SubscribeHow we pick ‘em for the MSN Strategy Lab
August 18, 2008
QuantaFundaTechna is the short name I found best to describe the process we use to uncover the stocks that will eventually qualify for portfolios. Just as is described, the first step is to find stocks that meet certain requirements based on several screening, or quantitative criteria. For the core portfolio, initial candidates will be selected from an active screen filtered for size, sector, earnings growth, rating, corporate structure and price momentum.
Several key fundamental overlays are then added to further refine the list. Read more
The Week Ahead: 3 Retail Stocks Poised to Move
August 16, 2008
My weekly installment of “The Week Ahead” on MSN Money TopStocks:
Is this rally for real? An 8% rise since mid-July has the S&P 500 resting on both the first step of a Fibonacci retracement and its 50-day moving average. Oil has been plummeting and the dollar has been strengthening while financials have seen a nice bounce. Still, the underlying fundamentals for the markets haven’t changed in a way that gives me confidence that we’re out of the woods.
Next week’s earnings will give us a further glimpse into just how bad things are for the consumer. Here is an inside look at some of the more significant positions, along with 3 stocks you may want to research.
Monday, August 18
There is an awful lot of confusion facing investors in the commodity markets. Whether it is corn or wheat or even oil or copper, the extraordinary price movements have been reflected well by the share price of BHP Billiton, which has seen its shares rise to a high of $95.61 and now down to a six-month low of $65.
Read the entire article HERE
New York’s Mutli-Billion Dollar Problem
August 13, 2008
Strategy Lab Journal Update
Adding a few short positions and one long. Also, exploring the upcoming problems for New York…it could be ugly.
For some time I have been writing about the games being played by many of the public companies within the financial sector. Their problems are causing the destruction of wealth on a global scale, amplified by years of the unrestrained use of credit.
I suppose that it is no wonder then that the top selling financial books these days are by authors Dave Ramsey, Suze Orman and Larry Winget. All have one thing in common: They are preaching/teaching hopeful fixes for a lifestyle gone-wild that left in its wake a long trail of self-made credit nightmares. Read more
That Sound? The FDIC Insurance Suck
August 10, 2008
According to Meredith Whitney of Oppenheimer, there is a huge amount of uninsured deposits at many of banks which could soon be causing a huge problem. If you think about it, it makes sense. As time goes on, more and more money will be moved from bank to bank as depositors become more concerned about the amount of money they are insured for. Essentially, money will be spreading around and:
- Fewer people qualifying for mortgages
- Banks recapitalizing and not providing credit
- Wachovia 35% uninsured
- Capital with be flowing from weak hands to strong hands
- People who need capital/credit will not get it, those that don’t, will.
- Available credit for consumers will shrink
- Some financial stocks will revisit lows
Think about the above list for a moment. What I think is the most interesting takeaway here is the fact that money will be moving out of banks at a very fast pace if we continue to see banks taken over by FDIC. This is because it will actually be detrimental for the FDIC to rescue Read more
Lynching Merrill - Suicide or Murder ?
August 4, 2008
It is really bad isn’t it? Even as we are being told that all is okay on Wall Street, the banks and brokers are so full of disease it can easily be compared to necrotizing fasciitis. You know, that awful flesh eating disease.
The latest shenanigans by Merrill Lynch (MER) is almost too much to Bear (pun intended) and now we are going to surely continue with a crisis of confidence as it seems impossible for this group to allow the truth to come out when they speak. Now Merrill is in a jam and they are trying everything to make it seem that all is just fine.
Bill Fleckstein had a few observations on this that just cannot be ignored:
So the question is: What changed in the past couple of weeks to cause a CDO — a package of loans known as a collateralized debt obligation — valued at 36 cents on the dollar to be “sold” last week at 22 cents? What did Thain know about this at the last conference call, and why was it not made clear to folks? (For more on the sale, click here.)
Of course, this is more a consignment sale than a true sale. Merrill is providing 75% financing on a non-recourse basis. That means it’s really receiving about 5 cents on the dollar. It may get the other 17 cents later, or it may get the securities back. In essence, Merrill wrote a put option “down 5 cents on the dollar” and gets a call option to get the other 17 cents.
Essentially, Merrill is putting up the funds to sell of the assets. Does that mean that the super-senior-debt they put up was sold for almost nothing? Why the payoff? What did Lone Star, Temasek or others have on them or even better, why did they unload the debt and lose the potential upside? Are they out of options?
The ugly factor is at an all time high. If Merrill goes down, it will not be because they were murdered, it will be because they kicked the chair out and hung themselves.
Jim Jubak’s feathers are in a ruffle over this and is mad as heck at the way CEO Thain has treated shareholders. The 38% dilution after this deal is appalling and shareholders should really take notice.
The games that are being played are the absolute worst thievery I have ever encountered. How do we invest in an environment in which the rules are continually changing - and we are not getting any of the updates. Something stinks on Wall Street. Perhaps it is the rotting corpses of the brokers that are still walking around like zombies, not knowing that they are already dead.
Jim Jubak on The Disciplined Investor Podcast is HERE.
Disclosure: Horowitz & Company clients do not hold positions (of this crap) as of the time of this writing.
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