Tuesday, December 20, 2011

AMAT/Some Positive Economic News Last Week/Sold 100 TRK at 13.96

The author of this article at MarketWatch argues that Applied Materials would be good investment for those with a two to five year time horizon. I am likely to add to my 50 share position when and if the price sinks below $10. I am currently sitting on a small unrealized loss after trading AMAT for small gains. Bought 50 AMAT at $12.45 (6/28/11 POST).

Fitch put several European nations on credit watch for a potential downgraded last Friday, noting that a comprehensive solution to the credit crisis appeared "beyond reach" Reuters Bloomberg  WSJ  

The U.S. GDP is around $15 trillion (research.stlouisfed.org). The total indebtedness is around $52 trillion (Total Credit Market, or about 350% of GDP. Debt was at 250% of GDP in 1998. Of the total indebtedness number, the federal government's share is over 14 trillion and growing at over a trillion per year annually now.

Federal Government Debt: Total Public Debt (GFDEBTN) - FRED - St. Louis Fed

The S & P 500 will need to close above 1,257.64 to end higher for 2011. ^GSPC Historical Prices This index closed at 1205.35 yesterday. Given the inflation rate and dividend yield for this index the closing number would have to be slightly higher to provide a real rate of return for 2011.  

There was some positive economic news last week. The PMI number released by the N.Y. and Philly Federal Reserve Banks showed expansion in the manufacturing sector. www.philadelphiafed.org.pdf Empire State Manufacturing Survey- Federal Reserve Bank of New York The new order index rose in the Empire state region to 9.5.

CPI was unchanged in November on a seasonally adjusted basis. Over the past 12 months, CPI has risen 3.4% before seasonal adjustment. Consumer Price Index Summary

The seasonally adjusted initial claims for unemployment fell to 366,000 for the week ending December 10, much lower than the consensus estimate of 380,000. ETA Press Release: Unemployment Insurance Weekly Claims Report This was the lowest number of initial claims since May 2008.

Bank of America closed below $5 in trading yesterday. Goldman Sachs declined $2.4 to close at $87.7, which is close to a five year low. GS Stock Charts

Paul Krugman argues in his NYT column that China's growth is not sustainable and the numbers released by the Chinese government are suspect.

1. Sold 100 TRK at 13.96 Last Friday (see Disclaimer):  I had bought this position in two fifty share lots. The first was bought at $14.65. I then averaged down at $11.65 (11/7/11 Post). I am going to re-deploy the proceeds into a higher yielding security.  I am still interested in Speedway Motorsports as a long term value play, but would prefer an entry point for 100 shares nearer $11.65 than $14.65.  The current quarterly dividend is ten cents per share. By splitting the purchase into two lots and averaging down, I was able to realize a small profit on the shares plus the dividend.  

TRK closed at $13.88 yesterday.

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