SubscribeTDI Episode 81: Profiting with the Strategy Lab II
November 2, 2008
Guests: Strategy Lab Panel discusses with Andrew how they are setting up their portfolio to profit and to 
protect during this difficult market condition. Out of the 6 players in the 6-month long game, 5 are all substantially ahead of the market. In this episode we will ask each player to explain their strategy and their outlook.
LISTEN TO PODCAST NOW | LISTEN @ ZUNE - @ iTUNES
Ron Prichard is investing editor at MSN Money and runs Strategy Lab, a ten-year-old stock-picking game 
in which a rotating cast of top investors try to beat each other and the market while documenting their every move. Mr. Prichard is a long-time journalist and has written and edited for the Eastside Journal in Bellevue, Washington, as well as several Gannett newspapers including the Westchester (NY) Journal News and USA Today. He is a graduate of California State University in Long Beach.
Howard Gold is the executive editor of MoneyShow.com, overseeing the content on the leading Web site for investor education. Previously, he served as the editor of Barron’s Online from its inception in 1996, through its successful spin-off as a separate subscription site in 2006. As a staff writer at Barron’s, Mr. Gold started the magazine’s popular “Electronic Investor” column and the “Best Online Brokers” feature. A former writer at Forbes, he was an associate editor for American Lawyer Media in Miami where he won a Gerald Loeb award for distinguished business and financial journalism.
Ken Kam is the CEO of Marketocracy.com. Ken believes that Wall Street analysts really don’t know a lot about the companies they cover. Warren Buffett likes to say that in the short term, the market is a voting machine. If the people who have the most votes (because their opinions drive billions of dollars of capital) are not the most knowledgeable about the company, how can a stock’s price end up being priced exactly right all the time? Ken also asks, “Our financial future depends on the investing skills of the people you choose to help you manage your money…Do you have the right people?
Vad Yazvinski likes buying stocks that offer growth at a reasonable price. He does not tolerate losing positions for too long. He is a permanent student of economics and of the investing world who is not only unafraid of challenges but who spends his free time looking for them. And I intend to stay that way, because, as the quote I cited above says, I know that while I might not be able to change my past, it is certainly within my powers to make a brand new ending.
John Reese is founder and CEO of Validea.com (www.validea.com) and Validea Capital Management, LLC (www.valideacapital.com). He is also portfolio manager for the Omega American and International Consensus funds offer in Canada. He holds two patents in the area of automated stock analysis. John is a graduate of MIT and Harvard Business School.
Jim Van Meerten earned a BS in Accounting and Business Administration from Berry College; a Juris Doctorate from the Woodrow Wilson School of Law; and post-baccalaureate and graduate courses in Business Administration, Quantitative Math, and Education at Florida Atlantic University, Georgia State University and University of North Carolina at Charlotte. In the past he has been an accountant, attorney, adjunct professor in Business Law and Internal Auditing, financial advisor, supervisory principal, and compliance officer. He would enjoy hearing your comments at VanmeertenFund@aol.com.
—
Stocks mentioned in this Episode: Elan (ELN), Goldman Sachs (GS) Kemet (KMT), Proshares Ulta Materials (UYM), Yahoo! (YHOO), Microsoft (MSFT) , Mastercard (MA), Apple (AAPL) and many more…
—
IMPORTANT: Andrew is teaching a FREE investing class on Portfolio Mastery this week - CLICK HERE
—
This episode is sponsored by GoToMeeting - Try it FREE for 30 days
Really Diggin’ DIG
October 30, 2008
It has been an amazing thing to watch as crude oil has dropped from $147ish to under $60 per barrel. We chose to close out our DUG position for a nice profit, although admittedly too soon. But the recent drop in oil, coupled with the shellacking that the companies within the Oil & Gas Index took was too tantalizing to pass up.
Currently, we have a 10% position for TDI Managed Growth invested portfolios in the ProShares Ultra Oil & Gas (DIG) as well as a similar allocation in my MSN Strategy Lab portfolio.
The impending rate cut was more reason to hold tight to this allocation as we felt that some level of cut would help to push down the parabolic rise in the U.S. dollar causing the price of oil to rise. That occurred right on cue.
Bloomberg is reporting:
Crude oil rose for a second day as interest rate cuts in the U.S. and China, the world’s two- biggest energy consumers, spurred optimism that a global economic recovery will boost demand for fuels.
Oil is set for its biggest two-day gain in five weeks after the U.S. Federal Reserve reduced rates by half a percentage point. China and Taiwan lowered rates while Japan may reduce its benchmark interest rate tomorrow and the European Central Bank is slated to do the same next week.
After the wild market close on Wednesday, additional stimulus in the form of $30 billion of “loans” to emerging markets was provided by the U.S. causing markets around Asia to rocket higher. That in turn helped to boost the idea that global demand could create increased oil demand.
Crude oil for December delivery climbed as much as $2.30, or 3.4 percent, to $69.80 a barrel. It was trading at $69.58 at 11:43 a.m. Singapore time on the New York Mercantile Exchange. Yesterday, crude oil jumped $4.77, or 7.6 percent, to settle at $67.50 a barrel. That was the biggest gain since Sept. 22, bringing the two-day increase to 11 percent.
Crude prices also climbed as the dollar extended yesterday’s decline, falling to a one-week low against the euro. The dollar fell to $1.3183 per euro, the lowest since Oct. 21, and traded at $1.3170 as of 11:16 a.m. in Tokyo from $1.2963 late yesterday. The yen weakened to 98.40 per dollar from 97.39.
If that was not enough…
The Organization of Petroleum Exporting Countries will “probably” cut crude-output quotas a second time to avoid the growth of inventories, Venezuelan Oil Minister Rafael Ramirez said in an interview on state television.
OPEC reduced its production target by 1.5 million barrels a day after meeting Oct. 24. Ramirez said the group would analyze the reaction of the oil market between that cut and a planned Dec. 17 meeting.
U.S. inventories of crude oil and distillate fuel, a category that includes heating oil and diesel, rose last week, an Energy Department report yesterday showed.
Add to that today’s inventory release:
Crude oil stockpiles climbed 493,000 barrels to 311.9 million barrels in the week ended Oct. 24, the department said. A 1.55 million-barrel gain was forecast, according to the median of 12 analyst estimates before the report.
Distillate inventories rose 2.33 million barrels to 126.6 million barrels last week. Analysts forecast that supplies increased 1.05 million barrels. Gasoline stockpiles dropped 1.51 million barrels to 195 million barrels, the first decline in five weeks. A 1.5 million-barrel gain was forecast.
Imports of crude oil fell 0.6 percent to 10.3 million barrels a day last week, the Energy Department said. The amount of oil products brought from overseas declined 12 percent to 2.9 million barrels a day.
On the other hand…
Demand for residual fuel, a category that includes heavy fuel oil, averaged 436,000 barrels a day during the period, down 31 percent from a year earlier. Some manufacturers and utilities can switch between residual fuel and natural gas depending on costs. The department measures shipments from refineries, pipelines and terminals to calculate demand.
No matter how you look at it, it appears that a nice bounce for the Oil and Gas index could be imminent.
Strategy Lab: Are we Economically Socialist?
October 24, 2008
From my latest MSN Strategy Lab journal:
Are we now economically socialist? Communists?
As the global economy struggles for a positive change during this financial crisis, it is apparent that the United States is having an identity crisis. Capitalism has long been the reason for the United States’ economic power. It has allowed our country to expand under creative ideals and allowed the free market system to determine who sinks or swims. Shouldn’t we still be employing these ideals? Read more
Strategy Lab: Buying Yahoo!
October 21, 2008
I have looked closely at our performance since August and made some definite conclusions. Even as I am still in 1st place, the portfolio is down 5%. Looking to buy Yahoo! (YHOO) as well…
From my latest MSN Strategy Lab journal:
What a mess. Markets are in disarray, investors are anxious and nervous about their financial future and we seem to be playing a giant game of hot potato.
Remember that game, right? Five or six of your friends would stand around in a circle with you passing around a hot baked potato (or some other passable object) until the music stopped. It was a game similar to musical chairs that had people circling around a group of chairs waiting for the music to stop and then sit down. The last one with the slowest reaction time didn’t get a chair and was out of the game.
Does it seem to you that Lehman Brothers was the slowest to grab the potato? Merrill Lynch and Washington Mutual didn’t have the staying power or the best reaction time and therefore didn’t get a chair. As an investor, I’m constantly wondering when and if the music will stop or if I am going to get stuck with the potato. That is why I have been deliberately cautious when structuring each and every investment within the portfolio.
Yet, that same degree of caution has caused the portfolio to recently move down by over 3% as protective sell-stops were hit on the ProShares Ultra Oil and Gas Index (DIG) as well as my investment in the Proshares Ultra NASDAQ (QLD). The good news is that our “real” client portfolios still hold overweighted positions in (DIG), the Oil and Gas ETF and we actually were able to add positions and hold a 10% allocation when it hit an intraday low last Thursday.
Much of the rationale for the buy of a position in the Oil and Gas sector was once again the prompted by the ridiculous level of chatter that oil was going to $30 a barrel. These were the same well-dressed fellows and well-heeled gals that called for oil at $200 a barrel by the year’s end. By researching and studying the overbought indications from a technical standpoint (See: Oversold Charts – Lots of ‘em) we were able to comfortably add this position. The mistake we made was simple: Utilizing a sell-stop in this volatile environment took us out of the position, just as it was bottoming.
Read the entire article with all my stock additions and deletions HERE
The Week Ahead: A Few Oversold Opportunities
October 20, 2008
From my weekly MSN TopStocks article:
These days, investing at any level is precarious… unless of course you are shorting or your portfolio is hedged. Just dipping your toes in the water, as has been suggested by many, could have yielded disastrous results. Listening or reading expert opinion shows that many are now recommending investing with an eye towards safety through companies with secure dividends. The problem with this idea is that there is no way to really tell how secure the dividends are until it is too late.
Earnings season has just started and already reports have been disappointing investors and many stocks have been continuing their fall. If there was ever a time when we didn’t need to see hundreds of earnings reports delivered during a five-day span, now would be that time. With that in mind, exceptional care and a watchful eye is job #1 into this earnings season. Read more
Links
-
GoToMeeting
