Thursday, March 10, 2011

10 March 2011 Silver and Gold Silver and Gold


10 March 2011 Silver and Gold Silver and Gold

As we mentioned, we are having some lacquer painting done in this phase of our construction so unless you want to reallyget whacked, it is not the type of place you want to stay at too long so we are set up at The Local Ayers Hotel.

So my typical morning for the next couple of weeks looks kinda like this. Up at 6 am out the door by 6.15 at the house by 6.25 on portfolios by 6.30 and off the portfolios by 6.45. Take care of the cats, jump in the pool by 7.00. Shower at 7.30. Meet the contractors by (whenever the hell they want to show up.), then a quick coffee and bagel, then to the office.

Today on my ride to the house, I was listening to Bloomberg radio and did not like what I was hearing about the pre-market hours. Oil was headed down, but so were the indexes? That was a little funky. The jobs number was disappointing (we kinda called that Sunday night.). Saudi’s said they will not tolerate social unrest by firing guns at potential protesters. (By the way, a great way to make a potential protestor a protestor is to fire guns at them.) They are now using the words “civil war” to describe what is going on in Lybia. China had announced its 5 year plan and it is several hundred pages long and it says we will consume more domestically and we want Chinese people to be more prosperous. Gold was coming down, treasury rates were going up. The dollar was gaining strength in almost all trades. That was all on my 7 minute ride from the hotel to the house.

When the market opened, we took our own advice. We cashed out of almost everything and did so with all the US portfolios we manage. (11 if you are wondering.) Most positions enjoyed a profit as we closed them out except for some call options that are more than one month out. They will either improve of expire worthless. In the Salve Lucrum portfolio we were 65% cash, 27% Bonds, 6% options, 2% equities (Long) before I hit the pool this morning. A couple of the portfolios actually ended up 100% cash.

This Is Our Garage After The Sell Off This Morning.

With Bloomberg playing in the back round all morning, our decisions seemed warranted. We would never be one to say we called the market, but may have close on this one. When lunch time came rolling around and the market was off about 2%, but in an orderly non-frantic way, we thought about the huge cash position we had created for everyone. We decided to place a low risk hedge bet.

We put nearly everyone in a 60/40 gold/silver position with the cash proceeds from the morning with some strategic June July Put options as cheap insurance for a possible slippage in those commodities. We left a 10-15% cash position in most of the portfolios.

The timing on this is good as I am heading to Tokyo for a couple of days next week and will not have convenient access to the portfolio in case there is a bout of bedlam.

Green Mountain of Cash

GMCR Green Mountain Coffee Roasters, ever heard of them? In 1980 a guy named Bob Stiller walked into a coffee shop in Waitsfield, Vermont and in 1981 he incorporated the business. After launching some organic brands and starting a mil order service, things began to take off. About 1993 a couple of engineers from a coffee maker company (Keurig) came to GMCR to work with them to design a single serving coffee maker. The rest was history. The single serving packaging called the K Cup patent was held by GMCR. By 2006 it is so successful that GMCR buys Keurig. GMCR stock is a rocket. One dollar invested in 2006 is worth $823 today. The stock was up today by 41%. Why? After three years of trying, Starbucks cannot break GMCRs stranglehold on the single serving format. Today Starbucks and Green Mountain have come to terms on a licensing agreement that will allow GMCR to sell Starbucks in the K Cup design. There are already discussions of who will end up buying who. GMCR buying Starbucks or vice versa. SBUX and GMCR were a few of the stocks that went into positive territory today. I’m excited because part of the deal is the SBUX Tzao Tea offerings will be available. We love our Keurig, or at least we did when we had a kitchen.

So it might not be a Pick of The Day, but definitely one to watch GMCR Green Mountain Coffee Roasters, Inc. operates in the specialty coffee industry in the United States and internationally. It sells approximately 200 whole bean and ground coffee selections, cocoa, teas, and coffees. The company offers Arabica bean coffee, including single-origin, Fair Trade Certified, organic, flavored, limited edition, and proprietary blends under the Green Mountain Coffee, Tully's Coffee, and Newman's Own Organics brand names. It also manufactures gourmet single-cup brewing systems and markets its patented single-cup coffee and tea brewing systems for offices and homes under the Keurig brand name. The company provides cocoa, teas, and coffees in K-Cup portion packs, Keurig single-cup brewers, and other accessories. It sells whole bean and ground coffee, K-Cups, Keurig single-cup brewers, and other accessories in domestic wholesale and retail channels, and directly to consumers. The company markets coffee, tea, cocoa, and single-cup brewers to retailers, such as department stores and club stores; and single-cup brewers to distributors, as well as to supermarkets. Green Mountain Coffee Roasters, Inc. was founded in 1981 and is headquartered in Waterbury, Vermont.

Salve Lucrum


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