8/21/07

Economics

Some interesting stats on income and employment from Barry Ridholz:

http://bigpicture.typepad.com/comments/2007/08/real-income-fai.html

Politics

Domestic

International War Against Radical Islam

The Market

Technical

Fundamental

We were a little bothered by a couple of things today: (1) the three month Treasury bill plummeted in yield--suggesting that there is still a flight to quality [meaning that the fear of panic in the credit markets hasn’t disappeared], (2) Bernanke is calling the heads of the major financial institutions--suggesting that he remains worried about lack of confidence in the non sub prime sectors of the credit markets and (3) the financial stocks were mostly down in price while the major indices were up. Our concern, of course, being that we were too early stepping back into the financial stocks.

That said (1) we indicated that we thought that there was a decent probability of a re-test of the lows and (2) all stocks don’t bottom and re-test at the same time, so it is not unusual that the financials which had led the market down, then led it up, would be out ahead of other stocks on a re-test.

So our task now is to remain very vigilant to the Value Range boundaries of those new purchases, averaging into them where we see support and getting out of the way if it looks like our buys were premature.

Along those lines, the stock price of Moody’s (MCO-$45) fell below the lower boundary of its Buy Value Range. Accordingly, MCO is being Removed from the Aggressive Growth Buy List. Since the Aggressive Growth Portfolio had not purchased this stock, no action is required.

EPS: 2006 $2.25, 2007 $2.60, 2008 $3.00; DVD: $.32 YLD 0.5%

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

News on Stocks in Our Portfolios

Illinois Tool Works (Dividend Growth Portfolio) is initiating a $3 billion stock buy back.

EPS: 2006 $3.01, 2007 $3.35, 2008 $3.70; DVD: $.84 YLD 1.6%

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

Staples (Aggressive Growth Portfolio) reported second quarter earnings per share of $.25 in line with expectations and versus $.22 reported in the comparable 2006 quarter.

EPS: 2006 $1.28, 2007 $1.47, 2008 $1.70; DVD: $.29 YLD 1.6%

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

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