Friday, December 31, 2010

New Year's Eve Investor Sentiment and Market Thoughts

Well, it's been a crazy New Year's Eve here. Bowl games. Beer. Polar bear plunge into the pool. Yikes! Nothing like a party with your buddies to remember the important things in life. (And that's drinking beer with your buddies).

The pool was 47 degrees for the jump. FWIW.

I'm over the legal limit to drive, but that doesn't mean I can't blog. And I'm on the iPad, so thank you to the folks at Zaggmate who have made this beautiful keyboard case for me to pound my thoughts. Into. How's my command of the English language so far?

Let me be honest. I thought a bunch this week about selling my positions and going neutral or reducing my beta. But there are so many folks warning us about how extreme the bullish sentiment is and how there will be a correction after this weekend that I had to take a pause. That's my gut feeling, too. But that's the crowd thinking. It is difficult to go against that. But I think I will. For now.

Basically, there is no reason to sell your winners while the trend is in your favor. There will be obvious signs of distribution with price and volume that it will be a no brainer to sell. When the time is right. But is that now?

I don't think so. I'm letting it ride until I see more distribution and technical reasons to sell. I'm ignoring all these warnings about how extreme the bullish sentiment is. If there were no warnings about bullish extremes, I'd be more worried.

I will post a 2010 recap and a 2011 prediction this weekend.

But for now, I'd like to thank God for a wonderful two years of market returns. It's been amazing. I hope you banked some coin. No reason to dance in the end zone as we have another year ahead of us. The game is non-stop.

Cheers. Be safe.

New Year's Eve Randomosity

The market meanders...

  • $NFLX up 225% in 2010. I don't think it will do that in 2011. Yes, I missed it. I went over it in the early AudioBoos (link to the right). I think there is a low barrier to entry in technology these days, and was worried that other, larger, companies would come in and dominate the sector. Much like Netscape eventually lost out in the browser war, even though they had the early lead. But, Netflix has been making deals and lining themselves up for the future. We shall see if Google TV or Apple TV make significant inroads on Netflix's business.
  • At Barnes and Noble, Ebooks out sell hardcopies. That makes total sense. Between the ipad Nook app and the Nook itself. I have been reading ebooks since I had the iPad. I like the experience. And the Nook app is a fantastic reader. (To be honest, all of the ereaders work for me).
  • I've also been reading ebooks checked out from the library website using the Bluefire Reader app, which allows the epub format.
  • Electric car sales slow. Looks like Nissan sold 10 Leaf electric cars the last couple of weeks, and GM sold just north of 250 Chevy Volt cars this year. I wouldn't sound the alarm bell just yet, but I'm thinking that these cars will be busts. Just a hunch. Very pricey. Very limited. Run on coal.
  • Quite a few good bowl games yesterday. I thought the penalty to the K. State salute was a bit much, but rules are rules. Washington surprised me in dominating Nebraska - especially after the home drubbing to the Cornhuskers earlier in the year. Tennessee imploded against North Caroline.

Thursday, December 30, 2010

Thursday Bowl Games Randomosity

imageShould $AAPL buy $NFLX?  Should Natalie Portman do more bed-rocking lesbian sex scenes? Should Brett Favre study harder for his concussion test? 

  • The Apple analyst wrote, "What I'd like to see is Apple buying Netflix. Netflix has approximately 150,000 titles, while Apple has just 15,000. Apple has a tremendous opportunity (if it buys Netflix)."  Yeah, maybe.  But Netflix has a good thing going.  They’re the king right now.  But as I said, low barrier of entry here for an Apple or Google to pick up market share.
  • Remember when Netscape was the king?
  • Jobless Claims drop to lowest level in two years.  Applications for unemployment assistance decreased by 34,000 to 388,000 in the week ended Dec. 25, breaking the 400,000 level for the first time since July 2008, according to Labor Department figures today in Washington. Other data showed businesses expanded this month at the fastest pace in two decades and pending home sales climbed in November for the fourth time in five months.  Timing is everything.  Imagine if these numbers were coming out before the election.  But, lets be happy that the lagging indicator is catching up.  We need it!
  • Kiss 4% mortgage rates goodbye. The average 30-year fixed mortgage rate has risen to 4.86% from 4.17%, according to Freddie Mac's weekly mortgage market survey. In the weekly survey, the rate rose to 5.02% from 4.96% last week, crossing the 5% mark for the second time in three weeks.  Still low.  Still nice. 
  • Brett Favre has not passed concussion test.  Brett, if you don’t know the answer, guess “B.”  I think “B” is the most common answer on those tests!
  • Natalie Portman: Everyone loves lesbian sex scenes.  Especially featuring Natalie Portman, who said "I remember them being like, 'How do you get guys to a ballet movie? How do you get girls to a thriller?' And the answer is a lesbian scene. Everyone wants to see that." Okay. Now I’m going to see it.  Portman, 29, shares a bed-rocking sex scene with a rival ballerina played by Mila Kunis, 27.
  • Bed-rocking!
  • Skype unveils iPhone video calling over 3G and Wi-Fi.

It’s Bowl Game Thursday!  Army up 13-0 over SMU!

Tuesday, December 28, 2010

Rebalancing on the Clock (Tick, Tick, Tick)

Only a few days left on the trading calendar, and some folks are wondering about rebalancing their portfolios.

Well, I wouldn't sell gains in a non-tax deferred account and incur a tax hit in the 2010 tax year. And hopefully nobody out there has too many losers. But this is a decent article on the options out there.

(Of course, the picture was edited just a bit. See if you can spot the edit.)

I remain 100% long and do not have a loser to sell in this tax year, but still am debating on whether or not to lower my beta for 2011. My thought (this isn't the official prediction...) is that we'll see some volatility in January, and then a resumption of the uptrend into the Spring. I'm going to go the easy route and say there will be some trading ranges and volatility that will be tradable for of us who like to do market timing. Duh. Stating the obvious, right?

Looking at the picture, were you able to find Los Angeles Lakers girl Angel somewhere amongst the text?

Is Apple too Big?

I know everyone loves $AAPL, and the iPhone and iPad are great.

But the company has a $300B market cap. Does valuation matter or is this stock immune?

Apple is also a big component of the NASDAQ 100, the QQQQ.

It's a great company and they've hit home runs with their latest products. But this story with the big valuation and must-own seem oh-so familiar.

Heck, I received a gift card for Christmas so I will be shopping at the Apple store soon...

Monday, December 27, 2010

The Monday After Randomosity

Well... candy and cookies.


  • Holiday sales up! Holiday sales up 5.5%, dashing the fears of pessimists everywhere. Okay, anecdotal story here is that I was at a Wal-mart on December 23rd and it was a zoo. So I'm in the video game section shopping for the little niece, and some guy comes in clamoring about ordering a Sony PS3 online and then being told it was ready for pick up. But then the manager said there were none in stock. So a shouting match ensued. While I was in line to buy, about 4 other people came in asking for the PS3 and weren't happy that there were none in stock.
  • Everyone is bullish, in case you've been hiding under a rock and have missed every financial headline lately warning us how everyone is bullish. With major U.S. equity indexes up by double-digit percentages this year and optimism rising for the economy in 2011, measures of professional investors' sentiment are showing high levels of confidence about more market gains in the new year. But as the number of bulls increases it raises the risk that the market party is getting closer to peaking, because there may be relatively few people left to be pulled in.
  • Teena Marie gone.
  • LeAnn Rimes engaged. LeAnn Rimes Gets Engaged To Eddie Cibrian. 'It's been an incredible last few days. I was shocked!!!' singer tweets. Efficient markets. It was priced in. Net effect on the news? A flat day. Sure, an initial gap down when the stupid money sold the news. But, that was bought up by cooler heads.
  • Israel says fences are unmended with Turkey. And I'm just being honest here, but if those two countries can't agree on a simple fence, how are they going to come together on the more complex issues? Like, say, a barn?
  • Sure. This Falcons vs Saints game was labelled as something exciting to watch, yet... Pretty boring.

$5 Gas by 2012?

$5 gas by 2012? Heck, if not sooner.

Ex-Shell President says higher prices are coming. I think that's pretty obvious with recovering economies. But since I've been saying that a few times recently, I'll just post the link and move on to the next topic.

Of course, that would be just in time for the 2012 election. I can already hear the chants of "drill, baby, drill."

Something to think about if one is in the market for a new car soon.

Monday After... Flat!

Stocks went mostly nowhere today as investors shrugged of global warming on the East Coast, China’s rate hike, and the chore of taking down Christmas.

Yes, maybe it started off a little dicey this morning. Heck, with trading volume way down the Monday after Christmas and traders locked in by blizzards, anything could happen. We often get big moves when there is no volume. But as the day went on the market meandered higher. I don’t think the shorts want to get squeezed in here, so I think we’re just seeing a lack of selling. And a lack of buying.

Let’s just assume that next week will be very interesting.

(Assuming global warming stays away…)

Sunday, December 26, 2010

More Day After Christmas Randomosity!

Last week of 2010. I hope you made a ton in the stock market this year. We have now had two good years. It's easy to understand some of the confidence and positive sentiment coming back into equities.


  • A Dash of Insight takes a look at interpreting investor sentiment. Dr. Jeff asks "If everyone else is bullish, should you be bearish?" A must read in my opinion. We hear so much about sentiment these days that it's important to take a good look at it. I love the Norm Fosback reference. Bonus points!
  • John Dorfman likes Intel and Goldman Sachs for 2011. As investors make their resolutions for 2011, many should resolve to take on more risk. John believes that most folks should have a large stake in equities. About 60% or so. And, to make sure to take a long-term view.
  • Rams vs. Seahawks game for next week moved to Sunday night. No, not because of global warming snowstorms, but for the division championship between two under-.500 teams!
  • Okay, so I have been playing some Halo on the XBOX 360. Kind of fun. Always a challenge for me to play with remotes that have 5000 buttons and joysticks, but seem to have made some headway in this game. Single player, of course.
  • Talking tech and building an empire from podcasts. Okay. Guilty. I download Leo Laporte's podcasts. I subscribe to the tech guy and ipad today. And I respect Leo's opinion and those of his callers and guests. It does influence me. So I understand the high advertising costs. It's the right target audience to pitch tech products and services.

  • Picture is of Lakers girl Dora. Just saying'...

The Day After Christmas Randomosity (and Crystal Harris!)

  • NFL postpones Vikings at Eagles game because of global warming. A blizzard is heading to Philadelphia, and the NFL is concerned about rising ocean levels threatening public safety. Can't be too careful.
  • How'd you make out with the Christmas gifts and celebrations with friends and family? I do like giving more than receiving, but I received some cool things. I usually end up with lots of gift cards. I did receive some of those, but also some stuff that was quite unexpected. Plus, I am loaded with leftovers.
  • Hugh Hefner to marry 24-year old Crystal Harris. This is the third marriage for Hef. You know, Holly Madison must be ticked off because she wanted to marry Hef. But, Holly is no spring chicken.
  • Did you read about the controversy between MobileRSS and Reeder? These are newsreader apps for the iphone and ipad, and I have been using MobileRSS. But, pretty cheesy that MobileRSS has basically swiped the design and features from Reeder. So, I bought and downloaded Reeder - for both the iPad and iPhone. I think it's the right thing to do. The folks working on Reeder deserve to be paid for their great newsreader. It syncs with your Google reader subscriptions, and has a brilliant interface. Take a look if you have an iOS device.
  • Global Warming also shuts down planes, trains, and busses (probably automobiles, too) in the North East, as snow and blizzard conditions strand passengers.
  • I received an XBOX 360 plus the Kinect. Totally unexpected. So, I've been playing Kinect Adventures. Er, I mean Halo. LOL.
  • Negotiation advice for Crystal Harris. Looks like Hef is worth $43 million and will likely have a pre-nup. Take a look at Forbes' advice! You think Hef would have more of a fortune, but then HE HANGS OUT WITH YOUNG HOT WOMEN. The rest of his money, he just wasted. (As they say).
  • Of course, what I was really hoping for was a crystal ball. How else am I going to time the market and make football bets? Unless I have a gift card for that store, it will have to wait until next year...
  • Investor sentiment: Extremes persist. The markets don't have to go down just because everyone is bullish, but if you are a "believer" and buyer at these levels, then you will need to identify a market top and get to the exits before the next guy to extract profits. This is a very crowded trade and identifying the top is a tall order.

Small Caps have Big 2010

Small cap stocks had a bad name mid-summer, when they were lagging.

But then, in the monster rally that took off from September, the small cap stocks took off and outperformed the SP500.

Of course, now come the 2011 predictions. Since small caps have outperformed recently, it's natural for folks to assume that they will again in 2011. After all, one of the reason contrarian analysis works at the end or beginning of moves is because everyone believes in the latest trend or fad.

On the other hand, when we look at history we know that small caps do outperform over the long term. Small caps also tend to rally early in economic recoveries.

Are we still early in this economic recovery?

Stuff to think about while watching the Dolphins and Jaguars throw their games away. Literally!
So, I don't like Christmas decorations once the holiday is over. And I had Christmas trees as my ipad wallpaper. I switched to a New Year's theme wallpaper, but there are other options:

Nah, not going to do it. But I won't criticize or judge those who do.

Jim Cramer’s Top 2011 Dow Picks! $$

Well, this is the week for predictions, and Jim Cramer has his 2011 Dow picks at the ready.  $$ I’m not sure if that means “buy buy buy” or “sell sell sell.”  It does have me nervous, as nothing feeds into market hype as Jim’s enthusiasm.  Here’s the screen shot and the link to read what the picks are.

cramer's top 2011 picks

I *may* have swapped out the E*Trade ad image for another image.  Nothing against E*Trade.  They run a fine brokerage.  But, being Sunday and all…

Cramer does expect a 16% bump in the DOW to 13,365.  With the historical average of the 3rd Presidential year (all over the financial headlines these days), that prediction is in the ballpark.


By the way, just wondering, do folks still do the Dogs of the Dow thing?  That was the rage for a few years, and I remember the Motley Fools talking about different Dog strategies.  Maybe it went out of favor with the last decade.


I used to subscribe to Realmoney, FWIW.  It’s a nice blog and chit-chat site.  I dropped it because I just don’t have the time to follow the market minute-to-minute anymore.  When I did subscribe, it was back in the day of Todd Harrison and Gary B. Smith.  Remember those days, Hoofy?

Saturday, December 25, 2010

Merry Christmas Randomosity Two

ABC asks if there will be a post-Christmas shopping boom. I believe so. First of all, I'm a big gift-card giver and receiver. And as I was out shopping, especially later this week, there were lots of folks buying gift cards. Yes, just one person's view and slice of shopping experience. Still...

  • More NFL blackouts? The NFL will see slumping attendance unless the bottom teams get better and ticket prices come down. Hello again, Redzone Channel.
  • Emerging markets see negative equity flow for the first week since May. ...amid concern China will continue tightening monetary policy, trimming a record-setting year for inflows. Hmm. Not sure how I feel about that.
  • How many 4th graders are going to jail? Texas uses fourth grade reading scores to project the number of prison cells they're going need 10 years out. Pretty stark yet realistic: ...was not inaccurate. Moreover, Texas wasn’t alone in using elementary school reading difficulties as a proxy for serious problems later in life. 60% of America’s prison inmates are illiterate; and 85% of all juvenile offenders have reading problems.
  • Barry Ritholtz looks at the Barron's iPad app.

Tech Gadgets for Christmas

$APPL iPad and iPhone were big holiday gifts today. I was out shopping the past couple of days and the iPads were gone. Sold.

So what apps to get?

Electronic Arts, whose brilliant 99-cent app sale means it has a TON of apps on the bestseller lists, including the #4, #7, #8, #10, #11, and #12 paid iPhone apps, and the #1 (Scrabble), #2, #4, #7, #9, and #10 paid iPad apps (six of the top ten).


Oh, you know what else was sold out? The Sony PS3 video game. Not sure how their Move controller is doing.

Merry Christmas Randomosity!

  • imageMerry Christmas!
  • China raises interest rates on Christmas.  The People's Bank of China said it will raise the benchmark lending rate by 25 basis points to 5.81 percent and lift the benchmark deposit rate by 25 basis points to 2.75 percent.  “The People’s Bank.”  Sounds pretty warm and fuzzy, eh?
  • What? I have Dwayne Wade in my starting fantasy basketball line-up.  He better play!
  • 2010: The year shoppers came backShoppers came back in force for the holidays, right to the end. After two dreary years, Christmas 2010 will go down as the holiday Americans rediscovered how much they like to shop.  People spent more than expected on family and friends and splurged on themselves, too, an ingredient missing for two years.  Man, traffic and crowds is what I’ll remember from the past week.  It’s been crazy out there!
  • Where the heck is Al Gore and that global warming thing?  Rare white Christmas blankets Tenn., Ky.  I bet Al’s energy bills are skyrocketing!

Friday, December 24, 2010

Merry Christmas (Eve)!

I hope you have all the shopping done and the gifts wrapped! And also, that you are with who you want to be with.

Best December in a Decade!

Whoa, best December in a decade! Thank you, Santa.

So ... That's good news.

And we are seeing the improving economy's impact on energy prices. Remember the crazy gasoline prices before The Great Recession? Well, we haven't done anything to replace our dependence on foreign oil. We haven't done anything to reduce our demand at all.

Just saying.

The Rich

The rich get richer. The poor get poorer. Or so they say.

It's good to be rich.

Thursday, December 23, 2010

Thursday Early

Leaders and Laggards just isn't the name for the Big 10 divisions!

Volume has to be getting thin out there! Trade safe!

Wednesday, December 22, 2010

#50: Oil and Gas

#49: Rally Rolls On!

Tuesday, December 21, 2010

Stocks Creep Higher to New Highs

Stocks are continuing to plod higher into year end. This is making a good year better, and we are looking at back to back years of nice stock returns.

Like most, I think I'm more worried about holiday parties, finding the right gift, and bowl games compared to stocks.

I don't want to realize a gain in this tax year,so I'm not selling here. Just staying 100% in.

Monday, December 20, 2010

Same Markets as usual, and the iPad Zaggmate Case!

More of the same-same from the market today. Anyone surprised? I remain long and concentrating more on 2011 than anything right now.

  • Did anyone catch 60 Minutes last night and how Meredith Whitney warned that the states, cities, and counties are heading toward a major financial crisis in 2011?
  • Kno is shipping a 14" tablet starting tomorrow, and I'm thinking this is begging for a Saturday Night Live skit about larger and larger tablets. For example, the 57" tablet/
  • Sure, the SP500 is sitting on about an 11% gain this year. But after all the whining and complaining about the small caps, have you seen how they have done? The S&P MidCap 400 Index and S&P SmallCap 600 Index are both up about 24% this year. Another widely watched barometer of smaller stocks, the Russell 2000, is also up about 25%.
  • When Brett Favre got slammed to the ground, didn't we all know that was it? Ouch.
  • I'm typing on my iPad, using the Zaggmate case with a keyboard. Works really well. I highly recommend it. Sure, it's $100. But, if the states can run deficits, why can't you? Can't you balance your budget by planning for federal matching dollars in 2011?

Sunday, December 19, 2010

Sunday Night Thoughts

Honestly, it's been a weekend of shopping, a holiday party, two trips to the casino, plus cold, wind, and rain. I keep thinking about lowering my portfolio beta but don't feel a sense of urgency. I continue to feel as if the market may hold up fine through year end.

I hear (what seems like far too many) folks warning about all the bullish sentiment. Europe. Korea. And all the states and munis in deep debt here at home.

I suppose it will matter when it matters.

Hope this finds you well, and your shopping wrapped up!

Friday, December 17, 2010

Abby Joseph Cohen Contrarian Alert $$

Uh oh, Abby Joseph Cohen Contrarian Alert for 2011.  $$


Her 12-month forcast for the SP500 is 1450.  Gird your loins.

TGIF Randomosity! $$

  • The markets sputtered a bit today into the close.  $$ But it seems as if the December theme continues, and we’ll continue on with the bull move until year end.   Then what?
  • imagePicture is of Bollywood actress Kim Sharma.  Whoa, Nellie. 
  • I just read Robert Reich’s Aftershock, which basically says that the inequality between the rich and the poor caused the 1930’s Great Depression and this most recent Great Recession.  Here’s a post at Naked Capitalism that basically says the same thing.  And it’s shorter than Reich’s book.  I disagree, but always worth a read to see what the other folks are thinking.
  • Friday night is casino night.  Heading there soon.
  • Peter Schiff writes at SafeHaven:  For Whom the Bell TollsThere is an old adage on Wall Street: no one rings a bell to signal a market top or bottom. Yet, I have found that bells do ring; it's just that few people know exactly what sound to listen for.  He says the bell is ringing for bond yields heading north.  So, what to do for income these days if yields are heading up?  Who wants to hold on to bonds that decline in value as yields go up?  So… CD ladder?  Dividend paying stocks?
  • I have the Villanova vs Eastern Washington game on.  A red field.  LOL.  There is nothing wrong with the TV set!  Someone ordered the wrong color of Astroturf!  “We’re all out of the green Astroturf, and sent our last blue Astroturf to Boise State.  We do still have the red Astroturf in stock.” Er….
  • So, I’m still big in the Nasdaq 100 types, and wondering…. hmm, what to do heading into a new year with negative divergences showing up on the charts.  At some point, it’s going to matter.  But, historically, the third term of a President is usually pretty good.  So… dot dot dot…  hmm.
  • Hey, I haven’t done an AudioBoo lately.  Sheez.  What is that?  Okay, more coming. And say, if you have an AudioBoo, share the link in the comments.  I’d love to listen!
  • For those of us who are Mark Hulbert fans, his latest notes that there is a disintegrating wall of worry, and sentiment is very bullish.  The HNNSI currently stands at 73.3%, which is disturbingly high. The only other occasions this year when this sentiment benchmark got any higher were early November and late April/early May. Both occasions turned out to accompany stock market highs — and in the earlier case came immediately before the infamous Flash Crash and severe May-June correction.  Although, I’ve noticed a lot of folks warning us that sentiment is too bullish lately!
  • President Obama signs the tax package into law.  OMFG!  It’s the third term of George W. Bush!
  • I went Christmas shopping today.  I think I wrapped it all up, literally, in one day!
  • One more of Kim Sharma before I head to the Indian Casino!  TGIF!


Thursday, December 16, 2010

Icing the Tax Cuts Randomosity

Hey, we will take a nice day in the market, right? Maybe December will just be back and forth for now...

The Lagging Indicator Continues to Catch Up

Good news from our favorite lagging indicator. Six straight weeks of declining jobless claims.

Of course, this is economic news of what has happened. As we know, the stock market looks ahead and not in reverse. So much of this could already be priced in and it may take better news going forward to keep the rally alive.

But if we think about what higher employment means, it could be good for retail, housing, energy, etc., as demand rises with more spending.

Just thinking out loud, and this could all be priced in, too!

Erosion of Risk Play

My thoughts for December remain the same. I don't think the major indices are in trouble. But we are starting to see the leader and growth names get undercut while the Dow stocks outperform. This could mean january gets a little dicey.

Meanwhile, are you watching treasuries?

Didn't Ben Bernanke say he was going to keep interest rates down?

Nice job.

And a nice article from Forbes: Uh oh Ben, now what?

Tuesday, December 14, 2010

Tuesday Thoughts

The big news of the day came from the Fed, as a nice rally was sold off post-Fed announcement.

Summary: Sluggishness and stimulus.

The Dow is at a two year high and treasury yields are climbing.

Retail sales are climbing and companies are indicating that they plan on hiring more workers.

Except for Yahoo, who is laying off about 4% of their workforce. In that link, you can read that other tech companies are hiring. So we are seeing the transition from the older Web 1.0 companies to the newer Web 2.0 companies. Or whatever number increment we are on at this point.

So, still nothing to do and I can't find a reason to sell stocks. Good time of year to go shopping and take in a movie. Or, go to the casino.

One Way the Rich Will Avoid Paying Taxes

While Warren Buffet and Bill Gates are urging higher taxes, they are giving away most of their wealth to charity. Oh, and avoiding taxes.

(MONEY Magazine) -- Warren Buffett says he will donate 99% of his wealth.

Bill Gates and his wife, Melinda, have given $14.5 billion to fund vaccines.

Oprah Winfrey has given $40 million to start a school for girls in South Africa.

Mark Zuckerberg pledged $100 million to improve schools in Newark.

In June, Warren Buffett and Bill and Melinda Gates challenged the nation's billionaires to give away at least half their net worth. To date, about 40 have heeded the call, including New York City mayor Michael Bloomberg, eBay founder Pierre Omidyar, and moviemaker George Lucas.


I think this is great. After all, if they are giving their money to charity, and avoiding taxes, it means money goes to schools and vaccines. Instead of, say, fuel to fly Nancy Pelosi back and forth from CA to DC.

The money in the peoples hands is better than sending it to Washington DC. Of course, these same people are eager to raise taxes. But they've figured out a way to avoid paying them, eh?

#48: Market goes Flat while Best Buy goes Splat

Monday, December 13, 2010

A 20% Rally through 2011? $$

Lest I start sounding like a bull market shill, let's take a look at the historical numbers for the third year of the Presidential cycle.

Mr. Yardeni notes that the S&P 500 is up 3.9% since the mid-term elections and is up 5.1% in December. “History suggests that a gain of 20% is likely be the end of next year.”


Lastly, since 1962, the stock market has always risen from the mid-term elections through the end of the third presidential year – averaging 20.9%.

Link from WSJ.

so, if we are repeating history, or closely rhyming, it will be difficult to add to returns by market timing. If the goal of market timing or reallocation is to avoid the dips and take more risk on weakness, when the market moves straight up you don't have many chances to do this. And if you try, you may miss some of it.

Hmm. Something to think about.

Monday Early Thoughts

So far, so good.

Lots of news on mergers, dividend increases, the rebounding economy, the extension of the tax cuts, and rising energy demand.

We are still in an environment of headline risk, but it seems a if Spain and Chinese inflation are taking a back seat today.

So far. It's early.

Sunday, December 12, 2010

December Market Seasonality $$

Great column from Safehaven on December Seasonality. $$

It may be difficult for the bears to get much traction through year end.

(Of course, keep in mind that high likelihood of advancing doesn't mean zero chance of declining.)

There are also plenty of worries out there. The tax deal isn't done yet. China is said to be a bubble - and we are certainly seeing some IPO bubble stocks that remind me of the US in the latter 90's. Gasoline prices are on the rise. Then we have the fears about inflation, a bond bubble, US deficits, state and local deficits.


I know more folks are becoming bullish, but I can't escape that everyone seems to be saying that folks are too bullish.

That's the way it looks from here on Sunday, where I just hope I can make it through the day without botching an extra point.

Tax Cuts For the Rich

The tax rate extension agreement between President Obama and the Republicans is being criticized as "tax cuts for the rich" by its detractors.

Here is the breakdown on where the money goes:

Bush tax cuts: $544.3 billion. The package would extend the Bush tax cuts for everyone for two years.

The bulk of that cost -- $463 billion -- is for the extension of cuts for families making less than $250,000, including two years of relief for 2010 and 2011 for the middle class from the Alternative Minimum Tax.

The rest -- $81.5 billion -- is attributable to the extension of cuts that apply to the highest income families.

From CNN Money

That's $81.5B to the rich, and $463B to those making less than $250K.

Saturday, December 11, 2010

Is the Santa Claus Rally Over?

Is the year-end rally over?

Interesting column at CNBC (using iPhone app) that says the average rally from Thanksgiving to year end is 3.4% and here we are with a 3.5% rally under our belts with trading volume declining.

My thought is that even if true, are there enough sellers to drive the market Down? The saying is never short a dull tape. And with volume skimpy, who wants to risk that?

In addition, it would seem as if folks would want to have the big gainers in their portfolios to show on the year-end balance sheet. So I'm wondering that any major selling or rebalancing would happen in the new tax year.

Just thinking out loud.

The New CNBC iPad App

The new CNBC iPad app is one of the better financial news apps available and a big improvement over their iPhone app.

The app has news, streaming ticker, videos from both CNBC TV plus their web exclusive content, and stock quotes and news. There are even some technical chart settings worth taking a look at. The app is zippy and videos stream without pause. The content is updated frequently and always feels fresh. Finding the information you are interested in is easy with a well-designed layout in both portrait and landscape use.

One nice feature is video segments on stocks that you are following. So you can hear bull or bear arguments.

Hats off to a very nice job from the folks at CNBC.

Friday, December 10, 2010

People Watching at $MCD

I mentioned in the AudioBoo the other day that $MCD was taking a price hit, then joked that maybe I'd swing through the drive thru and order some fries to help out.


I am working from home today, but made a quick run to Starbucks. There were 50 people in line, (screw that), so I went across the street to McDonalds instead.

I hit the interview hour.

Behind me, as I sit and sip a coffee and a snack, I have been able to catch a little from four interviews. Lots of middle aged folks are trying to get some work. I've seen two Hispanic folks, a person from India, and a black. The latter is talking right now, and she was recently let go from a call center. One of the Hispanic folks did not have an ID and the manager said she could not hire him without one.


I'm reading Robert Reich's book Aftershock, about the growing inequality between the rich and the poor. Mostly I think he's full of tired talking points, but I'm sure seeing some of that side of it here.

I hope the economy speeds up a little soon. People need better opportunities than working at McDonalds. These should be young folks applying, not seasoned people trying to get just anything.

Now a cute 20-something Hispanic is here, having just lost her job from an elder care facility.

Well, if I don't head home and do some actual work, maybe I'll get canned, too.

Thursday, December 09, 2010

Thursday Randomosity!

You are up 100% if you got in the $FRC offering. As I type.

Lesson learned? You can double your money every day with the right stock selection. Wow.

  • If you are at a holiday cocktail party, and someone starts talking about the top twenty concert tours, make sure you show them how smart you are. Memorize the list!
  • House Democrats to block tax cut extension? Sounds like Obama needs to get on the phone.
  • Household wealth up $1.2T in 3rd quarter. So I'm expecting some nice gifts under the tree. Comprende?
  • By the way, Roger Waters is number one in the list.
  • China is hot, but is it too hot? China's economy, to quote the alter ego of New York Dolls frontman David Johansen, is hot hot hot. Name an asset and there are worries that it may be a bubble in China. Several experts, most notably short seller James Chanos, have speculated that China's real estate market is too frothy, for example.. Well, it's a good question. People are worried about that.
  • Feels like week is going by quickly, adding to the pressure that I better start thinking about Christmas shopping...

Improving Economy = Rising Interest Rates

Better jobs numbers today indicate that the economy is on the move as the lagging indicator catches up.

I think it's okay to still say "generational low" for mortgage rates. Under 5% on a 30-year mortgage is a home run.

Claims for unemployment benefits dropped. And the market is looking at more stimulus with the tax cut compromise between President Obama and the Republicans.

I remain 100% long. My feeling is that nobody is going to rush out and sell their 2010 gains before year end and create a tax hit for the upcoming tax filing season. In addition funds will want to keep the winners on the books for the year-end statements.

Just thinking out loud!

Wednesday, December 08, 2010

#47: Obama Jawbones Tax Cut Extension, IBD Whipsawed (again)

#46: Market Holds and Obama Wheels and Deals with Republicans

The Anticipation of Growth

Seems as if folks are warming up to the idea of economic growth.

The market is edging higher. Bond yields are heading higher. And keep your eye on oil.

So, continued budget deficits and higher inflation.

But, an expanding economy will also lead to higher tax revenues. That would help.

Look at CA. Jerry Brown announced this morning that the deficit here may be close to $28B!

Tuesday, December 07, 2010

Big Market Reversal

This was not a good day for the markets. We bolted out of the gate on upbeat tax cutting news, and fell on rumors of insider trading probes.

Raise your hand if you feel like you got probed today.

(Used "got" instead of better English in above sentence, as there is nothing prim and proper about being probed).

It's almost funny how the market ran the stops on upside resistance with the faux breakout only to settle in right beneath the number.

Anyway, Obama is on the apology tour trying to justify to his progressive base why he extended the tax cuts for the rich and cut the payroll tax. Bottom line is that he is recruiting independent voters for his re-election run in 2012. That's the number one issue for all politicians. After all, even with tax cuts for the rich it's not like progressives will vote for Sarah Palin in 2012. Obama already has the left vote. He needs the center.

I digress.

Still 100% long. I think oil is a good play in a rebounding economy with a declining dollar and a ban on new drilling. But I suppose that's all priced in already, eh?

Monday, December 06, 2010

Winners and Losers: Obama to Extend Bush Tax Cuts

President Obama announced that he will extend the Bush tax cuts in exchange for an extension of unemployment benefits.

Who didn't see this coming?

In addition there will be a 2% cut in the payroll tax to offset the end of the making work pay tax credit.

So, the winners here are the unemployed, as they can take 2011 off and wait until 2012 to look for work.

American workers win as their tax rates are extended.

I think investors win. This should be seen as more stimulus for the economy.

Republicans win, as they will be seen as having forced Obama to move to the right. This also leaves the cut taxes debate alive for the 2012 election.

President Obama wins, as he moves to the center and hopes to capture the independent voters the democrats lost in 2010.

Future taxpayers lose as this just piles on more to the deficit. Interest payments on the debt continue to climb.

Sarah Palin and The Tea Party loses, as their desire to cut the deficit gets tossed out the window.

The value of the dollars should continue to decline. So gold and commodity investors win. But drivers lose, as this could mean oil prices also continue to rise.

Ding, Ding, Ding: Oil Prices!

Just a heads up: Oil prices are rising.

Remember back in the good old days in the 2000's when we had all those consecutive quarters of 3%-plus GDP growth? It does seem forever ago, but at that time the good times were creating demand for energy. And, energy prices increased.

Supply-demand. Oh, and falling US dollar, too.

Anyway, the US economy is improving. As crazy as it sounds, things are getting better. Trust me. They are.

(Must be all those weeks of unemployment insurance kicking in, eh?)

So what's happening? Oil prices are going up. And (as Bob Brinker calls him), "The current occupant of the White House" just signed legislation banning new off-shore drilling.

Sweet! Nice timing. No new domestic supplies of oil. What could possibly go wrong?

What's likely to happen is that inflation will tick up at least a little, just as demand for energy increases.

Excellent column. This will be like a tax. Your transportation costs will increase.

Sunday, December 05, 2010

You're a Mean One, Mr. Grinch

Ben Bernanke was on 60 Minutes tonight and said it could be four to five years before we see normal employment numbers.

Whatever the new normal is.

My faith in government estimates is very low and I'm thinking he's wrong. I just don't know if he's over or under on the number. Depending on the definition of normal, of course

Hopefully, we will see better hiring numbers soon. Even with the employment news less than expected last week, I think the economy is growing slowly and that at some point the lagging indicator will catch up.

Friday, December 03, 2010

$5 Million CA Car Perk

Fire teachers. Cut state worker pay. Release prisoners. But don't touch the free car perk!

With what is looking like a $26B budget deficit in California, $5 million is being spent on cars for CA lawmakers.

Arnold says times are tough and everyone must pitch in and sacrifice, but that doesn't mean your representative can't have a $55,000 Cadillac on you.

The seats have been gerrymandered here. Can't vote them out. Maybe that new redistricting panel will remedy that.