6/19/08

Economics

a disruption in global oil supplies (It is not the price of oil but its availability that will cause severe economic dislocation.). More nonsense from your elected representatives:

http://michellemalkin.com/2008/06/18/the-chavistas-in-our-backyard/

And the nonsense doesn’t stop there:

http://online.wsj.com/article/SB121375337067183049.html?mod=opinion_main_commentaries

An economic analysis of the impact of tapping the oil reserves in ANWR:

http://www.econbrowser.com/archives/2008/06/drilling_our_wa.html

More on income inequality:

http://mjperry.blogspot.com/2008/06/its-educated-take-all-economy.html

Politics

Domestic

International War Against Radical Islam

The Market

Technical

Yesterday’s Market action resolved the issue as to whether the DJIA April 2008 low was acting as a support level--it wasn’t. There are now two questions, technically speaking: (1) is the DJIA in a trading range and if so, where is the support? As I have suggested several times, the next obvious support level is the January 2008 low (11634), Given that the S&P remains above its 1982 to present uptrend and its own April 2008 support level, this seems to me to be the logical alternative, however (2) since both the DJIA and the S&P are in clearly defined short term down trends off their May 2008 highs, are those now the dominant trend? I don’t think they are; but I am not going to bet any money on it until I get a couple more days of Market action.

Fundamental

Chart porn on international interest rates (think Fed policy and the valuation of the dollar):

http://bespokeinvest.typepad.com/bespoke/2008/06/international-l.html

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Subscriber Alert

In the meantime, for the first time in this current correction, yesterday’s Market action resulted in the serious price deterioration of a number of our Portfolio’s holdings.

On the Dividend Growth Buy List, State Street (SST-$67), Coca Cola (KO-$53), Johnson Controls (JCI-$32) Nokia (NOK-$25) and Canon (CAJ-$50) all fell below the lower boundary of their Buy Value Range. Accordingly, they are being Removed from the Dividend Growth Buy List. The Dividend Growth Portfolio didn’t own STT so no further action is needed. The price declines in JCI, NOK and CAJ were only slightly below their lower Buy Value Range boundary; so for the moment, the Dividend Growth Portfolio will continue to Hold these stocks. However, while the price deterioration in KO didn’t push it through its Stop Loss Price, it was substantial enough to warrant protecting some of our profits in this stock. Accordingly, at the Market open this morning, the Dividend Growth Portfolio will Sell approximately one third of its position in Coke.

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

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

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

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

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

Visit www.strategic-stock-investments.com and learn about our investment strategy; then subscribe and see what other stocks we are buying/selling today.

CNBC Million Dollar Portfolio Challenge

Portfolio 1 (84.9%): Sold: none

Bought: none

Positions: Automatic Data Products, Johnson Controls, Nucor,

Canon

Portfolio 2 (86.5%): Sold: Nokia

Bought: Mastercard

Positions: Franklin Resources, Graco, United Technologies,

Mastercard

Portfolio 3 (91.0%): Sold: none

Bought: none

Positions: Nucor, Smith Int’l. ConocoPhillips, Mastercard

Portfolio 4 (81.3%): Sold: VF Corp, Walgreen

Bought: Suncor, General Dynamics

Positions: Suncor , Dow Chemical, Peabody Energy, General Dynamics

Company Highlight

Conoco Phillips is an integrated oil and petrochemicals company which focuses primarily on exploration and production (E&P) and refining. Profits have grown in excess of 20% annually over the last 10 years while earning a 17-20% return on equity. Dividend growth has not kept pace but the company should double its dividend growth rate over the next five years as well as continue its above average profit growth. Its growth plans include:

(1) acquisitions, alliances and joint ventures as well as an aggressive exploration program to expand up stream. The recent acquisition of an equity stake in LUKOIL is a perfect example. COP’s five year average annual reserve replacement is approximately 176%,

(2) expansion of its domestic refining capacity,

(3) greater capital discipline such as divesting non core assets and reducing balance sheet leverage,

(4) utilize its strong cash flow to raise dividends and buy back shares.

Conoco is rated A+ by Value Line, has a 20% debt to equity ratio and its stock yields approximately 2%.

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

News on Stocks in Our Portfolios

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

http://seekingalpha.com/article/81964-alcon-raises-guidance-as-stock-soars

More Cash in Investors’ Hands