Van Meerten's picks

I've really tried to pay attention to this whole Ken Lewis - Bank of America saga. I'm really more confused then ever. I'm not sure what to believe and need your help. Please give me your opinions.

1. Ken Lewis is one of the smartest CEOs ever. He has weathered the storm and bought both Country Wide and Merrill Lynch for a song and got the Feds to pay for it all. He should be Time Magazine's Man of the Year.

2. Ken Lewis has knowingly lied about everything and has committed securities fraud. Not only is he as bad as Madoff and Stanford but his Ponzi scheme is a lot bigger. Indict and arrest him for fraud.

3. Ken Lewis and his Board of Directors have misled the stock holders, the Fed, the SEC, and the press. Because of their lies and deliberate misinformation stockholders have lost billions. Sue them all for every cent they have.

4. Ken Lewis is the stupidest CEO ever. Because he was clueless he made and packaged bad loans that destroyed the American economy, bought Country Wide and Merrill Lynch without even the least due diligence. He isn't smart enough to be a teller in one of his bank locations. Fire him without a severance package.

5. Ken Lewis? Who cares?

Please give me your opinions.

Comments: View Comments |  Sunday June 21, 2009

My good friend Jack has restored a 1946 AirCoupe and promised me a ride in a plane a year older than I am. I couldn't resist. It was a nice sunny day so we drove over to Peachtree-Dekalb where he has the plane hangered and went through the check list. Soon we taxied down to the runway got clearance from the tower and we lifted off.

This is pure seat of the pants flying - old school style. A very uncluttered instrument panel, a tach, an altimeter, a gauge that tells the rate of ascent and descent and one the simulates the relationship of the nose and the wingtips to the horizon. I looked for a fuel gauge and couldn't find it. Jack pointed out that the tank is right in front of the wind screen and there is a float in the tank with a wire through the cap. The length of the wire tells you how much fuel you have left.

The plane has no flaps, no pedals, not even a joystick. It just has a steering wheel like a car that you push or pull to go up and down and turn from side to side to bank the plane.

He knew I was itching to fly it so he told me to take over the controls. It had been a long time since I piloted a plane so I kept close watch at what few instruments the plane had, I leveled of at about 3000 feet and kept glued to the instrument panel. Jack told me to enjoy the view but at 3000 feet in an 85 horsepower AirCoupe its hard to tell what's happening. Jack saw I had my head buried and wasn't enjoying the view so he pulled open the cockpit roof and let the wind blow through our hair. "How do you think they flew before they invented those instruments?"

He told me to quit looking at the instruments and just position the nose and wing tips to the horizon. Now I was looking forward not buried into the instrument panel and really starting to enjoy myself. It was one of those highlight days.

So what has all this got to do with the stock market? Too many of use have had our head buried in the instrument panel watching every little tick of the indicators that we rely on and not had a chance to look out at the horizon and enjoy the big picture.

While we were busy charting and plotting the market slide down and on 11/21/08 all three major market indices the Dow ($DOWI), the S&P 500 ($INX) and the Value Line Index ($VLA) hit their rock bottom low point and have since recovered.

Remember, the stock market is a leading economic indicator. Normally its ups and downs precede the general economy as a whole by 3 months to a year.. It started sliding back in 2007 before there was even one headline of the bad times to come. The Value Line Index peaked the week of 7/09/07 and slide from 2509 down 1493 points to 1016 on 11/21/08, a loss of almost 60%. The Dow peaked on the week of 10/08/07 at 14198 and slide down 6749 points to a low point on 11/21/08 of 7449, a loss of almost 48%. The S&P 500 also peaked on the week of 10/08/07 at 1576 and slide down 835 points to a low point of 741 on 11/21/08 , a loss of almost 53%.

We bounced off all those low points now and the Dow has gained 7%, the S&P gained 11% and the Value Line index is up almost 27%. Start looking at the horizon!

The election was a good thing. We got to hear all the pros and cons and the economy was probed and analyzed and we discussed and debated all the good and bad. There was no stone left unturned and by the time of the election outcome all the cards on the table had been turned over. Isn't it remarkable that the election debate ended in the same month the Market turned??

The Market is a big battleship and even after it has the order to turn there is a lag and we have to look out at the horizon and record our progress one degree at a time until we've turned the full 180 degrees.

So what's the battle plan. I can't predict which sector will recover first anymore than I could predict which sector would fall fastest and longest. I'd advice you to look at the broad market index Exchange Traded Funds. Look at Large Cap S&P 500, Mid Cap S&P 400, Small Cap S&P 600, Micro Cap and Real Estate ETFs. Decide would much conviction you have and how much risk you can take, then look at IShares for the conservative, Ultra ProShares for the aggressive and the Direxion 3X Bullish ETF's for you Screaming Eagle investors.

Don't buy all at once but dollar cost average your portfolio into the market at about 10% per month until this market gets some legs.

As always please use stop losses to protect yourself against the unknown.

What if I'm wrong and the Market tanks and the Value Line Index crosses the 1000 line? Then my plan B:

I'll go to cash, sell everything else of value on E Bay and go to the John Denver Survival Plan:

Blow up your TV, throw away your paper
Go to the country and build you a home
Plant a little garden, eat a lotta peaches
Try and find Jesus, on your own.

I would enjoy hearing your comments at VanmeertenFund@aol.com

Jim Van Meerten
Strategy Lab Open Winner July 2008
VanMeerten The Amateur Strategy Lab 2008

Comments: View Comments |  Tuesday February 3, 2009

Recently, I wanted to learn more about blogging so I went on my public library's on-line card catalogue and entered the subject: "blogging". I ordered 6 or 7 different titles to try to find the best one. One of the titles was "Blogging for DUMMIES" by Susannah Gardner and Shane Birley. Although it was a paperback and had a yellow and black comic book looking cover complete with a "Where's Waldo" look-a-like character on the front it really turned out to be the best of all the books on the subject. It was so good that I decided to take the Barnes & Noble gift card my daughter gave me for Christmas and actually purchase the book because it was really a step by step guide to blogging that even I could understand.

When I got to the Barnes & Noble Bookstore I figured it would be in the computer section and with the black and yellow cover with the Waldo cartoon face easy to find. As I looked in the bookshelf it appeared that every 4th book on the shelf had a "DUMMIE" cover and each was on a different subject.

I went over to tell my wife. She was in the wedding planning section getting reference books for my daughter and there was even a "Wedding Planning for DUMMIES " book there. As I walked around the bookstore I couldn't believe how many "DUMMIES" titles were in the store. Every single section and every subject had those yellow and black covers with the goofy Waldo character staring at me. I quit counting after several hundred titles.

I suddenly had a Peter Lynch moment and remembered how I read a story where he said some of his best retail ideas came from waiting for his wife at the mall and seeing a new store he knew nothing about. He observed shopper after shopper coming out with loaded bags and just had to research that company. I decided to do the same with these "DUMMIE" books.

The book cover said the "DUMMIES" books were published by Wiley Publishing so I Googled them and went to their web site. The first line of the web site said they had over 150 million books in print and more than 1400 titles! No wonder I lost count.

The investor relations section claimed to produce 58% Scientific, Technical Medical and Scholarly titles, 28% Professional and Trade and 14% Higher Education subject matter. Their customer base was 51% US, 24% Europe, 13% Asia, 5% Australia & New Zealand, 4 % Canada and 3% other. A worldwide power house!

The financial's were even more impressive:
Revenue 13% Compounded Annual Growth Rate (CAGR)
Earnings per Share 18% CAGR
Operating Income 17% CAGR
Stock Price 13% CAGR

This company has a great franchise, brand recognition and walks the walks with excellent financial results.

SYMBOL: JW.a & JW.b

Jim Van Meerten

Comments: View Comments |  Monday January 12, 2009

Too many investors spend time looking at the S&P500, Small and MicroCap stocks and totally overlook the Mid-Cap 400 . Here is a long and short pick from that universe.

This week it was really hard to find a positive stock in the Mid-Cap universe but WGL Washington Gas Light Co got the green light. The company in a public utility that sells and delivers natural gas product in the Washington DC metro area. Very solid revenue, operating income, net earnings and a steady dividend make this company attractive on fundamentals. The fact that in this market it still has had 10 new highs in the last 65 trading sessions if great. Place a stop loss @31 to protect your position.

The short pick of the week (and there could have been many) goes to HNT Health Net Inc. a managed care organization that manages health care services. We have a bear market in the health care sector and this stock has made 27 new lows in the last 65 trading sessions. Place a stop buy to cover at 17.

Jim Van Meerten
The Amateur Msn.com Strategy Lab

Contributor on:
MSN.com Money Central
Marketocracy.com
SeekingAlpha.com
InvestorPlace.com
MoneyShow.com

Comments: View Comments |  Saturday November 22, 2008

Below is a reprint of a blog on Harley I wrote in July. I hate to see rehashed articles as much as you do but give this one a look-over. I've got a friend who keeps pushing a certain pharm stock because he thinks some day it will be a great turnaround candidate. For those of you who read my blogs you know I'm a momentum investor/trader who dumps a stock when the price reverses but here is a value stock that is not hard to like.

Harley HOG is not a turn around stock, in any sense of the word They have always had great revenue, they have always made a profit, they have always stayed above a 10% margin and they have always paid a dividend. The price just keeps going lower.

If you want to be like Warren Buffet here is your chance. Here is a company that always makes a profit and can presently be bought for book value and just 4 times earnings. In 2006 the stock sold as high as 73.64 on earnings of 3.93 that's 18.73 times earnings multiple, You can presently buy it for 12.04 on earnings of 3.23. If it returns to its previous 18.73 earnings multiple it could sell at 60.50. That could give you a 500% return on your money.

Harley has 3 major divisions: the manufacturing of motorcycles, the royalties from authorized merchandise and a finance division. People will always buy Hogs and even if you don't own one you have to buy the outfits. The finance division will turn around one the economy turns also.

Here is the July reprint:

When I was about 12 there was a crane operator across the street that rented a room from one of our neighbors. Wayne, I still remember his name, was a rough dude but he had a really pimped out DuoGlide. He rode with a motorcycle club and some nights when all his buddies came over to see him the street resonated with the sound of rollin' thunder. Most of them had lights in the spokes and the patterns of the lights and the sound that those big V-Twins made as they all rode down the street was unforgettable. I knew right then I had to have one.

I've read a lot about Hogs. I know they are expensive, undependable, not very economical and the Jap Crap is cheaper, runs better, longer but even when they try to duplicate it they can't sound like a Harley. I NEEEED a Hog.

All around the country there are guys like me that are reading articles that with gas prices on the rise thousands of grown commuters are looking for economical transportation alternative to their SUV and looking at Vespas, Tomos and all sorts of DUI scooters but do you really want to be seen on a pastel minibike? Real dudes stride HOGS. We will convince our wives that a Hog is a good, economical and dependable alternative to our SUV's. You can't ride your Ole Lady on the back of a kiddie scooter!

That's the mystic the bike has going for it and that's the mystic the stock has too.

Harley has a following for both the bike and accessories. It will be around. They have a marketing genius and there always will be a demand not only for the bikes but also for the gear and endorsement items. This is a company with stable sales, stable margins, stable earnings. The company isn't as exciting as the bike, so why buy it?

It's on sale for 50 cents on the dollar. In November of 2006 the prices was around $75 now it's on sale at less than $35. ( TODAY @ $12)

If you've always wanted a Harley, they are as good as ever and tell your wife; I mean Ole Lady it's on sale.

Jim Van Meerten
The Amateur Msn.com Strategy Lab

Contributor on:
MSN.com Money Central
Marketocracy.com
SeekingAlpha.com
InvestorPlacecom
MoneyShow.com

Comments: View Comments |  Saturday November 22, 2008