If you've ever looked at the massive list of companies that I have picked in CAPS, I try to keep my list at a constant 200 or close to it, you can tell that I'm going with the throw as much stuff at the wall as possible and see what sticks approach. I obviously don't do this in real life. Back in November I began to take the time to start writing up reports on my favorite stock ideas and sharing them in my blog. With a couple of them under my belt, I figured that it was time to keep track of how they are performing. This is still the first inning so to speak, because I bought them in CAPS and in real life with the intention of holding them for several years. [more]
I find it humorous in a dark sort of way that Ben Bernanke is getting beaten up so badly in the press and by politicians lately. In fact, I almost feel sorry for him. Why you ask? Because a huge chunk of this mess that we’ve gotten ourselves into now is Alan Greenspan’s fault. Did Bernanke lower the Federal Funds rate to almost nothing and leave it there for years creating the mother of all housing bubbles and then rapidly start yanking the rug out from under it by rapidly raising rates? No, it was Greenspan. He borrowed from Peter to pay Paul as the saying goes, or in this case I suppose that he was borrowing from Ben to pay Alan, pushing off a little economic pain years ago for a much worse situation today. Then just when things are about to get really bad, Greenspan just rides off into the sunset and makes more money than the average U.S. citizen could ever imagine in the private sector by writing books, consulting, and giving speeches while poor Bernanke is left to clean up his mess. I realize that Bernanke is not blameless in this whole situation, but he certainly didn’t start it. [more]
Those of you who have read my CAPS blog (both of you ;)) know that I have been and continue to be bearish on the U.S. dollar. The decline of the U.S. dollar continued this morning. The Euro soared to a new record high of $1.5057 this morning. The British Pound continues to climb versus the dollar as well, it is approaching $2 again.
Bernanke is scheduled to speak in Washington today. It will be interesting to see if he hints at the Fed leaning towards the Fed making additional rate cuts. Donald Kohn, who seems to be the only other Fed speaker besides Bernanke that one should pay attention to when they speak, seemed to hint yesterday that more cuts are coming. Any additional rate cuts would likely add to the dollar's weakness. I hope they do cut rates, it would likely add some serious juice to my portfolio's results. I have substantial positions in foreign companies and U.S. companies that export goods. Both would benefit from a fall in the dollar. I also am very long oil and natural gas, both of which are priced in dollars. Lastly, I used the recent downturn in the markets to load up on companies that pay massive (and which I believe are safe) dividends. The lower interest rates are, the more attractive these dividend payments become. A cut in the federal funds rate is not necessary for the companies that I have invested in to perform well, it would be pretty risky place all of one's bets on a move like that, but it would likely add some rocket fuel to my returns.
It's a good thing that I'm not planning on heading to Europe any time soon. I was going to leave the country for a cruise that I had booked in a couple of months, but I was only going to the Bahamas. Well, I have good news and bad news about that trip. The bad news is that I had to cancel my much needed vacation. The good news is the reason, my wife is expecting our second child. It's still fairly early, but I figure that it has already leaked out to almost everyone in my life so why not share it here :). [more]
I came across an article by A. Gary Shilling, frequent contributor to Kudlow's CNBC show (which I can't stand BTW and I'm a relative conservative individual), this weekend (link: http://www.forbes.com/free_forbes/2008/0310/110.html?partner=yahoomag) and I was shocked at how wong I believe he is. He's looking at things the way they used to be, not the way they are now. In his article he stated that we are in the midst of a massive recession and that investors should "Sell or short commodities, perhaps via exchange-traded funds, stocks in companies that produce them or futures. Commodity prices, still high, are poised to fall hard as the worldwide recession takes hold. Chinese demand, terrorism and talk of peak oil drove crude prices. Agricultural prices were hyped by biofuel's popularity, droughts and the prospect of a shift in demand in poorer countries from grain to meat. So institutional investors rushed into commodities, believing they are a relatively stable asset class like stocks and bonds. Individuals bought commodity-backed ETFs. That enthusiasm will soon be history." [more]
Company: Chicago Bridge & Iron (CBI) [more]
Normally I find Alan Abelson's opinion pieces at the front of Barron's a little to pessimistic and acidic for my taste, but I almost spit out my coffee laughing when I read his article in this week's issue. Perhaps I'm getting more jaded as the years go on. Here are a few funny quotes from it: [more]
OK, so that headline didn't really make much sense. But doesn't it feel good to start the day with a little John Denver? The point of the headline was to say that another area that I have been focusing on looking for investment opportunities in, U.S. companies that are heavily involved in exporting their goods (see my blog from 1/24 http://caps.fool.com/Blogs/ViewPost.aspx?bpid=31274&t=01001019292467236494), is playing out perfectly. Today the government announced that U.S. exports rose 1.5% in December to $144.32 billion. [more]
OK, so he didn't exactly call me on the phone and say "Hey Deej, I completely agree with the changes that you have made in your investment philosophy over the past year and a half." but a lot of what Warren Buffett had to say in an interview today supports the decisions that I have made. [more]
The other international spin-off play that I am invested in right now (besides Altria - PMI International) is Telmex. The company announced plans late last year to spin-off its international operations. Telmex is scheduled to publish its fourth quarter results this morning. The conference call is not scheduled until 10:00 AM Eastern time and I haven't seen an official press release yet, but I did come across a Reuters article that has a brief summary of the results. At first glance, they don't look very good. Telmex's earnings for its Mexican operations dropped 11% during the quarter. However, here's the good stuff. The company's international operations, which I am really after, reported fourth quarter earnings of 1.986 billion pesos versus a loss of 638 million pesos during the same period last year. At first glance, these results look tremendous.
I can't wait until the International operations get separated from the core Mexican operations. Hopefully the dismal results that the company is experiencing in Mexico won't pull my current position in the company down too much. It's always difficult to tell whether one should purchase a position in a company that is going to be spun off prior to or following the transaction. The skeptical part of me wonders if Telmex's Mexican results were really this bad or if they were trying to make them look as bad as possible right now with the Mexican government's antitrust regulators investigating them. They can say, hey how you want to force us to lower our Mexican phone rates and interconnection fees when we aren't even making money as it is? Hmmmmm.
While I am in love with Telmex's international operations, I can go either way on its Mexican operations. If the company receives a favorable ruling in the antitrust investigation that enables them to begin offering television in Mexico without lowering its fixed line rates much the company definitely becomes more attractive. Furthermore, it is possible that Telmex stock will fall so much after the spin-off that it may become a value play.
I'm looking forward to finding out more information on the results and the spin-off during the conference call and when I can find an official press release.
Long TMX [more]