1/4/08

Economics

protectionism (Free trade is a major positive for world and US economic growth.).

http://www.american.com/archive/2007/december-12-07/the-globalization-article

An interesting graphic on the relative cost of living longer:

http://bigpicture.typepad.com/comments/2008/01/odd-chart-of-th.html

Politics

Domestic

International War Against Radical Islam

The Market

Technical

I have referred numerous times to the increased volatility in equity prices; according to this study, I was wrong:

http://bigpicture.typepad.com/comments/2008/01/2007-volatility.html

Fundamental

Subscriber Alert

The stock price of McGraw Hill (MHP-$42) has traded at its Stop Loss Price. Therefore, at the Market open today, the Dividend Growth Portfolio will Sell MHP.

The stock prices of Graco (GGG-$36) and Automatic Data Processing (ADP-$43) have fallen below the lower boundary of their respective Buy Value Ranges. Accordingly, both stocks are being Removed from the Dividend Growth Buy List. The Dividend Growth Portfolio will continue to Hold these stocks.

The stock price of Kinder Morgan Energy Partners (KMP-$55) has risen above the upper boundary of its Buy Value Range. Therefore, KMP is being Removed from the High Yield Buy List. The High Yield Portfolio will continue to Hold KMP.

The stock price of Realty Income Trust (O-$25) has fallen below the lower boundary of its Buy Value Range. Accordingly, O is being Removed from the High Yield Buy List. The High Yield Portfolio will continue to Hold this stock.

The stock price of SAP Inc (SAP-$51) has fallen below the upper boundary of its Buy Value Range. Therefore, it is being Added to the Aggressive Growth Buy List. The Aggressive Growth Portfolio will not Buy this stock at this time.

These actions include just the stocks that are either on our Buy Lists or are held in our Portfolios; and all save KMP reflect lower stock prices. Importantly, there are quite a few stocks that are on the verge of violating either their Stop Loss Price or the lower boundary of their respective Buy Value Range. The point being that if stock prices fall much further, the liquidation that will take place will be greater than occurred in 2001 (at least as defined by our Universe of stocks). I don’t think that this is any reason for panic; our Portfolios still own a lot of great companies whose stocks remain solidly in the Value Range. I am however alerting you that in our narrow Universe, the stock price action is increasingly suggesting a much tougher economic, and perhaps political, scenario than is currently in my forecast.

The High Yield Buy List

Company Close 12/19 Buy Value Range

US Bancorp $30.33 $29-34

Buckeye Pipeline 50.29 47-52

Alliance Resources Ptrs 36.70 33-38

AJ Gallagher 23.40 23-26

Martin Midstream Ptrs 36.55 27-31

Penn Virginia Resource Ptrs 26.15 23-26

News on Stocks in Our Portfolios

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

http://www.thestreet.com/_htmlmdb/newsanalysis/energy/10396825.html

A positive write up on Accenture (Aggressive Growth Portfolio):

http://www.zacks.com/rank/zcommentary/?id=6652

More Cash in Investors’ Hands