Wednesday, June 30, 2010

What a day, again!

The market tanks late again and then the Dendreon (NASDAQ:DNDN) dives late on news that's really no news. So Medicare is looking in to Provenge, as expected. The shorts and put holders must be laughing. By the way, what do you expect Medicare to do. For those longs, think about all of the previous stories and the stock reaction.

Next. Count down to Vivus (NASDAQ:VVUS). The 15th is V day. We think approval and the company has a market cap of about $775 million and a drug with $1 billion potential and another in the pipeline.

Also, Citi (NYSE:C) was halted after it's price was manipulated in some dark pool. Does it ever end. No wonder many people have just given up. Look to high yielding household names like Bristol-Myers (NYSE:BMY) and Verizon (NYSE:VZ) if you can't stand the heat.

Once again, this really is the most difficult market. Very little makes sense, retail investors are being thrown around, and the SEC seems powerless. Stay out of options and don't day trade!

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Sunday, June 27, 2010

Too bad for RIMM

So we've talked about it a few times and we'll hit it again. We wouldn't own Research In Motion (NASDAQ:RIMM), as they still don't seem to get it. Little companies become big companies by creating a product or service that people want, building out the brand, and then diversifying or building other products using the brand.

They fell flat on the last part. They didn't really think they'd be able to get by with just the same old smart phones for the next 50 years. Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) must be laughing. Both of which are better investments. Unless RIMM has plans to re-invent itself sometime soon it better sell itself.

The stock is being killed, as investors are just now waking up to the fact that RIMM isn't keeping up with AAPL and GOOG.

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Wednesday, June 23, 2010

The High Frequency list is out

Before you make that next trade you might want to check to see if that stock is on the top 25 hits list. That list is the High Frequency Trading (HFT) list and may explain why some of the stocks you thought were safe, behave erratically.

The list is here. I'm surprised that network snitched on their brethren. By the way, this market acts like it's broken. The most difficult market ever. Primarily a result of HFT in our opinion.

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Sunday, June 20, 2010

We may have turned the corner

So this past week we held up over 1100 on the S&P. We think that's good news and could mean a Summer rally. The news on the Chinese Yuan is being received positively of course. The miners should see a boost, as should the infrastructure names.

Stay tuned for more on this.

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Wednesday, June 16, 2010

We've said so long, see you next year to BP's dividend

Politicians finally got their way. They bullied British Petroleum (NYSE:BP) into suspending the dividend. Surprisingly the stock held up nicely after the news. The questions now are, does BP reinstate the dividend Q1 2011 or sooner, is it paid in arrears, will their be a special dividend, or what?

First things first, they have to get a handle on that leak, and soon. Kevin Costner to the rescue. Who cares how they do it, as long as they do it and do it right.

We went long at about $37 and we're hanging in there, as we believe the dividend comes back early 2011 and we'll be yielding 9+% at our price and the stock goes back to 50 easy. If not, we didn't bet the farm and consider it a risk worth taking.

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Tuesday, June 15, 2010

Do we hold or fall back?

The S&P is at a critical level. If we hold these levels, we believe we move much higher, if we fall back, then the market is broken. We think we move higher, as we've tried this level three times now and the third time is usually the charm (believe it or not).

We'll see where we go from here, but many of the usual names are still trading at bargain prices.

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Monday, June 14, 2010

Navigating the volatility with proven names

In a crazy market like the one we're in, it's nice to have invested in proven names like Bristol Myers (NYSE:BMY) and Verizon (NYSE:VZ). This definitely lowers the volatility in the portfolio and pays you to wait.

We've written about these names in the past and thought we'd hit it again. BMY pays just over 5% and VZ is paying about 7% at the moment. These two names are core holdings in our long term portfolio.

Things have definitely changed a great deal in the markets, as names like Dow Chemical (NYSE:DOW) and General Electric (NYSE:GE) used to be low beta names, but these two names trade like tech stocks. We still like DOW and GE and consider them core long term holdings.

We not only blame speculators, but regulators for creating an environment where our capital markets are more like casinos. Consider the news out today - traders can now speculate on the box office returns of movies. What a joke. Most in the movie industry appose this decision to allow futures traders to speculate in this way. The fear is that movies can be doomed before they ever hit theaters, as traders can sell futures of a certain movie and causing people, theaters, critics, etc. to believe the movie is a flop.

Whatever. There you have it. At the moment we're glad to be collecting 5-7% in dividends from a large part of our portfolio.

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Thursday, June 10, 2010

BP and politics

The situation with the Gulf oil spill would be comical if it weren't so tragic. I'm not sure either party, BP (NYSE:BP) or the feds really care about the little people down there or the little animals as much as they care about money and showboating.

Truth is, if the current administration hadn't endorsed off shore drilling days before the spill, I doubt they would be behaving in such an irrational manner. BP on the other hand has done itself no favors by underestimating the severity of the situation.

One thing is certain, all this talk about criminal investigations and possibly ordering BP to halt the dividend is nothing more than showboating. Save the investigation for later and who says BP can't pay a dividend and the clean up cost. This is one of the largest companies in the WORLD.

By the way, the critics who compare the current administration's response to the oil spill to that of the last administration's response to Katrina, aren't thinking clearly. One final note, other than updates, everyone should stay out of the media, as the talking heads just want to stoke the flames. You'd think all parties involved would know that.

Regardless of what happens, we think the stock, BP, represents good risk adjusted value down here.

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Monday, June 7, 2010

Watching the next few days closely

This sell off has been brutal and has caused many to doubt the economic recovery that is no doubt on going. Most of the excuses for the sell make little sense, as this is more a speculator driven sell off than one driven by fundamentals. Nevertheless it's brutal.

With that typed, the next few days should be crucial as we are sitting around 1050 on the S&P. We're not technicians and actually happen to think technical analysis is a bunch of mumbo jumbo, but this market is being driven by machines and algorithms and they primarily care about the technicals.

We really need to get back over 1100 and stay before we have a chance to change momentum, but more importantly if we move down and stay under 1050 could drag on a while longer.

While all that's happening, we still like the dividend paying stocks. Why not park your money there and earn 6% while you wait this out.

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Sunday, June 6, 2010

What a week

Up 3%, down 3%, and I really don't see a good reason for those kinds of moves. Traders and reporters create excuses later, but to blame a 3+% move down on the jobs number (like economist know what they're talking about), they're guessing like the rest of us. Economist see trends and they pretty much draw straight lines and see those trends continuing. Then the bears said Hungary looked bad. Are you kidding me.

The big up days are probably shorts cashing in, or should I say smart shorts. We need to work our way through this and hope speculators don't drive us into another recession.

By the way, we still like BP (NYSE:BP) and think people need to stay out of the media and stop the grandstanding. Work behind the scenes and make theses guys clean this mess up, but publicly jumping on the company just makes it more likely that they'll go into financial distress (although very unlikely). Wait until the situation is resolved, then blast them.

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Wednesday, June 2, 2010

Pulled the trigger on BP today

Okay, it was too tempting. One of the largest companies in the world, nearly $300 billion in revenues, and nearly 10% yield (in question). Started adding BP (NYSE:BP) today and won't look back. As these things go, anyone expecting BP to some how go away or be acquired is just crazy. Who has that kind of money?

Also, not to sound cynical, but if you think BP is going to end up paying billions and billions in settlements anytime soon, you don't know how the system works. They'll pay, but it won't be nearly as much as people think and they won't pay the last dollar until after the year 2020 sometime. Think about the tobacco companies. The people suing them will grow old waiting.

As soon as they get this leak stopped, the stock is going to move up 10-15% that day, assuming they don't kill the dividend.

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Tuesday, June 1, 2010

Recent Poll Results 25May-1Jun

When asked whether or not we were at a bottom in the market, readers replied evenly across the board, "Yes", "No", "Wish I Knew".

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The Vix

About This Blog

Where we rant and rave about the market and of course give our opinions on stocks we love or hate. We're not advisors and urge you to conduct your own due diligence.

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