10/12/07

Economics

protectionism (Free trade is a major positive for world and US economic growth.). The real impact of the free trade agreements with Peru, Panama, Columbia and South Korea (must read):

http://www.tcsdaily.com/article.aspx?id=101007B

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.)

http://www.clubforgrowth.org/2007/10/here_little_piggy.php

And:

http://www.examiner.com/a-983098%7EStop_their_pay__send_them_home.html

Politics

Domestic

International War Against Radical Islam

The Market

Technical

Technical comments on gold, 3M (Dividend Growth Portfolio), General Dynamics (Dividend Growth Portfolio) and Alcon (Aggressive Growth Portfolio).

http://www.thestreet.com/p/_htmlrmm/rmoney/technicalanalysis/10383933.html

Fundamental

News on Stocks in Our Portfolios

Fastenal (Aggressive Growth Portfolio) reported third quarter earnings per share of $.41 versus expectations of $.42 and $.36 reported in the comparable 2006 quarter.

EPS: 2006 $1.32, 2007 $1.55, 2008 $1.85; DVD: $.44 YLD 1.0%

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

Infosys Technologies (Aggressive Growth Portfolio) reported third quarter earnings per share of $.48 versus expectations of $.46 and $.35 recorded the third 2006 quarter. Despite beating estimates, the stock traded down on concerns over the potential weakening of US demand and currency translation issues. Management has already been dealing with these issue by cutting costs, raising prices and increasing their marketing effort worldwide. Further, they lifted their 2007 full year earnings forecast by 2% which had already been anticipated to grow 28%.

EPS: 2006 $1.50, 2007 $1.97, 2008 $2.35; DVD: $.55 YLD 1.1%

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

Positive comments on Oshkosh Truck (Aggressive Growth Portfolio):

http://www.zacks.com/rank/zcommentary/?id=6093

A negative write up on Altria (Dividend Growth Portfolio):

http://www.zacks.com/newsroom/commentary/index_pdf.php?id=6104

General Electric (Dividend Growth Portfolio) reported third quarter earnings per share of $.54 versus expectations of $.50 and $.47 reported in the comparable 2006 quarter. GE also stated that it would buy back $5.7 billion in stock in the fourth quarter.

EPS: 2006 $1.99, 2007 $2.25, 2008 $2.50; DVD: $1.15 YLD 2.7%

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

Johnson and Johnson (Dividend Growth Portfolio) is voluntarily withdrawing cough and cold remedies for children under the age of two based on an FDA recommendation. The impact should negligible.

EPS: 2006 $3.78, 2007 $4.10, 2008 $4.45; DVD: $1.62 YLD 2.7%

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

Citigroup (High Yield Portfolio) announced a corporate restructuring which is not likely to make some investors happy--they want the CEO gone and he is not. The High Yield Portfolio owns this stock as a bond substitute (i.e. its attractive yield); so our bet is (1) a safe dividend that provides a high yield and (2) a chance of capital appreciation. Those who bought the stock betting on the CEO’s replacement were betting on a short term spike in the stock were it to happen. They will likely be disappointed and sell C.

EPS: 2006 $4.25, 2007 $4.55 2008 $4.95; DVD: $2.16 YLD 4.7%

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

More Cash in Investors’ Hands

Avon Products is buying back $2 billion in stock.