Credo Investment Club Blog

A Pat On the Back?

2008-03-16T21:37:00.004-05:00

http://credoip.blogspot.com/2007/11/i-am-not-bottom-fishing-on-financials.html

I said I was skeptical then, do you believe me now?

LOL, granted I'm only 1 out of millions out there who believed this sh** wasn't over.

http://biz.yahoo.com/ap/080316/jpmorgan_bear_stearns.html

JP Morgan pulled the biggest bank robbery in the century. Kudos to Jamie Dimon. Because of his and the company's conservative strategy, which now helped to bank to reserve enough capital for strategic acquisition. JPM is in fact, being run like a distressed hedge fund, except it has many other less risky businesses. The Bear Sterns acquisition and TGT credit business will bring JPM a good chunk of profit in the future. Jamie Dimon, in my book, is the best trader of 2008.

Billionaire vs. an idiot with a billion dollar

2008-02-24T20:36:00.004-05:00

Steve Ballmer is definitely the latter.

BTW Steve, the Motorola Q sucks a**. Not that iPhone is any better. But as far as competing for business users. Dream on! What you think Blackberry wasn't invented before your Motorola Q?

Banks' business model is NONSENSE

2008-02-22T22:26:00.002-05:00

As we already know, most bank stocks are suffering from this slow down in mortgage underwriting and anything related to it (RMBS, CDOs, CLOs, CMOs....good stuffs). Anyway, this got me thinking about the banks and why I would almost NEVER invest in one.

Banks generate profit by borrowing money and lending it out. So if a bank borrows at 5% and lend the money out at 7%, it would make 2% on the capital.

Lets take a simple example:

Neighborhood Bank (NB) receive financing from deposit ($50), short term and long term credit facilities ($42) and issued equity ($8 - 8% capital requirement). The bank total capital is $100 ($92 liability + $8 equity). And the average cost of capital is 5%. So every year, the bank has to pay $5 to its investors. The bank will take this $100 and lend it out to Neighborhood Business Corp. and charge 7%. The bank will receive $7 and pay out $5, netting out $2 each year. This extra profit would go to the equity holder, so the equity holder is rewarded handsomely (100% ROE). Obviously in this example, we didn't factor in administrative cost and such, if we did, the equity holder of the bank would probably make about $15-20% ROE. Not too shabby.

The bank essentially is a over leveraged corporation (92% debt 8% equity). Now imagine the bank has to pay its administration expenses and other fix costs. A typical bank probably has net interest of 1.5%, so to cover its fixed costs, they need a HUGE capital base. And if part of their assets (portfolios of loans) start to go bad- the first loss would hit the equity holder. So the equity holder is essentially investing in an over leverage corporation that allow them to invest a small amount and make what it seem to be a significant gain - because of small initial investment.

This is what is happening to the banks now. Some of the banks might even trade "under" book value. The reason is simple: the book value of the bank is simply A - L = E. The problem is the market value of the Asset can be significantly different from the book value asset- so when a bank is trading below book value- it doesn't necessarily means that its cheap.

On top of that, the banks can buy "insurance" or credit derivatives on its loan portfolios. By doing so, they can lower their capital requirement- further allowing them to leverage up over 92%. Since most banks do over leveraged, they would face capital squeeze when the market value of their assets go down the drain... which is exactly what is happening now. In a sense, the banks are always walking on a thin line with equity holders at risk. That and a huge capital base that require to run the bank- make it a very unattractive business for me to invest in. Now, if we are talking about investment banks and brokers....that's a different story....

Long FOOD

2008-02-22T22:21:00.002-05:00

My play for 2008 is clear. It is to long agriculture related securities. Why? Because we all have to eat, recession or not. And as emerging markets are growing, more people can afford food. The acreage of land for agriculture isn't getting any bigger neither. Hog prices in China are rocketing, corn and wheat prices in U.S. are the same.

I'll be looking to buy Agricultural ETF (symbol: DBA) for the long term (2-5 yrs).

I can't figure out anything more then a sure play as this. What's the downside here? Are we going to stop eating? Since the ETF invest in futures and agricultural derivatives, there will be no risk in related to rising in energy prices (which squeeze food producers' margins).

Long DBA for 2008!

Rome

2008-02-13T22:05:00.002-05:00

How can you tell the U.S. is a falling World Power? Forget about the war, the huge budget deficit, the leader that can't really speak, or the huge household debt. Let's look at something real simple:

NYC:
http://www.youtube.com/watch?v=Lb-6bFqDSi8&eurl

This is an event called "Pillow Fight Day" where as the productive citizens and residents of the city came out to a place and smash each others with pillow. Above video is the video of NYC Pillow Fight Day in 2007- notice the amount of people showed up and feathers on the ground.

The similar event is hosted in Shanghai, China.

Shanghai:
http://www.youtube.com/watch?v=cobYJQ0iGzw

You can clearly see much less people participated in Shanghai (also a very crowded city). Also there are much less feathers on the ground- nearly none.

So this is what our country has became. Smashing each others with pillow in the middle of the day, leaving massive amount of feathers for people to pick up and go to waste. Good job, NYC!

I wish I can understand how "fun" it is, but I just don't. Save your pillow, donate it to someone that need them. All jokes aside - Pillow Fighting day is stupid.

Wall St. Tech darlings

2008-01-30T10:56:00.000-05:00

"Opps, I paid too much for growth"

The R word

2008-01-30T10:34:00.000-05:00

Aren't we already in a recession? I mean if you take nominal GDP - CPI = real GDP. Which at this point is close to 0%- the economy already "recessing" from the more normal 3-4% long term GDP growth. Strong employment was the only thing that held up in this economy and that picture is looking bleak, figuratively and literally.

However, the international industrial companies are doing quite well. Honeywell, 3M, GE, United Technologies, Textron are all doing quite well. The weak dollar definitely help the exports and international business. Could it really be that the rest of the world are "decoupling" from the U.S.?

China has built quite a huge foreign reserve in the last couple years- now all of those reserve are being deployed in finding energy resources (look how aggressive the Chinese oil companies are in acquiring foreign oil companies- Sinopec/CNOOC) and infrastructure building- these are capital investment that flow back to the economy. Can it be that China and other developing economies can hold up (because of infrastructure investment) while U.S. is slacking?

Bush's Stimulus and the Super Bowl

2008-01-29T14:59:00.000-05:00

I'm going over 2 seemingly unrelated topics in this post but in the end I will discuss how they will be similar.

Bush's Stimulus

Disasterous plan that is only delaying the inevitable. Somehow this plan will save America from recession (if it already isn't in one) along with curing AIDS and finding alien lifeform in outer space. Let's get down to it ... all this plan does is to stick more debt onto the future. By issuing bonds to pay off the $150 billion stimulus package (could be more once the Democrats throw in all the additional programs to increase food stamps and bigger Medicaid budgets), you are really paying for immediate gratification and temporary salvation and getting in return a big blurry future. Of course America knows this really well as our nation is one of the poorest in terms of savings and having millions of consumers close to max on lines of credit. Way to go on that plan Bush / Paulson. And they even have the nerves to propose a bill to add personal finance classes will now be offered in a government program for the poor. Yeah, start those classes with a lesson on fiscal restraints won't you. It's going to be my generation and future generations that will shoulder all of this heavy debt. It's no wonder the young nowadays are averaging only 2-3 years on the job as we all know there is little job security left and what's left of Social Security will only go towards the baby boomers. Generation Y should be re-dubbed Generation Debt.

Another item that has been tugging at me is this notion of a recession. Why is that "r" word so heinous? All the meaning of a recession is 2 straight quarters of a decrease in the GDP. 2 quarters ......... only 6 freaking months !!!!!!!!!!! Where exactly is the shame in that? Everyone needs a bit of a down time to calm their nerves. One cannot fully appreciate the good unless there is bad. It's like wishing for sunny skies everyday and then seeing all the plants die due to lack of rain. This is exactly how fickle this country has become due to the "r" word. Now if it's the "d" word as in DEPRESSION, then I would be scared. Before then, don't tell me 6 months of downtime is bad. That is how bubbles are corrected and believe me, there is still a real estate bubble especially in NYC and LA.

And speaking of real estate, if the proposed bill to up the limits that Freddie Mac and Fannie Mae may accept on loans with limits to vary depending on the U.S. city, it would cripple a rational economy. All this bill would do is to tell the world that U.S. real estate speculation is okay and that speculators can continue to drive up the prices on housing. Yeah, that's right, let the regular Joe rent while I speculate and try to make a bundle knowing that I have a floor to fall back on. This is total BS. By allowing say the NYC market to have limits of $716K, which is more than 3x the national average, is to allow for a continued real estate bubble. At the end of the day, if Congress really wants the American dream to come true, then leave the limits as they stand and perhaps expand on housing mortgage programs like NY State's SONYMA. Why should there be such a high cap on housing which all but ensures that everyday consumers be priced out of a house they can call their own?

Alright, enough of this economic ranting, it's already making me depress. Now for some fun sport analytical stuf:

Super Bowl

There are going to be several things to look out for this Sunday's Super Bowl matchup between the Giants and the Patriots. Key among such matchup would be the line battle, namely the awesome offensive line of the Patriots, the real success to the Pats, against the amazing defensive front 7 for the Giants. The O-Line of the Pats really deserve the MVP this season and not Brady because any QB can throw behind a line that allows them like 2-3 minutes to throw. Watch any Patriots game and one would notice that Brady just stands in the pocket, calmly waiting for Moss to get deep before throwing the deep ball (or if he's well covered like the SD game, then chuck to Donte Stallworth/Jabar Gaffney. Trust me, any QB would do well standing behind the Pats O-Line. As for the Giants, who lead the NFL in sacks, there has rarely been a team so fearsome in their defensive front 7 where there are 4-5 legitimate pass rushers. It's going to be an amazing battle in the trenches and one that I'm going to be looking at deeply.

As for the keys to each of the team's success they are:

Patriots

If the O-Line can keep the rushers from touching Brady for at least 45 seconds, then the Giants are done. Their secondary is very suspect and trust me that Wes Welker/Stallworth (Moss will be covered well) will shred them. Also look for the Patriots to pound the ball early and then throw late in the game as the Giants will get frustrated with stopping Maroney. In the beginning of the season, Belicheat abandoned the run in favor of the pass to go against conventional wisdom (it worked!) and once everyone buys into the Pats being such a pass happy team, he immediately switches gears and turns Maroney loose. It also helps that Maroney is now free of injuries that was bugging him in the 1st half of the season. It was then no surprise that Maroney has been averaging well over 100 yds in the post season. Giants, be wary!

Defensively the Pats will try to blitz all day as they know they can befuddle and faze Eli with movement. The key reason why they were able to come back from 12 pts down in the last game of the season against the Giants was the fact that Belicheat finally decided to rush and not allow Eli all the time in the world. Once this occurs, Eli became the old Eli, which is just a younger version of Jeff George, and the Pats will have their undefeated season.

Giants

Blitz, blitz, and more blitz. The G-Men must unsettle Brady and not allow him to sit in the pockets all day. Stick Pierce on Welker, double team Moss, watch out for the run and the Giants may manage to survive.

Eli must be the Eli that he was in the playoff run thus far and not make any mistakes. THE GIANTS MUST TAKE RISK meaning no punting once they are in Patriot territory. There is no need to make conservatively. If they are in the Pats' 40 yd line and facing a 4th and long, GO FOR IT. Throw to Toomer who has been on a resurgence this season and is the most reliable Giants receiver. Against the biggest offensive force ever in NFL history, now is not the time to play timid. This is the final game in the biggest stage so be bold, be very very bold.

Of course this is all a big test to the G-Men which is why they are currently 12 pt underdogs. And expecting a conservative Coughlin to take risk in the big game is also going to be tall order.

Good luck Giants, I'll be rooting for you since I hate the Patriots (hate hate hate hate hate Belicheat and Brady).

Now as for how the stimulus plan and the Super Bowl fit, it's easy. With the $1200 families will get (minimum), they can easily afford to pay off the big flat screen HD televisions they purchased with those 12-24 month 0% interest financing store cards. I mean there is a reason why the tv makers such as Sony and Samsung are upping their sales estimates in this supposely downturn in the U.S. economy.

China ripes for future growth

2008-01-28T13:41:00.000-05:00

In with the new (capitalism), and out with the old (communism).

After reading Jim Rogers' book on China, I couldn't agree more.

China in its current state, is a producing country. Because of its vast cheap labor and geographic location, China became an ideal location for all types of manufacturing activities. The rise in economic activities brought urbanization to the country. I can't help but think that China in its current state is much like the U.S. back in 1920s. The U.S. then was producing cars, oils, steel, and other commodities. And after WWII, the U.S. slowly became a consumption based economy as everyone moved into the big cities, standard of living rises. And that is exactly what is happening in China now.

Urbanization and economic prosperity will create the new middle class in China. China will then turn into a consumption base economy. As the standard of living rise in China (which will cause a rise in workers' compensation), even the Chinese companies would have to look elsewhere for cheap labor (southeast Asia- Vietnam, Cambodia, or Eastern European countries). This type of economic activities will continue to pass on as companies continue to seek cheap labor. Countries with political stability will follow the footsteps of China- just as how China followed the U.S.

This economics "pass-thru" from country to country is nothing new. There was the Dutch before the period of colonization. Then there was the British during the period of colonization. After the British, it was the U.S.- I can't help but think China would be the next stop. This is a cycle, a capitalism cycle if you will. As companies seek cheap labor and resources to produce, they will go to the countries with the best conditions (political stability). And once the investment pours into that country, the country would prosper. As the country prospers, the standard of living rises- which will cause an upward swing in wages and prices for resources. That country will no longer be competitive for manufacturing activities and it would then turn into a consumption based economy- the manufacturing activities would then move to its next target- benefiting that country the same way it did for the previous country.

Cheap cell phone plan: Sprint SERO

2008-01-26T13:37:00.000-05:00

http://delivery.sprint.com/m/p/sprint/epc/epclanding.asp
For email add. use: savings@sprintemi.com
Plan : $30 + tax
500 daytime min + unlimited weekend weekend and night start at 7 PM
Unlimited text msg, and internet

This is the cheapest plan in the country. If you use any type of data plan or text messages, this is the plan for you.

I personally endorse this plan, however, I can not say the same about Sprint's stock.

No frills

2008-01-25T09:57:00.000-05:00

Click to enlarge

The disastrous financial meltdown of the global market on Monday can appear to be quite scary. But whenever such panic or excess volatility exists, it can turn into some buying opportunities.

Using a simple method, we bought SPY (S&P 500 tracker ETF) when excess volatility is presented. This is a well known method call "dollar average down". And the result of the method was quite successful as it managed to have a 46% capital gain over span of 6-7 years- that's not including dividends!

Of course, hindsight is always 20/20. I wonder if we did this in 1987-88, would it work out ok?

$600 rebate! No thanks?

2008-01-25T05:10:00.000-05:00

http://ap.google.com/article/ALeqM5h19_YeGzwzlmJhx42iIA7nJF0_UAD8UCF6J80

If you didn't make more than $75k last year, you can get a tax rebate for $600. You might be thinking: "600 bucks. w00t!". This $150 billion injection along with low interest rate would cause the good old greenback US Dollar to become even more worth less. Flood the economy with cash and hope people would spend it. The catch is that general prices of everything you buy would become more expensive. How much more expensive? Probably 4-5% more expensive - and that's a conservative estimate.

So if you spent $20k of your discretionary income last year (which is normal for a sub $75k income guy), since the prices of general goods will go up 4-5%. You are expected to spend an extra $800-1000 this year buying the same amount of goods this year! You think you are getting free $600, but you are in fact- in economics perspective, lost $200! The only way to stomp inflation is the raise rate - which should bring inflation back to a more normal level. On top of that, the money you leave in the bank will earn a higher interest (net-net, you are better off without the tax rebate and lower interest rate...unless you have $0 in your bank account).

Conclusion? The average middle-class worker is being F--KED up the A--. Yea, you know what I mean.

Charting health of the market/eocnomy

2008-01-24T11:56:00.000-05:00

Charts are free, charts are quick, charts are easy. So why don't we use them?

To look at the health of the economy/market, simply look the health/strength of certain companies that would give you a big MACROECON picture:

The guy who lends you money to buy houses and other junks:

The guy who delivers the goods from the sellers to the buyers (B2B or B2C):
The guy who builds houses (if you have money, you probably want to own a house- it's The American Dream right?):
The guy who takes you from one place to another (vacation/business travelers):
The guy who helps companies raise money:
Overlay the chart of these companies with their competitors' and you can find who's doing better in that particular industry/sector. ie: When you overlay WaMu with other banks, you can see that WaMu is one of the worst performing bank in the industry- sometime this can means that investors are overly pessimistic on the company's outlook- value investors might pick these companies. Momentum traders would pay closer attention to the strongest of the pack- as they might be the first one to rally when the market does.

Give me back my FREE MARKET economy

2008-01-22T16:11:00.000-05:00

Caption: **OUCH** What's that headache I'm getting? Adam Smith just gave me the biggest slap in the history of Capitalism.

I feel your pain Bernanke, but I don't understand you. Whatever happen to Laissez-Faire, free market economy and capitalism? Must we always try to intervene with the nature of the free market? The excess (of debt in general, subprime or not) was created by a low rate environment. So to fix it, shouldn't we do the opposite (raise rate)?

So you decided to lower the Fed fund rate just because the market was spooked for one day? Why can't you let the market work itself out? Isn't that the basic principle of the "free market" economy?

And why this doesn't feel like its the first time we have excess of capitalism injected in the economy and have it taken away by the central bank? See: Panic of 1907, Crash of 1929...etc

I hope you are right and I'm wrong, Mr. Chairman. Because if you are wrong, there will be a whole lot more bloodshed...

Thoughts on the Presidential Candidates

2008-01-20T14:29:00.000-05:00

Although the previous post did an excellent job at analyzing all the presidential candidates and the potential economics ruckus each of them can cause. Let's step back as to what CAN a President do in term of bolstering the economy:

Government spending (expansionary fiscal policy)- The Federal Government's budget has to be approved by the budget committee in Congress every year. Although the President can propose a lot of different types of spending, the final say lies on Congress. Most often or not, the President has to compromise his/her plans with the Congress's (ie: Bill Clinton only got his increase in minimum wage plan for signing NAFTA in return) . Another way to boost spending without the Congress approval is for the President to move/invade country with our Army- defense spending would sure to shoot up. The downside to all of this is, of course, increase in budget deficit- which would required the government take out MORE debt- causing only one sure thing- INFLATION.

I'm not saying the President has no influence on the economy, but more often or not, the real power to "manipulate" the economy lies on the Federal Reserve. Even then, the economic/business cycle would often take on its course, ignoring the action(s) taken by the Fed or the President. The presidential candidates, of course, will promise a lot of CRAPS to their voters in order to get them voted to the office. That is why the candidate with the most campaigning money would have the biggest advantage (advertising 101?). I certainly think that the Presidential election is an over hyped event. We didn't care about the economy, abortion, death penalty, healthcare for the last 4 years. And all of the sudden, WHAM, the Presidential election is happening. All these issues get brought up. While most of us just live our lives with whatever problems throw at us ignoring those problems every 4 years. Hey, its not like the new President really has the power to get things done his/her way.

Voting for your favorite candidate isn't going to change much like I mentioned previously (he/she has limited power). On top of that, the electoral system furthers limit YOUR ability to vote in your favorite candidate- if you are in New York or California and you are a Republican that always vote Republican, your vote almost doesn't count since NY and Cali always vote Democrat. The real election battleground is the "swing" states such as FL and Ohio, they are the one who really have the power to decide who's our next president is (since the majority of the country is split up pretty evenly). So my suggestion is, move to one of these swing states, register yourself as that State's resident and vote there. Only then, YOU can make a difference.

I know I'm a skeptic. Look who we voted for the last eight years? Can you still put faith in this election system after what happened?

Don't even get me started with the rigged/broken voting machines/papers.

To end in a positive note, I've found the most useful tool for technicians and fundamentalists alike- AND ITS FREEEEEEEEE (can you complain?):

http://online.barrons.com/mktlab?mod=b_hpp_tools_screener

On a side note, I noticed that my blog posts have couple of grammatical errors. So to fix that problem, we are officially hiring an editor:

"Editor for a blog
Starting Salary: $0/hour, month, year
Interested candidates should post their resumes in the comment section"

$0 salary....ummm we used to call that...SLAVERY

2008 Candidates

2008-01-10T13:35:00.000-05:00

Now is the time to discuss the MAJOR 2008 candidates for both the Democratic and Republican party and particularly from a business sense. I will also rate on how well their presence in the White House would mean for the economy and for Wall Street on a scale of 1-5 with 5 being the best thing that would've occurred since the invention of the internet.

REPUBLICANS

John McCain - 2.0
Very mixed, often flip flops on his economic policies considering how as a Senator in Arizona he is open to illegal immigrants and disfavors the Bush tax cuts. Now as a candidate, he is leaving the immigration issue to the states ("we must first secure our borders") and is on the side of the Bush cuts. Flip-floppers are not to be trusted.

Mitt Romney - 4.5
The best among the major GOP candidates as he was the founder of Bain Capital, an infamous PE-buyout firm. He is so Wall Street oriented, I'm not even sure if some of the existing CEOs on the Street can be even better, although Henry Paulson may beat him at that if he ever runs. In summary, if he was the U.S. president, the economy would be heavily tilted towards the upper middle and upper class, especially the 1%. Also, the temporary Bush tax cuts would be permanent so goodbye (or at the very least a major reduction) to the inheritance and perhaps dividend and capital gains tax.

Rudy Giuliani - 4.0
Second best Wall Street type presidential candidate. His liberal business policies speak for themselves while was the mayor of NYC.

Mike Huckabee - 3.0
Very mixed as I still do not have total understanding on where to stands on the economy except for the tax issue. He is the foremost candidate on presenting a "Fair Tax" and abolishing the IRS. Doing such will GREATLY BENEFIT THE RICH and of course be very adverse to the middle and working class.

DEMOCRATS

Hilliary Clinton - 3.5
Opposed heavy tax cuts and definitely opposed the Bush cuts. Of course this could be political ploys as she vies for the favor of her party as a NY Senator. In reality though, Hilliary is the 2nd most favored candidate (aside from Romney) on donations from Wall Street and in particular the private equity firms. I'm sure that any donation from PE firms would expect some return so look for Hiliary to be just as as ease with the economy as her husband Bill.

Barack Obama - 3.0
I'm most mixed on Obama not only because he opposed tax cuts as the Illinois Senator but also because he is open to extending the child tax credits and scale back of capital gains. Amongst Wall Street, he is a close 3rd behind Romney and Clinton and is actually looked upon more favorably by the private equity community especially from the venture capitalists. He is truly a mystery one and his ranking could jump to the high 4s so 2.8 is just my opinion at the time of this post.

John Edwards - N/A
Won't win, no chance, who cares .......

Now as for the best presidential candidate from the pool, Romney would be the best for the economy and big businesses. Small businesses would hurt especially if he extends and allows for more outsourcing of American services. Huckabee is the most dangerous candidate and I'm not even speaking from a business perspective as this ex-Baptist minister could split this country in half. His religious zealousness and fervent believer in a Christian nation will work to undermind the fabric of the U.S. culture and further blemish the tolerance of the other cultures/religions. If so, Civil War 2 would well develop and thus bye-bye to the U.S. economy/Wall Street. May this day never occur.

From a personal perspective, Barack Obama is the best. He is a moderate on the tax issues and favors the middle class more so than the upper. Obama pledges to increase technological R&D on clean energy and do away with unnecessary corporate tax cuts. At the same time, he wishes to push down the capital gain tax as to encourage investments and savings. Overall, his policies would do the most to bolster the middle and working class because lord knows that the federal deficit isn't getting smaller and that people's savings are growing any larger.

OBAMA 2008 !!!!!

Positive/Optimistic Market Commentary

2008-01-10T08:48:00.000-05:00

I'm known for being gloom and doom for 2+ months now. My major portfolio position, which consists of 90% of my portfolio is SHORT (betting the stock will go DOWN) and I'm up 10%+ on that trade. Aside from temporarily oversold condition- which the market would bounce back up slightly on shorts covering. I really haven't read/see anything that's positive for the market. But I thought I found a piece of good news today. The headline read:

" Alcoa poised to open higher on 76% surge in quarterly profit"

Well, excellent. Alcoa, one of the biggest aluminum maker in the world reported a jump in profit! Alcoa is also a Dow 30 stock and its financial health is a good indication of the overall economic strength (if economy is expanding, we would use more metal to build shit - airplanes, buildings, cars...etc.). Reading deeper into the article, I've found the following:

"For the recent fourth quarter, Alcoa reported a profit of $632 million, or 75 cents a share, up from $359 million or 41 cents a share a year ago.

Total revenue fell to $7.39 billion from $7.84 billion due to lower aluminum prices and the exclusion of its soft alloy extrusion segment that is now part of a joint venture.

Excluding a favorable restructuring adjustment and a tax benefit stemming from the business sales, earnings would have come in at 36 cents a share."

So both revenue and earnings FELL from last year. However, because Alcoa has beat analysts' earnings expectation of 33 cents a share, the stock traded higher pre-open.

However, the overall picture Alcoa painted is NOT a good one. Well, I guess I would have to stay gloom and doom for the time being.

** As for the picture, it is the first pic that came out of Google image search, keyword "positive"

Predictions for 2008 and onward

2008-01-07T12:45:00.001-05:00

I'm not in the prediction business. But it is certainly fun.

Here are my predictions for 2008 and onward:

1. Economy will deteriorate further. We will actually hit recession couple with 4%+ inflation. The Feds will start raising rates. Smaller banks that don't have access to capital will go bankrupt or getting roll up into a bigger regional/national bank. The Banking sector will consolidate. Congress might lift the 10% saving deposit cap any bank can hold. Bank of America, JPM, Citigroup, along with 4-5 other bigger regional banks will be left of this mess.

2. Obama, or Clinton might win the election, but it doesn't matter. A colored man, or a woman- this nation isn't ready for either- they would be unlikely to win in the first place- even if they win, I'm sure assassination attempts will follow. The safe bet? Mike Huckabee, he sits well with all the "red" states. The nation continues to suffer from the hangover from recession/stagflation. Any rescue plans by the executive branch of the government will fail- because the Central Bank is the one that's controlling inflation and we can't really stop an economic cycle.

3. Jeb Bush will run for president 1-2 terms from now (that's 4-8 years). And he will win. And we will go into war with either Iran (oil), or Venezuela (oil). Oil will reach $200+. Stock market, which suffered for most of last 4 years (2008-2012) will pick up again as oil companies and defense contractors prosper- similar to what happened in 2004-2008.

4. North American Union (NAU) will be form. This will create a almost border-less nation (combination of Mexico, U.S. and Canada). All three nations will use one currency- the Amero. Which is similar to what already happened in Europe. (www.spp.gov)

5. Ohh btw, I didn't really make these predictions. George Orwell already did, he wrote a book titled 1984. If you read the book, you would know how close we are to the society that George Orwell predicted us to be.

http://en.wikipedia.org/wiki/Nineteen_Eighty-Four

Quote from the book:
"WAR IS PEACE
FREEDOM IS SLAVERY
IGNORANCE IS STRENGTH"

Sound familiar?

The biggest scam in the history of mankind....(joke)

2008-01-07T03:21:00.001-05:00

Get a slice of the China Madness

2007-12-31T13:28:00.000-05:00

http://finance.yahoo.com/q?s=caf
MORGAN STANLEY CHINA (CAF)
Prospectus:
http://www.morganstanleyindividual.com/Markets/IPOCenter/Prospectus/?DocID=p_CAFMS

This close-end fund allow you to invest in the China A share market. Unlike many other funds that invest in China, which most of them are buying H share (Chinese companies that are listed on Hong Kong Exchange). Currently, only Chinese citizens and qualified institutional investors are allowed in investing in China A share. Be extremely careful, that the Chinese stock market (A share in particular) is extremely over-valued by traditional metrics. The fund is also very thinly traded (avg vol: 400k). This makes CAF a extreme risky trading instrument IMHO.

I personally think FXI is a better way to invest in the Chinese market.
Prospectus for FXI: http://www.ishares.com/content/stream.jsp?url=/content/repository/material/prospectus/ftse_xinhua.pdf&mimeType=application/pdf

Here are the reasons why:
1. FXI is a index tracking ETF- low expense and not as thinly traded (avg vol: 6m)
2. The valuation is way more reasonable due to the fact the fund invest in ADRs/H share.

January Barometer

2007-12-26T09:25:00.000-05:00

"Since 1950, there have been 20 down Januarys for the S&P 500, all of which preceded a new or extended bear market, or a flat market, except for one year, according to the Almanac. But in eight of those years, the broader market ended flat or with slight gains."

http://money.cnn.com/2005/01/26/markets/january/index.htm

http://www.google.com/search?hl=en&q=january+barometer&btnG=Search

The January Barometer is one of the more "reliable" indicator. Of course, there is no sure thing in the market (nothing has 100% guarantee). Your job as an investor/trader is to extract the most return for the risk taken. Risk is defined by the chance that sh*t can fall apart (unpredictable events ei: 9-11). No one can predict the future accurately, but you can always react to the driving forces of the market - greed and fear. Warren Buffett and other "investment gurus" are very good at "gaming" the market knowing the driving forces behind it.

"View Mr. Market as having a disorder and being in a manic depressive state and take advantage of this state of disorder." (See SEA's April 1998 newsletter for full quote.)
- Warren Buffett

Most of these gurus are can be label "contrarian" to a certain extend. It is by going against conventional wisdoms that these gurus were able to be successful in investing. Does that mean shorting everytime the market goes up and buying everytime the market comes down? No.

As to how to be a contrarian or add contrarian flavor in when building a style of investing/trading...that's for us to figure out.

Randomness continues: Closing out 2007

2007-12-24T09:49:00.001-05:00

Recently, I took a 24 hour road trip from FL all the way back in NY in a little Japanese coupe/hatchback - Toyota Celica. How on earth can this trip has anything possibly do with investing? Sit tight...
First, let me reflect on my friend's Toyota Celica. It was a used car with a good amount of mileage on it. I must say, the Celica isn't as roomy and practical as a Honda Accord, it doesn't accelerate as fast as a Ford Mustang, and it certainly can't handle corners as quickly as a BMW 3 series. But it doesn't matter. The car was very well-built. On the highway doing some-what-over-the-limit speed, the car was as steady and reliable...well as a Toyota should be. Everytime I open up the throttle, the little Japanese hatchback just bugging for more. No squeaks, no rattles. This little bugger can't outhandle a BMW, but when you grab on to its steering wheel it takes you right where you wanted. This car sure as hell isn't perfect, but for $7k, it is amazing value and after spending 1200 miles with it, I simply adore it.

This car, a 2000-2001 Toyota, also marked the end of an era. It was the last time where Toyota has built something that is cheap, fun and reliable. Toyota has since turned into a generic corporation with numbers/goals to reach every quarters to satisfy the on-going ambition of being the world's largest car maker. No longer does Toyota build "cars". They now build what I call "econbox" or Box with wheels. Every cars in the current Toyota line-up are as boring as your daytime television program. Not to mention Toyota also started cutting corners on the quality of the cars they build. I sat in the new Camry and I just wasn't impress by its interior. And I wasn't the only one. If you browse around for Camry reviews, there are a lot of complains about the new Camry interior fit and finish. And then there is the new Scion brand. Scion isn't about building quality and fun cars, its just another marketing scheme by Toyota. I can go on about how Toyota is no longer the humble Japanese car maker from the 80s that try to enter the U.S. market with quality built cars. But to tie to my point: I would not invest in Toyota at the moment. Sure, it has gained a sure foothold of the U.S. market since the 80s. Sure, it is stealing market shares from the Big 3(2.5). But Toyota is no longer a corporation with personality. No longer does this car maker need to make desirable cars because they already in-still its brands in the consumers' mind. No longer does it need to build a fun car- only need to market another generic car in a diff. brand. And don't even get me started with the Prius. Toyota was the underdog, the new kid on the block, now it's all grown. No longer does it need to be recognized, no longer does it need to be humble. Toyota has forgotten where it came from.

My investing/trading philosophy is very much the same as my philosophy on cars. I like to buy and trade what I understand, what I know. I like companies and cars that provide "value". I like underdogs that struggle to be recognized. And if I didn't make the point already: you are who you are. Your trading/investing style should reflect who you are. For example: I am impatient- hence, I don't look to hold a stock/position for more than a couple months. My style of trading doesn't fit anyone but me (or someone with similar personalities).

Note: In closing out 2007, unless there is some disaster waiting to happen next couple of days, I'm proud to announce that our return has trounced the S&P500. We have met our goal on beating the index with a good amount of cash waiting to be deploy. And we are fortunate to dodge the Credit crunch bullets. 2008, here we come...

Have a Happy Holiday/New Year.

How to get RICH $$$

2007-11-30T09:01:00.000-05:00

Notice how every "millionaire" books talk about what it takes to be rich? Persistent, hardworking, willing to take risk... these are your very typical characteristics of "millionaire-next-door".
I must, however, point to a very big flaw all these how-to-get-rich books and websites all shared. These websites and books only interviewed and researched the people who actually succeeded. And it makes sense because we want to know their "secrets". HOWEVER, for every millionaire next door, there is a failed entrepreneur (perhaps 7-8 failed entrepreneurs for every 1 millionaire).
I can bet that if you interview these failed entrepreneurs, you would find they hold the very same characteristics you see in the millionaire next door. That is, they are also hardworking, persistent and ambitious. Give it a second to think about it. Do you really think that people who start and own businesses (even tho it failed) are bunch of lazy bums that don't want their businesses to succeed? So what causes their failures? No one wants to know. I mean, would you like to purchase a book called "How to start a business and fail?" or maybe "Failure-next-door", or "Entrepreneurship was not for me"? The problem is, we don't want to hear about/acknowledge these failures. But they exist.
So what separate a millionaire next door from a failed hardworking ambitious entrepreneur?

Sometimes, I think it's just LUCK (timing, other variables that you are simply not in control of). Take this guy for example:
Stephan Paternot
http://www.smartmoney.com/mymoney/index.cfm?story=20010806&hpadref=1

He started the whole "social networking" concept. Where as myspace and facebook succeeded, he failed. Why? Because he came to the party to early. It was 1999. Noone was ready for Myspace type of thing. So it never took off. And look where these social networking websites are now. (Facebook was valued at $10bil by Microsoft).

And how about fiber optics? Verizon started to lay miles of fiber optic line recently and spent billions to get everyone hook up to the new and faster network. And everything seem to be successful as more customers were signing on their "Fios" service. However, back in 1990s, there were bunch of smaller companies went around and did the same thing as Verizon (laying miles of fiber optic lines)- all of them went bust.

So what's the problem with these failures?

"Ohh they were too early, they should've waited"

"Ohh, the time wasn't right"

"Ohh, noone was ready for it then"

"Ohh, they should've would've could've......."

Hindsight is always 20-20.

I'm not advocating that hardwork is useless, persistent is garbage and carrying ambitious is like carrying sack of bricks- but be ready to fail, the downside risk is there. We just don't want to see it.

Desparate for money, Citi goes Junk

2007-11-27T16:00:00.000-05:00

Citi took out a loan that pays 11% coupons today. When an investment grade company has to take out a loan/capital infusion at junk rate, you know the credit market is in trouble. Especially when we are talking about a financial service company, which expertise is in managing interest spread and capital.

http://biz.yahoo.com/ft/071127/fto112720071558005500.html?.v=1

Sorry for all the Citi's shareholders and soon to be lay-off employees. I feel your pain.

However, the former CEO of Citi won't be feeling the pain with a severance package that is worth $40 mil. Good job, Chief Value Destroyer Chuck Prince.

Goldman the magnificent

2007-11-16T09:29:00.000-05:00

Goldman Sachs is an unstoppable beast.

First, they're the #1 investment bank on Wall Street.

Then they navigate the subprime mess with speed and efficiency unheard of in the Street (although the practice of taking the opposite side of the trade .... on their clients, is heard of) and was the only bank with heavy subprime exposure to turn a profit.

Third, all of their alums are heavily court at by their competitors and are turning up in CEO suites everywhere on the Street including Rubin (Citi), Thain (Merrill), Duncan (NYSE), Lampert (next coming of Buffett?).

And this last event is what really pops out at me .... Goldman Sachs' partners helping to play a hand in grabbing back the best player in baseball, A-Rod, from the grasps of Scott Boras and into the hands of the Yankees again.

I think this past quarter has been a great one for GS. Stay tune as I would not be surpise if Goldman somehow rescues the Knicks from being the NBA's black sheep into a powerhouse again by buying out the team from under the Dolan's eyes (Cablevision is a public company and the BoD hates the Dolans), firing Isiah Thomas, jettisoning Marbury, and getting LeBron James in 2009.

New York New York is soon becoming Goldman, Goldman.

Humor me

2007-11-15T12:36:00.000-05:00

Don't buy what Steve Schwarzman is selling

2007-11-13T14:02:00.001-05:00

A picture (chart) is worth a thousand words.

Am I joking? or Do I mean it literally?

Life takes Visa, but Mastercard is priceless.

2007-11-12T11:07:00.000-05:00

So, Visa has finally filed for IPO.
http://biz.yahoo.com/rb/071109/visa_ipo.html?.v=1

Visa is own by a group of well-known banks. JPM and BAC together own 34.8% of Visa. Citigroup, Wells Fargo, US Bancorp and National City own another 24% of Visa.

Now, this chart is a very rough comp. b/w Mastercard and Visa. We know that Mastercard IPO was a success. Mastercard stock went up 5x since its IPO. The problem with this chart is that I'm not sure if Visa is selling out all of its shares to public, which they value at $10 bil. Or if it's selling ~40% stake (60% own by the rest of the banks). If Visa is selling 40% stake and valued the stake at $10 bil. , then it would fetch a $25 bil. market cap. That is in-line with Mastercard's current market cap.

Assuming that Visa fetch the same price/market cap as Mastercard, then its IPO is NOT worth buying into. Even though Visa has a bigger share of the market, it fails to bring its top-line to its bottom-line. The lower net income margin is causing Visa to earn about the same amount as Mastercard (not looking too deep into the quality of the earnings). Visa has also agreed to settle a lawsuit recently- which would cost Visa ~$2 billion dollars. On the surface, Visa looks attractive because of Mastercard's previous success. However, Mastercard's successful IPO launch was due to the fact that it was vastly underpriced. But that is not the case for Visa (unless $10 bil it plans to raise = 100% stake, which I highly doubt at the moment).

However much I love IPOs. Visa is a no-go for me.

Financials dogged the market AGAIN

2007-11-08T12:23:00.000-05:00

Looks like many of my potential employers (financial firms)are in trouble. I must say my employment outlook does not look good at the moment. The financials once again take a hit today. As I posted over the weekend; uncertainty clouds over the financials. Morgan Stanley wrote down another couple bil. bucks. No biggie. It's only ~5-7% of MS market cap as Morgan already lost ~40% of its market cap YTD. MS is trading flat throughout the day. Up 0.49% as of now.

This is a good time to bring up the topic of Level 3 assets.

http://www.themoneyblogs.com/urbandigs/my.blog/level-3-assets-credits-next-concern.html

Basically, these are difficult to value assets. These are probably private investments in other private companies, investment in exotic investment vehicles, investment in illiquid instruments. ..etc. So the banks have to "guesstimate" the value of these assets. In today's environment, the value of these assets the banks have to come out with can be ugly. If I didn't sound bearish enough, I will say it again, I'm staying away from the financials.

End Of the Day Update:

A fresh round of buying emerged this afternoon. The XLF finished positive for the day. But I'm still not convinced that the financials are bargain at this level.

A whole lot of Irrational Exuberance Part II

2007-11-07T14:25:00.000-05:00

General Motors lost $39 billions?
Most of the $39 billions posted by GM today is accounting NON-CASH charges which is related to the write down of deferred tax assets on GM's book. The loss in GMAC is what concerned me. But even then, GM sold 51% stake of GMAC to Cerberus Group before the subrpime mess got messier. Smart move?
The automotive segment of GM actually made $122 mil during the quarter, driven by strong solid performance results from GM Latin America and GM Asia-Pacific segment. Surprise?

Toyota Motors trades at $200 bil market cap vs. GM $19.5 bil market cap. GM is on my list of stocks to buy if it get cheaper. Too many reasons to list in a blog post. You will definitely see a report on TM vs. GM from me soon.

Time Warner (AOL) mess
AOL division profit decline continued to drag down TWX's results. Disappointing to say the least, TWX replaced Dick Parson with Jeff Bewekes. Shareholders are probably looking at some sort of asset(s) sales in the near future (hopefully, someone would take AOL off TWX's hands). I must say, Steve Case (former CEO of AOL) sold the top. The man is a genius in destroying shareholders' value and enriching his own. I was tricked by Yahoo thinking that TWX is trading at P/E of 11. The company affirmed that guidance of $1.07 for 2007, which make the company trades at P/E of 17. No value here even if they sell AOL out (who will buy that crap?). Good luck to Jeff Bewekes. TWX is off my list.

The Big Red Umbrella?
I did not know that Citigroup sold it's big red umbrella logo to the St.Paul Travelers Group. Looks like Citigroup really need a big red umbrella now. They saved for rainy days, but it has been pouring every day since. On top of that, Citigroup's CDS is trading at the lowest of investment grade level, coupled with a downgrade from Fitch recently, the cost of capital at Citi must be rising. Citigroup is also stuck with $55 bil of CDOs and $135 bil of Level 3 assets (assets that don't have readily market value). I smelled more write downs to come. I'm staying away. If Citi trades at book value, another $10-15 bil write down will bring down another $10-15 bil market cap. That's roughly 10% of Citi $171 bil market cap. Citigroup, I will be waiting for you on the sideline.

I can't believe the automaker is the most attractive out of my list. Talk about Irrationality!

A whole lot of Irrational Exuberance

2007-11-06T11:21:00.000-05:00

Google at $700?
Google has gained 40% market cap over the last month or so. That is a gain of $90 billion. It is safe for me to say that the G phone factor has been priced into the stock. And Google has yet to bid on the spectrum.

http://techland.blogs.fortune.cnn.com/2007/11/06/verizon-and-att-no-shows-at-the-google-party/?source=yahoo_quote

Verizon, on the other hand, is trading at $120 bil market cap. This $120 billion market cap includes Verizon landline, DSL, Fiber Optics and Verizon Wireless. It boggled me as to how Google can find $90 billion off an already competitive wireless market.

$1 Trillion Company? Really?
Petro-China is now worth $1 trillion dollar. That's more than 2x what Exxon-Mobile is trading at. If the Chinese aren't selling gas at 2x the price what Exxon get in the U.S., how can you explain the 2x market cap? And if we (U.S.) is complaining about $3.0 a gallon gasoline, how can the Chinese afford $6.0 a gallon when their GDP/Capita is one of the lowest in the world. I'm perplexedly confused.

More Financials Carnage
So Chuck Prince finally quitted, and Citigroup's shareholders might finally get a relief. Not so fast. In the same day as they announced Chuck's resignation, Citi mentioned that it will write down another $8 billion +. Citigroup has lost about $100 bil market cap since the beginning of the year. I'm more than glad to announce that Citigroup will be in my "soon-to-be-too-cheap-and-attractive-value" list. (put that down with TWX)

It's Tuesday morning, I'm jobless and all I care about is $100 a barrel crude oil. Perplexed and Confused? I'm too.

I am not bottom fishing (on the financials).

2007-11-03T14:29:00.000-05:00

For the first time in five years, the financials are lagging the broad market indices.

The sub-prime mortgage virus has successfully spread itself to the entire financial system. Any financial intermediaries are feeling the pinch. However you want to be known to the outside world (investment bank, commercial bank, specialty finance company, mortgage lender, or all of the above), you did not escaped the effect of the recession in the housing market. The business of borrowing money short term (and cheap) and lending it long term (at a higher rate) has been very lucrative in the past few years, thanks to the low Fed Funds Rate and a robust housing market.

The party has come to an end as the Fed started to move interest rate back up and as the housing market went down the drain. And most banks are just feeling the pinch now as they are stuck with packages (ABS, CDO) that nobody wants. Each of these financials have recently written down billions dollar of value.

Dude, where’s my value?Source: Seekingalpha.com

The question is, are we done writing down?

Many of us want to believe that this is the last of it. The fact is, I simply don’t know what methods these guys used to write down their books. Which one of these guys are more conservative in their approach? Which one of them are stuck with a lot of bad loans (leveraged buyout loans/mortgage related CDOs)?

Until I get a better picture of these write downs, I’m in the same trench as Michael Mayo, the DB analyst who believed that this isn’t the last of it. (http://www.bloomberg.com/apps/news?pid=20601087&sid=ajoV.anbChd4&refer=home)

I refuse to go bottom fishing in the financials. I can vividly remember the recent turmoil in the housing market and how optimistic we were to believe that the housing market would bottom in 2007, or was it 2008, perhaps 2009 and beyond? The risk in buying these stocks remains high in my case since I don’t really know how to look at the financial companies nor do I have any experience in it. Investors tend to be overly optimistic in the beginning of every bubble burst. I am staying away from the financials for the time being. And not to mention a recent interview Jim Roger did with Bloomberg. He mentioned that there are "level 3" assets that have yet to surface on the books of these banks and brokers. And he is currently shorting the investment banks. I'm going to do my research on these "level 3" assets and in the meantime I'm going to sit tight on the next roller coaster ride.

All banks are not created equal:

XBD: Amex Broker Dealers Index http://finance.yahoo.com/q/cp?s=%5EXBD

BKX: Phlx Banks Index http://www.kbw.com/research/BKX.asp

A Quick Look: Textron Inc. (NYSE: TXT)

2007-10-31T11:08:00.001-05:00

Textron (NYSE: TXT)

Business Profile: Textron Inc. (NYSE: TXT) is one of the world's largest and most successful multi-industry companies. Founded in 1923, we have grown into a network of businesses with total revenues of $11 billion, and approximately 40,000 employees in 32 countries, serving a diverse and global customer base. Headquartered in Providence, Rhode Island, Textron is ranked 190th on the FORTUNE 500 list of largest U.S. companies. Organizationally, Textron consists of numerous subsidiaries and operating divisions, which are responsible for the day-to-day operation of their businesses ("Textron businesses").

Textron’s Business Segments:

Bell: The Bell segment includes Bell Helicopter [2], Textron Systems Corporation [3] and Lycoming Engines [4]. Bell Helicopter is a leader in the global helicopter industry and the pioneer of tiltrotor aircraft. Textron Systems provides innovative technology solutions to meet the needs of the global aerospace and defense industries. Lycoming Engines is the world leader in reciprocating aircraft engines.

Cessna: Cessna Aircraft Company is the leading worldwide manufacturer of general aviation aircraft, with product lines spanning single-engine piston aircraft, utility turboprop aircraft and Citation business jet models. Citation customers have access through a network of 10 company-owned Citation Service Centers.

Industrial: The Industrial segment is a diverse collection of high-powered industrial businesses including Greenlee E-Z-GO, Jacobsen Kautex , and Fluid & Power Group as well as various smaller brands within the Fluid & Power Group.

Finance: Textron Financial is a diversified commercial finance company with core operations in Aviation Finance, Asset-Based Lending, Distribution Finance, Golf Finance, Resort Finance, and Structured Capital.

Textron 2006 Revenue breakdown

Textron 2006 Segment Profit Breakdown

Source: Company website.

Recent Quarter (3Q07):

Textron reported a solid 3^rd quarter with revenue increased 15% (13% organic sales growth) to $3.3 billion. Earnings per share from continuing operation increased 40% compared to 3Q06. The strong operating performance in Textron was continued to be driven by strong demand for business jets (Cessna) and continue strong military spending (Bell). Cessna’s backlog continues to show strength with 609 business jet orders added to date. All of Textron’s business segments show top-line growth and margin expansion. Top-line growth at Textron was mainly driven by increase in volume and offset by inflation. The Finance segment continued to perform in spite of a shaky credit market. Full year free cash flow now expected to come in at $600-650 million. The free cash flow would likely be used for strategic acquisition (recent purchase of UIC), and for shareholder enhancement (shares repurchases).

Risk factors: (Source: Textron 2006 10-K filing)

-Textron might unable to effectively mitigate pricing pressures. (Industrial segment)

-Delays in aircraft delivery schedules or cancellation of orders. (Cessna)

-19% of revenue derived from U.S. Government. (Bell)

-U.S. Gov’t can terminate contracts with Textron at anytime. (Bell – V-22s)

-Cost overruns on U.S. Gov’t contract

-Interruptions of production and supplies chain and labor disruptions (All manufacturing segment)

-Disruptions in the capital market. (Finance segment)

-Macro economics factors: interest rate, currency and raw material prices

-Legal proceeding and claims.

Overall, Textron is a very solid industrial company that is more aerospace and defense oriented. The management was able to keep cost under control as we saw segment profit margin expanded during times of high commodities prices and higher labor costs. The big question for TXT's future is how well can the non-military related segments weather out a potential slow down in the global economy? That has yet to be seen.

3,2,1..... CHINA!

2007-10-29T16:46:00.000-05:00

We love China. Why? The Chinese stock market is making new high everyday. And if you were invested in Chinese equity in any way in the last couple of years, you should have done quite well.

Now, I have personally developed this stock market indicator. This indicator is quite accurate. It has accurately predicted the Tech Bubble of 2000. The indicator is called, my dad indicator. The best thing is, the indicator is free.

I remembered that my pop got very vocal about the market in 1999. He was complaining to my mom about selling stocks out too early, and not buying the next best stock. So, he took control of the family savings soon after. He bought some awesome companies. First, he bought Yahoo (Nasdaq: YHOO) at $200 a piece. Then he bought Lucent (Nasdaq: ALU) for about $60 a share. This was, of course, in the early 2000. Well, needless to say, not too soon after he made those trades, everything crumbled into pieces.

All of this bring me back to last couple days where my pop got very vocal again. He was constantly arguing with my mom. They usually argue about b.s. like most married couple, but these days, he was complaining about my mom management of the family savings (which is, for the most part, invested in Chinese equity through H-shares listed Chinese companies). He started to grill stock quotes every night. And he would flip through the finance pages of Chinese newspaper. He would make believe that he is the Chinese Warren Buffett.

I've recently suggested to my mom to buy into a Chinese railroad company (NYSE: GSH HKEX: 0525.HK). So she bought it and it went up about 12-15% since she bought it. It was a nice profit in a short period of time. Yesterday, my pop, would go through his usual routine and checks his stock quotes, and he would complain to me about how bad my pick had lagged the best performers (such as PetroChina NYSE: PTR HK: 0857.HK). I would simply ignore him and tell him to sell it and buy something else. Which he did.

Last Sunday, my pop read about a Chinese coal producer in a Chinese newspaper. The company name is China Shenhua (HK: 1088.HK) and the article in the paper mentioned UBS has just upgraded the stock and gave it a target price of 2x from where it is trading right now. My pop came into my room and inquired about the company. I pulled up the info. on the company real quick on Yahoo Finance and saw that the stock is trading at a P/E of 50. Immediately I said, "expensive, Google is only trading at 30-35 P/E, I would rather have Google if I want to pay that much." He would go on and complain about low P/E stocks never moves.

However, his question in the Chinese coal company got me thinking. As a commodity producer, your top-line revenue growth comes from the price you charge for the commodity you are selling. And the price is determine by the market/demand for the commodity. So it makes sense that a coal producer in China can be very well off because of China's rising demand for energy. Then it hit me like a brick: at a certain price point, it would become cheaper for coal consumers to import coal from other part of the world- this would limit the demand and price paid for Chinese coal. I'm no expert on coal, but the coal in China can't be THAT much better than coal from the U.S. right? So why would anyone pay a premium for a Chinese coal producer over a U.S. coal producer?

The poor Chinese citizens in China are only allow to buy Chinese stocks (A-share and recently H-share). So they don't have access to the U.S. stock market. Poor folks.

And looking at my pop and his recent behavior, I would say the Chinese stock market is closing in on a top (even if it's just a correction).

The Good, the Bad and the Ugly

2007-10-20T08:09:00.001-05:00

ECON 101 Review-

Output (GDP) = Consumption (C ) + Government spending ( G ) + Business Investment ( I ) + Net export ( NX )

The Good

Capacity Utilization- The assets are being used to produce. Although not quite at 1990s level, we are producing at a healthy rate. If we are producing, we are growing.

Unemployment Claim- Unemployment claims is at all time low: when people have jobs, they will spend. It’s not that difficult. What worries me is that this indicator is dangerously low- see 1999.

Unemployment rate and earnings- same story here. Earnings are at +4%. The more they make, the more they spend.

Business investment and consumption- No surprise here, both households and businesses are spending at a healthy clip. That’s the I and the C in the equation.

The Bad

Consumer sentiment – We are starting to see some deterioration in consumer sentiment. It is dipping a little bit low. This indicator seems to be more volatile in comparison to last economic expansion in 1990s. My guess is that the high oil price and War in Iraq were constantly on the consumers’ mind.

Consumer confidence – We are slightly above 100 here. These two consumers indicators are important because consumption makes up a good chunks of our GDP.

GDP and Chain Deflator – The weak U.S. residential market has taken the wind out of our economy. The question is can we get back to the normal 3-4%.

ISM- If it’s above 50, we are expanding. And if we are below 50, we are contracting. We are dangerously close to dipping below 50.

Construction – Commercial construction is still healthy, but it looks like we might be close to the peak. And we all know the residential construction story by now.

Durable Goods – If we aren’t buying durable goods, what are we spending on?

CPI – I don’t care about volatility, but how can you measure prices of basket of consumers’ goods without Food and Energy. Last time I check, I need to eat to survive.

Auto sales- We are trending down slightly since the peak at 1999. Why are we buying fewer cars?

Federal Budget – I’m surprised to see that we are actually creeping back to a balance budget. It is still in a horrible shape since we have a surplus in our last economic expansion.

And the Ugly

Housing Starts and permit – Partying like its 1995!

Median New Home Price – What do you want me to say? This is just plain UGLY.

Saving Rate – I suggest a couple of rate hike so we can see saving goes back up again. We are in a serious hole and a major down trend.

Export – China, anyone? A little uptick is cause by recent weakness in the USD.

Well, so far, so good. We have consumption and business investment remain intact, but the problem is- How much longer?

High gasoline prices wouldn’t shake the consumers out of their spending spree. If we are to look at the cost of owning a car, we can easily pinpoint that gasoline is a minor cost in owning a vehicle (you just bought a $35,000 BMW and you can’t afford to put $50 gas in it?). Employment and outlook on employment is the key to today’s economy.

No jobs= no spending = ▼ C = ▼ GDP.

Note: Briefing.com is the best.

Leveraged Debt Boom

2007-10-05T10:03:00.000-05:00

So I guess my predictions on the Yankees sweeping the hapless Indians is not going to be true. Little do you people know though that I truly do not care that the Yanks don't true. In fact, it may be even better that the Indians were ALLOWED TO WIN the 1st game of the series. Let's take a look at their record when they win/lose the first game of the ALDS.

2006 Yanks won first game to Detroit, lost series
2005 Yanks won first game against Angels, lost series
2004 Yanks lose first game to Twins, win series
2003 Yanks lose first game to Twins, win series
2002 Yanks won first game to Angels, lost series
2001 Yanks lose first game to As, win series
2000 Yanks lose first game to As, win series
1999 Yanks sweep Texas
1998 Yanks sweep Texas
1997 Yanks won first game against Indians, lost series
1996 Yanks lose first game to Texas, win series
1995 Yanks won first game against Mariners, lost series

Since the beginning of the ALDS series, the Yankees are 2-5 when they win the first game of the series and a PERFECT 5-0 when they lose the first game. Ladies and gentlemen, this is all set up for the Yanks to win the next 3 games (at Yankee Stadium no less and Steinbrenner gets to sell more tixs and concessions) and wipe the pathetic Indians off their playoff run.

Now that I have gotten that off my chest, back to this blog being more Wall Street oriented.

Here is an interesting article from the FT today on Citi selling part of their bridge financing loans to (drumroll) ........ KKR ...... of all entities.

http://www.ft.com/cms/s/0/a4075160-7081-11dc-a6d1-0000779fd2ac.html
http://www.ft.com/cms/s/0/68aa7404-72f6-11dc-b7ff-0000779fd2ac.html
http://www.ft.com/cms/s/0/9c737cfc-71ef-11dc-8960-0000779fd2ac.html

For those not familiar with bridge loans, they are promises to a private equity firm like KKR that the bank will lend them the necessary funds to buy out their target company. In the midst of the subprime loan scandal and thus a credit crunch, the banks were having a difficult time offloading these loans to the investors. PE firms like KKR of course would still benefit because they are getting the financing no matter what the credit environment is whereas the banks obligated to complete the loan. It then became a situation of the loans sitting on the banks' books and thus increasing their risk and aggravating shareholders everywhere.

Now Citi is turning around and attempting to sell off these loans (at discount of course) to .... the same private equity firm that are using the loans like KKR. Does this strike anyone being as ironic?

Think of it this way. Your parents promises to lend you the down payment on your house and it's a promise that you know they are good for. Before you can finalize the closing process, your parents were fired from their jobs and thus are in need of their savings. Now their original commitment to you to fund the down payment is in jeopardy but their word is their word. So what do they do? Instead of trying to decrease the loan commitment, they turn around and borrow the money from you to give back to you for the down payment. Is this odd or what? Basically the only person who benefits is you because you essentially have a free loan in that whatever interest you have to pay to your parents for the loan are negated by the interest your parents owe to you.

Now back to the scenario of Citi selling the loans to KKR which is even better because KKR obtains the loans on a discount, thus boasting the yield (in essence the true interest income) which would offset the interest expense owe to Citi for making the original loan commitment. KKR truly comes out on top as they would save (or even make) money on the deal from 1) interest income vs. interest expense and 2) fees and gains from opening the vulture leveraged debt fund.

Usually it's the investment banks like Citi who makes off good but this time it is heavily in the favor of their clients. Wall Street does not get any better than this. Stay tune for more on this developing drama of private equity fleecing the banks.

Go Yankees!

-Myth

Yankees vs. Cleveland

2007-10-04T10:28:00.000-05:00

This is completely unrelated to the premise of the blog but I'm posting it anyway because the Yankees are so great.

Here are some stats for you to chew on as you ponder how it is possible that the “experts” are wrong in predicting the outcome of the Yankees vs. Cleveland.

Game 1
C.C. Sabathia - Lefty

Career versus the Yankees in 8 starts is 1-7 with a 7.13 ERA and a whopping WHIP (walks plus hits per innings pitched) of 1.75 (meaning that he allows close to 2 base runners per inning, not good). Of course pundits will point to the fact that he had not faced the Yankees since 2004 and that his Cy Young caliber season this year (19-7, 3.21 ERA, 1.14 WHIP) makes him a completely different pitcher. I beg to differ as C.C will always be C.C. For proof, I can point to his other great season in 2002 where he went 13-9 with a 3.60 ERA and a 1.30 WHIP. In that season, the Yankees crushed him in his 2 games started and he went an ugly 0-2 with a 5.54 ERA with a 1.38 WHIP.

As for the Yankees hitters faring against this lefty, it is safe to say that A-Rod and Jeter will utterly destroy him as they have gone 474 and 583 OBP respectively in their lifetime. The only worry for the rest of the Yankees lineup is Damon and Abreu who really stinks against Lefty. This is more than countered by Posada, Cano, and Matsui who can hit lefty pitchers just as well as righty. The X factor in all this is Shelley Duncan who hits big (303 BA) against lefty pitching this season.

Conclusion: CC will lose game 1 yielding 5-6 runs although he will keep Cleveland in the game for a while.

Game 2
Fausto Carmona – Righty

Here is the fabulous sophomore pitcher that all the “experts” rave about in the Cleveland lineup. What these “experts” don’t know his that this guy sucks against the potent Yankee lineup. In the 2 games against the Yanks this season, he sports a mediocre ERA of 4.15 but this is a false statistic as he allows the Yanks to hit 292 off of him.

For the Yankee hitters, the reverse of CC holds true as all the lefty does phenomenal against him including Damon and Abreu with A-Rod stinking. Jeter though hits a robust 429 while getting on base 50% of the time.

The only positive for Carmona is that post All-Star he was nothing short of Cy Young like including an exclamation point of going 5-0 with a 1.78 ERA and a whimsy 0.99 WHIP in September. Of course this is all tempered by his other volatile months preceding it.

June: 5.82 ERA 1.50 WHIP
July: 1.74 ERA 1.09 WHIP
August 3.43 ERA 1.24 WHIP
Sep 1.78 ERA 0.99 WHIP

Notice the whipsaw up and downs in ERA and more importantly, WHIP. Seeing how this pattern would unfold, I sense that October would yield a bad month for him and greatness for the Yankees. I’m personally hoping for a repeat of his marvelous June performance.

Conclusion: Fausto will allow at least 5 runs as the heavy lefty hitting Yankee lineup will get to him as well as his see saw pitching history and he will lose the game.

Game 3
Jake “the castoff” Westbrook – Righty

Ah yes, Yankee castoffs. Of all the ones the Yankees had let go, which includes a nice lineup of Eric Milton, Ted Lilly, and Javier Vazquez, it is safe to say that none of them had much affect on the Yanks in the postseason (only exception is Kenny Rogers which is perhaps due to the steroids he is taking that is currently unknown to the press and MLB). Once a castoff, always a castoff, as they would never be good or why else would the Yankees let them go.

The story on Westbrook is pretty much the same as Fausto as lefty hitterse had feasted on him throughout the season. Yankee righties including A-Rod and Jeter also had success with him batting over 300. Coupled our tremendous hitting with the legendary heckling of Yankee castoffs and it is safe to say that Westbrook will falter … horribly.

Conclusion: Yanks will score at least 8 runs and blow out Cleveland.

I haven’t even gone into how horrendous their closer is (blowing the most saves in the regular season and close to singlehandedly killing my fantasy baseball team) so this only goes to prove that even if their starters last, their bullpen will give it right back up.

I smell a SWEEP. As they say, you could take the regular season away from the Indians (96-66 tied for best in MLB) but you can’t take the Indians away from being the Indians (0 championships in the modern era including the big choke in the 1997 WS).

-Myth

Note: My predictions are based on complete, unbiased, statistic backed proof on the greatness of the Yankees which does not include the aging starting lineup and the fragile bullpen aside from Joba so you can take it with confidence.

A-Rod will stay

2007-09-28T23:30:00.000-05:00

Just to let you all know this is not just a pure Wall Street blog as I will discuss some sports business, specifically one that concerns the GREATEST sports team of all time ... the NY Yankees.

Now the biggest issue facing my beloved Yankees aside from planning their 27th parade down Boardway at the end of October is whether or not their MVP, league MVP, offensive player of the year, Alex Rodriguez will re-up with the Yankees. Now there are a lot of critics who will argue that Greedy Rod will leave the Yanks for another vaster field of riches like the Cubs who had doled up approx. $300 million to free agents in the past season and has a manager in Lou Pinella who loves A-Rod and vice versa. Again cause of concern for A-Rod is the constant criticisms NY has given him and how he would fare better in a more relax baseball environment like the LA Angels (or even Baltimore there are no standards there anymore) who have the financial flexibility to sign him.

Let me address those causes of concern on the Yankees signing their star player. My take is this: A-ROD ISN'T GOING ANYWHERE BUT TO THE NEW YANKEES STADIUM ACROSS IN THE STREET.

Say all you want about the baseball fans of NY, they hate you and boo you lustfully when you suck but would fall behind you and give you loyalty like no other when you can hammer it up. There is no better market to showcase your talent, skills, and marketability when you succeed in New York since few have. One only have to look at Derek Jeter, who is not even the best shortstop on the team as evidence of how players on the Yankees get overrated and overhyped by the rest of the country.

Everyone knows that the Yankees have money so naturally one would assume that money is not the problem with them. Then the media comes out and stating their sources, go on to say that the Yankees will not overpay A-Rod to keep him in NY and will only pay him a small increase relative to his current salary of $25 million per season. The writers then assume that that future pay would fall into the $27-$30 million range. Playing the shrewd agent that he his, A-Rod's go to guy, Scott Boras comes out and publicly stated that his client is looking for a minimum of $32 million per year before talking. Clinging to that line, the writers of NY pretty much blasted A-Rod and dismissing him for an ex-Yankee in a season in which he is lighting up the offensive numbers.

That my friends, are false assumptions to cling on to. I truthfully, to the bottom of my heart believe that A-Rod will stay as a Yankee with a contract in the range of around $32-$34 million per year for the next 6-7 years (probably an extra 1-2 year option thrown in as well). What leads me to say this is all due to the health of George Steinbrenner.

http://money.cnn.com/2007/08/01/news/companies/yes_sale.fortune/index.htm

The article correctly guesses that the owner is in distress shape and that the sale of the Yankees are eminent. My guess is that within 5 years, the Yankees will no longer belong in the hands of the Steinbrenner family. Of course, if George passes away sooner (may that day never come), all bets are off and within 2 years of that unfortunate event, the team will be sold. Now when the team is up for sale, the assets that you promote to boost the value of the team is the services/products that the team provides. For the NY Yankees, the service is an entertaining baseball team which is known around the world. The product, and this is key here, is the players. For the Yankees, their most marketable players are Derek Jeter and A-Rod. DJ could only get you so much value as he is not big offensive player (save me the whole Mr. Clutch argument) who can singlehandedly drive people to the stadium. In this day and age, people (not only chicks) dig the long ball and the most potent player at that is A-Rod. The Steinbrenners would be extremely foolish if they do not resign their best HR hitter which would thereby stabilize and or boost the values of the stadium. With a new stadium set to open in 2009, this only makes the case to get A-Rod to stay stronger as he would be a pivotal attendance grabber. The best example of how a team would spend to keep/lure in marquee players is the 2007 Chicago Cubs. For a team which historically is not a big spender in the free agent market, it came as a surprise to most baseball experts they would spend about $300 million to bring in a few big name guys. To me though it was not surprising as it was well known that the Tribune company is up for sale and thus the Cubs. Like I says earlier, what better to boost the value of your company then to have valuable assets like Alfonso Soriano, Ted Lilly (vastly underrated front line pitcher), and resigning Aramis Ramirez. In the end, the Tribune company was sold to Sam Zell and the team was up for sale. No sooner was it announced that already the Cubs have several suitors, namely Mark Cuban of the Dallas Maverick fame.

Look, the Yankees will resign A-Rod to give them a big time draw for the new stadium. Players like DJ, Joba, Posada, and A-Rod would help usher in future record setting crowds at the brand new Yankees stadium as well as MLB in general. Having a 27th and perhaps 28th championship banner would only serve to an additional catalyst in that effort. Here is my early congratulations Mr. Alex Rodriguez for remaining a Yankee for the rest of your playing career. In your HOF induction speech, please tell the NY media that I told you so.

New York, New York !!!!!

-Myth

P.S. - big props to Goldman for investing in the YES network early and recognizing the platinum value of the Yankees brand

Hail to the Chief ! Part 2

2007-09-19T10:51:00.000-05:00

Here is another interesting article from Bloomberg quoting the opinions of 2 famed investors, Jim Rogers, and Marc Faber on the unnecessary rate cut.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aYBOOiT5mAO0&

Inflation will come back and bite us all on the behind ...............

-Myth

Hail the Fed Chief !!

2007-09-19T08:36:00.000-05:00

Those of us who follow Wall Street knew that Helicopter Ben, our Federal Reserve Chairman slashed rates by 50 bps yesterday. May all the homeowners, speculators, bankers and debt-dependent companies be saved! Ben Bernanke, in modern term, "made it rain".

Obviously, "inflation risk remains a concern". And as consumer price index came out better than expected today (http://biz.yahoo.com/ap/070919/economy.html?.v=13). We can now all take a breather.

So far, so good? Not to mention the Dow rocketed 300 pts on a single day. Now we are really on a roll!

Whenever you flood the economy with cheap money, you turn the knob a little higher on inflation risk. But didn't they just report that inflation is lower than expected?! Ohh, of course, we don't want to take food and energy into account because they are all too volatile . So forget the fact that lowering interest rate cause the Dollar to tank and causing oil price to trade at $82 a barrel (because oil is quoted in dollar).

"Outside of food and energy, inflation remained well contained as well in August, rising by 0.2 percent. This core inflation rate had been up by just 0.2 percent or 0.1 percent for the past six months"

Lets not remind ourselves that UPS, Fedex and the railroad companies are passing on fuel charges to businesses and individuals alike (raising prices in the case of railroads, charging "fuel surcharges" in UPS/FDX case). And you wonder why Warren Buffett invest in these things? (http://www.usatoday.com/money/industries/2007-08-31-berkshire-railroads_N.htm)

And did Bernanke really "engineer" a "soft landing"? Or is he simply delaying a "hard landing"? (http://money.cnn.com/2005/10/24/news/newsmakers/bernanke/index.htm) Didn't we learn that business cycle would run its course in Economics 101? I sworn that's what my professor has taught me throughout the years.

Booms are always follow by busts. Booms are created by the excess of GREED. Not the excess of cheap money, not the bubble in asset prices, it is GREED that get us. Or shall we use the term "irrational exuberance" coined by our previous Fed Chairman ? Do I have to remind you of 1998 and what happened follow in March 2000? Or the go-go Golden 20's that followed by the "Great Depression" in 1930s?

As a SMALL stockholders of many corporations, I'm all for the interest rate cut, which give a nice boost to my asset value and make me content about holding EQUITY. But with all the problems surfacing in the face of the economy (housing anyone?http://biz.yahoo.com/ap/070919/housing_construction.html?.v=3), it has me worry. And I'm not saying a recession is coming soon, but it will surface, when the time is right.

Helio Fools

2007-08-28T15:09:00.000-05:00

At the time that I'm writing this post and more specifically this sentence, the S&P 500 is down 2.35% (per Yahoo! Finance with 15 minute delay). One of the few companies which had gone up in stock value is a once lovable little broadband high speed internet provider, Earthlink (ELNK) which is up approximately 7.14%.

The big news with ELNK is that the firm is closing 4 of its offices and cutting about 900 staffers, roughly half of its work force. The market is seeing this as a positive news item and signs that the firm will save about $30 this year with additional savings in the future. This couple with the annoucement that the firm will spend about $200 million to buy back shares are driving up the stock price on this otherwise dismal day in the market.

Here is my take on the loving the market is giving to ELNK:

The fools who invested in this company today are most likely going to lose their money. Although savings will come from cutting 900 staffers, this is actually have a negative affect on the firm. With the loss of half of its staff, how will this company operate efficiently. Customer service will suffer and people will be drive to other internet service providers such as their local cable companies and AOL. Additionally, how will the company have enough resources to re-focus on their core strategy (if they ever decide to back out of Helio). In saving approximately $30 million for the next 4 months, ELNK will take a $65M hit, leaving a net loss of $35M from the staff cut. Would future savings be enough to cover current year's loss and customer service?

Now let's take a look at their cash flow situation. Adding back D&A and net working capital, I've come to $33.161M in Net Operating Cash Flow. Subtracting out ELNK's capital expenditures (because it has to spend money to make money) of $23.879M, its FCF is a $9.282M. This is all kosher until you take into account that approximately $11M of this FCF is due to stock base compensation. I don't know about you but I certainly do not want my company to make money from stock options. As such its True FCF which backs out the stock compensation component is a negative $1.5M. With negative cash flow for the first 6 months of the year, how will the firm come up with the necessary funds to buy back $200M worth of stock. The answer would be to borrow the money but in this credit crunch environment rates will definitely be unfavorable. If ELNK was annoucing the funding of stock purchases 2 years ago I would applaud but in today's environment, I am definitely cringing at the thought of paying high interest rates.

In it's agreement with Helio, ELNK has already signed up to extend to them an additional $100M of working capital of which $30M has already been commitmented (as stated in the 2Q07 10-Q) in July. Although the new CEO promised to review all of ELNK's current strategies it is obvious that he is not looking at it thoroughly enough. Why else would he waste more money on a losing venture? Even though ELNK will be receiving a 10% interest on its loan, would Helio survive in business long enough to pay the interest + principal? Additionally, why is the CEO telling the public that ELNK will re-focus on its core strategy of being an ISP when it is making such large commitments to a losing venture that it will plan to shed? Hmmm......

There are just too many questions on about this company. The CEO is currently not performing up to standard on his due diligence. Although I fall short of buying put options on this ELNK, the operations of the the firm is in dire straits. The only positive is that the CEO may put the company back on its original business which would boost the company back to positive cash flow territory. Even if he does this though, how much would the firm be able to grow in this tougher competitive environment where its customer service will lag those of its peers.

For those who ELNK today, I suggest to you to sell now and take small loss rather than losing the entire ship in the coming quarters.

My puny Library

2007-06-20T20:03:00.000-05:00

My puny library collection:

Reminiscences of a stock operator

Pit Bull

The New Market Wizards

Liar's Poker

Trader Vic Method of Wall Street Master

Come into my trading room

The essays of Warren Buffett

China shakes the world

Trump Art of Deal

Think and Grow Rich

Median Housing Prices

2007-04-06T07:46:00.000-05:00

Chart of the Day
Recent press reports suggest that the US real estate market is slowing. For some perspective, today's chart illustrates the US median price of a single-family home over the past 36 years. Thanks, in part, to low long-term interest rates, the trend over the past decade has been impressive. Not only did housing prices increase at a rapid rate, the rate at which housing prices increased - increased. That brings us to today's chart which illustrates how housing prices have dropped significantly below their accelerated upward trend. Stay tuned...

The chart is free and often insightful. Sign up at www.chartoftheday.com. New chart comes out every Friday.

Stock of the Year!

2007-03-30T19:17:00.000-05:00

As you know, we had quite a year with this stock market. So I've gone bargain shopping for stocks lately. As Warren Buffet said, "Be greedy when others are fearful and be fearful when others are greedy". With careful analysis, I bring you my stock pick of the year:

NEW CENTURY FINANCIAL (SYMBOL: NEWC.PK)

What does New Century do?
What Does This Company Do? New Century is a subprime mortgage lender. In 2006, according to Inside Mortgage Finance an industry publication, it was the fourth-largest nonprime originator, with origination volume of $53.6 billion. New Century primarily sells the loans it originates to third parties, but the company is organized as a REIT and also managed a $14 billion portfolio of loans as of Sept. 30. The company is authorized to lend in all 50 states and has relationships with 47,000 independent mortgage brokers.

I mean people need to buy houses right? You need to live, and if you want to buy a house, you need a mortgage. I mean non-prime lender just mean they lend to people with less then steller credit score/history. Who has a good credit history in this country anyway? Everyone has credit card bills to pay. Look at our government, they are running on like trillion dollar deficit and their debt is "risk-free" and probably rated at AAA by S&P and Moody's. If I have $3000 credit card balance, my rating must be like AAAAAAA.

So New Century lend money to AVERAGE JOE, like you and me who has credit card debt but not as much as our government. I mean only rich people can afford to have a perfect credit record because they have so much money they would never default on any loan.

Here's the chart:

http://www.marketwatch.com/news/story/story.aspx?guid=%7B01DEA338-1967-4F48-8A4B-C8EF19A722BA%7D&dist=rss

Well, if the smart guy at Bear Stern upgraded the stock at $15, the stock is now trading at $1, it must be SCREAMING BUY! I mean, if the stock does trade back up to $15, that will be a return of 1400%! And if the stock trades back to its 52 weeks high- $52- that's a return of 5000%!

Talk about value!

If the Bear Stern guy isn't convincing enough, check out NEW CENTURY on morningstar.com:

Stock	Industry	S&P 500	Stock's 5Yr Average*
Price/Earnings	0.2	17.1	20.3	5.5
Price/Book	0.0	3.4	4.1	1.6
Price/Sales	0.1	4.7	2.9	1.5
Price/Cash Flow	---	19.2	14.7	---
Dividend Yield %	439.8	2.3	1.8	---

A dividend yield of almost 440%! Dividend doesn't lie! 440%! How can I lose?! This is VALUE !! I think VALUE is an understatement. Let me put it this way: It is a Ferrari for sale at the price of a Honda. Look at "the market" dividend yield...what a joke! And a P/E of 0.2 vs S&P 17! So I'm only paying 20 cents for every dollar of earning vs paying $17 for every dollar of earning in the other 500 companies. S&P 500 is ripping me off!

http://quicktake.morningstar.com/stocknet/StockValuation.aspx?Country=USA&Symbol=NEW&stocktab=valuation

I mean if 400%+ DIVIDEND return doesn't sound convincing. Check out New Century's headquarters at Irvine, California:

I mean with the recent run-up in real estate price in CALIFORNIA, this beautiful glass building must at least worth millions and millions of dollar. I mean a two family house probably cost over $ 1mil. in California. Imagine how much this beautiful tall glass building is worth!

At last, the share price! It's $1 a share! How can you lose?! I mean one share of Google is like $450 and they don't even have tall glass building. And with $450 you can get 450 shares of NEW CENTURY FINANCIAL! 1 share vs 450 share! $10 move in GOOGLE share price will give you $10 profit. $10 move in NEW CENTURY share price will give you $4500! Why would you buy expensive stock like GOOGLE? I mean, can you even call up GOOGLE? Google is a WEBSITE for god sake, its not a REAL business like NEW CENTURY. And we know what happen to dot com stock...remember the year 2000? I mean remember Amazon trading at $400? Where is it now?! If you pay $1 for something, and it goes down to like $0.05, so what? you lost $0.95- you can't do anything with 95 cents anyway. I can't even get like candy in New York for 95 cents. But if you buy something like GOOGLE @ $450 and it trades down like Amazon did. You lose like $410! I mean you can buy a lot with $410! Especially when you have credit card bills to pay!

Guys, this is what VALUE investing is ALL ABOUT! P/E of 0.2 and a dividend yield of 400+%! Does any stock get any cheaper?! This is a diamond in the rough, get in before its too late!

DISCLAIMER: APRIL FOOOOOOOOOL!!!!!!!!!!!!!!!!!!!!

2007-03-30T19:10:00.000-05:00

Weekly Wrap

Last Update: 30-Mar-07 16:45 ET

The fundamentals were almost entirely bearish this week. It is no surprise that all the major indices were lower. In fact, it is a bit surprising that the sell-off was not more severe.

Oil prices were up sharply, the Fed Chairman as much as said that rate cuts are unlikely any time soon, the economic data were mixed at best, and a key inflation measure was higher than expected. There wasn't any significant corporate news to offset the bearish macro-economic issues.

The Fed Chairman's testimony before the Joint Economic Committee of Congress on Wednesday ranked as the most important event of the week. Fed Chairman Bernanke said that inflation remains the predominant concern. He made that absolutely clear.

He did not express significant concern about economic growth, and while recognizing the risk from the housing sector, he also suggested that the impact from the problems in the subprime mortgage market would be contained.

Bernanke's testimony implied that it will take a while for the current level of interest rates to bring inflation down. That means market hopes for a rate cut by the end of the summer are overly optimistic. The S&P lost 11 points on the day of his testimony.

The economic data this week brought mixed news. New home sales for February were down 3.9% despite expectations of a bounce from a sharp drop in January. Consumer confidence in March posted the first drop in five months. February durable goods new orders were up a smaller than expected 2.5% after a 9.3% plunge in January. The housing and manufacturing sectors remain drags on the economy.

More positively, initial claims for unemployment remained at low levels, reflecting a strong labor market. Fourth quarter real GDP growth was revised modestly higher to a 2.5% annual rate from 2.2%. The March Chicago PMI index jumped sharply higher to a strong 61.7 from 47.9 in February, raising hopes of a manufacturing rebound. And February personal consumption expenditures rose a stronger than expected 0.6%, showing that consumer spending remains strong.

The most important economic release, however, was the clearly bearish 0.3% increase in the February core personal consumption expenditure (PCE) price deflator.

This is the Fed's favorite inflation measure. The gain was larger than an expected 0.2%, and follows a 0.1% increase in December and a 0.2% gain in January. It raised the year-over-year increase to 2.4% from 2.2% in January. The Fed's forecast calls for this to get below 2.0% in 2008. It is going in the wrong direction.

This is just one month of data and it shouldn't be over-emphasized. If the core PCE continues at even a 0.2% rate in upcoming months, however, it will keep the Fed in an aggressive inflation fighting mood. Higher inflation is always bad for the financial markets.

Adding to inflation concerns is the fact that oil prices rose to about $66 a barrel this week from $62 last week and $57 the week before. The Iran situation was a factor, but there are concerns that oil prices will remain higher regardless of how that plays out.

The macro economic news therefore amounts to rising inflationary pressures, a tough stance from the Fed, and continued sluggish economic indicators. There isn't a lot of good news. The market could have sold off more following the solid gains last week.

The biggest corporate news this week was that Dell is delaying its 10-K report due to an ongoing investigation into its accounting, but that news didn't hit the stock market very hard since it is a company-specific issue.

The first quarter ended with the S&P nearly flat for the year. It was an up and down quarter with excessive optimism followed by excessive fears. The market has filtered through it all and has assessed that stable interest rates and significantly slower earnings growth warrant little net change.

The market is likely to remain extremely sensitive to economic releases, but an increased focus to corporate news will develop as first quarter earnings reports in mid-April approach.

Index	Started Week	Ended Week	Change	% Change	YTD
DJIA	12481.01	12354.35	-126.66	-1.0 %	-0.9 %
Nasdaq	2456.18	2421.64	-34.54	-1.4 %	0.3 %
S&P 500	1436.11	1420.86	-15.25	-1.1 %	0.2 %
Russell 2000	808.05	800.71	-7.34	-0.9 %	1.7 %

Choppy weak. Not much going on before earning season. Stay tune for stock of the year!

Weekly recap

2007-03-24T09:06:00.000-05:00

Briefing:

Weekly Wrap

Last Update: 23-Mar-07 16:35 ET

It was an amazing week. The broader indices were all up more than 3%. The Dow Jones Industrial average was up every day. The S&P 500 index was up every day except Thursday, when it fell 0.50 points

The tone has dramatically improved as bearish factors such as the Shanghai market plunge, the unwinding of yen-carry trades, and even subprime mortgage problems had little impact this week.

The focus remained on the macro issues. There was very little corporate news of broad impact. The underlying concern about the strength of the economy and whether factors such as housing weakness would lead to a recession remained the main concern. This week, the news was good.

The most important event was the Fed policy statement on Wednesday. The market rallied in advance of the report in anticipation of a softer, gentler stance on the part of the Fed. The market rallied even more after it got exactly that.

The Fed dropped the bias towards tightening that had been in previous policy statements. The phrase that "the extent and timing of any additional firming..." was removed and replaced with "(F)uture policy adjustments will depend on the evolution of the outlook for both inflation and economic growth."

This change in attitude can certainly be considered good news, but it has to be noted that virtually no one expected any Fed rate hike. The removal of tightening bias that no one believed in the first place hardly seems a reason for a major rally. Nevertheless, there is now a stronger expectation that the Fed is likely to lower the fed funds target by 1/4% by the end of the summer.

The economic data this week helped dispel recession fears. On Tuesday it was reported that housing starts rose 9.0% in February after a 14.3% drop in January. February starts were about equal to the average in the fourth quarter of last year. More good housing news came on Friday in the form of a 3.9% increase in February existing home sales. This followed a 2.7% increase in January. At a 6.99 million annual rate, existing home sales are well above the levels of 6.25 to 6.27 posted October through December. The housing market seems to be at least stabilizing.

The only other economic release this week was a reported drop in new claims for unemployment for the week ended March 17. Claims dropped to 316,000 from 320,000 the week before, and levels above 330,000 for a number of weeks before that. The labor market remains strong.

The earnings news was mostly good. Oracle had an outstanding report. Morgan Stanley easily beat earnings expectations. FedEx and General Mills had good reports. Motorola warned of lower than expected profits and revenue. The earnings reports and corporate news overall were of modest impact, however.

Bond yields rose slightly to 4.60% from 4.55% last week due to the good economic news. Oil prices quietly rose to $62.28 a barrel from $57.11 last week.

The market rally was very surprising in both its degree and depth. The nervousness from recent weeks has not been completely eliminated, and could arise again quickly, but was virtually absent this week.

The focus now will shift to some degree to upcoming first quarter earnings reports. Those will start in mid-April. Earnings expectations for the S&P 500 in aggregated have fallen to about 4% from 7% two months ago. Second and third quarter forecasts are close to 5%. The earnings slowdown is here.

Index	Started Week	Ended Week	Change	% Change	YTD
DJIA	12110.41	12481.01	370.60	3.1 %	0.1 %
Nasdaq	2372.66	2456.18	83.52	3.5 %	1.7 %
S&P 500	1386.95	1436.11	49.16	3.5 %	1.3 %
Russell 2000	778.77	808.05	29.28	3.8 %	2.6 %

To sum it up real quick:

Strong earnings from Oracle, a giant software company, which means businesses are spending. Fed kept rate steady, which took uncertainty out of the market for the time being. The housing number isn't as bad as it looks (existing home sales up but prices are down- buyers' market!). Stock market continues to carry a bullish sentiment- the sentiment is important! When market is bullish, they will buy on negative news! All and all, this seem to reaffirm my belief that this bull market is not yet over.

Weekly Recap

2007-03-17T21:13:00.000-05:00

Weekly Wrap

This week the S&P 500 index lost everything it had gained the week before, leaving it down 1 point over the two-week period. The reason for the decline this week was simple. Concerns remain about the economic outlook. The focal point of these concerns is the risk that troubles in the sub-prime mortgage sector will have a broader economic impact.

The market started the week fine. The S&P gained 4 points on Monday despite a warning from Countrywide Financial that its earnings would be hurt by problems in the non-prime sector.

The problems erupted on Tuesday. The MBA said that delinquencies on sup-prime mortgage loans hit 13.3%. That is the highest since the third quarter of 2002. Countrywide's CEO used the term "liquidity crisis" in reference to the sub-prime issue. A mini-panic set in. The S&P plunged 29 points.

Stability returned through the end of the week. The S&P recovered 10 points on Wednesday and 5 on Thursday. On Friday, the index lost 5 points, but that was due more to concerns about weekend risk than any specific sub-prime issues.

It is possible that some of the fears about the risks associated with the sub-prime issue eased as the week progressed, but it is also possible that these fears could erupt again in the near future. It is also possible that other reasons for selling arise, and that sub-prime gets pulled into the fray. The sub-prime issue persists.

The negativity associated with sub-prime mortgages was evident in a Wall Street Journal survey on Friday. The headlines said "Subprime Mortgage Woes are Likely to Spread" but the specifics belied the headline. Only 19% of economists said that it was very likely that the issue would have an impact on the prime market. And economists had only lowered their first quarter real GDP forecasts to a 2.3% annual rate of growth from 2.5% a month ago. That isn't much of a reduction, and it certainly isn't a recession. Earnings forecasts have yet to be broadly lowered either, but that doesn't mean the sub-prime issue will go away.

There were only a few earnings releases this week. Goldman Sachs had another great report. Lehman Brothers and Bear Sterns posted decent numbers. General Motors disappointed, but at least posted a profit.

The economic releases were also mixed. February retail sales were up a modest 0.1% due in part to cold weather. February industrial production rose 1.0% as the key manufacturing component was up a solid 0.4%. The core PPI for February was up a stronger than expected 0.4%, but the core CPI for February was in line with expectations at +0.2%.

The mix of data did little to alter economic perceptions. Economic growth is sluggish, and there are concerns that the housing sector will become an increasing problem. The modest core CPI increase eased inflation fears that briefly arose with the PPI data. Inflation is widely expected to hold steady of ease in the months ahead due to weak economic demand.

Market risks are believed to lie more with the economy than with inflation.

That is reflected in Fed policy expectations. The fed funds rate futures currently reflect expectations of a 1/4% rate cut by August.

Oil prices ended the week at $57.11 a barrel, down a bit for the week but hardly a focus. The 10-year note yield dipped slightly to 4.55%.

Market sentiment remains dicey. Reaction to any signs of economic weakness could be exagerrated. Any negative news from the sub-prime mortgage market will undoubtedly be the top talking point that day. But the fundamentals have been steady in terms of the economic, earnings, inflation, and interest rate outlooks.

Index	Started Week	Ended Week	Change	% Change	YTD
DJIA	12276.32	12110.41	-165.91	-1.4 %	-2.8 %
Nasdaq	2387.55	2372.66	-14.89	-0.6 %	-1.8 %
S&P 500	1402.85	1386.95	-15.90	-1.1 %	-2.2 %
Russell 2000	785.12	778.77	-6.35	-0.8 %	-1.1 %

How to Make Really 'Big Money'

2007-03-17T20:56:00.000-05:00

-Howard Schultz- CEO of Starbucks (Feed the addict's habit)

Net worth: ~$1.1 billion

Pick up an interesting (somewhat funny but SAD) article from Yahoo:Finance:
http://biz.yahoo.com/weekend/bigmoney_1.html

It takes money to make money. And the income gap is getting wider. The spending habit of the "middle" class isn't exactly helping neither. Oh well.

Save, stash, and invest people!

"I'm NOT a technician, BUT pull out a chart..."

2007-03-13T20:56:00.000-05:00

Another big sell off today. Blame it on those sub-prime mortgage guys...it's THEIR faults the market sold-off. Look at the chart for the S&P 500. The sell off began two weeks ago was nothing but a blip on the chart and it doesn't seem like its out of the pattern there.

Ok, so you not that big of a chartist/technician. What about the WEAK 0.1% in retail sales vs 0.4% expected? What about the sub-prime blow up? Isn't it cause for concern?

O sure, like we didn't know the retail sale is going to be weak because of the weather. Like we didn't know that sub-prime mortgage lenders are going to blow after the housing slow-down (I refused to call it a bubble burst because the price here in New York hasn't fell nearly as hard as the rest of the nation- its NOT a bubble- look at the Nasdaq 10 year chart then come back to me).

So fine, we didn't know who held those risky MBS papers or the sub-prime lenders sold it out at all. But you sure know that as interest rate rises + housing price fall = sub prime disaster right?

So you don't know about that until today. Fine. How about the people who has the buying power to move the market? The mutual funds, the hedge funds, the institutions and alike...you think they ought to know these stuffs because they are messing around with billion of dollars.

My point is that everyone knew about the overbought market in China, the sub prime disaster and the weaker (Goldilocks) economy. And these factors didn't just pop out of no where overnight (except for the China sold off- but when you have a market that was up 103% in one year, do you expect anyone to take profit? I guess not.), these factors have been creeping in the economy for MONTHS.

So the sell off is nothing but a breather IMHO. It's nothing more but a blip on the chart. Hey, look at that, the P/E ratio of the S&P wasn't going UP for the last 2 years...What?!

So this wasn't like 2000 when we had crazy valuation on stocks. U.S. equities are trading at a relatively cheap valuation when compared to the year 1999 and 2000. So IF the market does turn BEAR on us...it wouldn't be because stocks are expensive. I think sub-prime will not cause the market to go berserk, but Iran might just do.

P.S.: Anyone look at Goldman's earning today? Seem fine to me. I would buy GS on any dip. Just my humble opinion.

Weekly Recap

2007-03-12T08:54:00.000-05:00

Briefing:
"Weekly Wrap

The stock market rebounded 1.1% and stabilized this week. The presumed catalyst for much of the gains was an improvement in Asian stock markets. To a large extent, however, the market was buffeted by rapidly shifting sentiment that settled down over time.

The S&P is down a net 3.3% over the past two weeks. That represents a reasonable consolidation from the point where many analysts have said the market had gotten ahead of itself. The S&P is down 1.1% for the year to date.

The week opened poorly. On Monday, the S&P lost 13 points. Strangely, it was widely attributed to a decline in Asian markets. In fact, those markets were simply catching up to the losses on Friday in US markets. Regardless, sentiment was poor and the Asian weakness was for many a good excuse to sell.

The markets rocketed higher on Tuesday. The S&P gained 21 points. Again, the presumed catalyst was the Asian financial markets. It is hard to rationalize such a huge swing in the market value of US corporations based on a move in Asian stock prices, particularly Shaghai stocks, but the market was running on emotion more than reason.

The S&P eased back 3 points on Wednesday. That was not surprising given the huge gain the day before. On Thursday, however, the S&P gained a surprising 10 points even though February same store sales were fairly weak. The gain that day seemed to provide underlying support to the market and to stabilize sentiment.

Friday brought some truly relevant news. February nonfarm payrolls were reported up 97,000. This was close to an expected 100,000 increase. More importantly, it was not below 50,000, as many had feared. A weak number on that magnitude could have rekindled recession fears.

The good news was bolstered by the fact that the January and December payroll gains were revised a net 55,000 higher. Furthermore, construction employment fell a sharp 71,000 in February due in part to cold weather. It may bounce back next month. Finally, hourly earnings were up a stronger than expected 0.4%, leaving the year-over-year gain at 4.1%. With CPI up just 2.1% the past year, real wage gains are picking up.

The data were solid overall and very much consistent with expectations of real GDP growth at 2% to 2.5% for the first half of this year. There was nothing to suggest even a hint of recession. The S&P held its gains for the week and was up 1 point on Friday.

There was very little news of significance this past week other than the employment release. The February ISM services index was a bit weaker than expected at 54.3, but that still reflects growth. Factory orders for January were weaker than expected as well. Neither release had a large impact. The February same store sales noted above were weaker than expected overall but cold weather was undoubtedly a factor.

The earnings calendar was very light. Costco reported profits in line with expectations, and there were a handful of other retailers that reported, but all were quickly dismissed.

Instead, it was all about sorting through sentiment this week. Factors such as the recently noted increase in delinquencies on sub-prime mortgages continued to provide fodder for recession talk even though there is no evidence that overall mortgage demand is weak.

Also persisting as a bearish talk point through the week (on days when stocks were down) was the perceived threat of further unwinding of hedge fund positions as the yen strengthened against the dollar. And the swings in the Asian stock markets were closely followed.

Yet, none of these presumably bearish factors have altered economic or earnings projects. The interest rate outlook still calls for little, if any, change in rates. The bearish issues reflected the prevailing sentiment swings and provided a rationale for selling.

Now, with the market up 1.1% this week, there is a good argument that sentiment is settling down. The S&P is down a net 5.0% from its highs. The excessive optimism from a month ago is gone.

The recent pessimism about a possible recession has now also faded. Perhaps the recent volatility will ease.

If so, investors may look at the market with some optimism, but plenty of caution as well. Earnings growth is slowing. Economic growth is sluggish. There are plenty or risks. Valuation provides some support, however, as the S&P is trading at just 17.1 times trailing earnings.

There certainly will be more volatility ahead, and there remain risks on the downside; but the market may soon return to normalcy with a reasonably priced market and only a moderately favorable outlook.

Index	Started Week	Ended Week	Change	% Change	YTD
DJIA	12114.10	12276.32	162.22	1.3 %	-1.5 %
Nasdaq	2368.00	2387.55	19.55	0.8 %	-1.1 %
S&P 500	1387.17	1402.85	15.68	1.1 %	-1.1 %
Russell 2000	775.44	785.12	9.68	1.2 %	-0.3 %

"

Looks like the Friday's employment report helps to keep the market gain through the week. We will see if the market continues to stabilize here. Coming up...Barron's bullish picks.

Surprise me, homebuilders!

2007-03-07T17:09:00.001-05:00

Toll Cancellations Drop; Horton to Miss Projections (Update6)

By Brian Louis and Sharon L. Crenson

March 7 (Bloomberg) -- Toll Brothers Inc., the biggest U.S. luxury-home builder, said customer cancellations are falling and it's offering fewer sales incentives. D.R. Horton Inc., the second-largest builder by revenue, said it will miss its projections for closings this year.

D.R. Horton said closings will likely drop below last year's 53,000 and it will probably continue writing down land through 2008.

``I don't want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year,'' D.R. Horton Chief Executive Officer Donald Tomnitz said at a Citigroup Inc. conference in New York. ``Our future is not as bright as what we would like it to be.''

A yearlong U.S. housing slump has left homebuilders with a glut of unsold homes as customers have abandoned deals or held off making purchases. Sales in 2006 fell 17 percent, the most since 1990, cutting profit at home construction companies and spurring them to write off lost deposits and land purchases.

At Toll, the cancellation level has dropped to 16 percent in the last five weeks from a high of 36 percent, CEO Robert Toll said today at the conference.

Burning Off Inventory

``We're now running at half the pace of inventory that we had three or four months ago,'' Toll said. ``So I would guess, and that's all it is, it'll be another four or five months before you finally burn off inventory in most of the markets.

After predicting that the home market was nearing a ``bottom'' in December, Toll last month reversed course as deposits failed to live up to expectations. Today, he tempered his comments by saying the market ``is still beset by speculation'' and that it may take longer in some areas to pare the number of unsold properties.

``We believe that as soon as the market turns, and I'll speak about it, we think it'll turn with a vengeance,'' Toll said. ``The incentives are coming down.''

It's ``remarkable that we still have speculative investment going on,'' he said.

Horsham, Pennsylvania-based Toll Brothers has raised prices in 15 of its communities and has trimmed incentives, Toll said.

Shares of Toll Brothers rose 44 cents to $29.24 at 4 p.m. in New York Stock Exchange composite trading. The stock slid 12 percent in the year through yesterday. Fort Worth, Texas-based D.R. Horton rose 30 cents to $24.86. The stock dropped 24 percent in the year through yesterday.

The Federal Reserve today said ``almost all districts reported that housing markets remained weak,'' according to the regional survey known as the Beige Book for the color of its cover.

The only exceptions were New York and New Jersey, which reported ``some stabilization in the market for new homes,'' and New York City's apartment market, which saw ``strong demand,'' said the report, based on information collected through Feb. 26.

Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=aZYONcrN26wQ&refer=home

No comment, just a big LOL at D R Horton CEO. CNBC said the market sold off because of his comment. Another big LOL from me.

Subprime Subprime Subprime

2007-03-05T10:34:00.000-05:00

From Briefing:

"When we look back on the mortgage market ten years from now, New Century Financial (NEW 14.65) is going to be held out as a glaring example of the risks involved with sub-prime mortgage lending. Whether the company itself still exists ten years from now is another question. Right now, it doesn't look good."

Thanks, Sherlock.

Why did subprime loans get so popular? Subprime loans made up 12.75% of the $10.2 trillion mortgage market in 2006, up from 8.5% in 2001, according to Inside Mortgage Finance. The homeownership rate has grown to 69% from 65% over the past decade, about half of which came from subprime lending, according to a study by the Federal Reserve Bank of Chicago.

Everyone expect the housing downturn to spread through the rest of the economy. Housing sales had crashed. Housing prices had came down. Sub-prime loans are blowing up. Yet, we still have +2.2% GDP and the stock market up double digits last year.

New BLOG!

2006-12-21T21:28:00.000-05:00

This is going to be my new blog. I'm going to post my thoughts, analysis in here for the upcoming year. I'm hoping I can update this more than my other blog.

Thanks for visiting.

Credo Investment Club Blog

A Pat On the Back?

Billionaire vs. an idiot with a billion dollar

Banks' business model is NONSENSE

Long FOOD

Rome

Wall St. Tech darlings

The R word

Bush's Stimulus and the Super Bowl

China ripes for future growth

Cheap cell phone plan: Sprint SERO

No frills

$600 rebate! No thanks?

Charting health of the market/eocnomy

Give me back my FREE MARKET economy

Thoughts on the Presidential Candidates

2008 Candidates

Positive/Optimistic Market Commentary

Predictions for 2008 and onward

The biggest scam in the history of mankind....(joke)

Get a slice of the China Madness

January Barometer

Randomness continues: Closing out 2007

How to get RICH $$$

Desparate for money, Citi goes Junk

Goldman the magnificent

Humor me

Don't buy what Steve Schwarzman is selling

Life takes Visa, but Mastercard is priceless.

Financials dogged the market AGAIN

A whole lot of Irrational Exuberance Part II

A whole lot of Irrational Exuberance

I am not bottom fishing (on the financials).

A Quick Look: Textron Inc. (NYSE: TXT)

3,2,1..... CHINA!

The Good, the Bad and the Ugly

Leveraged Debt Boom

Yankees vs. Cleveland

A-Rod will stay

Hail to the Chief ! Part 2

Hail the Fed Chief !!

Helio Fools

My puny Library

Median Housing Prices

Stock of the Year!

Weekly Wrap

Weekly recap

Weekly Wrap

Weekly Recap

How to Make Really 'Big Money'

"I'm NOT a technician, BUT **pull out a chart**..."

Weekly Recap

Surprise me, homebuilders!

Subprime Subprime Subprime

New BLOG!

"I'm NOT a technician, BUT pull out a chart..."