September, 2009 Market Timing Update

money

September, 2009

' What makes a person decide to become a stockbroker?'

' When he realizes he doesn't have the charisma to succeed as an undertaker.'

~ Unknown

The Professional Opinion

S&P 500 Index: 1020.62

LEI - Leading Economic Index

The LEI has improved for four months in a row now, with an increase of .6%. Real GDP should increase in this second half of 2009. Look for a range of GDP in the 2-3% range.

Six of the ten leading economic indicators also increased in the lst month. Capacity utilization rose by .4% and Industrial Production rose .5%, helped along by the Cash for Clunkers program.

The housing market appears to be stabilizing, with sales of existing homes leading the way with a 7.2% increase in July. Sales of new homes rose 9.6% in July and the average price for a home rose 2.9% in the second quarter versus the those in the first quarters.

Other Key Factors

Tight Money: There is none - the Fed has been very accommodative.

High Inflation: Can't see it with a telescope.

Rising Rates: Not in the near future.

Rapid Growth: There isn't any.

Overvaluation: Not anytime soon, The S&P is sitting in at a PE of somewhere around 14. More realistic going forward would be a multiple of 16-17 into 2010.

Summary

The cyclical bull market remains intact. Buy on the dips. Buying an oil stock or two on price declines is a good way to hedge against higher energy prices going forward. Bob prefers oil companies located in North America and producing oil in North America. A good place to start looking is in the province of Alberta, CA.

No, not an Alien - a Cicada Larvae

Personal Portfolio

Another good month! I beat Bob's portfolio by about 12% and made up very quickly for lost ground.

Huntsman (HUN) has been on a tear and I haven't sold any since it went over 12% of the portfolio a couple months ago. Hope any readers decided to pick up a few shares. Peter Huntsman was appointed Ambassador to China and that cant hurt!

Teleprompter sponsored health care looks like the catalyst finally uniting disparate groups from around the USA into a common purpose - defeating fascism.

I think our Teleprompter is an idealogue and with any luck, this single issue will sink the Teleprompter ship.

I have been encourged after talking with numbers of the X-Box generation who voted for change and in reflection are not pleased with the general direction the Teleprompter is taking, actually support the USA, and they and they are concerned about how the Teleprompter supports the military! Great News!
YTD

Personal Portfolio

I think I pulled the trigger a little too quickly when I purchased Electronic Arts (ERTS) and then I ended up selling for a slight profit. I took advantage of some dips and invested heavily in NEP, China North East Petroleum Hldng Ltd at what I think are some attractive prices. This stock has become my favorite swing trading stock and I have done quite well with it. If you decide to add it as part of your portfolio you need to be aware that this is a microcap, and rather thinly traded. If you want to buy or sell, settle on a price and enter it as 'Good
Until Canceled".

The Cramer Effect

I've owned B&G Foods (BGS) for several years and have been reinvesting dividends into new shares and have been quite pleased with the results. Haven't sold a share.

And then the other day I happened to be looking at the portfolio and saw a big swing to the upside which of course piqued my curiosity and guess what......the stock was featured on CNBC's Mad Money as a pick by Jim Cramer.

This is a fine example of the Cramer effect.

The news coverage artificially boosts the stock price up and then it deflates.

What did I do? Sold most of the stock at a handsome price.

B&G is a small cap company and it is not going to power higher and higher because of the dividends it pays. I suspect a lot of traders are figuring this out and are now bailing. I think I will be able to buy back more BGS shares at a lower price before you have to be an owner of record at the end of Septemper to get the dividend.

In the interim I bought more shares of NEP – China Petroleum at low prices with some of the B&G cash NEP is volatile so I think I can sell these shares within the month time frame for at least 10-20% profit.

If that happens, then I’ll end up having even more shares of B&G!

A thank you goes out to Cramer for causing this opportunity.

Lets see, anything else of financial interest? Not really. Have a good month.

How to Make an American Quilt the real way.