I Eat Bear

Another million please

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I must say I have been a fan of Robert Walberg for some time now, and in a "normal market", it can be quite a job to pick stock dogs, and make a winning portfolio. Today though, I think he has one of the easiest jobs on the planet. Picking a stock dog is about like opening a Wall Street journal and pointing with your eyes closed. The number of beaten up stocks is the highest I have seen it in some time. I do understand his conservative approach to a market in a foul mood lately, but I find too many stocks have just been pounded lately.

Then again, I must say, I am not always right either, as witnessed by my recent prediction of an upswing in shipping stocks. It seems they have seriously gone south on stock price since that prediction, so I have a mountain of gains to make up if that predictions is to be correct. Still, I do have faith. Shipping has been a very volatile industry since I first started following it, and it is not a group of stocks for the squeemish! It can be a true terror ride, if you have large sums invested in it. Still, with today's prices, I want to sink a lot more into it, than I seem to have available, so can I have another million or so please?

Yes, despite what can only be called a bear market, I remain bullish on stocks. At least some of them.

For the world economy to get out of the recession we are undeniably in (despite so many refusing to admit it), more goods and services must be produced. Granted, consumers are strapped to the bone for cash in many cases, but there is money out there. Once goods are produced, they have to get to the markets. Now, I happen to believe, we could use the existing retailers and wholesalers to get goods to consumers, but a few more would not hurt. I also believe we are too heavy on the services sector. So, what is left?

Materials for one. Take BHP for example. Not much more than two months ago, the stock price topped $100. Today, it is trying to survive $80 a share resistance. Much the same is true of RTP, RIO, and some more. Now, we can lie to ourselves if we want to (it does no good), but raw materials will go into just about anything produced, in some form or fashhion. To think that stocks will not recover is foolish. More money please, as I want to load up on materials stocks.
I would have to be cautious on gold right now, but if there was ever a group that has seen a recent pounding, gold, and gold miners would be near the top of the list.I still look for gold to recover with the dollar, but my faith in the dollar is not high right now.

Which brings up another "dirty word". Inflation. Prices are going to go up. They have for the last fifty years, and I see no reason for that trend to change now (there is always hope?). But, and you heard it first here, "Get used to it". You can throw tons of resources to fighting it, and it will still go up. To fight it, could put us in a GLOBAL DEPRESSION. Think things are bad now? They can get worse, and fighting the inevitable, is one of the fastest ways to get there.

So, everyone is looking for the "scapegoat", and I think they have picked on the wrong one. OIL, is now in a category with other four letter words in the minds of many consumers. Don't get me wrong, I hate paying the prices at the pump too. But, are oil companies to blame? I don't really think so.If anything, I think they may have been the savior of many investors.

Now, I am dissapointed in a few in the oil sector, but for the most part, oil companies and stocks have done well this year. That bodes well for investors. My biggest dissapointment so far has been RIG. What, it is one of the better gainers in your portfoilio? Well, I do try to be fair.
Since the merger with Global Santa Fe, they paid out a decent distribution to shareholders of both companies. And, the stock was seriosly under book value as of the date of the merger. The gains I have seen on RIG this year, are to bring it up to book value only. It has only briefly seen stock price apprecaition this year. Much the same is true of DO, and some more. Go back about a year, and the stock price on them was almost exactly the same as today. Yet, drilling is on an upswing this year. Where are those gains reflected in current stock prices? Not in most of the drillers I have found. I look at SLB, and it has had some gains since the round started, but I have to believe it too is grossly undervalued, especially for the earning potential I see there. I have seen some gains in PDE, NBR, ATW, and some more. Maybe I am just waiting for the other shoe to drop, but I see oil drillers as a real bargain right now. RIG will do well again too, as they put the merger issues behind them, especially by next year. And, oil service companies should do well too. Yes, they have seen some run up this year, and I am great a fan of WFT and SII. But, if nothing more than the value I see in them NEXT year, they are at bargain basement prices now!

Before you go think I have totally lost my mind, I should cover this too. Have I not noticed that the market is down SIGNIFICANTLY since last year? Oh boy, have I noticed! And, the real dollars of my portfolio are PAINFULLY aware of it. But, is oil to blame for it? I contend not.
In fact, I have become greatful to it, for it is about the ONLY thing keeping people from jumping from tall buildings right now.

Ok, I forgot to give some credit where it is due. The agricultural sector has some nice winners in it too. And, some LOSERS. I finally had to get out of MON and DE, not because they are not good companies, and good stocks, but because there was no stock price appreciation there this year. They were simply blown away by POT, TNH, MOS, and some more, and I still say TNH is a MARVELOUS stock, in both stock price appreciation and dividend! But, who is to argue with about 45% stock price appreciation in POT this year alone? And, with the global demand for food, no reason to beieve crops will require less fertilizers next year, or that less will need to be planted. Despite high stock prices there, I still feel the need to invest more in it.

Well, if oil and agriculture have been saviors, then who is to blame? Another four letter word, "Banks". Gross mis-management of funds, is likely the real root of all of the world's economic problems right now. Now, banks are going to blame it all on the housing sector downturn, but that just does not hold water. Even if the asset depreciates and goes into default, they SHOULD still retain the asset, and in time, losses from that get recovered by resale to more solvent buyers.But, they had to come up with a derivative for everything, to the point that nobody owns anything any more, and the government, and yes, us, the taxpayer, are getting the screws put to us for it by playing with interest rates and other "normal" market functioning. Ok, I am going to be unpopular here, but let them go broke, and be done with them. I still contend the almost 30 percent of the stock market made up of banks is the real cause of this global economic slowdown, and get rid of them, and the market will rebound nicely.

Ok, I would not invest two cents in anything related to banking, if I totally listened to my conscience. Yes, when I pay the pump price for gas, I curse BANKS (ie, collectively as financial institutions).

But, I digress. My point was, that I think there are so very many stocks at bargain basement prices right now, that I would dearly love to invest a ton of more money into most of the ones I have in my portfoilo already. Yes, I have been scraping off profits from this one to put into that one, but I am robbing Peter to pay Paul. That is just not a good investment strategy.

Oil, solar, materials, agriculture, industrials, rails, shipping, and more, all look too good to pass up, and yes, I do mean at today's prices. I have been far too short on capital, but utilities are a good safe investment that should grow returns over time. I just can't get into them because I need QUICK returns in this game.

Come to think of it, I don't think a million would be enough! There are so MANY absolutely GREAT buying opportunities out there right now. Could it be that I would have it all paid back by the end of next year? Or is that just another one of my missed predictions of the future?

Then comes maybe the ultimate question of all. Do I deserve it? Well, the obvious answer is only if every other lab player gets it too. But, despite some temporary setbacks, I have maintained a portfolio near the top for most of this lab sssion. It is unlikely I will win the round, but I have soundly trounced the indexes, and a fair portion of other lab players. Overall, I would say that makes me a pretty fair investment, and/or investor!

And, I should probably go on record for this too. Strategy lab is a GREAT learning tool, and it can be fun too.

So, do I get points for that? Ok, don't clap, just drop a couple million into my account! I will put it to good use!

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Another million please

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I must say I have been a fan of Robert Walberg for some time now, and in a "normal market", it can be quite a job to pick stock dogs, and make a winning portfolio. Today though, I think he has one of the easiest jobs on the planet. Picking a stock dog is about like opening a Wall Street journal and pointing with your eyes closed. The number of beaten up stocks is the highest I have seen it in some time. I do understand his conservative approach to a market in a foul mood lately, but I find too many stocks have just been pounded lately.

Then again, I must say, I am not always right either, as witnessed by my recent prediction of an upswing in shipping stocks. It seems they have seriously gone south on stock price since that prediction, so I have a mountain of gains to make up if that predictions is to be correct. Still, I do have faith. Shipping has been a very volatile industry since I first started following it, and it is not a group of stocks for the squeemish! It can be a true terror ride, if you have large sums invested in it. Still, with today's prices, I want to sink a lot more into it, than I seem to have available, so can I have another million or so please?

Yes, despite what can only be called a bear market, I remain bullish on stocks. At least some of them.

For the world economy to get out of the recession we are undeniably in (despite so many refusing to admit it), more goods and services must be produced. Granted, consumers are strapped to the bone for cash in many cases, but there is money out there. Once goods are produced, they have to get to the markets. Now, I happen to believe, we could use the existing retailers and wholesalers to get goods to consumers, but a few more would not hurt. I also believe we are too heavy on the services sector. So, what is left?

Materials for one. Take BHP for example. Not much more than two months ago, the stock price topped $100. Today, it is trying to survive $80 a share resistance. Much the same is true of RTP, RIO, and some more. Now, we can lie to ourselves if we want to (it does no good), but raw materials will go into just about anything produced, in some form or fashhion. To think that stocks will not recover is foolish. More money please, as I want to load up on materials stocks.
I would have to be cautious on gold right now, but if there was ever a group that has seen a recent pounding, gold, and gold miners would be near the top of the list.I still look for gold to recover with the dollar, but my faith in the dollar is not high right now.

Which brings up another "dirty word". Inflation. Prices are going to go up. They have for the last fifty years, and I see no reason for that trend to change now (there is always hope?). But, and you heard it first here, "Get used to it". You can throw tons of resources to fighting it, and it will still go up. To fight it, could put us in a GLOBAL DEPRESSION. Think things are bad now? They can get worse, and fighting the inevitable, is one of the fastest ways to get there.

So, everyone is looking for the "scapegoat", and I think they have picked on the wrong one. OIL, is now in a category with other four letter words in the minds of many consumers. Don't get me wrong, I hate paying the prices at the pump too. But, are oil companies to blame? I don't really think so.If anything, I think they may have been the savior of many investors.

Now, I am dissapointed in a few in the oil sector, but for the most part, oil companies and stocks have done well this year. That bodes well for investors. My biggest dissapointment so far has been RIG. What, it is one of the better gainers in your portfoilio? Well, I do try to be fair.
Since the merger with Global Santa Fe, they paid out a decent distribution to shareholders of both companies. And, the stock was seriosly under book value as of the date of the merger. The gains I have seen on RIG this year, are to bring it up to book value only. It has only briefly seen stock price apprecaition this year. Much the same is true of DO, and some more. Go back about a year, and the stock price on them was almost exactly the same as today. Yet, drilling is on an upswing this year. Where are those gains reflected in current stock prices? Not in most of the drillers I have found. I look at SLB, and it has had some gains since the round started, but I have to believe it too is grossly undervalued, especially for the earning potential I see there. I have seen some gains in PDE, NBR, ATW, and some more. Maybe I am just waiting for the other shoe to drop, but I see oil drillers as a real bargain right now. RIG will do well again too, as they put the merger issues behind them, especially by next year. And, oil service companies should do well too. Yes, they have seen some run up this year, and I am great a fan of WFT and SII. But, if nothing more than the value I see in them NEXT year, they are at bargain basement prices now!

Before you go think I have totally lost my mind, I should cover this too. Have I not noticed that the market is down SIGNIFICANTLY since last year? Oh boy, have I noticed! And, the real dollars of my portfolio are PAINFULLY aware of it. But, is oil to blame for it? I contend not.
In fact, I have become greatful to it, for it is about the ONLY thing keeping people from jumping from tall buildings right now.

Ok, I forgot to give some credit where it is due. The agricultural sector has some nice winners in it too. And, some LOSERS. I finally had to get out of MON and DE, not because they are not good companies, and good stocks, but because there was no stock price appreciation there this year. They were simply blown away by POT, TNH, MOS, and some more, and I still say TNH is a MARVELOUS stock, in both stock price appreciation and dividend! But, who is to argue with about 45% stock price appreciation in POT this year alone? And, with the global demand for food, no reason to beieve crops will require less fertilizers next year, or that less will need to be planted. Despite high stock prices there, I still feel the need to invest more in it.

Well, if oil and agriculture have been saviors, then who is to blame? Another four letter word, "Banks". Gross mis-management of funds, is likely the real root of all of the world's economic problems right now. Now, banks are going to blame it all on the housing sector downturn, but that just does not hold water. Even if the asset depreciates and goes into default, they SHOULD still retain the asset, and in time, losses from that get recovered by resale to more solvent buyers.But, they had to come up with a derivative for everything, to the point that nobody owns anything any more, and the government, and yes, us, the taxpayer, are getting the screws put to us for it by playing with interest rates and other "normal" market functioning. Ok, I am going to be unpopular here, but let them go broke, and be done with them. I still contend the almost 30 percent of the stock market made up of banks is the real cause of this global economic slowdown, and get rid of them, and the market will rebound nicely.

Ok, I would not invest two cents in anything related to banking, if I totally listened to my conscience. Yes, when I pay the pump price for gas, I curse BANKS (ie, collectively as financial institutions).

But, I digress. My point was, that I think there are so very many stocks at bargain basement prices right now, that I would dearly love to invest a ton of more money into most of the ones I have in my portfoilo already. Yes, I have been scraping off profits from this one to put into that one, but I am robbing Peter to pay Paul. That is just not a good investment strategy.

Oil, solar, materials, agriculture, industrials, rails, shipping, and more, all look too good to pass up, and yes, I do mean at today's prices. I have been far too short on capital, but utilities are a good safe investment that should grow returns over time. I just can't get into them because I need QUICK returns in this game.

Come to think of it, I don't think a million would be enough! There are so MANY absolutely GREAT buying opportunities out there right now. Could it be that I would have it all paid back by the end of next year? Or is that just another one of my missed predictions of the future?

Then comes maybe the ultimate question of all. Do I deserve it? Well, the obvious answer is only if every other lab player gets it too. But, despite some temporary setbacks, I have maintained a portfolio near the top for most of this lab sssion. It is unlikely I will win the round, but I have soundly trounced the indexes, and a fair portion of other lab players. Overall, I would say that makes me a pretty fair investment, and/or investor!

And, I should probably go on record for this too. Strategy lab is a GREAT learning tool, and it can be fun too.

So, do I get points for that? Ok, don't clap, just drop a couple million into my account! I will put it to good use!

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Good investing

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I don't think I can stress enough, that the strategy lab is both an investment tool, and a game.

Early in my posts, I stated a goal to beat the indexes, and I certainly have soundly trounced them so far this year, with room to spare. Naturally, I wanted to do well in this lab performance also.

I have to say, I have accomplished both of those goals, and to some degree, I have "led the pack", without violating too many investment rules.

The first rule of GOOD investing, is to be diversified. I look at both the open, and other portfolio's in the lab, and too often, I find that rule has been broken. Well, to be fair, the regular lab has less beginning dollars and that will force them into fewer stock selections. It does however show investors that money can be made, and you don't have to have millions to do it.

Then I look at some of the portfolios in the open, and I don't know whether to congratulate them, or to have pity on them. Yes, maybe the way to win the open lab is to have a few stocks that do very well, but I contend it is a poor way to manage a portfolio. But, if you can make the big bucks that way, should I be one to criticize? Well, I am going to anyway!

I see portfolio's with 25% in a single stock. What a HORRIBLE thing to teach other investors to do, and should we not lead by EXAMPLE?

I do not want to give percentages of what portion of an individuals portfolio should not be exceeded because there are so many different investment amounts. If you have few dollars to invest, you may need to invest in only a few winners. But, as your portfolio grows, the best bang for the buck has to be to diversify.

Maybe I ran too big of a portfolio for this game, and I certainly have a portfolio with more stocks in it than most. Over the coarse of this lab, I have introduced close to 65 stocks, or more, and have fairly consistently maintained about 50 stocks. For a portfolio with a beginning balance of a million dollars, I think that is about a right number, for the stocks I picked.

First, you have to pick good stocks, and that means good companies. Once that is done, then it is just a matter of allocation. But, the job is not done there.

Are the stocks diversified by sector? Now, I am not in every sector, and I don't think you have to be. But for a reasonably large portfolio, how few sectors is reasonable?

I am pretty good at the oil sector, and it could have been a good strategy for this game to put large amounts in just that one sector. In fact, I do have 40+% in that sector, as the sector has been a market leader, but the portfolio is comprised of about 20 comanies in that sector alone.

Well, before I get too windy, and bore everyone, a few sectors is OK in a real dollar portfolio, then just diversify within those sectors. Provided, if the market changes, you are prepared to diversify into other sectors. Without some diversification into other sectors, you may not know where to turn, in the event your previously outperfoming sector goes into a long term downturn.

So, to some degree, I am proud of my portfoio. Not only has it out-perfomed the market as a whole, and many other players, but is composed of good companies, and is well diversified.

Yes, I think for a portfolio of this size, it would be a management error to have much more than 5% invested in a single stock, and I think that rule should apply to most any personal portfolio.

Now, that said, the best use of the strategy lab, is to aide investors to find winning stocks, so that you can add diversification to your portfolio. The strategy lab is nothing more, or less, than a learning tool. Check out the portfolio's, especially in the open. Don't just look at the dollars or percentage gains, but track the stock, over some time. Maybe, jump into the lab yourself, and test a stock, before you decide to buy it for your personal portfolio.

Yes, my portfolio has some stocks in it that are in the red. Better there, than in my REAL portfolio?

And, I wish I had good news for investors, but I don't think we are at the bottom yet. Is that a reason not to invest now? I don't think so. Keep in mind, in times like these, where the DOW is down more than 10% this year, and may be going lower, your results may be far better. In a decidely bear market of late, this portfolio has GROWN by about 18% (yes, it fluctuates) in less than 6 months. Yes, in my mind, that is sucess!

Yes, maybe I am an optimist, but despite a treacherous market, I think you need to be investing for the future. And, this bear market will turn. Investing now, should have you well positioned for the beginning of the next bull market. Dare I guess when that might be? Not soon.
So, get busy, and GROW your porfolio NOW.

Pick your stocks well, but DO pick them! And I definitely encourage people to practice good investing strategies, and that means diversification! Happy investing!

So, in what may be my last post of this lab session, I would like to let you all know, that you too can join me,,, as I EAT BEAR.

And, of coarse, I do encourage you to use the strategy lab. It is both fun, and educational. Yes, I do mean PARTICIPATE, not just watch (but that can be beneficial too).

Comments: 1