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Market Thoughts - Week Ending 09/07/2012

|Includes: AIR, ARCB, Cleveland-Cliffs, Inc. (CLF), LAYN, MXWL, URS, WOR

A couple of weeks ago I said that Quantitative Easing Three (QE3) became the big turd in the proverbial punch bowl. After last week, I am standing by what I said. In the end, investors are not bottom fishing, looking for stocks at very cheap prices, they are recession investing.

Economic events are starting to come into focus now that both the Republican and Democratic Conventions have finally come and gone. It has become clear, at least to me, that Mr. Obama is in a very deep economic outhouse with no waders.

The President spent that last four years doing nothing to improve the economy. QE1 and QE2 were simply bailouts for everybody but working people, which is why I don't believe there will be a QE3. There simply are no more corporate favors to pay back.

In weeks past, I have been criticized for making such statements about the current administration, with several (I only have a few) readers attempting to remind me that Mr. Obama inherited the financial mess from Mr. Bush.

My retort to that is simple. Yes the President did. But aside from doing nothing for the masses, you and me, the administration has yet to prosecute a single person. Hello!!!!!!!!

Why has the current administration not prosecuted anyone? Not one CEO, CFO, or IDUNNO, went to prison. Why?

What has the current administration done to prevent things like the mortgage crisis from happening again?

As investors, we all have to at least be aware that economic history can repeat itself. The current administration has done nothing and will do nothing, to prevent that from happening.

I mean if all of this QE bull crap had actually worked, why are we considering QE3? If the government had an actual understanding of the economy why haven't they done anything to improve the employment picture, which in my opinion continues to deteriorate.

Employment numbers are anemic, with only 96,000 jobs created in August, a far cry of the consensus estimate of 130,000 new jobs.

Add to that the revised numbers for June of 45,000, revised downward from 64,000, and the revised numbers for July of 141,000, revised downward from 163,000, and it is seems obvious, at least to me, that our economy is simply not growing.

Some other government released information last week saw a report that employers held 1,340 mass layoffs in July, putting 137,420 people out of work and that from 2009 through 2011, 6.1 million workers were "displaced" from jobs they had held three years or more.

Another government report noted that the jobless rate had fallen in 305 of the 372 metro areas in the report and that payroll jobs increased in 276 of those 372 areas.

To me, if unemployment numbers are down in 305 metro areas, payroll numbers should be up in 305 metro areas. The number the government put out in their report tells me that people are being hired, but they are working for less money.

The point of all of this is to simply remind individual investors that a politician will tell you anything, and that the "anything" they will tell you has a direct impact on your portfolio.

For unlike politicians who run for office every four years or so, individual investors run for office everyday.

Portfolio Commentary
The Wax Ink Portfolio had a huge week, up 5.7%, ending the week with an averaged share price of $26.09.

By comparison, the Dow closed up 1.6%, the Nasdaq was up 2.3%, the S&P 500 was up 2.7%, and the Russell 2000 was up 3.7%.

Year to date, the Wax Ink Portfolio is up 11.0%, while the Dow is up 8.9%, the Nasdaq is up 20.4%, the S&P 500 is up 14.3% and the Russell 2000 is up 13.7%.

The portfolio breakdown changed last week with the addition of Cliffs Natural Resources, Inc. to the portfolio. Equities now occupy 69% of the portfolio, with cash occupying the remaining 31% of the portfolio.

As I have been saying, I continue to look for opportunities to take money out of equities. With last weeks announcement by the ECB that their are going to start buying the bonds of troubled Euro Banks, I'm hopeful that over the next month or so, I will be able to get that done.

Holdings Commentary
As I noted, we added Cliffs Natural Resources, Inc. (NYSE: CLF) to the portfolio last week, taking a position at $33.60. The stock has been on our watch list for sometime, and finally reached an opportune entry price, allowing us to open a position.

In addition to the CLF position, there were other stocks that ended the week on positive note. Among them were aircraft fixer company AAR Corporation (NYSE: AIR), up 15%, electronics manufacturer Maxwell Technology, Inc. (Nasdaq: MXWL), up 14%, and steel container maker Worthington Industries, Inc. (NYSE: WOR), up 11%.

Sucking the life out of the portfolio last week were trucking company Arkansas Best Corporation (Nasdaq: ABFS), down 10%, industrial construction company Layne Christensen Company, (Nasdaq: LAYN) down 5%, and government contractor URS Corporation (NYSE: URS) down 3%.

Political Commentary
I noted last week that the thing that makes politics so completely and utterly boring for me is it's utter sameness.

I note this week, well hell, I don't note anything.


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, AIR, MXWL, WOR, ABFS, LAYN, URS.