Liquid Gold

Dear Fed, Please bring me a rate cut for Christmas

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Dear Fed Governors,

The financial markets are in bad shape. The dollar is dropping. The economy is growing very slowly and may avoid a recession if you act quickly.

On a personal note, I'd like to improve my ranking in this contest. If you drop rates, gold will climb and all my gold mining stocks will outperform. Stocks like Yamana Gold (AUY), Kinross Gold(KGC) and Goldcorp(GG) are already up considerably but my underperformers need some help. The CEO of U.S. Gold (UXG) just upped his stake in the company to 21% so he must be a believer in the upward trend of gold. The stock is down for the year but it has moved up over ten percent since he took the larger stake.

And then there's tiny Northgate Minerals (NXG) a Canadian producer. It's production is rapidly increasing and the company has so much potential. Because it is so inexpensive, a fat rate cut could give it a huge percentage pop upward.

Oh, fellas, I forgot to mention oil. That, unfortunately, could rise as rates get cut, but it is not a given. Most of my oil stocks are doing just fine, thank you, but Haliburton (HAL) could use some improvement. Fortunately because HAL has moved its headquarters to the heart of the oil fields in the Middle East, I'm sure it is only a matter of time before I see some significant improvement in its price.

I've been playing defense during the past four months because of the economic climate. In my real life portfolio I've taken even higher stakes in the metals and mining stocks. You could really improve my holidays and my year end performance with a 50bp rate cut.

Your friend,
Liquid Gold

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SLO Question of the Week

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I've decided as an American to believe this whole subprime bailout mess is totally political.

During the years that I have lived on this planet, I have yet to go to the grocery store and walk out with free food. If I don't have the money, I don't eat. Ditto with electricity, gas, water, etc.

Years ago the government got invoved with the savings and loans fiasco and the RTC was formed. I sold most of my stock and bought all the property I could afford. My "investments" a/k/a foreclosures I got from banks' real estate owned departments and the General Services Administration have increased in value beyond my wildest dreams. This time I've bought one foreclosure and plan to purchase two or three more.

The few souls that benefit by keeping a low mortgage rate have hit a political lottery. It's about as rare as being hit by lightning. Don't spend too much time debating about the issue. Sell some of your stock and go buy some property. Diversify your assets. Times won't always remain like they are now. People need housing and businesses always need a storefront. Take a hint from me and look first at commercial opportunities or ones with commercial potential. They are a lot less hassle and offer long leases.

I personally don't approve of the bailout. However, if I were struggling like some of those families appear to be, I would be grateful for the opportunity to right myself and my family. I would also be grateful that I live in a country that makes this opportunity possible. Show those million or less families some holiday spirit and then rush like mad to pick through what will eventually be the biggest buying opportunity in real estate that you may ever witness in your lifetime.

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Stocks to Help you Sleep Better

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Market madness has errupted and capitulation in all things financial is in the beginning stages. What's an investor to do in all this confusion? Let me share with you some under the radar stocks that may help you through these rough times and give you some income while you're waiting for the market to improve. Also, these stocks are all oil and gas related so they should have earnings as well as upside potential.

First off is Buckeye Partners (BPL). This stock costs $48.96, yields 6.76%, and pays $3.30 per share in dividends.

Next on the list is Teppco Partners (TPP). This one costs $38.27, yields 7.24% and pays $2.78 per share in dividends.

That's followed by Amerigas Partners (APU). It costs$35.97, yields 6.79%, and pays $2.44 per share in dividends.

Now on to Williams Partners (WPZ). It costs $37.70, yields 5.88%, and pays 2.20 per share in dividends.

Then there's Enbridge Energy Partners (EEP). This stock traded today for $49.56, yields 7.54%, and pays $3.80 per share in dividends.

Let's move on to Plains All American Pipeline (PAA). It traded for $50.17, yields 6.68%, and pays $3.36 per share in dividends.

I'll list five more symbols, all paying between six and seven per cent yield. They are ETP, EPD, KMP, SPH, and TGH. Check them out!

I've loaded up on all these names because they pay me well, let me sleep at night, and I can enjoy some upside come springtime. Happy holidays. Liquid Gold

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LIARS CAN FIGURE AND FIGURES CAN LIE

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I've been thinking these words since the government took food and energy costs out of the inflation forecast.

The beginning of 2008 may present an opportunity for profits in energy, agriculture, and gold, but later in the year may set up one of the biggest buying opportunites for value investors in years. Sell off some of your profitable positions to raise cash in the first quarter so you will be well positioned to take advantage of the upcoming fire sale in some stock sectors.

One of Sir John Templeton's best remarks was "Buy when there's blood on the streets." Well, investors, there'll be plenty of that in the financials and the retailers. Personally I'm loading up on SHLD (Sears Holding), AIG, and several of the higher yielding banks. There's still time to pick and choose over the next six months as things may get even more grim. Consumers have Christmas bills and high energy bills to pay and raises have failed to keep up with the rising costs even though they mirror the "inflation" rate.

When you invest, go for the large caps and pay attention to the dividend yield. You may have to hold your stock picks for a period of time; you may as well get paid by the company as you wait for the market to improve. Also, watch for buybacks. Those can accelerate your progress. Most companies announce buybacks and there are web sites that track this information for you.

One final word on value, put your patient cap on. These stocks can drag around for months before they take off, but the upside is always worth the wait if you select carefully.

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