Wednesday, July 16, 2008

7/16/08

Economics

Another look at oil ‘speculators’ (this is a good article):

http://www.american.com/archive/2008/july-07-08/don2019t-blame-the-speculators

Politics

Domestic

I can’t help myself. A response to the Obama editorial I linked to in Monday’s Morning Call:

http://www.powerlineblog.com/archives2/2008/07/020997.php

International War Against Radical Islam

The Market

Technical

The good news is that the volatility index is moving in the right direction (a selling climax); the bad news is that other sentiment indicators reflect too much investor complacency. My gut tells me that we are getting close to a flush but there are still too many buyers. Patience, defense.

Fundamental

The other bit of bad news is the Fed and Treasury Department’s reaction to the developments over the past week in Fannie Mae and Freddie Mac including yesterday’s appearances of the high mucky mucks of both organizations before the Senate. They (the Fed and Treasury) are trying to sell the American people (and its elected representatives) on a huge transfer of power to themselves. This would include expanding the authority of the Fed from being the manager of the money supply with some oversight of the banking system and a mandate to balance employment and inflation to some multi tasking federal entity who in addition to the aforementioned dual assignment appears to be assuming the role of regulating a much larger chunk of the financial system (investment banks and the government sponsored enterprises) and in doing so, apparently insuring that lousy business judgment doesn’t carry with it failure as a consequence.

I may be misreading their intention. Today’s House hearings will hopefully provide clarification. But if I am correct, this is not good for the long term health of the economy, it is not good for inflation and it is not good for the dollar because the Fed has a history of being only marginally successful at correctly executing its original dual functions; adding infinitely more complex responsibilities, many of which should be taken care of by market forces, will likely insure its utter failure at all.

Thoughts from Jim Rogers:

http://bigpicture.typepad.com/comments/2008/07/jim-rogers-fann.html

Subscriber Alert

The stock price of Kimberly Clark (KMB-$55) has fallen below the upper boundary of its Buy Value Range. Accordingly, it is being Added to the Dividend Growth Buy List. The Dividend Growth Portfolio will not Buy shares of KMB at this time.

http://finance.yahoo.com/q?s=KMB

Visit www.strategic-stock-investments.com to learn more about our dividend based investment strategy; then sign up and learn what other stocks we are buying/selling today.


Million Dollar Portfolio Challenge

Portfolio 1 (90.9): Sold: none

Bought: none

Positions: ExxonMobil, Eaton, WalMart, Mastercard

Portfolio 2 (87.7%): Sold: none

Bought: none

Positions: Franklin Resources, Chevron, SAP

XTO Energy

Portfolio 3 (92.6%): Sold: none

Bought: none

Positions: XTO Energy, Smith Int’l. McDonalds, SAP

Portfolio 4 (88.0%): Sold: none

Bought: none

Positions: Suncor, Chevron, Nike, SAP

News on Stocks in Our Portfolios

US Bancorp (High Yield Portfolio) reported second quarter earnings per share of $.53 versus $.65 recorded in the comparable 2007 quarter.

http://finance.yahoo.com/q?s=USB

A positive comment on Johnson & Johnson (Dividend Growth Portfolio):

http://www.thestreet.com/p/_htmlrmd/rmoney/healthcare/10426609.html

Charles Schwab (Aggressive Growth Portfolio) reported second quarter earnings per share of $.26, in line with expectations and versus $.23 reported in the 2007 second quarter.

http://finance.yahoo.com/q?s=SCHW

More Cash in Investors’ Hands

Waste Management is buying Republic Services for $6.3 billion in cash.

Cleveland Cliffs is buying Alpha Natural Resources for $10 billion of which 17% is in cash.

Have you noticed the pick up in corporate merger activity? When the owners and managers of businesses think that there is significant value at current prices in other businesses that has to be a good sign that stocks are getting cheap.

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