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November 2007

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4

Risk

November 27, 2007 – Comments (3)

"Risk comes from not understanding what you are doing." - Warren Buffett
"Chains of habit are to light to be felt until to heavy to be broken" Warren Buffett

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Another Fav. GD

November 22, 2007 – Comments (2)

Firstly while some of their competitor pursue new programs at any cost, GD focuses on allocating capital to programs that will create share holder value.  What differentiates them is that their revenue base is well balanced among end products.  Not to mention they make some cool crap being a guy and all.  Submarines, ships, ammunition, land vehicles, and a recent focus towards IT stuff.  “Defense work assures a steady stream of business.”  They are one of the few industry plays that consistently generates returns above the cost of capital.  They don’t compete for risky projects like Airborne Laser and focus on directing resources to building capabilities on established platforms.  For Example, submarines and warships are unlikely to ever be phased out the military but few competitor have the resources to match GD, especially when it comes to engineering new variants that meet the changing requirements of the defense department.  While waiting for good opportunities management divvies out dividends and buys back shares with its capital.  While waiting to pounce on something.  [more]

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Favorite Stock #2 and Why (AXP)

November 18, 2007 – Comments (4)

Despite this credit crunch AXP had a great quarter.  Net income grew 10% for their third quarter.  They had double digit growth in 3 out of 4 business units.  ROE was 38%.  Tell me that aint great for a financial services firm.  Most of this came from more growth in the billed business (the dollar volume that flows through AXP’s cards)  it was up 14% from last year (excluding a 2% boost from the weak dollar).  Growth in this was a result of 11% rise in the cards in the force and 8% growth in avg. spending per card.  [more]

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Why Western Union is one of my favorite Stocks

November 18, 2007 – Comments (0)

There are many reasons I like this company.  First and foremost it has two things that I like best in a company.  A strong generator of free cash flow and a WIDE economic moat.  The biggest risk to this moat I believe comes from other channels for people to transfer money such as people using payment cards.  This would eliminate the need for their agent network. I do not think this poses a serious threat because 95% of the companies transfers are cash based and that payment cards are not an option for its customers, of whom most of live on a cash basis.  [more]

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Yippee my score went back up.

November 16, 2007 – Comments (0)

My score went back up today, Maybe this is a turn around?

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Losing my Entire Score

November 14, 2007 – Comments (3)

So If you have not noticed I lost nearly all my CAPS score. About 87% but.  This volatile market is killing me.  I believe based on a lot of the picks I have that a lot of the homebuilders and banks are going to go bankrupt and I am willing to sit with my picks (a lot of short covering driving the prices up).  I think that the huge drawdown of AAPL shows how crazy this market is.  Since I am pretty young most of what I have been doing is a lot of reading and seeing what my investing style is.  I have (semi-develop style).  The investing style of mine is conservative over the long run.   I do a lot of stuff with options.  I rarely have a position that is un-hedged except for the small growth companies that I have money on.  Right now I am short the QQQQ, while holding March Calls as a hedge, I believe that we are in a bubble and headed for a recession.  I think that tech is a bubble especially.  My upside break even is 49 with the hedge (49 and lower is my upside since I am short and I am hedged until march. I am in a pretty comfortable position right now and like where I am at.  Bernake will keep lowering interest rates to keep the market up but in the long term that does not take away from the fact that the good majority of companies are overvalued.  The banks are going to have HUGE write downs at the end of the year, they are waiting until bonus time is over to do so.  If the market keeps getting higher I will keep going short and hedging with options.  Because this bubble has to burst and when it will the higher the market is the bigger it will burst.  In my opinion MER has the highest chance of going broke.  They have another 20 Billion at least to write and they are notorious for their shady dealings, at least in my book they are, that is the firm that has the most conflict of interest in my option.  I can’t call out the whole firm though, I know some people are MER who are great guys and have helped me out a lot.  I hope that a couple good brokers don’t go down with the whole firm is all.  I will be top 100 in CAPS sometime.  By the time that I make it up there with luvb2b, specbear, and floridabuilder the top scores will be in the 5 - 10K range.  Right now I am just comfortable sitting on my picks and hope to do well.  [more]

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Part II

November 03, 2007 – Comments (1)

Part II  [more]

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Who is to blame part 1.

November 02, 2007 – Comments (1)

Some thing I have heard lately about the credit crisis are who is to blame.  It has led me to a lot of thinking.  We didn’t get unlucky.  It was the result of a lot of bad decisions.  It is where this burden lays that I am still thinking about.  I never tend to reach finite conclusions, I always question things (maybe its my philosophical way of thinking about things).  In todays markets there is a lot of conflict of interest on many parts.  Before I get to this I would like to say that securitization is a BAD idea.  Re-securitization of already pooled assets into a CDO is an even worse idea.  The worse yet to come is the idea of funding a pool of long-term illiquid assets with very short-term funding in the so called asset-backed commercial paper market.  I will talk about how this caused our credit crisis.  [more]

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