Wednesday, January 14, 2009

GE/ Added to Spectra Energy /retail sales & more retail bankruptcies

I am reasonably confident that a buyer of quality stocks now will ultimately be rewarded for their bravery.   The only question is whether I can withstand the pain before receiving my reward.  

Remember Uncle Warren receiving from GE a 5 year warrant to buy its stock at $22.5 a share. Time to Sober UP It looks like soon the average Joe could buy all of the GE shares that they want for less than 14.  I would not be one to say that the market signals are always correct but I would read the current fall in GE to be signaling some major disappointments in 2009 including a possible dividend cut notwithstanding management's protestations to the contrary. The dividend yield at the current price is close to 8%.   I will wait to add more to my rapidly diminishing in value position until I see whether that Barclays' analyst made a good call about the 4th quarter earnings report from GE.

The flight to perceived safety  is causing a further rise in treasury rates today with TLT rising almost 1.5% in early trading.  As far as I am concerned, I would like the 20 year treasury to continue rising so I will be afforded an opportunity to put on my hedge of the long corporate bond position by buying TBT at much lower prices than prevalent now and even at my last purchase. Chris Cox: Medal of Freedom?/Massive Dividends for Proshares ETFs/TBT add
The TBT buy was at 36.68 on 12/24/08.  The best movement today is in the long bonds, just compare the Vanguard ETFs BSV and BLV, or TLT and SHY, and it is in the long bond where most of the inflation danger resides, which is why I want to hedge some of my corporate long bond position as soon as I can at much better prices than today, even after TBT has already fallen 4% in early trading.    I simply take less risk with the hedge by buying it at ever lower prices.  And, I can not completely dismiss those who argue the long treasury will rise in price to yield a mere 1%.  IR WARNING/the Japanese Experience with Deflation/Debasement of the U.S. Currency
So I hope that the treasury long bond continues to rally. 

I am staying with my game plan which requires me to buy some common stock tomorrow with the cash flow received.  I will either go with the previously formulated plan to add one or more small caps or I may buy a blue chip large cap if tomorrow is another bad day.  I also went ahead a few moments ago and bought the other 50 shares of Spectra Energy (SE) at 14.7, bringing my total ownership to 100 so a 1 day delay was rewarded by a lower price.    I elected to put in the Roth as the replacement for PKK recently sold on the ex interest day at 16.05.

The talk now is that the banks will need another extremely large  infusion of taxpayer money, with some estimates of losses in the coming months of another 500 to 750 billion dollars.

I saw that Nortel filed for bankruptcy.
It was about time someone put a stake in the heart of that monster.
Retail sales fell 2.7% last month.
It would be reasonable to expect more bankruptcy filing among consumer discretionary names, including retailers and restaurants. Reuters
The poor results from Tiffany and Coach shows restraint in buying even at the high end. MarketWatchMarketWatch


  I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. In these posts, I am acting as an unpaid financial journalist and an occasional political commentator.   I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine.  Any discussion made by me of particular securities  is not a recommendation to buy or to sell.  Trade at your own risk.  Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons.  The sale may before or after the post.  Before buying or selling any stock, even one recommended by a trusted financial advisor,  please research it and make up your own mind which is what I always try to do.  Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news.  In this post, and all others by me, I am merely describing my reasons for purchasing  or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale.  The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile.  Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.  Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed.  These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities.   All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me. 

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