7/15/08

Economics

protectionism (Free trade is a major positive for world and US economic growth.) A fact sheet on US exports:

http://www.clubforgrowth.org/2008/07/fact_sheet_on_us_exports.php

Politics

Domestic

McCain on immigration:

http://michellemalkin.com/2008/07/15/mccain-at-the-race-conference-capitulation-complete/

International War Against Radical Islam

Some thoughts on the Iraq (the war of choice) versus Afghanistan (the war of necessity) debate from Christopher Hitchens:

http://www.slate.com/id/2195288/

The Market

Technical/ Fundamental

The charts of the DJIA and S&P remind me of a Wylie Coyote/Roadrunner cartoon, when Wylie misses a curve in the road at the edge of a cliff, looks down and sees nothing under him. There is simply no indication of a level that buyers have shown themselves willing to step in for another 6% to the downside. As you know, I have a growing fear of being too bearish but I see little technically to support my concern.

Plus while all the talking heads are worried about a collapse of the banking system, I am worried about that fear preventing any meaningful governmental action to combat inflation and the falling dollar. Whether I am right or wrong almost makes no difference--the economy has enough problems to correct that it will be sometime till their resolution has any visibility; and that assumes that the political class lets the economy self correct and doesn’t enact another moronic piece of legislation that makes things worse which is probably a bad assumption.

Larry Kudlow’s thoughts along with a good explanation of the Fannie Mae/Freddie Mac problem:

http://article.nationalreview.com/?q=MDBlMmQxMjBkMDUzZDczNzE3Y2RjYmZiYzlkODNjYTQ=

All in all, it looks pretty bleak on the surface. But much is already in the price of stocks; plus I have been doing this long enough to know that when the gloom is thick enough to cut, negative psychology blinds investors to mitigating developments that soon prove to be all too obvious. At the moment, I’m not smart/prescient enough to see how the economy extricates itself from its current dilemma. All I can do is play defense and be ready to act when the tide turns. This week I am dedicating myself to planning our re-investment strategy.

Subscriber Alert

Given that the current strategy is defense, defense, defense, at the Market open this morning:

The stock price of Wells Fargo (WFC 22) has fallen to its Stop Loss Price. Accordingly, the Dividend Growth Portfolio will Sell its remaining shares in WFC.

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

The Dividend Growth Portfolio will Sell a portion of its holding of Automatic Data Processing (ADP-$41).

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

The stock prices of US Bancorp (USB-$23) and Dow Chemical (DOW-$31) have fallen to their respective Stop Loss Prices. Therefore, the High Yield Portfolio will Sell its remaining shares in these companies.

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

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

The Aggressive Growth Portfolio will Sell a portion of its holding in SEI Investments (SEIC-$21).

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

Million Dollar Portfolio Challenge

Portfolio 1 (91.2): Sold: Automatic Data Products, Johnson Controls, Northern Trust

Bought: ExxonMobil, Eaton, Mastercard

Positions: ExxonMobil, Eaton, WalMart, Mastercard

Portfolio 2 (88.2%): Sold: none

Bought: none

Positions: Franklin Resources, Chevron, SAP

XTO Energy

Portfolio 3 (92.5%): Sold: Wells Fargo

Bought: McDonalds

Positions: XTO Energy, Smith Int’l. McDonalds, SAP

Portfolio 4 (88.5%): Sold: Wells Fargo

Bought: Nike

Positions: Suncor, Chevron, Nike, SAP

News on Stocks in Our Portfolios

Johnson & Johnson (Dividend Growth Portfolio) reported second quarter earnings per share of $1.17 versus expectations of $1.12 and $1.05 recorded in the comparable quarter of 2007.

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

More Cash in Investors’ Hands