What if You are Wrong?

Every time you make an investment in 2008, ask yourself the following question: What if I am wrong?

As we look forward to the next five years, we need to ensure we are always and everywhere operating with balanced ideas and temperament.

Our dialogue at Invest with an Edge starts and ends with the following: Having a Core Strategy and a Counter Strategy - just in case you are wrong!

One way we like to think about the capital markets and investing is the following: You can have a core set of beliefs, ideas, notions, and strategies. You can and would implement based on your core beliefs. However, what if your core strategy (or belief) is wrong, blows up, discontinues to work? In this case, you better have a back-up plan. That back up plan is what we refer to as a “counter strategy.” In some sense, this is the nature of diversification, but as you can guess, we do not believe in asset allocation and diversification just for the sake of it. Your core and counter strategy can still be opportunistic, and not spread out far and wide, because the far and wide asset allocation approach usually doesn’t stand a chance of beating the market over time and delivers mediocre results.

For example, you could be an aggressive investor, and your core set of beliefs is that we are in a day and age of progress, innovation, productivity…and you are going to build and design a portfolio that is technology heavy. It could contain semiconductor, software, and hardware type names…but maybe innovation also means biotech stocks, alternative energy, medical device companies, etc etc….these are clearly aggressive growth type companies, probably significantly tilted towards growth as opposed to value names. Bottom line, this is your core belief, and you hope to achieve substantial returns investing this way.

My question: what if you are wrong? Or, what if you are right, but wrong in the short term? The market has a nasty way of disappointing almost every investor, over time, and time and time and time again. Right? We’ve all been there. That investor better have something that might do well if his tech heavy portfolio lags, and that might mean owning financials, commodities, retailing, etc.

So, how should we address this situation in a simple way? The best way in our mind is to purposely mix a few specific strategies together in one global equity type portfolio. Let me address one thing – this is geared toward that 10% type long-term equity return. I am not taking into account fixed income, or a quasi balanced type approach. This is an equity only portfolio for funds earmarked for growth. There is a time and place for fixed income, but in this example, I am addressing the “equity return” objective.

Nonetheless, we combine an active sector, style and international rotational investing approach, with classic and longer-term/fully invested growth, value, and international funds so that we have the best of all worlds covered. First, it’s a global portfolio - we are neither taking a big bet for or against the U.S., or for or against non U.S. equity markets. Second, we run active rotational models as a core strategy, seeking to own what’s working and avoiding the laggards. However, our counter strategy is long baseline diversified equity funds – representing strategic & fully invested growth, value, and international asset classes. We think this type of portfolio stands the best probability to beat the market over time. All we are hoping to accomplish is that mythical goal of beating the market over time, and anything we can do to raise the probability that we can, we will implement!

They key point though, is that we are looking 5 to 10 years out, and we are willing to accept the volatility that comes with equity investing, and we make no guarantees or even statements about what the rate of return might be in that 10 year time frame. We will be subject to what the market serves up. Indirectly, it is a bet on capitalism and a bet that the equity markets will continue to perform better than bonds, enabling us to stay ahead of inflation and taxes. The key though, is simultaneously having core and counter strategies working for you at the same time.

Now, admittedly, there are numerous ways investors attempt to game the capital markets. However, that is precisely what makes the market tick! Also, some investors are faced with the limitations of the universe of funds available to them in retirement accounts or 401k type plans . In addition, this strategy is not a simple process - it is not easy to implement and to follow. It requires time and energy.

Therefore, one might think about a long-term portfolio that might look like this. S&P 500, MSCI EAFE, and a rotational strategy. The allocations to each are dependent upon personal circumstances and what not.

This is an important discussion for all investors and why I post it as my last post for 2007 - how to optimally manage a portfolio, especially since each and every one of us has some retirement objective in mind and some sort of lifestyle that is one day very important to us. If we seek to maximize our results against the benchmark, all the while considering that what we are doing could be wrong, then we will most likely succeed and our dreams will come true!

Good luck!

John

Beset by People Wanting to Get out of the Market

Another blog post that is quite the read....in some ways, rebutting the comments from yesterdays entry from Prieur du Plessis. Click here to read something from Victor Niederhoffer. An excerpt:

9. When considering the hornet's net of worries that the stock market has been exposed to each year over the last 100 as we have documented on Daily Spec, are these troubles that much more significant? And if they are, have they been discounted, and what happens when troubles are more or less than usual relative to the market move? A quantitative approach hear would be apt.

A well written article. Enjoy!

A Shockingly Bullish Statement....

from a guy across the pond. His name pops up from time to time in John Mauldins' musings. He hails from South Africa, and his name is Prieur du Plessis. The WSJ blog picked up on this incredibly rookie-like statement. Click here for the WSJ piece. Here's the actual excerpt:

Prieur du Plessis, in his Investment Postcards from Cape Town blog, says it hasn’t looked this bad in all his years. “Not since buying my first stocks in 1968 have I experienced the stock market outlook to be as murky as we are experiencing today,” he writes. “The fears are well documented and, in short, include lingering concerns about the financial system, a US economy on the doorstep of recession, and mounting inflation worries.”

Why do I call this a "rookie-like" comment?? The part that gets me is this: "The fears are well documented." I bolted out of my seat and almost wanted to load up on S&P calls when I read that. Why? Simple - the stock market discounts all known information - as it trades well in advance of facts, pricing in today what will happen in 6 months. Frankly, the market outlook is always and everywhere murky, it's never ever easy, a sure thing, something so crystal clear that we can invest today with 100% confidence in the outcome. However, the market is terrific at discounting the future, and the level of bearishness and the cacophony of noise surrounding recession, subprime, inflation, the dollar, etc etc., is such that it is more likely the surprise will be these things aren't as bad as once thought, and the investor out or short the market will get caught looking the other way. Therefore, the path of least resistance could be higher, as those short or in cash are forced to cover or get long as things ultimately turn out much better than once feared. This is perverse thinking, but that's exactly how it works on Wall Street. Again, the key point is the "known information" part...markets move on new information...so we'll watch and wait for new information and see how it impacts our positions. Good luck.

An Efficient Market?

Why the angst on Wall Street today? If the futures market was pricing in a 53% chance of a 25 bp fed funds rate cut, that means 47% were calling for something else. We can keep this whole analysis simple - that's close enough for 50/50 for me. Therefore, the market should have neither gone up a lot or down a lot, since theoretically, the discounting nature (efficiency) of the market had both outcomes priced on either side, close to a 50/50 type bet, although except for something extraordinary, such as a rate hike, or 75 bp cut or more. Therefore, neither side should have been enthused, nor dismayed. But we read and hear all sorts of dismay and disgust with the Fed, and all of a sudden the market declines 2% in less than a few hours.....Good luck efficient market theorists..surely didn't pan out today for you!

Volatility Means - I'm Losing my Shirt!

Caroline Baum has been writing for Bloomberg for as long as I can remember. I recall viewing her articles straight off the Bloomberg machine in Woodside, California a decade ago. She has a neat way to call it like it is, and I always like to hear what she has to say. Click here for a link to her most recent article. She points out that the word "uncertain" pops up in times of distress.

She states, for example, during good times central bankers don't pepper their official statements and speeches with references to uncertainty, which makes me think uncertainty is a euphemism for ``things are worse than we imagined.'' It's an excuse, in other words: a way to paper over a bad forecast. Recently, she dissects speeches where the word is used quite frequently.

In fact, in a similar vein, I discussed the word "volatile" last August in a post here as well.

Which leads me to the following...

"Freedom is just another word for nothing left to lose" Janis Joplin

Trapped in a Bear Fund

Read an article at cbsmarketwatch today whereby the author mentions getting hit with email regarding bear funds and asking if now was the time to buy. Click here for the article. This is classic investor behavior. After a significant decline for the averages in November, we find investors now believe a bear market is here, and consequently, are losing their grip on discipline and now buying bear funds, although probably too late! Now is not the time to change your long term plan...especially in light of a market that has been hit with bad news after bad news, and is still up 4% for the year on the S&P 500. This tells me the discounting nature is working well, and we are close to bullying forward and attacking the old highs. There will be calm after the storm, but you have to get out in front of it and buy before fact. The subprime mess will end, the credit crisis will subside, and the angst and fear amongst investors will ultimately change to optimism..but by then, it will be too late to buy! Good luck sorting it all out.

Held Hostage - Vice Chair Kohn Remarks

WOW....just catching up to the actual comments from Fed Vice Chairman Donald Kohn. Some very important statements here:

We should not hold the economy hostage to teach a small segment of the population a lesson

Central banks try to avoid the creation of a moral hazard...but to those who lend, borrow, or run money should bear the consequences of their decisions.

Key here is "However, in my view, when the decisions do go poorly, innocent bystanders should not have to bear the cost."

Since the moral hazard issue is now off the table, in this blogger's view, the Fed can use all the tools in their toolbox to prevent contagion, and to help those "innocent bystanders" as well as the broad economy. This is bullish for stocks. We'll see if Gentle Ben affirms these comments tonight.

Yowsa!

November Swoon Over? Time to Expect Santa Claus?

Today's gap lower of the Volatility Index and the spike in the equity averages might mean the correction is over. The market experienced a sharp 4 week decline of about 10% on many broad indices, and the strong move since yesterday certainly feels like it has legs. We are moving into that time of year where the market typically experiences a year end rally, plus the small cap or January effect has found its way into the month of December too. See below for the definition:

The January effect (sometimes called "year-end effect") is a calendar effect wherein stocks, especially small-cap stocks, have historically tended to rise markedly in price during the period starting on the last day of December and ending on the fifth trading day of January. This effect is owed to year-end selling to create tax losses, recognize capital gains, effect portfolio window dressing, or raise holiday cash. Because such selling depresses the stocks but has nothing to do with their fundamental worth, bargain hunters quickly buy in, causing the January rally. The strength of the effect varies depending on company size and other factors.In the last couple of years, after the January effect became widely known to the public, it has become less pronounced and has started shifting to December causing a rise in stock prices, known as a Santa Claus rally and the December Effect.

Beat the market, any market, any time!!

I think some of my colleagues place unusual things on my desk, secretly hoping I diligently read them through and through - all the while hoping I proceed to the blog, unleashing a spotlight of scorn and contempt on the ridiculousness and folly of what we receive as junk mail sometimes.

Yes, I have one that is a keeper today! The headline reads: BEAT THE MARKET, ANY MARKET, ANY TIME!

What I like most about this one...is that they devised approx 9 different investor types, placed them in bold headlines, and declared how a certain strategy will deliver out-sized gains no matter which one you follow.

Conservative Investors - safely enjoy annual returns of 88.45%
Long-Term Investors - profits of 173% are possible
Aggressive Investors - get in and out fast...key trades for profits of 200% or more in weeks
Speculative Investors - the risk is greater, but the return could be more than 760% in months
Short Sellers - discovering the secrets of 19 and 44% in as little as 2 months
ETF Investors - imagine seeing impressive 47% returns
Option Traders - enjoy returns of 100% or more in weeks
Natural Resource Investors & Retirement Investors round out the list....

Plus, this guy named Bart DiLiddo says, "Only with VectorVest OnLine market timing system can you make profits 99.46% of the time. It has never failed and never will!"

Gee whiz, ain't it cool that "conservative investors" can "safely" get 88% type returns, espcially in a day and age when CD's yield 5%, the 10-Year Treasury is 4%, and US Govt Money Market Funds pay 4.75%. If you're an aggressive or speculative investor, you stand to achieve returns even greater than the "conservative and safe" 88%...how bout that!!

CAUI.OB re-visited

My expose about this Las Vegas based uranium exploration company was dead on. Click here for the fine reporting about CanAm Uranium (CAUI.OB). I hope the 4.9mm investors who got the "mail piece" did not succumb to the sales pitch! Check out the chart above...holy toledo batman...she's going through the floor!!!!!

Seaweed?!

LULU got busted today by the NY Times for not having seaweed in their yoga clothes! Gasp!! The stock has been hammered of late, but it's not alone. The market meltdown that we've experienced since Oct 31st has been sudden and swift. The Nasdaq 100 declined over 10% in four days!! Many trading services and other info sources show a huge flight out of the market, or into defensive sectors. Of course, that is also evident in the VIX shooting back up towards levels hit this past summer. It'll be fun to see how the capital markets act as we run towards the holidays and the end of the year. Good luck.

Spilt Milk

From CNBC today: "It's kind of like spilling grape juice on the couch, and you'd rather tell mom and dad first before they find out, hoping the punishment is not as great." But the bad news keeps coming, with Wachovia on the tape today with write downs...apparently yesterday it was better than expected bad news, but today it is surprisingly worse since this is new "bad news." Follow that?? Good luck.

Fed in a Bind

Gentle Ben Bernanke was on the Hill today, testifying to the Joint Economic Committee. The text of the speech pointed to downside risks remain in the economic outlook, but upside risks to inflation given higher commodity prices and a weaker dollar. What this means is what traders fear the most, can the Fed lower rates to stimulate growth while not causing inflation to shoot higher? Today, the market is emphatically answering "NO," while the market sells off. The market now fears a Fed sandwiched between the rocks, with no where to go. They cant fight back against the slowing economy and fallout from the housing crisis with rate cuts, for fear of stoking higher prices and runaway inflation. Therefore, they are stuck in a bind, can't do a thing, and the result could be an economy that falls off a cliff. The stock market will take a hit if that is the end result. Good luck.

Jobs Report Friday: What is Good News or Bad?

Tomorrow brings the monthly jobs report. The expectation is 80,000 new jobs created. If the actual number is greater or less, I have no idea how the market will react. This is an instance where good or bad news can be translated just about any possible way. Yesterday's Fed Funds benchmark rate cut as well as corresponding discount rate cut were welcomed by Wall Street. Today, the spin is different. Traders are gaming the wording in the release where the Fed statement said; "the Fed judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth." The take-away is no more rate cuts. My guess is that this is the Fed acting judiciously, with their moral suasion sword cutting a wide path today, talking the market down, attempting to put fear and concern into any speculative investment schemes. However, the bond market is rallying, and the futures market now places a 74% chance for a rate cut at the December meeting. So, I think the analysis here is: It's not what the fed says, it's what they do!

So, we'll see what tomorrow has to offer for the stock market. We have a heavy volume distribution day at hand, and bull markets can sustain periodic distribution days, but we don't want to see many distribution days racked up back to back. Good luck.

Dry Bulk Shipping a Crowded Trade

Saw DRYS (Dry Ships) cross the screen today, on heavy downside volume. This IBD 100 super duper stock extraordinaire, was down over 12% today. I punched in the symbol and viewed a weekly chart..and was quite surprised to see the enormous move in one year or so. See above. I suppose the rumor mill of the day was economic related, folks probably questioning whether or not a recession is ahead, and then the scenario where day shipping rates plunge if the global economy teeters. I am only guessing here, for it could be profit taking after a substantial move. Momentum works both ways folks, AND, the market can remain irrational longer than you can remain solvent. Good luck.

AAAE.OB has $25k, how nice! Hm......

The story I published last week about something better than Uranium...well, today a 10k was filed on AAAE.ob, and from the 10k I found this tidbit:

ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Our plan of operation for the twelve months following the date of this annual report is to continue to review other potential acquisitions in the resource sector. Currently, we are in the process of completing due diligence investigation of various opportunities in the base metal sector.

As well, we anticipate spending an additional $25,000 on administrative fees, including fees we will incur in complying with reporting obligations. Total expenditures over the next 12 months are therefore expected to be $50,000.

While we have enough funds on hand to cover our administrative expenses for the next 12 months, we will need additional funding for the review, acquisition and development of business assets. We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. However, we do not have any arrangements in place for any future equity financing.

Third Week a Charm for Uranium

Uranium shares are on the move again. This time I do think it's for real. After getting clobbered this summer, Uranium shares are spiking higher as the yellow metal spot price is firming. Click here for the story. There are dozens of Canadian and Australian ways to play it, but the gorilla, of course, is Cameco (CCJ), but don't forget about Denison Mines (DNN), she's a $3 billion cap name that is marching strongly higher and exhibiting leadership traits. Right now, you can pick any of the legit players in the space and hang on for the ride (esp. if the Dines letter is gunning for them too right now, and he is, trust me, LOL!!) . The metals and mining group is en fuego, and the Uranium sub-sector is a way to participate, and even more so now that the market price is firming once again. Good luck!

Giant Bull Mkt in Molybdenum!!

Yup,

that's the headline on today's monster 16 page report I received in the junk mail pile! There is a featured stock here, which is supposed to go from $1.25 to $10 within a month and $20 by year's end. Straight to the fine print: Market Movers is the newsletter, the stock is symbol AAAE.OB , and a shop named Capital Financial Media received $750k for this print advertising campaign, and will retain any amounts over and above the cost of production and distribution as a fee for its services. Readers are also strongly urged to independently verify all statements made in the "advertisement" and to perform substantial due diligence. Got that?! Good luck.

A conversation with myself

I see this headline today:

Coach Declines on Slower Store Traffic
Tuesday October 23, 3:24 pm ET
Coach Shares Decline As Coach Says Traffic Has Been Weaker in U.S. Retail Stores

NEW YORK (AP) -- Shares of luxury bag and accessories retailer Coach Inc. fell Tuesday after the company said it was experiencing weak traffic in its U.S. retail stores.
Coach expects fiscal second-quarter same-store sales growth in the low single digits for North American retail stores, and believes factory stores will generate same-store sales growth at least in the mid-teens.

So, I think to myself, (after digesting Walmarts' and Caterpillars' latest news releases), that things must be getting bad out there, and it isn't just the low end with WMT, but now affecting the high end at COH. And then I think about next Wednesday's Fed Meeting...which means more conviction for a rate cut, and therefore, the slowdown that we are experiencing is temporary, and you dont want to fade the rate cut....Or, hey, it's a bifurcated mkt, I dont want a Coach handbag, but i gotta have an iphone! Tech is in; retail, financials out!

Then I think about statement after statement on these earnings calls; & the big picture theme throughout this earnings season is:

Giant Tug of War: US Consumer Weakness vs. Global Growth Juggernaut! CEO after CEO states: "Our domestic sales are sluggish (or down) due to weakening consumer demand, but we are extremely pleased with the growth in our international sales."

So, where does that leave me? LOL. Plenty of conflicting signals. We'll see where the market takes us. Good luck.

We've seen this before

The raging wildfires across Southern California have occurred many times before, and will undoubtedly occur again in the future. It reminds me of the corrections that we have in the stock market from time to time. We've seen them before and they will occur again, and again, and again. LA Times sums it up nicely here. I find much in our daily lives is imitated by the stock market, or does the stock market mimic our daily existence? Either way, there are lessons to be learned, and although knowledge of history can be helpful, it can only be used as a road map, and not as a concise guide as to what might happen next. Good luck.

Big Bounce Coming

Check out these stats from the NYSE:

Up Volume = 193,392,487 (5%)
Down Volume = 3,506,866,972 (95%)
Unchanged = 3,045,300 (0%)
Total = 3,703,304,759

That's about 18 to 1 ratio of down volume to up volume. The Bears will argue this is a complete disaster and you better head to the hills, while the Bulls will tell you that after a wipe out the size of today, there is no where to go but up. Some technicians argue all it takes is a 10 to 1 ratio to get the buyers back in business.

Maybe a better idea is to read the weekend Barron's edition and do the exact opposite of what they say:) Good luck.

Re-Visiting the CRB

The CRB Index that I wrote about recently is sitting at all time highs, and appears to be ready to break higher again. See the chart above.

A way to play higher commodity prices is thru the iShares S&P GSCI ETF - symbol = GSG. The ETF is designed to track the S&P GSCI Index, which is composed of:

70% energy related, a combo of crude, brent, unleaded gas, heating oil, gas, and natural gas.

12% Agriculturals; wheat, corn, soybeans, cotton, sugar, coffee, cocoa.

10% Industrial metals; aluminum, copper, lead, zinc, nickel.

5% livestock; cattle, hogs.

3% precious metals; gold and silver

Investing is a Marathon, not a Sprint

I shared comments about a recent marathon I ran in St. George, Utah with my running mates, and I thought you might enjoy the story as well. Regarding the marathon and its trials and tribulations, it certainly hits home when one makes the analogy to successful investing. To be successful, it takes lots of preparation, a well thought out plan, experience, patience, and courage to get through the difficult times. Here's the story, I hope you enjoy it.

St. George, Utah Marathon Report

Hi Gazelle’s,

If you ever want to run the St. George Marathon, here’s a re-cap of the event. Let me preface by saying it is “as advertised,” an outstanding event all around, well organized and streamlined, and the course is beautiful, almost like running on the moon. I’ll give you a general overview, and then my comments towards the end will contain more of a personal review of the run.

The event was this past weekend – it’s a Saturday marathon, which is neat as it gives you an extra day for travel/recovery, and/or a stop in Las Vegas. St. George is in southwest Utah, only 110 miles or so north of LV. As many of you know, easy to fly in and out of Vegas, and getting to St G is a snap, so the logistics are a piece of cake.

St G marathon is highly sought after. The field was limited to 6500 this year and it is a lottery type system. There were people entered from every state in the nation except for Vermont. The lottery results are announced in early May, so there is plenty of time to choose Plan B for a fall marathon if you don’t get in. Of course, Chicago blew out in record time this past year - well before the St G lottery results were known – so it may necessitate flexible thinking.

The course is point-to-point, starting approx 23 miles north of St G. You must take a bus from the finish line (between 4am – 5.30am) as the run starts at 6.45am. The start line vibe is terrific; they have massive bonfires all over the place. I think the avg. temp at start is something like the low 40’s, and this year was no different, as it was 39 degrees. The bonfires were absolutely necessary – as it was darn chilly. Irony here folks, esp. with the Chicago record highs this past weekend – as some of you know – I am a warm weather fan, and when I did the Milwaukee Lakefront marathon a few years ago (usually around same time of year as Chicago), I vowed never to run a marathon “North of the Mason Dixon Line” ever again as I cant handle running in super cold/windy/rainy weather, only unless it was either NYC or Boston. So I was actually chagrined to see the weather channel report of warm and humid conditions for Chicago, and I thought I was going to freeze my scheister off in the Utah desert!! Little did I know what was ahead for the Chicago crew. Just proves the frailty of the human condition and sometimes, you don’t always want what you wish for.

Back to St. G….the start is surreal, crackling of the fires, 6500 runners huddled around and keeping warm, lots of music, camaraderie, plenty of port o potties, and a wide open desert if you didn’t want to wait in a 10 deep line at the port o potty. Many folks waited until the last possible moment to leave the fire and join the race once it got started. They do have pace groups. Also, easy bag loading for your supplies and cold weather clothes, plus any clothes discarded in first 5 miles would be collected and taken to the finish line if you placed name and number on them.

The start elevation is 5200 feet, and the end is 2500 feet. Elevation is not a problem, and many St G veterans and the web site will tell you not to be concerned about the altitude. My take is mostly true, frankly, I didn’t give it any thought – my concern was more about my quads and the downhill pounding I was about to endure, not worried about my lungs.

The first ½ of the marathon is flat to slight decline, with one big uphill climb around mile 7 to 8, immediately followed with a steady ascent to mile 10…so this three mile stretch is where you wanted to be on your game, but not going too fast to blow you overall pace and fitness. Once cresting mile 10, and primarily past 13, it was fast and declining most of the way in, with an ascent thrown in here and there, one big one around 19 or 20, but overall: flat, fast, and set up for a negative split for those seeking to kick butt and take names. Plenty of water stations and support, but not a course set up for a support group or big crowds. The course is beautiful, with majestic scenery, red rocks, mountains, and a sunrise to warm the bones 45 minutes into the race.

The final three miles are through town, lots of crowd support here, and a long finishing chute to bring you to completion. Easy clothes bag pickup, massage tent, usual solid post marathon atmosphere with food, drink, and more camaraderie. I did notice some vacancy signs at a few of the hotels in town the night before, so not as bad as indicated when planning a trip to this marathon. All in all, a darn fantastic marathon event. I did Pocatello, Idaho at this time last year, and in many ways, not to take away from Pocatello’s fine offering, but this one beats it hands down. The bonfires at the start line mucho mucho important, plus the decline segments over the second half made it much easier to navigate the whole course and saves your quads for the end as opposed to Pocatello, where huge declines in first half, esp. right out of the gate, didn’t leave much oomph in the legs for a strong finish. St G is set up for a fast time, assuming you are prepared! Finally, you get the benefit of a Las Vegas sojourn, with includes great meals, spas, gambling, sports betting, music, shows, the whole nine yards...so a great way to celebrate a fine marathon and a summer of training with your fellow Gazelles.

As for my effort on this day, I can only say this: I kicked arse, took names, and killed the course! I ran a personal best of 3:08, 19 minutes better than my previous best, and a BQ time to boot.

I was geared up from the get go, mentally prepared and brimming with confidence after a summer of gazelle training. My last series of Yasso’s were at 6 minute per mile pace, and I ran a 10k segment of the Silicon Labs Relay a week before at 6.30 pace – so I knew I was well prepared. The run started right on time, but I was reluctant to leave the fire pit area, as it was just dark and cold out there! Once you clear the timing mats and ¼ mile down the road, it is close to pitch black. My first mile was the slowest of the day, running a 8:00 flat mile - navigating the packed street and shimmying around runners jockeying for position. I knew there were pace groups ahead, and my plan was to find the 3:10 group and take it from there. My BQ maximum was set at 3:20, but I knew I could do better. Mile 2 was a 7:30 pace, so I knew I was good for the first two at 7:45. I passed the 3:30 group somewhere after mile 2, and I had my next target of the 3:20 pace group somewhere down the road ahead of me and I knew I’d find them eventually. Funny thing is, I reeled in the 3:20 and then the 3:10, and for a while I was right behind the 3:00 until I backed off some in fear of not having some mojo near the end. Thoughts of the Pocatello blow up were in the back of my mind at all times. However, once cresting mile 10’s hill and knowing the big ascent was behind me, I was feeling strong, with no ill feelings or thoughts, and right then and there I knew it was going to be a special day. Crossing the ½ around the 1:36 time was good, I knew I wasn’t going too fast and didn’t have any notions of this being a bad day. Running for joy was clearly evident and the beautiful surroundings were keeping me in good spirits and at this point, I knew Boston was in the bag, and it was now a question of how fast was I really going to run this thing? When you are confident, anything is possible!

Ok, of course no marathon is ever easy, no matter what you fitness level is, professional or amateur alike. Somewhere around mile 14 or 15, concurrent with a large decline portion, my left big toe just felt like I was stepping on a knife with every step. Of course, our long training prepared us, and a similar sensation occurred out on Shoal Creek this past summer, and I prayed then, as I did now, that the pain would subside and if I could force it out of my mind, I’d be ok. Sure enough, once I got down to a flat segment, and running on the outside of my foot for a few miles, the pain subsided. Onward from there! My brother met me around the 18 mile mark, his plan to pace me for as long as he could – which lasted approx 3 miles- WTH?!?! – a guy who can pedal a bike for 100 miles easy, and then he peeled off, thinking that I was nuts running a 7.15 pace for 26 miles and he too lobbed a final, “you got this one brother and I’ll see you at the end!” I wasn’t all too talkative when I saw him anyway, still focused on the goal, still feeling fairly good, but knowing the true marathon doesn’t start until the 19 or 20th mile and the first sensations of pain were creeping in. Sure enough, finally entering the small and quaint St. George town limit with a 5k to go, I was starting to hit the wall. Having the 3:20 in the bag already, I was still calculating what my PB was going to be. However, having never pounded a 7:15 pace or better for 24 miles straight, I was coming unglued. The crowd support was helping, but as we all know, those last couple of miles are grit, determination, and a singular focus on the finish line. It was now, “keep moving” time. I dropped suddenly to a walk around 24.5 miles, and said, focus on the next street, the next visible marker, whatever I need to, and keep going – so a series of walks and runs got me to 25 and change, and then that final will power of knowing the finish was close got me revved up, and over the hump, and the my last energy cells were utilized to get me to the line. My sister in law met me in the finish area, I told her about my foot and the battle over the pain mid run, and she said, “Look down John.” Holy cripes, my left shoe was covered in blood. Later did I find out what a huge piece of skin came off the bottom of my foot, and my sock and foot were caked in blood. Guess what – didn’t matter, I was finally in the Boston Club and I was silently elated and delirious, yet absolutely exhausted after leaving everything I had on the course.

A special thank you to Gilbert, all of the Gazelles, and the Austin running community. There is nothing like conquering a marathon and the satisfaction that follows. Just nothing quite like it! See you guys around.

What is a Global Warming Industry?

Just rec'd what i consider to be a sketchy type of small stock reco. I receive these junk mail items from time to time, and i take the time to read them, especially for entertainment purposes. Hitting the mailbox today is something called the Green Investor Report, with an exclusive report about the "only public company 100% focused on fighting global warming." I punch in the ticker GWSO on the pink sheets. Did a reverse split and name change this past summer. The first PR that i can find was about 2 weeks ago. Their website claims 61.7mm shares outstanding. Based on today's close of 2.46, the mkt cap is $150mm. Click the headlines, and we find this company operates in three places; 1) a patented GEM hybrid engine, 2) LETG solar energy technology, and 3) water purification technology. The newsletter states the "global warming industry" (whatever that is) will be $51 billion by 2015. Finally, this stock could soar by 500% or more.

The small print is always the best part. The Green Investor Report (GIR for short) was paid $1.1mm for various fees and costs for publishing and distribution of this newsletter. The advertisement was paid for by a third party shareholder of GWSO. GIR was not paid by GWSO, and GWSO and its management had no involvement in the distribution of GIR. GIR is not a registered investment advisor, but may hold shares of GWSO and may buy and sell the stock at anytime. GIR does not guarantee the accuracy of any information compiled from various sources.

If anything is unclear to you about this special opportunity, please re-read my entire blog post again. Good luck.

Gold Blasting Higher, Dollar Weakens

Congratulations on your yellow metal trade. Click here for my previous post. You are making bank and a nice way to close out the quarter. Until the trend changes, no reason to fight the tape.

CRB Index - Does it Matter

I may be dating myself, but the CRB Index was once cited as a main snapshot to understand inflation. The main components of the index are:

Energy (17%) - consisting of crude oil, heating oil, and natural gas.

Grains (17%) - corn, soybeans, wheat

Industrials (17%) - copper and cotton

Livestock (12%) - live cattle and lean hogs

Precious metals (16%) - gold, platinum, silver

Softs (21%) - cocoa, coffee, orange juice, and sugar.

The above chart is tellin'? Yes?

Another interesting tidbit...the Bureau of Labor Statistics incorporates "owners equivalent rent" as a component of its Consumer Price Index (CPI). CPI does not take into account home prices, but measures rent. This "rental" figure is a whopping 30% of CPI. So, think about it, the stunning home price increase over the past decade was not captured in CPI, and as more folks sought to own homes, they did not demand rental units. Therefore, CPI did not have any pressure due to a stable rental market. Now we might have the opposite effect going forward, as home prices fall, and more homeowners (subprime, adjustable rate holders, etc etc) are forced out, they will seek to rent again. Also, those previously contemplating home ownership are frozen out of the market too, and therefore they stay put...aka = Renting. Therefore, we have additional demand coming into the rental property market, which could mean a significant pressure on CPI since it represents 30% of CPI. How might this impact the decisions from policy makers in the months ahead? Good luck.

Bernanke Caves In

So, the Bernanke put exists. The global stock market moved up strongly over the past 24 hours on the back of Bernanke's 50-50 rate cut. This clearly signals his style and mojo closer to Greenspan than he originally led on. There is no clear indication what might happen at the next meeting on Oct 30th. Market participants are now left debating whether this is helping Main Street or Wall Street. Time will tell.

Johnny Rogue was spotted at USA Today, today. Check it out here. Good luck.

After a Rate Cut, then What?

More fall out from Northern Rock this morning. Don't think we can't have a bank run in the States? Click here for article on what is happening in Northern England. The most striking point is that Lloyds Bank was in talks with Northern Rock days before the Bank of England rescue, and Lloyds didn't even want a so-called juicy steal and a big discount to where the shares once traded just weeks earlier. Obviously they didn't like what they saw! Bearish!

The squeeze is on all over the globe, and investors seem content to think the U.S. Federal Reserve will rescue everybody with a rate cut tomorrow. The question all investors should ask..."after the rate cut, then what!" I suspect it will be hard to beat expectations..it always is!

Dennis Green flips after loss to Chicago Bears.

Today, the BEARS are who we thought they were. The Nonfarm Payroll numbers are out, plus downward revisions for the previous two months. It's UGLY out there and the BEARS are growling. We'll see if we get a bounce based on a rate cut that now seems inevitable...or will Wall Street declare a fed woefully behind the curve and anything they do today or on the 18th is much too late and a recession is unavoidable. Stay tuned....

The Green Slime or Subprime Slime?

Coming to a neighborhood near you. Of course, not unless George W Bush has something to say about it.

What a day, a Bernanke speech in WY, and George Bush stealing his thunder from the White House! We now have monetary AND fiscal policy attempting to cure all that ails the good ol U.S. of A. Again the question: On every intervention by outside forces, how much future stock price action gets immediately priced in today?

GOOD LUCK.

Breaking the Greenspan Mold

Greg Ip's influential WSJ column today compares and contrasts Bernanke to Greenspan. He recounts Bernanke's speech after being nominated to head the Fed, and a key promise was to "maintain continuity with the policies and policy strategies established during the Greenspan years." But in handling his first financial crisis, he is showing signs of a key break. The initial use of the discount window and lengthening the term of loans as opposed to cutting the fed funds rate is the primary break from the past. Alan Binder has a wonderful quote; "There's no doubt they were trying to draw a distinction between using the main tool of monetary policy, which is the fed funds rate, and aiming the discount rate at restoring the plumbing." However, as Ip notes, if/when Bernanke cuts the fed funds rate, as markets anticipate, the contrast to Greenspan will be less sharp.

All eyes on Jackson Hole. Investors should be asking this key question: HOW MUCH IS PRICED IN? Good luck.

Jackson Hole and the Bernanke Put

The stock market is cautiously waiting to hear from Ben Bernanke this weekend. What is at stake is the notion of the Fed coming to the "rescue" of Wall Street by beginning a series of fed funds rate cuts later this year. Late afternoon talk show icons James Cramer and Lawrence Kudlow have flip flopped so many times in the past 14 days...first pounding on the fed to reduce rates, then calling them magicians after the discount rate cut, only to recently lambaste them days later as if they are failing the U.S. of A. since they haven't cut the fed feds rates in the meantime and the Dow drops 280 points in one day. What is going on here!?

The Fed has a choice. Maybe a hard choice. Here's the question: If they do in fact announce rate cuts, are they imbedding the "Bernanke put" into the hard wiring of the capital markets? Would rate cuts validate the idea that the Fed will bail out any financial market participant when in trouble? Would this insure against losses and encourage risky behavior? I don't have the answers, do you?

PS--that picture is of a big bull elk from Yellowstone Natl Park!

Relief May be Short Lived article

Here's a link to a prescient article from All Star. Enjoy.

Marrs- Pump Up the Volume

Cmon Mr. Market - pump up the volume!!

When Light Volume Matters?

Greetings Edgies! Late summer / pre holiday action in the market these days, huh?? Time to spin some tunes, and coin some market tales?

What has me up in arms is all the talk yesterday and today regarding low trading volume, and how today's decline isn't important because so many people are away in the "Hamptons." Contrary to last week, where the bulls were cheering the uptick, although on low volume as well! Isn't it interesting those who are long suggest the market will be just fine next week when people return "from summer vacation" and how things will magically sort themselves out and we'll head towards 14,000 in a blink. I suspect things aren't as simple as that. It would be too easy & Mr. Market is never that easy! Therefore, my view is that we'll get significant selling pressure next week in complete opposition to what the consensus is advising right now. Just an early call as we look in the post Labor Day crystal ball. Of course I could be wrong.

The Gap Returns

FXI could have been bought for $112 on 8/16, which was 7 market days ago.
Closed at $153.07 today for an easy +36.7% return (annualize that!!).

It might take a mere 40% pullback to get back to March '07 levels, but "only" a 20% decline to get to last week! I guess the next edition of "Shanghai Surprise" wont be all that eventful, will it?

The Plot Thickens

Last Sunday, August 19, the Fed granted to Bank of America, the right to borrow $25 billion directly from the Fed to provide liquidity to its affiliates. I am reading these stories in WSJ and Bloomberg. They disclosed the exemption in a regulatory filing this week. On Monday, August 20th, the Fed extended the same exemption to Citibank "to extend credit to market participants in need of short-term liquidity to finance their holdings of certain mortgage loans.'' B of A spokesman Robert Stickler said, "We're not sure what's going to happen down the road, so we want to get ready for contingencies.'' Holy toledo...all this talk of stealth fed moves may not even be hitting the mark, it may even be more stealthy than originally thought!

Citi is pleased to inject liquidity....

We can thank Citigroup for saving America in its time of need. We are so lucky to have such a kind corporate neighbor watching over the financial condition of our country.

The statement from Citi after it joined three other banks calling at the Federal Reserve discount window Wednesday goes like this: "We are pleased to inject liquidity into the financial system during times of market stress and to support creditworthy clients." How touching.

The other newsworthy nugget was that Deutsche Bank actually tapped the discount window last Friday. Citi was joined yesterday by JPMorgan, Bank of America, and Wachovia. A Punk Zeigel analyst had some pointed comments about these actions: "It suggests the stress in the financial system is as great as feared."

Good luck.

Trading Places

Not Yet, Almost

I recall the final scene in a 1983 movie called Trading Places, featuring Dan Aykroyd and Eddie Murphy, where they had the Duke brothers (Randolph & Mortimer) on the run with an orange juice trade. As the market was climbing and the Duke's were buying hand over fist ahead of the crop report, Aykroyd turns to Murphy and says: "Not yet, almost." They finally look at each other with a gleam in their eye, and raise their arms and sell the futures contract into the furious rally...a few minutes later, they show the television and the speaker releasing the crop report saying something about not having a cold winter...and the contract immediately crashes. The Duke's were now on the wrong side of the trade. Moments later, we see Aykroyd and Murphy buying back their positions as fast and furiously as they had recently sold them, for a fraction of the price!

That's where we are with the market right now. There are dislocations all over the place. There will be a time to buy, but it isn't right now. The key is to maintain buying power and plan for the day when you can buy and take advantage of the opportunities.

The Leading Edge with the R2K!

The Russell 2000 provides some clues as to what to expect next week. She appears to be shrugging off the global subprime meltdown and credit freeze, and could be a harbinger for better days ahead for stock investors. While the headlines are bearish, there appears to be positive developments below the surface, as the R2K is showing signs of vibrancy after a bruising 10% pullback. The key point: the market leads the economy, and the market is the ultimate barometer of how things really are, not what some talking head or market pundit wants you to believe (or wants you to believe so that their positions move in their favor!)

On another note, IBD certainly changed their tune quickly. They are reporting a "rally under pressure," mere days after a follow through and a new bull market claim. Their take is that in 13 out of 14 times since 1982, when the market has flashed a distribution day within the first three sessions of a follow-through, the rally has gone on to fail. We'll see if they are right. Good luck out there!

Calm, Cool, & Collected

It may be too late to sell...the stock market is going to gap lower this morning, and those of you setting up sell orders may get taken out at the lows. The news of the morning for me is not that another hedge fund or two is blowing up due to the credit freeze out there, but the fact that the Fed Funds futures are pricing a 100% chance of a rate cut by September. In fact, I hearken back to the 90's when we had a surprise rate cut or two. The stock market zoomed higher after these events. We may be back in the zone where the Fed could come in with shock and awe and take the market by surprise with a rate cut. The bottom line is this: Surprise moves the market, not something that we have been facing down for months (ie SUBPRIME)...the market has been digesting and discounting the worst of the credit freeze, it's what is directly ahead of us that isn't yet priced into the market, and what is ahead could be negative OR positive news! So stay calm, cool, and collected.

IBD says Market in Confirmed Rally

Anyone catch the subtle shift? They've changed their tilt from "market in correction" to "confirmed rally." They seemed to like the big day we had this past Monday, coming on day 4 of the new rally and it was confirmation of a directional change in the market. Yesterday's Fed announcement continued with their focus & vigilance to inflationary threats, but they did acknowledge heightened credit risks to households, etc..and the market appears to have applauded this modest shift. Financial stocks and home builders had big positive moves yesterday, including the brokerage names too. Many will probably conclude the "all clear signal" isn't necessarily a given, but there is a breadth of fresh air and a collective sigh on Wall Street. Therefore, with plenty of concern and fear still evident, this market might begin to climb the proverbial wall of worry again.

Elimination of the Uptick Rule

Anyone think it's a coincidence that the market started to roll over soon after the uptick rule was eliminated? Check the chart of the Russell 2000, it declined almost 10% from its recent peak. Small cap stocks have been pummeled and some folks think the ability to short sell shares without waiting for an uptick is one of the reasons for the market swoon of late. I'd suggest it certainly exacerbated the decline, but it is not the sole reason. Nonetheless, it is important to understand the dynamics of what this means to the market. Click here for a solid blog posting about the elimination of the rule and what it might mean for the market. Good Luck!

Volatility = Decline!!!!

Quick note, as i chuckle day in and day out every time we go through a correction - at the mere mention of the word "VOLATILITY." Talking heads and beat writers drag this word out from under a rock and I hear it over and over and over again. Volatility is code word for decline! Why can't people understand there is such thing as upside volatility too? Ah ha, but "the establishment" doesn't want to tell it like it is, so they try to brainwash you into thinking LOSSES are just VOLATILITY! This is so much fun. The word comes up 23,600,00o times in a 0.05 second search on Google. Doesn't that picture of a roller coaster at Knott's Berry Farm look like a blast?

Any News will be Good News!

Key data in next 48 hours: Initial jobless claims tomorrow, and non farm payrolls/monthly unemployment report/hourly earnings Friday. Any news will be good news. Why? A weak employment number could draw comments from the Fed and the chit chat will feature well placed and timed notions of cutting rates. The comments may not emanate immediately, but within a few days or few weeks, we'll hear how they are concerned about the economy, and as employment craters, the consumer will be on the ropes with spending (as well as re-setting mortgages) and the financial markets will demand a bail out. Therefore, a seizure in the financial market will force the Feds hands. There is no doubt they are watching closely, and it wont even depend upon Ben Bernanke comments directly, it could be from any Fed Governor or hired gun at the Wall St Journal. The mere mention or discussion the Fed "might" cut rates will stem the correction and cause a turnaround.

A strong employment number could also stem the pessimistic tide. If the stock market is concerned about mortgages and spending...their concerns will be alleviated with a strong employment report. The pessimists wont be able to argue in the face of recent econ reports that include a 3.6% GDP growth rate, a 112.6 consumer confidence report, and low unemployment or high non farm payrolls.

Therefore, any news tomorrow and Friday could be good news! Good luck.

AHM crushed, down 90%

This event is spreading like a wind aided California wild fire. The repercussions will be felt like last weeks Countrywide Mortgage earnings report. Brace yourself. That said, as the financial sector transitions into nuclear winter...and the market takes some hits...think of the big picture asset allocation decision: Let's assume a million dollar base and how to invest in the current market environment:

1) Are you going to allocate a significant portion to fixed income?
2) What percentage will you allocate to real estate?

3) Assuming 1&2 are toxic, you are left with some combo of cash (money market or T-Bills), equities (non finance and real estate exposure), and commodities. You could certainly allocate to rare art, classic automobiles, stamps, and a host of other alternative type stuff, but that's not relevant when we are talking about big giant swaths of capital as it moves across the globe.

4) ultimately, a bid is in place for the "stock market": because most other asset classes are bunk. That's my conclusion. Therefore, you can panic out of stocks, but you have to ask yourself, where are you going to put the proceeds?

LULU !!!

Priced last week and first trade was Friday - in the midst of the carnage - and boy, did she soar! $18 US was IPO price (recall - they are a Canadian shop with aggressive US expansion plans), and today trades over $30. Click here for the release. Watch it closely and add on weakness. This is one hot stock....see my previous post here

What next? Record Short Interest

Last week I mentioned record short interest as a reason this market will find a bid. Click here for the record short interest stats from the Nasdaq, courtesy of Reuters. With the VIX exploding higher last week, I would hazard a guess that if you were short right now, and the market having pulled back 5% or so in one week, you'd be looking to cover and lock your gains. Therefore, on top of the put/call ratios and advance/decline information, one might argue there are plenty of reasons for a nice rally. Bubblevision also flips to the bearish bent, and they can arrange guest after guest offering negative views. Therefore, what usually works is to fade the noise, and back up the truck. Good luck.

Sentiment

Today's CBOE's put/call ratio indicated a low of 1.18, and a high of 1.33. Yesterday, the total CBOE put/call ratio of all stocks and indices was 1.53. These are extremely high readings.

I also saw a tout for Lawrence McMillan (option guru) as he cited an unusual occurrence, where the market had two days of 90% down stocks in the past week. There have been only 3 other 90% down days in the past 11 years apparently. In addition, there has been recent record high short interest data coming from some of the exchanges, and Bubblevision's "Breaking News" coverage of the DJIA down 100 points or more is drawing lots of attention and is always cause for people to do harmful things to their portfolios. In fact, the VIX is also Exhibit A for high fear levels and modest panic.

The key is to maintain your discipline, focus on the process, and stay committed to doing those smart things that got you to this point in the first place. We will assess the situation again this weekend and on Monday morning, with the plan to search for signs of full panic & retreat, while seeking an intraday reversal on heavy volume and a upside surge. The market will probably then have to digest the initial thrust higher, perhaps with a re-test to the lows over the resulting few days, and then a sustained push higher would be imminent. Let's watch and wait! Good luck.

Maintain Your Edge!

When Bubblevision tells you the DOW is off 411 points (and the worst day since Sept 17, 2001 !!), your first instinct is to panic, lose your wits, and immediately log on to your online brokerage account. You are tempted to sell first and ask questions later. You cease to follow your initial intentions and formal plans for long term wealth creation and haphazardly send sell orders for many of your stocks and etfs. Don't do it. Stay calm. Take a few deep breaths. Go take a walk around the block. Recall, many investors blew out of shares this past February and never got back in, and subsequently missed substantial gains. The same scenario could play out again in the next few weeks. Beware of follow thru selling tomorrow morning, and then watch to see if there is a significant rally off the morning lows. We are looking for the one day reversal after a blow off, large volume, capitulation type event.

Gold Bugs Index Set up in the Kill Zone

Ok, we are presently experiencing fireworks and excitement across the investing landscape. Global markets are skidding, and there are few places to hide. A $12 billion debt offering from Chrysler has been scuttled, and reverberations are rippling across Wall Street. The 10 year treasury is presently yielding 4.90%...anyone notice?! The S&P 500 broke below its 50 day average again. We've been here before, so will this pullback be met with another round of buying? The story since 2002 has been to buy the dips. As for the break in the gold shares, the Gold Bugs Index (HUI) appears to be smack dab in the middle of its Bollinger Band, and we've drawn down to the 20 day moving average as well. If you are seeking to exploit a move in a strong sector, this would be the time to buy. Lastly, the HUI made a powerful move from 320 to 370 (50 points), so if you think there is one more day of downside ahead, you might get the opp to buy in at the 345 level, which is a pullback of 25 points off the recent high - which equates to 50% of the magnitude of the recent move. Good luck.

Uranium Shares Hammered

The Uranium complex has been selling off recently, and missives from Dines can't even stop the bleeding. CCJ collapsed below its 200 day average on heavy volume today. Here is an interesting article about Cameco, uranium prices, and other thoughts regarding the state of the business. I never get a sense of objectivity when reading pieces such as this, and it doesn't help me determine if the price of U is ready to collapse or not. Plus the Dines folks have been able to support their stocks in the past, but I haven't seen any signs of buying of late, and I gotta believe many could be in danger of falling out of their long term up trends. I wonder if this trade is crowded, and the U-bugs have fallen in love with their story? The game of chicken with the Utilities is close to a turning point, and who will win?

Energy Service Stocks Bid Higher!

M&A activity in the energy sector today is driving the OSX to new highs. Transocean Inc. (RIG), the world's largest offshore drilling contractor, and rival GlobalSantaFe Corp. (GSF) plan to merge. The combined company will have a market value in excess of $50 billion.

More ETFs for Profit Pleasure

We've made bank recently on International ETFs such as Australia, Brazil, Canada, China, Germany, & South Korea, to name a few. So let's add a few more to the stable. We've got a bond market sizzling today, coming way back under 5% on the 10 year treasury yield, and with the Dow down over 125 points, it's time to step in and scoop up the bargains. We'll spotlight Taiwan (EWT) and India (INP). Good luck.

XAU Blasting Off - Are you Onboard?

Gold shares continue to romp higher, and we are fast approaching all time highs. Today's chart and relative strength readings show a slight overbought condition. Have your powder ready if you haven't made an allocation to gold shares yet, and buy any weakness. One significant indicator in our favor here? Bubblevision, not one peep about the XAU so far this week - I haven't heard one commentator or so-called analyst mention gold shares...little if any chit chat on hype-tv. That doesn't mean bloggers such as myself haven't taken notice of what's hot to trot, but it is an extremely powerful underpinning if the herd hasn't been clued in yet. Once bubblevision gets on board, we can expect the additional bid on the shares and perhaps the ultimate breakout. GDX is the ETF to play the miners, and my analysis of their holdings and a break down vis a vis IBD's ranking system suggests core holdings of ABX, AEM, and BVN if you want to play some straight equities. To be clear, those three have high IBD rankings. Others near the top of the list, depending on the day, are PAAS, RNO, & HL. (GDX - the three largest positions are ABX (Barrick Gold) at 14%, NEM (Newmont) and GG (Gold Corp) - are close to 10%) The thesis is to buy the leaders, and the IBD methodology would lead you to them. Good luck.

Continued Success for Nintendo

Nintendo's name keeps popping up on the radar screen. They've had tremendous success with the Wii, but also have solid hits with their Gamecube and DS Systems. The shares trade on the Pink Sheets in the US - under the symbol NTDOY. Nintendo finds themselves amongst the top ten highest market cap stocks that trade in Japan, recently surpassing Sony (SNE) in market cap.

Apparently educators in Japan are creating a stir as they are suggesting certain educational games for young children to play as they seek unique ways to foster learning in school children. Click here to review a report about Nintendo in Money & Markets and why teachers in Japan love the DS Game System.

Last week, Nintendo was the buzz at the E3 Summit in Los Angeles, having debuted additional new games for the Wii. Some of the new games even promise to make you healthy - very cool!

Forbes spotlighted Nintendo's financial success in a article here.

iShares Japan (EWJ), a $13 billion ETF, has over 1% of its assets in Nintendo, and it is the 12th largest holding in this particular ETF. All in all, Nintendo is a compelling story, now isn't it?

Surprise Moves the Market

From the Wall Street Journal today: What Could Topple Bulls' "Wall of Worry"?....these types of articles can be found in print (newspaper and magazines), on the internet, or in discussion at the local coffee shop....just about anywhere and everywhere on land or sea...we get the litany of "worries" for the stock market. This is not a new phenomenon - year in and year out, we'll have to contend with and face the uncertainty of investing in intangibles. Today's list includes: High risk investments (subprime mortgages), global growth rates, inflation, the weak US dollar, and liquidity. Heck, I could type the same list 10 years from now and it will probably be the same worries then as now! I'm surprised they didn't have a few paragraphs about political instability, global terrorism, high oil prices, etc etc...The question that I think should be asked is: by how much have these "worries" been priced in by the market? On the face of it, none of these items will cause the market to roll over tomorrow...what WILL cause the market to change direction in a meaningful way (up or down) is when there is new information, or new surprises, for the investor to digest. The stock market in and of itself is a pretty good discounter of known information..sure, there are inefficiencies that can be exploited from time to time, but overall, millions and millions of investors making millions and millions of buy and sell decisions each day certainly brings a large amount of efficiencies to stock prices. Warren Buffett once said, "In the short run, the market's a voting machine and sometimes people vote very unintelligently. In the long run, it's a weighing machine and the weight of business and how it does is what affects values over time." That makes sense to me, and that is also why I don't get too pre-occupied with the latest headline about the dollar, oil, sub prime mortgages, etc etc...The key is to find and exploit existing trends, stocks on the move, and securities in favor, and finally, to maintain some risk management and stop loss discipline just in case you are wrong (or new information (aka surprise) causes your position to go the other way!!!) Good luck.

Wanna own Tech??, then buy EMC!

Cramer is right on this one. He featured it last night. Click here for his post. Trading Goddess is on board too. (Note, Trading Goddess is a very popular site, but PG-13 rated)....

What's the fuss about EMC - it's all about VMware. EMC is going to spin this out and it will be the most popular IPO of the summer. Cramer thinks the road show for the VMware IPO will generate a ton of buzz for EMC, and he's probably right. The stock is breaking out, and tech is hot, so why not buy some shares? Good luck.

Fireworks in the Gold/Silver Shares

The XAU Index is vaulting higher today. She is entering a fascinating area. Anything above 150 and we are in rarefied air. These levels have been reached three times in the past 20 years...There are various technical reasons to be long precious metals, but add the bonus of a weak dollar, world wide political instability, emerging China and India, massive petro dollars floating around, M&A activity in the space, and last but not least - a quasi defensive position if the general equity market falls apart. The money has to go somewhere, and GOLD is a safe haven!!

Dollar Hitting Lows & Gold Shares Percolating

Gold prices seem to be firming as the dollar continues to decline. Seeking a pure play gold stock basket brought me to GDX - the Market Vectors Gold Miners ETF. In addition, the top holding at 14% of assets in this particular ETF is ABX - Barrick Gold. I plotted the chart of ABX and immediately was drawn to the Golden Cross that was just put in. A GC (Golden Cross) is a powerful sign that higher prices may be imminent.

Energy Hormone! - DKA

Wisdom Tree's International Energy Sector ETF (DKA) has a beautiful looking chart. They own a basket of 57 oil and gas issues throughout the world. Click here to see the recent holdings.

If you think the price of oil can sustain itself in the $70 range, this ETF may continue to do well.

The Technology Spider - XLK

One headline today was about the Nasdaq trading at 6 year highs. Too bad those who have bought and held the Nasdaq are still about 50% under water from the early 2000 peak. That's all water under the bridge, as we are focused on the here and now.

WIN - What's Important Now - a special phrase coined by Lou Holtz has us checking the action in the XLK shares. See the chart above - XLK is breaking out and in a nice uptrend. Click here to learn more about this ETF. This is one simple and concise way to play the buoyant tech sector.

Totally Geeked for this Movie - Transformers & GM

Click here for a report on the new Transformers movie and how it might positively impact General Motors (GM). The common stock of GM has been on a tear of late, and it recently marked a Golden Cross. This is usually a bullish sign and one where investors might want to sit up and take notice...just like how your ten your old child is geeked about the movie opening in theaters today.

The Fidelity Select Automotive Fund (FSAVX) has 7% of its assets in GM. It's other large holding are Johnson Controls (JCI - 17%), Harley Davidson (HOG - 15%), and Ford (F - 9%). Click here for a Morningstar snapshot of the fund.