Thursday, January 22, 2009


In an earlier post, I mentioned that one of the primary goals of the GOP in Tennessee, other than removing the right to privacy protections in the state constitution, was to expand the places that our fair citizens can carry their weapons.  I mentioned the important places like airport terminals and buses.   I have heard reports that one of the major goals is to allow weapons to be carried into the redneck bars.  So, you can see the GOP's argument, when a terrorist enters the bar, all the drunks could pull out their weapons and open up.  Now, the likelihood of anyone surviving such an incident would probably be nil which may have been the terrorist's objective from the start.  

It is easy to see why Meg Whitman decided to retire from Ebay.  It is best to avoid being around when things turn sour and your reputation and business prowess take a hit.  I remember the football coach for Tulane left for Clemson after Tulane went 12-0.  Best to just leave when you know that it can only get worse-a lot worse.

One of the trading rules that I am using now is a suspension of any COMMON STOCK buying when the S & P 500 has a close below 815 until it has a monthly close above 815.  I am now in that suspended mode. There can be only two exceptions to this prohibition: (1)  I am allowing myself the right to invest the remaining cash flow received prior to the recent S & P index close below 815 (less than $1,000) and (2) as with any trading prohibition, I can sell a common stock and replace it with another provided the purchase of the replacement stock uses less money.  Thus, I could sell 100 Kraft at 28 and buy 100 AT & T to receive a higher dividend but I could not buy 100 Pepsico after selling 100 Kraft.  I could buy 50 of PEP.  This rule does not apply to bonds and preferred stocks.  Of course, one alternative in the short term trading operation, just to stay involved primarily, is to buy back the 100 Kraft below my last purchase price or near it. However, the most likely substitution, and the one that I will try to do, is a stock with a higher dividend. 

With the recent strengthening of the dollar, many of these multinationals will face a headwind just from the adverse change in currency exchanges in addition to the economic slowdown and increasing substitution by consumers of cheaper and functionally equivalent products for brand name or more expensive products.  A company like AT & T is adversely impacted by the slowdown but it would not be hurt by changes in the currency exchange rates like a Coca Cola or a Kraft (KFT had about 42% of its sales outside the U.S. in 2007).

I read some news stories that Ken Lewis bought some BAC common stock. Lewis, BofA Officials Buy Shares - WSJ.comThis is meaningless to me.  He also bought 86,000 shares of BAC series H preferred stock last November 4th.BAC-PH: Summary for Bank of America Corp. PRFD 'H' - Yahoo! Finance  Those preferred shares are now trading at around 13.5.  The close on 11/4 was 23.04.

I would not be heartened by the appointment of Richard Parsons as Chairman of the Board at CitigroupYahoo! Finance  Did he dissent from the appointment of Chuck Prince or any of the activities that led to the demise of this bank?  Parsons joined the Citi Board in 1996.  All of the old Board members need to resign or be removed by shareholders unless they can prove that they dissented from approving actions that led to the bank's current predicament and took active steps to try to stop it other than just casting no votes at Board meetings.  Without such as showing, Parsons would just be part of the problem rather than part of a potential solution.

It was a good thing that I took a pass on Cramer's recommendation of DryshipsStuck In Indecision/JPM debt downgrade/PWE dividend cut/Bond vs. Common Stock Yields  DRYS expects to report a loss and suspended its dividend in an announcement today. Reuters  The opinion that I expressed previously was that it was way too early to be buying a dry goods shipper. I see no reason to change that opinion.  

I previously bought 100 of Kraft at 26.52 in mid December 2008.  Buy of Kraft Food and Partial Sell of LNC Postion  I had previously set an objective to hopefully sell the shares at around 35 in 1 to 2 years. I was thinking today that I might change its positioning in my portfolio from a long term hold, meaning shooting for a long term capital gain, to my short term trading book. I did receive 1 dividend payment.  The Citigroup packaged foods analyst did cut his price target today.    MarketWatch   It is important to for me to remain active so I just sold the Kraft and will wait for an opportunity to plow those proceeds back into another short term trade position.  The order was filled at 28.06. 


  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. 

No comments:

Post a Comment