Archive for May, 2004
Remember my two precious metal plays? Well some competitors don’t want them to merge and have offered competing bids. This should drive share prices back up, so I am not too upset that I held even though the planned takeover seemed to be a mistake and resulted in dropping share prices.
Also, sorry I haven’t bee writing much; been busy taking care of a very sick dog…
In a recent press release, Lifeline Biotechnologies, LBTT.PK, blames illegal short selling for its recent decline and argues that there is no business reason for a decline. Previously, I’ve written about how you have to be careful with stocks like Lifeline. I’ve even covered the short seller issue before. It’s starting to sound like a lame excuse, but this is a purely speculative play. We’ll see what happens.
I wrote about how stocks will be choppy. It would be nice to be wrong on this one, but with rising oil prices and escalating global tension over Iraq and other issues, I don’t think I am.
I wrote about dividend paying stocks (also a dividend update) being one possible defense and stocks like Marvel enterprises that are ripe for good news. And I’ve written about diversity and how precious metals play a role here. More about precious metals since the gold industry appears headed for more consolidation.
This could mean that small cap gold stocks might be attractive, partially because the gold industry is considered somewhat safe in volatile markets and partially because it may be a takeover target. Of course your two small caps might mess everthing up by merging the wrong way (at least the market thought it was the wrong way).
I talked about which dividend paying stocks I own not too long ago. Here’s another article about dividends. This ones suggests (among other things) that dividends reduce volatility by encouraging people to hold (for the next dividend). I don’t know if it’s true for everyone, but it is for me. And considering all the threats to stock market stability (terrorists, politicians, natural disasters) a little less volatility can go a long way.
Summer is not always the best season for stock markets. The market has become choppy and may remain so. How do we protect ourselves? I already talked about stocks with dividends and see that as my main defense.
Another option is to look for stocks that might get good news soon. I’ve talked about Lifeline Biotechnologies – LBTT.pk before (Lifeline Biotechnologies – lbtt.pk update) and they may be due for good news but are a risky investment.
Today I’m going to talk about a stock I used to own. I bought Marvel Enterprises- MVL – the comic book company around 19-20 and sold around 24. When the stock went up to 29 I figured I had misjudged (I had sold because I thought that The Punisher wouldn’t have enough mainstream appeal to be a spiderman type blockbuster). Spiderman 2 approaches (interesting article on Spiderman/MLB advertising) and Marvel seems reasonable at 19.30. Yahoo! finance quotes a 15.5 PE, an 18.2 forward PE, and a 1.2 PEG. Motley Fool has been bullish since the stock was at 5.00 and they still see Marvel Enterprises as a company with excellent financials and lots of room for growth. I don’t own MVL but I considering it. If Spiderman 2 is a huge hit, MVL stock might ride the news upward…
I was watching an interview on Bloomberg television and the two men being interviewed both said something that I have believed for a long time. They said buy stocks with dividends. I look for dividends anyway, but they said that dividend yields were especially desirable because this summer is likely to be a choppy one for the stock market.
Some dividend yielding stocks I own: IMH (which recently reported good earnings but is sensitive to interest rate increases), DVY (actually an ETF), FDP (which recently reported bad earnings but is a good value pick according to some), MCGC, and PFE.
I used to own HCN (read why I sold HCN), and MO.
Stocks were down Thursday, largely based on fears that interest rates could be raised in June. I heard on CNBC that many bull markets occur in periods of rising interest rates. And if rising interest rates indicate an economy is heating up, I don’t think investors need to be scared of gradual rate increases.
So as expected the Fed left interest rates unchanged but removed the word “patience” and signalled a gradual increase in rates. The experts on CNBC TV were predicting a 25 basis point increase at some point this summer, possibly August.
Investors like predictable economic conditions, so overall this was good news. IMH, a company I write about often and one of the core holdings in my portfolio responded especially well, perhaps mostly due to a positive earnings report. Shares were up almost 4 percent but the dividend is still over 13 percent.
Tyco also had some good news in the form of higher earnings. Shares are up nearly 4%.
Warren Buffet will join John Kerry’s team. It’s hard for people not to respect what Buffet has done with Berkshire Hathaway, but his advice doesn’t always convince/help politicians.
Bob Kerrey didn’t win despite Buffet’s support in 1992. More recently, when he told Arnold that California property taxes were too low, Arnold ignored him. I wonder why Hollywood actors are ignoring Warren Buffet on economic issues.
Anyway, I won’t ignore Buffets investing advice (too bad I can’t afford any Berkshire) about buying companies you understand. Well I bought lifeline biotechnologies which I don’t know much about, but other than that…