by Bryce

The short-term attention span of many people and similarly the media with respect to investing never ceases to amaze me. As mentioned by Forrest in “Has anything Changed,” are companies worth 20% more than they were two weeks ago? The common sense answer is no and yet their values as reflected by the equity markets indicates otherwise. I am by no means complaining about the recent rally but I would like to provide some perspective. 

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by Forrest

Chesapeake Energy is one of the most widely reported on stocks in the market, but this still doesn’t mean that the media is getting the story right. I have been a CHK stock owner for some time now and all it has brought me is pain, but I fear not because I believe in the story management has to sell. I have bought CHK at $70, $55, $45, $30, and $15 so needless to say I have not exactly been right on the timing of the story, but none the less I keep buying the more and more as it goes down and now is as good an entry point as you are going to get. First, some information on the company, Chesapeake is the largest independent producer of natural gas in the country and has pretty much staked it future on natural gas locked up in shale rock formations in four different basins. The Barnett, Fayetteville, Marcellus, and Haynesville shale plays represent their growth in production going forward.

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By Forrest Lowell

The financial news world has been extraordinarily singularly focused in the last 6 months on basically a hand full of stocks.  I think this has been at the expense of sound companies making long term structural changes in their business model that will keep them competitive in the emerging new economy.  I think one of these companies poised to consolidate and expand control over their industry is Microsoft.
MSFT has moved from 15 to 18 during the recent bull market bounce but it seems utterly left out of any discussion in the news media.  This is an opportunity to capitalize on the singular focus in bank stocks by really taking a step back and looking at the big picture, trying to find the companies that going to lead the real economy back into expansion.  Microsoft has several things going for it that makes it an attractive stock over the next 2-4 years.

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By Forrest Lowell

News Flash! The American economy is worth 7% more now than it was 24 hours ago! Of course the economy is not worth more today than yesterday; 20,967 more people are unemployed, thousands more just defaulted on their mortgage, millions of homes went unsold, 10’s of millions of square feet of commercial property continue to be unrented, and the tax payer just lost another trillion dollars. All in all I would say it was a pretty crappy day, unless of course you owned anything with a ticker symbol, then you think today was fantastic. But one needs to ask themselves if anything has changed.

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by Bryce

Ultra ETFs have become extremely popular for the average investor. They allow investors the ability to utilize leverage in favor or against a certain underlying index. Previously, an investor would have to rely on more complicated options strategies that have finite time frames or futures contract that bear substantially more risk. One very important aspect of these leveraged ETFs is that they provide twice the daily movement. Over the a period of a few days, this does NOT translate into a 2:1 return on the underlying index. 

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by Bryce

It should be no surprise to anyone following the markets or even current events that the US had a huge rally today encompassing nearly all stocks. Bloomberg has an article entitled ‘U.S. Markets Wrap: S&P 500 Caps Biggest 10-Day Gain Since 1938‘ summarizing the days price action that was largely driven by announcements from the Treasury. Now the focus is on whether the move marks the beginning of a bull market or yet another bear market bounce. I would opt for the latter although that does not mean we won’t go higher in the short term. What I do expect is some consolidation. The attached chart demonstrates that the SPY an ETF for the S&P500 crossed the 50-day moving average today. At this point if one wishes to be long the S&P expecting a further market appreciation, I would encourage using the 50-day moving average as a sell stop. I would also examine the RSI indicator at the top of the image to determine any overbought condition. It appears as though the SPY is reaching such an apex and will need some consolidation before further gains if there are to be any in the short term. 

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by Keith

Today we witnessed the continuation of a recent bullish trend in the market. After a fuss over executive compensation, the markets witnessed a nice gain to begin the week. While today, and most likely over the next few weeks, offers opportunities to accrue nice gains, we must be cautious. The obvious questions at the moment are: have we seen if there finally going to be a sustained rally? and have we seen capitulation? Personally I think the answer is no to both, but it is hard to say in these times. The changes in the housing figures released recently make one want to believe things could last, but as always we must be careful. In light of this, I think it is time to remember the importance of separating trades from investments. In bear markets (as with any other market) we have to set metrics for ourselves about what to buy, and when to sell it. One would have done well to view things as trades, and only trades. Making purchases only for the short period of time to time the ebb and flow of this bear market was certainly easier to handle than trying to buy up long term holdings after the first few lows. As this rally continues one must question what to sell and what to hold to test the life of this rally. I would suggest the simple question of whether your holdings are investments or trades, because it is much easier to swallow pulling the trigger too early on trades since we see questionable long-term value to them. While your investments will stir draw your ire should you miss out on a sell, if it is a true investment you will not be upset in the long run. All of this should not be new to anyone, but in this market it does not hurt revisiting your basics.

by Bryce

The most recent fiasco on behalf of politicians is a perfect example why politicians should refrain from attempting to run business operations and stick to regulating them. On top of that, this hysteria is reducing confidence on both ‘Wall Street’ and ‘Main Street.’ While the $165 million bonuses paid by AIG are absurd for a company who should be bankrupt, the fact of the matter is that they are not bankrupt because ‘we’ keep giving them money. Politicians had the chance to include language to restrict bonuses and yet they did not. Contractually, AIG was bound to pay the bonuses  unless it filed for bankruptcy which ‘we’ seem to find non-plausible (to which I agree). I am by no means a lawyer but perhaps there was some justification to break the contracts under ‘unjust enrichment’? I have faith in the American people and if the French at Societe Generale can bow to pressure and drop their stock options then I would expect nothing less of their Americans counterparts. 

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By Forrest Lowell

Everything was going very well with the bear market rally until congress decided to become principled, which I will get to later.  But that being said this is an absolutely perfect time to realize that the rally is for real and you can buy the financials for something like 20% less than they were on Tuesday.  As soon as the current news cycle is over and congress reverts back to being incompetent the technical rally can continue.  You have been presented with an opportunity to see a dress rehearsal of the rally to come.  You have the opportunity to do what has very rarely happened before; you can see the market’s rally, have an unrelated issue undue the rally, and then position yourself based on previous observations.  If congress will just get out of the way the march to S&P 900 can continue.  In a stroke of luck I heard about the plan to tax the bonuses at 90%, and at that point I realized if they actually got it past the house the markets would be really displeased.  This allowed me to buy SRS at 57 and I sold it Friday afternoon at 70, but that trade is over.  With the proceeds from that I am going put my faith in the incompetence of congress once again and assume their attention span is that of a Chihuahua on cocaine.  The rally is going to resume this week, I am not sure if it is going to be Monday morning or not but the story of AIG is getting old, and once that is out of the way, hello S&P 900!

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by Matthew Lu.

The employees at AIG do not deserve their bonuses; certainly they are dishonorable, and they definitely deserve to be denounced. But there is much more at stake here than a few hundred employees and several million dollars.

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