Archive for August, 2008

Any better stock ideas?

Monday, August 25th, 2008

I am curious what others who invest and follow the market are investing in or liking these days. I will mention a few of my own and would like to hear your ideas.

1) I know it has become a joke but I have Apple. It has been fantastic. I am not buying any more because with the stock price going up as much as it has, it has become too big a portion of my portfolio to add more. I have sold some and of course been sorry. I have never seen a company hitting on all cylinders like that company is. I am holding my shares and occasionally writing covered calls.

2) Devon Energy this is a good oil and gas producer. Of course it has done well with the energy complex but it has the wild card of the potentially enormous discovery in the Gulf. It holds a 25% stake in what might be another Prudoe Bay. Of course we had a thread on this earlier. In any case the big money has been made there although I think there is more. I actually lightened up my energy holdings a few days ago, selling my energy share mutual funds in my IRA.

3) Two financials
a)CSE a beaten down financial. It has not suffered major credit losses but it’s stock price got down to $10 where it was yielding over 20% on it’s dividend. I bought at 10.6 and it is now over $15. The yield is still very good. They announced plans to buy the branches of Fremont Investment and Loan. I know that company from my days in the banking industry. They are high priced deposits but cheaper than repo agreements or other collateralized agreements used and certainly more stable. This is a case where I kind of caught a falling knife, which I don’t recommend but it has worked out.
b) USB a very well run bank out of Portland. They have largely escaped the blood in the financial industry. They have a dividend yield of 5%. I have owned shares for 8 years and bought more today.

Speculators influencing oil prices more than some thought

Monday, August 25th, 2008

Yes, a speculator can obviously lose money but in a bull market the only sure loser is the end purchaser of the commodity. For this reason, regulators want to make sure that private parties and the speculation isn’t screwing the regular people too much.

This article shows how they failed. It seems Vitol had as much as 11% of oil contracts regulated by the New York Mercantile Exchange.

Naturally it’s becoming a political issue: “It is now evident that speculators in the energy futures markets play a much larger role than previously thought, and it is now even harder to accept the agency’s laughable assertion that excessive speculation has not contributed to rising energy prices,” said Rep. John D. Dingell (D-Mich.). He added that it was “difficult to comprehend how the CFTC would allow a trader” to acquire such a large oil inventory “and not scrutinize this
position any sooner.”

Regulators getting fooled in the oil market

Friday, August 22nd, 2008

Yes, a speculator can obviously lose money but in a bull market the only sure loser is the end purchaser of the commodity. For this reason, regulators want to make sure that private parties and the speculation isn’t screwing the regular people too much.

This article shows how they failed. It seems Vitol had as much as 11% of oil contracts regulated by the New York Mercantile Exchange.

Naturally it’s becoming a political issue: “It is now evident that speculators in the energy futures markets play a much larger role than previously thought, and it is now even harder to accept the agency’s laughable assertion that excessive speculation has not contributed to rising energy prices,” said Rep. John D. Dingell (D-Mich.). He added that it was “difficult to comprehend how the CFTC would allow a trader” to acquire such a large oil inventory “and not scrutinize this position any sooner.”

Disney stock: Is it time to buy DIS?

Saturday, August 16th, 2008

We have a complaint about how Disney is trying to maximize profits by making more employees go without health insurance. Ethics aside, is Disney a good investment now?

This article claims that DIS has a wide moat. It’s tough for new competitors to enter the animation market.

I love moats, though as with with Ebay that doesn’t always mean short term success. Disney ought to continue making money (regardless of how well it does cheating employees out of health insurance benefits) but will it outperform the broader market? I’m not counting on it.

Be careful when you buy a home because people are trying to screw you

Friday, August 8th, 2008

This article talks about some of the issues you face finding a home inspector in Pennsylvania, but everyone needs to be careful finding a home inspector. More generally, before you buy a house you really have to make sure you’re not getting screwed.

I know of one case in New Jersey where the sellers cheated on a radon test. The buyers moved in thinking everything was fine but when they went to sell they realized two things:

1. They and their children had been living in a very high radon environment.
2. They would now either have to cheat the new buyers like they had been cheated or they would have to spend thousands of dollars trying to reduce radon levels in the home.

Radon tests are extremely easy to cheat on (too bad they didn’t know that before buying the house) but they chose option #2 and lost a lot of money.

The same people then bought a house on the Jersey shore. Home inspection was no problem when they bought the house but when they went to sell…

Their dock violated some laws and had to be ripped up and rebuilt. $50,000. The electric had to be redone, etc. The previous owner and the inspector had screwed them. It took them about 12 months longer to sell the house than it should have so in addition to that $50,000 they had 12 months worth of taxes and lawyers and stuff.

Plus the stress was unbelievable. These poor people could hardly talk about anything else during that time. It screwed up their retirement plans pretty good.

So anyway, when you’re buying a home you need to be extremely careful. You can get majorly screwed.

When do you expect the housing market to hit bottom?

Sunday, August 3rd, 2008

Bank of America Chief Economist Mickey Levy told Bloomberg Television that he expects housing prices to continue to decline. “The decline in home prices, while necessary to clear the inventories, is building in expectations of more house-price declines, which is keeping potential buyers on the sidelines.”

I don’t think anyone is arguing with levy but everyone questions when the declines will reach bottom. Most estimates I’ve heard range from 12-18 months. What do you think? When do you expect the housing market to hit bottom? Is real estate better than stocks right now?