Economics
fiscal profligacy (Government spending as a percent of GDP is too high and the looming explosion in entitlement expenditures will make it worse. There is no good solution save spending discipline.) More on the omnibus budget bill and the earmarks it contains:
http://www.clubforgrowth.org/2007/12/conservatives_call_on_bush_to.php
Politics
Domestic
If you thought that our government was constructing a fence on the Mexican border, think again and read this:
http://article.nationalreview.com/?q=OTZhYTk3YWM1ZDY5NDBiZGU4ZWE4YTc2MWM5NGZmOTI=
International War Against Radical Islam
The Market
Technical
Fundamental
I gotta tell you, I was surprised that yesterday’s news highlights--the European Central Bank’s (ECB) $500 billion liquidity injection along with the positive earnings surprises in Goldman Sachs (a financial) and Best Buy (a consumer discretionary)--didn’t have a more positive impact on stock prices than they did, especially given the normally upward seasonal price bias. Indeed, every one of those items provided more clarity to the resolution of either the sub prime problem itself (the ECB injection) or how it is impacting related industries (Goldman Sachs--owner/seller of the sub prime paper; Best Buy--big ticket consumer items which should be affected by mortgage defaults). And yet…..
So our Portfolios are going to continue to average out of stocks in which partial sales have been made. At the Market open this morning, the Dividend Growth Portfolio will Sell the remaining one half positions in American International Group (AIG-$55) and Wells Fargo (WFC-$30) and the Aggressive Growth Portfolio will Sell the remaining one half position in ASTA Funding (ASFI-$26) which incidentally blew through its Stop Loss Price yesterday (the downside of partial sales).
Company Highlight
I have emphasized two areas of investment focus of late: companies in industries that are relatively recession proof (consumer staples, health care and technology) and companies with large international exposure where foreign sales can offset any weakness in the
Linear Technology designs and manufacturers high end linear chips which monitor, amplify or transform continuous analog signals associated with real world phenomena (temperature, pressure, weight, position, light, sound and speed) and markets them in over 4,000 products. The company has grown profits and dividends between 15-20% annually over the past 10 years earning in excess of a 20% return on equity. LLTC should be able to maintain this record because:
(1) it has one of the most efficient business models in the technology sector, generating operating margins of about 50% and consistent free cash flow,
(2) it has an outstanding analog design engineering team,
(3) its products are customized (meaning there is a large upfront design cost which acts as a barrier to entry), they have longer life cycles and carry higher margins,
(4) while avoiding lower margin consumer products, it offers significant product breadth in multiple industrial segments which in aggregate are expected to produce strong annual sales growth,
The company has over $3 per share in cash, generates strong cash flow and has a history of returning cash to shareholders through share repurchases and dividend increases. LLTC is rated A by Value Line and its stock yields 2%+.
http://finance.yahoo.com/q?s=LLTC
News on Stocks in Our Portfolios
More Cash in Investors’ Hands
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