Monday, January 12, 2009

Spectra downgrade by Jefferies/More on Isis/TARGET Funds

Jefferies downgraded Spectra Energy (SE) this morning from hold to underperform, which has caused a 4+% loss.  I do not have access to their report, but I am more likely now to just round up my position to 100 shares from the 50 just bought late last week.  I will do that with some of my 30% cash allocation now earning less than 2% sometime later today or tomorrow.  If the Jefferies downgrade is based on the lower natural gas transport volumes which could have been reasonably expected for some time now due to lowered industrial demand for natural gas, then the brokerage would be telling me something that I already believed to be the case.  The analysts' earnings estimates for 2009 already show a drop off in earnings per share from 2008 levels. SE: Analyst Estimates for SPECTRA ENERGY - Yahoo! Finance
The stock price has also fallen from close to 26 in late September 2008 to 15 and change this morning too.  Hopefully, the dividend should provides either some deterrent to any further major decline or a cushion for a more serious decline.

The upcoming earnings releases from the banks will be both just awful and pathetic. 

I can not explain the recent movement in Sunopta.  I have not seen any recent news.  But it has been showing way above normal volume.  

I mentioned that I saw no need to buy foreign currency ETFs at the current time. Asset Allocation Problems: foreign currencies, stocks and bonds
I do look at them every day and I have the most interest in the Canadian and Australian dollar ETFs at lower levels.  They are being driven lower today.  I may be wrong, but I view both currencies to be more attractive than the U.S. dollar over the longer term.  They are still in a bear market versus the dollar from all appearances now.  The Yen is rallying this morning, FXY, and sometimes the movement of the Aussie dollar goes the other way due to an unwinding of the Yen carry trade.  But, although I do not know, I would have suspected that the ones borrowing in YEN to buy the Aussie dollar would have already exited that trade by selling the Aussie dollar and repaying their Yen denominated loans.  That is the kind of thing that I have not done but I have seen at least one ETF spring up that attempts to mimic borrowing in low yielding currencies to buy a higher yielding ones. 

It also appears too early to significantly increase my allocation to commodities, and I will consequently simply add to my severely underweight position in that asset class, hovering at less than $2000 excluding hard asset holdings which remain constant, in small increments once a month, recognizing that the risk is still to the downside in my opinion but I will be for sure be unable to call the bottom.

 I  am curious what it would take to have a bond revoked in New York.  I suspect Bernie is lucky that he is not in jail in Tennessee.  The Williamson County Sheriff would probably already have Bernie working to pick up trash along the roads in a orange jumpsuit in the current below freezing weather. Yahoo! Finance

I just happen to see this morning that company owned restaurant sales at Ruth Chris Steak decreased by 18.5% in the 4th quarter. I do not own shares in a restaurant or a retailer, and have no plans to buy any of them this quarter.  I always underweight those sectors and have not had a position at all in close to two years.  I have noticed a significant change in crowds at many casual dining restaurants over the past year.   I do have small position in Mall Reits, both the common and preferred issues of Glimcher Realty and CB & L Properties.

Having sold my position in ISIS recently purchased in my IRA, at a quick profit.  Microsoft Buy/ISIS sold in IRA/ AEGON PREFERRED STOCKS, I still own 50 in the main account so I read this story.   Yahoo! Finance
I also noticed that Morgan Joseph started coverage with a buy.Quotes for ISIS - Yahoo! Finance
Cramer views it as a speculative play and not a great one and consequently does not recommend it.
I view it as a speculative play too, which means trading the position to book gains which brings me to where I am now on ISIS, playing with the house's money.  I disagree with Cramer that it is a bad speculative play.   I have a more favorable opinion of the company than Cramer and will continue to look at it for favorable entry points, keeping my exposure modest and trading in and out.   
Part of the recent spike in price after my last purchase was related to the sell of its IBIS unit to Abbott. 

I  have been critical of the performance of the so-called target funds last year.  I was disappointed in the performance of one that I bought in 2007 with some of my funds raised from selling pure stock funds, where I thought that I would  find some shelter from the upcoming storm just to see an almost 30% decline in the second most conservative one offered, a 2010 target fund. Part of their failures as a class had to with poor performance from their bond funds in a year when bond funds need to provide a lot of ballast in an asset allocation.   I will keep this fund for 2009 and then look at how the individual components fared against the comparable index ETFs for each category.  It would be no trouble for me to replicate it using ETFs if the ETFs do a better job.  My discussion of the target funds can be found at these posts:
This article in the WSJ this morning points out some of the problems from last year about the supposedly more "safe" target

I have spent the morning looking at small caps.  I had some undesired money come into the main account this money.  By unwanted, I mean the closed end fund (GCS) paying me a very large capital gain distribution for calender 2008,  which was paid today, and it constituted nothing more than a tax liability for returning some of my original capital investment in a major down year for that fund-never a good thing.  Whatever, I have a limit order for a small cap that I previously owned and sold at over twice the current price.   All of the small caps currently under consideration would be classified as speculative,  and are a great deal lower than my prior sell, where I have also already booked profits from 2006 and/or 2007.  More cash flow is due on the 15th and I will use all of it to start back into one of my favorite asset categories due in large part to the challenges they present to me. 

No comments:

Post a Comment