Economics
A pretty dismal view of our government’s current economic policy:
http://www.american.com/archive/2008/march-03-08/fighting-recession-with-panic
A look at the whole mortgage market:
http://mjperry.blogspot.com/2008/03/some-perspective-on-subprime-mortgages.html
What’s happening with the reset rate on adjustable rate mortgages? Hint: think down.
http://mjperry.blogspot.com/2008/03/reset-libor-rate-for-subprime-arms.html
A look at industrial production:
http://mjperry.blogspot.com/2008/03/industrial-ouptut-1-annual-growth.html
Politics
Domestic
The candidates and fiscal policy:
http://reason.com/news/show/125522.html
International War Against Radical Islam
The Market
Technical/ Fundamental
Indication of a Market rebound:
http://bigpicture.typepad.com/comments/2008/03/contrary-indica.html
Lehman Bros stock chart versus Bear Stearns:
http://bigpicture.typepad.com/comments/2008/03/charts-of-the-d.html
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There are two items which need comment:
(1) when all is said and done, the significance of yesterday’s Bear Stearns news was that the Fed basically back stopped the financial system and indicated that it would continue to do so; that is, it is not going to let the illiquidity in the debt markets result in any of the debt defaulting. To be sure, this is good; and, to be repetitive, it provides additional clarity to the resolution of the credit crisis. The problem I have is that the Fed and the Treasury are reacting to crisis rather than getting out ahead of the situation. There are a couple of things that could be done to alleviate this difficulty [i.e. the Fed could buy outright illiquid paper or it could, in conjunction with bank regulators, declare a moratorium on the mark-to-market requirement on bank assets thereby reducing margin calls]; and, indeed, if I were a betting man, I would wager that one or both will ultimately be done. By acting now these steps would remove a lot of fear and loathing from the Markets; however, if the government waits for other crisis before reacting, they prolong this period of high uncertainty that the Markets are now enduring and raise the risk of not being able to control the next crisis.
(2) stocks once again challenged the January lows. The DJIA opened down a couple of hundred points, but closed (11972) above the January low close (11900): similarly the S&P opened down big and while it closed (1276) below the 1982-present up trend (1285), it remains above the January low close (1269). That stocks could perform this well in the face of the Bear Stearns news lends additional support to the notion that the January lows will prove to be the bottom of this Market cycle. As I said last week, that doesn’t mean that I am going start aggressively drawing down cash reserves, but it does argue for putting some money to work which our Portfolios will do at the Market open this morning (see Subscriber Alert) below. And while each of the Market’s unsuccessful assaults on the January lows unquestionably makes me feel more comfortable about owning stock, I still believe that the slowing economy, the likelihood of further credit problems and the risk that the economic agenda of this country could change suggest that we keep our cash reserves higher than we might otherwise.
Subscriber Alert
At the Market open this morning, the Dividend Growth Portfolio will Buy small additions to its Holdings of VF Corp (VFC-$76), 3M Corp (MMM-$79), Emerson Electric (EMR-$49) and Canadian Nat’l RR (CNI-$47).
A recent review of the financials of BP Ltd (BP-$62) resulted in lowering its quality rating below the minimum acceptable for inclusion in the Dividend Growth Portfolio. Accordingly, it is being Removed from the Dividend Growth Universe and the Dividend Growth Portfolio will Sell its position in BP at the Market open this morning. However, BP financials and current stock price yield are sufficient for its inclusion in the High Yield Universe. Therefore, it is being Added to the High Yield Universe and the High Yield Buy List. The High Yield Portfolio will Buy a one half position in BP at the Market open this morning.
I know this may seem like a lot of administrative nonsense; but it is not. The primary reason, in my opinion, is that when one buys a stock you have to have a very clear reason as to why you bought it. Otherwise, you will never know when to sell it. In the Dividend Growth Universe, companies qualify for inclusion because they meet certain strict financial standards which are determined by the investment objectives of the Portfolio. If they cease to do so, then they need to be sold; otherwise why have strict financial standards in the first place?
However, we have another Portfolio which doesn’t have the same qualifications for financial strength of a company but does require as an offset a higher yield from the stock; and BP fits the minimum standards of financial strength and stock yield for inclusion the High Yield Universe.
The stock price of Chevron (CVX-$84) has fallen below the upper boundary of its
In any rally, stocks in the Dividend Growth Portfolio that (1) have traded between their Stop Loss Price and the lower boundary of the
In any rally, stocks in the High Yield Portfolio that (1) have traded between their Stop Loss Price and the lower boundary of the
At the Market open this morning, the Aggressive Growth Portfolio will Buy small additions to its Holdings of Microsoft (MSFT-$28), American Vanguard (AVD-$14), SAP (SAP-$49), Reliance Steel (RS-$55) and Accenture (ACN-$33).
In any rally, stocks in the Aggressive Growth Portfolio that (1) have traded between their Stop Loss Price and the lower boundary of the
News on Stocks in Our Portfolios
Parkervision (10 Bagger) reported fourth quarter earnings per share of ($.19) in line with expectations and versus ($.14) recorded in the comparable 2006 quarter.
More Cash in Investors’ Hands
1 comment:
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