The Dow dropped 360 points today following a strong day yesterday. The housing fiasco is still driving the market lower, although it is effecting the entire market (including tech). Apple gave back all of yesterdays gains dropping $5 to $186.30. Wallstrip featured apple today, see below. None of my positions were up today, so I am going for a run and hopefully tomorrow will be better. On days like this I have to remind myself that I am an investor and not a trader, think long term.
Wednesday, November 7, 2007
Tuesday, November 6, 2007
Very Strong Close
Good day to be long. The market closed strong today, ending with the Dow up 117 points, NASDAQ up 30, and the S&P up 18. Tech lead the way again with apple jumping 5 bucks to $191.79 and Google up 16.14 to $741.79. Google is up nearly everyday on growth and anticipation of the g-Phone. It is going to be hard to compete with the iPhone, but they may just change the way we pay for and use our phones.
Volt
Oil may hit $100 a barrel this week as fighting continues in oil rich countries. Electric automobiles can not come soon enough. GM has introduced an electric rechargeable concept car called the Volt that has been getting a lot of attention. The Volt is projected to get about 40 miles on a single charge, which should cover most Americans commute. This concept may be counterproductive if the electric companies can not find an alternative source of energy like wind or solar (many electric companies currently use coal). GM is projected to build as many as 60,000 cars in the first year with a target price between $20-30k. Sign me up.
Monday, November 5, 2007
Down Day
The Dow closed today down 51.70 today on continued credit worries. The regular group Google, Bidu, and RIM continue to climb higher despite the broad market concerns. No big movements in my portfolio today, but most positions were slightly lower.
Tech Crunch has an interesting article on the value Second Life. With many social networking sites going for tens of millions it is very difficult to put a value on a site like Second Life and since I have never played the game or gone to the site I will not try.
Tech Crunch has an interesting article on the value Second Life. With many social networking sites going for tens of millions it is very difficult to put a value on a site like Second Life and since I have never played the game or gone to the site I will not try.
Friday, November 2, 2007
Catfish Investing
I am looking at some bottom feeders today. Countrywide & Merrill Lynch are trading very low (and for good reason). When I look at a play based on problems in a sector I usually want to look for the sector leaders because they seem to rebound faster and there is less risk of a complete collapse. Countrywide fits that criteria, but it is hard to find the bottom, and I don't like to chase stocks lower because then you have to play the waiting game. I am going to pass for now, but I will keep my eye on both.
Mortgage Rant
Take some personal responsibility for your dumb financial decisions. If it seems too good to be true it probably is. You knew when you bought that million dollar house with nothing down that you were getting in over your head. Now that house is worth 800k and you want someone to bail you out or you are going to walk away. That is not the way it works. Take some personal responsibility and pay your bills. You traded your financial future for granite countertops and hardwood floors and now it is time to make good on your bet. If the government bails you out by artificially inflating home prices the ones that are going to get squeezed are the old (on fixed income) and the young fist time home buyers who can not afford an entry level home.
Jim Cramer on Market Manipulation
This video has been out for a long time, but I felt with the market acting so volatile the past few months I would take another look at it. Cramer basically says that his hedge fund (closed now) would manipulate the market on the short side. Although this is highly illegal it happens everyday.
Get a Job
According to the Labor Department employers added 166,000 jobs in October. This is nearly double what economists had anticipated. The current unemployment rate is 4.7%. This is a good sign that the credit crunch has not spilled over into other parts of the economy. This market is still trading lower in early morning trading. The DOW is currently down about 60 points @ 13,508.
Should be a great weekend for football with the highly hyped Indy vs patriots game on Sunday. The Cowboys are playing Phili in Philadelphia on Sunday night. Should be some great football.
Thursday, November 1, 2007
Dow down 362 points!
The Dow closed down 362 points
NASDAQ closed down 64 points
S&P 500 closed down 40 points
Today was a blood shed, with financials and anything related to housing spilling the most. Everything in my portfolio ended in the red but Dreamworks (DWA) which for some reason has been moving against the market. I guess Wall Street had a sugar hangover today and decided to take some risk off the table. I have been staying away from financials and housing stocks so today mainly hurt my mutual funds (I am afraid to look at how much) but my speculative investments were not damaged to bad. I know I am completely insane for looking at this stock, but Countrywide is looking really cheap right now. I am going to hold off for now, but if it drops another 10-20% I may pick up a few shares and forget about them for a year. Countrywide is not going anywhere, so it is likely a safe bet (especially with Buffet buying at $18).
Doomsday for CROX
The inevitable finally happened. Crox is down today $22 or 29% due to disappointing revenue and 2007 outlook. I think everyone knew this stock was greatly overvalued and that one day it would tank. Well today is that day. I don't like to see stocks turn this fast, knowing that a lot of investors lost big, but that is the risk we all take when investing in growth stocks. Here is a Wallstrip from the good old days when Crox was on fire...
Here's a ranking of the top 10 stock gainers in the past decade according to Market Watch.
Company.........Cumulative gain (%)
Chico's FAS......3,790.889
Apple...............3,504.444
Frontier Oil......2,367.556
Oshkosh Truck.2,153.455
Clean Harbors..1,995.059
Echostar...........1,870.947
Gilead..............1,816.260
American Eagle.1,737.162
Holly Corp........1,706.189
XTO Energy......1,629.161
Company.........Cumulative gain (%)
Chico's FAS......3,790.889
Apple...............3,504.444
Frontier Oil......2,367.556
Oshkosh Truck.2,153.455
Clean Harbors..1,995.059
Echostar...........1,870.947
Gilead..............1,816.260
American Eagle.1,737.162
Holly Corp........1,706.189
XTO Energy......1,629.161
Wednesday, October 31, 2007
Cash Call!
Ever thought of going completely to cash? Check out this article from the New York Magazine and you may do it tomorrow. It is all about managing risk. Know your tolerance and don't overextend. Here is my favorite part:
"The Derivatives-Related Meltdown, Part II
Anybody who glances occasionally at the financial pages these days knows that mortgages issued to home buyers are packaged together (in a process called securitization) into a collateralized-debt obligation, or CDO. That’s what’s known as a derivative, a security whose value depends on the value of other securities. The price of the CDO, you see, is “derived” from the prices of the underlying mortgages. (It works with credit cards, too, or bank loans—any kind of debt will do.)
In principle, the idea of a CDO makes perfect sense. In buying $5 million worth of a CDO, an investor has essentially lent money to an entire portfolio of homeowners, instead of placing all his eggs in one basket, say, by funding a single $5 million mortgage. In the real-estate-crazy environment of the past decade, the CDO market took off like a rocket. But the buyers of these derivatives made a critical error—they confused the spreading of risk with the elimination of risk. A booming economy made this confusion not just possible but irresistible. With relatively few defaults in the first half of the decade, investment firms, including many hedge funds, came to see CDO returns as a sure thing and loaded up on them, often borrowing money to do so, taking on debt to buy debt and thereby setting up a potentially deadly chain reaction. The readiness of the secondary market to buy all these mortgages encouraged the lenders to run wild and lend to anyone who walked through the door, leading—inevitably, in retrospect—to a decline in loan quality. Analyst Christopher Wood of Asia-Pacific investment house CLSA succinctly defines the problem in his highly readable newsletter Greed & Fear: “[Securitization] has one fatal flaw, which will ultimately prove to be its undoing … it removes the incentive of those making the loan to worry about whether the loan is a good credit.”
Still, it all held together until mortgage defaults began to cut into the yields of these CDOs and holders looked to sell them, only to realize their value had slipped. Forced liquidations as a result of that “price discovery” were a primary factor in Bear Stearns’ hedge-fund calamity in August. And it’s not over yet: The aftershocks of the mortgage meltdown are still being felt, as banks such as Citigroup and Deutsche Bank announce multibillion-dollar write-downs.
Each time one of these write-downs has been announced, the market has had a curiously positive response, taking the news as a sign that the worst was over and the banks were cleaning up their books. But because these derivatives are linked to other debt, there’s no reason to be certain that trouble won’t bleed into other markets. Among other things, the liquidity crisis froze the market in structured investment vehicles (SIVs), a nifty bit of financial engineering that banks use to profit from the spread between short-term debt and long-term debt. No one yet knows how nasty these losses could turn out to be because SIVs are stashed, Enron style, off the books."
thanks Jason for the link
"The Derivatives-Related Meltdown, Part II
Anybody who glances occasionally at the financial pages these days knows that mortgages issued to home buyers are packaged together (in a process called securitization) into a collateralized-debt obligation, or CDO. That’s what’s known as a derivative, a security whose value depends on the value of other securities. The price of the CDO, you see, is “derived” from the prices of the underlying mortgages. (It works with credit cards, too, or bank loans—any kind of debt will do.)
In principle, the idea of a CDO makes perfect sense. In buying $5 million worth of a CDO, an investor has essentially lent money to an entire portfolio of homeowners, instead of placing all his eggs in one basket, say, by funding a single $5 million mortgage. In the real-estate-crazy environment of the past decade, the CDO market took off like a rocket. But the buyers of these derivatives made a critical error—they confused the spreading of risk with the elimination of risk. A booming economy made this confusion not just possible but irresistible. With relatively few defaults in the first half of the decade, investment firms, including many hedge funds, came to see CDO returns as a sure thing and loaded up on them, often borrowing money to do so, taking on debt to buy debt and thereby setting up a potentially deadly chain reaction. The readiness of the secondary market to buy all these mortgages encouraged the lenders to run wild and lend to anyone who walked through the door, leading—inevitably, in retrospect—to a decline in loan quality. Analyst Christopher Wood of Asia-Pacific investment house CLSA succinctly defines the problem in his highly readable newsletter Greed & Fear: “[Securitization] has one fatal flaw, which will ultimately prove to be its undoing … it removes the incentive of those making the loan to worry about whether the loan is a good credit.”
Still, it all held together until mortgage defaults began to cut into the yields of these CDOs and holders looked to sell them, only to realize their value had slipped. Forced liquidations as a result of that “price discovery” were a primary factor in Bear Stearns’ hedge-fund calamity in August. And it’s not over yet: The aftershocks of the mortgage meltdown are still being felt, as banks such as Citigroup and Deutsche Bank announce multibillion-dollar write-downs.
Each time one of these write-downs has been announced, the market has had a curiously positive response, taking the news as a sign that the worst was over and the banks were cleaning up their books. But because these derivatives are linked to other debt, there’s no reason to be certain that trouble won’t bleed into other markets. Among other things, the liquidity crisis froze the market in structured investment vehicles (SIVs), a nifty bit of financial engineering that banks use to profit from the spread between short-term debt and long-term debt. No one yet knows how nasty these losses could turn out to be because SIVs are stashed, Enron style, off the books."
thanks Jason for the link
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