Category: Portfolio Update

It looks like “talk-too-much-itis” is running rampant amongst the financial company executives.  Last week Angelo Mozilo, CEO Countrywide Financial (CFC), held the longest conference call in history.  The more he talked the more the market dropped.  We almost escaped this week without another market moving speech, but at 2PM on Friday Bear Stearns (BSC) decided that another one was warranted. 

Having had two hedge funds collapse and having halted redemptions on another – the market needed to know that worst was over for Bear Stearns.  Instead Sam Molinaro, CFO Bear Sterns, had the following to say, “I have been at this for 22 years.  This is as bad as I have seen it in the fixed income market.” When asked if the company would initiate a stock buy back, often a sign of confidence, Molinaro said, “Our stock is very cheaply priced.  The current stock price is not reflective of the value of the company, but we are going to preserve our capital to weather the storm.” In other words, why throw good money after bad. “Talk-too-much-itis” strikes again.   

Continue reading “Week in Review 8/3/07 – Stocks Pummeled Again”

The euphoria of the DOW closing over 14,000 seems like ancient history.  In the six trading days since, the market has gone into free fall. Triple digit down days has become the norm.  Last Friday’s 149 point loss was a victory compared to this week’s 226, 311 and 208 point losses on Tuesday, Thursday and Friday.  Three months of gains wiped out, vanished, gone. 

Countrywide Financial Corporation (CFC), the largest mortgage lender in the U.S., kicked off the party when it announced that it was taking a huge charge as it prepared for the possibility of more people failing to make their mortgage payments.  Get this – they didn’t blame the usual suspect subprime slime (loans given to borrowers with poor credit histories).  The company stated the rise in credit-related costs was primarily related to its investments in prime home equity loans.  These are loans to people with solid credit profiles.

Countrywide’s conference call to discuss this mess went on for three hours.  These calls are usually only an hour.  The longer they talked the more the market fell.  I found the following quite troubling.  Continue reading “Week in Review 7/27/07 – Stocks Pummeled”

The DOW closed at 14,000 on Thursday for the first time in history only to sell off 150 points the next day.  Subprime woes took some of the blame, but disappointing earnings were the true story.  Intel kicked the week off with a stink bomb.  Revenue and earnings were in line with expectations, but profit margins were down.  On Thursday and Friday, the eggs continued to be laid by Google, Microsoft, and Caterpillar.  It was just a pathetic start to earnings season.  For the week, the DOW, S&P 500 and NASDAQ were down -0.4%, -1.2% and -0.7% respectively.  In the midst of this carnage, the semiconductor index (SOX) was up 1.3%.

A few weeks ago, I was excited as the Grand Daddy of semiconductor stocks – Intel broke out to new highs.  I was excited not because I own Intel, but because higher prices would bring new money to the market. Intel and others of that ilk are still sentimental favorites, but the money is being made in the new kids on the block. SanDisk maker of flash memory for devices such as the Apple’s iPod and iPhone led the SOX to a positive close this week.  As long as the SOX hold up, I am not nearly as bearish as many turned on Friday.

Continue reading “Week in Review 7/20/07 – DOW 14000, If Only For One Day”

The DOW 14,000 watch begins this week.  It was only a few months ago (February) that it looked like we were going to crash down through 12,000.  How the tides have turned?  The bears had their heads handed to them on Thursday as the DOW spike up 284 points.  It was the largest one day move since October 2002.

Larry Kudlow of CNBC’s Kudlow and Company loves to have Doug Kass (a perma-bear) on his show on days like Thursday.  Kass seems like a really nice guy, but he has been wrong about the market for a long time. To a certain degree, I agree with Kass.  I think that the market is ahead of itself and due for a slow down.  However, it doesn’t matter what I think.  The market is going to do what it does and my job is to react to the market.

The general market was led again by the SOX up 3.0% for the week. This bodes well as the most powerfully rallies are typically led by the semis.  The other indices fell in line – DOW, S&P 500 and NASDAQ were up 2.2%, 1.4%, and 1.5% respectively. Commodities were not to be outdone – Gold, Silver, and Oil were up 1.9%, 2.8% and 1.8% respectively for the week.

Look for some fireworks next week as Intel, Google, Caterpillar and a host of others release their earnings.  The semis are heating up. The commodities are still hot.  I am expecting to see a lot of Kass over the second half of the year.

How did The Time & Money Group portfolios do this week?

• Fab 4    6.4%
• BBO      6.9% 
• BRIC    4.0%
• Real Money   4.1%
• TBS     4.4%
• MDs Ag Play  0.3%

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Sell in May and go away is one of many sayings on Wall Street.  It has been proven in several studies that gains from November through April are typically better than May through October.  It’s somewhat understandable. Would you rather spend time on the beach during the summer or on the trading floor?  That reasoning may not be as applicable anymore as it’s possible to trade from the beach.  

Trading from the beach was the right move this past week.  Although volume was low due to the mid-week holiday, the market performed nicely.  For the week, DOW, S&P 500 and NASDAQ were up 1.5%, 1.8%, and 2.4% respectively.  As I noted a few weeks ago, Intel’s breakout bodes well for the overall market.  Robust market rallies are usually led by the semiconductors and the SOX didn’t disappoint – putting in a 2.7% week.

A rally in the broad market is cool, but the bulk of my money is in commodity related stocks and that’s what I really care about.  Commodities shined: Oil 3.0%, Copper 4.1%, Silver 2.3%.  Gold lagged which has become par for the course.  However, gold stocks rallied big time up 6.9% for the week.  Gold stocks usually lead bullion.  This could be the start of some fire works.

How did TTaMG portfolios do this week?

• Fab 4   8.4%
• BBO   6.0%
• Real Money  5.9%
• BRIC   5.5%
• TBS   4.1%
• MDs Ag Play 3.2%

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