Thursday, December 02, 2004


The oil price bubble has burst! Oil is trading at $43.45 per barrel down $5 in just two days! World wide oil demand is still strong but at least in the near-term the worst is over.

The price break is very positive for consumers and indeed for the stock market. In a very short period of time, the big problem for the market will be the concern that the economy is growing too strong! The concern will be that a strong economy is inflationary for the cost of goods and for interest rates.

Although there is always something to worry about, the market is currently in a sweet spot. I hope you are taking advantage.


Recent press releases from various companies show that communications capital expenditures are going to be very strong in 2005. Many stocks have been affected. NT, LU, LVLT and others are moving up. There are rumors that Cisco and Nortel are going to partner. NT should be the big winner should this rumored deal go through. Ironically GLW is down today. The news is that LCD sales were weaker than expected in November. LCD growth is important but the growth in fiber optic to the home should trump the down-turn in LCD sales.

Now that ESPN is in the phone business, would you not agree that cell phone LCD screens are going to grow in size and be in strong demand? After all, many other firms are working on TV broadcast to

. If I were not already fully invested, I would buy NT, LU, LVLT, MOT, NOK, FON and GLW today. In a broadly diversified portfolio I would even buy a big airline such as DAL or CAL.


A reader wants to know,
Did you really sell part of your TIVO and NFLX to buy WMT?
Yes, I did. I booked small tax losses on the TIVO and NFLX and purchased shares in a huge consumer staples retailer. No, WMT is not where I expect to make big money in the near-term; however, I purchased the shares on margin and need to be careful. I have a very positive outlook on the market, but the move for the last three months has been substantial. Until I receive the proceeds from a couple of real estate transactions I feel that
aggressive caution
is a rational approach to a portfolio that is loaded up with high beta securities. When you own shares such as YAHO that have quickly moved from $7 to $39, you have to restrain yourself. You must remember that the market does not go straight up. It is always wise to keep an ace or two or three up your sleeve. After I receive some funds, I will consider buying more TIVO, RNWK, L or maybe some FON.

By the way, I have started posting these missives to a blog. The address is I hope you will visit the site.