October 06 Market Timing Update

My Guru  says that moving into the autumn season,  the market timing model
is remaining fully invested.  

Economic Cycle 

    GDP in a range of 2.5% - 3.5% going forward.
    The easing of the oil and gas prices will help offset the housing slowdown.
    Housing however, is going through  a correction brought on by excessive speculation in the market.
    Kind of reminds you of the dot.com bust, but much less severe.
    

Monetary Policy

    Continued weakness in housing industry may cause a reduction in short term interest rates.
    Look to rates easing to less than 5% next year of weakness persists.


Sentiment

    The contrary indicator, the 60-Day Put/Call ratio is still at a very high level.
    High readings very rarely mean big declines in the market, so this looks pretty good.

Summary

  Remain fully invested and buy on weakness.  Dollar Cost average any new monies into the market.
  Interest rates are expected to remain steady during the election cycle.

Other

    No portfolio changes were called for.  My Guru is still a happy camper

A Personal Note

I've stayed away from the energy services sector because  I thought it was too late in the run-up to consider
doing so.  That said, there has been a considerable correction in oil prices so I started doing some looking
and here's what I came up with in late September:



This fund has been run by the same manager since 1989 and it has an expense ratio of .96, which is pretty
good for this type of fund.   It sports a turnover of 150% so buying it in a tax deferred fund would be the first
choice.

I don't see this as a buy, hold and forget fund, but one that  should be traded in and out of so it definitely is not
a core holding.  It does have possibilities  for the more active investor though.

I think that going into the winter season  we will see the normal hysteria that pervades the market when they
discover it is getting cold outside.  

" Oh my god  it's going to be one of the worst winters ever,  terrorists threats to the oil supply,  global warming, super storms"

-  and all the other blather supplied by the 'if it bleeds, it leads' media.

So,  I see some possibilities of $$ in this fund and am putting some $$ where my mouth is.

Something else that came up on the radar screen:

Remember back in the early 2000's when a number of companies had to declare bankruptcy because
of all those asbestos lawsuits?

US Gypsum and Owen's Corning were two of them.

Remember when  Philip Morris settled  all the tobacco claims and turned into Altria?
They essentially set a pot of money aside for further claims with the understanding they couldn't be
sued any further.  If memory serves me correctly, Altria started out at 20 and change and is now around 60.

Well,  the same thing has and is happening with these two companies.

US  Gypsum has emerged from bankruptcy and last year had some four billion in sales.
Warren Buffet has been steadily buying shares and now owns some 20%  of the company stock.
Looking at the charts, now may  an attractive time to do some purchasing.

Owens Corning has cleared the last of their legal hurdles and has settled with everyone.  
They expect to emerge from bankruptcy and issue new stock by the end of 2006.
They had about  a billion more in sales last year than US Gypsum did.

Owens Corning has been steadily making alliances, mergers and partnerships with other companies
and looks to perform very well out of bankruptcy.

A recent News Item:

I think both these companies are worth a look.

---And I in particular need to pay attention to this particular quote:

"The stock market is a device for transferring money from the impatient to the patient"...Warren Buffet"