Wednesday, December 15, 2004


GOODYEAR LEADS EBAY AND NEXTEL (click chart to enlarge).

We made big bets on Goodyear a couple of years back because it historically makes big gains in the years following a recession. Even Mom jumped on this one again. We sold hers too early last time and she only made 350%. We hope she gets at least a 10 bagger this time.

Just to needle "MY OLD MERRILL PAL", let me say that the financials for DAL currently look a lot like the financials did for GT a couple of years ago. He knows down deep that you got to buy'em when nobody else want'em to get the best deal.

Two years ago, the company had massive debt and massive union contracts to re-negotiate. Now the company is rapidly paying down debt from cash flow and from selling off less profitable side businesses. Few folks have any idea that GT makes most its money off things such as rubber hoses and shoe soles. It doesn't matter as long as it makes money for its shareholders. As you can see on the chart, the stock is zooming.

The chart also shows EBAY and NXTL. These two have been among our strongest positions for a long time. After NXTL exploded 9 times in value in less than three years, one would never have guessed that EBAY would ever catch up. However, we had confidence in EBAY and have bought more shares several times. The last purchase we made was a few months back for $78. Our EBAY total value and total profit has now passed NXTL.

EBAY still has a long way to go to catch up with our GT, but it probably will eventually. Since GT is a cyclical company, we plan to sell all the shares in a few years. We see no end in sight for EBAY. It has a huge share of the growing internet auction business and its PayPal business may be the biggest long-term winner of all.

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