Albie's Take:
The S&P500 has reached support and has stopped its spiral downward. However, after having headed back up it has shown weekness again and fallen back to Daily support lines. Hour four Charts are encouraging as new support and resistance lines are now able to be drawn, but it seems that only the Daily support lines are really holding. Reflection on the odds of it going up are still questionable in my mind. I am thinking that the deal between Greece and the Euro will be more of a favorable short term indicator than anything at this point. After having just written this, I see that some progress has been made between Germany and Greece this morning. However, there is still some more work that needs to be done this week before everything is finalized. As I edit this on 2-1-12 The S&P has headed on it's way back up from Daily support.
Bryan's Take:
Buy Radioshack! (RSH)
I don't normally make short term predictions or speculate on companies within the stock market. RSH got hammered yesterday and was unduly punished, losing over 30% of its value. This company is not going out of business any time soon. Although I wouldn't consider this a long term play or a wonderful company by my standards, if I had a hankering for a short term trade to make at least a 10-15% quick pop, I would put some money down on this one. Of course this is pure speculation and I could be way off, but I think this one has found a bottom. As I write this, RSH is trading at 7.25 a share. Keep your eye on it!
Albie's Take: Thanks Bryan. I think you've given us something practical to use! On a different note: "Did you read the article on MSN about China? ("China Goes On Gold Binge; World Wonders Why" 1-31-12) China has been dramatically increasing its supply of gold. 'Why' is the question! Here is the quote: "Third, the purchase of gold would be especially risky for the central bank, which is already insolvent from a balance sheet point of view. The PBOC needs income-producing assets in order to meet its obligations on the debt incurred to buy foreign exchange, so the holding of gold only complicates its funding operations." MSN
Troy's response: "In one word: 'Propaganda'. Gold has gone up nearly $200 in the last 4 to 5 wks... In other words ain't selling... I sleep good at night knowing I have gold and silver..."
Albie: "Good to know! But the fact that China has doubled its intake of Gold lately is a fact. China's buying of gold seems fear related. This seems like something I want to keep my eye on..."
Troy: "China doubling its gold in take... For me that's called a clue..."
Albie: "Again - you have a point. I understand its fear of the world economy. But when you consider that gold does not help ITS economy right NOW and its having a hard time keeping currency flowing and jobs. Check out the article quote above. Surely that is based on some real facts!
Troy: "It does help its economy because China has an inflation problem. Gold and silver is the best remedy for this problem..."
Albie: "You are on the ball... But check this out from MSN: "A better explanation for the gold-buying binge of Chinese citizens is that they are using the shiny commodity as an inflation hedge, as the Financial Times recently suggested. Yet the buying of gold has increased while inflation has eased. And that means there must be another explanation. The best explanation is that individuals in China are using gold as a substitute for capital flight."
Troy: [Troy referring to the article from MSN, 1-31-12] "When China says no asset is safe...they are referring to the USD.
Albie: "That makes sense... (Albie's laughing). Why do they say buying gold does not produce income? They can hold and sell gold like anything else?!! Right? The question comes from the quote from MSN:'but there are real constraints on its ability to purchase assets that do not provide current income.'"
Troy: Gold does not purchase income because it's a form of insurance. It's a hedge. It's a hedge that been producing a good appreciation return.
I know it does not produce "income" but most mutual funds don't produce income either. Gold for me is a form of savings not investing
Albie: Good answer. So do u have any clue why China's doing what they're doing considering the bind they're in?
Troy: Yes inflation may be dying down a LITTLe but do you drop your health insurance just because you just got over the flu?
Troy: I think they are preparing for the day where they have the world's major currency.
Albie: True - but do you hold any thoughts on the fact that China is 100% dependant on US. And this quote from MSN: "the Chinese government rarely benefits others - and hurts itself - by telegraphing its short-term investment strategies." How to be a world dominating power when your a miser. Miser's become hated & even rejected because they only think of themselves.
Troy: China 100% dependent on the US?? How many people does China have again?? Gold is not a short term investment. China is thinking long term.. The US is thinking more short term. How is China being a miser?? If they were a miser they would have let the RMB float & the dollar would have tanked. If they were a miser they would have stopped buying our troubled bonds then we would be in deep deep trouble. They have actually been holding us up. We have actually to beg to them to keep buying our bonds to keep the % rates low.
Albie: Wow! Ok - terrific comeback! But China does have tons of people & resources but in the last century its track history of using them was grade of 'D' if you know what I mean, and I don't trust this gov much more than Mao tse Dong's. But the actual people of China are a different matter... True that about them helping USD. But on flip side - what would have happened if we stop buying all their stuff!
Troy: I know exactly how you feel. But people change. But we both have to look at the numbers and as Jim Rohn says the numbers tell the whole story. A legendary bank robber was asked why he robbed banks. His reply? Thats where the moneys at...Unfortunately the Asian countries are where the money is at...
Albie: So true! Haha! Good one!
Tuesday, January 31, 2012
Wednesday, January 25, 2012
Bryan 's Take: Success Without Personal Development? Troy's Take: Commodities
Bryan's Take: Why it’s impossible to be a successful long term investor without becoming personally developed along the way.
How you think about money directly affects your performance in stock market as well as in life. We’ve all heard the stories of people who won the lottery and within a short period of time have lost all their money. In fact, statistically this is the norm. We’ve also heard the opposite story about millionaires who lost their money and within a reasonable period of time made it all back, and then some. This is because each one of us has a “money blueprint”, if you will, that goes back to what we were taught about money when we were young. When we come of age, each one of us has the power to change this blueprint and to expand it at the same rate we expand our thinking.
A perfect example: Isn’t it interesting that people who live paycheck to paycheck always have just enough money to make it till the next payday? This is not an accident.
In the same way, if you think you can make riches in stock market, and you have yet to change your blueprint from a middle class or poverty mindset to a rich one, you are severely deluding yourself. Since the decisions you make affect what your eventual return will be, this makes perfect sense. After all, isn’t it the decisions we have made in life that have gotten us to where we are today? And aren’t all of our decisions based on who are at the particular moment we make them? After all, if a person finds themself homeless one day it is because he or she has made a series of bad decisions internally which are reflected now in their lives externally. The adverse is also true. Therefore, if you expect to gain riches in the stock market, but you have not grown mentally to be able to house the types of ideas and thinking of someone ready to receive the money and keep it, ask yourself two questions:
Who makes the buying decisions for the stocks you purchase?
Answer: YOU DO
Who makes the selling decisions for the stocks you sell?
Answer: YOU DO
Isn’t it apparent then, that since your success in stocks is wholly dependent on making the decisions a rich person would make, that you need to learn to think this way in order to have success? Now, here's the million dollar question: If you make the stock buying decisions a poor person would make, what do you think you will continue to be?
Troy's Take:
From a Commodities perspective gold & silver have consolidated and they both appear to be trending back up again. Silver, several weeks back, was at about $27.00/oz (because that's when I bought some more) and now its about $32.00. Gold has, for several weeks, corrected to the $1560 range and now its back up around the $1650's. I'm still paying lots of attention to whats going on in the Euro. When Europe gets their finances together (one way or another) I believe that the idea that the US dollar - as a safe haven - will have run its course. I think you may start seeing another flight from the dollar. Which is usually bullish for the precious metals.
How you think about money directly affects your performance in stock market as well as in life. We’ve all heard the stories of people who won the lottery and within a short period of time have lost all their money. In fact, statistically this is the norm. We’ve also heard the opposite story about millionaires who lost their money and within a reasonable period of time made it all back, and then some. This is because each one of us has a “money blueprint”, if you will, that goes back to what we were taught about money when we were young. When we come of age, each one of us has the power to change this blueprint and to expand it at the same rate we expand our thinking.
A perfect example: Isn’t it interesting that people who live paycheck to paycheck always have just enough money to make it till the next payday? This is not an accident.
In the same way, if you think you can make riches in stock market, and you have yet to change your blueprint from a middle class or poverty mindset to a rich one, you are severely deluding yourself. Since the decisions you make affect what your eventual return will be, this makes perfect sense. After all, isn’t it the decisions we have made in life that have gotten us to where we are today? And aren’t all of our decisions based on who are at the particular moment we make them? After all, if a person finds themself homeless one day it is because he or she has made a series of bad decisions internally which are reflected now in their lives externally. The adverse is also true. Therefore, if you expect to gain riches in the stock market, but you have not grown mentally to be able to house the types of ideas and thinking of someone ready to receive the money and keep it, ask yourself two questions:
Who makes the buying decisions for the stocks you purchase?
Answer: YOU DO
Who makes the selling decisions for the stocks you sell?
Answer: YOU DO
Isn’t it apparent then, that since your success in stocks is wholly dependent on making the decisions a rich person would make, that you need to learn to think this way in order to have success? Now, here's the million dollar question: If you make the stock buying decisions a poor person would make, what do you think you will continue to be?
Troy's Take:
From a Commodities perspective gold & silver have consolidated and they both appear to be trending back up again. Silver, several weeks back, was at about $27.00/oz (because that's when I bought some more) and now its about $32.00. Gold has, for several weeks, corrected to the $1560 range and now its back up around the $1650's. I'm still paying lots of attention to whats going on in the Euro. When Europe gets their finances together (one way or another) I believe that the idea that the US dollar - as a safe haven - will have run its course. I think you may start seeing another flight from the dollar. Which is usually bullish for the precious metals.
Tuesday, January 24, 2012
TAKE TWO
Albie's Take:
S&P500 has reached Daily Resistance/Retail value and chances are there will be some profit taking. These are my expectations but with all the good news on fri & weekend it might continue up to Weekly resistance.
News Events That I see as effecting the market:
Yahoo News: "The CBOE Volatility Index, or VIX, a measure of what investors are paying to protect themselves against the risk of losses, is at its lowest level in seven months."
IronFX: "Manufacturing in India and China improved in December, a sign the world’s fastest-growing major economies are withstanding Europe’s debt crisis."
MSN: Friday 20th "Cash-strapped Greece is fast running out of time as it pushes to wrap up an agreement by Monday paving the way for a fresh injection of aid before 14.5 billion euros ($18.5 billion) of bond repayments fall due in March."
TODAY: Yahoo.news: "Eurogroup chief: Eurozone wants interest rate on swapped Greek bonds 'well below 3.5 pct'"
Yahoo News: Thursday, January 19, 2012, 3:00 PM PST
"Rate on 30-year fixed mortgage falls to 3.88 percent, the 8th record low in the past year."
NOTE: Don't forget to look at Take Three on the last blog. Many of the takes are still valid!
Bryan's Take:
Since I take a long term approach to investing,the way I view these events are as something temporary and inconsequential. They are merely a snapshot as to state of things on a particular day. The way I invest is to consider whether individual businesses are worthy of being bought as an enterprise. If so, then I buy as many shares of that business as possible, provided I can get the shares at the right price taking into account it's probable future cash flow generation. Case in point: Today I bought shares of TNAV because the company boasts high returns on invested capital (a sign that management is adept at investing the company's excess capital at high returns)and is trading at an extremely reasonable valuation compared with it's future growth prospects. So the events and indicators Albie mentions, though they may useful tools for various types of Traders and Chart Enthusiasts, have about as much relevance to me as they would to your local convenience store owner. They are not going to have an affect on his business on a day to day basis, and are certainly not something he would pay the least bit of attention to...
Albie: Albie's Take:
Even though I agree that valuing a company and finding a great price to buy in on it is a great thing, I do not think that world economics plays only a part in the short term traders life. Big events happen very slowly. Identifying key things can help you get a grasp on what the turns the market will make for possibly six months to several years. And though I am presently in the process of valuing some new business to invest in, I also find that getting into a trade just to hold it at the same price or watch it fall for six months or more due to world events is perhaps a waste of my 'money's time'. As I found out a while back, Wall Street often will have a bad day not because anything bad is happening in the US. It often will take a spin out of control based on the EURO or something happening in China for instance. And if the Dow or S&P500 is having a bad day or month or year - it very well could mean my stock is too. If things are in process to influence long term trends for a bear or bull market, I for one want to know about it so that I at least have some clue as to how long I expect the market to continue this way. On the flip side, as Bryan stated in 'Take Three' (1-19-12) more negativity means a better discount price to get into a stock. And while this is plausible and desirable, it also helps to know what the S&P500's support line is so that you can get a feeling for the bottom price. If the odds that your stock will drop even lower along with the market, I would rather wait to buy.
S&P500 has reached Daily Resistance/Retail value and chances are there will be some profit taking. These are my expectations but with all the good news on fri & weekend it might continue up to Weekly resistance.
News Events That I see as effecting the market:
Yahoo News: "The CBOE Volatility Index, or VIX, a measure of what investors are paying to protect themselves against the risk of losses, is at its lowest level in seven months."
IronFX: "Manufacturing in India and China improved in December, a sign the world’s fastest-growing major economies are withstanding Europe’s debt crisis."
MSN: Friday 20th "Cash-strapped Greece is fast running out of time as it pushes to wrap up an agreement by Monday paving the way for a fresh injection of aid before 14.5 billion euros ($18.5 billion) of bond repayments fall due in March."
TODAY: Yahoo.news: "Eurogroup chief: Eurozone wants interest rate on swapped Greek bonds 'well below 3.5 pct'"
Yahoo News: Thursday, January 19, 2012, 3:00 PM PST
"Rate on 30-year fixed mortgage falls to 3.88 percent, the 8th record low in the past year."
NOTE: Don't forget to look at Take Three on the last blog. Many of the takes are still valid!
Bryan's Take:
Since I take a long term approach to investing,the way I view these events are as something temporary and inconsequential. They are merely a snapshot as to state of things on a particular day. The way I invest is to consider whether individual businesses are worthy of being bought as an enterprise. If so, then I buy as many shares of that business as possible, provided I can get the shares at the right price taking into account it's probable future cash flow generation. Case in point: Today I bought shares of TNAV because the company boasts high returns on invested capital (a sign that management is adept at investing the company's excess capital at high returns)and is trading at an extremely reasonable valuation compared with it's future growth prospects. So the events and indicators Albie mentions, though they may useful tools for various types of Traders and Chart Enthusiasts, have about as much relevance to me as they would to your local convenience store owner. They are not going to have an affect on his business on a day to day basis, and are certainly not something he would pay the least bit of attention to...
Albie: Albie's Take:
Even though I agree that valuing a company and finding a great price to buy in on it is a great thing, I do not think that world economics plays only a part in the short term traders life. Big events happen very slowly. Identifying key things can help you get a grasp on what the turns the market will make for possibly six months to several years. And though I am presently in the process of valuing some new business to invest in, I also find that getting into a trade just to hold it at the same price or watch it fall for six months or more due to world events is perhaps a waste of my 'money's time'. As I found out a while back, Wall Street often will have a bad day not because anything bad is happening in the US. It often will take a spin out of control based on the EURO or something happening in China for instance. And if the Dow or S&P500 is having a bad day or month or year - it very well could mean my stock is too. If things are in process to influence long term trends for a bear or bull market, I for one want to know about it so that I at least have some clue as to how long I expect the market to continue this way. On the flip side, as Bryan stated in 'Take Three' (1-19-12) more negativity means a better discount price to get into a stock. And while this is plausible and desirable, it also helps to know what the S&P500's support line is so that you can get a feeling for the bottom price. If the odds that your stock will drop even lower along with the market, I would rather wait to buy.
Tuesday, January 17, 2012
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. :-)
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. :-)
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