mymeohmoneyblog

hi, i just woke up, and had blogging/stocks/markets on my mind. so i think i'll write something, since i've woken up fresh. i'm on 6 hours sleep, and was studying stocks/markets till like 3 am, so no wonder i've been thinking about it, perhaps subconsciously while i slept. i'm sort of in a place in my life where i need to get back to my own thoughts anyways, spending so much time in this information world of ours reading/listening to what everyone else has to say.

i should probably include something like this blog in my bio, cause thats more where it belongs. I do have my bio done at the marketocracy site, and it would've been nice if they would've just exported those bio's over here to the investorplaceblogs/movabletype setup for us.

in this blog i'll scrutinize myself a bit, scrutinize the markets a bit, and then scrutinize my impatient picks i just made 2 days ago.

first, regarding moi, i think maybe in doing a contest like this it'll help me balance out individual stock picking with market predictions. what i mean is, anyone can predict the markets, and time it to go long (generally), and jump in to the rising tide that seems to lift all boats. (or short stuff - if your're into that, a practice which b.t.w. i think must have become much more prevalent over the several years, in my opinion - without looking for supporting numbers but which i get a sense for based on experience. i.s.[intra-script] i do realize i need to understand better the practice of short selling and the prevalence thereof.) All my life i've been a great market timer, on both a daily and LT basis. The last 2 years i've been looking specifically at stocks (having acquired a computer and the internet). I'm hoping my last two years diggin into individual stocks has served as some sort of beneficial apprenticeship for the future. I've spent probably an inordinate amout of time the last 2 years looking at stocks, much to no avail in my rather small portfolio. Because of my small account, it doesnt make sense for me to diversify, or to invest aligned with longer-term prognoses. I just spent about an hour searching for an old quote, from a woman, not sure if it was n. zambell, v. lewis, or l.p.weston, last winter/spring about how short-term trading was mentally unhealthy, something i began to consider myself before i'd read it. While focusing on individual companies is a great way to learn more about the world, and gives one a broad base of perspective, much like a lawyer whom handles different cases has to learn about the intricacies of any particular case's particular subject matter, i find that the amount of time i literally spend at the computer has its adverse effects on my eyes and posture, and to some extent mental health as well(?). so i would like to be able to combine my prior years of experience with macroeconomics with my last 2 years experience in micro-corporate fundamentals to find some sort of happy medium, so i can somehow get myself away from the computer so i can devote more time to other things in life. I have doubts about the 6 month lab format, and how it can persuade me to sythesize the longterm and shortterm views of investing. Incidentally, here's a link to a site basically showing that the strat-lab experts over the last several years have basically failed to beat the market: http://www.cxoadvisory.com/gurus/StrategyLab/ .

Perhaps sector/cap/etc. performance is really where its at....??....?.. I've never really thought about this sort of thing. I realize my long term picks do wonderful, because buyers catch up to time. And i realize i can get burned short term, for various reasons. Perhaps i'd always assumed 'sector performance' was just too obvious..... e.g. buy electricity just before summer, gas before winter, christmas present stocks before christmas, etc.,...it just seems too obvious. Sector performance (or lets call it 'mid-term' investing) investing makes me feel like a total heel, more so than short-term trading, where i know i'm not really contributing to the good of society (other than providing liquidity) by what amounts to essentially trying to skim money off others. Because 'sector performance' viewpoints at heart basically mean that you ignore the fundametals of the company itself, i.e. it's sort of counterintuitive, it actually eliminates stock-picking, even if you're gonna pick a sector to pick a stock within. So anyways, i guess at some point i , or the eventual leaders of this lab, are gonna have to say, "well this lab is six months ending from mid-year to end-year so lets pick some cyclicals that fit that bill, hurricane stocks, back to school stocks, holiday stocks, tax season stocks, heating stocks, etc., etc." Do i really have to go with the monthly/quarterly ebb and flow of sectors to outwit the tidal effects of short-term trading and/or languishing longterm undervalued stockinvesting? Pardon my resentment? i guess that's what were here for - i.e. midterm investing. Oh well, anyways, like i said, maybe this lab experience can help cajole me into looking more closely at the significance of sythesizing these two (shortterm and longterm) aspects.

Well so what's up with the market? and where's the economy going? were currently at about a 7 percent pullback here in mid-august. i wouldnt be surprised to see a larger pullback to the 13 +/- 3 percent range in the coming weeks, Historically the aug to oct period can be pretty weak. by november things will have settled down a bit. Perhaps we'll break down till labor day when/then everyone then can feel 'back to work'/new season/new beginnings etc. i thnk bernanckes doing a good job. i'd go with a soft landing outlook. the fundamental aspects of the bullmarket/economic expansion begun in 81/82 hasnt changed. world demand takes the load off our back to lead. While worldwide growth can be worrisome/competetive, we americans can hold our own, but we need to think about energy complications. Bush has been a failure at talking down the ppb of oil - from his bully pulpit he alone could have kept oil ppb from ever rising about 50. I suspect he feels, at heart and undisclosed, as i do that maybe we should just use up as much earth-oil as we need at any cost - even upto 200$pb, because of a hope/understanding that somehow in the future we'll get along anyways (fusion, coal, conservation) and so/thus we might as well let the middle-east pull as much oil from the ground and sell it to us at whatever cost, thus to some extent also preserving our own reserves. Anyhow, the energy sector is obviously a main theme now and for the indefinite future. Oh b.t.w. as to what i said about bush and 50 to 80 ppb oil, doesnt anyone else feel that way? that oil ppb going from 20 to 50 is a rather large jump, that 50 to 80 is a lot of speculation, despite worry about the demand/supply future incl. disruptions/war/etc, that oil companies were in business making huge profits off 20$ppb oil and therefore also 30 and 40 ppb? that a big-oil texan from texas maybe just maybe could have said something, just one little thing, in all these years, about the price of oil/speculation/, that his advice/input/concern/opinions/word(s) might of/have counted for anything?? well i suspect well see rates go a bit lower at some point, perhaps the next FOMC meeting. Bernanckes in no rush to cowtow to special interests/pleas for rate cuts, but anyways well see how these short '3 day' infusions work out. If china market pulls back big maybe i can get in there with a pick. lord knows i dont quite have the confidence to start pickin int'l stocks, but it does make sense, and maybe i'll have a chance to break the ice here sometime this fall. Market PE of course is reasonable in the mid to upper teens. Pullback to 12500 +/-200 within next 2 - 8 weeks, small end-of year rally back up to 13200 by end of year. Financials volatility for next few months. end 2008 at 15500 +700-500, with more chaff burnt off, lower rate?, higher comps(latter half 08). Cant beat the housing dead horse forever. Definite dent in consumer discretionary spending. However consumers only account for 1/3 of economy (or is it 2/3?? - i forget), but the marketcap dropoff from pullback dents mid-upper class personal/business reinvestment/spending/etc. I.e. reducing stock holders networth by a trillion or whatever has bigger impact that a hundred billion of loan default on the economy, nonetheless a soft-landing.

BTW can someone ever explain to me why any of these housing and/or mortgage companies are going belly up? so a small percentage of borrowers default - so what?! Cant builders just fire their workers and thus preserve their balance sheet? Cant homeloaners just take the default property back and sell/auction it off for a small (e.g. 10 percent) loss? how does a company like american home mortgage (AHM) or accredited home lenders (LEND) go bankrupt or sink so far with previously such high value and earnings... cant they just close up shop? stop the spigot? stop making new loans? i mean, e.g. if a bank loans me 300k for a mcmansion and i fail to pay then they take the home from me and auction it off for 280 and take maybe a 20k loss - right? - but so what??!! so they lose 20k on me, but there balance sheets are full, they've built equity and cash, they been in business for years accruing value (right?) and then again all in all only a small portion of their borrowers default, even if defaults go up to 10 or even 15 percent right? And what about funds like the bear stearns funds??!! how do/are these considered belly up... so they lose a few points on the credit spread when interest rates rise 10 or even 100 basis points...so what?? how do they suddenly become worthless? its not like billions just dissappeared.... were talking about POINTS here, percents of a percent, not wholesale defaults. somebody pleas explain the microeconomics of these companies/funds balance-sheets/fallouts to me.

On a related note, i must add that i've been reading msn contributor bill fleckensteins articles for last 2 years now, and he is the only analyst to correctly, confidently, and presciently call all of the subprime/housing fallout this year. This imho make him w/o a doubt the analyst of the year. For this reason, i will continue to give his picks (NSTK) extra attention. Incidentlly, i lost money last summer when the market tanked, and i do in fact blame the talking heads, nearly all of whom from all medium jumped on the bandwagon. There was no reason for the market to tank summer '06 may10th fed-speak-rates onward. Corporate earnings were/are double digit then, before, and until this year, and market PE's then, (and now) reasonable, considering. Again with the market mid-term timing thing and sector timing.

Well looks like my impatient picks to start this contest were pretty spread out by sector, without planning, in hindsight. I dont really like ridin in the boat with everyone, and it looks like with my current portfolio crop i might have the same sort of everyone up and everyone down days along with everyone else. Hohum. Can anyone say boring? Predictable? Mediocre? I think risky biotech is a great sector to be in right now, because out-of-the-money biotechs are already always risky, so there's no added risk premium to being in that sector right now compared to the rest of the market, in essence, they become a 'defensive' play. Think ill be happy with my DNDN pick; i should look to build that sector. I'm gettin into this idea of utility for the transition between diffenert types of bullruns, maybe ill add one there, but still, what would we be talking about, maybe a 20% move in 6 months, if were lucky? Looks like i got about a 5-10 percent exposure on gold with EGO and GFI; too bad - i see my personal favorite - GSS- picked over 2 years ago down near 2bucks which i traded profitably from time to time, is back down in the low 3 as of today. Incidentally i'd like to get out of GTW whenever i can; i overlooked the fact that these small caps take a too-big commish bite, much moreso than in real life (why?). i paid 2k in commish for that entry. Well long entry already think ill skip the close-encounter with indiv stock analysis.... later, bon voyage

Comments: View Comments |  Wednesday August 15, 2007