quote:

...you do so well short term maybe you should be more of a trader.—Bulldoug

     Maybe not. Did I mention that my purchase just prior to PFE was scads of AA? I'm still in the hole for that one.
     I must admit that it was pleasant to see prices rise and hold throughout a trading day, but I hope it does not become the norm. Those daily mini-crashes are a source of bargains. BP's price is rising now, although it still looks like a steal. I'm holding back, however: Its future is fraught with uncertainty and I don't like to gamble. Have you noticed news about the spill is drying up? That troubles me somewhat.
Seán

I was considering your AA as well since I thought at times some of your buys at paper profits. If realized as a trade you might have been able to buy back in lower. It was just a thought. I am always looking for ways, or stategies to minimize losses while maximizing gains.

I didn't say those ideas always work though. hahaha. At least they gave me some of my money back last week. That was nice.

     When prices rise above what I think a stock is worth, I do take the profit and may buy back in when the price is lower. I did with ING, which increased my shares considerably (also, alas, my taxes).
Seán

quote:

(also, alas, my taxes).

Paying taxes on profits is better than holding until it turns in to a loss.

I like paying taxes. It means I am realizing profits. It beats the heck out of the alternative.

BP is going great guns on the well. They are doing what I thought they should have been doing from the start, unbolting and replacing the top end of the Lower Marine Riser Package. I thought the earlier efforts were a touch funky and not well advised. It could be it just took time to design and build what they are installing. But still, it is nearing three months.

Another Oil Spill comment.

When BP started working with the flange cap they realized or discovered they had two of the well pipes stuck in the BOP.

Possibly when the well blew a second piece of pipe went down in the BOP and either damaged it or made it too difficult for the BOP to cut off both pipes to shut off the well.

The second pipe was also likely what gave them problems with trying to cut off the top of the flange smoothly with the diamond band saw. They said the problem was the inner well pipe but at that time it sounded like they did not know there were two of them.

     Early today I bought INTC at $20.61 and was gratified to
see its price rise rapidly thereafter. By day's end, though, my gloating
rights had vanished: Intel closed at $20.60. I am overweighted with the
issue now, but will buy again at $19.50, if it goes down some more. I figure
someone will need a CPU eventually.
Seán

     Today my portfolio gained 4.6% on average, without a single loser. That's
absurd: Stocks are bound to take a tumble. Until they do I'll be sitting on
the sidelines, waiting for another chance to buy. It should not take too
long. The modest volume indicates to me the jump in prices was the result of a
reluctance to sell rather than an eagerness to buy.
Seán

quote:

Originally posted by Sean:
     Today my portfolio gained 4.6% on average, without a single loser. That's
absurd: Stocks are bound to take a tumble. Until they do I'll be sitting on
the sidelines, waiting for another chance to buy. It should not take too
long. The modest volume indicates to me the jump in prices was the result of a
reluctance to sell rather than an eagerness to buy.
Seán

Your personal performance sounds about right to me due to your stock picking. Your have been trying to pick beaten down stocks that are undervalued so for them to pop back some makes sense to me.

In the past month or so we have recovered much of what we lost in the bad May and June but still haven't recovered all of it. With the economy drifting in the short term we might be nearing full value for the moment, but I still believe well undervalue longer term. Heck, we are barely up for the year and this year we are still improving.

I think the 10 year bonds being under 2.9% is what is absurd. And the amount of cash on the sidelines is staggering. At some point I think the market, and maybe the economy, is going to have a large bull run. Can't say when, and it may be a long way off but the upside potential seems to be building more all the time. And not just a rebound bounce either.

A couple weeks back I read the short interest was as high as during the worst of the downturn, at record levels. That is contrary to the improved conditions. I think in the short term the upside jumps will be bigger as the shorts will get squeezed by rallys.

But not to worry, they are taking a little of it back from you today so you will feel better about too much good fortune.

quote:

I think the 10 year bonds being under 2.9% is what is absurd.—BullDoug

     I must agree. It takes a lot of scared money to keep Treasury yields so low. Yesterday DOW went down abruptly after what I thought was a very good report; today ADM shot up on the news that Russia will temporarily halt its wheat exports. Both movements entailed high volumes.
     I think investors alternately expect an instantaneous boom or bust and are unable to deal with the slow arduous recovery that is now in progress. My sole complaint is that I miss the bargains that were plentiful a year or two ago. However. there must be a lemon somewhere waiting to be squeezed.
Seán

     This Friday the jobs report caused anguish. Do investors really think recovery will be linear instead of progressing by fits and starts?
     I do expect recovery will become more rapid as hiring accelerates in response to increasing consumer demand. I'm sure there is a growing backlog of worn-out things that need replacement. Manufacturers of essential household equipment will likely revive before the gadget makers.
Seán

     Early this morning my Good Until Canceled order for INTC at $19.50 was filled. That was great price for all this month, but I could have gotten it today for $19.40 by fishing patiently. I'll buy again at $18.50 if it continues falling.
     If I were a little braver I might load up on BP now. What deters me is the uncertainty concerning how much more cleaning up the spill will cost.
Seán

quote:

Originally posted by Sean:
     Early this morning my Good Until Canceled order for INTC at $19.50 was filled. That was great price for all this month, but I could have gotten it today for $19.40 by fishing patiently. I'll buy again at $18.50 if it continues falling.
     If I were a little braver I might load up on BP now. What deters me is the uncertainty concerning how much more cleaning up the spill will cost.
Seán

Averaging down is a good way to go with the market generally down or taking frequent hits as it has of late.

Heard a comment I particularly liked;

You make most of your money buying in to down markets, you just don't know it until later.

As for BP I think they are okay so I'm holding on. The critical question I think is if they will be determined to have been "grossly negligent" which I doubt. That makes a difference if they will be fined $1,200 a barrel or $4,300 a barrel for the spill. With the total number of barrels the government wants to accept, admit to, that is the difference between $5 billion in fines or $21 billion in fines. The higher number would hurt some but it still only one year's net earnings.

An article today said some of the oiled marshes are already recovering and growing back. So the amount of damage is up in the air. They probably won't know about the loss of something like the loss of shrimp reproduction. But I did read shrimp have a high tolerance for toxins. So we won't likely know the damage until we see the catch from next year.

At least we are on the upside of things now that the well is not still spilling.

The two year treasury hit a record high, rates a record low, last week.

When I hear "record" as in high or low my ears perk up big time. That is exactly the out of norm extreme that suggests both an opportunity and a high likelyhood of a reversal. It suggests a mis-pricing.

Just tonight I noticed others are starting to think the same.

quote:

Bond Funds Gain Cash Like Stocks in Dot-Com Era: Credit Markets
Share Business ExchangeTwitterFacebook| Email | Print | A A A By John Glover and John Detrixhe

Aug. 23 (Bloomberg) -- The amount of money flowing into bond funds is poised to exceed the cash that went into stock funds during the internet bubble, stoking concern that fixed- income markets are headed for a fall.

Investors poured $480.2 billion into mutual funds that focus on debt in the two years ending June, compared with the $496.9 billion received by equity funds from 1999 to 2000, according to data compiled by Bloomberg and the Washington-based Investment Company Institute.
----
The money flowing into bonds is “probably not repeatable on a consistent basis,” said Joel Levington, managing director of corporate credit in New York at Brookfield Investment Management Inc., which oversees $24 billion. “Eventually it won’t be sustainable. Whether that means five years from now or five weeks is a little difficult to tell,” he said.

Bond Funds Gain Cash Like Stocks in Dot-Com Era: Credit Markets

or

Bond bubble fear returns as investors flee stocks

or

Wall Street debates prospect of bond bubble

or

Investors Shake Up Fund Industry With Record Bond Love Affair

My mutual fund inflows/outflows have confirmed this for some time.

I have no doubt this will turn at some point but it may take longer than most would like. And with all the cash not in stocks, the reverse of 10 years ago, I think the potential for stocks is very large despite being off in the distance.

Doug,
     I agree with your take on the rising demand for Treasuries and bonds of
investment grade; investors, dreading risk, are seeking shelter even to the extent
of sacrificing yield. This is a traditional defensive tactic that, in some ways,
is a good one. Unfortunately, it does not provide protection against the rise in
interest rates that accompanies inflation. To be caught with long-term, low-rate
instruments when inflation hits is to lose one's shirt and nether garments.
     On the bright side, the flow of money out of stock and into bonds can be
expected to hold good stock to attractive prices. My bid for shares of INTC
at $18.50 has not been accepted yet, but I expect it will be. I am also hoping to
acquire some RDS.B at a bargain basement price. Hope springs eternal.
Seán   

     My GTC bid for INTC at $18.50 was accepted at opening today. If I had dragged my feet a little I could have saved a dime a share. Just for fun I may bid for more at $17.50 although I don't expect to see the price that low.
     I think Intel is hoping to earn a lot by selling chips for smart phones. That may be misguided, if the craze for apps subsides. My smart phone use is tending toward being limited to phone calls; a computer serves for all the other functions. However, I am hardly a trend-setter when it comes to gadgetry.
Seán

Doug,
     Investors apparently took heart from Mr. Bernanke's promise to combat deflation, and interrupted the losing streak that was providing stock at ever-lower prices. RDS.B seemed well within my grasp, but now it's moving upward and I am not on board. Oh well.—One learns to take the bitter with the sweet and await another opportunity.
     He offered us no hint concerning his strategy for stifling deflation. It could be done, I think, either by limiting production or by increasing consumer's buying power. The first way would diminish jobs, the second would increase them.
Seán

quote:

Just for fun I may bid for more at $17.50 although I don't expect to see the price that low.

You almost would have had that the other day. I wouldn't have expected it but it almost happened.

quote:

He offered us no hint concerning his strategy for stifling deflation. It could be done, I think, either by limiting production or by increasing consumer's buying power. The first way would diminish jobs, the second would increase them.
Seán

Our factory utilization was down to 60%. We are losing capacity now. Think Autos and plant closing. The rust belt.

Did you forget that we just spent a decade under supply side economic stimulus efforts? We have and had a demand problem. That is why we crashed so hard.

They did try to stimulus demand by letting people pull all the equity out of their homes to buy $10,000 TVs. How did that work for us?

quote:

I think Intel is hoping to earn a lot by selling chips for smart phones. That may be misguided, if the craze for apps subsides. My smart phone use is tending toward being limited to phone calls; a computer serves for all the other functions. However, I am hardly a trend-setter when it comes to gadgetry

AMD is making good inroads in to that market and gaining market share.

     I was so content with DLM and now they're selling out. Admittedly I'll make a profit, but I'm left faced with choosing a replacement issue in this rising market. Customarily I buy only when a stock is priced below its moving average. Few of those are still around and fewer still are sound investments.
Seán

     CAG more or less meets my buy criteria: It's price is below the 200-day average, the company has sound financials and it pays good dividends. I paid $21.44 for it early this morning, before the price began edging upward.
     The catch is I'm temporarily overweight with food stocks. That may not be a bad thing because inflation is evident in foodstuffs, which may increase the profits of food suppliers.
Seán

     Federal borrowing costs, that is to say the interest paid on US Treasury instruments, will soon be going up. That is bad news for current holders of long-term government notes and bonds because the value of those securities will go down to match the interest rates on newer issues.
Seán

No inverted yield curve these days.

Graphically they consider it very steep. It is steep yet at a low level.

Steep suggests better times ahead. Extremely low rates today suggest bad times currently.

My question is where does it go from here?

My guess is since the FED has stated extended low rates and they mainly influence the low end, then they want it steeper.

Recovery will raise the long end.

My fear is that we will go from steep but very low to flat and the long end won't climb if growth is continued to be delayed.

Would the latter describe stag-flation?

quote:

My question is where does it [the yield curve] go from here?

Doug,
     Mr. Bernanke has promised to keep yields low. This can only happen if investors abandon hope of profit in favor of safety or the Fed buys treasuries enough to drive down the yields. Naturally the Fed wants to promote safe-haven thinking: high price/low yield. Unfortunately, there is a countervailing factor: Nations who have bought our debt at higher interest rates when Treasuries were cheap are sure to take early profits now that Treasuries are expensive. That will force the Fed to print money in order to keep prices up and interest down.
     Until recently, T-Bills have been a useful place to earn a little money while awaiting a chance for real investment. That's hardly true now because the money is somewhat encumbered, with too little compensating profit; a Certificate of Indebtedness, which has no yield at all, is preferable because it is equally safe and is payable on demand with no chance of loss from changing prices.
     With the safety factor as the sole reason for buying Treasuries, I expect actions, by the Fed, to keep the fear alive will continue for several month to come.
Seán