Friday, November 11, 2005

CONGRATULATIONS TO A GREAT FRIEND

One good fellow who has trusted my investment judgment for a number of years just closed out an incredible week in the market. The stocks in his account went up 15% in value in the past two days alone; he has been an aggressive investor and used margin to increase the total return by substantially more; wow!

I am sure that he knows how much I appreciate his trust. He knows I am not the smartest trader on the block but he also knows that I learned a lot through many years in the school of hard knocks. My wife and I have been under great stress closing down our long time business, selling our house and preparing to be grandparents. Having good friends during a difficult time is good for the soul. I have many prayer group friends and I thank all of them from the bottom of my heart.

A number of other good folks enjoyed a good week in the market. Another close friend who takes my advice in regard to his 401 K plan, saw positions in every thing from WMT to CAL to AMR make nice moves this week.

Having many good friends is much more important than having much money, but helping good friends make good money is about as good as it gets. What is also nice is the confidence we have that the move in airlines is not over.

One of the things that many folks are still fighting is the idea that oil prices can come down as fast as they went up. The demand in countries like China has actually declined; China used less oil in the past 12 months than it used in the prior 12 months. Yes, 5 and 10 years from now the total annual consumption in China will be substantially greater than it is now. However in the short run, the run up in prices and new electrical plants have lowered the Chinese demand for oil. Five and 10 years from now abundant supplies of coal and tar sands will be processed into clean fuel for less than $45 per barrel. China will be using much more oil by then but it will also be producing much more.

Congratulations to all of you who purchased AMR, CAL or LCC after reading one or more of my many missives about these the past three years. You are riding a "Ken Fisher bucking bronco" that will try to shake you off. Some of you have already made 100, 200 or even 300%. You will be very tempted to take profits after you hit the next 100% mark. Don't take the profits; let your winners run! There will be pull-backs and you will be severely tested. Don't scale out at all until the business stories are all about the booming economy and only after there have been several lead stories in magazines and news stations detailing the history of how the airlines nearly went broke before making the big turn.

Another friend sent an IM today to ask if I would still buy. My response was that one of my close friends took my advice this morning and split some new money half into AMR, and half into WMT. There is risk of a pull-back but big moves often do not pull-back enough to let late comers buy. The best strategy if you do not have adequate exposure to the airlines is to buy at market opening Monday and hold on for the "bronco ride".

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