is bearish if you get our drift.
September 19th, 2012 – the day
Apple’s stock price hit an all-time closing high of $702.10 per share. At that
moment Apple market capitalization (Market Cap. = Stock Price x Total Number of
Shares Outstanding) was $659.3 billion. As of our writing this, Apple was worth
$416.6 billion, a drop of 36.8%. During the exact same six months, to the
day, Google’s market capitalization has gone from $194.6 billion to $269.7
billion, an increase of 38.6%. A near mirror-image coincidence? Or
perhaps some big traders and bigger investment funds deciding to switch one
tech titan for the other while Apple’s valuation and growth prospects are
March 22, 2013
Comment on Model Portfolio activity
We did a tad of buying and a bunch of selling
this week as markets stagnated near all-time highs and Europe became a problem
again in the minds of the big boys and girls who man/woman the trading
Every time the Model touches
the magic $700,000 number the markets pull back and for the
third time in the last three months this occurred. We took profits in
Apple, DreamWorks, Sony, Walgreen Cisco and Research in Motion and traded plus
to flat out of Nvdia, JC Penney, Intel EMC Devon, BP and half our GM B
We did add to Juniper, U.S.
Steel, and repurchased BankAmerica in accounts. Finally on the recommendation
of our 13 year old granddaughter who has replaced her grandma, aunt and mother
as our retail bell weather we purchased shares of Lululemon and at the behest
of our grandson we are considering a position in Under Armor. An hour after
buying the LULU we got cold feet since it sells at 10 times sales and 40 times
earnings. We couldn’t resolve holding such an expensive stock at all-time
market highs. As clients know sometimes we don’t know until we own. The day
trade cost us $1 a share.
The markets have seemed tired for a while but
the bears haven’t yet been able to break the uptrend. Month/Quarter end next
week may lead to some pull back in April/May.
March 15, 2013
Comment on Model Portfolio activity - Ides of March 2013
DJIA calmly made new all-time highs all week except today
but the S&P 500 couldn’t. Today is quadruple witching and the HFT boys and
girls seem to want to e tired. Our guess is that the run to record highs will
fizzle by the end of the Month/Quarter. There seem to be many folks still wanting
to get in so the pullback may be mild.
economy is not blasting but it may be humming. With all the media available it
is sometimes hard to hear ourselves think let alone make reasoned judgments on
the markets. But we do think this year’s markets feel different from the last
five years and that there is more room to room to roam on the upside. Time will
During the week we added Devon (natural gas) and British
Petroleum (cheap bad oil) to accounts and purchased more Blackberry, EMC, JC
Penney and GM B warrants in some/many accounts.
are 40% to 60% invested in large accounts and more so in smaller ones and we
will probably hold through a correction- unless we change our mind.
And for all the high school English class folks of a
long ago day:
Romans, countrymen, and
lovers! hear me for my
cause, and be silent, that you may hear: believe me
for mine honour, and have respect to mine honour, that
you may believe: censure me in your wisdom, and
awake your senses, that you may the better judge.
If there be any in this assembly, any dear friend of
Caesar's, to him I say, that Brutus' love to Caesar
was no less than his. If then that friend demand
why Brutus rose against Caesar, this is my answer:–
Not that I loved Caesar less, but that I loved
Rome more. Had you rather Caesar were living and
die all slaves, than that Caesar were dead, to live
all free men? As Caesar loved me, I weep for him;
as he was fortunate, I rejoice at it; as he was
valiant, I honour him: but, as he was ambitious, I
slew him. There is tears for his love; joy for his
fortune; honour for his valour; and death for his
ambition. Who is here so base that would be a
bondman? If any, speak; for him have I offended.
Who is here so rude that would not be a Roman? If
any, speak; for him have I offended. Who is here so
vile that will not love his country? If any, speak;
for him have I offended. I pause for a reply.
countrymen, lend me your ears;
I come to bury
Caesar, not to praise him.
The evil that men do
lives after them;
The good is oft
interred with their bones;
So let it be with
Caesar. The noble Brutus
Hath told you Caesar
If it were so, it
was a grievous fault,
And grievously hath
Caesar answer'd it.
Here, under leave of
Brutus and the rest--
For Brutus is an
So are they all, all
Come I to speak in
He was my friend,
faithful and just to me:
But Brutus says he
And Brutus is an
He hath brought many
captives home to Rome
Whose ransoms did
the general coffers fill:
Did this in Caesar
When that the poor
have cried, Caesar hath wept:
Ambition should be
made of sterner stuff:
Yet Brutus says he
And Brutus is an
You all did see that
on the Lupercal
I thrice presented
him a kingly crown,
Which he did thrice
refuse: was this ambition?
Yet Brutus says he
And, sure, he is an
I speak not to
disprove what Brutus spoke,
But here I am to
speak what I do know.
You all did love him
once, not without cause:
What cause withholds
you then, to mourn for him?
O judgment! thou art
fled to brutish beasts,
And men have lost
their reason. Bear with me;
My heart is in the
coffin there with Caesar,
And I must pause
till it come back to me.
March 8, 2013
Comment on Model Portfolio activity
We repurchased Apple, Juniper
and Yahoo and added to Alcoa, Deutsch Telekom and Facebook.
Bulls dropped to 44%
from 46% as the DJIA made new highs. That is unusual because bullish sentiment
usually rise as with the markets and falls with the markets.
GDP in the last Quarter ex the drop in
Government spending was up 3.75%. all the pooh bahs are calling for a drop in
government spending as the cure of all evils on earth so they should be
ecstatic with that fact.
In THE LAST QUARTER Business investment rose
9.7% and residential construction jumped 17%.
The DJIA made a new all-time high exactly 4
years to the day March 6 that is made its correction low in 2009.
March 1, 2013
Comment on Model Portfolio activity and other stuff
We sold our trading positions: Merck, Dow, Joseph Banks, and
Coach because we wanted to add a few longer tem positions without increasing
total equity commitment. We bought Sony, EMC, Facebook DreamWorks, and First
Solar with some of the proceeds. Our thought is to maintain our long term
positions and add in any selloff while also adding several more holdings in the
coming pullback positions. First Solar disappointed with its forecast and
dropped 15% in one day but is the leader in the industry and has a good plan
going forward. We have been in and out of DreamWorks, Facebook, and Sony for
the last year. EMC is a play on VMware which is the leader in the cloud
infrastructure stuff. EMC owns 70% of VMware and is a less
volatile way to play the cloud because of EMC’s other businesses which add some
support to the share price with the volatility of VMware’s share price.
Inc . provides virtualization and
virtualization-based cloud infrastructure solutions in the United States and
internationally. The company’s products address planned and unplanned downtime
management, system recoverability and reliability, backup and recovery,
resource provisioning and management, capacity and performance management, and
security issues. Its cloud infrastructure products and technologies include
VMware vSphere, which is a data center platform that also enables live
migration of actively running virtual machines across servers or storage
locations without disruption or downtime; enables availability for all
applications against hardware and operating system failures; and enables
centralized point of control for cluster-level networking, as well as
automatically manages the placement and balancing of a virtual machine across
storage resources. The company also offers cloud application platform solutions
that help organizations build, run, and manage enterprise applications in
public, private, or hybrid clouds optimized for vSphere. In addition, it
provides end-user computing solutions, which provide secure access to applications
and data from various devices and location, as well as serves the corporate IT
departments through managing and connecting end-user assets delivering them as
a managed service. The company’s end-user computing solutions also provide the
ability to manage software as a service, Windows, Mobile, or enterprise
applications, as well as enhance communication and collaboration between end
users. Further, it provides a range of professional services, such as
consulting, education, and technical account manager services, as well as
customer support services. The company sells its products through distributors,
resellers, system vendors, and systems integrators. VMware, Inc. was
incorporated in 1998 and is headquartered in Palo Alto, California. VMware,
Inc. operates as a subsidiary of EMC Corporation. http://finance.yahoo.com/q/pr?s=VMW+Profile
Earth feels like all there is, but we know that it’s just a tiny planet in a
vast Solar System. And our Solar System is just one member of a vast Milky Way
galaxy with 200 to 400 billion stars. But how many galaxies are there in the
entire Universe? This is a difficult number to know for certain, since we can
only see a fraction of the Universe, even with our most powerful instruments.
The most current estimates guess that there are 100 to 200 billion galaxies in
the Universe, each of which has hundreds of billions of stars. A recent German
supercomputer simulation put that number even higher: 500 billion. In other
words, there could be a galaxy out there for every star in the Milky Way.
there is no doubt that Fed support has been a crucial, crucial support
mechanism for higher equity values and economic improvement since first being
utilized in late 2008, one cannot ignore (nor, admittedly, separate out) the
improvement in the earnings environment. Our good friend Larry Kudlow is fond
of saying that profits are the mother’s milk of stock prices. In that regard, the S&P 500’s four quarter trailing EPS is
currently $98 or so. At the end of March 2009, that number was $43 or so
meaning EPS has more than doubled, 129% higher
today than at the equity market’s bottom. Guess how much the S&P 500 is up
since then? 128%. We suppose this isn’t all
about the Federal Reserve after all.
are the reasons, good or bad, that cancer means a half-million- or
million-dollar tab? Why should a trip to the emergency room for chest pains
that turn out to be indigestion bring a bill that can exceed the cost of a
semester of college? What makes a single dose of even the most wonderful wonder
drug cost thousands of dollars? Why does simple lab work done during a few days
in a hospital cost more than a car? And what is so different about the medical
ecosystem that causes technology advances to drive bills up instead of down?
bill and six others examined line by line for this article offer a closeup
window into what happens when powerless buyers — whether they are people like
Recchi or big health-insurance companies — meet sellers in what is the ultimate
result is a uniquely American gold rush for those who provide everything from
wonder drugs to canes to high-tech implants to CT scans to hospital bill-coding
and collection services. In hundreds of small and midsize cities across the
country — from Stamford, Conn., to Marlton, N.J., to Oklahoma City — the
American health care market has transformed tax-exempt “nonprofit” hospitals
into the towns’ most profitable businesses and largest employers, often
presided over by the regions’ most richly compensated executives. And in our
largest cities, the system offers lavish paychecks even to midlevel hospital
managers, like the 14 administrators at New York City’s Memorial
Sloan-Kettering Cancer Center who are paid over $500,000 a year, including six
who make over $1 million.
as a whole, these powerful institutions and the bills they churn out dominate
the nation’s economy and put demands on taxpayers to a degree unequaled
anywhere else on earth. In the U.S., people spend almost 20% of the gross
domestic product on health care, compared with about half that in most
developed countries. Yet in every measurable way, the results our health care
system produces are no better and often worse than the outcomes in those
to one of a series of exhaustive studies done by the McKinsey & Co.
consulting firm, we spend more on health care than the next 10 biggest spenders
combined: Japan, Germany, France, China, the U.K., Italy, Canada, Brazil, Spain
and Australia. We may be shocked at the $60 billion price tag for cleaning up
after Hurricane Sandy. We spent almost that much last week on health care. We
spend more every year on artificial knees and hips than what Hollywood collects
at the box office. We spend two or three times that much on durable medical
devices like canes and wheelchairs, in part because a heavily lobbied Congress
forces Medicare to pay 25% to 75% more for this equipment than it would cost at
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