Monday, July 13, 2009

Bought 50 SIMG as Lottery Ticket/BAC & Meredeth Whitney/

1.  BANK OF AMERICA:  Meredeth Whitney had a positive comment about BAC.
in a CNBC interview this morning, near the end of the interview(after 7 minutes 30 seconds). It seems like there will be some short term "gimmicks" that will improve tangible capital this quarter . She is bullish on GS as a stock. GS is a top underwriter,  and Lehman's demise is a positive for Goldman.   Her interview is worth a view. 

Barclays changed its earning estimate for BAC's second quarter to a small profit from a loss. 

2. Bought 50 Silicon Image (SIMG) at $2.19 as a LOTTERY TICKET:  One way that I have stayed out of trouble since October 2007 was to focus some of RB's energy into selecting stocks to buy in my category called lottery tickets.   Since this seems to keep it satisfied, and only small amounts of money are devoted to each selection, then there are two ways for Headknocker to win, the Lottery Ticket may actually rise in value and RB is kept from losing a serious amount of money.  Any investment technique that keeps losses to a minimum during a bear market is viewed as beneficial by Headknocker to his overall capital base.  In a bear market,  money can be made only by incessant trading,  at least when the time frame is in intervals of less than ten years or thereabouts, and it is difficult even for seasoned Stock Jocks to trade the gyrations of a long term secular bear market on a consistently profitable basis.  Consequently, it is best to channel RB's animal spirit into an area where the least amount of harm can be done, and so the lottery ticket strategy was formed by LB to keep RB in the game. LOTTERY TICKET PURCHASES: LINKS IN ONE POST
It really doesn't matter what happens considering the amount of capital involved, but so far so good in this bear market.  

One of the valuable lessons taught by Peter Lynch is to buy stocks that you  know.  For lottery tickets purchases, that piece of wisdom is totally ignored, what is the fun in anything remotely resembling wisdom in such matters, since the primary purpose of buying a lottery ticket or playing a game of chance is for the enjoyment, or just to keep the aging brain from turning into mush.  So the lottery tickets are not investments, although I am told on good authority that many consider playing powerball an investment strategy.  

I bought 50 shares of Silicon Image this morning at $2.19.  What I know about SIMG's business can be found in the description of its business found at  Reuters.com.    But, while I can be a good parrot at times, there is a fundamental difference between knowing a fact and understanding its meaning.  I do not understand the products made by SIMG except in a minimalist kind of way. The company makes products that facilitate the storage of digital information and chips which delivers digital information to various electronic devices. Silicon Image - Delivering Digital Content Everywhere  I do understand that SIMG has as of 3/31/09 more cash on the balance sheet than the current market cap of the company shown at Yahoo Finance which is 164 million.  The cash is listed at around 169 million with no debt. 
The company is expected to lose money in 2009 and 2010 according to the consensus analyst estimate.  Price to sales and price to book are around .67.   Statistics 
Prior to the recession, SIMG was profitable on an earnings per share (and free cash flow) basis from 2005 through 2008.   Morningstar currently has it rated 4 stars and an overall lukewarm type of report on it.  The company maintains that it has about a 60% market share in HDMI chips that deliver digital information to TV screens.  It recently introduced semiconductor products incorporating the latest HDMI 1.4  standards (High Definition Multimedia Interface) for digital television and home entertainment systems. 

The long term chart offers scant reason to be confident, however.  During the nutty spell in 2000, the stock hit $60 and then went in a waterfall pattern down to a bottom in 2001 of around 1.6.  After meandering in a range bound channel below $10 until early 2004, the stock then mostly moved in the 10 to 15 range until February 2007, when it started its slide to the current price.   The stock has been trading at below its 200 day moving average since September 2008 

3. CIT:  I read several stories over the weekend that several unnamed government officials believe that  a CIT bankruptcy was not a systemic risk to the financial system and that banks would fill the void left a CIT failure.  I suspect that many of the small and medium sized businesses that borrow from CIT do so because the banks were reluctant to lend to them even in the best of times. This company has about a million customers.   The banks are refusing loans now even to worthy borrowers based on anecdotal evidence.  The belief that banks will step in and provide financing now for CIT's customers is not based on any realistic assessment of the current lending environment. 

4. Shiller on Need for More Stimulus:  Schiller says that the fundamental shock to the economy is stronger than econometric models now predict. Shiller argues that more stimulus is needed now, otherwise we are "in store for years of a weak economy".   He also points out one reason the Great Depression lasted as long as it did is that the public withdrew their support for FDR's "pump priming".   Shiller also maintains in this interview that we are already late in delivering a stimulus.  I would agree with that statement.  And, I would add that a large chunk of the 787 billion dollar stimulus bill was more relief than stimulus.   An economic model for the U.S. needs to be developed that is not based on borrow and spend in ever increasing amounts, a model that has no long term sustainability.  

5. "Fallen Angels":   To date in 2009,  60 issuers have had their debt ratings cut to junk status, impacting 209 billion in debt and another 75 issuers are near the edge.  

 
6.  The Tennessee GOP:  The two most important objectives of the Tennessee GOP is to remove privacy rights from the State Constitution, and of equal or greater importance, to insure that those who have a permit to carry a weapon can carry their guns into bars and parks. You never know where a terrorist may be lurking after all.    Their fondest dreams were finally realized, Permit holders can now carry their firearms into a state park, but they could be arrested for discharging it under most circumstances.   Fortunately, or unfortunately depending on your point of view, the state GOP has not yet tried to authorize the carrying of firearms in the  airport  which was a goal of their kindred spirits from  Georgia.   The powers that be at the airport thought that carrying weapons in an airport, particularly after 9/11, might be a bad idea, and refused to play ball.  They were subsequently challenged by a group,  GeorgiaPacking.org, for violating the citizens Second Amendment rights.  The GOP Governor, Sonny Perdue, joined the fray saying that his wife should be allowed to carry her gun into the airport. (Sonny Perdue  is the first GOP governor of Georgia since Reconstruction - Lester Maddox was a Democrat)   I understand that there may be those who believe that unemployment, health care, the environment, the recession, dealing with the state budget deficits, and sundry other issues are more important than expanding the places where firearms can be carried by permit holders.  No way, that is just being silly,  judging from the headlines in the local paper, for the headlines about guns predominant over such mundane matters as a unemployment,  so it is clear that the "right" to carry a gun into a state park,  even if it can not be discharged, is the most important issue facing all Tennesseans.  Never know when you might come across a bear that needs killing.     As far as the state Democratic Representatives go, the main difference between them and their republican colleagues is that some of the Democrats thought it was a bad idea for the state to sanction gunfights in  bars among a bunch of drunks.   

7.  Embarq Bonds:  The Embarq bonds are now listed on the CenturyTel page at FINRA:  Search Results

DISCLAIMER 
 I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. I have never worked for a financial institution and never will.  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 readers of these posts 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.  By way of example, it is unlikely that I will ever need the funds contained in my retirement accounts. 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.  It is always important to follow the investment process. the investment process    NOT A RESEARCH SERVICE 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.   Opinions are subject to change and they certainly evolve over time as information is assessed and analyzed for compatibility with prior opinions, the only process for a serious investor, and a topic of frequent discussion in this post.  Everyone is responsible for their own investment decisions, and no one should ever make any decision unless they are willing to accept full personal responsibility for it. 

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