Sunday, October 04, 2009

BAGAKOAA May 4, 2009


May 4, 2009

Another great day in the market.

I just finished building a spread sheet this weekend that I will be using to evaluate equities. It looks at PE Ratio, Price to Book, Return On Equity, Net Income BT for 5 years, Cash Flow from Operations for 5 Years, Long Term Debt by Current income Ratio and Net margin BT versus industry average and its own 5 year average. Its rates these value stocks like wine on a scale of 1-100. I don’t usually buy wines rated below 89.

The spread sheet is written in MS Excel (Thanks Sue and Kirk for tweaking). You will need MS Excel to use it. It is a template and you do need to input the raw data. If you want a copy let me know.

If you look at some of the stock I have put out since last October, most are doing well. Some of the oil related stocks (XOM, CON, MUR, RIG) are in the green but still very soft. We should have 1st qtr results to look at on most stocks and I will look at the oil stocks and plug them into the template and let you know. Other stocks are doing very well (GS, GE-depending when you bought, AA, GWW-thanks Ben, STR, ATI), and we had one dog HITT sorry about that down 16% and value has vanished.

Just please be sure to put your stops in on any you were fortunate to buy into. Since early March lows some are up 40-60%.
These stops will become important as in my humble opinion the market is getting way to hot too fast. First quarter earnings are looking good, but keep an eye on revenues. Many of these companies are reporting earning beating analysts estimates. Revenues ofr the same period are down 10-30% from last year. That will weaken profits and cash flow.

I am looking for at least one more 500-700 point correction in the next few weeks, probably towards the end of 1st qtr earning season. Then I thing we can see a prolonged steady gradual climb to the 9,480 I mentioned earlier this year. Job numbers are out this Friday and they will probably be ugly again. That could trip the correction mentioned above. Hope I am wrong, but just in case put those stops in place.
As usual and per my attorney’s recommendation, do your own homework. I am not a professional. Investing is very risky business. Based upon my experience and education, you may be better off playing KENO in RENO. No children or animals were harmed in the creation of this e-mail. And if you make any money on these investments, please be sure to claim any income as Speaker Pelosi, Senator Reid, and our President have some big plans for the money.

Slave Lucrum


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