money

January 2009

"I'm not so sure the old saying about the poor getting poorer and the rich getting richer is so true any more.
Looks like a lot of rich folks are also doing a pretty good job of getting much poorer.

~Riley,  on the Made-Off Scam
The Professional Opinion

S&P 500 Index: 931.77

An Outlook for the Stock Market

The first part of the newsletter provides more history on bear markets and their bottoming processes and basically a rehash of prior commentary.  A successful bottoming test is likely to occur in the low to S&P mid 800's before moving higher.

Interest rates are expected to remain very low in order to provide maximum stimulus to the economy. Priority number one for the fed is to prevent further economic deterioration and job losses.  Job losses by the way, are expected to rise into the 8-10% range before all is over.  In other words if you have a job, do your best to keep it.  An unpleasant statistic is that 90% of laid off workers still remain unemployed. Not a good sign.

The government is throwing all the money and stimulus it can at the economy, and a Roosevelt style roads, bridges and other infrastructure work is being contemplated.  There is much talk about tax relief and in Bob's view, an immediate reduction in the payroll tax would be the most effective method for circulating more money throughout the economy, stimulating same.

Inflation is expected to remain very low for quite some time.  Anyone sounding alarm bells for inflation
needs to have their head examined.

Housing remains a problem with 4.2 million unsold properties on the market. Lower taxes, restructured loans and the drastic reduction in new home construction will eventually improve the housing market.
It will take a while.

On the plus side, the collapse of the commodities markets has put a lot more money into the hands of the consumer, negating some of the effects of recession.

GDP growth is expected to remain flat to barely moving in the first quarter of 2009, due to the fact that the finance and credit markets are not working correctly.  When these markets improve, all others should follow.  In the event lending thaws at least somewhat in the first quarter, there is a possibility of seeing some growth later on in the year. Best guesses are somewhere between 1.5 & 2.5%.   Don't hold your breath though.

When we see a sustainable market uptrend, expect to see some violent swings to the upside. What this means of course, is if you are out of the market when these gyrations occur....expect to miss out on some nice profits.

Dollar cost average in any new monies.   Bob is staying fully invested.

Portfolios

No changes to portfolios.

Individual Issues (Stocks)

No changes

 
Gold Finches in the Sierra

Living Christmas Ornaments - Lesser Gold Finches waiting for the thistle socks to be refilled.

Personal Portfolio
Ytd Closeout
A Pause in the Downward Spiral
Well well,  I actually closed up a percent or so for the month. I decided to go ahead and sell all my position in ETFC and use it as a tax loss.  

Where did the money go?  See Below.
UNH has turned around and is actually showing a gain now.  MO and RF are going positive on occasion.

GE continues to be one of the biggest drags on the portfolio on a percentage basis.
 
The bank and insurance stocks....Not improving nearly as quickly as I would have thought.  I am going to continue holding these as I think the 'Obama Nation' won't dare do more damage to the economy in the short run..  



What a Year

The Year in Review

Differences in Holdings

I like Morningstar's Instant X-Ray for getting a grip on the types of holdings actually in the portfolio.

Around the World

Quite the shift from 2007 - Almost all US Stocks.  I think this is a very good idea.

Asset Types

One thing about owning more individual stocks, it is easier to get a handle on what it is exactly, that I own.    I think it is a good idea to reduce cyclical and increase slow and classic growth in these very strange times.  The weightings overall are closer than those in 2007.  Should reduce volatility, I would think..........


Yes, It's Your Money. I have a Passion......  Yessir, I Surely Do!
Your Money The number of weeds sprouting up in the garden of investing these last months have been a sight to behold.  If you are a fan of talk radio as I am and know at least some of the fundamentals of investing, you would wonder how in good conscience some of these radio stations could even think of selling radio time to these jackals without a minimum of vetting.

I understand 'Caveat Emptor' and all that, but some of this stuff I think goes over the top.  

Here is a look at one of them.



Will PALM get it Right this Time?  Or is it just Hype?

Palm, Year to Date
I've been following PALM a long time and may have traded the stock once or twice.

Before I go much further I should preface this commentary with the following:

I consider myself tech savvy enough but have very little interest in mobile computing.  

I have a cell phone that makes phone calls.  

That's It

 It does not have a radio, camera, mp3 player, gps or internet connectivity. All I want is a cell phone that does not drop calls.  

Period.  

I don't want Your Book, MySpace, MyFace and whatever other social networking places there are, where I can stay constantly connected via mobile technology.  It holds no interest for me.

I resisted cell phones long after everyone else had them, my wife included, because I viewed them (and still do) as electronic tethers.
I finally got one because it was a requirement for the job.

As a result of this personal bias,  I missed out on some very valuable investing opportunities.

I look around and see people with their phone receivers hooked around their ears,  their white IPOD ear pieces in their ears,  their belts loaded up with mobile gadgets and their hands either clicking away on Black Berries or mobile video games.........my only thought is that it will be a cold day in hell before I end up wired up to cyberspace and the world at large on line, all the time.

That is not for me.

It does not however mean that I will continue to overlook the world of mobile computing as an investment arena:

PALM has been steadily losing market share, share value and capital.  PALM needs something big to turn it around and get it once again competitive with industry leaders.  It needs to be different and substantially better, preferably minus anything associated with the Windows platform - some bias here as well.  It also needs capital.

Looks like a  tall order to me and really requires a minimum of due diligence.

Here is a minimum:

 Rumor Control

The first blip on my personal radar screen was some months ago when I heard a rumor that several Apple engineers and senior vice presidents quit Apple to go to work for PALM.  A couple weeks ago I heard another rumor that PALM spirited away a senior engineer or three from NVIDIA.  

That got me thinking PALM just might have something interesting.  What could be interesting enough for people to leave what are undoubtedly good paying positions with enviable companies?   Something better?

What is this new product?   Good luck finding out.

The Product

From Wired.com - http://blog.wired.com/gadgets/2008/12/palms-new-os-ph.html

Palm is planning a massive product launch for the upcoming Consumer Electronics Show in Las Vegas next month. It could be the company's last, best shot at survival.

"It's quite likely, actually close to a certainty, that they will show a new OS, new user interface and probably new hardware," says Lawrence Harris, an analyst for Wall Street brokerage firm CL King & Associates. "This is Palm's last shot to prove it has what it takes to survive in a very competitive market."

''''
Now Palm has industry watchers buzzing about its plans for a CES press conference. According to analysts contacted by Wired.com, the company is likely to debut its new, Linux-based operating system, dubbed Nova, and show the first of a new family of smart phones that would use the OS. Nova is scheduled for release in the first half of 2009, the company has previously said.

CES, the largest consumer electronics products fair in the U.S., will clearly be a make-or-break event for Palm. The company recently posted second-quarter financial results nearly 40 percent below what some Wall Street analysts had projected. Sales of the Centro smartphone, the company's biggest seller, have been fading. Palm also faces strong headwinds from a weakening economy.
............
Palm currently uses its Palm OS, aka Garnet, and Windows Mobile for its handsets. However, Palm OS is restricted in its use. It lacks support for high-speed HSDPA networks, also known as 3G mobile technology.

Nova could fix that and offer Palm an opportunity to create a new family of products that would go beyond the Centro and its Treo line.
...............

Palm may have gotten industry watchers buzzing but, so far, it has held its cards close to its chest. There have been almost no leaks about new hardware or features of the upcoming OS.

It could be a result of the culture that the company's many recent hires from Apple may have brought with them.

Over the last 18 months, Palm has hired a number for former Apple executives including Jon Rubenstein who was instrumental in the creation of the iPod, Lynn Fox, former head of Mac PR and Paul Mercer, a former Apple engineer.

"It is part of the Apple culture to keep things under wraps," says Harris. "And now we are seeing greater secrecy than ever from Palm."
 
Capital

New Capital
Competitors

Competitors

Competition

Conclusion:

I ended up buying a boat load at $1.82 and $2.08 a share.  I chickened out and sold 33% at $2.82 and am holding the rest.  
This was before the announcement of the 100 million capital infusion last week,    As of today, 12-23-08, shares have risen above the convertible Class C shares at $3.25 a share to $3.65.  I would imagine those who put up the 100 million are expecting a return considerably better than a 40 cents a share.

Elevation Partners has invested 425 million dollars in Palm................

Elevation Partners

I was watching CNBC where a couple other interesting factoids came out:

Feature Phones to Smart Phone:

Smart Phone market share has increased from 3 to 6%

Blackberry has < 3% global market share - look at the size of just Blackberry the company.

Palm's New architecture  is expected to last 10 - 12 years (Good Luck with That).

Elevation Partners has 39% stake in Palm, and my guess would be they are not invested to lose money.

More Information:

Is this new smart phone going to wow those at CES and perhaps provide another direction for mobile technology sans anything Windows related?  I hope so.

Exit Plan

If Stock goes over $7.00:

Replace 300' of old fence with new, guaranteed never to blow down privacy fence.

If stock goes over $15.00

Xeriscape the front yard.

Otherwise

Use stops on a portion of the remaining shares to ensure profit / loss stays on the 'profit' side.

Bridge to Nowhere South of Reno, NV on 395 - another example of bureaucracy at it's finest.

May your finances in 2009 travel in an upward direction somewhere, and not on a bridge to nowhere.  Best wishes to all.