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Scott Wachsler
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I manage Wax Ink.net, a baseline equity research company comprised of individual investors not licensed or registered with any government agency. I have been all cap value investor and independent equity researcher for the past 30 years, and believe that patience is the key to successful... More
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Wax Ink
  • Market Thoughts - Week Ending 09/14/2012 0 comments
    Sep 17, 2012 5:32 AM | about stocks: CLF, LAYN, IIIN, DCO

    Well Gentle Ben fooled the crap out of almost everyone Thursday with the Fed's big mortgage purchase move. I know he sure as hell fooled me.

    Oh I still stand by all that I have said, which was that all of the Quantitative melodramatic hocus pocus will only make the banks richer, but I certainly am not complaining when I see how the portfolio has benefited as the idiots of Wall Street send stock prices into the stratosphere.

    In the end, I still believe that the Fed's latest bowel movement will have little to no influence on what business does or doesn't do regarding employment. Business, at least the businesses I like to invest in, are a bit like Wax Ink, they simply don't pay attention to much except their business.

    Unlike Wall Street and the government, business is not going to hire people if there is no demand for their goods and services, regardless of how many dollars the government pisses away buying mortgages.

    So the Fed does what it does on Thursday and the markets go crazy and investors can't throw their money into the investing hat fast enough. Easy street is just around the corner.

    By Friday the graphs and charts people enter the game.

    These people have analyzed the Feds latest move and with a graph and a chart for the number of farts an Ostrich makes attempting to fly, have determined that the Feds latest move is, drum roll please...inflationary.

    Hot damn what I wouldn't give to be that smart. To think somebody paid good money to send those graph and chart people to an institute of higher learning.

    I'll bet their cab driver daddy's and stay at home mom's are just real proud of their graphs and charts children for being able to determine what the Port-A-Can guy already knew.

    You think I'm kidding? Pay attention to CNBC and Bloomberg and most of the financial and investing websites. You are about to see more graphs and charts than there are condoms in a whore house.

    I admit that I have never been a fan of the graphs and charts crowd. I guess I'm simply too dumb to understand the information being conveyed through the graphs and the charts.

    But all of that aside, in the end, all of this Fed razzle dazzle isn't going to amount to squat.

    In the end, the billions the Fed will transfer to banks buying up mortgages will simply be transfered back to the banks' "savings" accounts at the Fed and the Fed will pay the banks interest on that money. In my opinion, little will be put into the economy.

    So when the dust settles and the smoke clears where will America be?

    Mr. Obama will still be President, unemployment will still be above 8%, credit still will not be expanding, 90% of the Congress will be re-elected, the graphs and charts people will still be making drool absorbing graphs and charts, and the American people will have once again been screwed by the banks and the politicians.

    God I love free enterprise.

    Wax

    Portfolio Commentary
    The Wax Ink Portfolio had a very nice week, up 3.8%, ending the week with an averaged share price of $27.08.

    By comparison, the Dow closed up 2.2%, the Nasdaq was up 1.5%, the S&P 500 was up 1.9%, and the Russell 2000 was up 2.7%.

    Year to date, the Wax Ink Portfolio is up 15.2%, while the Dow is up 11.3%, the Nasdaq is up 22.2%, the S&P 500 is up 16.6% and the Russell 2000 is up 16.7%.

    The portfolio breakdown remains the same, with equities occupying 70% of the portfolio, and cash occupying the remaining 30%.

    I am still looking for opportunities to take money out of equities. With last weeks Fed announcement that they are going to start buying mortgages, I should have several opportunities to get that done over the coming months.

    Holdings Commentary
    The portfolio had some nice gains last week, most notably from iron ore producer Cliffs Natural Resources, Inc. (NYSE: CLF), up 14%, industrial construction contractor Layne Christiansen Company (Nasdaq: LAYN), up 12%, and steel and iron producer Insteel Industries, Inc. (Nasdaq: IIIN), up 11%.

    The loan turd in the punch bowl last week was government communications contractor Ducommun, Inc. (NYSE: DCO), down 6% for the week.

    Political Commentary
    I hate politics. I like Saturday Night Live. I just wish I could stay up late enough to watch it.

    Apparently the President was on last week. Or somebody that looks like the President was on last week.

    Here, you decide.

    Wax Ink is comprised of individual investors, NOT licensed or registered with ANY government agency. Please obtain the advice of a registered investment professional BEFORE considering any information obtained from this site.

    Disclosure: I am long CLF, LAYN, IIIN, DCO.

    Stocks: CLF, LAYN, IIIN, DCO
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