Buy low, Sell high

While the old addage still stands true, in this turbulant time its becoming harder to apply traditional fundamentals to the equities market(s). So what can you use as your guide - Greed. That's right, let that little voice in the back of my mind be your guide.

A great example of the big G. Just a few months ago Google was selling at around $700 per share. Had you bought the stock at $400 a share your eyes should have been green with glee.

When looking at your short-term investments (no matter if its long-terms that have come due or a day trade) its a good idea to set some buy/sell limits for yourself. A very simple way is to say -5% and +10%. This way you are in there long enough that you can weather a small storm or you stick around until right before the bubble burst. Its never a good idea to trade on emotion.

Some strong sectors that should bring some solid returns are: aerospace/defense, manufacturing (especially TVs and DvD players), and AOL. While AOL isn't a sector its deal with Verizon, combined with the restructuring makes them a good value pick.

Stay away from companies that are heavy in the export business, the weak dollar is slowing cutting into already slim margins. Restaurants, blame it on the rain or maybe the lack of it. Fuel prices and crop shortages are leading to increased food cost. The problem is that with families pocketbooks being tight its hard to raise prices. A silver lining may be Applebees, Ruby Tuesday, and Red Lobster. Some builders and their suppliers... Need I say more.

Wall Street Wraps Up 2007 in a Somber Mood

NEW YORK (AP) -- Wall Street ended a painful year with another steep loss Monday as investors glumly anticipated that 2008 would bring more of the uncertainty and turbulence of 2007.

The Dow Jones industrials fell 101 points, the latest in a string of triple-digit moves that became commonplace in the just-ended year amid a continuum of bad news about housing, faltering mortgages and shrinking credit. Thanks to a big first-half advance, they managed to finish 2007 with a respectable increase of 6.43 percent -- not as large as the 16.29 percent jump in 2006, but a better performance than the modest loss in 2005.

The Dow's annual gain came even after it posted its worst fourth-quarter drop in 20 years, amid billion-dollar losses at the world's biggest financial firms and falling spending by consumers whose budgets have been crimped by record-high oil prices and declining home prices.

"Considering all that's going on, the market really acted pretty well," said Todd Leone, managing director of equity trading at Cowen & Co.

It's tough to say what the primary market driver of 2008 will be, but the stock market faces a slew of threats: more adjustable-rate mortgage resets, a still-tight credit market and the possibility of accelerating inflation. But Leone said the fourth-quarter earnings season in January should shed some light on how U.S. companies are surviving the recent slowdown and credit crunch.

There was more downbeat news on housing Monday. The National Association of Realtors said November existing home sales rose 0.4 percent to an annual rate of 5 million -- the first rise in nine months. However, sales are 20 percent below where they were a year ago, and the median existing home price has dropped 3.3 percent over the past 12 months.

Falling home prices have made it hard for struggling homeowners to refinance their mortgages, and the slump in construction activity has hurt homebuilders and other housing-related industries.

Still, there were some slivers of optimism Monday. The U.K.'s Observer newspaper reported Sunday that Merrill Lynch & Co. was in talks over the weekend to line up capital from investors in China and the Middle East in exchange for portions of the Wall Street firm.

Merrill, like many other financial houses, has seen its portfolio lose billions of dollar in value due to misplaced bets on mortgages. And as Citigroup Inc., UBS AG, Morgan Stanley and Bear Stearns Cos. have done, it has turned to investors in Asia for much-needed capital -- Merrill has already gotten $4.4 billion this month from a Singapore fund, which bought a 9.9 percent stake in the U.S. brokerage.

The Dow fell 101.05, or 0.76 percent, to 13,264.82. The blue-chip index remains below its Oct. 9 record high of 14,164.53, at which point it was up more than 13 percent year-to-date.

The Standard & Poor's 500 index and the technology-dominated Nasdaq composite index also declined Monday, but both posted annual gains for the fifth straight year.

The S&P 500 index fell 10.13, or 0.69 percent, to 1,468.36, to end 2007 with a gain of 3.53 percent. It had reached a record close of 1,565.15 on Oct. 9.

The Nasdaq fell 22.18, or 0.83 percent, to 2,652.28, to finish the year with a 9.81 percent gain. Despite the market's volatility, this was the best performance for the Nasdaq, still well below its tech boom highs, since 2003.

Government bonds rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slid to 4.03 percent from 4.12 percent late Friday, and is down nearly 17 percent for the year.

Declining issues narrowly outnumbered advancers on the New York Stock Exchange, where volume came to a light 1.15 billion shares.

2007 was a remarkable year on Wall Street. The market began the year continuing the rally that propelled the Dow above 12,000 for the first time in October. Then, in late February, came a reminder that stocks were capable of turning tail and plunging -- a skid on China's stock market and an ominous economic outlook from former Federal Reserve Chairman Alan Greenspan sent the Dow down 416 points in one day.

Fed up with the Bull-ish

Its now the end of our week, and a lot has happened, but it seems like everyone is already looking forward to next week’s Fed Board Meeting. Today, the Fed is not our concern; some people spend so much trying to predict what Mr. Ben S. Bernanke and his cohorts on that sit on the [Federal Reserve] Board of Governors will do, that they forget about the here and now. At Landes, we are doing the exact opposite: we have examined a few sectors have are providing you with some sound advice, for both the domestic and international markets.
First, while there has been a slight recovery in the financial sector, look for value buys on the engineering side. Companies that make “stuff”. The engineering sector is very diverse and is made up of companies that are frequently household names such as, Rolls Royce, ABB, Siemens, and L&T. One of the big reasons that these companies will continue to do well is the fact that in America and globally is because governments are constantly investing in infrastructural upgrades; in the USA it there is an attempt to make everything more green, while in nations with experiencing rapid GDP growth nations such as India and China, they are simply trying to lay the foundations of the World’s next Industrial Revolution. On the small-cap side: Kirloskar Brothers, Honda Siel Power, and Aban Loyd Chiles have all seen sharp gains over the past few months. While on the Big Board: Cummins India, Bharat Electronics, Alfa Laval, Bharat Forge, Thermax, Crompton Greaves, BHEL, Siemens, ABB, Kirloskar Oil Engines and Alstom Projects, have all doubled within one year’s time.

Countrywide

Buy Countrywide (CFC), the Nation’s largest independent mortgage firm. There was never a question of when CW would get bailed out, but merely who would provide the financing to bail them out. Over the past few weeks Countrywide has trimmed its workforce, sold off a 2 billion dollar stake to Bank of America, which (by the way plans to raise ATM fees to the absurd amount of $3) and borrowed over $11,000,000,000. Additionally, in the month of August, less than 4% of new loans originated by Countrywide fell into the Sub Prime category. These efforts combined with low rates still make this a buyer’s market and CW should be able to bounce back, but remember this is a long-term pick. For bond investors, it is important to realize that Countrywide debt carries a Bb2 rating, making it a “junk bond”. With high risk comes higher reward.

Strong Buys
On the other side of the real estate market take a look at Tarragon Corp. (TARR), which has been up since it announced plans to sell a Florida rental property to General Electric Capital. The buzz is that there are more sales to follow. Get in now, the stock in only about $3 and will rise to over $6 by the end of the year. Also a good strong buy is Euro Tech Holdings; everyone likes having fresh water. Last for the week is the big G again, Google. The reason is Google is boost ad revenue and the P/E margins are off the chart. If you can afford it, buy it.

Happy Investing, and have a good weekend.

American Elitism

Sometimes good ol American arrogance affects us all. Isn’t it odd that most Americans can only name 2-4 stock exchanges? Now we seem to think that our mortgage crisis, which will lead to an eventual recession, will affect the rest of the world’s markets. While CDO (collateralized debt obligations) defaults are at a high point, there are so many sectors to our economy that remain unaffected. Example: when Ford (F) was downgraded by S&P from AA to below “investment grade” , did the US car market plunge? Did prices drop? The “Market” is kind of like the Earth; no matter what we throw at it, the greater good always seems to win out. After an ice age, come the Grand Canyon and Great Lakes. CDO, CDO2, and other mortgage backed securities. That said, in the spirit if “buy low, sell high,” if you have some extra money look at things like Freddie Mac, Fannie Mae, and Wells Fargo. These are all companies that will see short-term dips, but each has what we at Landes refer to as FSP or financial staying power. Basically, over the long haul, these companies will bounce back into the black and see continued growth.
For the more immediate returns you will need to look places like: Tech, Pharma, and Blue Chips. There are some good values in small caps, but you have to look. One other place to look is at short term luxury goods and services, like restaurants. This short-week will see a lot of moving and shaking. I expect to see a lot of volatility, but all-in-all we will be up for the week. My suggestions are: NVIDIA (NVDA), Ultra Petroleum (UPL), and BP.I hate to say this but perennial disasters lead (one month later) to oil spikes. Oh yeah, BP will be pumping in Oman by 2011.

Credit Crunch 2

What makes the Fed Chairman believe that a rate cut will have such economic impact that the Lener's will be more free with lending. Rather I think the converse is true. The Fed hasnt made an interest rate cut in four years. Lenders are not in touble because they didnt have money to loan; they are in trouble for trying to artifically boost profits at the expense of the Middle Class. If you give money to a homeless man, assume that you will not get the money back. In essences that is what happened.

Lets not forget the banks still have money, they are simply keeping it all for themselves.