Thursday, July 26, 2007

7.26.2007

The housing market is getting slaughtered today on news that new home sales have decreased substantially. It is said to be the worst downturn in 16 years and the largest one month drop in 5 months. Is this a buying opportunity or a sign of things to come? Housing and mortgage stocks look cheep right now, but is that because they don’t have the financial legs to sustain a turn in the market or has Wall Street accurately valued these stocks? Wall Street loves to find a weakness (subprime) and talk about like it is the end of the world until a report comes out that says the trend has turned. It is very difficult to find the bottom of that curve. The best way to invest in a downward trending industry is to look for quality stocks and invest over a period of time. When you invest in quality stocks you lower your risk of a complete collapse. When you invest over a period of time you are able to lower your cost basis by purchasing on dips. Or option #2 is to buy Apple stock!! up 10 points taday!

Tuesday, July 24, 2007

Correction

The risk of running with the bulls!

Today’s correction was no surprise to most of us, but AT&T coming out and saying the iPhone’s first weekend of activations was less then anticipated was very surprising.

AT&T Inc. -- the sole provider of the new product -- said it activated 146,000 iPhones, while analysts had expected at least 200,000 during the first weekend.

The most important word in this report is “activated.” The iPhone is selling, but what analysts underestimated is the number of people who bought the iPhone and either sold it on e-bay or using it as an iPod. From what I have read the iPhone is not the easiest phone to activate, so a delay in activations is not a deal breaker. This may hurt Apples bottom line in the long run (due to contracts with AT&T) but the iPhone has definitely not been a disappointment.

Sub prime is continuing to take a huge hit, but is likely just the shorts trying to tear down anything they can. The demand for housing is not going to stop especially with the population growth. Countrywide (CFC) is one of the largest mortgage companies so it is likely a safe bet. With unemployment at all time lows, who is not paying there mortgage? Maybe everyone is buying the iPhone! Estimate- September 1 CFC is trading at $40

Disclosure: Long Apple & Countrywide

Wednesday, July 18, 2007

Bernanke the Bear

Bernanke told congress today that overall economic growth this year will be lower than expected. Of course the markets overreact, but this appears to be only a temporary slip as the bulls still looks very strong.

Bought some JP Morgan Chase (JPM) today on stellar earnings report, beating estimates by .12 cents. The stock dropped however due to future expected losses in home equity defaults. Buying opportunities everywhere.

Monday, July 16, 2007

Unilever

Unilever (UN) produces many of the products that you may use everyday. Slim Fast, Vaseline, Dove, Hellmann’s, Axe, Country Crock, Wishbone, Lipton, Surf, and Ponds are just a few of the product lines that Unilever produces. Here is Unilever’s profile provided by Yahoo.

Rumor has it that Colgate (CL) is interested in acquiring Unilever. This rumor does not make a lot of sense, due to the fact that Unilever’s market cap is nearly three times that of Colgate’s. Colgate would have to team up with a private equity firm to make this deal happen or purchase just a section of the company (personal care business estimated at $35b).


Unilever appears to be a strong company with many attractive and appealing brands in its arsenal.
Disclosure: buying UN long on dips

Monday, July 9, 2007

$$ Top 5 Summer Money Reads $$

This summer when you are lounging by the pool or on the beach with SPF 45 smeared all over you pale body pick up one of these books. They may not help with that sunburn but they will help your stock picking. Some are classics that deserve another look, while others are new this year.
1. The World is Flat, Thomas L. Friedman
As suggested in the title this book analysis the effect that technology has had on the globalization of business. Technology has created an even playing field for the entire world, allowing workers in India to compete for US jobs and vise versa. The World is Flat is a great read for anyone wanting a global economic outlook from a fresh perspective.

2. The Brand Gap, Marty Neumeier
“A book you can finish in a short plane ride,” is the author’s accurate description of this short but effective book. Having a recognizable and identifiable brand is essential to the success of any business. The Brand Gap is a quick and entertaining read that will leave you with a different perspective on what a brand really is.

3. The Richest Man in Babylon, George S. Clason
A classic every serious investor should read.

4. The Warren Buffett Way, Robert G. Hadstrom
Although I am not a Warren Buffett enthusiast or fanatic, I do admire his overwhelming success. His conservatism on investing is different from my approach, but I do have an appreciation for his thoroughness and analytic abilities. I am currently reading this book myself and really enjoying it. There are a ton of Warren Buffett books out there, but The Warren Buffett Way differentiates itself by taking a broad look at not only his success but also his mentors.

5. Freakonomics, Steven D. Levitt & Stephen J. Dubner
Very interesting looks at how data can be misunderstood and misrepresented do to inadequate analysis. Written by a New York Times journalist and a young MIT economist, the blend of intellectual energy spills on to the pages. Freakonomics questions and analysis many taboo subjects including abortion and the Ku Klux Klan. This is a great book to read in a group because you will want to discuss it in detail when you are done.

This list is just a few of my personal favorites, if you think I have overlooked any great pieces of literature or you have read anything recently that should join the list please feel free to add a comment.

Vegas baby, Vegas!!!

Classic Swingers!

Vegas Baby! Vegas!!

According to the most recent census bureau release North Las Vegas is the fastest growing city in the country. With continuous multibillion dollar resorts’ going up annually it is no surprise that Vegas tops the bureaus list. Investors have been gambling on the success of Las Vegas stocks for a very long time. Recently gaming stocks have been out performing the market due to strong earning and investor confidence. Should investors double down or walk away with a gain? It’s usually safe to bet on the house, but there are many variables that effect gaming stocks. Let’s take a closer look at a couple of the best gaming stocks sin city has to offer (WYNN & MGM):
Wynn (WYNN) resort and casino is currently the most expensive (2.7 billion) mega resort to be constructed in Vegas. If you are looking for a new Ferrari after hitting it big at the roulette table the Wynn has you covered. The Wynn differentiates itself from the other mega resorts by servicing exclusively to high end gamers and business travels. The Wynn is well equipped with an 18 hole golf course on site, Ferrari & Maserati dealership, high end shopping center, and numerous award winning restaurants. The Wynn does not have a gimmick or a theme like many of the large strip casinos. The Wynn is trying to attract a different type of demographic which obviously does not include families.

Wynn stock has been on a steady rise the past year hitting an all time high of $114 in February. With a p/e ratio of 14 and a profit margin of 39% the Wynn has strong financials. Being the new kid on the block should help the Wynn’s numbers for the next couple years until the next mega resort pops up.
Since the Hilton-Blackstone deal was announced this past week rumors have been flying about our next sin city stock, the MGM Mirage. Here is MGM’s profile provided by yahoo finance:

MGM Mirage, through its subsidiaries, engages in the ownership and operation of casino resorts in the United States. It offers gaming, hotel, dining, entertainment, retail, and other resort amenities. The company operates casino resorts under the names of Las Vegas Strip, Bellagio, MGM Grand Las Vegas, Mandalay Bay, The Mirage, Luxor, Treasure Island, New York-New York, Excalibur, Monte Carlo, and Circus Circus Las Vegas. It also operates other casino resorts under Circus Circus Reno, The Laughlin Properties, Railroad Pass, MGM Grand Detroit, Beau Rivage, Gold Strike-Tunica, Gold Strike- Jean, and Nevada Landing names. In addition, the company has 50% interest in Silver Legacy, Borgata, and Grand Victoria resorts. Further, MGM Mirage owns and operates golf course, Shadow Creek, Fallen Oak, and Primm Valley Golf Club. As of April 13, 2007, the company owned and operated 19 properties located in Nevada, Mississippi, and Michigan. It has strategic alliance with the Mashantucket Pequot Tribal Nation. MGM Mirage, formerly known as MGM Grand, Inc., was founded in 1986. The company is based in Las Vegas, Nevada. MGM Mirage is a subsidiary of Tracinda Corporation.

The MGM has looked strong the past year doubling since last October. Trading at a premium do to buyout speculation, MGM is an excellent gambling stock. Do you feel lucky?

Sunday, July 8, 2007

Week in Review

After a week of being out of commission, I am glad to say that I am back up and operating. I lost all the files on my hard drive including my pictures and word documents! Back up your important documents as often as possible, you may be next. I think I am going to take a serious look at a MacBook for my next laptop.

Anyways, the markets looked quiet this past week. Travel and hotel stocks were active with the announcement of Blackstone Group buying Hilton hotels for $26 billon.

Apple also had a great week with reports that the iPhone may live up to the hype. It has been tough not to take some gains off the table, but I am going to hold on a bit longer. Steve Jobs is always full of surprises so this stock is fun to follow.

Alcoa Inc. (AA) will kick off the next wave of quarterly earnings on Monday. Keep a look out for international stocks this week. The dollar has been abnormally week the past quarter which should create strong earnings for international stocks usually underestimated by wall street.