7/18/08

Economics

An interesting perspective on drilling in the US:

http://www.realclearmarkets.com/articles/2008/07/oil_the_dollar_and_comparative.html

The article provides a much more optimistic view of the world’s energy consumption problem (A good read):

http://www.american.com/archive/2008/july-august-magazine-contents/the-good-news-about-energy

a rising tax and regulatory burden (Government has never proven that it could solve economic problems efficiently or satisfactorily.) A sad commentary on the seat of capitalism:

http://bigpicture.typepad.com/comments/2008/07/a-nation-of-whi.html

A chart on a different index of leading indicators (it is not pretty):

http://bigpicture.typepad.com/comments/2008/07/ecris-leading-i.html

Another reason why exports are carrying this economy:

http://mjperry.blogspot.com/2008/07/global-explosion-of-middle-class-and.html

The ongoing correction in the sub prime mortgage market:

http://mjperry.blogspot.com/2008/07/rise-and-fall-of-subprime-mortgage.html

Politics

Domestic

International War Against Radical Islam

The Market

Technical

Another good day. The DJIA is only 100+ points away from the upper boundary of its down trend off its May high; so we may know shortly if it can breach that resistance level. The S&P is a bit further away. Having committed a portion of our reserves yesterday morning, until it becomes clear whether or not stocks have made a major bottom, I am going to be as nervous as a cat on a hot tin roof.

That said, I did spend a lot of time yesterday re-reviewing all our holdings and I have got to say that at least at this moment in time, I am comfortable with the vast majority of our holdings whatever Market scenario unfolds. Indeed with the exception of only a couple of stocks, the prices of all our positions are above one or more of the prior lows (August 2007, November 2007, January 2008), I had been using as resistance levels to trading ranges--which means that they are in their own trading ranges not a down trend as characterized by the major Averages.

In addition, remember that a good deal of the selling we have done over the past month has not been to avoid large losses, it has been to protect profits, that is, selling stocks that have performed very well but which were likely to suffer some price depreciation in what has been a lousy Market. The most recent example being the paring of our holdings in the energy and materials stocks. These stocks have been great to us; but because of that, there is a huge spread between their current price and the lower boundary of their Buy Value Range. As depressing as this Market has been, I’d rather be fighting that battle than scrambling to avoid large losses. Not that we haven’t been doing that also. My point is things are not (were not) as bleak as they seem at the time.

So right now my near term objective in this rally/turnaround (?) is to eliminate those few remaining stocks that haven’t held up well in price even though they may still not have penetrated their Stop Loss Price. Then once we know whether this is a rally in a bear Market or a bounce off of a bottom, the objective will be focusing on building our new positions/re-building those holdings where we took protective action.

Patience remains a virtue.

Fundamental

With 11% of the S&P reporting their second quarter earnings, 72% are beating analysts’ forecasts:

http://bespokeinvest.typepad.com/bespoke/2008/07/sp-500-earnings.html

Subscriber Alert

The stock price of Abbott Labs (ABT-$58) has risen above the upper boundary of its Buy Value Range. Hence it is being removed from the Dividend Growth Buy List. The Dividend Growth Portfolio will continue to Hold ABT.

Visit www.strategic-stock-investments.com, learn about our dividend growth investment strategy, sign up and find out what we are buying/selling today.

Million Dollar Portfolio Challenge

This is the last trading day of this contest. For some reason, the final rankings weren’t posted--which is too bad because we had a kick ass day yesterday.

Portfolio 1 (90.9): Sold: none

Bought: none

Positions: T Rowe Price, Kimberly Clark, WalMart, Mastercard

Portfolio 2 (87.7%): Sold: none

Bought: none

Positions: Franklin Resources, Mastercard, SAP

Nike

Portfolio 3 (92.6%): Sold: none

Bought: none

Positions: Franklin Resources, Mastercard, McDonalds, SAP

Portfolio 4 (88.0%): Sold: none

Bought: none

Positions: Blackrock, Eaton Vance, Nike, SAP

News on Stocks in Our Portfolios

A positive write up on Nokia (Dividend Growth Portfolio):

http://www.thestreet.com/s/nokia-outlook-boosts-shares/newsanalysis/technology-update/10427119.html?puc=_txtmdb

More Cash in Investors’ Hands