July, 2010 Market Timing Update

money

July, 2010

"Government big enough to supply everything you need is big enough to take everything you have ...
The course of history shows that as a government grows, liberty decreases. "

~ Thomas Jefferson

The Professional Opinion

DJIA: 9744.02

Stats:

LEI - Increasing since May suggests slow to moderate growth during the second half of the year.

CEI - All up, suggesting a slow to moderate expansion.

Work Week - The average work week rose once more and now stands at 34.2 hours.

Unemployment - Stubbornly High

Industrial Production - YOY advance to 7.6%

Motor Vehicles and Parts - Up 28.6% YOY

Real GDP Growth Forecast: 2.5 - 3.5%.

Homes: The expiration of the new home buyer tax credit has helped new home sales decline 33%, the lowest ever in 47 years.

Housing starts: Declined 10% in May and it's going to take a long time to recover.

CPI - Has risen only .4% annualized over the first six months. Nothing to worry about in the foreseeable future.

Summary

Assuming you wish to take on market risk, stay fully invested and buy on the dips.

Buy Recommendations

Suncor (SU) when you can get it under $29.00 a share.

Comment: I have found that with this stock and a beta of somewhere around 1.7, Suncor makes for a better trading stock than a buy and hold stock. You just need a little patience.

Here's to capitalism: Fence financed entirely by profits from an investment in the Huntsman corporation. Because of this, I paid a man for one weeks worth of work. I bought about 450 feet of fence and hardware, which added to the store's bottom line. Taxes from same added to the state's bottom line, which of course was spent judiciously.

Now I have peace and quiet. Dogs that can't see other dogs keep their &*$^#)@ traps shut.

What do the libs want to do? Tax me more, of course. If I can afford this, they're obviously not taking enough of my income. Right?

Something to think about come election time.

Personal Portfolio

Election Season can't come soon enough...
Reid

I hope Harry gets packed back to his home town of Searchlight. Unfortunately, I think those on the right are blowing it. Again.

Nevada has the worst unemployment rate in the nation, higher even than the state of Michigan. Nevada has one of the worst education stats in the country along with some of the highest high school dropout rates. Nevada's state debt ratio is the worst in the country - even worse than New Jersey. Nevada leads all states in the home mortgage crisis.

And what does Harry talk about on the local radio ads?

Something like this: 'Hi, I'm Harry. I love guns! I will always fight for gun ownership! Guns, guns, guns!

Vote for me!!

Jeesh

Personal Portfolio

June was a crappy month, all in all and it would have been a good month to be entirely in Ginny Mae's, even though Adam Bold has issues with that. A yield of 5.55% doesn't look bad at all.

A number of stocks in this portfolio will be paying out distributions in the form of reinvested shares during the month of June so if share prices are weak for another month I won't complain too much.

This was a month of not doing much at all, except to buy a little more EP and IGT.

Last Month:

I think I will Test out a New Theory this Month (June):

1. Keep some cash on the side.
2. In the third week of the month, start paying attention to who or what the teleprompter is currently demonizing.
3. Wait for the stock or sector to start tanking. This usually happens during the last half of the month.
4. Scoop up shares at below average prices.
5. Sell those shares when the teleprompter loses focus, allows the shares to recover and begins demonizing something else.
6. Repeat the process.

I'm only half-kidding as this seems to be happening fairly regularly.

Sound like a plan?

This Month:

Well well, what have we here?

It seems the teleprompter is making a nationwide address tonight in which it will try to nationalize BP and once again push windmills and solar panels. It will also probably trash big oil and since it loves socialists, there may be some talk about nationalizing one particularly large oil company.

Meanwhile, BP is trading at a 30 year low so what is an investor to do? A little unbiased research seems like a good idea:

After spending an hour or two getting opinions, I came to the conclusion that the stock is volatile enough to make some cash in the short run. This would not be a long term hold.

.....and it wasn't. Held it about a week and made about 7.5%.

And......John Chimes In

I think you are right about BP. They have the cash and the assets to get past this. I just wanted to make sure that the teleprompter wasn’t taking them over and putting a czar in as CEO.

I think companies are pulling as much profit into 2010 as they can. The Bush tax cuts expire at the end of 2010. With the other tax increasing coming from Obamacare, 2011 is going to be a bad year for everyone. If companies are pulling their profits into this year, it would explain the large profits in this slow economy. The state-run-media isn’t talking much about this. This is an election year and it would be bad for the Democrats. I think they are setting up the Republicans for 2011. If they take over both houses and the economy tanks, the Democrats and state-run-media will be setting the stage for the 2014 election. I can’t help but think this is why Obama place the moratorium on oil drilling. This will drive up the cost of energy in the next few months. Add Cap and Tax on to both of those and the economy will crash in 2011. If the Democrats keep control of one or both houses, look for them to extend the Bush tax cuts and for Obama to lift the moratorium on oil drilling. It’ll happen just days after the election.

Dividend rate 2010 15% - 2011 39%
Death tax rate 2010 0% - 2011 55%
Capital Gains rate 2010 15% -2011 20%
Personal income tax rate 2010 35% - 2011 39.6%
Alternative Minimum Tax AMT goes up ?? – hits small companies like mine
Energy ??? Plus Cap and Tax ???
This will affect everyone. Not just those making $250K plus a year. We’ll be looking back at 2010 as the good old days.

I still recommend you buy some silver or gold and keep it in a safe place. Silver appears to be the best buy for now. I did use the word crash and not recession.

Obama’s hope and change.

-John

I ended up buying a bit more GS the other day after reading remarks by Howard Chen, an analyst I am familiar with.

$225.00 a share?

I think I can live with that.

An Oldie that is looking like a Goodie

Xerox

My sister has owned this stock for years through thick and thin and still works with the company on occasion.

I decided to add this to the portfolio for diversification. I still am significantly over-weighted in banks. It looks like a 50% price appreciation is a reasonable target. Don't know if this will be a long term hold or not, but it looks like a good place to park some cash.

Ursala Burns

Xerox has been meeting or beating analyst expectations for a while and there are good words to be said about their CEO. She certainly has longevity and knows the business. The compensation package I think, is not unreasonable.