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My Top 4 Categories

Recs

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June 28, 2007 – Comments (1)

Likely, you'll only be looking at this BLOG if I move way up in the ratings.  If I do, you should know what are the 4 most important categories within my picks:

 1)  Oil & Gas - amazingly, there are still many undervalued stocks out there in Oil & Gas, IMO.  If Oil prices drop to the 30's (or lower), my picks will hurt me.  Otherwise, I should be o.k.

 2)  Gold - this is a long-time obsession of mine.  One of these days I might  post my reasoning for $12,000/ounce gold, but the long and short of it is supply and demand.  There has been an inflated supply of gold as central banks sold and sold off all their reserves.  Obviously, there is a limit to that selling, but demand is still increasing.

3)  Banks - this is a long-term value play - I have a lot of banks and financials in my portfolio.  These have strong fundamentals and low (sometimes single digit) P/E ratios.

4)  The weakest links.  CAPS and Morningstar have helped me identify financially struggling stocks.  International Fight League (IFLI.OB) was one that I got from CAPS and am very grateful for!  I also bet with my "Red Thumb" against a bunch of "sub-prime" lenders, New Century, Accredited (LEND), and Novastar (NFI) are among my picks.

 Final thought - here's a funny thing I did - I bought Dendreon (DNDN) even though I hope the stock goes down.  I wrote some calls for this, so I'm protected down to 4-ish, which I think is fair value, but if it goes to 4-ish, my CAPS pick does well.  But, who does that?  Who buys a stock with real money that they want to go down?  Sheesh!

 Best wishes in your investing!  I highly recommend CAPS for investment ideas!  Thanks to all of you who have posted the reasoning behind your picks.  I may not always agree, but I often learn.

1 Comments – Post Your Own

#1) On September 05, 2007 at 12:38 PM, DerektheDude (98.94) wrote:

I'm with you on the oil & gas and precious metals. Diamond Offshore, Valero, Chevron, and Freeport McMoran are my "darlings" that I hope will usher in the 80's rating that I previously held for about 4 days.

Check out my picks sometime, it looks like our valuations are fairly similar. BTW, great job on the rankings! I'm kind of struggling, but I think that both above-average and below average players are in for a big shot of adrenaline in rising scores once this correction, corrects.

PS- If you have a brokerage and want a good precious metals pick, check out USAGX - USAA Precious Metals & Minerals fund. USAA lists it as an "Agressive" fund, which is their most risky rating for a fund. However, as of March '07 when last I checked, it was their best-returning, and most volatile, fund.

(Discl.: I'm a member of USAA and have previously held this fund; sold all holdings in Spring '07 at a profit due to the fund's price increase. The USAA membership is free and I have never received compensation/incentives of any kind from them.)

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