Take Three!

Isaac Newton once said, " I can calculate the movement of the stars but I cannot calculate the madness of men."

Albie: "You're quotes are genius Troy!"

Troy: [Laughing]

Narrator: "Before Albie, Troy and Bryan begin to give their 'Takes on the Market', first here are some Market Highlights":

A) "The global economy is entering into a new phase of uncertainty and danger," said the [World] bank's chief economist, Justin Yifu Lin. "The risks of a global freezing up of capital markets as well as a global crisis similar to what happened in September 2008 are real."

Albie: "My wife said all this financial talk sounds like the Charlie Brown teacher: waa, waa, waa...[Laughing]!"

Troy: [Laughing] "Your wife RULES!"

B) Eurozone is being hurt by S&P credit downgrades, and by the negativity concerning Greek bonds.

C) For the United States, the World Bank forecast 2.2 percent growth from 2.9 percent and for 2013 to 2.4 percent from 2.7 percent.

D) MSN had this to say about China's expansion and commodities: [it] slowed to a 2 1/2-year low of 8.9 percent in the three months ending in December from the previous quarter's 9.1 percent.

E)Prices of energy, metals and farm products are down 10 to 25 percent from their peaks in early 2011, Timmer said."

F) The United States has already been effected from Europe's crisis.

G) IronFX had this to say about the Euro: "The euro rose for the first time in three days against the dollar and the yen as Spanish and Greek borrowing costs fell at auctions,
the market is already very short the currency, so positioning certainly explains some of today’s move toward a stronger euro.” A short position is a bet a currency will weaken."

Albie's Take:

"The S&P500 is in positive territory, maintaining Daily Technical up trend on its climb to Weekly Retail levels. I would personally wait till it reaches its Daily and Weekly retail (resistance) level and then see if if begins to head back down to wholesale (support). Since the S&P is in a general uptrend, I would wait till it falls to support levels and then put a buy stop in when it begins its climb up again. This move is called a 'Pull Back Buy'. From more of a fundamental view, the list from above are the problems that are effecting stocks this week. With all these things happening, there is much negativity in the market and fear. I will be watching with great curiousity how this negativity will effect the technical support and resistance levels. As far as commodities are concerned, this fear increases the odds of the price of gold and silver rising - which is one of the few bright spots on the horizon."

Bryan to Albie: "Good take."


Troy's Take:

"I think it will be a very volatile market because of the S&P downgrades. The S&P is on the war path! There is also a bond market bubble!"

Albie: "Yes - GREAT points! What does the bond bubble do on a practical level for stocks and what would make the bond bubble bust?"

Troy: "When the bond markets busts, there will be collateral damage especially equities... The price (not yield) on the 10 yr is bidding up! It's already over par right now at 101-07 for a yield of 1.86%. Please! I think it's absolutely insane for investors to be over paying for so little!"

Albie: "Wow - ok...(amazing how I don't even speak 'bond language'!)"

Troy: "Overall, the S&P downgrades around the financial world are generally good for gold and other commodities. Just as in late August of 2011, metals and other commodities such as Gold, Silver, Copper, Natural Gas, Crude Oil, Platinum etc are up as of the morning I am writing this. Why? Whenever investors are fearful, they run for the safety of precious metals (gold and/or silver). I am very certain that unless the US & other countries address their debt issues, there are more downgrades to come. The downgrades will be especially detrimental for the US bond market. I am very certain that there is a bubble in the bond market that will pop in the next 2-3 years (if we even have that much time). When it bursts then one of the asset classes investors will run to, are precious metals for safety. I am of the belief that gold (at about $1650) and silver (at $30) are a EXTREMELY undervalued asset class."

Albie: "Fantastic take Troy!"[Changing subject] "Tell me a little about what happens to stocks when the USD is down?"

Troy: "Usually when the USD is down, stocks tend to go up BUT that is inflationary. If we get a trend of a stronger USD and a rising market that is really good. That is value! BUT we have not really had that since the 1990's."

Albie: "Thank you Troy - that is VERY helpful. I'm sold. I need to go buy some gold!"


Bryans Take:

"I am not sure what effect rising oil, S & P downgrades, China's slowing economic growth, or the Easter bunny for that matter, will have on the entire stock market in the short term, nor do I really care to speculate on it. In the short term the stock market is a voting machine, in the long term is a weighing machine. If I had to choose, I would rather have the market go down in the short term as it may present further buying opportunities among the select companies I keep an eye on in my watchlist. In addition, none of those factors should have much of an impact on the underlying economics of the types of businesses I am looking for that I would consider to be within my "circle of competence". Whereas my cohorts here are in the business of speculation, or viewing what a stock has done in the past in order to determine its future prospects, I am in the business of valuing companies, and buying wonderful ones at cheap prices as often as I can. So bring on the pessimism!"

Albie: "Excellent take Bryan! I love youre focus on what's important. I'm glad I took your advice and found some great companies to invest in. Thank you!"


Narrator: "Here are some more Takes by Bryan this week":

Bryan: "If I were an avid trader, which I am not, I would take advantage of short term, bad news situations, some of which can be gleened from the news we see everyday. Case in point. With the recent Carnival cruise disaster, Carnival's stock CCL dropped precipitously overnight to open about 15% lower than it closed the previous. In the the last two days of trading it has regained some of its losses, though it still is about 10% away from fully recovering. Will this incident affect the company's earnings in the short term? Possibly. But long term the stock and company should fully recover and then some. Short term bad news situation such as these present compelling buying opportunities for those with a long term perspective. Buy when others are fearful and sell when others are greedy!"

Albie: "You know, this is very clever. Thanks Bryan for this great insight!"

Bryan: "Some interesting thoughts on Google(GOOG). They reported earnings today and, like a parent a child can never please despite straight A's on his report card, Google's shares got hammered in after hours trading. Here's the news:

Google, based in Mountain View, Calif., reported that net income in the fourth quarter rose 6.4 percent, to $2.71 billion, or $8.22 a share, from $2.54 billion, or $7.81 a share, in the period a year earlier. Excluding the cost of stock options and the related tax benefits, Google’s fourth-quarter profit was $9.50 a share, up from $8.75 a year ago. Analysts had expected $10.49 a share.

The company said revenue climbed 25 percent, to $10.58 billion, from $8.44 billion.

Net revenue, which excludes commissions paid to advertising partners, was $8.13 billion, up from $6.37 billion. Analysts had expected net revenue of $8.4 billion.

As you can see, Wall Street is not very forgiving if you fall the least bit short of their expectations, especially if you have met expectations consistently in the past. So, I wouldn't be surprised if we see a sell off in GOOG on Friday resulting in an overreaction and shares falling a bit too much. This would present a buying opportunity. I believe shares of Google are worth at least $800 dollars conservatively factoring in a growth rate of 15%. The Street estimates their future growth at over 18%. So if Wall Street slaps Google hard enough tomorrow we could see the stock start to come into the upper end of a buying range. The problem with being a small individual investor is that you don't have constant float to invest at your every whim, and hence you must sell your second favorite position in order to buy your first favorite one. I believe my current holdings will still yield a higher return on investment than GOOG, even if it drops a bit. For this reason, though GOOG will probably drop a fair amount tomorrow, I would have to see it fall to the $400's for me to consider a purchase. At this point I would load up the truck, and hold for the long term. Google's not going away any time soon folks. It's hard to compete against a company that gives it's product away for free, so if you if you buy it even at these levels you are certain to make money in the future. Happy investing!~~



*We WANT to hear YOUR TAKE too! Your comments are APPRECIATED and if you would like to ask a question of Albie, Troy or Bryan, please leave a message and or email on the sight and we will try to answer you as soon as possible!

**Please keep in mind that this blogs main intent is not the reporting of world or financial news, only the opinions of what is of real importance in the stock market, world market and commodities to 'Three Takes on the Market'. Thank you for your understanding. :-)