Citigroup, Legg Mason swapping assets in $3.7 bln deal - Banks - Financial - Specialty Finance - Financial Services - M&A

Citigroup, Legg Mason swapping assets in $3.7 bln deal - Banks - Financial - Specialty Finance - Financial Services - M&A

Merger activity continues at a brisk pace. This morning, in addition to the LM deal, the Unocal deal is in the news. Unocal now has two bidders. The Sprint-Nextel deal will be approved by the voters on July 13. The J&J Guidant deal will be renegotiated. The FAA approved the AWA USAir deal. Many other deals are in the works.

Warren Buffet says we should expect additional purchases by China. He is correct. The country is selling a lot of goods and the companies involved are making high returns. Like the Japanese "invasion" in the '80's, we can expect the Chinese "invasion" not to stop with computers or oil.

Investors should understand that the way to make money is to invest prior to the next take over. Spread your investments into good companies in various industries and you will hit your share of take overs. I can help you set up your portfolio if you like.

Once you hit a winner, it pays to be patient. When a company agrees to sale, the board of directors is compelled to accept the highest offer, not the first offer. When the ET bear-hug letter was sent to AMTD, traders suggested the $15 bid should be hit. My family was patient and we now own an $18 stock that is paying a $6 special dividend. We know own the leader in online trading. A firm that has completed 7 prior deals that were all accretive to earnings. In the mean-time, our ET shares have traded up another 30%.

My daughter will close on the sale of a beach property today. She will loan me a portion of the proceeds to support other real estate projects. With another portion, she will add to her stock portfolio.

Stocks are cheap in relation to bonds and real estate. Many professional money managers believe that stock market returns will be below the long-term average over the next few years. They may be right but stock market returns should be the returns on bonds and real estate.

MY FAMILY IS BUYING THE BULL! YESTERDAYS DROP DID NOT KILL THE BULL. WE EXPECT THE S&P TO RETURN 25% OR BETTER FOR THE YEAR. THE MARKET HAS DONE VERY WELL IN THE FACE OF INCREASING SHORT INTEREST RATES AND INCREASEING OIL PRICES. THESE INCREASES WILL NOT LAST FOREVER. STOCKS WILL GO UP EVEN FASTER WHEN IT IS CLEAR THAT SHORT RATES ARE ABOUT TO STABLEIZE.