Thursday, April 28, 2005

Jim Rogers - Riverside Conversation 2

I've got some great stuff here. A thought provoking conversation between Jim Rogers, Marc Faber and Anthony Burgmans on the economies of Europe and where they may be heading. This cannot be missed!

Go here. And click on the video link on the right (the second one down is the high bandwidth video)

Find out about Jim Rogers here.
Find out about Marc Faber here.

Thursday, April 21, 2005


Feeling some pain in the back of your neck? That's how I feel after the whipsaw action in the markets this week. Down big one day and then up big the next. If you are trying to time this market - good luck. I don't think anyone can and I pity the TV commentators who have to change their tone everyday. Sounding bullish on one and bearish on another. What I don't like are analysts who caution viewers not to buy after a bad day and then say 'I told you to buy' after an up day.

A recap of the whipsaw action the past five trading days:

Friday - Markets down big. DOW down 191 pts, Nasdaq down 40 pts. This was capitulation but many thought this was only the first stage of capitulation and that a second and final sell off would take the DOW down to 9800 pts.

Monday - Markets ended flat. The bounce that some predicted did not happen. Maybe this was just a break before the second leg down.

Tuesday - UP day! DOW up over 50 pts and Nasdaq up 20pts. Maybe we are out of the woods? Maybe the bottom has been reached on Friday.......but wait...

Wednesday - SELL! Big down day. DOW down 115 pts and Nasdaq down 20 pts.

Thursday - HUGE up day! Biggest up day since the year 2003. DOW up 206 pts and Nasdaq up 48 pts!

What is going on? Are you feeling dizzy yet? Pessimism was rampant in March with fears of inflation, rising Fed rates, decreasing corporate profits. Negativity everywhere. IBM's poor earnings and apples estimates miss last week were oil on fire.

This week, Intel had great earnings. Followed by Yahoo, EMC and Google. These companies beat estimates and raised guidance. Hey, maybe the economy ain't so bad after all?

I'm excited to see what tomorrow brings.

Tuesday, April 19, 2005

How quickly things change in the stock market. Just last Friday the markets tanked with the DOW dropping 191 points. Voices screaming 'sell! sell!' and 'economy is falling of the cliff' could be heard from the myriad of market bears. This week, a ray of warm sun light has landed on the markets and they are looking good so far with solid earnings coming out of Texas Instruments and Intel. If you sold on Friday then you really need more patience. Patience is gold for anyone wishing to win in this market. In fact, you need nerves of steel.

I have come to the conclusion that with the introduction of online trading and ever improving trading technologies available, trading has become easier, faster and more accessible. As a result, markets have become more volatile with wilder gyrations. The volatility comes faster and goes away faster than ever before. Markets can now have huge swings from overvalue to undervalue in the matter of days. The folks at CNBC giving daily commentaries can barely catch up!

This week is shaping up to be a good week for the technologies. The semiconductors in particular should have a nice bounce tomorrow. If you hold these stocks then I caution that you sell into strength this week because the outlook for the sector is still weak for the rest of the year.

Friday, April 15, 2005

Anticipating a tough day

After IBM's disappointing earnings announcement, everyone is expecting a tough tough day tomorrow in the markets.

After market open in Europe this morning, a commentator on CNBC World, looking at the down market numbers across Europe said to viewers - 'If you are long in the market, go take a break, lie down and take an aspirin'.

Golden words of wisdom.

Thursday, April 14, 2005

Bitter Sweet Apple Earnings

What a tough market. Apple reported earnings after market close yesterday beating estimates and showing sequential growth and higher revenues. But Apple stocks fall and are now trading at $37 falling from $41 before earnings release.

Sometimes, markets are all about expectations and reality and where the two meet. When a stock has low expectations but releases good numbers in reality, it rises. In the case of Apple, expectations have ballooned so big that even a great reality is not great enough. So the stock sells off.

I believe the core of the issue is that although ipod sales have gone up 16%, profit margins have fallen 16%. This means that although they are selling more, they are having to reduce prices to do so. In addition, the halo effect of ipod owners buying MACs have not yet materialized with MAC sales increasing only 2%.

Sit tight, this apple ride is very bumpy.

Monday, April 11, 2005

Investing in Apple Computers

Jim Cramer from CNBC's Mad Money thinks that Apple Computers earning report will be good this week. He also thinks they will give good guidance.

Apple has doubled over the last 6 months riding on the tremendous success of the IPOD. IPOD and accessories sales are now half of Apple's total sales!

Most understand that the IPOD will not and can not rule forever. Competition from Creative Labs and other manufacturers are heating up and prices are sure to fall. It is however the halo effect of the IPOD that will bring fortunes to Apple. Many believe that a high percentage of IPOD owners are likely to switch to the MAC from the PC. This will drive Apples future growth.
I personally won't be switching to MACs anytime soon, but I can understand why many would. MACs are good looking and trouble free - a great combo for most users.

For these reasons, I believe Apple would be a good trade at least for the short term to take it a few points higher.

Thursday, April 07, 2005

Investments: Buy Energy Sell real estate

Winds of change are constantly blowing on our economy into different directions. What direction the economy ends up taking is difficult to see day to day. But slowly the trend becomes visible akin the pattern of the sands on the beach.

Some indisputable truths are visible: Energy prices are increasing, interest rates are increasing, inflation is increasing, real estate has been on a tear upwards for the last 3 years.

Before I continue further, let me remind you that all markets go in cycles. Nothing goes up forever and nothing goes down forever. Bubbles form when crowds become irrational and chase for profits. Bust cycles follow with people who chased the tail end getting burned the most.

Energy prices are going to go up for the long term. Oil in the $20-30 dollar range will never be seen again in our lifetimes because exploration costs and refining costs alone are above $25 a barrel. Add the increasing global demand from emerging markets (China, India etc) and you can see why both supply (decreasing) and demand (increasing) is going to push prices to knew highs.

In the short-term, oil may retreat. That I anticipate. Oil related stocks and investments have gone up quickly recently and a correction should be around the corner. Nothing ever goes straight up. But in the long term, buy energy.

Interest rates are increasing and it has to stomp inflation. There has been a lot of speculation on housing with people flipping condos and houses like stocks. This has largely been fueled by the low interest rates. But as the rates increase, demand will slow. The overblown bubble will burst. People stretched on their mortgages with a tiny down payment and floating rates will get hurt the most. Its unfortunate that such events happen but history shows it always happen when people flock to a place where there seems to be endless flows of easy money. If you own several homes hoping to flip them, I advise you sell them while the market is still good because by the time the masses see the bubble bursting, they will be flooding to the emergency exits and those slow to move will get tramped on amidst the frenzy.


Yes, the horrible R word. I don't know for sure if we will be entering a period of recession in the near future but there is a possibility. Higher oil prices affect everything that we do beyond just at the gas pump. Food gets more expensive to produce, transportation of goods get more expensive, utility bills increase, holidays get more expensive - EVERYTHING becomes more expensive. What's the immediate result? People spend less. The economy slows.

Spending slows, people hold back in buying that new condo, they go to the mall less and they go to restaurants less. The weekly high prices they pay at the pump decreases their appetite to spend.

The cost of businesses due to higher energy prices also increases. Combined with slowing spending, companies may close shop or would need to cut cost and unfortunately workers lose their jobs. This viscous cycle continues.

Could all this trigger a global recession? Possible. Slowing spending in the west would hurt many economies around the world including China and India whom sells most of their goods here. The world's economies are intricately bonded to each other.

The end result is be very careful and diligent with your investments. We are entering a difficult period.