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Bud's Poem Page |
30 November 2005 Daily CommentThoughts We are mostly cash now but may
make one more trading foray before year end. In many accounts we are
ahead on a cost basis even if we are below the On But we didn’t leave the casino.
And in the first week of 2005 we lost 7% of our money and at times
during 2005 our cash was below the $100 we started with on By our reckoning, as we left the casino yesterday we were ahead, even though we gave up a bit of our winnings. That’s because we had more money than which we began the adventure one year ago. There were clients who left the casino with less actual money but in those cases we have been able to mitigate the losses over the last two months. Could we have done better? Of
course we could have and we could have done worse. But we outperformed
five–year Treasuries over the last 23 months and now we have our capital back
and that is calming.
67% of all industrial bonds
currently outstanding are considered High Yield (Junk). In 1980 that number was
3%.
The touching of 1270 by the
S&P 500 on Monday marked a 61.8% Fibonacci retracement
of the move down from 15000 to 7800 on the S&P 500 over the last five
years.
7:30pm and Preliminary GDP for the third Quarter of 1005 was announced as 4.3% which is up from Advance GDP announced last month of 3.8%. Of course we have to wait for Final GDP next month before we know what happened three months ago by which time such information will be meaningless except for those who drive the economy and make their investment decisions through the review mirror. The GDP Price Deflator (Inflation) was 3% versus and expected 3.1%. Treasuries are a bit better on the news. We also get the Chicago
Purchasing Mangers Index at These are the numbers for the boys and girls to trade on today. Yesterday new home sales were
greater than expected but mortgage applications were lower. Consumer Confidence
also was up.
9:42am
and the Chicago PMI was 61.7 versus and expected 60 and Crude Oil Inventories
were down 4.2 million barrels. Treasuries are off a bit in price on that oil
news.
Sears Holding closed at
$98 at year end 2004. It is currently trading at $115 down from a high of $163
at the time of the merger of K-Mart and Sears. Eddie Lampert
takes a bonus of over 20% on gains for the year in his hedge fund. SHLD
is by far his largest holding. The action of the stock in December will be
interesting.
Breadth was negative on the NYSE and slightly positive on the NAZZ on the day and new highs exceeded new lows 2/1. Treasuries closed higher in yield with the two-year and three-year and five-year all at 4.40% and the ten-year at 4.48%. Oil was higher at $57.35 and gold ended at $497. The casino opens at 8:30am
tomorrow and we’ll be here.
29 November 2005 Daily CommentThoughts It is good to be back in the land of milk and honey. Yesterday marked the first down day in eight days. Folks are looking for a correction. Yesterday may have been the beginning. Tomorrow is month end and on Thursday December 1 the release of same store sales numbers for the retail industry will give a good idea of how Christmas sales are going. If the markets move higher this morning, we are going to take dollars off the table. Durable goods ex aircraft orders were up 1.3% in October versus down 2% in September. That has bonds a bit weaker. Overseas the Asian markets were
lower and Tuesday’s Markets November 29, 2005 We are expecting a sell off in December and in the last five weeks our
Model Portfolio has moved from $530,000 to $560,000 which is 5.6%. We don’t
know which stocks will move higher from here and which lower and so it is
prudent to sell all and look at conditions in a few weeks. We are making small
profits on most of our current positions and taking small losses in a few and a
larger loss in AEOS. We are selling the GPS and AEOS ahead of Thursday’s same
store sales numbers. We would like to wait and see the numbers but our trading
discipline is that if we are selling our winners, which are fun, we should also
sell our losers. Over the week-end we looked back at our trading in 2005 and realized
that 7 short days into the New Year of 2005 our Model Portfolio was at $535,000
which was down 6 % for the year. We have been clawing our way back since then. With
the 6% up move we have just experienced we aren’t going to be greedy. We are not yet back to where we ended 2004,
but we will take down 1.8% for the year given where we have been. Some of our smaller accounts have not benefited from our more
conservative trading approach this autumn in recovering their losses for the year.
But then those same accounts did better over the last six years than many of
our larger accounts. Managing our money and our clients’ money is a long term proposition
that we accomplish by trading when we think market conditions are good. They
were good in October and now they are iffy. With two-year Treasuries at 4.40%
and probably moving higher over the next month investors have an attractive
alternative that hasn’t existed for the past few years.
New highs were one third more than new lows and volume was active but not extraordinary. Treasuries gave ground with the two-year at 4.39%, the five-year at 4.40% and the ten-year at 4.48%. Oil ended lower at $56.30 and Gold closed at $503. With tomorrow being month end we would think that bulls will make an effort to hold the major measures at or above current levels. And we will be here when the
casino opens tomorrow. 23 November 2005 Daily CommentFriday is a short
day with Trading till Thoughts Best wishes for the Thanksgiving Tis the day before Thanksgiving and the girls and boys will do their magic as the trading floors thin and imaginations brim with ideas for making money. We are fully invested in our smaller accounts and at a good investment level in our larger and aggressive accounts so today will probably be a day of rest. There is going to be a sharp overreaction sometime in the next two weeks and we may then spend some more. But for now we are content. Fed governor Lasker said last
night that the Fed isn’t finished tightening as the rumors of a Fed ending of
rate raising helped markets yesterday. As a result Treasuries are a bit lower.
Jobless claims rose 30,000 to
340,000 for the most recent reporting period.
BankAmerica reiterated its buy
rating on Nokia. Thank you BAC.
Lehman Bros doesn’t like BUD. But November Consumer Sentiment rose
to 84 from 76 in October.
10:22am and the major measures are higher but trading is mixed with breadth slightly positive. Oil is now lower and Treasuries are flat to up a few bps in the longer maturities. We added Bristol Myers at $22.20 and Abbott
Labs to our large/aggressive accounts. BMY has a 5% yield which we think
will stay. We are not going to add BMY
to our other accounts. ABT is down from $45 a month ago in the general end of
the year Pharma sell off.
We added AEOS and GPS to many
accounts in the last week. With the decent consumer sentiment numbers this morning
and the action of the other retailers we think the street is in the mood to revisit
retailers for the month of December. We aren’t going whole hog because there is
one more sales report due Thursday December 1 from the retail sector. Last
month AEOS tanked on good numbers
and so we are going to have to make a decision next Tuesday if AEOS is much
higher of whether to hold through the numbers or not. But that is next Tuesday
and for now we will enjoy the rise.
Jim Cramer of CNBC is the Dan
Dorfman of this stock market.
Breadth was positive and over 380 new highs beat new lows by a 3/1 margin. Treasuries were higher in yield with the two-year at 4.34% and the ten-year at 4.47%. Oil was lower at $58.71. And the casino is closed tomorrow
but the football pools will be active as will online poker. Friday is half day
and we are taking a few days off so we’ll be back on Tuesday evening. Our best to all for the Holiday.
22 November 2005 Daily CommentThoughts 42 years ago today American Politics changed. As in the case of the
markets it does no good to play woudla,
coulda, but it is OK to be sad, and that we are.
Overseas markets were and are muted.
There aren’t a whole lot of numbers for the boys and girls to trade off today so they will be on their own. Warren Buffet is following our
lead and has a 45 million share stake in BUD.
Short interest hit a new
high on the NYSE on November 15 at 8.8 billion shares up 1.5% from the
previous month. Some folks are construing that as a lack of faith in the rally
which of course it is. But ‘the old
stockbroker’ always said that high short interest is bullish because that
stock eventually has to be bought back. If the market rise causes enough pain
the shorts cover and that leads to a blow off top.
9:02am and the major measures are lower as a bit of profit taking has entered the markets. Also, cold weather in the east caused heating oil to spike higher and Treasuries are a bit higher in yield. We bought a few shares of GPS for accounts that didn’t own it. We paid $17.54 which is more than the $17.20 at which we sold in early November but we think the price action in the stock especially after the sell off last week has been bullish. We also added a few shares of AEOS at $24.40and AMAT at $17.40 to accounts that didn’t own them and increased the AEOS holdings of some of our larger accounts. We also increased holdings in SGP at $19.53 in accounts that own it and added it to some other accounts. Finally we bought a few shares of
Micron Tech at $14.45 in our large/ aggressive
accounts. MU and INTC announced a plan to build flash memory chips together
yesterday and today Mother Merrill upped
MU to a buy. We are being aggressive
in following Mother’s buy but they have thousands of brokers wanting to sell a
$14 stock to clients and we are taking a flyer. MU surely is and always has been an anchovy to us and most of Wall
Street.
1:32pm and the release of the Fed minutes from the last meeting had the Treasury Markets and thus the stock markets all atwitter that Uncle Alan may change his language at the next meeting on December 13. That’s because the just released minutes suggest that the Fed thinks inflation is under control and that the economy is growing at the perfect rate. So the Fed Chairman can go out in a blaze of inflation under control glory. And there is speculation that the Fed may be done raising at the next or the next meeting. That is how rallies are created out of thin air in thin markets during a holiday week. The major measures are all higher
with the DJIA up 20 appoints. Oil is higher as traders in NYC walked outside at
lunch and felt the cold. And gold is rallying also to $492. We don’t quite
understand that but then we never have understood or traded gold.
With the Fed Minutes rally we
decided to go back into CNBC has the talking heads guessing when the DJIA will go over
11,000. Why can’t they leave well enough alone?
Breadth was 5/4 positive at the bell and new highs bested new lows by a 3/2 margin. Treasuries closed lower in yield with the two-year at4.30% and the ten-year at 4.43%, Oil closed at $58.75 and gold at $494. And the casino is open again
tomorrow before the day off for turkey. We’ll be here.
21 November 2005 Daily CommentThoughts
With options expiration complete
for the month today may be a hangover day as Friday’s settlements are sorted
out. Also folks will be leaving for the holiday and so trading volume will be
light and there may be more volatility as a result. One of the gurus we follow
expects a sharp pullback before a move to 1275 on the S&P 500 by year end. Another
that we follow thinks that traders may run stocks higher this week. Two
differing views are what make a market.
We spent the week-end reviewing
accounts and will be adding stocks we already own to accounts that don’t own
them. We may wait till after this week to see if the correction occurs before
the move higher into year end. Then again we may not if an individual stock
presents a good price point.
Kathy returns from her Australian adventure today and say she will
be in to work tomorrow but our guess is that Wednesday or Friday is more
likely.
Today as the Monday of
Thanksgiving week is now being called Black
Monday since it has become the busiest
day of the year for internet purchases. Do folks do this at work or at home?
Support resistance for the week on the DJIA is 10584 and 10834/77 respectively. S&P 500 is 1223 and 1253/58 respectively. NAZZ is 2173 and 1253/58. these are the numbers of Richard
Suttmeier at www.realmoney.com .
BankAmerica cut CSCO’s
price target to $20 from $22.
Treasuries are down a few bps in yield and oils is 50 pennies higher. We added Nokia at $17.35 and Symantec
at $17.88 to many accounts this morning. We are interested in adding AEOS and AMAT and BMY but are holding
off on them for now.
Oil closed up 50 pennies at $57.70 and Treasuries were lower in yield higher in price with the two-year ending at 4.37% and the ten-year at 4.45%. And the casino is open again
tomorrow for gambling as usual.
18 November 2005 Daily CommentThoughts Cisco is buying Scientific
Atlanta, the maker of set top boxes for $7 billion which nets to about $5.5
billion with the cash Scientific Atlanta has on the books. We don’t know what
to make of this so we will have to see the street’s reaction. It doesn’t
change our desire to own CSCO. In the we told you so
department The Gap met earnings expectations but then warned and the
shares are trading below where we sold them a few weeks ago. We didn’t
understand the run-up after we sold but that is the market and often occurs. We
remain interested in the company because eventually they will turn it around.
Another we told you so is the
street’s reception of Hewlett Packard’s numbers and the acclaim for
Mark Hurd, the 9 month in office CEO. We sold when
they fired Carli and it is obvious that her
turnaround strategy is working. But it is also interesting to note how
different press outlets report the story. Operating earnings were above
expectations but there was a $1.1 billion special charge. At the time Hurd took over we said that special charges would allow
HPQ to manage earnings for the next few years and that is what Hurd is doing with analysts and the street lapping
the syrupy talk. What follows are two different headlines and opening
paragraphs. HP profit up on server, PC sales SAN FRANCISCO (Reuters) - Hewlett-Packard Co.
(NYSE:HPQ - News), the No. 2 computer maker,
on Thursday posted a quarterly profit ahead of expectations on strong gains in
its server and storage business and a healthy rise in PC sales, sending its
shares 6 percent higher. HP also raised its target for job cuts to 15,300 from
14,500 in had set in July. The company said then it expected the move to save
nearly $2 billion annually with the cuts. The company's fourth-quarter net profit fell 62 percent, due in part to charges related to the restructuring. But its operating performance improved across a range of businesses and contrasted with disappointing reports from PC rival Dell Inc. (NasdaqNM:DELL - News) and printer maker Lexmark International Inc. (NYSE:LXK - News)."The results look very, very positive pretty
much across the board," said Richard Chu, an
analyst at SG Cowen. "In the printer business, there's no question in my
mind that throughout the last six to nine months, HP has really been flexing
its muscles." HP Fourth-Quarter Earnings Drop to $416M Hewlett-Packard
Fourth-Quarter Earnings Fall 62 Percent to $416 Million on Restructuring Charge
All of these stories suggest a
topic we were playing with this morning. On CNBC a talking head said the Google
was worth $400. What he might have said was that Google was
selling at $400; or that Google stocks was priced at
$400. We don’t think Google is worth
$400 but we won’t argue that it is priced at/selling at $400.
That price is what the one buyer and one seller thought it was worth at a
moment in time just past. And every price movement is a past judgment on what
one buyer and one seller agreed a certain number of shares were worth to them
at that instant. But since less than 1% of the outstanding shares of any
company trade in a typical day, about the best we can say is that the trading
range for the day in Google was $395 to $405. Another way of considering worth
is to consider the home you own. To you it is worth a certain price that may or
may not be what you could sell it for on any particular day. That is the
difference between worth and priced at /sold for. Worth is a personal concept, not a market concept. We are thinking of adding Pfizer,
Bristol Myers and Schering Plough to accounts as a year end
package of depressed Pharmaceuticals. All three are near 8 year lows and
the “old stockbroker” and Don keep whispering in
our ear that year end, when all is bleak and certain former must own stocks
are being sold with abandon, is the time to step up to the plate.
7:08am and oil is lower, Treasuries off a bit, and stock futures higher. Morgan Stanley lowered JP Morgan to equal weight from overweight. We wonder when JPM will do the same to Morgan Stanley Dean Witter. GE raised its earnings
forecast and boosted its share buyback plans.
UBS upped SBC to
buy on valuation.
So far this morning two
brokerages have dropped GPS to sell. Why were they surprised? The Gap’s
management has been forthcoming about their problems.
9:55am and the major measures are higher but giving ground after the S&P 500 toyed with 1250 but couldn’t make it through. With today being double witching expiration day, stocks opened much higher out of the gate as the specialists made their Holiday bonuses shorting stocks on the opening at nutty prices and are now covering at more reasonable prices to last night’s close. Breadth is 3/2 positive and new
highs are in command by a 3/1 margin. Treasuries are weaker and oil is lower
with a $55 handle now. In many accounts we bought Pfizer
at $21.25 as the first stock in our three drug stock trifecta. Cisco is off 30 pennies so
we guess the early street decision is to sell. We are not in that camp.
Speaking of unloved, Bristol
Myers has 1 analyst out of 25 that considers BMY a buy. Schering Plough
is better with 12 out of 28 but only 3 consider SGP a strong buy. Pfizer
has 8 strong buys, 8 buys and 12 holds.
We bought SGP at $19.60
and NOK at $17.25 in our large/aggressive accounts and will buy more of
either in more accounts if the shares move lower. We also bought GPS for our
large/aggressive accounts at $16.99 since it is holding rather well - although
off $1.50 on the day - given their forward looking negative earnings announcement
today. Bristol Myers popped over
$22 and we are going to pass on that stock for now.
3:02pm and the DJIA
closed up 45 points at 10765. The S&P 500 gained 6 points to end at
1248. The NAZZ gained another 7 points to end at 2228. Breadth
was 5/4 positive and new highs exceeded new lows 2/1.
Treasuries closed lower
with the two-year at 4.39% and the ten-year at 4.49%. Oil ended at
$56.14. And the casino is closed for the
week-end so join us again on Monday for the shortened The NKU Norsemen begin their
season tonight so we wish them luck. And deer hunting begins tomorrow
morning so we wish the deer and hunters well.
17 November 2005 Daily CommentThoughts Jobless claims were 303,000 so we are close to the magic under 300,000
number. The only problem is that nobody cares about that number anymore. Traders are focusing on housing
numbers. Housing numbers were 2.01 million annualized starts which was down
5.6%.
We’ve been reading that the
strength of the dollar has foreigners buying American stocks hand over fist.
AMAT is lower this morning after traders decide they didn’t like the earnings report last night. We are interested. We exited AMAT a little too quickly and missed the run-up but it has given back much of that run-up today. We are buying in the large aggressive accounts. Our strategy of exiting before
earnings has helped this quarter. It may have to do with our penchant for
buying out of favor blue chips which class of stocks is currently at the bottom
of the momentum folks buying list and the top of their sell list.
With our sales yesterday of our
two low priced stock we are set up for year end with quality stocks. Now all
they have to do is move up 10% in price for us.
9:36am and the major measures opened higher but are now coming back down. Breadth is 2/1 positive. We are picking up some Symantec for aggressive accounts at $18.48. We traded it earlier this month when the stock dropped $4 on less than earnings. At that time we bought at $19.50 and sold at $19. Subsequently the shares ran back up but are now tailing off and we are inclined to take a small position to add to into year end. We bought an initial position in our large/aggressive accounts in Pfizer and $21.31 for an over year end trade. The shares are at 11 times earnings and many mutual fund and institutional holders are paring positions. The major measures are higher
with the NAZZ leading the way up over 2200 again.
Delta is bankrupt, United
Airlines is bankrupt, GM is
being pilloried as IBM was in 1994, and yet the markets keep rallying. Times do
change. Google surpasses $400 per
share and is cheap. Say what.
Treasuries closed higher with the two-year at 4.37% and the ten-year at 4.46% and oil lower at $56.33. And tomorrow is Friday and the casino has one more day of play before the traders turn to their football betting pools for the weekend. And speaking of casinos: HOLY CASINO This may come as a surprise to those of you not living in Las Vegas but there are more Catholic churches there than casinos. Not surprisingly, some worshippers at Sunday services will give casino chips rather than cash when the basket is passed. Since they get chips from so many different casinos, the churches have devised a method to collect the offerings. The churches send all their collected chips to a nearby Franciscan Monastery for sorting and then the chips are taken to the casinos of origin and cashed in. This is done by a chip monk. 16 November 2005 Daily CommentThoughts CSFB cut the price target on AEOS from $33 to $23 this morning. We
think they are a day late.
CPI and Core CPI were both up 0.2% for October. Year over year CPI was up 4.3% while Core CPI was up 2.2% year over year. September Business Inventories were up 0.5% while Sales were up 0.6%. Investors Intelligence is now 52% bulls up form 50% last week and
Bears are 22% down from 24%.
9:16am and the major measures opened higher but are now back to
even in slow trading. Neither bull nor bear seems to have much conviction this
morning as all the gurus are calling for a pullback. 1216 on the S&P 500 is the line in the sand for our guru.
Oil inventories were lower and so
oil is higher which is giving pause to most stocks but helping oil stocks. Breadth
is negative but volume remains moderate. This is an expiration week so anything
can happen.
In keeping with our newly adopted
year end mantra of not trading stocks under $5 we are also going to sell our Q holdings for an 8 pennies loss.
Treasuries are staging a nice rally today.
We sold the Target we
bought yesterday for an 80 pennies gain. What was amazing was that it took and
hour to sell our small amount of stock and we had to give up almost 12 pennies
per share to get it off. The specialist was not there to buy any stock and while
we were watching TGT traded in a 50 pennies range on very few shares. When these
big cap stocks crash there is no one there to stabilize them.
Treasuries closed higher with the two-year at 4.40% and the ten-year at 4.48%. Oil ended at $57.77. And the casino will be open for
business tomorrow.
15 November 2005 Daily CommentThoughts With the end of earnings season and the Holidays upon us it’s going to take an unforeseen extraneous market event to derail the bull train before year end. There will probably be a pullback but we are guessing that buying the pullback momentum will carry stocks higher into the New Year. We are happy with a comeback from
down 7% and will be hoping to finish the year down 2% to up 2% depending on how
aggressive we are in our various accounts. Our mantra remains preservation of capital.
Overseas Amazon is going to replace AT&T
in the S&P 500 on November 18. Since SBC is thinking of changing its name
to AT&T, AT&T under the symbol SBC (?) will be back as soon as the
merger is completed. Amazon is up $3 on the news as indexes scramble to buy the
stock.
George Soros has upped his holdings in Motorola and Microsoft
and initiated holdings in Intel.
2700 birds in 9:31am and the major markets are lower in moderate trading. Home Depot had better than earnings and
opened higher but is now lower. Target
missed for the first time in eons and the share prices is down 10%. We are
buying shares for our large accounts. American
Eagle Outfitters was in line but he shares are back under $23 and we
repurchased AEOS for those where we traded the stock a few weeks ago.
Oil is lower and Treasuries are a
bit firmer.
CNBC is reporting that a trader
in Oil closed lower t $57.03 and Treasuries were a bit better with the two-year at 4.47% and the ten-year at 4.56%. And the casino is open for
business tomorrow. Tonight we are to get our first snow of the season.
14 November 2005 Daily CommentThoughts Koch Industries, a privately held behemoth is buying Georgia Pacific for over $20 billions
including the debt.
This week is options expiration week and last month the big boys and girls sold stocks down into expiration. This month our guru thinks they will buy stocks up into expiration. That would set up our correction
into mid-December thesis. That thesis is holding on by a thinner straw each
day.
Bernstein and Bank of America
have both discovered Verizon this
morning with positive comments.
9:33am and stocks are mixed in light trading. We are buying Coke and Budweiser in our accounts where we profitably traded AEOS two weeks ago. Both stocks are near multi year lows. We think most of the selling is out of them since they are mainly institutional but not hedge fund type stocks and with many talking of the move to large caps these two are waiting in the wings. We are also buying SBC back in these same accounts. We will
buy more at lower prices for these accounts and other smaller accounts. SBC
yields over 5%.
For our aggressive accounts we
are going back into Q at $4.81 which
is a breakout high for the year. CEO Notebart was non-committal in his answer
on CNBC last week to the question of whether Q was for sale. We have been
trading this stock and will continue to do so in aggressive accounts.
The markets are meandering and
volume is light. Treasuries remain lower and oil is unchanged. Breadth is 2/1
negative on the NYSE and 5/4 down on the NAZZ.
Treasuries gave ground with the two-year ending at 4.48% and the ten-year at 4.59%. Oil was up 16 pennies at $57.69. And the casino opens again
tomorrow and hopefully there will be a bit more action.
11 November 2005 Veterans DayThoughts There are about $30 billion of shares of public companies available for trading. Hedge funds control about $1 trillion and that number is growing. Hedge funds account for 75% of the daily trading, according to Bennet Seducca, President of Atlantic Advisors. The means the markets as constructed today are one large casino. In three weeks folks have gone from:
the
glass is half full to the half full glass is overflowing. Now the word
is own stocks for the year end rally. Our thought is that most of the rally may
have occurred.
Bonds are closed today as are
futures markets. Overseas 10:19am and the major measures opened slightly higher and stayed in
plus territory all morning. Breadth is flat and volume is muted. Oil is lower.
It is dullsville today.
|
|
Share Price and NAV History |
Premium Discount History |
Calendar Year Total Returns Since Inception
Source: Thomson, as of
NAV
|
1996 |
1997 |
1998 |
1999 |
2000 |
2001 |
2002 |
2003 |
2004 |
2005 (YTD) |
|
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
4.68% |
Share Price
|
1996 |
1997 |
1998 |
1999 |
2000 |
2001 |
2002 |
2003 |
2004 |
2005 (YTD) |
|
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-4.16% |
Source: Thomson, as of
|
|
1 Year |
3 Year |
5 Year |
10 Year |
Since Inception |
|
Share Price |
-6.55% |
-- |
-- |
-- |
-4.51% |
|
NAV |
5.86% |
-- |
-- |
-- |
4.78% |
|
As of |
|
Holding |
Dollar Value |
% of Total Portfolio |
|
|
$26,143,768.00 |
2.54% |
|
Adelphia Communications Corporation < A |
$25,786,179.00 |
2.50% |
|
Metro-Goldwyn-Mayer Inc |
$25,328,125.00 |
2.46% |
|
LNR Property Corporation < LNR > |
$23,852,931.00 |
2.31% |
|
Emmis Communications Corporation < EMMS |
$23,599,220.00 |
2.29% |
|
Graham Packaging Holdings Company |
$23,232,938.00 |
2.25% |
|
Charter Communications Incorporated < C |
$21,911,686.00 |
2.13% |
|
General Growth Properties Incorporated |
$20,932,833.00 |
2.03% |
|
Warner Music Group |
$20,935,627.00 |
2.03% |
|
Macerich Company < MAC > |
$20,082,500.00 |
1.95% |
Our guess is that Nuveen Floating Rate (JFR) has gone to a discount because it is no longer being sold to new investors but also because of its holdings.
We do not think buying junk bonds or floating notes in a rising interest rate environment is a good idea. We'd rather buy VZ and SBC yielding 5.5% on their six year lows. Then we have some appreciation potential and their common shares are more quality than any of the junk owned by JFR.
Stocks are for risk not bonds.
With our bond money we are waiting for the two and six year
Treasuries to get to, or close to, 5% in late December or early January. Then
we will put half our money in the two year and half in the six years.
When the Fed stops raising rates with Bernacke's taking over the six year
bond will rally and provide a 1% plus gain to be moved to a shorter
maturity if it looks like the economy is going to remain strong.
We'd rather get 5% assured with
exemption from state taxes than 7.5% from junk. We buy the Treasuries and
sacrifice yield over A rated bonds
for the liquidity and ease of sale. We are in a rising interest rate
environment until we aren't.
The only way interest rates go
down is if stocks go down because of recession or slowdown.
*****
10:02am and the major measures are lower but the profit taking is not strident. Oil is under $59 as Oil Company
executives testify on Capitol Hill and say high prices are not their fault. Breadth is positive and Treasuries are slightly weaker. New
lows and new highs are again even today.
*****
11:41am and the oil honchos have finished testifying so oil is moving higher. Two Fed governors are speaking the hard-line today and so Treasuries have weakened.
We are trying to buy some RAD for our aggressive/large accounts
for a trade at under $3.50.
*****
And the casino is open for business as unusual tomorrow.
*****
8 November 2005 Daily Comment
Thoughts
We read an opinion column by Nicholas
Von Hoffman in The New York Observer last night. The Observer is a wonderful
paper if you want a
Go to the article here http://www.observer.com/opinions_vonhoffman.asp it is well worth the read. It describes well our own thinking on the economy and the economic outlook going forward as housing prices contract.
Just by coincidence, Toll Brothers, the large home builder,
warned this morning. The share price is down $4 in early trading. The high this
year was $52 and the low was $24 and it is trading at $35 this morning.
*****
www.minyanville.com reports that since May of 2005 insider selling at Toll Bros came to 3 million shares at an average selling price of $52 for over $150 million proceeds.
Some folks know how to sell the
high.
*****
Overseas markets were nondescript
overnight and the euro is at a two year low against the dollar. Treasuries are
a few bps lower in yield and oil is 16 pennies lower.
*****
Tuesday’s Markets November 8, 2005
The home builder stocks are going to be taken to the woodshed today
on the back of Toll Brothers downbeat forecast.
*****
9:58am and the major measures
are lower as some profit taking has entered the casino. Breadth is 2/1 negative for the first
time in week and new lows and new highs
are about equal. Treasuries are
better with the two-year at 4.40% and the ten-year at 4.57%. The narrowing of
the spread is not good for banks. Oil remains
lower.
*****
We are buying XEL the utility stock yielding 4.8% in our large/aggressive accounts for a trade. We have traded it profitably many times this year. The dividend yield gives us comfort while holding it for the move.
In our scenario the downturn
begins in earnest after Thanksgiving. But even if there is no downturn we think
rates are going to 5% on the two-year and five-year. At that level we will put
a great deal of money to work in Treasuries. It is a waiting game for now.
*****
Oil finished a few pennies higher but under $60 and Treasuries were slightly better.
New highs and new lows were even and breadth was 2/1 negative.
And the casino opens at
*****
7 November 2005 Daily Comment
Thoughts
It is better to sell too soon than too late.
Berkshire Hathaway reported an $800 million loss on its short dollar position. With $40 billion in cash Warren Buffet’s company isn’t going into bankruptcy but the loss demonstrates that even a market genius can be wrong at times.
We would also suggest that Buffet
made his reputation buying undervalued companies for the long term which is the
opposite of trading dollar futures betting on a downturn.
*****
Guidant is suing Johnson and Johnson to force them to perform on
their $25 billion acquisition of GDT. JNJ is balking because GDT sold all those
Heart devices that didn’t work. And the beat goes on.
*****
We don’t have much on the line
right now and so we will be observing for a few days anyway. We are hoping for
one more trading flurry before year end but as we said last week we expect a
late November early December doldrums to present that opportunity.
*****
Monday’s Markets November 7, 2005
10:44am and stocks have been up and down and up today with no clear trend. Breadth is flat and volume is light. Treasuries a bi better and oil is under $60.
We are watching.
*****
*****
Breadth was 5/4 positive most of the day and new highs contracted to 220 but still outdistanced new lows by a 2/1 margin.
Treasuries closed better with the two-year at 4.46% versus 4.47% and the ten-year at 4.64% versus 4.70%. Oil ended down $1.11 at $59.47.
And the casinos are open for
business as usual tomorrow.
*****
4 November 2005 Daily Comment
Thoughts
And we take the approach that we aren’t that smart. We caught a lucky break and have happily watched the Model Portfolio and all our other large portfolios increase nicely in value over the past two weeks for the first time this year.
The gurus are saying that the rally is good till Thanksgiving and some say beyond. We hope so and that folks make a lot of money. We ourselves are no longer home run hitters. We play more like the White Sox as they won the pennant but not the World Series and we have won the battle of the markets over the last six years by being quick on the trigger and taking small singles for profits rather than hoping for home runs to rescue us in the ninth inning.
With that in mind we are going to sell SYMC, CSCO, GPS, NCC, INTC, RDEN and TWX and OATS. We have a profit in NCC; we have a scratch plus in CSCO, RDEN, and TWX, a scratch minus on OATS and a loss in GPS and SYMC. We have a profit on most of today’s INTL but an overall loss on the trade.
NCC is being squeezed on margins as short rates rise to the point where the yield curve may invert by Christmas. Gap will turn things around but it seems not until next year and so it to the analysts it is next year’s story and next year’s trade. TWX is stuck here in part because of lousy reception CMCSA earnings story received yesterday and OATS announced decent sales and no earnings again today. The tech stocks have run and may run more but we want to get off the train.
These sales will get us to 12% invested. That’s a much more comfortable place to be after the run of the last two weeks. Making all our losses back in one fell swoop would be nice but unrealistic. We again are going to play the averages.
The sales will leave us with a large
Verizon holding yielding 5.5%, McCormick Spices. We think VZ will move higher as the closing date
of the MCI deal approaches. MKC moved
higher right after recent earnings to $33 and then came back down in the
October sell down. We would expect to see the share price higher.
*****
Thank the Lord Friday’s Markets November 4, 2005
The October employment number was a mish mash and seems to be an increase of 56,000 jobs when plus 123,000 was expected. But there were revisions to September and with all the hurricanes who knows what really happened. Average hourly earnings increased more than expected and that has the bond vigilantes worried.
Early trading will tell how
traders are interpreting the news. Overnight
*****
9:09am and stocks opened higher today and we used the opportunity to sell the stocks mentioned above.
The DJIA is up 19 points: NAZZ is up 10 points and the S&P 500 is up 1 point. Breadth is flat and new highs/ new lows are even. Oil remains lower.
Treasuries are firmer with the two-year at 4.44% and ten-year at
4.63%. The thirty-year is 4.82%. The return on intermediate term Treasuries for
the year is now flat if price loss is subtracted from coupon income.
*****
The dollar is at a new high for
the year against the euro. A lot of hedge funds were betting the wrong way.
*****
These observations are the raison d’etre for our move to cash today. We don’t plan on doing any major trading until we see how the rest of November and early December play out. Most accounts remain down for the year but we have mitigated the losses and are satisfied with our large cash posture. 1225 on the S&P 500 has been trouble and may be again.
We kept Verizon because our investment horizon on the stock remains longer than
on the other anchovies we traded in the last month. We think there is a move to
$33 in MKC.
*****
Breadth is 5/4 negative for the first time this week and new highs and new lows are even. Oil finished the day down $1.20 at $60.58 and Treasuries were flat on the short end to up a few bps in yield on the ten-year at 4.66%.
And the casinos open again on
Monday morning. We’ll be here and spectating not speculating.
*****
3 November 2005 Daily Comment
Thoughts
American Eagle Outfitters and Talbot’s did fine in October but The Gap trailed the field. But just you wait Henry Higgins, just you wait. This year’s bad numbers for The Gap will lead to good comparisons next year in the never ending monthly cycle of same store sales.
By the by HAIN had great numbers and we will probably be selling that stock also as it trades into the $20 range. Comcast showed revenue growth but they lost subscribers and the stock price is down this morning. We may give the stock another look lower.
We are probably going to say thank you and goodbye to AEOS and TLB and HAIN in as we begin raising cash into Thanksgiving as portfolio values rise. We will try to do it smartly but it has been a tough year and we are more inclined to lock in even and out than dream the dream of huge profits for the year. Maybe we should, but in our view half a loaf is half a loaf and since we have been on a diet both from performance and weight we will gladly settle for half the loaf this year. Coupled with the last six years an unchanged performance year would leave us well ahead of the markets.
But not counting our chickens before the eggs are laid is probably a good idea. It is true that the S&P has finished above its 200 day moving average for three of the last four days and that the shorts are in a bit of pain but until we take the profits to offset earlier losses we are still in the hole for the year.
Our tech guru confirms that the Second
Mouse Move above the 200 DMA confirms an intermediate up move which is
as we suspected.
*****
Thursday’s Markets November 3, 2005
Jobless claims fell 8000 to 323,000. Treasuries are unchanged and
oil is lower as the casinos open their doors.
*****
We are going to sell the Dell we bought the other day because we
are taking profits in a few issues (sell losers with winners) and the price action
in Dell yesterday was not to our liking. We will get out and look at it again
later. We are taking a scratch loss on the trade but the gains on the other stocks
will more than compensate. As others turn bullish we turn scared. Remember we
are only renting most of these stocks.
*****
11:24am and we have been doing a good bit of selling. We are raising cash and we are taking some profits and a few losses along the way. Some of the stocks we just bought yesterday and the profits are marginal but with the run the markets have had the last week we think moving to a larger cash position is warranted. If the market corrects we may buy a few back but our feeling right now is to let the stocks we own work higher and keep the cash in the bank.
In addition to HAIN, TLB and AEOS, we sold EL, VECO, DELL, AMAT, Q, and are working on selling ASD. All were profits except the scratch loss on DELL.
All the major measures are higher with the S&P 500 at 1223 and the DJIA up 83 points. Breadth is 2/1 positive; volume is good and new highs are 322 versus new lows of 75.
Oil is over $60 and Treasuries
are a bit higher in yield.
*****
1:25am and the major measures are higher but the rally seems to be tired as breadth contracts. Also Oil is up $1.65 and so no one is ever going to shop again. We sold MU and ASD and are now working on TLAB in larger accounts.
We did buy a few shares of Elizabeth Arden, the cosmetic company,
in aggressive accounts at $19.32 which is down over $2.60 from yesterday’s
close on less than earnings. RDEN is
not the same quality as Estee Lauder and that is why we are only buying in
large/aggressive accounts in small numbers.
*****
3:
Breadth was flat and new highs beat new lows 2/1.
Treasuries closed higher in yield with the two-year at 4.45% and the ten-year at 4.64%.
And the casino is open again
tomorrow for the last fun day of the week. The monthly employment report will
give the big boys and girls something to trade on in the early going.
*****
2 November 2005 Poor Souls Day
Thoughts
The stock markets marked time yesterday and we think they are going to break out with in the next few days. Our hope is to the upside but we really don’t have a clue. Our investment decisions this past month have been made on past historical actions but this year has been a fooler so anything is possible. Obviously we expect higher prices and we are also stressing high quality issues.
We begin the day with goods news from Time Warner and bad news from Symantec the computer software protection company (the Norton name for personal computers). Interestingly both Fidelity Capital Appreciation Fund and Fidelity Magellan have holdings in this stock and so it will be interesting to see how the stock fares today. SYMC, which we traded earlier this year for profit, is off $3 in the early going. It is projecting earnings for the year of $1 and is currently priced at $20.25. We are interested.
We think our Intel position is
too large and we didn’t discover that until yesterday when the shares tanked 90
pennies and we got a lump in our throat. Sometimes we learn by experiencing. We
want to maintain a sizable holding but we are going to flip the shares we bought
last week to AMAT. That will give us
exposure to the chip equipment maker again. We have had good luck with AMAT this year. AMAT is a cash rich tech
at a decent multiple but high relative valuation to the kinds of stocks we
usually buy. But we want to be in tech and that involves getting used to the
pricing of these companies.
*****
Investors’ Intelligence reports 46% bulls and 26% bears. The bull number
is up 2% and the bear number is down 2%.
*****
The dollar is at a two year high
against the yen.
*****
Wednesday’s markets November 2, 2005
9:06am and stocks are marginally higher in slow trading. Breadth is positive and new highs are
bettering new lows by a 2/1 margin. Treasuries
are unchanged on the short end with the two-year at 4.42% to up 8 bps in yield
to 4.60% on the ten-year. Oil is
down 21 pennies to $59.64.
*****
We took a 10 penny loss on the additional INTC we purchased last week as we sold it this morning up 16 pennies from last night’s close to reduce our oversized position. It still remains one of our largest holdings.
With the money we purchased AMAT at $16.10 for accounts that didn’t own any AMAT. Two weeks ago we sold AMAT at $17.20 for our third profitable trade in the stock this year.
We also bought Qwest at $4.19 for all accounts where we sold the INTC. Goldman Sachs raised Q to neutral and S&P raised Q’s ratings. We have traded these shares profitably this year and with the settlement of the largest shareholder suit yesterday and the recent debt actions we think the company is coming around to being attractive as a speculation on takeover potential.
We bought shares in Symantec at $19.50 for our large and
aggressive trading accounts in which we bought DELL yesterday. SYMC is down
$4.50 at that price which is a pretty steep discount for the size of their
miss.
*****
11:28am and the DJIA is
up 55 points and all the major measures re higher. The S&P 500 is at 1210 and holding and if the bulls can push to
the upside through that level this afternoon that will be a positive. Breadth
has improved to 2/1 to the plus side and new highs at 250 with new lows 100. That’s
the best ratio in a while.
*****
Breadth was better than 2/1 positive and new highs hit 300 versus 150 new lows. Volume was the best of the week.
Oil ended at $50.68 down 17 pennies and Treasuries were higher in yield on the long end with the two year at 4.42% and the ten-year at 4.61%.
And the casino opens for business
tomorrow. It should be interesting.
*****
1 November 2005 Daily Comment
Thoughts
Yesterday the S&P 500 moved up to 1210 resistance and then a few sell
programs entered the markets in the last 15 minutes of trading and the S&P
500 closed at 1206. With the Dell warning last night it would seem that another
test may be a day or two off. Stocks need to get above that level for the rally
to continue. Any strong move through the level is going to set off a buying
panic.
*****
Dell warns, traders shriek, and stocks crash.
We hope not and today will be a
good test of sentiment as the stocks markets digest the warning from Dell last
night that sales are going below expectations and it is going to take a $450
million charge. And Uncle Alan and his merry crew also raise rates today and
issue a new oracle at
*****
The talking heads on CNBC have
already buried Dell. Interestingly, Harry Lange, the new fellow at Fidelity
Magellan had Dell as one of top 25 hidings
in the Capital Appreciation fund he managed. Nokia was his second largest holding. Last night we were thinking
about the restructuring of Magellan’s portfolio with the new fellow in charge.
It is a $50 billion portfolio which is still large by anyone’s standards. Intel
has been a large position in the Magellan Portfolio and it could be that the
pressure on the stock these last few weeks was from Magellan selling. After
all, Fidelity knows its way around markets by now and we presume that Lange, the
new and Bob Stansky, the former manager of the fund have been collaborating for
a few months on the changes Lange would want to take in Stansky’s holdings. So
maybe the strength in Nokia and weakness in Intel suggests that some of the switches
have already been made.
*****
In looking at the WSJ article on
the change in managers at Fidelity Magellan it is amazing to see that when
Peter Lynch left the assets of the fund totaled $14 billion. That was a huge
amount of money to be running in 1990.
*****
President Bush is to unveil his
anti-bird flu strategy today- or so the headline reads. Enough said.
*****
Tuesday’s Markets November 1, 2005
*****
9:03am and the major measures are lower with the NAZZ down 10 points on the Dell sell
off. Dell is down $2.25 and we are
buying stock for our large and
aggressive accounts. We will be selling shares in the Pharmaceutical Trust where
needed to fund the purchase since we are fully invested in many
accounts. Dell will give us a better
bang for the buck.
*****
*****
*****
Intel is off 90 pennies today to $22.60 on the Dell news. That price is 15 times this year’s earnings and 13 times next year’s earnings. Volume in the shares are brisk but not extraordinary. The sellers are much more determined than the buyers. .
Dell lost $7 billion in market value today because earnings are
going to be 39 cents (up over 20%) for the quarter instead of analysts’
expectations of 40 cents. Sales are gong to be $13.9 billion instead of $14.1
billion.
*****
Breadth was negative 5/4 and new highs exceeded new lows. Treasuries dipped in price with the two-year ending at 4.41% and the ten-year at 4.57%. Oil closed below $60 but was up on the day.
And the casino is open again
tomorrow.
*****
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Summary of Business Continuity Plan
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