jstratt

10 Dangerous Stocks to Avoid

I will look at the authors logic but before looking at it I have to disagree that IBM is a dangerous stock. Reading the latest analyst reports and being a long term holder I find significant upside to IBM.

Some things I like about IBM include
1) Software and services steady recurring revenues
2) strong financial position
3) large generation of free cash flow
4) High Return on Equity
5) IBM has weathered the worst of this downturn and continued to grow earnings.

On the other hand it isnt hard to believe that Caterpillar and Marriott can have some hard shareholder times.

I read SA because articles like this challenge my beliefs and forces me to consider other perspectives. thanks!

10 Reasons Why We Still Haven't Hit Bottom

I appreciate the authors perspective. We can debate about whether the bottom is in but I would encourage investors to think long.

1) It may not be the best time to buy stocks but it is a good time. Where was the fear at Dow 14000+ and where is the opportunistic aggression of a Dow 7200.

2) I could be wrong but I see 4% Mortgages creating some RE purchases and increasing disposable income through Mortgage refinancings.

3) Credit cards dont alarm me as the first 15% loss is probably a loss of interest and fees rather than capital.

4) World leaders are acting more or less in concert and are actively engaged. When that happens things ususally improve.

5) Business activity and earnings from a macro sense appear to be bottoming. I dont see fewer homes being sold or fewer cars being sold in the future.

Finally I have to add that I have never found a time not to invest. Whatever you earn save some for yourself and invest it. It always is a great time to invest in the best and worst of market scenarios.

Elizabeth Warren: The End of the Middle Class

So sad!

Most people that enter this world will never know freedom. We live in a small window of time where freedom is prevalent.

Unfortunately people choose to squander. The result is they lived in a time where they had the opportunity to choose freedom and chose poverty.

Let them sell their farms and businesses. Let them borrow heavily. Let them raise children without a college education. Let them buy huge homes and vehicles and motorcycles and boats and RVs and spend to their hearts content. It is a confession of ignorance!

Unlike most in history they had an opportunity. They just didnt have the moxi. Fortunately people still have a chance. They can choose to move ahead. They will just have to choose to do so.

Perhaps 20% dont have the ability, 20% can get by, 20% have an opportunity but squander it, 30% will live a reasonable existence, 5% will live well but still worry and 5% will live well.

The best news is that the end is not near. It will come soon enough! China has not evolved to choose freedom. India has a cast system which attacks those who try to rise above their class, the islamic world does not believe in freedom.

The result is the free world reigns when it is strong. However it likely squanders its inheritance as it softens and loses its edge. It has returned historically but perhaps after 1000 years. Lessons of the crusades!

Perhaps we are more evolved! When I see squander, drugs, school dropouts and lack of interest I begin to wonder!

My advise is to save at least 10% of your salary or wage. You will need it. It may sound outrageous but saving 20% is not out of the question. Either one will force choices over pure squander. If I am right you will one day be happy you chose to do so.

Winter's Coming for the Boomers: Part 2

Based on your advise I think I will invest in a tombstone manufacturing company.

It sounds like nothing good can ever happen again. It is a good thing the 1st half of my life has been so wonderful.

Constructing a Cautious Portfolio for 2010

I enjoyed the perspective. Some thoughts

Japan in 80s was hugely overvalued with many stocks at 100 PE. I couldnt understand how they could be so high at the time.

Higher quality stocks that can increase earnings in tough times such as KFT, HPQ, EMR, MMM, IBM, T, VZ, PG, UTX seem good to me. A 10% return seems like a reasonable expectation.

If you look at historic PEs many stocks are trading near low decade PEs based on forward earnings. Based on valuation to expected earnings it may be a time to let things ride with quality managements in quality companies. My emphasis is on quality rather than increasing sideline cash.

How GE Compares to Other Banks

In Oct 2007 I owned about 1200 sh of GE and concluded that GE was a financial company and we were entering a financial crisis. I sold off over 50% of my position.

Last March 2008 I believe it was when Immelt stated that earnings would be good then 2 weeks later announced bad earnings. I did some research and located the GECS 10k. From memory I recall 40 billion in RE purchased in the past 2 years and 50 billion in SIV assets. They also pointed out that their large consumer debt was non US and mostly UK and the rest of the world. I sold the rest of my shares above $30.

In December 2008 I concluded that GE will likely not fail and began watching it. In the past few days I purchased a small amount of GE. It is not a time to be greedy. Buy a long term position about 1/10th at a time. Perhaps even start buying some each month for a year.

GE will survive. Much of the dividend and Immelt will not. I will not suggest GEs future low or high but I suspect it will go lower and then rise for many years. Purchases in this era will do well over time do to GEs diversified business mix and some level of financial acumen. This is however my only allocation of high risk capital.

'Almost All Assets Appear to Be Overvalued' - Bill Gross

I think it must be a hard time to be in the bond business. Bill Gross in my opinion is talking his book. That is justifying to his investors why they should accept puny returns. He said that at the very bottom and those who took his advise at that point locked in huge losses.

It is a great time for long term investors. Many quality long term stocks are still at or near 10 year low PE ranges.

In the last big recession around 1980 every kook came out with their opinion on why the world was ending and why you have to sell everything and why the US was in decline. As a young investor I foolishly allowed myself to sell my meager holdings.

Stocks may or may not be great values but they are better than when they were 4000+ points higher on the DOW.

For Bill Gross however an article like this may save a few billion in assets under mangement from leaving. If I was him I might continue to write articles like this.

The Feds and UBS Reach a Squeal of a Deal

This is my take on the negotiations. The negotiations were over the handling of 3 different categories within the 52000 total.

1) Regular cheats
2) 100 Million + cheats
3) Those who made substantial political contributions

If you are in class 1 you are being handed over. If you are in class 2 you have been invited to make political donations and if you are in group 3... no one will ever know.

Here is how you will if I am correct. If out of all the big money tax evaders a bunch of political contribution issues dont get raised you will know the fix was in.

The Scandal of Overdraft Fees

I normally keep an extra grand in my account and hadnt experienced this in a long time. About a month ago I overdrew by a couple hundred dollars which US Bank honored and charged me $39 on 3 transactions including a $6 lunch.

I have a choice which is to unwind my business activity with US Bank or not. Since charges at that level are nothing more than theft I will move my business.

Many people I assume are unable to generally keep an extra $1000 on hand making this a huge profit center on the backs of poor people. It is easy for a mid life person with a good job to act like they are standing on moral high ground and say dont overdraw checks. That doesnt justify the greed and avarice calculated to take advantage of the youth/young/weak etc.

I dont like it one bit! By the way if you study wealth data from the Fed it is shocking. Money is rapidly flowing away from 95% of the population. Just because I can easily afford these charges doesnt make them right.

Paulson Throws Bernanke Under the Bus, Backs Ken Lewis

I still think Lewis wanted MER so bad that he agreed to it without a reasonable knowledge of what he was doing. Afterward when the crisis escalated he wanted to back out.

If I was a regulator I would tell him the same thing. The time for making up his mind was before agreeing to acquire MER not after.
Also if he saw things getting worse he should have had the gumption to terminate bonuses.

The whole episode should create a new verb. In addition to poor decision making I think he got "Thained".

Buyer Beware: 30 Biggest Bankruptcy Risks

Excellent post! I appreciate this information.

Goldman Dissembling: Dark Pools et al

Excellent points!

I would add that disguising markets is thievery.
Flash trading is thievery

At least in a casino there is an honesty about what is taking place.

Dark pools appear to me to be a way to give special advantage to some institutions.

Flash trading is even worse as your individual buy order is being transmitted to others so that they can profit directly at your expense. It was amusing to see when a major investment bank had their code stolen and they revealed that in the wrong hands it could be extremely dangerous. I would add that in their hands it is extremely dangerous.

They are able to pay congressmen and senators enough that they own them so things will not likely change.

What you can do for yourself is buy quality long term investments and hold them. If you are a trader you better be darn good... because the odds are stacked against you more every time you trade.

It's Good to Be Goldman Sachs

I am amazed at High Frequency Trading.

If as a small investor my buy information is transmitted to other traders and they are able to transact prior to me then I will join the lawsuit for damages.

Sucker's Rally Approaching an End

This is an interesting time to invest. On one hand are emotional reactions proclaiming this is the prelude to the greater depression. On the other hand when the market is rising fast it is hard to not get caught up in the enthusiasm.

If you are trying to decide what to do here are some thoughts.

1) You should not be in all cash if you are an investor.
2) The banking stocks may have bottomed but that doesnt mean banks are out of the woods. I can only go by the consensus of the best analysts, that we have lots more financial assets to write off. Perhaps 30 Trillion.
3) Some of the greatest companies are selling at lifetime low PE ratios.
4) The market is priced at approx 54% of its highs.
5) The PE of good companies was dropping for most of the past decade prior to this recession.

My point is that when you remove the emotion and assess the situation it is a good time to own some stocks. Just dont bet the ranch on the market going straight up from here.

4 Stocks for an Anticipated Industrial Recovery

You make some excellent points!

I am a strong believer in UTX/MMM/HON because they have strong management teams that manage well in tough times. Bought them a little early around turn of the year and built positions over last 2 months. I am not interested in CAT as I think they face stiffer headwinds.

If these are some stocks you want to own long term it is a good time to buy. It is possible the market including these names will pull back next week in anticipation of earnings. If not I might wait and see how earnings are before buying a larger stake.