I Beat the Street?

Sell on News

2007-02-02T06:10:00.001-08:00

CLRK has had nothing but good news recently. Yesterday was no exception. Forbes placed it on their 25 fastest growing companies list for the second year in a row. Initially up the stock then tanked by three dollars into the $17 range and subsequently managed to recover some ground to finish down only $1.46. We’ll jut have to wait and see what happens with its earnings next week.

The January jobs report came out this morning and was weaker than expected. The report showed that 111,000 jobs were added to the US economy versus a forecast of 150,000. This caused both futures and bond prices to rise. Now, normally a weaker jobs report would be a bad thing. So why is Wall Street so happy? Well since the economy is strong, the Feds biggest concern has been inflation. If the Fed thinks there is inflation then they will be looking to raise rates. However if the economy shows signs of slowing or weakening, the inflation fears subside and the Fed must now look to an appropriate time to start gradually lowering rates to try for Greenspan’s famous soft landing. So today, the market looks poised to charge ahead on a weaker jobs report.

All Signs Look Up

2007-02-01T06:04:00.000-08:00

The day after the Fed held rates steady the market look like they could be in for a good day. Google posted earning three times greater than a year ago beating forecasts. Dell announced that Michael Dell would be back in the CEO post. Dell said his company needed to execute better. Starbucks and Royal Dutch Shell both posted improved earnings.

Oil is hovering around the $58 per barrel range after recent comments from OPEC.

In economic news, incomes rose 0.5 percent in December and spending by individuals rose 0.7 percent, both in line with economist’s forecasts.

Today's the Day

2007-01-31T06:29:00.001-08:00

U.S. GDP numbers came out this morning and showed that growth picked up to 3.5% annually from 2% annually in the previous quarter. That helped picked the futures up off their lows. Oil prices jumped yesterday as the Saudi’s caught everyone off guard by saying they that they would further reduce production after saying the day before that they were fine with prices and production levels.

Time Warner, Flextronics, and Alcan all met or exceeded forecasts while Allstate posted weaker earnings. But the major news today is the Fed’s decision on interest rates. It looks like nothing much will happen until the rate is released at 2:15pm. As I said yesterday, the Fed is widely expected to leave rates unchanged and the market will be focusing on the accompanying statement for any clues as to where the fed thinks rates will be going in the future.

Here’s hoping for Good News.

Waiting for the Fed

2007-01-30T06:08:00.000-08:00

Some good news for the markets as both 3M and Proctor and Gamble posted good earnings. Will this be enough to drive the markets higher? I think today will be a somewhat flat day as everyone waits to see what the Fed is going to do with interest rates tomorrow. The current thinking is that the Fed will hold the line on rates.

The Fed has, in the past, talked of the economy being stronger than they thought so there is a slight danger that they may do something stupid an raise. Actually the chance is probably a little larger because you can always count on senile old men to do something stupid, especially on the highways. But I think that they should lower by a ¼ point as there have already been a number of companies forecasting weaker growth for the next few quarters. Too bad that the Fed would rather push the US into a recession rather than have a vibrant economy with 4 or 5% inflation. For some strange reason the Fed would rather see people unemployed and no inflation. I don’t understand why since they make so much money that 4 or 5% inflation really wouldn’t be a problem for them.

Oh well, the bottom line on today is to expect a flat day as the market waits for the Fed rate announcement tomorrow at 2:15pm.

Hold On. It's Gonna be an Interesting Week

2007-01-29T05:51:00.000-08:00

This week promises to be an interesting week with a number of major earnings and economic reports due out and another Fed meeting. There were also a number of deals announced this morning that will hopefully get the markets moving in an upward direction. Among them:

Merrill Lynch is buying First Republic Bank for $1.8 Billion.

Abitibi Consolidated is combining with Bowater in a merger of equals.

And US Airways is willing to increase its takeover offer for Delta Airlines by $1 billion.

Looks like the tone has been set for an interesting week. I’ll keep you posted throughout the week.

Anyone's Guess

2007-01-26T05:58:00.000-08:00

It seems as though earnings reports are alternating between beating, hitting and missing forecasts. Yesterday Microsoft beat forecast (although those were lower than last year) and guided higher. Also beating forecasts was Dow component Honeywell. The other Dow component that reported results yesterday was Caterpillar and they missed their forecasts. Finally Amgen also missed its forecast yesterday. So far this earnings season 69% of companies reporting beat forecasts while 15% matched forecasts. Only 16% of companies missed their forecasts but you would never know it by the way the market has performed over the last few days.

Oil seems to be creeping back up to the $55/barrel range which isn’t very good. I know all the gas stations have been only to happy to raise their prices over the last week. Well here’s hoping for some milder weather and lower prices. My wallet is enjoying the break and looking for more.

What’s going on today in the markets is anyone’s guess. Where they start may not be where they finish. All I can say is that today will certainly be interesting.

The Good, the Bad and the Ford

2007-01-25T06:33:00.000-08:00

More good news from the tech sector as Ebay, Qualcomm and Nokia all posted better than forecast earnings. Ebay even raised their outlook for the next quarter and the full year. They also announced the buyback of $1- billion in stock. Chip maker Qualcomm also posted better than expected earnings and raised their guidance. Expect Nasdaq to do well today.

The blue chippers may not fair as well on the NYSE as Ford reported a record loss of $12.7 Billion, that’s right BILLION loss for the quarter. Boy if I lost even half that my bank would have me shot. Ford got stuck with a high reliance on trucks when high gas prices hit and sent consumers running to buy smaller cars. Although the margins are high on trucks, you can’t realize the profits unless you sell the trucks. It will be interesting to see what Wall Street thinks of all this.

Yahoo for Yahoo!

2007-01-24T06:35:00.001-08:00

Yahoo and Sun Microsystems both advanced in the after hours market yesterday and helped push up Nasdaq futures this morning. Looks like we’re in for a positive open on Nasdaq. Yahoo posted numbers that beat Wall Street’s expectations. The stock initially dropped but in their conference call Yahoo reassured Wall Street that their new search tool will boost revenue at the end of the year. Perhaps this is the year where Yahoo steps out from under Google’s shadow.

During Bush’s state of the union address yesterday he called on Americans to reduce their gas consumption by 20% over the next ten years. Could this be the reason that oil is lower this morning by 56 cents? I think not. But it will be interesting to watch the inventory report due out at 10:30 am Eastern time this morning.

Overall it looks to be a positive day today and I hope to see a continuation of the modest gains in the stocks I’m holding today (CLRK and WIRE).

Another Dull Day?

2007-01-23T06:39:00.000-08:00

It doesn’t look good for technology this morning with Alcatel-Lucent forecasting a drop in their fourth quarter earnings. Texas Instruments posted earnings that beat forecasts but also guided lower for the next quarter.

Oil was also higher crossing $53 to trade at $53.35, largely based on the recent forecast for colder weather in the northeast and the new OPEC quotas taking effect. I don’t expect the price of crude to remain above $50 because demand has fallen and supply has risen. There are also quite a few non OPEC countries supplying oil that are not subject to the OPEC quotas and they show no signs of reducing production.

GAP’s CEO Paul Pressler resigned after he had been unable to halt the slide in sales. GAP’s chairman will take over as CEO until a suitable replacement can be found.

DuPont and United Technologies both reported earnings that beat the street. At this point we can expect the broader market to be flat to slightly higher.

We need a couple of major companies to post some stellar earnings to kick start the rally that we saw before Christmas. Maybe people are waiting until after G.W.’s State of the Union address to decide whether they’re buying or not. God I feel sorry for those poor people down south having to put up with another two more years of Bush. What an embarrassment and pathetic president he turned out to be. But then again the Americans did elect him.

An Apple a Day?

2007-01-18T07:05:00.000-08:00

Yesterday Apple released its earnings. It announced its first ever $1-Billion profit quarter. Profits were $1.14 per share beating the 78 cents that analysts were looking for and the 65 cents it earned in the year before. Income was up 77% from the same period a year earlier. All this is fabulous news for Apple so the stock should be vaulting ahead this morning, right?

Wrong! Apple was down 1.2% in overnight trading. Why is that you ask? Well the stock market is quite a fickle place to be. You can post the most stellar quarter setting records all around yet still the market sees something it doesn’t like. In Apple’s case it looks like future guidance for the next quarter and lower ipod growth rates. People buy stocks based on the company’s potential for future earnings so some short sighted analysts look at things like the next quarter and lower ipod growth rates and think that Apple will earn less money in the future. But each time this happens Jobs proves everyone wrong. He will do it again with the iphone and itv. For with Jobs at the helm it’s always a good time to buy Apple.

Back in the Saddle Again

2007-01-09T05:42:00.001-08:00

Well I’m back after a much needed holiday. I managed to blow my Christmas budget out of the water again this year so I need a nice Spring rally to help defer the cost of Christmas. Well looks like the holidays weren’t very good for the stocks that I’m holding. CLRK is currently sitting at $19.35 while WIRE is a disappointing $21.59. CLRK is our long term investment so we can expect to ride out some ups and downs but WIRE needs to get moving or we should look at selling it and putting our profit to better use. WIRE is set t begin a share buy back program and to send out some dividends.

In the business news, the mild weather that we’ve been having in the north east has reduced the demand for heating oil and driven inventories up. As inventories go up the price of oil drops. Looks like the TD’s call of a $55/barrel oil price was right on the money. OPEC is starting to get worried but I don’t think that they can do enough to stop the slide of oil to the hight 30’s low 40’s. As we’ve seen before as oil drops the markets rise and my wallet is happier on both fronts.

Come on Santa

2006-12-21T06:06:00.000-08:00

Yesterday Nike’s earnings beat Wall Street’s expectations. This morning the third quarter revised GDP number is due out at 8:30am. Also this morning the Conference Board will release its report on leading indicators at 10:30. If these numbers come in at good levels, we can see a continuation of the Santa Claus rally that was underway for December. The Dow was well into record territory early yesterday before the record run was cut short yesterday. Good numbers can change all that and spur on further records well into the New Year.

Another Reason to Rally

2006-12-18T06:28:00.001-08:00

CNN Money.com’s headline this morning is “A Merry Merger Monday.” It looks like Express Scripts, Harrods, and Realogy will all be merged or sold. Even overseas markets are getting into it as Citigroup won regulatory approval for it’s majority purchase of China’s Guangdong Development bank. Norway’s Norsk Hydro and Statoil have agreed to merge their oil and gas operations. Orthopedics maker Biomet appears to be the target of a couple of firms. And Finally Canada’s BCE has announced that it will sell Telesat. All this merger activity has led to a jump in the futures and a likelihood of a continuation of this rally further into record territory.

I’m hoping all the merger talk and activity gives boost to my stocks, especially WIRE which seems down and out at the moment. CLRK signed another licensing deal. This one with Chinese manufacturer Neo-Neon that should help fuel another rise. We need something that will take the stock above the $25.00 range.

Good News Friday

2006-12-15T06:02:00.000-08:00

Well the stock market looks poised to take off into record territory as this mornings CPI report came in showing inflation unchanged. Nasdaq futures are currently up over 17 points, suggesting a large gap at the open should things remain unchanged. Economists had forecast a 0.2% rise in the inflation rate so this is truly good news. This news should offset the oil production cuts announced by OPEC yesterday and hopefully give a much needed boost to WIRE.

'Tis the Season

2006-12-14T05:50:00.001-08:00

OPEC is at it again. They’re meeting in Nigeria to discuss more production cuts. It doesn’t seem to me that long ago when OPEC was talking about the ideal price of oil range as being between $28 and $35 per barrel. What happened you ask? When the price of oil rose above $60 and the global economy didn’t fall apart, OPEC realized that it could make a lot more money by keeping oil above $60. So now we are facing the possibility of production cuts and higher oil prices, which the market most certainly won’t like.

On the plus side, Wall Street is having a great year. The pick up in market activity along with all the mergers and acquisitions, has resulted in record profits on Wall Street. Bear Sterns for example, blew past their forecast $3.36 per share and hit an actual number of $4.00 per share. Well record profits lead to bonuses as Goldman Sachs announced it was setting aside $16.5 billion to cover salaries and bonuses for its employees with top bonuses exceeding $20-million. Not bad for shuffling some paper and greasing some palms. Where do I sign?

Looks Like We May Have A Merry Christmas

2006-12-13T05:53:00.000-08:00

I don’t post for two days and the markets turn around? Maybe I should be a little more quiet?

Yesterday, as expected the Fed left rates alone yesterday and the market took that as a positive. Although, I would have liked to see a nice Christmas gift of a cut, I’ll take the unchanged. Better than an increase.

Also, this morning word of merger talks between Continental Airlines and United Airlines to create the worlds largest airline has markets in a positive mood. GE also announced it was increasing it’s dividend by 12%.

Adding fuel to the Christmas rally this morning was a much stronger than expected November retail sales report. Economists consensus forecast was for a 0.2 percent gain. So it looks like we have all the makings for a nice Christmas rally. Here’s hoping that WIRE takes off so I can sell it as I’ve got my eyes on another stock, but more about that later.

Fianlly a Good Friday

2006-12-08T06:31:00.001-08:00

This morning the Labor Department released the jobs report. They said that the US economy created 132,000 jobs in November beating the consensus forecast 105,000 jobs. This was despite the rise in the unemployment rate to 4.5%. As expected the futures jumped on the news and it looks like we may be back on track for a Christmas rally despite the price of oil rising above $63.00.

On the plus side it looks like a lot of retailers are deeply discounting ahead of Christmas so maybe it looks like it’s a good idea to wait until the last minute this year.

Both my stocks were down with the general market yesterday.

Go Christmas rally.

Waiting for Friday

2006-12-06T06:31:00.001-08:00

Today looks like the day when the markets could be lower as the futures are all slightly down this morning. Yahoo and Chrysler both announced restructuring plans and Novell came out with disappointing numbers. Usually in this scenario, when I say the markets will be lower something happens to drive the markets higher. Right now there are no major economic reports or numbers being released until Friday’s unemployment report. Right now the only good news out there for the markets are lower oil and lower gold prices.

Looking at the stock that I’m holding, some good news on the CLRK front. CLRK announced that is has settled its suit with Super Vision. Under the agreement, Super Vision will pay CLRK a fee to settle past claims and in return get a royalty license so it can continue to sell LED products. Good news on the CLRK front . Now all we need to do is get WIRE moving. Something I did look up was the number of shares short. There is 30% of the float that is shorted. So by my logic, if WIRE can put a rally together for a few days then there will be some short covering which will drive the price up and more short covering and so on and so on. Come on WIRE we need some upward movement.

Two Days in a Row....

2006-12-05T08:44:00.000-08:00

The market today seems poised for another rally. I think Wall Street and the rest of us want to see a nice Christmas rally. A Christmas rally will be good for everyone. It will put more money in everyone’s pockets and give my retirement account a nice boost. The futures are all pointing up this morning but things could come to an end this morning at 10:00am when the government will report on October factory orders. The rally looks to be spurred on this morning from home builder Toll Brothers who this morning said that it appeared the housing slump in the US has bottomed out.

The big day will be this Friday when the government releases the unemployment report. Economists are expecting the unemployment rate to edge up to 4.5% from 4.4%. In this case a slight increase would be good for the markets because it will mean that the economy is not growing at a frantic pace. That kind of unemployment gets Wall Street worried that there will be wage inflation. After all if people are earning more then there’s talk about wage inflation. An we know what happens when that talk starts….

Welcome to December

2006-12-04T12:13:00.001-08:00

Ok. Today I delayed writing this entry because this morning Wall Street looked like it didn’t know where is wanted to go. Pfizer had withdrawn a heart medicine it was working on and oil was up. There were a few negative factors in the air. I wanted to get an idea of what was going to happen before I shot my mouth off. Well now I see that the Dow is up over 100 points, Nasdaq is up 40 points, and CLRK is up 0.35 (WIRE is down 0.55). So what changed?

Well one of the things Wall Street picked up on merger news. Bank of New York is merging with Mellon Bank, LSI Logic is buying Agere Systems and Station Casinos has received a $4.7 billion bid from management to take the company private. Crude prices also slid today after the National Weather Service Forecast milder temperatures over the next couple of weeks. Also December, particularly the first week, is a traditionally strong month for stocks. All this good news for the markets led to today’s rally.

At home in Canada, the Liberal party did what I considered to be a disservice to their party by electing Stephane Dion as their leader. I think that an unknown francophone may not be the best person to represent the party and could end up failing to get the Liberals back in government. But at this point only time will tell and we should give the man a chance and see what he can do.

No Excitement Today

2006-12-01T07:08:00.001-08:00

Markets are somewhat cautious today after a volatile week. I don’t think there are a lot of people that want to take big positions especially ahead of this mornings auto sales numbers and construction spending due out at 10am. Once those numbers come out I hope the market will then settle into a direction, but my feeling is that the markets will hold off until Monday.

Here in Canada, the Liberals paid tribute to there out going leader Paul Martin yesterday and will turn their attention to the process of picking a new leader today. Today’s agenda includes speeches from all the leadership candidates and a first ballot. After the first ballot is where things really start to get interesting.

Stocks Go Up, Stocks Go Down

2006-11-30T12:24:00.001-08:00

Up one day and down the next for the markets. Well I think that this may be the theme for the near future until the Fed drops the notion of rampant inflation and either knocks off the interest rate hike or better yet lowers a quarter point. I don’t see how these guys can keep on thinking that everyone is making a fortune and there are too many dollars chasing too few goods. I know my salary hasn’t increased near the amount that they say salaries are increasing. The labour market is tight? There are a lot of people that aren’t working maybe because they aren’t qualified for the jobs that are available. Yet then I look at some people who are driving taxi’s because they were engineers in India yet somehow can’t be engineers (or Dr’s or whatever) here. Maybe something should be done to ensure that these spots get filled by qualified people. I don’t really think there is the kind of employment problems the Fed claims to be there. OK enough about that.

Markets and market sentiment was negative most of the day and could still finish that way. There were a lot of negative things out there; inflation worries, a weak manufacturing reading, rising oil and gas prices, slower retail sales and on and on it goes. Yet then people started thinking like me and thinking that maybe the Fed will or should lower rates and the market picks up. So who knows what’s going to happen in the short term, but hey CLRK is a long term bet and we know that over time it will be a winner.

Looks Like a Great Day is Upon Us

2006-11-29T06:29:00.000-08:00

The futures are pointing up to a brighter day today. It seems that Bernanke and the Fed think that the US economy is growing at a faster pace than the market thought. Something that was proven in the GDP number which came in at 2.2 percent versus the 1.8 percent expected. This kind of positive news has caused the stock futures to surge this morning. The S&P futures are up 4.70, the Dow futures are up 27.00 and the Nasdaq futures are up 9.75. All this good news points to a rally at the open. Let’s hope the markets can sustain the momentum through Christmas.

On the corporate news front, Pfizer announced it is cutting it’s sales force by 2,00 employees. Shares of Pfizer were up in European trading on the news, but I can’t see how cuts of this size to a group that bring in revenue can be good for the company. Also about half of Ford’s hourly workers have agreed to take early retirement packages, which puts Ford ahead of it’s reduction goals. On the Canadian markets, Bombardier reported earnings of 4 cents per share beating analyst’s expectations of 3 cents per share and last years lost of 1 cent per share.

Also today in Canada, the Liberal party leadership convention kicks off. With eight candidates in the running, this promises to be an interesting race to say the least. Right now there doesn’t appear to be any clear front runner so it’s anyone’s to win or lose. Balloting doesn’t start until Friday and a winner won’t be declared until Saturday, so it should be an interesting weekend for Liberals in Canada.

Finally Back Online

2006-11-28T07:20:00.001-08:00

It’s funny to see how heavily we rely on telecommunications and the internet. I was without internet access for two weeks and unable to post anything. I did manage to phone in some stock quotes and watch market updates on TV but having no internet access made me realize how dependent I am on it. Not having access to email gives me a sense of wondering what went on in the world despite having access to TV and newspapers. But I now have access again and can go on endless rants.

How are my stocks doing?

Well CLRK is basically holding it’s own and still around $19.00 and WIRE managed to move off it’s lows but the recent down turn seems to have knocked some steam off WIRE’s recovery. I think WIRE is still a good bet, just look at it’s P/E Ratio or Price / Sales ratio.

Well I see in the news the Canadian government has gone and done something stupid again. Seems they passed a resolution declaring Quebec or Quebecers as a separate nation. I think that anytime you say that a group within your country is a separate nation then you are inviting a whole world of problems. I guess all Harper is looking at is the next election and trying to win votes in Quebec. But at the same time, how many votes is he gonna lose outside of Quebec? It sure looks like this is another example of how misguided the conservative government is. Harper seems to be doing a good job of messing things up. Well I guess because he has a minority government the voters will be able to decide how god he is doing in a little while.

Good News Comes in Threes

2006-11-09T08:37:00.000-08:00

Three amazing things happened yesterday. The first was the resignation of Donald Rumsfeld. Since Rumsfeld was the chief architect of the war in Iraq, I take this as an acknowledgement from both Bush and Rumsfeld that the war was a failure. It now looks like Gates is charged with cleaning the mess from Bush and Rumsfeld. You know when the President says they need a fresh perspective he’s acknowledging that the status quo isn’t working.

The second major blow to Bush occurred when the control of the Senate turned over to the Democrats as Jim Webb was declared the winner in the Virginia Senate race. The victory brings the number of votes the Democrats get to 51 giving them a majority for the first time since 1994. They will likely try and keep the spending of the Bush government in check. Does anyone besides me see the irony in this?

The third thing is that Cisco posted great earnings and guided higher for the future so expect a tech rally today. I know the two stocks I’m holding aren’t tech stocks but I’m hoping the positive news on Cisco moves Nasdaq up in general. Let’s keep our fingers crossed. I have a feeling the mood may turn positive until the end of the year. Lookin for that Christmas rally….

Election Day

2006-11-07T06:17:00.001-08:00

I didn’t post for one day yesterday and the Dow has a huge rally. That just goes to show you that the market moves on with or without you. Despite the rally on the Dow, my stocks did pretty much nothing. WIRE was down three cents so I’m hoping that it has finally stabilized and we can now move on up from here.

CLRK was down 20 cents despite announcing the appointment of a new COO. Jeffrey Cassis was appointed yesterday as the new COO of Color Kinetics. Cassis will focus on the day-to-day management of the company and assume responsibility for product delivery. You would think that would be a good thing, but somehow the market sold CLRK for 20 cents. But we must always remember that CLRK is our long term play.

Today is election day in the United States so I expect that there won’t be much happening on the markets. Of course every time I call a day we get the opposite. I should have been an economist. I hope that the democrats rout the republicans because I don’t think I’ll be able to listen to Bush if the republicans do well. Somehow people forget that it was Clinton that ushered in one of the longest runs of prosperity.

Where Are We Going From Here?

2006-11-03T07:48:00.000-08:00

It looks like a dropped the SCUR in time as they dropped sharply after their earnings release. But what about my purchase of WIRE? WIRE is down over a dollar from where I bought it. Had I been a day trader, I would have been in and out several times. But this blog and my account isn’t really about day trading. It’s about spotting opportunities; whether that be grabbing a stock for a bounce or spotting an undervalued stock. I consider WIRE to be the latter. It’s a strong and solid company that is growing and well managed. Their P/E ratio is now under 5.0 and they tripled their earnings over last years quarter. All these factors scream buy to me. Since I’m not trying to time the market, I decided to buy at what I saw was a good price. So the stock dropped another dollar but it seems to have stabilized.

CLRK also dropped significantly but largely to the general market weakness of the last few days and an analyst downgrade. Since CLRK is a long term buy and readers of this Blog know what I think of analysts, I’m not at all worried about CLRK.

This morning the unemployment reports in both Canada and the US showed that unemployment rates declined. This can be seen as a good news / bad news story. The good news is that the economy may not be slowing as fast as some people feared. The bad news is that if the economy is not slowing, the Fed may be looking to raise rates. Right now I don’t think the market really has a good grasp on what to make of these reports. But since it is a Friday, my bet is that the markets will finish slightly lower. Maybe me saying that is a good thing because we know what tends to happen to my predictions.

Toronto Stock Exchange Gets Hammered

2006-11-01T07:12:00.000-08:00

Today may hinge on a few economic reports. At 10am the Institute of Supply Management will release its survey of manufacturing executives. The index is forecast by economists to be 53 unchanged from last month, but remember any number over 50 means growth. After that at 10:30am the report on US fuel inventories will be released. Oil was down slightly ahead of the report. Also out today are the September construction spending and Pending Home Sales reports. Any of these reports can spook the markets if the surprise negatively.

Also today Time Warner released earnings two cents above last year but a penny below forecast. The big three automakers are also reporting October sales today.

The NYSE will also be consolidating trading rooms from five to four over the next 18 months as more electronic trading comes online and ceilings for electronic trading are raised. Could this be the beginning of the end of floor trading at the NYSE? The NYSE has always said that some part of the floor will remain and has hung on to its floor brokers and specialists, but that kind of physical presence must come with a high overhead. The cost savings by going electronic must be a huge temptation. After all they do have to compete with the likes of NASDAQ.

The big news in Canada is the announcement by the Finance Minister that he will be taxing income trusts. Income trusts are units that pay all or most of their monthly profits out to shareholders as distributions. Since these distributions are paid out immediately, the income trusts are not subject to tax. Seniors liked them because they could get a higher yield than with dividends and they got a monthly income stream. Soon corporations got a hold of the idea and could make their shares more attractive and reduce their corporate tax. The trouble with that is that the Federal Government starts losing tax revenue and we know they won’t put up with that for long. Well it ended yesterday as the Finance Minister announced that income trusts would be taxed. Also to not upset seniors he announced special tax breaks for them. Now if we could only get him to do something about the stupid pension legislation and locked in accounts.

The TSE opened down 300 points and is trying to come back a little, but don’t count on it.

Scary Day for the Markets! Wait It's Halloween!

2006-10-31T12:42:00.001-08:00

Today I couldn’t make up my mind with what I wanted to do. I saw an opportunity when WIRE came down. It has come down about $10 to the $27 range after reporting its earnings. The thing that I can’t figure out is why? The company posted stellar earnings of $1.51 per share vs 0.48 a year ago and guided higher for the future. They continue their conservative balance sheet management and their P/E ratio is now around 5.0. So they’ve gone down from $36 to $26 in about two weeks. My take is that I have to take advantage of this and sell SCUR and buy WIRE. I can only get 200 shares but even if it bounces up by half that’s a profit of $1,000 and something I have to take. I don’t think that I can pass this up.

In broader terms, some reports today indicated some economic weakness which seems to have spooked investors. Consumer confidence dropped in October and that caught the bank economists off guard as they were expecting a rise as a result of the recent stock market gains. Once again we see the accuracy of the bank economist’s predictions. The other major negative was the Chicago PMI report on manufacturing fell more than economists expected. Once again, no surprise there. There was also a report that said that employment costs were up. Oil prices also rose. All in all a pretty scary day for the markets.

End of Month Blues?

2006-10-30T06:52:00.001-08:00

Consumer spending fell by 0.1% in September while economists were expecting a rise in spending by 0.3%. The good thing is personal incomes rose by 0.5% after economists were expecting a 0.3% rise. Prices fell by 0.3% largely due to energy prices. So what the net of all these numbers means is that consumers have more money in their pockets, but right now they are not spending like they were. It appears as if they are saving.

The above numbers also mean that I should be an economist since they also appear to be able to predict as well as I can. This is going to be a confusing time for the Fed. Everywhere you look you can spot conflicting numbers and measures. One says the economy is fine, one says the economy is slowing, still another says the economy is growing. So what’s a Fed to do? Personally, I’m hoping they drop rates and let the economy move a little. I don’t think the inflation rate is too high right now to worry about risking a recession by raising rates.

So word on the street according to the business news this morning is that today and tomorrow are going to be down days as fund managers sell to take profits for their monthly returns. Boy the competition and pressure must be intense for them to perform as a lot of them seem to be trading, rather than managing money. So I’m expecting CLRK and SCUR to drop over the next couple of days then continue their climb upwards.

Great Earnings so Sell the Stock

2006-10-27T08:13:00.001-07:00

CLRK posted it’s third quarter earnings last night. They posted 8 cents vs expectations of 4 cents. Fully diluted of 5 cents. So it looks like they beat all around. Their revenue increased 21% to $17.1 million, their Gross margins are 56% and got another US patent. They expect to see revenues from the SC Johnson deal in Q4. They are increasing their guidance for Q4. All is well, right? No way! This morning an analyst at Merriman Curhan Ford (Obviously not the brightest bulb in the chandelier – pun intended) downgraded CLRK from Buy to neutral. Well we’ll see whose right in the next 12 months. Go CLRK.

In broader news, GDP in the US grew at 1.6 percent vs forecast of 2.1 percent. On the plus side the deflator fell to 1.8 percent from 3.3 percent forecast was for 2.8 percent. The deflator is the main inflation indicator in the GDP report.

So the market is down overall, CLRK is down 1.45% and SCUR is down 2.26%. CLRK was down over 7% at one point so it is showing some strength. Which is a good thing. Ah one to Q4….

Judgment Day

2006-10-26T09:31:00.001-07:00

What a crazy and confusing couple of days it’s been. The Fed left rates alone. Then there is the unexpected decline in oil stocks so back above $60 goes the price of oil. But wait we’re not done yet. Durable goods orders are the highest they have been in six years. Wait again. New home prices fell by 10% last month and I’m sure I left out a lot more. So the markets may be a little mixed up until we get some clearer signals. What we need are some more companies with some solid earnings.

Speaking of earnings, it’s judgment day for CLRK. They are reporting earnings after the bell today. I’m hoping that some of the deals that they have signed will bear some fruit. All we have to do now is just wait and see.

Waiting For The Fed.

2006-10-24T21:39:00.001-07:00

Today looks to be a mild wait and see day. Everyone will be waiting for the Fed to show us the way on interest rates. Here I am again ranting about how everyone will be hanging on the words of a few senile old men. These guys will be making decisions that will impact us all. Yet likely none of them has ever held a real job where they have actually worked for a living yet they are more than happy enough to decide what we will pay in terms of interest rates. You gotta love em.

Does anyone really feel sorry for Skilling. Should this guy even be allowed to go to prison. How about the death penalty for this guy? He literally wiped out a lot of his employees, A lot of them lost everything. At the very least he should be doing hard labour. Maybe doing a full days work for 24 years will teach him something?

CLRK looks to have gotten hammered the last couple of days but is reporting earnings on Thursday. I expect them to beat. SCUR seems to be holding it’s own, but we would like to see it back into the $7.00 range.

Trust Your Gut

2006-10-24T08:00:00.001-07:00

Nice track record, huh? I say the market will go up and it tanks. I say the market will go down and it rallies. Well yesterday I said market wouldn’t do much and it rallies to a new record. Perhaps I should give up trying to predict the market movement on any given day. But I would say that this teaches me about how difficult it is to predict what the market will do on any given day.

But I still say that no matter how much people try to make it a scientific discipline, the stock market is still more about social science than anything. People can take all the empirical measurements and predictions they like but in the end it’s all about the way people feel and think. All your charts and figures can be telling you a stock is going to soar and in the end if people don’t like the stock for ,what ever reason, they won’t buy it and the price won’t go up. I think the best tool a trader can have is his gut feeling. If his gut feeling is telling him to get out of a stock then he better do it, because more often than not the gut feeling trumps the empirical evidence. Always go with your gut feeling when trading stocks. If the numbers say the stock you’re looking at should go up but you get a feeling of doubt then it’s best to stay away and look for somewhere else t o put your hard earned money.

$5.8 Billion Loss? Someone Give These Guys a Medal

2006-10-23T06:40:00.000-07:00

I’m not expecting too much from the markets this week because the Fed is meeting. We all know that life must stop until the Fed pronounces it’s decision on interest rates. My guess is that the market will wait for the Fed, despite some good earnings posted by companies. That or the market will start to focus on the stinkers. This morning AT&T posted earnings of 63 cents a share easily beating analysts forecasts. But my guess is today’s focus and perhaps rightly so will be on Ford’s loss of 62 cents a share.

Ford posted a total quarterly loss including restructuring costs of $5.8 Billion! How is this possible? I fail to see how companies can post losses of this size and still be allowed to remain as going concerns. But one thin is for sure. You can bet that the top executives at Ford won’t be taking any pay cuts or be losing their bonuses. I’m sure in the boardroom it will be all congratulations on the cuts. Their will be pats on the backs and kudos all around for those execs. And, oh yeah, how ‘bout bonuses and perhaps raises for a job well done. How will they get the money to pay for all this? Perhaps they can ask the workers to take pay cuts? Well the union won’t easily concede to that so my guess is that middle management should bend over and get prepared for some cuts.

I’m hoping that both CLRK and SCUR can show some modest gains through the Fed meeting and into their respective earnings at the end of this week and early next week. We’ll be watching.

Sometimes Life Happens

2006-10-20T22:02:00.001-07:00

Sometimes life gets in the way of making money in the stock market or day trading. Today I had a busy day at work and was unable to watch the market at all. It is days like these that make the day traders nuts. If you take a position in a volatile stock and can’t watch it during the day, then you could be out a lot of money. That’s why I chose to position trade.

My goal is to find stocks that I think will do well or are moving upward quickly and jump on their bandwagon. Because I take this philosophy, I can afford to not pay close attention to the markets. I’ve known all the reasons for buying the companies that I have bought; and I have a reasonable chance of making money over some time period. My time periods can be days, weeks, or even months.

Aside from Google, the earnings weren’t very good for quite a few companies, especially or Caterpillar. Because of the way I’ve been picking my stocks, I don’t have a lot to worry about if I can’t watch the market all day. Life still goes on. It’s not going to upset me if I can’t watch the market. So the markets can go down and it won’t hurt me too much.

So today I had to spend more time living then I otherwise would have liked but you know I did manage to get a lot done. My stocks are fine and the world has not ended. Make sure that when you pick stocks, your not worrying about them constantly or else you need to look at other investments because you will give up a large portion of your life to watching over and worrying about stocks. Relax, have a beer. Enjoy life.

See Saw Day? Or Dow Above 12,000?

2006-10-19T07:20:00.000-07:00

Yesterday the Dow did trade over 12,000, although it didn’t last. The futures are kind of flat this morning. Yesterday Apple and Ebay beat expectations, but AMD reported lower than forecast earnings. Citigroup, Bank of America Honeywell and Pfizer all beat forecasts while Coca-Cola posted improved results. Also on the earnings front, McDonalds hit their recently raised forecasts. All this points to a good day for the markets and a close over 12,000.

So why then are all the futures so flat? Well I think it has a lot to do with OPEC meeting to discuss production cuts. Part of the reason the market was doing so good was the recent slide in oil prices. If OPEC decides to cut production to get prices over $60.00 per barrel then it could put a damper on Wall Streets recent party. I personally can’t see oil staying over $60 for too long. High oil prices only promote more conservation and investment in alternative fuels. What OPEC’s greed will end up doing is ensuring that people find alternative sources of energy and thereby reducing the overall demand for oil, driving the price down, then more supply cuts and so on…. In the end they will be hurting themselves. But hey, what do I know.

Inflation? Yes? No? Maybe?

2006-10-18T06:28:00.001-07:00

Yesterday saw an up tick in the wholesale price index and an increase in the price of oil. The market reacted expectedly by selling off. This morning, as I write this, the stock futures are all pointing up. So what’s the difference today?

Well after the market close yesterday, Intel reported better than expected (although lower) earnings and said that it was gaining market share back. IBM beat expectations and got an upgrade from Goldman Sachs. Yahoo reported lower than expected revenue but earnings that matched expectations. Yahoo shares were up in after hours trading however as the company announced that its long awaited search technology is now live. Motorola reported lower earnings of 39 cents a share vs last years 69 cents per share; as expected, their shares were trading 8% lower.

This morning saw the CPI number released. The report showed that the CPI was down by an unexpected 0.5%. This is most directly attributed to the fall in the price of oil. The core CPI, however, rose 0.2% which was in line with expectations. Since the Fed is meeting next week, the market took the news as good. The Fed should leave rates alone next week.

Also this morning, JP Morgan blew away their expectations posting earnings of 92 cents vs the 86 cents that analysts were expecting. Look for shares of JPM to take off in early trading.

SCUR managed to hold over $7.00 so we’re happy with that result. CLRK actually slipped below $20.00 yesterday for a brief period but managed to finish over $20.00 closing at 20.24. I’d like to see CLRK gain back all the ground it lost yesterday. Although I like to see the stocks rise, I realize that they can’t keep rising day after day, and so they must take a break when they have come too far too fast.

Why I Love Wall Street

2006-10-17T13:06:00.001-07:00

Looks like the negative sentiment, while still there, may abate a little. Seems that the new home builders survey is suggesting that they feel the housing market may have bottomed out. Was this the factor that caused the Dow to pair its losses? Perhaps the market is so earnings focused that they can push out any inflation fears? What is the real level of inflation anyway? I for one think the CPI is a terrible way to measure inflation. But until someone comes up with a better measure, I guess it’s all we got.

CNN Money had a great article today.

http://money.cnn.com/2006/10/17/news/newsmakers/bc.financial.wallstreet.pay.reut/index.htm?postversion=2006101715

Now if anyone can read this and tell me why these salaries are necessary or even justify them to me, I’d greatly appreciate it. If there is any group of people that are grossly over paid it would have to be these analysts, brokers, traders, investment bankers etc. I’ll throw real estate agents in with that group. Now probably 80% of those people are making under $75k, so imagine what the top tier people are making?

Someone post a comment and clue me in please…

Inflation Jitters?

2006-10-17T07:30:00.001-07:00

Sorry for my absence yesterday, but I was out of town on a family emergency and unable to get any internet access. But the world merely goes on blissfully unaware of your existence whether you’re online or not. Looking back over the days I was away, I see SCUR is still over $7.00 and CLRK announced a $100 million stock shelf.

SCUR looks like it is strong, but looking at the futures this morning, today will be a test of support. The futures are all negative this morning and we expect the market to decline. Two reasons for this are the price of oil has climbed back to the $60 mark and the core wholesale prices have risen higher than expected. Both these things point to inflation and potentially higher rates, which the market doesn’t like. So look for the market to at least open low and then we’ll see if SCUR can hold $7.00.

CLRK announced that they filed for a $100 million stock shelf. They plan to use funds for general corporate purposes including acquisitions, marketing and research and development which is standard language for these filings. Basically what it means is that the company is setting aside a certain amount of stock that it may sell in the future to raise money for any number of things. So I’m hoping that management will be smart about the extra shares. I have some faith in them as so far they have managed the company well.

Is That Love in the Air?

2006-10-13T06:44:00.000-07:00

No it's snow.

Insane is the only word to describe it. Apparently there are over 300,000 people without power in Buffalo this morning. They actually got over two feet of snow in buffalo. In October? Wow talk about your Friday the 13th. Apparently 80% of the roads are impassable and several counties and towns have declared a state of emergency.

But what about the markets on this Friday the 13th? Well the Dow is sitting at 11,947.70, a mere 53 points away from 12,000. So is Friday the 13th going to be a lucky day for the Dow? I don’t think so, and let me tell you why? Despite good news from GE and Microsoft, market will at least open lower on slowing September retail sales. Yes, right now the focus is on earnings, which makes the read on September retail sales interesting. If retail spending is slowing now it will have an effect on company’s earnings in the future. Since stock prices are based on future earnings, look for the market to drop.

Also a lot of the big players are reluctant to hold big positions over the weekend so they may pair down some of their holdings. And let’s not forget the Friday the 13th effect. Are there any people that are still superstitious on Wall Street? There are plenty of superstitious traders out there. When they are on a roll, they are reluctant to change anything they are doing for fear of breaking the good luck. But does this mean people believe in Friday the 13th enough to let it affect their trading? I guess we’ll never know.

I Actually Called One Right?

2006-10-12T13:20:00.000-07:00

It’s nice to have a day go your way. I called CLRK going over $21 and it closed at $21.50. I also said, and this was more of a stretch, that SCUR would cross $7.00. SCUR crossed $7.00 and stayed over $7.00, closing at $7.14 up 27 cents. Sometimes it’s amazing to see things go your way. Maybe I should buy a lottery ticket? Or maybe I just lucked out and found my own lottery ticket in CLRK? Well one thing’s for sure, I am enjoying this moment. Hope it continues….

What a Difference a Day Makes.

2006-10-12T06:31:00.000-07:00

Today everything in our world seems ok again. Yesterday saw a negative reaction to Alcoa’s earnings, then there was the OPEC production cuts, the Fed, and finally to top it off, the plane crash in New York. These factors all contributed to the negative numbers seen on the markets yesterday. Ah, but today is a different day. What’s new today you ask?

Well for one, oil is down almost a dollar to its lowest level in a year. So much for those OPEC cuts. The real test of oil will come this morning when the inventory numbers are released at 10:30am ET. Watch for oil to head lower should inventories increase. Saudi Arabia also said that they would likely not make any production cuts until at least the end of November.

It also looks like the markets are looking past Alcoa’s earnings as Pepsi, Costco and Harley Davidson all reported stronger than expected earnings. McDonald’s also said third quarter sales were higher than expected and raised it’s earnings forecast to 68 cents per share from 63 cents per share. Clearly Wall Street will see that as good news and continue the rally as strong earnings begin to flow. The Dow, Nasdaq and S&P futures are all up this morning suggesting stocks will start positive. All we need is good news from the oil inventory report to ensure the days finished positive.

Looking at my two plays, SCUR is still hovering below $7.00. Like most stocks yesterday, it was down a few cents to $6.87. I’m looking for it to cross $7.00 today and then will base our decision to sell on its direction after it crosses $7.00. If it can’t hold and heads back down then it will be time to take our profit and move on putting our money to better use. I’m looking at Encore Wire to put my proceeds from SCUR. WIRE was down 86 cents yesterday to close at $33.36. I’d like to pick this stock up in the $32’s but I don’t know if that will happen.

CLRK surprised us yesterday with a 25 cent gain to close at $20.99. While a close over $21.00 would have been great, I’ll gladly take a 25 cent gain on a day where a lot of stocks were in the red. Today I’m looking for CLRK to cross $21.00 and hold there.

Accident?

2006-10-11T13:14:00.000-07:00

So just when you think your stocks are doing OK in a ho hum market, a plane goes and hits a building. Well that sent markets into a tailspin. It looks like they are trying to recover but they may not make it before 4:00pm. I don’t want to make light of the situation or any casualties, but this incident illustrates the way the market reacts to events.

If you look at the chart you can see the knee jerk reaction as the market dives. When the dust settles, they are thinking that the crash is an accident. The more it begins to look like an accident, the more the Dow recovers. Now if you were a day trader, it would be a perfect opportunity for you to buy. Now the gut reaction is that it is terrorism, especially with North Korea on everyone’s mind. But when you look at the circumstances terrorism is a good knee jerk reaction. I can’t blame the markets for selling off, but I know people capitalize on things like this.

Good Earnings? Sell, Sell, Sell!

2006-10-11T06:38:00.000-07:00

Only Wall Street can be disappointed in a company that nearly doubles its third quarter earnings. Wall Street was looking for Alcoa to come in with earnings at 77 cents per share but Alcoa came in at 61 cents per share. Alcoa warned the street earlier that there was weaker demand from housing and automotive sectors and that aluminum prices would come down. They still managed to nearly double their earnings from last year. This begs one to ask the question, Did Wall Street effectively take this into account? Was Alcoa’s guidance effectively priced into the stock or is this another case of the institutional guys selling on news? Some say that Alcoa’s news will set the tone for the markets for the day, and indeed the futures were lower this morning. I, for one, don’t think the entire market will move according to the fortunes of one stock.

The other major company out with earnings was Genentech. Genentech beat the street by two cents yet shares still fell in yesterday’s after hours session. What gives? These guys actually beat the street. Well it looks like sales of some of its cancer drugs seemed to be tapering off, so that sent Wall Street running. Perhaps this is another case of selling on the news?

I expect to see more rhetoric coming out of North Korea. Whether it is enough to affect the markets is anyone’s guess. But when you have a country like North Korea and a group of leaders with enough collective brain power to dimly light a 40 watt light bulb anything can happen.

Today may shape up to be an interesting day.

Ho, Hum

2006-10-10T12:52:00.001-07:00

It looks like the markets are taking North Korea’s saber rattling in stride. Markets seem more focused on what is happening with third quarter earnings. The first of the third quarter earnings reports is coming from Alcoa tonight. Alcoa will be the first Dow component to report earnings for the third quarter. The market will place a lot of weight on the numbers that they post.

On a more personal note, CLRK seems to be coming back a little and SCUR is flat. The Dow is up barely a point and NASDAQ is down barely a point. Looks like a rather bland finish for the day. Perhaps Alcoa will spur the markets tomorrow.

North Korea Leads the March into Earnings Season

2006-10-10T09:05:00.000-07:00

I got a nice surprise after coming back from a three day Thanksgiving weekend in Canada. Although the markets were closed here, the US markets were open. Both my stocks managed nice gains despite the rhetoric and nuclear tests by North Korea. CLRK finished at $20.91; maybe people are finally getting the idea of the LED lights being a good thing and CLRK being the leader. SCUR managed to finish at $6.86. I’m hoping to watch this climb over $7.00 in the next day or two.

So I guess the topic of the week for oil, gold and the markets is going to be North Korea. Today the saber rattling is about North Korea threatening to launch a nuclear missile. I think the US should let China take the lead on this and allow China to smack North Korea around. After all China is starting to play ball and seeing that reforming their economy is starting to pay off for them. Now if they can get their human rights together then we’d see them develop into something of a good international citizen. But in the meantime, the US should allow China to walk into North Korea and put a stop to things. This accomplishes two things. First the US is telling China, we think you’re capable of handling this and trust you to put a stop to it. After all, China is a neighbor to North Korea and could be in the line of fire. Secondly, the US doesn’t have to bear the cost of invading another nation. The US needs to save its resources for Iraq, and having China take care of North Korea would save them a pile of money.

We are also on the verge of earnings season so the market may be a little nervous to move too much further up until some companies start to come out with some decent numbers. I don’t see the markets moving too much higher this week, but the potential for them to go lower is definitely there. The one thing that will propel the markets higher is if North Korea backs down.

Sometimes You Just Have To Go Along For The Ride.

2006-10-06T06:32:00.001-07:00

It looks like the Dow won’t be setting another record today as the unemployment report was weaker than expected. Economists forecast the addition of 120,000 new jobs but there were only 51,000 jobs added in September. This still managed to push the unemployment rate down to 4.6% from 4.7%. Stock futures stayed unchanged on this news. Last check put the S&P futures down 4.70, suggesting a lower open to the markets. Now I’ve called for Dow records before and the markets turned lower. Now I’m expecting them to turn lower so watch the markets take off.

Yesterday was a great day for me. SCUR was up $0.55 to close at $6.96. So looks like it’s making its way back over $7.00. Once it crosses, we’ll see if it will stick. CLRK gained $0.83 to close at $19.42. It’s coming up to a huge psychological barrier at $20.00.

This weekend is Thanksgiving in Canada. Looks like I have a lot to be thankful for this weekend. When I started this I was really worried about the markets and their ability to move upwards. The returns I have to date are pretty darn good. So far I have made $984 on CLRK and $980 on SCUR for a total of $1964. That works out to a net return after commissions of 17.86% in the six weeks I’ve been doing this. I don’t think that is too shabby. I think that we should sit back and enjoy the day and see where the markets take us today.

OPEC Loves Money

2006-10-05T06:50:00.000-07:00

Oil is back over $60 this morning. Looks like the governments in OPEC really love to keep that money rolling in. It seems that since the price of oil has fallen in the $60’s OPEC has seen the pressure come off the Fed to raise rates. They have also noticed that the US economy is slowing and not heading into a recession, so why not capitalize and keep oil in the $60’s? So this morning OPEC announced they would be cutting production by 1,000,000 barrels. The news caused the price of oil to rise above $60 and the futures to turn negative.

On a positive note, September retail sales rose 3.8% which was slightly lower than the forecast 3.9% but it looks like the markets will take this as a bit of good news. So today’s battle on the markets will be between the effect of oil prices and the retail sales.

I look to SCUR to add to its gains from yesterday as it gets ready for another attempt to clear $7.00. I think that CLRK might stay in the high 18’s for a while before it heads towards $20.

Stand Back or Get Trampled

2006-10-04T13:08:00.001-07:00

CLRK was on a bit of a pullback from the tear it went on yesterday. So after a run like that there’s two directions a stock can go; up or down. In today’s case it looks like some people decided to take their profits. The other thing that could happen is that the shorts get caught off guard and then rush in to cover their positions, driving the stock higher. My guess is that there aren’t a lot of short positions out on this stock so there was no covering to push the stock higher. The result if that the profit takers won out on the day. Maybe CLRK can get some analyst coverage over the next couple of days. Hahaha.

SCUR looks to be starting another trip towards $7.00 so we won’t cut it loose just yet. My guess is that it will make a third attempt to stick over $7.00. If it doesn’t then it will surely come down in a hurry so we must be ready for that. When we see the inability to stay above $7.00 we want to make sure that we’re in the front portion of the pack as they head for the exits.

Looks like the Dow is really moving and 12,000 is now in sight. It isn’t unrealistic to see the Dow over 12,000 by Friday. This morning it didn’t look like it was going to be much of a day until we got some news on oil inventories, the economy and treasury yields started to fall. Funny how a slowdown is now beginning to be seen as a good thing. What that means to the market is that the Fed is done raising rates and they might possibly start thinking about lowering rates.

Now with the Dow hitting new records, my take is that the general public will now start to pile into the market either on their own or through mutual funds. Investors see new records as people making easy money and greed kicks in. They see other peoples’ wealth increasing and they want to increase theirs as well so in they pile.

Even though I still see the foundation of this rally as shaky, I can’t ignore the rush of money that will now flow into the market. All this means is that the institutional players will make more money as the public drives the market higher. Short term players must guard against the institutional guys taking their money off the table and sinking the market. Longer term people may want to take some profit and buy back at a lower price.

Easier said then done.

Where to from here?

2006-10-04T06:56:00.001-07:00

Well the Dow finally made its record. Now this morning it looks to be coming undone. Well I did say it would be a volatile week. The Dow futures are currently pointing down after Walmart lowered its sales estimates.

Oil gained a bit of ground after Kuwait said that any OPEC production cuts would be voluntary. But let’s not forget that the oil inventory numbers are due out this morning. So if the inventories rise more than expected, I’m looking for a stampede toward the exits for oil. Maybe $55/barrel oil is a lot closer than we think.

Ben Bernanke is speaking this afternoon in New York so the markets will likely be hanging on his every word trying to get his take on where things are going. We could see some movement in the markets on his comments, but I doubt it.

SCUR was down a few pennies and looks like it is consolidating at this price level. I’ll give it a few more days to try and mount some kind of recovery. If none is in sight, we’ll have to take what’s on the table and move on.

CLRK closed at $19.00 for a one day gain of over 9%. Looks like my long term stock has turned into a short term play. We’re gonna stick to our original plan and hold CLRK long term. Should we make any money on the short term stuff, we can always by some more CLRK. Why was it up so high? They signed a licensing deal with Osram Sylvania. One of Osram Sylvania’s subsidiaries is going to produce light fixtures for CLRK’s colour LEDs. Now that there is a large player like Sylvania selling LED products on behalf of CLRK, they should get wider penetration of their lighting systems. The other thing the market is looking at is the potential for further deals with Sylvania for the white light products. If all goes well with the colour deal, Sylvania will want to do one for the white lights and become a market leader in a new technology.

All we need now is a couple of analysts pushing it up…

More Ranting About Politicians.

2006-10-03T07:36:00.000-07:00

It doesn’t look like the Dow is going to be hitting any records today. So call me a liar. Well maybe if it goes down quite a bit today it won’t hit the record close for a while. But I do think it’s in the interest of Wall Street to let the Dow hit a record. Think of all those folks that will be streaming in to the markets, only to have Wall Street sell of when 12 or 13,000 is broken. That would be more conducive to large profits for Wall Street.

We do know that the price of oil has fallen almost two dollars this morning and is currently below $61. If the inventory report this week shows an increase, hopefully the markets will be spurred on to reach new highs. I think once oil breaks $60 then we’ll be heading to the low 50’s or high 40’s.

Yesterday we were talking about politicians. Then later at home, I was watching the news and a story comes on about former city councilor and now Immigration and Refugee Appeal Board Judge named Steve Ellis offers to accept a claimant if she has sex with him. Fortunately, or unfortunately for Ellis, her boy friend got the whole thing on video. Just more proof that politicians are not only useless for any sort of public good, but only after their own interests. If you want to see the whole story here’s the link:

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20061002/irb_judge_061002/20061003?hub=TopStories

The video is on the right in the video section. Enjoy.

A little while ago I sent a letter to the Finance Minister of Canada talking about how unfair it was that people who work under federally regulated companies could not do what they want with their pension money when they leave. They have to keep it in federally regulated locked in accounts and are unable to do anything with the funds until they reach retirement. People who work at all other companies are free to use their funds. Rather than talk about that you can read the September 19th post for the particulars.

What this post is about is that I emailed the letter to three people; the Finance Minister, The Prime Minister and my member of parliament. So far I have received responses from the Finance Minister’s Office, and the Prime Minister’s Office. I guess my MP is too busy to reply, and he’s not even in the governing party.

I sent my email on the 28th of August. On the 31st the Finance Minister’s Office sent me a nice and short form letter reply. I have since wrote back and am awaiting there reply. The form letter as well as my reply is below:

Does as soon as possible mean before the next election? Am I now to petition all Federally regulated employees and forward that to the minister to get this issue looked at? The previous Liberal government was at least looking into it, what happened to that information? I've read several letters to that commission asking for the withdrawal of the Locked in pension requirement. Yet where is there any action?

Dean
re-FINEMail@fin.gc.ca wrote:
August 31, 2006
2006FIN194479Mr. Dean
Dear Mr. Dean:
On behalf of the Minister of Finance, the Honourable James M. Flaherty, this is to acknowledge receipt of your correspondence of August 28, 2006.Please be assured that your comments will be brought to the Minister's attention as soon as possible.Departmental Correspondence Unit

Now is that cool or what an actually acknowledgement from the Minister’s Office. Wait it gets better. Yesterday, over a month from the original email, I received a reply from the Prime Minister’s Office. I hate to think how long it would have taken had I used regular mail. But the PM’s office say that they will pass my concerns on to the Finance Minister but my email was addressed to the Finance Minister, I only cc’d the Prime Minister. Below is the email I received along with my reply:

Prime Minister/Premier ministre wrote:
Dear Mr. Dean:On behalf of the Right Honourable Stephen Harper, I would like to acknowledge receipt of your recent e-mail correspondence regarding pension funds and locked-in RRSPs.Please be assured that your comments have been carefully reviewed. I have taken the liberty of forwarding your message to the Honourable James Flaherty, Minister of Finance. I am certain that the Minister will wish to give your enquiries every considerationThank you for writing to the Prime Minister.Executive Correspondence Officerfor the Prime Minister's OfficeAgent de correspondance de la haute directionpour le Cabinet du Premier ministre
And my reply:

Thank you for your prompt response; however, I have already forwarded my comments to the Finance Minister directly. His office is doing an excellent job of humouring me as well.

I know the previous Liberal Government was looking into this issue as I have seen several submissions to the commission looking into federal pension rules from concerned people like me with funds stuck in locked in retirement accounts that could be combined into our regular RSP's as with most of our provincial counterparts. Instead we are forced to keep second accounts and pay double the fees. All this to ensure that the friends of the government, in the executive offices of the banks, earn more profits at the expense of the little working guy.

I would assume that the Finance Minister's pension from his days as an MP are not subject to the same restrictions as mine or any other federally regulated employee? Perhaps the government enjoys being condescending to the little guy? Perhaps these working "stiffs" are not smart enough to control money that is rightfully theirs? I really fail to see the logic in the government not doing anything to amend this archaic pension legislation.

I it really necessary to go through the exercise of collecting signatures on a petition, starting a website etc. to get the government to look at this issue? Or is there someone in the public service that actually see how unfair this is? I know that the Finance Minister doesn't care. He's earned enough as an MPP and now as an MP to care. When he gets out he will have enough connections to get a high paying job. But the rest of us are having a hard time and need access to additional funds or at the very least need to be able to manage their investments without watching them dwindle under the burden of additional fees.

Please let me know whether you will look at the work of the pension commission and work to get this restrictive legislation changed.

Regards,

Dean

I think that my MP has gone missing.

Ya Just Gotta Love Politicians

2006-10-02T13:02:00.001-07:00

Oh yeah baby! The accuracy of my predictions is uncanny. IF I say the Dow will break the record today, you can be damn sure that it is going to go down, or at least wait until tomorrow to break the record. Perhaps, tomorrow, I should say that the Dow will tank, then wait and see the rally that you’ll get.

Well, I’m happy that CLRK is up a quarter at least. SCUR is only down pennies so it seems to be holding it’s own.

The replies to my open letter to the Canadian Finance Minister seem to be pouring in. I’ll have to get them posted to the blog shortly. One of the good things about form letters and having teams of people to answer your correspondence is that you can get replies to your emails sent out quickly. I guess if you’re the Canadian Government, then over a month long is quick. Actually I think that the job the current PM is doing is quite sad. The Finance Minister is also misguided and incompetent.

Take for example the recent and much touted, by the government, one percent cut in the GST (Goods and Services Tax). Although the tax was much hated and loathed by the general population, the government decided that they would reduce it by one percent, instead of eliminating it. Now that meant that they had to scrape the direct cut to income tax rates that the previous Liberal government had already put in place. Well I haven’t noticed the huge difference this one percent cut has made to my life. A quick canvass of my friends, family and colleagues reveals the same thing. I think people would much rather see the effect of a direct tax cut on their pays than a one percent tax cut in the GST. It also turns out that a lot of establishments that had the taxes built into the price did not pass this tax cut onto consumers. The only people that benefit from this tax cut are the people buying new Mercedes and BMW’s. In other words, the upper class, elite, friends of the conservatives, what ever you want to call them. All it means is that the friends of the current government are making out quite nicely while the rest of us have to pick up the slack.

God I love politicians.

Well at least we’re marginally better than the politicians in the USA. They look like they’ll be having a blast with Foley for quite a while.

The Death of Online Gambling?

2006-10-02T06:57:00.001-07:00

This week looks like it’s going to be a volatile week. I expect the Dow to be in and out of record territory all week. There are quite a few economic reports coming out this week, starting with today’s construction spending and manufacturing and ending the week with the unemployment report. I think we should do OK heading into Christmas as the market is coming off the best third quarter it’s had in years, and as I said before a new record will cause greed bells to ring in peoples heads. Not wanting to be left out, the public will rush back into the markets.

I’m hoping for a good week from CLRK and would like to see SCUR shake off its downgrade. CLRK finished below $17.00. We’re still looking for it to hold above the $17.00 range. SCUR dropped to $6.33 on Friday after a downgrade and we’re looking to see it shake that off this week and head back towards $7.00.

My favorite event of the weekend occurred on Saturday. Congress approved a bill that would make it illegal for banks and credit card companies to make payments to online gaming sites. This would effectively prevent any online gaming sites from charging US players. As most of the online gaming sites derive the majority of their revenue from the US, this will have a major impact on their revenue. As can be expected, the shares of most of these companies are plunging on overseas markets. Shares of these companies are down anywhere from 20% to over 60% in European trading.

I expect that this caught a lot of these company’s shareholders off guard. I think this is another case of the institutions running for the exits and the little guy waking up and, not being able to trade in Europe, finding himself in a world of pain.

I wonder how much of this ban is to protect Vegas and Atlantic City? After all I would assume that all the major casino players would have developed online gaming sites. Maybe they were slow off the mark with sites of their own and couldn’t get market share form established players that saw a market and were quick to launch? I’m not very familiar with the gaming industry but it strikes me as strange that in the USA where they pride themselves on freedom to choose, that the government would tell people that they can’t spend their money as they wish. Especially the Republican Party.

Shame, shame.

Quick! Someone Give My Head a Shake.

2006-09-29T08:17:00.000-07:00

So the Dow finally made it into record territory, but where’s SCUR? Yes there was another downgrade. Now someone needs to give my head a shake. SCUR was over $7.00 then it was downgraded. It fought back to over $7.00 again, but did I sell it? NNNNNNOOOOOOOO!!!!!!!! So then what. There was that nasty old NASDAQ letter that sunk it below $7.00. And today they get another down grade, which drops the price 22 cents to $6.34. So now what?

The approach I’m taking with SCUR is to hang on to it for now. that since the Dow is heading on to new records, I’m going to see if SCUR can battle its way back over $7.00. Then you can believe it that I’m going to sell otherwise my short term play is going to end up being my long term play. Someone give these guys a good contract so I can take my ball and go home.

Back on the oil front, oil rose the last two days on rumors of an OPEC production cut. However, it seems as if only a few countries are in agreement over a production cut. The result is that the price of oil is back down to the $62.00 mark today. Looks like Nigeria will be the lone country to cut production by 5%. But the Alaska pipeline has come back online and inventories are good so it is unlikely that Nigeria’s move will result in any permanent price increase.

Now the only thing the markets have to worry about is the broader economy and the growth rates. From all the indicators in the last month or so it would appear that any inflation worries are dead. That means the only thing the markets can be worried about now is a slow down or a recession. There I said the “R” word, look for the world to fall apart shortly. We’ll just have to see how the senile old farts at the Fed manage this one.

Long term play CLRK is at $17.20.

What's Going on with the Dow?

2006-09-28T09:21:00.000-07:00

Yesterday I said the Dow would make it to a record close. Today I’m eating my words. Perhaps I should also be eating my shorts. Again, today, it looks like the Dow will not be hitting a new record close at all. The second quarter GDP number was revised down from 2.9% to 2.6%. This lower number reflects the slow down we were talking about earlier in the week. At the very least it shows that the US isn’t growing at a break neck pace so there’s no need for the Fed to raise rates. Leaving rates unchanged or lowering then is good for the market.

Let’s take a look at SCUR.  Secure Computing today announced a deal with IceWEB Partners. IceWEB Partners is going to start trying to sell Secure Computing’s line of products to their Federal Government customers. Ordinarily, that would be a good thing, but today SCUR also announced that they had received a letter of deficiency from NASDAQ. A portion of the news release reads as follows:

On September 26, 2006, Secure Computing Corporation, a Delaware corporation ("Secure"), received a Deficiency Letter (the "Letter") from Nasdaq ("Nasdaq") indicating that when Secure completed its acquisition of CipherTrust, Inc. ("CipherTrust") on August 31, 2006 (the "Merger") pursuant to the Agreement and Plan of Merger dated as of July 11, 2006 with Peach Acquisition Corp., a Georgia corporation and a wholly-owned subsidiary of Secure, CipherTrust and CT Shareholders' Representative LLC, a Georgia limited liability company (the "Representative"), as amended by that certain First Amendment, dated as of July 14, 2006, that certain Second Amendment, dated as of August 1, 2006, and that certain Third Amendment, dated as of August 30, 2006 (as amended, the "Merger Agreement"), it failed to comply with the shareholder approval requirements set forth in Nasdaq Marketplace Rule 4350(i)(1)(C) (the "Rule").
Nasdaq verbally notified Secure of such noncompliance on September 14, 2006. In response to the verbal notification, Secure took action to cure the deficiency by entering into the Fourth Amendment to the Merger Agreement to restrict the issuance, in connection with the Merger, of an aggregate number of shares of its common stock equal to or in excess of 20% of the number of shares of its common stock then outstanding on the closing date of the Merger, unless and until shareholder approval has been obtained.
Consequently, the Letter confirms that, subject to the public announcement requirements of Nasdaq Marketplace Rule 4803(a), Secure has regained compliance with the Rule and the matter is now closed. On September 27, 2006, Secure issued a press release, in accordance with Marketplace Rule 4803(a), disclosing receipt of the Letter.

So now the merger is going ahead and SCUR is onside with NASDAQ. The good news is that IceWEB is peddling SCUR’s products to its establish customers. Now the market is choosing to focus on the letter and the merger instead of the good news of the agreement. This focus on the negative is what concerns me. Looks like this might be an indication of the market mood in general. Perhaps I’m looking at what’s going on with a particular stock and overlaying it on the entire market.

Am I reading too much into what’s going on with SCUR today? Or is the market mood turning negative in general? Maybe what’s going on with SCUR is an indication of why the Dow can’t hit a new record? But if you look at the market breadth for the Dow it’s positive. More stocks are going up than down.

So what gives?

A Record Breaking Day

2006-09-27T06:44:00.000-07:00

Yesterday was a relatively good day. SCUR, although down, managed to hold above $7.00. CLRK gained 0.31 to close at $16.99. It would have been nice to see CLRK break $17.00, but I’ll take a 31 cent gain any day.

The big news for today is that the Dow is within 53 points of the record close of 11,722.98 it set on January 14th 2001. The futures are all pointing up this morning and all indications are that the Dow will be able to break the record close today. If this happens the market psychology will shift to a more positive one and we should see the markets on a break out and pushing on to new highs. Seeing the Dow at new highs will spur a lot of the little guys to get into the markets. There’s no way that regular folks will want to miss out on the rising market. They’ll want to get in and make some money too. So in they’ll pour. The institutional guys will wait and watch for signs of a market top. When everyone is in, they will start selling and pull the rug out from under the market. Then the little guys will get burned.

Greed has a funny way of influencing behavior. Many of the guys that will get burned will be the same ones that got burned in the internet bubble. But greed has a way of wiping out their memories, a kind of selective amnesia if you will. Greed is also the same emotion that will allow these people to hold stocks to the bitter end. They won’t want to sell stocks below where they bought them. So rather than sell and take a small loss, they will ride these stocks down until margin calls force them to sell and take a bigger loss.

The one thing that can throw a wrench into the Dow’s record is this mornings report on fuel inventories due to be released at 10:00am EST. Right now oil is down $0.44 to $61.01, so my guess is the market thinks that the oil inventories will come in higher. Although oil managed to consolidate over $60, I see it dropping further, which will be good for the markets.

So we’ll look to see the Dow post a new record close and CLRK should cross $17.00 and SCUR should also rise. I’ll need to revisit my price target on SCUR in the short term for tomorrow.

Ebbers heads to Jail

2006-09-26T06:39:00.000-07:00

This day is going to be a strange day and the rest of the week will likely be volatile. This morning the S&P and Nasdaq futures were up slightly but the Dow futures are down slightly. Lennar, a large home builder, said its revenues would be short of forecasts. This adds to the worries that home prices will continue to decline.

Today sees the release of consumer confidence at 10:00am so look for some kind of move in that market just after 10:00am. Most economists see a stronger confidence number from August so look for that to come in over 100.

Oil seems to be consolidating in the $60 - $62 range. I think oil will consolidate at this level for the rest of the week before heading lower to the high $40’s or low $50’s.

It looks as if the link I included on one of my posts last week was timely as Bernie Ebbers is starting his 25 year prison term today. Looks like he’s gonna take the fall, as he should. There are folks at CITI Group that should be doing hard time as well but they had connections. It just goes to show you that Wall Street lives by a different set of rules that the rest of us.

Bad News/Good News

2006-09-25T13:03:00.000-07:00

The market kind of started out good and then the housing report came out. No surprise that the housing market is cooling. Home prices actually took their first drop in 11 years. So now the real estate experts all say they expect prices to drop for several months while the excess inventory works its way through the system. The question now becomes, will the lower mortgage rates cause people to pick up the pace of purchasing taking advantage of reduced prices and rates to absorb the excess inventory of houses faster then it would otherwise take? Does this mean there will be a lot more talk about hard or soft landings? Well, one thing’s for sure, the lowered housing prices will almost certainly help reduce the inflation rate.

But around noon the market stabilized and started heading north. What gives? The market seems to be looking at the hard versus soft landing question. The Fed stated that they were concerned that there may be inflation in the system, but the market has looked at the recent fall in the price of oil, gold and other commodities and now the drop in housing prices. The market is basically saying that inflation is becoming a non issue which will allow the Fed to move a little earlier on lowering interest rates to head off a recession. The net effect is the market thinks there will be a managed slow down not a full blown recession.

I think it’s kind of interesting to see that the markets initial reaction is negative and then they look harder and see some positive. I think this goes a long way to gauge the mood of the market. Maybe the market participants want to see a rally. Maybe they would like to see the Dow in record territory. Then the public will come enter the market in droves setting us up for a nice bubble to burst.

CLRK is now up 2.14% to $16.67 while SCUR has cleared the psychological barrier of $7.00 and is currently sitting at $7.15.

The Golden Egg

2006-09-25T06:51:00.001-07:00

After a nice relaxing weekend, the first thing I see Monday morning is that oil is below the $60 price level and the futures are pointing to a positive opening today. BP said that it would resume shipping Prudhoe Bay oil and it seems Iran is prepared to discuss its nuclear program. The S&P, Dow and Nasdaq futures are all up this morning and ready for action.

The only thing that can reverse today’s upward trend is the housing report due out at 10:00am Eastern time. A larger than expected slowdown in housing sales could be confirmation for the market that the economy is slowing down. Signs of a slowing economy bring about talk of the “R” word. Speculation will run rampant that their may or may not be a recession looming on the horizon. Then, once again, we’ll be left to a bunch of senile old men, removed from reality to keep the economy rolling.

Look out here comes the soft landing. Like they say, it’s not the fall that kills you, it’s the sudden stop. But I’m sure all the Feds men will get together and do the right thing. After all they’re appointed and not in any real danger of losing their jobs if they make any bad decisions. Even if they did lose their jobs, they’re never in any real danger of hard times like you or I. Theirs is the world of fat cats. Like their corporate executive friends, they will be taken care of quite nicely.

Speaking of corporate executives, are they getting fat lately or what? Seems like even when they mess up or post lower numbers they still get a high(er) bonus. Yet if my performance falters during the year, my bonus will be in the toilet. Even when these so called execs ultimately fail enough to be dismissed, check out the golden handshake they get on the way out the door. Do some research, you’ll see what I mean. We need to see performance based compensation. I’d love to see one of these execs lay it on the line and say, if I don’t perform I will not collect a penny in salary or bonus. At the very least no bonus will be fantastic. But we’ll never see that happen because they are only interested in themselves. They don’t care about us as shareholders, only themselves and what they get out of it. So next time you buy a company, think about whether the top execs are looking out for the shareholders, or their own pockets.

It's Friday and Nothing Much Going Is On

2006-09-22T07:38:00.000-07:00

Today’s a kind of boring day. No major news on the market front, other than the price of oil. Oil and gold are both up a bit today, so the negative feeling from yesterday carried forward to today. Although markets are off there is no major selling. The Dow at the moment is down only 30 points and Nasdaq is down 16 points.

Looking at my portfolio, CLRK is down a penny and SCUR is down 3 pennies. Man I am starting to feel like the markets. I don’t feel like doing much today. I can’t see anything going on today to change the mood. We’ll just have to ride it out until Monday and start over with a fresh good feeling. Today feels like the focus should be on the weekend and taking a break from all this talk of markets and inflation.

One interesting thing going on today is that the treasury prices in the U.S. are rising, bringing the yield on the 10 year note to 4.61%. Does this suggest that the markets think that the economy may be slowing faster than the Fed thinks? I say it does. We have to remember that all of the statistics that the government uses to measure economic output are usually at least a month old or more before we see them. So although the Fed says that the economy is showing signs of slowing, it has likely gone beyond that point by the time of the Fed statement. But being old, senile bankers, the Fed’s ability to anticipate is, much like their sex drives, greatly diminished.

So we will see the economy slow, then the Fed will react as the economy comes out of the slowdown. Then the recovery will pick up even more steam from the Fed’s late reaction and everyone at the Fed will pat themselves on the back.
Oh well, back to anticipating the week end that lies before me.

Wrong, Just Dead Wrong

2006-09-21T13:02:00.000-07:00

So it figures that when I say that the market will have a fairly good day all hell breaks loose and the Dow heads into the toilet for 100 points. Well things started off ok until the market started to falter as the price of oil popped up a bit. Things really went bad when the Philadelphia Fed index was released. The report, which was released at noon, the read on regional manufacturing plunged into negative territory for the first time in three years. The market was only expecting a modest decline from the August number. So as expected, the insiders turned tail and went for the exits. Now guys like me see that our stocks are down. Concern hasn’t slipped in yet as we still have a nice profit on SCUR and CLRK is up a little as well.

I came across this wonderful link to the PBS show Frontline. This episode is entitled “The Wall Street Fix” and is a great program documenting the kind of playing field the little guy like me is up against. The frontline folks have broken this program into five chapters that are easy to load. Here’s the link:

http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/view/

Enjoy the show.

It's Nice When Everything Works as it Should.

2006-09-21T06:43:00.000-07:00

My large two stock portfolio looks to be in good shape. SCUR finished yesterday at $6.85 giving me a total profit on that stock of $903.00 and CLRK finished at $17.58 giving me a more modest profit of $248.00.

Yesterday the Fed did what the market wanted and the little guy like me that held onto some stock got a little bit of profit out of it. Of course I haven’t realized any profit yet as I haven’t sold either of the two stocks I hold. That’s the main thing to keep in mind when bragging to friends about your investing prowess. Until you sell there is no profit. Now, that is much easier said then done. People are greedy and always listening to the voice inside their head telling them to hang on and squeeze a little more profit out of this stock instead of selling at their target. Then the next think they now, the stock retreats and they end up selling below their original price target when they finally decide to sell. One of my rules is to never beat yourself up for taking a profit. Better to take the profit than a loss. There are thousands of stocks out there, so there will always be others to play.

The trouble is that people get lazy and don’t want to look for the next stock to play. It’s so much easier to ride the one I’ve got now than to put the effort in to find a new one. But I think if you keep a list of stocks that you watch, even when all your money is fully committed, you’ll always have options to play if you are watching specific stocks. You should also keep your list dynamic. If there are stocks that don’t appear to be moving in any particular direction take them off your list. And if you find others that are volatile, then make a point of adding them to your list. By keeping an active and dynamic list you should at least have one or two options to go into once you free up some cash.

Oil appears to be rebounding this morning but I’m not going to be fooled by this bounce. I can’t see this “rebound” lasting and see oil continuing its long term downtrend. Someone also asked me if this is a good time to buy gold. I don’t think there is any reason for the price of gold to rise. I don’t see gold as being a store of value during recessions as it once was, especially since the Federal Reserve tends to think it can manage cycles through monetary policy and good propaganda. The only reason that I think people buy gold as a store of value is during a geopolitical crisis. When something nasty happens, people panic and then run to gold but under normal circumstances, gold should just end up becoming another industrial metal the way silver has.

Since the Fed made everyone happy, and oil and natural gas have backed off, look to see a nice positive day today.

The Fed Dog and Pony Show Coming to a TV Near You

2006-09-20T13:11:00.000-07:00

Looks like the Fed did what was expected and life went on as usual. Everything is rosy. Markets initially backed off a bit after the announcement but the Dow came roaring back and is currently sitting pretty up almost 83 points. Whether you like the Fed or not, or subscribe to the mumbo jumbo, propaganda, Voodoo or what ever you would like to call it, the markets are up and that’s all that counts.

Well the rest of the day and evening will be full of self serving analysts and commentators with inflated heads trying to get as much TV exposure as possible. They will be trying hard to complicate the world so that we will feel we need them to gain some form of primitive understanding of the complex financial world. To Quote Peter Lynch, arguably the world's most famous mutual fund manager, “I spend about 15 minutes a year on economic analysis. The way you lose money in the stock market is to start off with an economic picture. I also spend 15 minutes a year on where the stock market is going.” I tend to agree with Peter that all this analysis of the Fed, inflation, unemployment, rates etc. is a great show and perfect for over complicating something that is essentially a simple concept. Something so simple even a guy like me can grasp the concepts and maybe make a little money to boot.

For the record, SCUR is at $6.87 up $0.10 and CLRK is at $17.51 up $0.49.

Fed up with the Fed

2006-09-20T06:51:00.000-07:00

My stocks didn’t fair too badly yesterday. Things could have been much worse. SCUR surprised my by finishing up seven cents to close at $6.77. CLRK managed to hold and finish above $17.00 so that psychological support holds.

Today looks to be off to a good start anyway; all of the futures are up significantly and the overseas markets are largely positive. Yesterday Oracle’s earnings beat Wall Street’s estimates and also forecasted solid growth for the current quarter. Because Oracle surprised the Street and forecast strong growth for the current quarter, their shares were up 13% in the after hours markets and will be one of the catalysts for a rally this morning. Had Oracle not forecast solid growth, then their shares may even have dropped.

Oil, on the minds of most market participants over the last few weeks, managed to slip below $61.00. This will add further fuel to the fire of any morning rally. A low price of oil will cause a broad based market rally. The only variable in today’s market rally is the Fed decision due out this afternoon at 2:15pm.

The Fed is expected by most market watchers to leave rates unchanged. However, most of the market participants will be taking a close look at the accompanying statement. The business economists and the analysts will be looking at the statement for clues about where the Fed sees the economy and inflation going in order to determine what the Fed is thinking about future rates.

This whole system is one giant farce if you ask me. Why should a bunch of people that are out of touch with reality decide what I have to pay for interest rates? These guys have no idea what inflation is, what the middle class do, their struggles to make ends meet. In fact these guys are so out of touch with the majority of people, the hard working middle class, that they have shrunk their numbers. The numbers of the middle class are shrinking and the gap between the rich and the poor is widening. So these guys must be doing something right.

My all time favorite of the Central bankers is Alan Greenspan, whose senility never ceases to amaze me. This guy is often heralded as the greatest of all time, yet most people could never understand what the hell he was saying. Greenspan even acknowledged this himself when he said, “guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I said.” Now here’s a guy, with the stated objective of confusing people, running the monetary policy of the country.
These guys even go so far as to say that some level of unemployment is a good thing. They actually call it a natural level of unemployment and know what it is. Last I hear somewhere in the 4.5% - 5% range. But these bankers and economists can say that because they are never the ones laid off or part of that 5%. I’ll bet their tune would change if they were unemployed for any length of time.

All I know is that with each passing week my paycheck buys less and less. Yet these senile old men are going to sit in a room behind closed doors and decide what’s good for me and the rest of the free world. The best part is that none of these people have spent any time in the free world and most have no clue about the real effects of inflation and unemployment. None have ever done a hard days work for meager pay and wondered how they will make it to the next paycheck or what they need to cut back on to make a go of life. These guys and their rich investment industry friends have no concept of what stuff costs and what it takes to get things. Yet here they are affecting my life and yours but all the while ensuring that the pockets of their rich friends get fatter.

Markets Lower Ahead of Federal Reserve Announcement

2006-09-19T12:45:00.000-07:00

Looks like the market is going to finish down today. I am somewhat dismayed that CLRK is below $17.00 today. I was hoping that it would hold above $17.00. I talked about even numbers being psychological support and resistance. For those that are not familiar with the concept. A support level is a price at which the market feels the stock is cheap enough that an inflow of orders creates enough demand to push the stock price back up. Support is formed when the stock keeps bouncing off a price.

Resistance is the opposite concept. A stock price rises to a point where people feel the stock is over valued and sell to take their profit. This act of selling causes the supply of a stock to increase resulting in lower prices. The stock is seen to rise and fall after hitting a price, the price becomes like a physical ceiling if you will. I think the market looks at even dollar numbers as psychological support and resistance.

This means that if CLRK can close above $17.00 the market will see $17.00 as support and buy stock when it gets close to $17.00 and hopefully cause the price to rise. If CLRK closes below $17.00, then $17.00 can become resistance and people will sell CLRK as it approaches $17.00. The act of selling as it approaches $17.00 will make it difficult for CLRK to make it above $17.00. That’s not to say it won’t happen, it will just be more difficult.

As we discussed earlier, tomorrow the Fed is meeting, It looks like not much will be happening before the Fed announcement. So all eyes will be on the Fed.

An Open Letter to Canada's Finance Minister

2006-09-19T06:14:00.001-07:00

Now that the personal stuff is largely out of the way we can get back to looking at stocks and ranting about the investment industry in general and the stock market in particular.

Yesterday was a decent day for me. CLRK woke up for 53 cents to close at $17.55 and SCUR was off a little bit at $6.70 down five cents. CLRK is slowly starting to show some potential and it’s only a matter of time before the market realizes the gold mine that is Color Kinetics. I will give SCUR another day or two before I can determine if I should keep my target on that stock or dump it. Two stocks that I have put on my radar are MFLX, which I mentioned in previous posts and WIRE. WIRE is the symbol for Encore Wire a manufacturer of residential and industrial electrical wiring. Their main market is the southern US where they are benefiting from the reconstruction efforts after last years hurricanes. I look at each of these companies and let you know my opinion in my next post.

Now I want to talk about something near and dear to me. In Canada when you leave a company with a pension, you can have your share of the pension funds deposited into a Registered Retirement Account until you decide to retire. In the past at the provincial level, this money had to be kept in separate “locked in” retirement accounts. Now if you tend to change jobs on average every five years, you can end up having five or six separate locked in retirement accounts. Naturally, all these accounts have fees associated with them. And to make things even sweeter for the financial institutions, they were allowed to charge yearly fees for the administration of these accounts. Most charge fees over $100 per year. People that change jobs more frequently, tend to have more of these accounts with smaller balances. The end result is that these smaller accounts become eroded due to proportionally high fees. Throw in some losses in the markets and commissions and the accounts can head towards zero in a hurry.

The provincial governments looked at the situation and realized that this was not good for the average working people. The provincial governments decided that they need to relax these rules and allow people to place these funds into their regular Registered Retirement Accounts. This allowed people to consolidate accounts. It also had the added benefit of allowing people, who were facing financial hardship to access the funds by deregistering some of these previously locked in funds. The provinces recognized that these locked in funds were the account holders and they really had no business in telling the account holders how to manage their money or what to do with their money.

Not so for the federal government. In Canada, any company regulated by the federal government also has their pension regulated by the federal government. And the federal government says that when you leave a federally regulated company, your pension money must remain in a separate locked in retirement account and you are not allowed to access those funds or move them to a non locked in account under any circumstances. They somehow feel the need to dictate to people how they can and what they can do with money that is rightfully theirs. Through these regulations, this experiment, and eventually this blog was born. The money used to trade is sitting in a locked in account. Since I am unable to touch it, and it is not a large amount, I realized that it will just be eroded over time. So I decided to throw caution into the wind and see if I can either make a lot of money or lose it all. What difference does it make? The federal government says it’s not mine anyway. At least I can’t do with it as I see fit.

A few weeks ago I sent a letter to the Finance Minister (In Canada, he’s referred to an Honorable, but frankly I can’t see what’s honorable about any politician) asking him to address this issue. All I got was the standard patronizing reply:On behalf of the Minister of Finance, the Honourable James M. Flaherty, this is to acknowledge receipt of your correspondence of August 28, 2006.Please be assured that your comments will be brought to the Minister's attention as soon as possible. Departmental Correspondence Unit
Since then I haven’t heard back from his office at all. Now perhaps if I give a sizeable donation to the party, I would get a response. I huge donation may even get me a change in some legislation. Well my distaste and dislike for politicians has only been reaffirmed from this experience. I can most definitely assure you that if it was to the Finance Ministers benefit the legislation would be changed, but because it benefits the ministers friends who run the financial institutions, the legislation will never change.

Once again the little guy is screwed. Bend over here comes your government with a big smile on its face.

Below is the letter I sent:

Hon. Jim Flaherty,

I am writing to you to request a change in the legislation pertaining to locked-in RRSP's. I recommend we change the locked-in RRSP legislation to mirror the legislation in place for normal RRSP’s. I find the legislation onerous and unfair to individuals who need access to the funds today. The failure of the Department of Finance to address the anachronism and unfairness of the Locked-in RRSP is not only unfortunate and short-sighted, but it fails to recognize the hardship the present system puts on many people who have Locked-in RRSPs.

I have discovered in researching locked-in RRSP’s it appears a large number of Canadians are burdened with this restriction. It creates unnecessary financial hardship when it should not. This change would simplify the legislation and could be easily accomplished without creating new legislation. At the same time this would increase the tax revenue base. This will also provide individuals with the option to access funds that rightfully belong to them.

Also, the rigid rules surrounding locked-in plans means that if people want to consolidate their investment portfolios, by combining their RRSP with their Locked-in RRSP, they cannot and are not allowed to. This makes for very inefficient and ineffective investing, as well as it increases investing costs. So on the one hand the Finance Dept. purports to "protect" pensioners from their possible ineptitude and on the other hand prevents pensioners who try to organize and operate a responsibly invested portfolio from doing so. This is both contradictory and hypocritical on the Federal Government's part.

Less government and a "hands off" approach have always been a conservative philosophy. But with regard to Locked-in RRSP accounts nothing can be further from the truth. While other provinces have moved to remove the restrictions from Locked-in accounts and allow people access, the federal government and the Department of Finance refuse to allow Canadians any form of control over funds that are rightfully theirs. Why would the federal government refuse to allow people too have control over their financial futures? Why would the federal government want to stand by and watch its citizens suffer financial loss and hardship because they had the unfortunate luck to be employed by a company with a federally regulated pension plan? Why is it that the provincial governments have moved into a new age of enlightenment and have allowed people control over their financial lives while Ottawa refuses to grant people the same dignity?

Upon researching this issue, I have found that a majority of people when informed of this issue find the position of the Federal government to be unreasonable. I have found the Federal governments antiquated and paternalistic attitudes towards this issue so disgusting that I will not work for a company that is under federal pension regulations if at all possible. I would appreciate a response concerning the above questions and would like to see an indication that the Federal Government is moving towards giving control of Locked-in RRSP funds to the owners of the funds.

I await your response.

Regards,

P.S. – I’m still awaiting his response.

The Fed is Meeting This Week

2006-09-18T08:28:00.000-07:00

Well I had a rough weekend and was unable to post until late this morning. As I speak CLRK is over $17.00 and SCUR is up nine cents to $6.84 despite a downgrade on Friday.

Well I guess the big thing on the market’s mind this week is the Federal Reserve decision on interest rates. The Fed will make an announcement on interest rates this Wednesday. Most of the beloved analysts and business economists expect the Fed to leave rates alone. What will grab all the headlines is the statement they release on the economy and inflation. If they raise caution that the economy is showing signs of inflation then look to see a major sell off. Similarly, if they say the economy is showing signs of slowing then there may also be a sell off. I think the only way the markets will not be able to find an excuse to sell off is if the Fed says that the economy is growing strong and at a steady pace.

I think that the markets are looking for an excuse to take a breather. I think that the institutional folks want to get the little guys in and hopeful before the pull the rug out. Perhaps they will let the markets rise a little before pulling the plug but I have a feeling that the markets will drop in the next few weeks. The Dow is within 200 points of it’s all time high right now so I think that I will be very cautious over the next three or four weeks. My gut feeling is that the Fed rate announcement is the perfect day to do it. At this point only time will tell. But the main point of this rant is that the institutional folks will pump up the market and sell shares to the little guys at high prices so they can buy back off the little guys at a discount a week or two later. My gut feelings are often only sometimes right, as witnessed last week, but we’ve seen this too many times in the past.

More on this topic down the road.

My Dislike for Stock Analysts

2006-09-15T09:53:00.000-07:00

Well SCUR got the dreaded downgrade this morning and as can be expected the stock is down 10%. So this analyst qualifies the downgrade by saying that he remains optimistic on the company’s long term opportunity but in the short term challenges could limit the appreciation of the stock. How uncommitted can you get. Essentially what this guy is saying is the stock could go down but in the end it will go up. I’ve never seen a statement from an analyst that doesn’t cover both cheeks. That’s why I have such a dislike for them. Analysts are right up there with politicians among my favourite people. In fact I think we should encourage a lot of analysts to go into politics. They can speak for hours on a topic and when you look at what they really said, you discover that they said nothing meaningful at all. Perfect for the campaign trail. Think of the speeches. Taxes will go down before the election but once the government is back in office, let’s hike them up.

I like statements like over the short term we see weakness in the stock or overvaluation etc. but over the long term we remain bullish on the stock. What kind of a useless statement is that? That’s just covering your ass. Basically your saying that you think the price will go down, but since you’re not sure you’ll be long term bullish. By using this kind of phrasing, your saying if I’m wrong and the price doesn’t drop, I can comment about how the company resolved the short term challenges and are moving ahead with growth. These guys know that fundamentally sound companies with good management in growing industries will all appreciate over time. There’s no rocket science there.

But my favourite rant; and the reason that I think analysts issue statements like that is to get the price down in the short term so their institutional clients and/or the firm can load up on the stock shortly after the down grade. They anticipate, correctly, that the small retail investors will panic that their stock got downgraded and then head for the exits. As the stampede causes the stock to drop, the institutional folks sit on the sideline and wait for the opportunity to buy the stock at a discount price. After which more positive stuff can slowly start to come out about the stock and next thing you know the analysts prediction comes true and the stock price is up long term. Meanwhile he/she looks like a genius while a lot of people have made a lot of money.

Well that’s my jaded take on things as SCUR sits down almost 10%. I’ll be here waiting for the institutional guys to get back in and campaigning for my local analyst in the next election.

Inflation still tame.

2006-09-15T06:24:00.000-07:00

The inflation number came out this morning, much anticipated I might add. Inflation came in right in line with forecasts at a modest 0.2%. As expected, a happy Wall Street pushed the futures well into the plus side with the S&P futures at 3.70 and Nasdaq futures up 9.50. What this means to the small investor is that Wall Street liked the inflation number and markets in general will go up today. On the whole if you have a diversified and balanced portfolio, it should go up, all things being equal.

My stocks, on the other hand, are not diversified but merely a play on two that I thought would go well. Although I hope that they will follow the general trend of the market, they are also vulnerable to company or industry specific news. Fortunately there is no negative news that I can see for CLRK so I hope that they participate in any rally today.

More concerning to me is my short term play. Although there is no negative news out there on SCUR, I am concerned that it closed below $7.00 at $6.99. I consider round numbers as psychological barriers. So if the stock crosses a psychological barrier, I think traders see it as a good thing. In their eyes the stock has momentum and they should buy. If the stock fails to hold and drops down through the round number, then I think traders see it as not having enough strength to hold or sustain it’s momentum. Since SCUR closed below $7.00, I’m worried that it will trade a lot lower today. My hope is that the positive inflation news is enough to push the stock solidly back over the $7.00 mark.

Since we’re been talking about oil lately, I should mention that the price of oil is down again to the low $63’s. This is another good sign for any sector but the oil and gas sector. Hopefully it will just keep getting cheaper and cheaper to make the commute to work.

Also remember the witches are out today, so we may see some volatility.

Good luck and happy trading.

Sometimes Things Just Don't Work Out

2006-09-14T13:05:00.000-07:00

Well there is 10 minutes left to go in the markets and the Dow is down 15 points. Looks like my gut feeling isn’t exactly accurate. Well the Dow did actually manage to cross into the positive for a brief period today so I was partly right. Here’s hoping that the last 10 minutes goes like gangbusters and we get a late rally to the positive. Just goes to show you that your gut can’t always be exactly right but there can be some kernel of truth in what it’s telling you.

Back onto the topic of oil. Looks like oil is down yet again. The folks at TD may end up being right after all, as now the price of oil is closer to $60 then $70. I can only hope for a return of cheap oil. After all, when consumers are paying less for gas, they will have more money to spend on other things. That money will go towards buying real stuff instead of into the pockets of oil companies. As people spend, earnings will once again increase at consumer goods companies and their suppliers. Then the talk of slowdown will diminish. Hooray for lower oil prices.

Tomorrow will see the release of the CPI number as well as the infamous triple witching. Looks like it may be an interesting day to say the least.

SCUR closed below $7.00. Nuts to that. We’ll have to be careful tomorrow. I was hoping it would hold but now we’ll have to see if it tanks tomorrow.

CLRK actually gained three cents to close at $16.60.

MFLX close down $1.26 to $23.52.

Tomorrow will definitely be interesting.

Retail Sales

2006-09-14T07:52:00.000-07:00

What’s going on this morning?

Well continuing yesterday’s rant on oil, I noticed that it was back up above $64.00 this morning. I think that can be expected after seven straight days of declines. Some random people I canvassed said they expected oil to head back up. I did however find a report on the TD Canada Trust website, under the economics section called the TD Commodity Price Report. In it they talk about a US slowdown, the return of the BP pipeline, the diminished forecasts for this hurricane season, and the discovery of additional oil in the Gulf of Mexico. All this they say will contribute to a decline in the price of oil. Their one year price target is $55.00. I don’t know if I agree with their price target, but I do think that the price of oil will decline over all.

Retail sales numbers were also released this morning and they rose 0.2% vs an expected 0.3%. So what happens? The markets sell off and the Dow ends up starting the day down. All this because of a difference of 0.1%? Well I guess when you talk in terms of the United States spending, a 0.1% difference translates into a lot of money. Maybe the US economy is slowing after all?

Well SCUR is down a little but it is managing to stay above $7.00. That’s a good thing. Somewhere in the bottom of my gut is a feeling that the markets will finish the day in the positive. Well we’ll have to wait and see. If the markets finish in the positive, I think we can see SCUR around the $7.20 - $7.25 range. How’s that for hopeful optimism?

CLRK looks to be down about 20 cents on completely anemic volume. When are all the people out there going to realize what a great company this is? Oh well. Long term means long term, right?

The MFLX I was looking at is down another dollar. Maybe it will return to the $18 level where I planned to buy some in the $18 dollar range after I hit my target on SCUR. But alas, it was not to be. MFLX made its run from $18 before I could sell SCUR at $7.56 so I put any thought of selling CLRK to chase MFLX out of my mind.

Most of the other stocks on the list that I put together don’t really stand out as being a potential next buy, except maybe for one that I will look further into talk about latter. If anyone has a stock they see as particularly interesting, feel free to say what it is and why you like it as a comment.

Mid Week Update and Look Ahead

2006-09-13T12:13:00.000-07:00

Well oil inventories were a little lower and distillate inventories were higher. So initially the price of oil dropped and no surprise the markets advanced. Oil has since rebounded a bit but the market is still up. There is a fair bit going on this week from a market standpoint. Thursday sees the release of the Retail Sales Report and Friday is the CPI report.

Perhaps a larger event looming on the horizon for this week is the infamous triple witching day also sometimes referred to as Freaky Friday. Freaky Friday occurs four times a year on the third Friday of March, June, September and December. It’s when all the contracts for stock index futures, stock index options and stock options all expire on the same day. The day typically is a more volatile day as traders look to offset their options and futures positions. This is something taken into account by the day traders but position traders, like what I’m doing, and especially long term investors need not worry too much about it.

Looks like both my positions seem to be diametrically opposed today. SCUR looks to be poised to close above $7.00 so I’ll have to look at keeping my price target or switching to the stop loss that we talked about earlier. Meanwhile CLRK is down 0.15. Yes, CLRK is a long term investment but there is some frustration in seeing a stock you bought sitting below the price you paid for it. Writing this blog requires me to look at prices on a daily basis,, but I must resist the temptation to dump this stock and buy something else. I think this one will prove to be a long term winner. Also MFLX looks to be down $1.00 so that is still on the radar screen. It looked poised to break out but the volume just wasn’t there I guess. Let’s see how low it can go.

As my price target on SCUR is approaching, I must start to look for other stocks that I might want to move into as I exit the SCUR position. So I’ll have to do some searching and see what I can come up with. I’ll bring up some stocks in a future post and we can look at each in turn to flush out some candidates. Who knows maybe someone will post some stocks to look at…..

Oil is Falling, Stocks are Rising

2006-09-13T07:11:00.000-07:00

Well looks like the main story this morning is the price of oil. Oil has fallen to around the $64/barrel level. The oil inventory levels are supposed to be released today. I can only expect that if oil inventories are higher, the price of oil will fall. If the price of oil falls, then the markets in general should rise.

So what is this effect of oil prices on the stock market? Why is the price of oil so important to the stock market?

Well the most obvious effect is on the stock prices of the oil companies. When the price of oil rises, the profits of the big oil companies rise, since it essentially costs the same to pump oil out of the ground. Because profit/earnings is such a large component of stock prices, as profits rise so to do stock prices of the oil companies. All one needs to do is to go to Yahoo finance and take a look at a multi year chart of any oil company and see what has happened to their stock price over the last few years.

The second effect on stock prices that a rise in the price of oil has is on the transportation sector. As should be fairly obvious oil is a major cost for companies like airlines and trucking firms. Any company that has fuel as a major component of its cost structure will see their costs increase and their margins fall. Remember that earnings are such a large component of stock prices that as earnings decline so to do stock prices (all things being equal). This is especially true in a highly competitive industry. So any industry that has oil as a cost factor will have likely seen a decline in their earnings and the price of their stock as the price of oil increased over the last couple of years.

We also can’t forget about the general effect on the price of oil. Rising oil prices lead to rising gas prices. Rising gas prices are not only a component of inflation, but also a major part of people’s lives. People find themselves paying more for gas to get to work and go on family trips. Paying more for gas leaves people with less disposable income to spend. It also makes people think twice about going out of town for the week-end when the otherwise might have. Oil prices therefore have an effect on consumer spending.

Rising oil prices also contribute to inflation. Since it is a stated goal of the North American Central Banks to keep inflation in check, rising oil prices can also cause interest rates to rise if the Central banks perceive inflation too be rearing it’s head. If the Central banks increase interest rates, consumer spending will decline as the cost of borrowing increases. The housing market will start to slow. Interest bearing securities become more attractive to investors. All these factors combine to cause a general decline in the market.

This of course is a very simplistic and basic view of how I see things. I’ll keep my fingers crossed that the price of oil continues to decline; both as a consumer of oil products and as someone who is trying to make a buck in the stock market. More on this later.

Good luck and happy investing.

When is a good time to sell?

2006-09-12T12:02:00.001-07:00

Now that the market is open, SCUR is above its 50 day moving average. Should I revisit the $7.56 price target I have for the stock? I wonder if I should revise the target after this new information or leave it? I think I would have no problem revisiting a stock if the information turns negative. Or perhaps it’s best to buy a stock with an upper price target and a scenario in which I would exit the position if things get ugly. Prior to now I hadn’t given it much thought. I know that my discount brokerage will not let me put both a sell at limit order and I stop loss order in at the same time in case one gets executed and I forget to cancel the other order. Both could eventually get filled.

Perhaps I should step back and explain a few things first. I have a basic knowledge of orders and a basic and very simple knowledge about technical trading. I am assuming that anyone who reads this also has a basic understanding of how to place orders in a discount brokerage account and some basic understanding about reading stock charts. There are plenty of good places to find the basic information on stocks, charts, placing orders etc on the web that I won’t cover that kind of stuff here. I want to instead focus on the topic of this blog and that is to try and buy some stocks to put a superior return together and prove that it is possible for the average guy to make money in the market.

Now back to the topic at hand.

I have in my experience over the years seen people that buy a stock and watch it run up and as it runs up they keep raising the price of their sell orders to be just above where the stock is trading. Every time the stock closes up they raise their price until one day the price drops and then they end up selling at or below where their original price target is after the stock falls. My question is, “How do I participate in the upward movement of a stock without fear of missing out on any profit I have earned?”

My first thought was to go with a stop loss order. A stop loss order allows me to set a price where if the stock drops to that price, it will be then sold immediately at market. This will allow me to hold onto the stock as the price increases. Should the stock trade through my target price I will still be able to participate in additional gains. But as the price of the stock increases, it moves farther away from my stop loss trigger price. The only way around this problem is to watch the stock and adjust the trigger price upward as the stock increases. Let me give you an example:

Suppose I bought a stock at $10 and had a target price of $13 on it. I could immediately put an order to sell the stock at $13 so that when the stock hits $13, I can realize my profit. If the stock continues higher then I lose out on the profit. Or I could watch the stock cross $13 and then place a stop loss order on the stock to sell if it declines back to $13. Suppose the stock closed at $14, by placing the stop loss order I have now participated in the gain above $13. Now suppose the stock reaches $15, I can leave my stop loss at $13 or I can tighten it up and place it at another price like $14.50. If the stock declines my order will trigger at $14.50 and I will make $1.50 or so above what my original target was. As always if this doesn’t make sense or you want to add some input please feel to post a comment.

So this brings me back to my dilemma. Should I cancel my sell at $7.56 and put a stop loss order on the SCUR? Right now, since the stock is at $6.93, it is far enough below my target sell price that I can ponder on what to do for another day.

What happened to CLRK? My longer term hold, well it’s bounced back and is currently trading at $16.69. Granted it’s below the $16.97 I bought it for but it is a long term hold and my account is still on the plus side overall. So far things seem to be going well.

What to do? What to do?

2006-09-12T06:38:00.000-07:00

Well looks like SCUR was up 0.17 yesterday to close at 6.72. My price target I put on the stock was 7.56. The stock hasn’t been doing a whole lot lately and I was wondering if I should dump it and move on to something else? Are there any opinions out there?

One of the stocks on my list of stocks to watch is MFLX. They have been on a little run as of late and looks like they have just crossed their 50 day moving average and the MACD chart has just hit the positive. The volume on the stock is just a little below the average volume. There is no heavy volume to carry the momentum. Moving into the positive on MACD and crossing the 50day moving average both appear to be good signs. But the markets look to be volatile. What is going on with the broad market?

Well looks like the US trade deficit widened today to record levels which can’t be a good thing. Texas instruments narrowed its earnings forecast for the current quarter last night. On the plus side, Goldman Sachs beat expectations in the third quarter and Apple and Microsoft are both releasing new products today. Oil is lower so that’s a good thing but treasury prices were lower raising yields.

Hmm, what to do. For the time being, I think I’ll wait and see what happens to the SCUR. It had a good day yesterday and I think today will be good too. I realize that the MFLX has broken the 50 day moving average, but I should stick to my plan with SCUR. After all there are plenty of stocks out there and there will always be other opportunity. In my gut the MFLX just doesn’t feel right for now. It feels as if I would be chasing the stock. That’s something I don’t want to get into. If life has taught me anything, it’s to listen to my gut.

My First Two Purchases

2006-09-11T10:11:00.000-07:00

So I decided to take this “I have nothing to lose” approach before the idea of tracking things in a blog form entered my mind. I put together a list of stocks to watch, which I can discuss in more detail in future posts. I watched the stocks in the list for a few weeks and then selected two. I decided that I would buy one as a short term play and the other as a longer term holding.

The first stock I decided on was SCUR – Secure Computing Corp. I looked at it initially because here was a stock that had come down. It was affordable to a little guy like me and the charts showed that it was starting to turn upwards. Although it was not probably an ideal buying opportunity for the pure chartisits, I had really nothing to lose and wanted to get in on an early opportunity. I bought 700 shares at $5.56 with a $29.00 commission bringing the total to $3921.00.

I thought that for once I would get in early because one of the knocks about being a small investor is that we are always late to the party. Well now I’m in early and even if I have to wait a little while for the party to start, I won’t get left in the cold watching from the outside. If you look at the chart from Yahoo finance, you’ll that the signal line on the MACD was still negative but trending up while the price of the stock had not yet crossed it’s 30 day moving average. But hey, I’m trying to anticipate here. To date SCUR had been up and down and closed on September 6th at 6.89. That brings us to $4,823.00 not too bad for under a month.

The second stock, and my long term play, was a bit more expensive. CLRK – Color Kinetics Inc. was chosen because I believe in their product. I think as energy costs rise more people will be looking towards low cost alternatives like LED lighting. I also like their balance sheet. They have a lot of cash on hand and no long term debt. I also like the licensing agreements they are entering into. It is a great way for them to get revenue and keep costs down. I bought 400 shares at 16.96 plus $29.00 commission brings the total to $6,813.00. Yesterday they closed at $16.10 so I’m not doing so good there but I think they are a longer term winner. Stand back on this one.

Can the Little Guy Beat Wall Street?

2006-09-07T11:59:00.001-07:00

Over the years I’ve heard it said that the little guy is no match for Wall Street. The small individual investor doesn’t stand a chance. Wall Street will make plenty of money off the individual investor in terms of interest and commissions, but in the end the small investor ends up losing. With the wealth of information on the web and the proliferation of online brokerages, you would think that the odds would tilt in favor of the small investor? Not so it appears. All over the web are competing interests. People want to sell you better info, superior trading systems and convince you that you can make 10 times your money in a year. Is there any truth to this? Is this really possible? Do you really need to pay for information and complex trading systems?

Well I’m proposing to find this out. I was given about $11,000.00 US that is in a locked in account that I cannot touch. Since I don’t have access to the money it doesn’t seem to be mine. What I thought I would do is trade on it and see what kind of returns I could get if risk wasn’t a factor. Then I thought, why not make this public and see if there were other people interested in what I’m doing. After all maybe people could give me some tips and recommendations. Maybe I can get people to post comments on techniques and strategies that worked for them. I also thought that some people may want to do the same thing I am; take a little money and see if they can turn it into a lot of money by trading it. I will welcome all suggestions, tips and techniques and evaluate them and comment on them. I may use some or I may not but in all cases I will explain my rationalization.

I also invite people that want to try this along with me to make comments on what they are buying, what price and how much and we can track their success. Perhaps there are people that I can learn from and will do better than me. Perhaps there are people out there that can learn from me. Only time will tell.

I have worked for eight years on a retail trading desk for a discount broker. I started as a trader (order taker) and eventually would up as a team leader. Now before some of you say that I have an inside edge; as a discount broker, we were merely order takers. Think about phoning any call center to order a pizza. We are simply order takers taking your order and sending it to market where your order is filled and confirmed back to us. Granted over the years I did learn a lot about how the stock markets work and types of orders etc. but that is nothing that can’t be found out over the web. I thought of myself as standing on the outside of the building (the stock market) looking in through the window. Although I could see what is going on, I was not part of the “action.”

So now this is my chance to see what I can do…..