BAGAKOAA December 12, 2009 The week that was.
December 12, 2009
The week that was.
Consumer credit reported down but not as much as had been expected. US Consumer are continuing to pay down their debt, but last month they did not pay them down as much as the experts had thought. So what? Well the experts were off about 5 Billion dollars. Remember when 5 Billion used to be a lot of money? But I digress. That 5 Billion is not attributable to income cuts, in fact the income number are stabilizing. Could it be people are shopping?
Well on Tuesday the retail sales report would say no they are not shopping. SS Sales (Same Store) were down. And the Redbook report from Tuesday said sales were down. All hopes were on Friday’s Retail Sales report. And the report came in better than expected. After getting autos and gasoline off the book it was up about 1.2%. If you got to the US Commerce Department website you can actually see the money. It does not ad up to 5 Billion but it does come in about 3 billion.
Another positive tell were wholesale inventories, coming down for the first time in a year. Thursday exports increased more than imports which is also good news.
Behind all of this mostly good news was the fear of Dubai, Greece, Spain and yet to be determined (look for Argentina’s name to get booted around next week.) credit issues. The Dubai 35 Billion dollar possible default might turn out to be 110 Billion. Remember when 110 Billion used to be a lot of money? But I digress.
So what does all that mean? Who knows? All of the bank stocks in all of my portfolios (direct and indirect) are down. I actually got out of most of them except in UK where trading is too expensive to execute my normal 8% retreat. I am watching Standard Charter very close in that portfolio. I am out of STD, WFC (Well’s has some large commercial exposure so it probably just as well), and HBAN (stopped out but still like it). You still need a financial or two to balance a portfolio so you need to go back to the well and do a lot of homework. Broaden your horizon a bit and consider preferred stocks. This is what I settled on. BACpD. Bank of America just pulled 45 billion out of their behinds to pay off their TARP loan. The dividend on the BAC preferred is 4.14%. Not to shabby. I am warming back into BAC, but I think the preferred is a better way to go. Another option is the options on BAC. There is a ton of interest in the May 2010 Calls at 20.00. The better idea might be spending the 2.00 a contract for the 15.00 in the money call.
Another preferred is the GS Preferred. There was some money made earlier this year by many of us with GS. It got rich and the sector got wobbly. It is definitely best of breed, but some say the 165 price is a bit rich. The current forward PE is 9 so you could argue that. The preferred sells in the 20 and has an 8% yield. Think about it. In the Salve Lurcum Portfolio, there are both preferreds.
What else happened in the SL Portfolio, Bought more GME before their sales announcement, I told you so! Sold off almost all the GLD etf in all accounts. The upward pressure, be it short term, on the dollar will cause gold to come back down to 1000 and maybe even 950. Let’s take some profit while the takin is good. Sold off some Corning Jan 10 $12.00 options at a nice 69% profit. Bought Several April 2010 AMZN 120 options. (Caution-read this weekend’s Barons article about AMZN. It says I’m an idiot and AMZN should be trading about 100.) Continued adding to my NEWN position (Lithium battery technology very very speculative). Bought some May 2010 26.00 Home Depot options. Cramer has been pimping this for a year, but I bought when I heard about the Obama Cash for Caulking stimulus announced this week. DAP is the world largest supplier of caulking materials and HD is one of it biggest if not its biggest retailers. DAP’s parent company is RPM Int’l. Bought some February 2010 17.50 RPM options. (Caution-I have not done a complete analysis of RPM but at face value they looked solid please please please do your homework. I will be doing mine this weekend.) Just discovered I accidentally took some profit on AMT, think cell towers. I think I meant to buy more and sold off a few shares with about a 9% profit. Added to Pfizer and Flowserve buying on the weakness. Got some nice dividends from CVX, TGT, IBM and TPI. (That line was for you Tim.) Finally got the hell out of 10,000 shares of IJJP at an 84% loss. Not to worry it was only 76 dollars. It’s a long story so don’t ask. OK, Sequoia Grove 2005 Cabernet and on line trading do not go well together. And added to my position on Western Union.
It’s a rainy weekend and we have no homework so I will probably post another note this weekend, if not have a great rest of the weekend and get out there and stimulate the economy!