The other winners will be the equipment companies. Companies such as Motorola, TIVO and Scientific Atlantic who make set-top boxes will sell a lot of new sophisticated "boxes". The debate has raged about the new media center computer. The question has been will it be a box or a full blown computer that controls the media. Both sides have good arguments. Because the content owners want to be careful not to have video go the way of songs, the first winners will be the set-top box providers. Later, I believe the boxes will communicate so well with computers that they will be indistinguishable from computers.
BUY THE BULL! WE ARE INTO THE SECOND HALF OF THE GROWTH PHASE OF THE INTERNET AND WIRELESS INOVATIONS. THIS PHASE SHOULD LAST ABOUT 4 YEARS. MAKE SOME MONEY WHILE YOU CAN! 
The telecommunications market is hot.
I assist a number of folks with their accounts. In them, we hold stocks such as MOT, FON, TXN, GLW, NXTL, QCOM, AMX, and LU. The least profitable of these is LU and we have better than a 100% gain in the past 2.5 years. We have purchased a few others. A couple such as AWE were bought out at more than 100% gains and a few, such as CSCO and LVLT were sold at small losses. NT was sold at a substantial gainer but we should have sold when it ran too far too fast.
Today we jumped on Juniper Networks or JNPR. JNPR provides internet network connections equipment. During the bubble of the 90's, this was one of the high fliers as was GLW. We could have added to our GLW position but it is always prudent to spread your capital around in these volatile businesses.
We all know reform is needed in the area of cable TV service. We know that VZ, SBC, BLS and others are spending billions in preparation to compete with the cable companies. My common and recent experience with Time Warner makes me hunger for an alternative provider. I am not saying that I will switch. I am saying that the cable company monopolies lead to poor service at high costs.
A bill was recently introduced in congress to deregulate the industry. It is very late in the legislative year. It is hard to tell what priority this bill will be given. One would normally be pessimistic about the chances except that the congress is on a roll. CAFTA was passed with a two vote margin, the energy bill and highway bill both passed after 4 years of wrangling. It is clear that our congressional representatives do not want to be painted as a "do nothing congress" before the next elections. There is even a slim chance that congress will pass Social Security reform after the August (6 week) recess. Of course a lot of time will be spent on the Supreme Court vacancy.
Regardless of the bill in congress, the need for telecom equipment is clear. The growth over the next several years is going to be huge. In a few years, the average citizen will wonder how he ever got along without having his pc in his pocket! All of these wireless connections have to be "connected and routed". We are talking about sophisticated science when communications are sent over electrical waves and light waves and switched numerous times from Bangladesh to Maine in an instant. GLW is one of our favorite stocks partly because it holds a number of fibre optic patents.
As my daughter reported in her blog last week, our family purchased computers before DOS was invented. We owned computers that had virtually no memory. To look through a file of names we had to insert floppy disk after floppy disk. My children learned to type and to play games on Digital Research Software. The point is that the early computers were not connected to one another and were not productive. People spent a lot of money and wasted a lot of time learning how to use them. When Visicalc was written, users finally had a spread-sheet program that could actually save the user time and effort. The usefulness grew when email was invented. At first, even dial up connections were difficult to make. The mosaic browser and gopher networks added functionality. The development of the World Wide Web was a watershed event.
In the same way that computers became much more valuable after they were connected by the internet, the pocket PC is going to gain value when it is commonly connected via the wireless internet. The next several years will see the adoption by millions of wireless internet devices.
We like MOT, FON, TXN, GLW, AMX, QCOM and LU and we have added a position in JNPR. On Kramer and Co. Tell Labs, Dycom Industries, MRVC, JDSU, EWY and IWZ were all recommended yesterday. Cisco has continued to buy small companies to expand its dominance. Of course the EFT's, EWY and IWZ are the conservative ways to play the field.
Those of you who hide in mutual funds do not know what you are missing in individual stocks. You can save yourself a tremendous amount of money by avoiding the hidden fees and have the joy of seeing your winners take off. Buying individual stocks will mean that you hit some losers along the way. No big deal, hit the sell button. Weeding the garden is an important part of managing a portfolio. A friend of mine likes to buy and hold. One look at the portfolio tells the whole story. There are some good stocks in it but there is also a lot of dead weight. It would be an advantage to sell the losers for the tax loss and add more lively positions.
Investors who are not willing to weed the garden and to perform other logical management functions, should allow a knowledgeable investor to help. One should not be forced into mutual funds or other high cost accounts to avoid the minor headaches of managing an account.
In any event, BUY THE BULL! It is clear that growth is going to occur and that the big established companies are going to keep or expand their market share. Little guys will continue to be bought out but other little guys will simply lose out. The same bet now is on the large established telecom companies.
The above is not a recommendation for the large mainline phone companies; SBC, VZ or BLS. These companies pay large dividends. However they are having to invest heavily to do battle with the cable companies. They are growing their cell phone businesses but their main line phone business is over priced and getting eaten up by new technology. The reason I like FON so much is because it has chosen not to battle for the main line business. FON is willing to partner with cable companies to gain the connection to the home. The cable companies need a cell phone service provider. It seems unlikely that the cable companies would build or buy a cell phone provider. T-Mobile is certainly a possibility as are several regional providers but FON is offering attractive terms for a partnership.
BUY THE TELECOM BULL! THE WORLD IS CHANGING. YOU ARE GOING TO OWN A WIRELESS POCKET COMPUTER. YOU MIGHT AS WELL OWN SHARES IN THE MAKER OR SERVICE PROVIDER.
I have no problem buying oil drillers but speculators should consider buying tech stocks. The sector cycle typically rotates as follows: consumer discretion, technology, industrials, materials, energy, consumer staples, health care utilities and financials. We have been through the cycles since the recession, experienced a mid recovery slow down and are now working our way back through the cycle.
Betting on growth stocks is better than 50/50. The infrastructure is being put in place to save consumers and business much time. The new computers will require new software. There are many good plays that are not being talked about on the TV shows. Run a few screens and you can find many good stocks selling at low prices.Sport Chalet, Inc. operates specialty sporting goods superstores in Southern California and Nevada. The Company sells traditional sporting goods merchandise like footwear, apparel and other general athletic products and nontraditional merchandise like downhill skiing, mountaineering and SCUBA products. In addition, Sport Chalet also offers value-added services from “The Experts” enabling their serious sports enthusiast customers to take lessons, giving them a complete experience from getting advice to receiving training in their sport. In addition, they operate a retail e-commerce store at http://www.sportchalet.com/
Their legacy started on April 1, 1959, when a young man named Norbert Olberz heard about a little ski shop for sale. It was located north of Los Angeles. In 1981, Norbert doubled the size of his Company by opening a store in Huntington Beach and began to build a loyal following of beach customers.
In 1992, Sport Chalet went public, trading on the NASDAQ Stock Market under (SPCH). In 2001, Sport Chalet expanded beyond Southern California for the first time, entering Nevada. In 2003, Sport Chalet opened stores in Northern California. Today they have 36 stores and are continuing to expand.
In June 1998, six years after gong public, the founder of Sport Chalet, Norbert Olberz gave nearly 300,000 of his own Sport Chalet shares to all employees who had been with the company for more than 10 years and managers with more than one year of company loyalty in celebration of its most profitable year in sales and gross profits.
Trading on July 28th @ $17.05. 48% higher than their 52-wk low (11/3/2004): $11.51. Their 52-wk high (6/29/2005):$19.50
Their goals for 2005 are to leverage the investments they have made to intelligently grow. This year they expand into Northern California with three new stores. Their first Central California store will open and they will add another Southern California location. These five new store openings will set a record for new store growth.
Remodeling older stores will give them 44% of their store base being three years old or less. Their employees have been challenged to work more closely together than ever before to improve their logistics processes, bringing in merchandise to market even faster yet at a lower cost and making sure every item is received in their stores in "floor-ready" condition.
Are they on the right financial track? On June 28, 2005 Sport Chalet, Inc. announced the results for its fiscal year ending March 31, 2005. Sales increased 17.0%, from $264.2 million last year to $309.1 million this year. The increase was the result of opening five new stores this year and three last year, as well as a same store sales increase of 5.7%.
The same store sales increase is due to better inventory assortments compared to the same period last year and increased customer traffic from the appeal of winter related merchandise. Sales of winter related merchandise were driven by record winter weather conditions at the resorts frequented by their customers. Same store sales excluding winter related products increased 4.7%.
Gross profit margin increased from 30.3% last year to 30.9% this year primarily due to a strong winter season, which reduced the need for markdowns as well as reduced costs from more efficient inbound logistics.
Net income increased $1.5 million, or 32.9%, from $4.6 million to $6.2 million this year.
Commenting on the results, Craig Levra, Chairman and CEO said, "Our outstanding results for the fiscal year reflect the consistent and effective execution of our strategic plan. The entire Sport Chalet team contributed to a very successful year during which we made strides in both enhancing our operational performance and implementing our growth plans. As we expand into Arizona in the new fiscal year, we believe we are well positioned for continued strong performance.
“As we announced in a separate release today, the Company’s board of directors has proposed a recapitalization plan that is designed to facilitate the orderly transition of control from Norbert Olberz, the principal stockholder, to the Company’s management and increase financial flexibility for the Company and its stockholders. The proposed recapitalization plan retains current stockholders’ existing voting interests and allows management to maintain our strong culture and continue to focus on our growth strategy. Overall, we are pleased with our results for fiscal 2005 and encouraged about the direction of our business. We remain committed to our strategy to generate long-term top and bottom line growth and increase stockholder value.”
Being debt free for the last seven years, this forty-five year old sports company seems to have a feel for their customers and what they want. Can Sports Chalet successfully have a “changing of the guard”, add new stores and still be a climber in this Bull Market?
Google, Yahoo, MSN and AOL to name the most important players are all preparing to be communication portals. In other words, instant messaging is about to morph into a voice, data communications home base. It is going to be very interesting to see who buys Skype. Skype has 42 million registered users. It is the plumb of plumbs in this area. Yahoo recently purchased Dial-Pad which has been a VoIP provider for many years. I suspect Yahoo is still willing to bid on Skype.
Companies such as Comcast and Sprint are working together to make VoIP and cellular seamless. Who knows, maybe Comcast will be the big bidder for Skype which has also made moves to become "mobile". Can you imagine the traffic when kids can play video games and carry on conversations wirelessly from any location for no additional costs--no wonder GLW keeps trading higher and higher.
Google's home portal is now an RSS reader! Gmail also accepts RSS feeds. This means that if you have a favorite news source, you can have updates feed to your home page automatically. It also means the days of the home delivery news paper are numbered. It means the day is coming when consumers will look at one screen to see who has called, who has left voice mail, who has sent email, who has made the news and much more. Voice activation is the next huge step to taking the pocket computer to the next level and changing our lives in ways we cannot understand.
Google is not the only firm to recognize that digital storage space is virtually free. Promise.tv is a personal video recorder similar to Tivo. The big difference is that it records all your TV channels so that you can watch anything at anytime! This sounds so much easier than the Tivo approach of allowing you to burn any shows you record to DVD so that you can take them anywhere. In the long run, the methods will merge such that you really can watch what you want when you want and where you want. Radio anywhere has been available for a long time but the big difference coming is personalized TV and radio anywhere.
One of the many mistakes I made during the past three years was to never double up on my AMX position. The stock is up 275% since we purchased (note the 3 for 1 stock split) and we never purchased another share. It is not too late to buy this one but I really like FON. Using Cramer's term, FON is the best of breed by far. I know! Yes, I know! Sprint does not have the best coverage in the world and a friend had a billing problem and you have heard that xyz is the best cell phone company.
Sprint is the pure play in the US. When you buy SBC or VZ, you are making a bet on their success in the TV business as much as anything else. When you buy FON you are betting that the growth in cell phone business is going to continue. The part of SBC or VZ that are growing the fastest is the cellular phone business. FON is the one who has said it does not want to be in the land line business but would rather partner with the cable companies for connections to the home. The strategy is right on.
Communication portals are coming--Google, Yahoo, MSN and AOL but how are they going to go wireless? FON could be the biggest winner of all in this game.
BUY THE BULL! AS HARRY DENT HAS POINTED OUT, THE PEOPLE WHO BOUGHT GM 7 YEARS AFTER FORD INVENTED THE PRODUCTION LINE MADE 22 TIMES THEIR MONEY IN THE NEXT 8 YEARS! FON DID NOT INVENT THE CELL PHONE BUT IT SURE IS POSITIONED TO SELL A LOT OF SERVICE!
A reader has asked how I was able to start talking about net new highs a couple of months before the S&P reached net new highs. The answer is simple--good stock selection!
As a general rule, I avoid mutual funds but one of the funds I purchased for a friend last year, TEMFX, an international fund, is up 19% while the S&P is up 13% year over year. My stocks, on average have done much better. In the past 12 months, here are a few of my good selections and the percentage change for the year (not including any dividends paid): FON 39%, GLW 59%, GT 65%, UNH 70%, AMTD 80%, GOOG 200%.
Did all of my stocks do so well? No! I purchased Kellogg for a conservative account and it was up 8% (plus a nice dividend). I owned EBAY that dropped dramatically at one point but is currently down 10% year over year. Lost in this number is the fact that I doubled up the position while the stock was down and actually have a large gain here as well. AMZN was down as much as 18% during the year and I never pulled the trigger to buy more. Never-the-less it is now up 12% for the year.
Note that I have not mentioned airlines. The reason is that I bought most of them in the last 3 to 5 months. The returns have been on average wonderful even though I have down positions in NWAC and DAL. Being down 10% in these is more than offset by being up in the larger positions of CAL, AMR and AWA. These three are up 55%, 65% and 84% respectively. 
Yes! This is a fun market! Net new highs are always nice! They are especially nice to have when the second half of the tech boom has just started. The market will not go straight up from here but it will go up over time. A couple of prognosticators whom I respect have indicated that the market may pull back now that the BUSH ROLL will be temporarily suspended.
Yes! President Bush is on a roll! Energy reform is about to pass, the high way bill is about to pass, the budget deficit is dropping like a rock as revenues are surprising everyone, the democrats are fighting old battles and losing them badly. Bill Frist was so bold to bring up gun manufacturing liability reform this week. The cost to consumers are ready to decline due to tort reforms and deregulation. The energy bill throws out antiquated laws passed during the depression and a telecom bill was introduced yesterday that would do the same for communications. Inflation keeps getting hit up side the head with the reduction in costs. The probability of a more conservative supreme court is already built into the market--keeping inflation expectations and bond rates low.
The American economy is sitting pretty; high growth, low inflation, high productivity and an FOMC chairman that is doing his job. A few weeks ago, pundits screamed that Greenspan was bringing on a recession. Today some of the same folks are amazed at the growth in the tech sector. Greenspan is shooting at a moving target and he may eventually miss as he has done in the past--so far this cycle he has been winning every turkey shoot on the circuit.
Yes! The folks who take my advice had net new highs two months ago and have since seen serious increases in account values. We do not think the move is over. The innovation cycle is largely over but over the next few years more and more businesses and consumers will use wireless equipment to save a tremendous amount of time and money. Investors have a rare opportunity to take advantage of an innovation that is as significant as the printing press invention of about 500 years ago!
BUY THE BULL! THE CURRENT SITUATION IS SIMILAR TO THE YEARS OF 1995 TO 1998 WHEN LARGE CAP GROWTH STOCKS OUT PERFORMED OTHER SECTORS. IT WAS ONLY AFTER YEARS OF OUT PERFORMANCE BY THE BIG CAPS THAT THE BUBBLE OF 1999 AND 2000 EMERGED. BUY NOW--DON'T WAIT FOR THE BUBBLE. (BY THE WAY, FOREIGN STOCKS, BONDS AND SMALL CAPS DID RELATIVELY POORLY DURING 1995 THROUGH 1998--DIVERSIFY BUT DON'T HOLD LOSING SECTORS JUST TO BE DEVERSIFIED).
My sources include The Callan Periodic Table of Investment Returns produced by Callan Associates and The Next Great Bubble Boom by Harry S. Dent.
I have yelled and screamed to BUY THE BULL long enough. I started my email newsletter in September of 2002 because I was a raging Bull and I wanted others to follow my lead and make serious money. Those who followed have done extremely well.
I will write several more blogs today if I can but again, it is up to you to climb on board this BULL MARKET. I have recently discovered that several of my most loyal readers have improved their investment performance by taking some of my suggestions but they have continued to leave a lot of money on the table. I think part of the problem is that the idea of diversifying has been drilled into the heads of investors to the point that they stay in losing investments in order to stay diversified!
The BULL MARKET continues this week; the past few months have been a lot of fun! Some of my readers have listened to me and done extremely well. Others were slow to get on board; they made some money but not what they could have made. It is frustrating to write and write about how attractive stocks are and then have readers confess that they are putting their money in over-heated resort real estate. The real estate run is not over but the BULL in stocks still has a long way to run. Today it was the telecom equipment and services stocks that broke out.
While at Myrtle Beach, I added HDTV to one of my condos and as usual I had to deal with the horrible service from Time Warner Cable. My family owns shares in the company and we receive service at at least 20 locations but, boy! is this an industry that needs competition! The employees can never get an order right and they don't care. I am sure there are caring persons working at TWX but you seldom run into them when trying to set up new service.
Today, a bill was introduced in congress to deregulate telecom services. This would be a blessing to consumers. SBC, VZ, BLS and many others are chomping at the bit to be able to offer cable service without fighting through layers of local bureaucrats. Internet phone service and TV services is ready to expand rapidly. Yes, cities earn franchise fees from cable companies; yes, the citizens pay dearly in the poor service and weak selections they receive.
Google and others have invested in new broadband service through electricity lines. The recapture of the tremendous amount of radio spectrum dedicated to analog TV is going to make Wi-Max omnipresent. The future is coming but not soon enough. Deregulation would set off a tremendous round of upgrades to equipment in homes and offices. When the AT&T monopoly was killed, a long distance call cost more than $2 per minute in today's dollars. Today people carry a phone in their pocket for less real dollars than a home phone cost before the deregulation.
Sprint doubled its earnings this quarter. The demand for wireless communications is there. The second phase of the telecommunications revolution has begun! Motorola, for example, just introduced a thin "email phone". The amount of computing power in these mini-computers is more than was in a desk top computer a few years ago!
FOR THE PAST FEW MONTHS, I HAVE POUNDED THE TABLE! I HAVE SAID ALL I KNOW TO SAY TO ENCOURAGE YOU TO INVEST IN TIME TO CATCH THE MOVE! IT IS NOT TOO LATE TO MAKE SERIOUS MONEY! 
The market has a lot of momentum now but many stocks have already made a big run. The risks have increased in the past few months. On the other hand, pundits such as Jim Cramer are now fully on board--shouting to the public to buy-buy-buy! Yes, he hits the sell-sell-sell button often because his style is that of an active trader but he is telling investors to aggressively buy stocks. In the next couple of years, late adapters will buy digital TVs, pocket computers, and more.
Earlier this week, I encouraged a family member to sell Wal-Mart to buy TXN. It is not that I dislike WMT. The situation is that TXN is well positioned for the build out of the digital communications networks that is taking place. TXN is particularly strong in cell phone tech and in flat screen TV tech. I was tempted to put the money into GLW (Corning). GLW has been a sweet stock. We paid around $2 for our first shares and bought more at $4, $6, and $9. The stock was strong to day around $19. TXN has already been a good stock to us but we think the potential is big.
It is interesting that this has been such a great year so far because it surely started off in the wrong direction. The key was that after the market went down, we went into an aggressive mode. We sold low beta slow movers, added cash and bought high beta stocks. Our aggressive account is up more than 30% on the year. 
The reason to report the numbers is to encourage others to join us in making money. A river crossing always seems risky. The water flows to fast, it is too deep and you can't see what is swimming in the dirty water. However, the other side is a neat place to visit. Give it a try!
BUY THE BULL! THE MARKET IS OVERBOUGHT A BIT AND THERE WILL BE PULL BACKS BUT STOCKS ARE STILL CHEAP RELATIVE TO BONDS AND REAL ESTATE!
HOW MANY TIMES HAVE I WRITTEN THAT STOCKS ARE CHEAP RELATIVE TO BONDS AND REAL ESTATE! THE REASON FOR THE REPETITION IS THAT INVESTORS SHOULD FOCUS ON VALUE AND NOT GET CAUGHT WHINNING WITH THE NAYSAYERS. THE BEST MARKETS ALWAYS ARE IN THE MIDDLE OF ONE CRISIS OR ANOTHER. THERE ARE TRILLIONS OF DOLLARS ALWAYS LOOKING FOR A HOME AND RIGHT NOW THE BEST HOME IS STOCKS--NOT BONDS OR REAL ESTATE! BUY THE BULL!
America West Partners With DHL to Offer FlightFund Members a New Opportunity to Earn Miles
What a good stock to buy a week before my vacation. The stock is up 42% in about two and a half weeks. GO BABY GO!
The linked article is about a new deal with DHL. DHL has been making a strong move. AWA is the second largest discount carrier. The deal offers AWA customers the chance to earn extra miles by shipping with DHL.
This program is a good move for AWA. When an airline fills and empty seat, the cost is next to nothing. The miles can't be used on flights where the seats can be sold.
AWA will triple its size when the deal with USAir closes. The cycle has turned. Revenue seat miles are up. Capacity is up. Loads are up. Fuel is up but is from here fares will increase at a faster rate than fuel.
BUY THE BULL!
Today, it was NFLX, MOT, AMZN, GLW and others that kept the momentum going. AWA was up again. BUY THE BULL!
Investors come in all varieties. Some folks are cautious others emotional. Some are busy while others are casual. However some folks who think they are investors are not true investors at all! Most folks are observers, speculators or collectors. Most of the observers are those who have given up!
My parents did very well investing in real estate. They worked hard, saved money and invested with success. They also invested in stocks but their returns were not as good as in real estate. This is interesting because the long term average return in stocks is better than the average long term return in real estate (they did well with leverage and without leverage in real estate).
My Dad was smart. He was successful in many ventures. He taught me much about investing and I appreciate his lessons. I have often wondered why he was more successful in real estate than in stocks. Gary Keller in "The Millionaire Real Estate Investor" hit the nail on the head. He lists four investment profiles: the observer loves ideas but never takes action; the speculator loves the action and buys anything; the collector loves ownership and buys something; the investor loves opportunity and buys to the right thing.
THE SPECULATOR
Mom and Dad were very successful real estate investors because they shopped around to find what they wanted, bought it and generally held it long-term. On the other hand, Dad speculated in the stock market. He saw the stock market as the place to make a quick buck. He held a number of substantial positions long term but for the most part, he sought quick trading action. He loved the action!
I have never know anyone to make consistent profits trading puts and calls but Dad loved to try. He loved to study stock charts and to buy and sell for short term moves. This was a form of entertainment. It was a fun hobby that could be practiced from his home office. He also purchased many a speculative low cap stock. For example, he purchased SIRIUS satellite radio based on tape action when he did not even know what business the company was in. Dad did very well in the market for long periods of time, however, he eventually landed on the wrong side of the market--giving back his gains. Please do not take my comments about my Dad the wrong way. After-all, I and other investors have made plenty of mistakes. We all need to gain perspective in order to be better investors. The reality is that winning by placing thousands of short-term trades over many years has lower odds than winning the lottery. Short-term trading is similar to rolling dice in Las Vegas. The transaction cost and spreads are like the house advantage and the house always wins.
THE COLLECTOR
Mom is a collector. For example, she owned AT&T for decades. It didn't really matter if there were better investments around, she loved ownership of "Dad's" company. The same idea extends to IBM. She has owned it for a long time, she knows it to be a solid company and she will never sell the stock unless prodded very hard. She has little knowledge about the company and does not wish to compare it to other investments. Stocks for her are like her antique pottery collection--she does not know what it is worth and does need to find out. When asked if she will sell a piece for a high price, she declines because she is a collector not an investor. Again, if my any member of my family should read this, I hope they will not take offense. The good news is that collectors do make money. They do not make as much as investors but assets do tend to go up in value over time. There are no transaction costs and taxes are deferred.
Being a collector or a speculator is not a bad thing--I respect either more than the observer who talks a good game but is afraid to put his big toe in the water. Speculators have fun trading and collectors enjoy owning. With just a little more work, either could become an investor but that is like saying that with a little bit of work most of us could become decent bowlers.
Investors buy good value and hold until the value is realized. Investors examine what they own and are willing to sell when the price is high relative to another opportunity. Mom is right to hold her Rosewood pottery. The values continue to rise and she enjoys owning. Should she sale, she would be hard pressed to find an investment that would give her equal value. However, owning a large number of IBM shares just because she has owned them for a long time is not a good reason to own the stock without examining other opportunities. (By the way, IBM should do well for the next several years as the economy has moved into an expansion phase).
The following paragraph from Keller's book is a summary of his thoughts on the subject: 
"Investing requires action. Successful investing requires the right action. Observers, Speculators, and Collectors are not true investors--Investors take action, minimize risk, and buy based on investment value; they are a breed apart."
BUY THE BULL! I HOPE YOU ARE NOT AN OBSERVER IN THIS MARKET! BIG GAINS ARE BEING MADE DAILY! ONE OF MY FAMILY ACCOUNTS IS APPROACHING A 100% GAIN IN LESS THAN 2 YEARS! ANOTHER FAMILY ACCOUNT IS UP 30% IN ABOUT 2 MONTHS! YES-ONE NEEDS TO BE CAUTIOUS ABOUT THE STOCKS THAT HAVE MOVED BUT THERE IS MORE TO COME! A DIVERSIFIED ACCOUNT WILL HAVE DIFFERENT WINNERS AND LOSERS EACH DAY BUT IN THIS MARKET THE TOTAL RETURN SHOULD BE SUBSTANTIAL!
NewsFinder
It is nice to be home from the beach and nice to read that Wal-Mart has plans to grow in China. The tremendous success of Wal-Mart in the US has slowed the companies growth potential as local businesses fight to avoid Wal-Mart competition. Many a local curb market buys its goods from Sam's Clubs. Wal-Mart pricing is hard to beat.
Of course, Wal-Mart is expanding in other areas. In Europe, the company sometimes buys into a partnership as those markets are tough to enter. Consumers are the beneficiaries when Wal-Mart arrives.
This company is too large to grow at the pace of years gone bye but it is an efficient money making machine. Not a bad core holding at the current price.
BUY THE BULL! THE SITUATION HAS CHANGED A LITTLE SINCE MY VACATION STARTED BUT THE BULL IS STILL ALIVE. THE US ECONOMY HAS MOVED FROM THE RECOVERY PHASE TO THE EXPANSION PHASE. MORTGAGE RATES WILL GRADUALLY RISE DURING THIS PHASE. THE HOUSING BOOM WILL SLOW. HOWEVER, THE INCREASE IN RATES WILL BE CAUSED BY THE STRENGTH OF CORPORATE SPENDING. INDUSTRIAL EXPANSION IS A GOOD THING.
When we realized that dad’s 55th birthday was approaching we started thinking about what we could do to honor and celebrate him. It was apparent that just another material possession wouldn’t suffice. We thought about the things that he seems passionate about and wanted to give him something that he would truly appreciate. Since investing has been one of his lifelong interests, a gift dealing with investing seemed like the place to start.
Growing up Dad was always introducing us to the latest technology, teaching us how to use the computer as young children, encouraging us to create email addresses and use the internet, and talking about what would be possible in the future. He instilled in us a desire to learn and taught us that we were capable of doing it ourselves if we put our mind to it.
For example, we had a computer before any of our friends and although we mostly just played Wheel of Fortune on it, we still learned valuable computer skills at an early age. We can remember having our own email address before most knew how to access the internet. Courtney even recalls him predicting the ability to run more than one program at a time, basically describing Windows before it had been released. In addition, as we have gotten older, he always stops to ask us if we’ve heard about the latest products or developments in technology. While we frequently laugh at him asking us if we have heard of Skyp or whatever else he’s been reading about, we truly appreciate his knowledge of the latest trends. Dad is technology savvy and he has always been the one to teach us about the economy, investing, and other financial matters.
More recently, he has created his own weblog where he has been able to combine both his loves for investing and the latest trends in technology. We decided a great way to celebrate Dad on his day would be to honor him with our own contributions to his weblog. Although these are certainly not the only things our dad has taught us about, they are some reasons why we believe he is a great dad! Today on his 55th birthday we hope this tribute will honor him and make him smile. We love you Dad!
"To provide fast and friendly service, quality products in clean and convenient locations"
is the mission statement of Sheetz. Sheetz is a convenience store that was founded in 1952 and has grown to 300+ locations which are located in 6 states. It still remains a privately owned and operated business which earns it the title of industry leader. The Forbes 500 List of Top Private Companies lists it as #87. As well as competitively priced gasoline and the usual convenience store items, this "store" sells fresh, fantastic and fabulous sandwiches.
One thing that makes Sheetz a joy to visit is the touch screen ordering. Jack has talked for years about how one day you would have the ability to order for yourself at a fast food restaurant and now that I’ve used it, I recognize the extreme value that he envisioned years ago. By walking up to the touch screen and ordering yourself, customers no longer have to put up with the "wah, wah, wah wah wah" from drive through windows and not knowing that what you ordered is not what you are taking home. Each order is freshly "made to order" and tastes great! By being open 24 hours a day and 365 days a year, you have the flexibility to try some today!
Sheetz employess are pleasant and play an active role in their communities. During the holiday season, Sheetz works with the Salvation Army to identify deserving children and make their holiday dreams come true with a shopping spree. Furthermore, Special Olympics has received more than $1 million from Sheetz since 1991. Employees have produced and catered thousands of lunches for the Special Olympic events.
I encourage you to visit your local Sheetz convenience store or mall location soon.
Marilyn Miller
When I think about my dad and all of the things I have learned from him over the years, I immediately think of his knowledge about investments. Some basic principles that I have heard repeatedly growing up include buy stocks in products that you love and use, greater risks equals greater profits, and everything is cyclical.
In December I will graduate from the University of North Carolina at Greensboro with my MS/EdS in School Counseling. Recently, after discussing my upcoming graduation with my parents, my dad suggested that I begin looking in to buying a new car. Although my first thought was about how much I have enjoyed riding in my friend’s 2004 Volvo S40, a second thought quickly followed. Another principle that dad has engrained in me is in regards to buying two of life’s most basic possessions: houses and cars. He has always taught me that when buying a house, you spend more than you can afford, because houses appreciate in value. On the other hand, cars depreciate in value as soon as you drive them off the lot, so you do not buy the most luxurious car on the market, but instead you try and get the best deal possible. Despite hearing Dad’s words of wisdom in my head, I have my heart set on buying a new Volvo S60 as my next car.
Through my research online, my discussions with Volvo owners, and my experience at the dealership, I have learned that Volvos are considered one of the most dependable cars. One owner said, “Volvos have earned a well-deserved reputation for being safe, dependable and durable.” Statements like these have fueled my attraction to Volvo.
Furthermore, the Volvo website, www.volvocars.com, simply states, the S60 is “uncompromised performance, technology and safety in the body of a stylish European sports sedan.” One test driver said, “These vehicles have capabilities other manufacturers will be chasing after.” Another said, “While relatively small on the outside, the S60 is very spacious inside and the 2.4T was a pleasure to drive.” Most importantly, you can load it with lots of premium features. The main options are a navigation system ($2,120), leather trim ($1,300), Dynamic Stability and Traction Control ($1,100).
In my research I once again considered my dad when I looked at the optional GPS system. This would most definitely be one of his favorite bells and whistles, as for years he has told me about how cars will drive themselves someday. This particular system is described as an “information and route guidance system which helps people to reach their destination in the simplest way possible.” The system uses satellites to track the location of the car and then a recorded voice directs the driver to the desired destination. The key here is that the driver can then direct their attention on the driving. While my dad was disappointed that the navigation system is not yet standard, it is still a nice option and supposedly it is easy to operate using a few buttons on the steering wheel.
While the decision will ultimately be up to me, I will certainly consider Dad’s philosophy when I purchase my next car.
Whitney Miller
I recently started a part-time summer job as a sales associate at the major retail store Kohl’s. Upon completing four days of training classes I was immediately impressed with the store’s customer service policy. Their philosophy concerning customer service is simply put, “Yes we can!” Should someone ask an associate to hold their purchases for four or five days the answer should be, “Yes we can!” Should a customer ask if they can be given a discount off of an item because it is missing a button the correct response is, “Yes we can!” Should another ask if they could have the recently advertised sale price on a product because they weren’t available to shop during the sale duration the associate answers, “Yes you can!”
Furthermore, a customer can return any Kohl’s purchase at any of the stores locations. The Kohl’s Associate Handbook states, “Kohl’s views customer service as the most important aspect of our business. Every decision that is made, whether at a Store, Distribution Center, or Corporate Office, is made with the customer’s needs in mind.” Basically the old adage “the customer is always right” truly does apply at Kohl’s.
Not only does Kohl’s have an excellent customer service policy, but it is among America’s fastest growing department stores. It began in Brookfield, Wisconsin in 1962 and became a publicly traded company in 1992. Kohl’s has since spread to most areas of the United States including most recently the mid-Atlantic and Southwest. In 1999 Kohl’s reported its fourth consecutive year of earnings growth over 30%. As you can tell, Kohl’s continues to grow at an impressive rate, both from opening new stores and from existing store sales increases. As my father always says, “if it ain’t broke, don’t fix it.” One of the biggest mistakes some companies make is going in and making changes when they are not needed. Kohl’s is a solid company that in my opinion does not need change.
In addition, the family-oriented company dedicates its charity efforts to improving health and educational opportunities for children in its communities. This is accomplished through the store’s Kohl’s Cares for Kids Program. Kohl’s also supports community programs such as the United Way and offers many additional benefits to its associates.
Kohl’s trades on the New York Stock Exchange, ticker symbol KSS. It is currently trading at about $58 per share. Kohl’s is part of the Standard & Poors Top 500 Index.
Courtney Tucker
Today’s technology has allowed people of all ages to communicate, play games, listen to music, watch movies, take pictures, and perform computer operations from anywhere the user might be. The biggest problem with doing each of these functions is it requires a separate gadget for each function. Several gadgets have tried to incorporate more than one of these functions but the gadgets still treat the initial function as its primary and the other functions are mere afterthoughts. For example, camera phones lack the ability to take clear pictures. Hewlett Packard has attempted to consolidate these major functions into their iPAQ h6325 Pocket PC. 
The HP h6325 offers all the functionality of a PDA, along with a mobile phone, and a camera. It’s the first and the smallest handheld with integrated three-way wireless (GSM, GPRS, WLAN, Bluetooth®). This allows the user to access the internet, email, send text messages, and make phone calls. Take pictures with the built-in camera then print to a printer or synchronize with your PC via Bluetooth. Accessories allow even greater flexibility such as the snap-on thumb keyboard for composing email, notes and instant messages. You can even buy a GPS module that will turn the iPAQ into a navigation system giving you turn-by-turn driving directions.
Many reviewers have mixed feelings about the HP h6325’s wireless phone service. Cingular and T-Mobile both offer service and several users have complained that calls are often dropped or the phone has little signal. Others have stated that a software upgrade has resolved the issue. However, they all agree that if you want a small, sleek phone that will run days on a battery, this is not your huckleberry.
While not everyone sees the need for such an item, numerous people already use many individual gadgets to do what the HP h6325 will do by itself. As one reviewer so put it, “I shed a whole pile of devices and cables for something I can put in my front pocket.”
Jonathan Tucker
WSJ.com - The Evening Wrap
ECONOMIC BOOM!
The economic boom, written about in the Wall Street Journal, is powerful. High paying job growth, booming exports, and growth across most industries. The best news is that the strong growth is concurrent with low inflation!
The strong growth implies that long term interest rates will rise; the low inflation numbers imply that the rise will be moderate. The recent strength in the stock market has been accompanied with an increase in long rates. Our SOW portfolio has done very well while the recent increase in rates has pushed the equivalent bond portfolio down.
Just a short time ago, I convinced a friend to replace the bond portion of his IRA with AAA grade high yield stocks. The payoff is already apparent. Stocks perform well during economic growth--bonds do not. One must expect interest rates to creep up during an economic boom; same with the cost of fuel. Higher interest and higher fuel are simply a part of the costs of doing business. Were our resources stretched thin one would expect higher inflation. The world continues to export jobs to under-employed nations. The world wide standard of living is making progress and Americans are saving billions on their purchases.
After a few years of boom, resource utilization will grow tight and it will be time to grow cautious. This will be a time when all know how strong the economy is. For now, those who recognize the strength early will be able to take advantage and make serious money long before the crowd arrives.
BUY THE BULL! OUR ACCOUNTS HAVE LONG PASSED THEIR OLD HIGHS! WE ARE IN PROFIT LAND! THE STAMPEED WILL CONTINUE!
Earnings Outlook: Pockets of profit amid airlines' red ink - Airlines - Transportation - Earnings
POCKETS OF PROFIT!
5 months ago, airline owners would be happy talking about pockets of profit. Now, writers discount the profits because the higher fuel costs are keeping the pockets from being buckets of profits.
The owners of home builders should express a similar complaint. Profits would be much higher except the cost of building materials has gone up dramatically. It is an old story. You don't hear much about fuel cost and truckers because the truckers are turning profits and like the airlines they are passing along the higher costs.
In the short run, the costs of fuel has absolutely nothing to do with the price of a ticket. The airlines charge as much as the market will bear as do the oil companies. Of course, airlines cannot stay in business if their expenses are lower than their costs for a long enough period of time.
The time of loss is coming to a quick ending. One after another, the airlines net has turned from very negative to a declining negative and in some cases to a positive.
The best news of all is that the majority of investors do not believe it. This is allowing the building of large positions at low prices.
The big carriers are playing hard ball with the discounters. I have not checked the numbers lately but, just a few months ago, the market valued LUV more highly than all the legacy carriers combined. The revenues of AMR, CAL, NWAC or DAL are dramatically higher than LUV revenues. LUV is more efficient and has lower costs. Just remember, it is a cyclical business and the worm has turned.
BUY THE BULL! IT TOOK A LONG TIME TO BREAK OUT TO 4 YEAR HIGHS! NOW THAT THE BARBARED WIRE FENCE HAS BEEN TRAMPLED, THE STAMPEED COULD RUN A LONG WAY!
Social Security seen on hold until fall - Financial - Financial Services - Economy - Bond Market
BUY-BUY-BUY!
The fact that the public is so negative toward the stock market that they are willing to accept 2% returns in Social Security is a buy signal! The depths of the fear that lurks in the hearts of men is worse than even the Shadow knows.
It must have been close to thirty years ago when Buffet said that there are two emotions that drive the market--fear and greed. He went on to say that the whole secret to successful investing is to be greedy when others are fearful and fearful when others are greedy.
The majority of young Americans believe that they cannot count on social security to be around when they retire. I believe they are wrong. Social Security will be around but the size of the account is what matters. The size for each individual will be smaller if the funds continue to be invested in t-bills.
Anyone who looks at the facts objectively will conclude that individuals would be better off if their Social Security funds were invested long term in stocks versus treasury bills. The fact that sentiment is so negative to the market is a strong buy indicator.
Ironically, after the market has done extremely well, there will be pressure from the public to change the system.
BUY THE BULL NOW! YOUR SOCIAL SECURITY WILL BE WHAT THE POLITICIANS SAY IT WILL BE. IN THE MEAN-TIME, MAKE SOME REAL MONEY!
I have written, read and heard that the market may really take off when the fed stops raising rates. This does not mean that one should wait for the news before investing.
The markets discount the future. Sometimes the markets get the future wrong for awhile but some folks get the future right before other folks.
In some cases, such as this one, the future is not hard to predict. Yesterday's CPI report showed that the inflation rate is low, today's PPI report showed that inflation is low, other reports out for the past couple of months have shown that worldwide economic growth has slowed. The writing is on the wall!
Besides, it is not necessary to determine if the proper stopping point is 3.5% or 4.25%. It is certainly possible for the fed to overshoot--it has happened before--but it is a reasonable bet that the fed will not over shoot. It is reasonable to assume that the expansion phase of the economic recovery will last for several years. The pattern is well established. The trend is your friend.
BUY THE BULL! PROFITS ARE GROWING, THE ECONOMY IS GROWING, COMPETITIVE INVESTMENTS ARE NOT AVAILABLE. BONDS AND REAL ESTATE ARE IN GENERAL OVER-PRICED RELATIVE TO STOCKS. IF YOU WAIT FOR THE FED TO STOP FIRST, YOU WILL MISS THE BIGGEST PART OF THE RALLY.
The Peridot Capitalist: Concentration Explains Much of Buffet's Investment Success
Buffet has about 70% of his assets in his top 5 holdings. I have built a concentrated position in the airlines. My belief is that a concentrated position in 5 big carriers is less risky than when I had most of my assets invested as the owner operator of a small business.
On the other hand, Buffet's massive shares of AXP, KO and G are not the same quality stocks as are the airlines.
One can only dream of consistent returns approaching Buffet's. Never-the-less, I am comfortable with a concentrated position in 5 of the legacy carriers. CAL, for example, has lowered its labor costs by about 500 million per year while flying more full planes than ever before. Oil price momentum has slowed. The current price is about the same as it was weeks ago. Fares are increasing. Private jets are being squeezed out of prime landing times and first class seats are being added. New international flights are to everywhere and back.
Modern portfolio theory says one should diversify. Common sense says that if you should invest where you expect a high return.
BUY THE BULL! MONEY IS FLOWING TO STOCKS. THE S&P HAS BROKEN TO A 4 YEAR HIGH. INVESTORS DO NOT HAVE THE WILL POWER TO SIT THE BULL OUT. THE PSYCHOLOGICAL PRESSURE TO JUMP ON BOARD WILL BUILD AS EACH NEW HIGH IS REACHED.
What a beautiful day at the beach! There are clouds in the sky but the air and water are warm.
I finally got around to lunch at 2PM. I checked the market and my families aggressive account is up 2.5%! This aggressive account owns airline, internet, tech and other stocks. Gains in AMR and CAL are mounting up. Crude oil is down 2.31 per barrel! Inflation numbers this morning were fantastic.
As one might guess, I added to AWA this morning and all my other airline stocks are up on the day. One can never tell exactly which stock will perform well in the short run but the airline industry has cut cost and while increasing revenue seat miles. Most any business does well after it cuts costs and increases revenues. The airlines have high operating leverage which means that after break even is reached most of the marginal revenue is profit.
In a retirement account, I purchased Ford one day last week. This market is in BULL mode so I want to participate in every way I can.
BUY THE BULL! THE MARKET IS PAUSING MID DAY AFTER A GREAT RUN! SHORT TERM--WHO KNOWS WHAT WILL HAPPEN--LONG TERM STOCKS GO UP!
UnitedHealth affirms outlook as quarterly net rises 36% - Insurance - Health-Care - Financial Services - Earnings
Our 120 bagger continues to do well. As reported before, we made the huge mistake of not averaging up in this stock over the years. The company is well managed and it is well positioned. The announced purchase of Pacific is not a problem. The company has always grown organically and by making strategic purchases. A great stock to hold long term.
BUY THE BULL! THE BULL IS RUNNING AGAIN THIS MORNING. OIL IS DOWN AGAIN THIS MORNING. I PURCHASED MORE TIVO AND MORE AWA THIS MORNING. THESE ARE AGGRESSIVE PURCHASES. IN AN BULL MARKET IT USUALLY PAYS TO BE AGGRESSIVE. DON'T WAIT FOR THE FRONT MAGAZINE BULL MARKET HEADLINES TO GET IN.
Google Target $350 at Lehman
Last week I purchased more Google--in a friends IRA account. I made the mistake of mentioning the purchase to a long time reader who pinned my ears back! She asked how I could possibly justify putting Google in a retirement account?
Why not? The allocation made was less than 2.5% of the portfolio. A portfolio that also owns low beta high dividend stocks such as Conagra. The proof is always in the pudding and I am thankful to be able to write that GOOG has quickly moved up 14 points since the purchase. On a $293 base, 15 points is only 5% but still not bad in a week.
The real point has nothing to do with short-term performance. The fact is that this retirement account will not even start being withdrawn for another 20 years and will still be large in assets in 40 years. When you have a long time to stay in stocks then it is a good idea to own at least a few growth stocks.
I have made no bones about the fact that I like Google. I have bought it regularly since it was first offered and I will continue to buy as long as I believe it offers value. I have indicated in the past that I might sell some shares after the stock is added to the S&P 500. Value is often in the eye of the beholder. It is hard to measure. Some folks rely on P/E ratios to measure a stocks value but what meaning does a P/E ratio have when a company has a clear path to extraordinary growth? Crammer arrives at $350 on the stock using $7 as projected earnings and a 50 multiple. Using a 50 multiple is just another way of trying to justify buying a stock that has tremendous growth potential. The important thing for any company is the projected bottom line over future years. In other words, buying a stock always requires one to make educated guesses. My hunch is that Google has many more years of growth ahead. By the way, the same IRA account allocated 2% to EBAY. Time will tell if this was a wise choice or not.
The opportunities for increases in Google's earnings are unusual. The company can go in so many directions and yet it continues to be focused on its primary strategy. Ebay has a very different strategy but both companies are working hard to be big in China because China is very big.
I will buy more stocks after the opening this morning. The purchases will not be GOOG or Ebay. I will not write much today as I am currently watching the waves roll in at Myrtle Beach. Some of my family arrived after 2 AM this morning so several are still asleep. Life is good.
BUY THE BULL! IN CASE YOU HAVE NOT NOTICED, TECH STOCKS AND OTHERS ARE BREAKING TO THE HIGH SIDE. INFLATION REPORTS THIS MORNING WERE OUTSTANDING. BOND YIELDS ARE DOWN THIS MORNING. THE ENVIRONMENT FOR STOCKS COULD NOT BE MUCH BETTER!
Yahoo! Buys Internet Phone Provider - BizReport
A few months ago, the buzz was about Google starting an internet phone service. YHOO is making the jump first. DialPad has been around for 6 years and has acquired 14 million users. The number could expand rapidly when integrated into YHOO services.
Yet another example of cost to consumers going down. DialPad has charged 1.7 cents per minute for calls. Hard to beat that price on traditional circuits. Skpe and others offer free computer to computer service.
Ebay has gotten a lot of bad press lately. The buzz now is that Google will start a system similar to PayPal. I added Ebay and Google to an account a couple of days ago. Ebay is making progress in China. Success in China could almost double Ebay revenues.
BUY THE BULL! THE INTERNET IS NOT GOING AWAY. CONSUMERS WILL BENEFIT BUT PROFITS WILL BE MADE!
Technology stocks are BOOMING!
I have not been writing much lately. While at home, I am busy packing to move. In between packing, I am vacationing with family at Myrtle Beach. The next ten days, it will be the Miller family at the beach. I expect to have a great vacation while I keep an eye on the BULL!
Tech stocks are leading the way! Over the next few years, millions of folks will adopt HDTV, Mobile WiFi, Pocket Computers, media center computers, mobile TIVO-to-go, and much more. The "next" tech boom is here! Look at the charts of MOT, TXN, TIVO and other tech stocks to see the break-outs.
This has been a slosh and fill market but the BULL is trying hard to get loose. Whole sectors have traded up and down as investors try to find leadership. SIRI has been on a run for a few weeks but it has back tracked today after some folks pointed out how incredibly expensive the stock is. Many other stock values get out of whack and then there is a correction in the group. Short traders are caught in squeezes. The big problem short sellers have is that most try to own the best values while being short the worst values. However, the best values have been stagnant and the worst values have been participating in the rallies--ouch!
Projecting the value of any particular stock is always very hard in the short-term. The reason to own at least 15 stocks is to avoid big mistakes. Trying to be too precise is a good way to get into trouble. I am not saying to use the dart board approach. Indeed, I have invested heavily in high beta sectors because I believe in the BULL--it is here, it arrived in October of 2002 and only rested a while early this year. Also, I plead guilty of ignoring my own advice. My family is currently more than over-weight in the airline sector. The perceptions of this sector are so negative that we have become very comfortable owning 5 of the legacy carriers. We believe there is less risk in owing 5 carriers than all of any small business.
Market indicators said to sell bonds and buy stocks in October of 2002. This was a wonderful call. In hind sight, bonds did better than most professionals thought possible but stocks have done great. The BIG BULL BOOM is not over--the next stampede has started.
I am concerned that Cramer and others are now shouting about the BULL. The more people that use the word BULL the more cautious I will become. Sentiment indicators are no longer screaming "buy stocks" but we are not near screams of "sell stocks". I will not take money off the table lightly. For now, I will remain aggressive. Stocks are too cheap to be overly cautious.
BUY THE BULL--THE TECH BOOM IS HERE! THE OIL PRICE MOMENTUM IS DEAD--I SEE $55 OIL BEFORE $65--$65 WOULD NOT KILL THE MARKET. CONSERVATION AND INCREASED PRODUCTION WILL GRADUALLY WORK THEIR MAGIC. CHINA AND INDIAN DEMAND FOR OIL IS REAL BUT ONLY PART OF A STRONG WORLDWIDE ECONOMY. INFLATION PRESSURES HAVE SUBSIDED. THE MARKET CAN GO UP IN PARRALLEL WITH OIL PRICES AND SHORT INTEREST RATES BUT IT WILL REALLY MOVE IF OIL AND RATES HALT THEIR MOVES UPWARD.
Losers Average Losers: A Key Trading Concept
Paul Tudor Jones, Turtle Trader, keeps a sign posted in his office. It says, "Losers Average Losers". The concept of averaging up--not down has been around for a long time. One of the great proponents of averaging up was the great Jesse Livermore.
The concept is a simple and important one to follow; however, it takes discipline. The temptation is often great to buy more of a $10 stock when it falls to $8 and even more when it falls to $5. One should generally avoid buying a stock that is making new lows. In these situations the market may know something that you don't.
Jesse practiced his 20, 20, 20, 40 rule. He put 20% of his average position size into a stock and added another 20 only if the stock went up. If it went up more he bought more. Only after he invested 60% in the stock and it was still going up did he commit the last 40%.
Yesterday and this morning I averaged up several positions. The price of my average purchase went up because I bought shares at much higher prices than my original purchases. Too often, traders have the mentality that they have no profit until they sell a stock. This is totally false. One stock that I am comfortable buying modest amounts of today is Yahoo. It does not matter that I have a 500% profit in my first purchase. It does not matter to me that the stock sales at a high multiple to its earnings. I understand and believe that Jeremy Siegel is correct in his assertion that growth is not the primary determinant of total return. Logic is only part of the formula for making money in the market. I feel comfortable holding YHOO long term and therefore it is a good stock for me.
YHOO is one of the stocks that I might average down. For example if I bought shares today for $36 and later the stock dropped to $26 and stabilized, then I might buy more. I would not buy more just because the stock went down in price. However, I would buy more at a lower price if I still believed in the long term future of the stock.
With YHOO, I am half way to a 10 bagger. I have confidence that this one will become a 10 bagger. I hope to own the stock 30 years from now as a 50 bagger. My best stock so far is a 120 bagger.
Different stocks should be bought with different expectations. CAL traded in the upper 50's in 2000. The company has since lowered its operating costs dramatically. Business has been growing for a few years and in recent months load factors and revenue miles have been going out the roof. My "Old Merrill Pal" and I discussed our outlook yesterday. We figure the stock will exceed it old high during this business cycle. In other words, we believe the stock will trade in the 60's by 2010 or so. From the current price, this would be better than a 4 bagger. My families cost is not dramatically lower than the current price because we have averaged up aggressively.
The airline industry is very cyclical. We do not plan to own these shares more than a few years. Still we did not buy them on the way down. We waited patiently for the shares to make a bottom and then come back and test the bottom. Only after the stocks were "on the way up" did we buy.
One of the most famous gambling stories of all time was when a beginner rolled 9 straight passes. The beginner bet a $5 chip each time and made $40. Nick the Greek did not bet on the first to passes but he bet heavily the third and fourth pass and raised the bets thereafter. Nick netted a couple of million. The idea is that once you are onto a winning position you are playing with "house" money.
BUY THE BULL--BET BIG WHEN THE BULL IS RUNNING--AVERAGE UP! IT IS SILLY THAT THE OIL MARKET IS UP STRONG BASED ON ONE LISTING RIG IN THE GULF. THIS RIG IS A DROP IN A VERY LARGE BUCKET. SUVS ARE DOWN 19% IN PRICE DURING THE FIRST 5 MONTHS OF THIS YEAR--DON'T TELL ME THE MARKET IS NOT ADJUSTING TO HIGHER OIL. THE PRICE MOMENTUM IS ALREADY DYING. PRICES BUMPING AROUND FROM 56 TO 62 AND BACK IS NOT INFLATIONARY. ONLY INCREASING PRICES ARE INFLATION. OIL IS ONLY A SMALL PART OF THE FAMILY BUDGET. CONSUMERS ARE STILL SPENDING. STONG OIL PRICES ARE A SIGN OF A STRONG ECONOMY. PROFIT REPORTS OVER THE NEXT FEW WEEKS WILL SHOW THAT COMPANIES ARE DOING WELL.
The Big Picture: DayTrading Florida Real Estate
As Barry points out the real estate market seems crazy. The reality is that prices are not jumping 30% or more in a day but long term owners are selling without adequate market knowledge. They simply do not understand how big the market move has been over the past two or three years.
Investors who are aware of price increases in an area can often buy based on old comps and tax values. In other words a property that has appreciated 10% for three years might be bought by an investor at the three year ago price and then resold quickly at 30% gains.
It is important for all investors to understand that real estate prices and price to earnings ratios are both inversely related to long term interest rates. An increase in long term interest rates would hurt real estate and stock prices. The short-term rate increases have had no visible effect.
The bottom line is that world wide productivity is holding down the rate of inflation which in turn is keeping long rates low. This makes for a good housing market and a good stock market. Many a hedge fund and millions of investors have been caught under-weighted in stocks. The market keeps climbing. Even the London bombs did not push this market down for long.
A fundamental rule of good investing is "Don't fight the tape"! This market is going up. Don't fight it. Selling short just because a stock or an index has gone up is a poor reason. A lot of folks still don't get that the earnings yield on stocks is higher than bond yields. A lot of folks do not understand why the dollar is now appreciating against the Euro. The link between all of these thoughts is that money flows to where it is paid the most. Stocks are paying more than bonds so money is flowing to stocks. Recent increases in US rates mean the US is paying more interest than the Europeans; money is now flowing back to US dollars.
If you can find a piece of real estate at a 25% to current value, buy it. Also keep in mind that the average stock is at a 25% discount to current value.
BUY THE BULL!
A Hop, Skip and Jump Away, American Airlines Offers Customers Shorter Flights for Fewer AAdvantage Miles
Legacy carriers are learning how to compete with discount carriers. The attached article is about AMR's offers for lower cost short hops. The business flyer who needs to use AMR on long flights through hubs can now get a discount when taking short flights.
Some months back, I wrote about the market value of LUV being greater than the market value of all the legacy carriers combined. That situation is changing. LUV has stopped its meteoric rise and the legacy carriers are moving up in price. There is still a long way to go for prices to make sense.
BUY THE BULL!
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CAL is my favorite airline. Management is doing a heck of a job with this one. One must be a little tough or a little crazy to buy airlines. Fuel costs are out the roof and two majors are still under the protection of bankruptcy court. GlaxoSmithKline to develop HGS drug - 2005-07-07
HGSI is in an interesting situation. The company is losing money because it has many clinical trials in progress. Companies that are willing to take the hit in the short run can be real winners in the long run. I do not own the stock but several of my readers are big holders of GSK. When bond rates start rising, drug stocks will likely do better than the average stock. A situation worthy of study.
STOCKS ARE CHEAP! BUY THE BULL!
Having reported a number of times that a family member owns a high beta portfolio, I receive questions about Beta. Fridays action supplies a good example to explain the concept.
Friday produced the following results:
Dow up 1.42%
S&P up 1.17%
NAS up 1.79%
IBB up 2.64%
FAM up 2.73%
The Dow contains very big slow growth stocks and is not very volatile. However, it is an index of only 30 stocks. The Dow went up by more than the S&P on Friday but over long periods of time the S&P is more volatile on average than the Dow and its long term performance is likely to be better. 
The NASDAQ index contains high tech stocks which are more volatile on average than the average S&P or the Dow. Whereas the IBB, a fund of bio-tech stocks, is on a roll. It is moving up quickly.
FAM is the aggressive family account. It does not include any bio-tech stocks (I simply have no feel for them and tend to avoid what I don't understand.). Never-the-less, it does include high tech stocks and out of favor stocks which include 5 airline stocks.
This account has done extremely well. It has hit net new highs several times in recent weeks and closed again Friday at another net new high. I use the term net new high because I net out any additional funds that have been deposited since the last new highs were made. The big winners in this account this year have included AMTD, GOOG, ET, GLW, and 4 out of 5 airline positions.
This account has out-performed the market dramatically from the date it was opened until now. Alpha is the term used for out-performance. When you read the words, "seeking alpha" you should interpret that the writer is trying to beat the market. Always keep in mind that the majority of all investors, including the majority of professionals, under-perform the market. Also keep in mind that beating the market is not necessary to become very wealthy.
It is in trying to beat the market that risk is added. One can invest in an index fund and capture about 98.5% of the market return. One can dampen the volatility with a balanced account and still capture about 90% of the market return. Or one can invest in a high beta or volatile mixture of stocks in an attempt to beat the market.
Here again, one can take the easy approach or one can "play the game". For example, one can invest 100% in small cap stocks and beat the market over long periods of time. Using this approach, one will suffer huge draw downs during the tough years but those who hang tough will enjoy even larger gains in the good years. 
My choice is to "play the game". I buy what is hard to buy. Sometimes that is a Google at 70 times earnings, sometimes it is volatile resort rental property during a real estate recession and sometimes it is an airline at .05 times sales! Life is meant to be fun. If one can be aggressive and sleep well, then the joy of hitting home runs will more than compensate for the strike outs along the way.
Low beta high yield stocks are not bad substitutes for bonds that are priced at historic highs. High beta stocks are for those who want some action. Diversification is important to avoid taking a big hit when your guesses are bad.
Right now, the odds favor aggression. The last time the earnings yield on stocks was higher than the yield on bonds was the summer of 1982! Aggressive investors did very well for the next 10 months--until bond yields zoomed up while stock yields zoomed down.
If memory serves, it was Michael O'Higgins who wrote a couple of books titled something like Beating the Dow with Bonds. His premise was simple. If the S&P earnings yield is higher than the yield on 30 year bonds, one should buy stocks. If the bond yields are higher, he suggest that you buy long bonds if Gold has gone down year over year and stay short if Gold has gone up year over year.
Since the S&P earnings yield is about 1.5 times the 4% yield on bonds, we buy stocks and not worry about bonds. However, worry warts will correctly point out that PE ratios are inversely related to the yield on bonds and therefore, if bond yields go up, stock PE ratios should go down. There are several rebuttal points. Earnings are growing. There is a huge cushion since stocks are making so much and the price of Gold is down for the past year! Gold is indicating that inflation is not a problem. The price of Gold suggest that bond buyers should go long!
I can't do it! I cannot buy long bonds at 4.3%. With conservative money, I would rather buy AAA high yield stocks. If stocks are not an option, I'd rather take the short term hit and stay with the highest yielding money market account available. If forced to buy bonds, I would buy an intermediate fund. Of course, I manage my 82 year old mothers account and a few retirement accounts very differently than the way I manage my families aggressive account. 
The bottom line is that I seek alpha and understand that I must accept beta. I seek to beat the market and accept volatility as the price for having a whole lot of fun. One must experience pain to know real joy. I have had my share of both; Praise the Lord!
BUY THE BULL! YOU WILL ENJOY THE STAMPEED IF YOU RIDE HARD WITH THE HERD HARD AND EARLY! DON'T WAIT TOO LONG TO COMMIT.
The following is a letter I sent to the Winston-Salem Journal editorial page.
Tears and Prayers
The loss of life in Iraq, Afghanistan and London is painful. I cry and pray and pray and cry. I pray for peace; I expect wars and more wars. I pray that all nations will stand in opposition to terrorism. Without responsible action by peaceful nations, the wars will grow large. Too many times, peaceful people have not met aggressors with force. War is to be avoided when possible but is to be won when fought.
Hitler is example sited most often of the aggressor met with apathy. Mahmud of Ghanzni ruled Afghanistan from 997 to 1030. He raided the cities of neighboring countries and ravaged India in particular. He stole the wealth of the temples and often killed all the men, women and children in the towns he raided. He got away with murder because his sporadic forays were dispersed among several countries and because he retreated to the high mountains for periods of time to let the anger die. Does this sound like the terrorist of today? How long will citizens of America, France, et. al. harp on the evil of George Bush while murderers continue their work against the innocent?
Recently another American child was lost to a convicted sex offender out on $15,000 bail! We must stand firm against evil. Otherwise we and millions of others will shed more tears. Pray with me for peace but support all actions necessary to stop the carnage!
Everybody In The Pool - Forbes.com
APPLE COMPUTER: PHONE COMPANY!
David M. Ewalt writes about the cell phone industry for Forbes magazine. He recently wrote about the new phone services offered by Disney (including ESPN for sports nuts and Disney for families). Now he suggest that Apple is about to get into the act.
Earlier, MOT and Apple jointly developed an iPod-cell phone. Carriers refused to offer it to their customers. Carriers want a big piece of song down-load revenue. The way around this drag is for Apple to provide service as an MNVO provider. Wal-Mart may offer a prepaid service similar to the service offered by 7-Eleven.
I believe the big winner will be FON! FON should be able to increase market share through these various deals. FON has the infrastructure built. The marginal cost to provide service to another cell phone user is minimal. Disney, ESPN, APPLE and others have content to offer. It behoves them to market cell phone service as another way to distribute their content. FON cares less if it is Disney, APPLE, 7-Eleven or any other firm that is paying the wholesale rate. The marginal revenue will provide FON with the economy of scale to add to its nationwide network.
Should Wal-Mart, APPLE, NIKE or any other firm decide to launch service as an MNVO, it is a relatively easy task. These companies need to know little about the cell phone business. They simply pay the wholesale rate for time and resell it to customers for a profit. FON may see a few customers drop Sprint when they select an MNVO as their carrier but offering multiple channels of distribution should allow FON to take away more customers from VZ and Cingular than it loses to the MNVOs. has announced the rolling out of high speed data service. This premium service converts Sprint Cell Phone Service to access to the internet. It is interesting that Best Buy stays sold out of Treo phones. I have been to Best Buy twice in two weeks and they can't get enough of these popular phones.
PalmOne announce a great quarter. Early adopters have already acquired mobile high speed internet access. The masses are now more than ready to buy. The next few years, high speed mobile internet access will move rapidly along the product cycle S-curve. Investors should take advantage of these developments.
My favorite plays include FON!, MOT, TXN and QCOM. I plan to take a look at PalmOne and RIMM.
BUY THE BIG BULL BOOM BUBBLE! A BUBBLE IS NOT A PROBLEM FOR THOSE WHO BUY EARLY TO RIDE THE ASSENTION OF THE BALLON!
The Big Picture: The Megabubble Poll
A BULL LIKE ME LOVES TO READ ABOUT MEGABUBBLE POLLS!
The above article is the kind one is likely to read while the market climbs the proverbial wall of worry. There are lots of bubbles to be concerned about but the market keeps going up! I appreciate Barry for bringing the article to my attention. A contrarian must be thankful to those willing to share ideas just like any investor must.
Today, I needed a couple of good quality, high yield stocks for a portfolio. It didn't take long to spot Sara Lee and Rubbermaid. Each of these companies have been through trying times. Sara Lee, for example, has done major restructuring and is still in the process of cutting costs and rationalizing the business. My thoughts and prayers are with Travis Lazenby and others who are currently waiting to hear about restructuring decisions.
The balance sheets of these companies are strong. The dividend pay-outs are high. Low beta stocks that are out of favor are a bargain.
My portfolios are currently filled with high beta stocks. For example, I often write about my beloved airlines and indeed these stocks fly all over the place (pardon the pun). One of my big gainers today was NWAC. It has been going up and down like a yo-yo. The company continues to struggle with its attempt to get labor costs in line with competitors but revenue seat miles are growing. Airline earnings reports are due. CAL and others are likely to report very strong load factors and revenue seat miles. High fuel costs will hit the bottom lines (except for LUV) but I am buying for the future not the present. The future will see high fares. Fuel prices may go higher but the odds are good that current high prices will attract new supply and encourage conservation.
The SLE and NWL are nice stocks to have in a portfolio that includes airline stocks. SLE and NWL will go up when the high flyer's run out of steam. In one of the worst bear markets in history, 1969 to 1974, low beta high dividend stocks climbed about 20% in value while the average stock went down.
I continue to believe a big up move in stocks is in process. The bombs in London were no match for this BULL! A huge spending cycle is ahead in HDTVs, cell phones, wireless internet and more. The market is starting to discount the big boom in spending that will occur in the next few years. Businesses and consumers have money to spend. High tech and airlines should benefit.
SLE nor NWL are likely to be my big winners in the months ahead. However, substituting solid, high yield stocks for bond positions in this market makes sense.
PE ratios are inversely related to bond yields. This means that when bond rates go up, there is likely to be multiple contraction. The good news is that there is a lot of cushion in the current market. We could see a significant rise in bond rates without significant contraction in PE ratios. If bond rates do rise, the flight to quality should boost the price of companies such as SLE and NWL. With current tame inflation around the world, bond yields may stay low. An ideal situation for stocks to profit.
BUY THE BULL! FOLKS HAVE BEEN SKITTISH OF THE MARKETS EVER SINCE THE DOT.COM BUBBLE AND SINCE 9/11. THE MARKET HAS DONE WELL SINCE OCTOBER 2002. WAS TODAY THE START OF ANOTHER LEG UP?
Listening to the reports of the day in London flooded me with tears and anger. I hope and pray that tears and anger are common around the world tonight. We need world wide resolve to stop senseless bombing of innocent men, women and children. 
The stock market recovered today. The markets believe terror will be contained. One must avoid the word defeated because there will always be lunatics somewhere who will cause problems.
Today my purchases included shares in Friedman Industries, Ford, Merck, Rock-Tenn, Conagra, Google and NWAC. I am considering the purchase of additional shares in TXN or MOT tomorrow as well as Commerce Bank and TWX. Another recent purchase was a substantial stake in VTSMX. VTSMX is the Vanguard "all stocks" index. Of the stocks purchased, Friedman, Ford, Merck and Conagra are all high dividend payers. Merck is facing law suits, Ford, Rock-Tenn and NWAC are facing restructuring and Google is over-priced.
If it were possible to find the perfect company, the perfection would be a sound reason not to buy. There are always reasons not to buy.
Today the market showed again that this is a resilient market. I keep hearing that it is a difficult market. Tonight I heard yet another commentator suggest AMTD should be sold at $18.50 as the $6 special dividend is already baked into the stock price. I am glad I did not listen to the sell suggestions at $7, $11 and $13! Trading activity is ready to explode. Millions of investors have grown comfortable trading online. They like the savings. Low cost trades lead to more active trading. ET and SCH were both strong today. AMTD has successfully assimilated 7 other purchases. The company is good at merging operations to save costs. 
BULL markets have traditionally climbed a wall of worry. That is what is happening now. Those who were caught in the tech bubble are still skeptical. However, those who got back into the market in late 2002, after the recession, have done very well for almost three years. The second leg of the BULL should start soon.
Tears and anger are appropriate reactions to the terrorist attacks. Avoiding the markets is not an appropriate reaction. One who "flies" to quality under the circumstances will buy bonds at near all time high prices. The safer route is to own quality stocks.
My family takes an aggressive approach. We own quality stocks but we also own many more aggressive positions. Right now, high yielding blue chip stocks are good bond substitutes. I know many advisors would disagree, but good quality high yielding stocks are typically less volatile than bonds and even go up during recessions. The current yields on many quality stocks are higher than bond rates.
BUY THE BULL! THE GROWTH STAGE FOR CELL PHONE AND INTERNET TECH IS READY TO ENTER THE ACCELERATION STAGE. NEW EQUIPMENT AND SERVICES WILL BE ADOPTED BY MILLIONS OVER THE NEXT FEW YEARS. BONDS ARE NOT GOING TO BE ATTRACTIVE INVESTMENTS IF ECONOMIC GROWTH IS STRONG. STOCKS SHOULD OUTPERFORM REAL ESTATE, BONDS AND CASH!
Current Value of the SOW Portfolio: $74,772.39Simple Return: 17.53% ~~>~>~~>~>~~>~>~~>~>~~S & P 500 Value : $71,776.69
Simple Return: -.04%~~>~>~~>~>~~>~>~~>~>~~Treasury Bond Value : $69,892.42
Simple Return: 2.84%~~>~>~~>~>~~>~>~~>~>~~As you can see, our STOCK OF THE WEEK portfolio continues to outperform equal investments in the S & P 500 index and in the TLT Treasury Bond index fund. write me
Big performers include airlines stocks (AMR up 33% and CAL up 65% over purchase prices)GME continues to soar at 68% growth and USG at 29%. J. Alexander, Team Global and Russell Corp continue to lead income potential for the total investment package to date with 28%, 24% and 22% respectively. Be sure to check out Kupsky's review of this week's Stock of the Week to see if it's a pick you want to include in your portfoio. Past performance does not guarantee future performance. We make no recommendations! Please call or write if you have questions about how to make money in stocks, bonds and real estate. You can reach me during office hours at 336-778-0543 or
The bombs in London are not a pleasant matter but the market has taken them in stride. The resolve to stop this evil will grow. It is sad to talk about this in terms of economics rather than in terms of the life of humans, but the economics will be the catalyst for change. The economy of every country in the world is hurt by these actions. It makes sense for countries from Saudia Arabia to South Africa to support a crack-down on terrorism.
In recent months, it has been as if America was alone in fighting the terrorist. Yes, Britain and other countries have troops in Iraq, but even the American public has been losing its resolve. Support around the world will grow for stronger police action.
Airlines were the hardest hit stock group this morning but even these stocks are well above their winter lows. The decline is moderate. The oil price dropped off a little because the economies of the world will not grow as fast as long as the treat exist.
When I started writing this the market was holding but down sharpley. I was interrupted and came back two hours later to find the market is about to break even.
The BULL IS ALIVE!
Jo-Ann Stores Announces June Sales Results
Our Stock of the Week selections are doing very well. My assistant still has not gotten the hang of how to compute returns but the stocks are doing well. We will post corrected returns as soon as possible.
One of our selections, Jo-Ann Stores, continues to grow the business. Sales increase in June by 4%.
BUY THE BULL! IT IS A RARE DAY TO SEE STOCKS SELLING AT A DISCOUNT TO BONDS!
BOND BUYERS SHOULD CONSIDER SWITCHING TO AAA GRADE HIGH YIELDING STOCKS! THE HISTORICAL VOLITILITY IS LOWER THAN LONG BONDS AND THE LONG-TERM RETURNS ARE SIGNIFICANTLY HIGHER. AAA GRADE HIGH YIELDING STOCKS EVEN BEAT THE S&P 500 97% OF ALL 10 YEAR PERIODS. THE BIG DIFFERENCE IS THAT THESE STOCKS HAVE NOT HAD A LOSING 5 YEAR PERIOD AT ANY TIME IN THE PAST 50 YEARS. INDEED, THESE STOCKS TYPICALLY GO UP DURING A RECESSION!
From the British Isles to the Australian Coast, central bankers are considering lowering short term interest rates. The inflation concern is almost over.WSJ.com - Senate Approves Cafta Trade Pact, Delays China Vote
BUSH IS ON A ROLL!
The Senate continues to go along with Bush on legislation after legislation. Graham and Schumer provided cover by attacking China and the Senate passed Cafta--Wow!
Free trade with Central American nations will help continue the US streak of low inflation. It will lift the standard of living of our neighbors.
BUSH IS ON A ROLL! IS IT POSSIBLE THAT SOCIAL SECURITY REFORM WILL PASS? I BELIEVE THE MARKET WOULD EXPLODE!
WSJ.com - Rite Aid to Open In-Store Clinics
Drug stores are opening on site health clinics. This could be big!
WSJ.com - Disney to Enter Cellphone Market, With Kids in Mind
Disney and many others will offer mobile phone service. The marketing will be handled by Disney and FON will provide the service. Children should carry cell phones for safety and convenience.
BUY THE BULL! THE SUMMER OF 1982 WAS THE LAST TIME STOCKS WERE THIS CHEAP RELATIVE TO BONDS! THE S&P WAS DOWN EARLY IN THE YEAR BUT TOOK OFF IN AUGUST. THE S&P GAINED 22% IN 1982 AND ANOTHER 23% IN 1983!
WSJ.com - Delta Air Lines Reports June Traffic Up 4.7%
HIGH VOLUME LEADS TO HIGH PRICE!
My wife and I rented resort property condos for 20 years. Setting rental rates was always the toughest job. Most people set their resort rates by playing follow the leader. If the market leader raises rates 6% then the followers do the same. The trouble with this strategy is that the leader does not tell his competitors about discount plans offered.
The best way to set rates is to adjust based on volume of business. If the last week of April in 2004 is booked solid, then one should raise the price for the same week in 2005. If the whole summer is booked solid, the company that does not raise its price is leaving money on the table. Of course, those who raise their price too much are apt to lose money to vacancies.
DAL is just one more airline enjoying very high load factors. In the sort run, airlines will continue to struggle to make profits--fuel costs are high and fares are relatively low. However, the public is flying again. Business travel is exploding. Coach seats are being taken out and first class seats are being added.
Seat prices are ready to surge. High loads and high seat prices will result in a multiplier effect of much higher total revenues. It does not really matter if oil prices are up or down from here, airline profits are ready to surge.
DAL and NWAC have not avoided bankruptcy yet. UAL and USA are not out of bankruptcy yet. Competition is keen. Caution is recommended.
My family owns more CAL than any other stock--more than double the amount of Google. We also own shares in AMR, AWA, DAL and NWAC(in that order of position size). We added more AWA recently. (We also recently added to our DRI and WMT holdings.)
A bomb on a plan would hit our stock prices pretty hard. However, we are confident that the business is recovering. It is such a leveraged business that we believe the upside is large. Buy at your own risk!
BUY THE BULL! GREENSPAN IS NOW FACING A RISING DOLLAR! THE SHORT TERM INTEREST RATE INCREASES HAVE DONE THEIR JOB! THE MARKET IS BEING PRESSURED NOW BY THE INCREASE IN THE DOLLAR. ONLY A FEW MONTHS AGO, NERVOUS NELLIES WERE FRIGHTENED BY THE FALLING DOLLAR. THE STRENGTH MAY CAUSE A TOUGH TIME FOR INTERNATIONAL COMPANY EARNINGS BUT FOREIGN BUYING OF US STOCKS SHOULD TAKE OFF. BUY THE BULL!
WSJ.com - Air Deals on Site for Immigrants
Airlines are continuing to cut fares when it helps them eliminate travel agency fees. As demand is high and empty seats getting scarce, legacy carriers will gain back advantages from discounters. It does one no good to fly at a discount if he can't get a connecting flight.
BUY THE BULL! A CLASSIC TURN AROUND IS COMING IN THE ARILINE BUSINESS. USE CAUTION--NWAC NOR DAL HAVE CLEARED THE BANKRUPTCY HURDLE YET.
WSJ.com - France Telecom, Microsoft Forge Product Alliance
Deals are being made fast and furious. Disney and FON, ESPN and FON, France Telecom and Microsoft, NOK and INTC, etc. BT is now offering hybrid cell/internet phones. I expect at least one or two of the big cable companies to offer cell service soon.
We are approaching the time when there is rapid adoption of new high tech service combos. A good rule of thumb is to invest in new technologies before you buy them for personal use.
BUY THE BULL! STOCKS ARE CHEAP RELATIVE TO BONDS AND REAL ESTATE!
Barron's Online - Texas Instruments Calling
BARRON'S IS HIGH ON ONE OF MY FAVORITE STOCKS!
TXN is a good company to own. The company makes superior products in many areas; including cell phones and video displays. Read the Barron's article if you subscribe. BUY THE STOCK TO MAKE SOME MONEY!
IN THE NEXT FEW YEARS, BILLIONS OF PEOPLE WILL PURCHASED ADVANCED CELL PHONES (POCKET INTERNET WIRELESS COMPUTERS). BUY THE BULL!
WSJ.com - Spam Blockers Duel For Industry Backing
Email commerce will take off as soon as industry standards are set to get rid of most spam.
Sign me up!
WSJ.com - UnitedHealth Agrees To Buy PacifiCare
In 20 years, my family has made 120 times our money on United Heath Care and the predecessor company. UNH is buying Pacificare which will put UNH in range of being the biggest. What a company? What a management team? Some people buy based on PE ratios and other foolishness:-). We are happy to get on a good horse and ride!
The BULL is now worried about dollar strength; how can both dollar weakness and dollar strength be bad for the stock market? There is always lots to worry about. THE BULL WILL RUN AGAIN!
Bill Cara: Return Monday July 11
Bill Cara lost both his parents this week. Bill reports that his parents were married for 65 years and died within days of one another. Our thoughts and prayers are with Bill and and his familily.
The Internet Stock Blog: Jim Cramer the coin-flipper? (TSCM)
In earlier blogs I have pointed out the Jim Cramer can turn on a dime three times in a week. The internetstockblog reports that a study shows this to be true. The study shows that Mr. Cramer is right about 50% of the time and that he swings from optimism to pessimism and back again over very short periods.
The appropriate general rule to remember is that short term trading is 50/50 over the long term; just like coin flips. The reason is that stocks trade not on value but on emotion times value. Investors run in crowds like a heard of cows. In 1999, stocks were over-valued the entire year but the stampede was into stocks. By October of 2002 the stampede was out of stocks.Right now, the stampede is still out of stocks. One might say the stampede is into real estate but investors are for the most part trying to avoid risk. Therefore the stampede is out of stocks and scattered into money markets, bond funds, real estate and insurance products.
Stocks are undervalued. Cramer can hop on or off the short term trend quickly. However, the smart move is to over weight stocks until the big move comes. As long as bonds and real estate are dear relative to stocks, it makes sense to invest new money in stocks.
BUY THE BULL!
My family has done well by buying Goodyear at the end of the last three recessions. This one is performing like the last two. Demand for expensive, heavy duty mining and construction industry tires is out the roof.
A friend has been making changes to his retirement account allocations. A month ago, his account was poorly structured and it was invested in high expense funds. He was virtually guanteed that his account would underperform any reasonable benchmark. This fellow is in good health. He expects to draw-out the least allowed by law starting in 20 years. His wife is the beneficiary. He or his wife are expected to live 40 years or more. He hopes to will the balance to his children. In summary, althought the duration of this account is 30 years or better, more than 50% of his funds were invested in bonds with an average duration of 4 years.
Old genererals and investors fight the last war. Investors are still shell shocked after the dot.com bubble. Many folks added funds to the market after it was at extreme highs. Now they are more afraid of capital loss than they are of inflation. Inflation is a much more certain risk than is loss of capital.
Which is more likely, that the stock market will be lower ten years from now or that food will costs more!
Surely if asked the above question, most people would agree that the price of food will likely be higher. They may grudgingly admit that they believe stock prices will be higher. Many still hide their money in the cash purchase of rental property, in bank cds or in bonds and bond funds.
What if their investment horizon is 20 years? Will food be higher? Will stocks be higher? Will interest rates be higher? A long-term view point makes capital loss pale in comparison to inflation risk.
I shared the following information with my friend.
Odds of losing money in the average S&P stock:
1 year: 24%
5 years: 6%
10 years: 1%
20 years: 0%
In answer to the above question, the risk of capital loss in 10 years is only 1% but the risk of inflation loss is 100%. 
Odds of earning 10% or more annually in the average stock:
1 year: 57%
5 years: 64%
10 years: 70%
20 years: 78%
Odds of averaging 10% with cds or bonds probably less than 1%
Folks hiding in bonds may not appreciate the interest rate risk or the inflation risk. The following table shows the decline in bond values if there is an increase in rates.
If rates rise .5%:
5-year bonds will decline 2.2%
10-year bonds will decline 3.7%
20-year bonds will decline 5.3%
30-year bonds will decline 6.1%
If rates rise 2%:
5-year bonds will decline 8.3%
10-year bonds will decline 13.7%
20-year bonds will decline 18.1%
30-year bonds will decline 21.1%
Investors sometimes ignor inflation because prices go up a little bit at at time. Interest rate risk is currently at historically high levels as interest rates are at historical low rates!
Another way to gauge the inflation risk is to look at ones retirement hopes. If one hopes to retire with a $50,000 annual income, one must adjust for the fact that in 20 years one will need about $100,000 for the same life style as $50,000 will buy now.
Those who currently earn less than $50,000 can count on social security for about half of their retirement needs. Those who earn more than $50,000 must save more than half of their retirement needs. The following table shows the percentage needed and the amounts provided by Social Security.
Income $40,000; % needed in retirement 71%; % provided by Social Security 44%
Income $50,000; % needed in retirement 74%; % provided by Social Security 37%
Income $60,000; % needed in retirement 75%; % provided by Social Security 31%
Income $80,000; % needed in retirement 84%; % provided by Social Security 23%
Income $150,000; % needed in retirement 86%; % provided by Social Security 13%
Bond substitutes: Solid, high yield, large cap stocks make good substitutes for bonds in this environment. There are several necessary points to consider.
1. Bond rates are extremely low.
2. Bonds could easilty decline 10% more in value.
3. The worst year ever for solid, high yield, large cap stocks was down 15%.
4. Dividend yields for many in this group are equal to or better than bond yields.
5. The investment horizon in this account is more than 20 years!
6. These stocks have never had a negative return for any 5 year period!
7. These stocks have beaten cash investments 95% of the time!
8. These stocks have beaten long-term corporate bonds 100% of all 10-year periods!
9. These stocks have beaten long-term bonds 95% of all 5 year periods!
10. In bear markets, institutional investors pile onto these stocks; they tend to go up when the market is going down! 
In summary, I am thankful that my friend allowed me to help him restructure the account. He and I compromised on the final allocation. The allocation had to be comfortable for him; after all it is his money. Never-the-less, we decreased his carring cost dramatically and increased his projected return by almost 2%! Two percent compounded over the next 30 or 40 years will make a huge difference
He now owns a more diversified account than before. I feel good. I have helped a friend make a higher rate of return while taking less risk!
BUY THE BIG BULL!
MANY FOLKS BEMOAN THE US SAVINGS RATE.
REALITY IS: SPENDING MAKES AN ECONOMY STRONG.
AMERICANS ARE CURRENTLY ENJOYING RECORD NET WORTH AND RECORD DISPOSABLE INCOME.
AS THE GM AND WAL-MART SALES REPORTS SHOW, AMERICANS ARE SPENDING MONEY.
CORPORATIONS ARE MAKING EXTRAORDINARY PROFITS.
STOCKS ARE CHEAP RELATIVE TO BONDS AND REAL ESTATE!
BUY THE BULL!
WSJ.com - GM Discount Spurs 47% Sales Gain
WHAT SOFT PATCH?
3.8% GNP
A LITTLE DISCOUNT GOES A LONG WAY!
Don't tell me consumers are tapped-out. GM offered a discount off high margin vehicles and is about to run the table. Chrysler is now ready to offer their employee discount to all. The gross margin on SUVs which receive import protection is sweet. In recent years, GM or Ford have offered every thing from cash back to zero percent financing. The latest campaign of offering the employee discount is another way to make an attractive deal for the buyer and seller. After all, we late in the model year when the best prices are typically available.
Low mortgage costs are helping consumers. Those who have lived in the same house for 20 years but have refinanced have lowered their housing costs by half! Smart home owners have locked in low cost financing for the next 30 years. As long as long term interest rates remain at historically low levels, consumers will continue to reduce payments or cash out equity.The fact that 78 million consumers are in the peak earnings and spending years of 46 to 59 years of age is an additional reason to believe that the economy is ready to strengthen. The combination of an empty nest and peak earnings is powerful. Restaurants, boats, RVs, recreation, second homes and travel will all benefit from boomers with cash.
A few weeks back, when I replied to a blog that I'd rather buy GM than HP, I should have taken my own advice. Those who need a high yielding stock should consider owning GM.
BUY THE BULL!
WSJ.com - Continental Air June Load Factor 82.2%
LOAD FACTORS UP 3 POINTS IN JUNE!
Continental is filling seats, 82.2% in June. Continental increased revenue per seat mile by 6 to 7%! For the year, traffic has risen 9.7% and the load factor has increased 3.6 points to 78.3%.
WOW! AN OUT OF FAVOR BUSINESS THAT IS BRINGING IN BUSINESS LIKE NEVER BEFORE!
In full disclosure, CAL is my families largest single stock holding. We will probably buy more airline stock this week.BUY THE BULL! A COUPLE MORE YEARS LIKE THIS ONE AND A NUMBER OF AIRLINES MAY EVEN HAVE BOOK VALUE! BUY AT YOUR OWN RISK!
WSJ.com - Euro Falls Against Dollar, Hitting 13-Month Low
DOLLAR STRONG--US ECONOMY STRONG--GREENSPAN ON TARGET
The European Central Bank may cut interest rates this week. The weakness in the European economies and the recent strength in the US dollar bodes well for the possibility of a rate cut. The US economy is doing fine. The "soft patch" produced a GNP of 3.8%! Some complain that the strength was in housing--so what? 
Lower rates around the globe will boost the world economy. The last time the earnings yield on the S&P 500 stayed above the yield on bonds for an extended period was the summer of 1982. The market from August 12, 1982 to June of 1983 was down-right explosive.
Conditions are ripe!
BUY THE BULL!
WSJ.com - M&A Activity in Japan Rises to Record Levels
BUY FIRST ASK QUESTIONS LATER!
Merger activity has been hot around the world. European companies have done more merger volume than US companies. In Japan, a record of 1,196 deals were announced in the first half.
I have written about how this seems like the BULL MARKET of 1983. In that market, company after company was under-value and was bought by take over specialist.
This past week, my favorite credit card issuer, MBNA was the second of the big card companies to be bought this year. Deals are being made in the US and around the world daily--boosting over all market returns.
IF YOU DON'T BELIEVE YOU CAN HIT A TAKEOVER, BUY VTSMX! THIS FUND OWNS ALL THE LISTED STOCKS. THE FUND SHOULD DO WELL IN THE COMING BIG MOVE!
BUY THE BULL AND HANG ON FOR THE RIDE!
WSJ.com - Wal-Mart Raises Forecast For June Same-Store Sales
I AM NOT A SHOPPER!
With the exception of book stores and the occasional trip to a Best Buy or a Sam's Club, Marilyn has to drag me to shop. Friday evening late, Marilyn asked me to go with her to Wal-Mart. As one who tries to be a good husband, I was trapped. It was almost 10 o'clock, too late to expect my wife go out alone. I couldn't believe the crowd at Wal-Mart!
Granted it is the 4th of July weekend. Never-the-less, Thruway Shopping Center and Hanes Mall were closed up tight while Wal-Mart didn't have more than a few empty parking places. I looked at the high definition LCD TVs and noticed that the 26 inch Sanyo was $689. I happened to know that the 26 inch Sony at Best Buy is priced at $1079. The Sony is a good looking model but $400 discount on $1079 is big. I showed the set to Marilyn and she agreed it looked "cheap". On the other hand the Sanyo wireless surround sound system at $279 looked like a real bargain.
I didn't buy anything. My wife bought groceries. I watched a steady stream of full shopping carts rolling out the door. These were not filled with just groceries. The merchandise included everything from fishing gear to auto supplies. This one Wal-Mart must have been selling Dvds at better than 200 per hour.
Wal-Mart didn't grow so large so quickly without offering value. I am not a shopper but when I do buy something I feel "safe" in paying the Wal-Mart price. I understand the reasoning but despise the "discount" cards one must use at most grocery stores. My families properties at Myrtle Beach are located near a Wal-Mart. When it is necessary for me to buy anything from paint to apples, I go to Wal-Mart. There is a Kroger just as close and it is a bit easier for me to find groceries in Kroger but the knowledge that the price is better sends me to Wal-Mart.
The company announced improving sales. Buy Wal-Mart and forget you own it; 20 years from now you will retire with assets.
BUY THE BULL!
STOCKS ARE CHEAP RELATIVE TO BONDS AND REAL ESTATE.
SHORT TERM SENTIMENT INDICATORS ARE THAT THE MARKET WILL CONTINUE TO REST A WHILE.
THE LAST BIG RUN--THAT STARTED IN OCTOBER OF 2002--IS STILL BEING CONSOLIDATED.
THE NEXT BIG RUN SHOULD BEGIN SOON--AT LEAST BY NOVEMBER!
WSJ.com - Debate Heats Up Over Successor For Supreme Court Justice
ONLY IN AMERICA
Although there are many possible nominees, my guess is Alberto Gonzales will be the next Supreme Court Judge. Yes, I am out on a limb here. First he has to be nominated and the conservative right will not be happy if he is the nominee. Then he has to be confirmed. The Democrats may have a harder time fighting Gonzales than many another pick. His views are considered to be on the conservative side of moderate by many. On the other hand, Demo crates have fought conservative minorities tooth and nail. Success by conservative minorities steals thunder from the far left agenda.
Mr. Gonzales is the son of a Mexican migrant farm worker. He would be the first Hispanic Supreme Court Justice. Mr. Gonzales should be nominated and confirmed because he is well qualified. All democracies muddle through. There are many cross currents in politics and the battle for the next two seats on the Supreme Court are critical. The American political "battle ship" is too big to make sharp turns but the Supreme Court make up can alter the course of history.
BUY THE BULL MARKET! STOCKS ARE UNDERVALUED RELATIVE TO BONDS AND REAL ESTATE! THE COURTS OF THE NEXT 50 YEARS ARE LIKELY TO BENEFIT AMERICAN BUSINESS!
WSJ.com - Deutsche Telekom Unit Is Hung Up Over Future
Consolidation is still needed in the US cellular phone market. AT&T wireless is gone, NXTL and FON will complete the merger soon but T-Mobile is still trying to hold a 10% market share. The largest cell company in the world, Vodafone, owns 45% of Verizon. Vodafone would like to control a US cell phone company. Verizon and Sprint use one of the two systems where as Cingular and T-Mobile use the other standard. Vodafone uses the same standard as Cingular and T-Mobile.
Wireless internet will be the big growth area for cell phone companies for the next many years. Google just made another deal to be the home page. Vodafone is likely to stay with VZ thus the Cingular deal to buy AT&T wireless has left T-Mobile out in the cold. The two big levers T-Mobile has are the ability to spend 10 Billion to upgrade to the new systems needed and the possible opening for Vodafone to compete directly in the US market. Cingular, FON and VZ would love for T-Mobile to be gone but not to Vodafone. Maybe Cingular will step up to the plate and take this one out.
As FON-NXTL investors, my family looks forward to the roll-out of high speed wireless internet-phone services. As consumers, we expect to enjoy using the internet on the road. We think it best for T-Mobile to sale but FON does not need the assets. Should Cingular or VZ buy T-Mobile, FON should benefit. In any event, we plan to hold our FON-NXTL investments. Land line phones are dying; long live FON-NXTL!
BUY THE BULL! STOCKS ARE CHEAP RELATIVE TO BONDS AND REAL ESTATE!
NewsFinder
WOW! One must wonder how big the battle in the Senate will be to replace O'Connor? Progress has been made on a lot of issues lately. For example, it looks like an energy bill is about to go through.
On the one hand, the senate has not confirmed Bolton for the UN. This implies that passing a judge will be extra difficult. On the other hand the "compromise group" has pledged to avoid filibuster. It should be a contentious debate.
The new court should eventually help consumers by reducing the red tape for businesses. A good economic period is ahead!
BUY THE BULL!
The Big Picture: Mortgage Rates versus Fed Fund Rates
A lot of folks have trouble with the idea that long-rates have held steady or gone down while short rates have gone up. I don't.
The very reason the fed has raised short rates is to fight future inflation; long rates forecast future inflation. Why shouldn't the market forecast of future inflation move down when it is clear that the FOMC is earnest about fighting future inflation. Most investors appreciate the fact that the stock market discounts the future. What is wrong with Greenspan and company raising rates well before inflation hits? So far this cycle, the FOMC has performed masterfully. The US economy is enjoying extraordinary growth and low inflation. What more can consumers, businesses or investors ask for?
Most folks incorrectly focus on commodity prices as the key to inflation. The world has changed. In the old days, the US was a manufacturing based economy. Now it is a service based economy. The current average cost of products is about 85% labor. The cost of services are often more than 85% labor. We will not have high inflation unless unit labor costs are rising at a fast pace. The FOMC is targeting something like projected unit labor costs. The Fed is trying to stay ahead of the curve. So far, the FOMC is clearly doing a great job!
All the talking heads can project future inflation and then argue about whether the FOMC is being too aggressive or not but we will know that the FOMC has been too tight only if the economy actually slows below trend. The only thing we can say now is the policy of the FOMC six months to a year ago was right on the money!
The current game being played by talking heads is to site backward looking numbers to prove that the FOMC is wrong. The revisions to GNP show that real growth is growing faster than the long-term history of our nation. The revisions to inflation show that the total number is not bad at all.
Much has been made about the revisions to growth. The revisions simply accounted for faster home sales than were originally reported. These numbers have always been subject to revisions for months and even years.
Conditions continue to be almost perfect for second home purchases. Second homes are now a significant and growing share of total home sales. Second homes now account for more than 6% of all mortgages. Second homes are a little bit like IPO's. IPO's are riskier stocks than seasoned securities and you have to "know" someone to get an allocation of shares. Similarly, you have to "know" someone to be allocated a preconstruction condo in the hottest markets. With second homes growing as a percentage of total home sales, it is natural that investors account for a growing percentage of mortgages.
Investors buy pre-construction, hold for a year to get long-term capital gains and then sale to boomers who can afford second homes. Builders must have 60% of high rise buildings sold before construction can start. Therefore, they offer good prices to those willing to buy pre-construction.
With a solid trend in place for boomers to own second homes, it is natural for our economy to be revised upward due to stronger than expected home sales. The talk about the real estate bubble has done the job of taking the edge off the boom but "the trend is your friend--never fight the trend". My family is gradually selling real estate into the rising market. This is the same way prudent investors scale out of heavy stock positions that have exceeded expectations. My family would like to sell all properties at the top but we are realistic investors. We expect to sell some properties too early and some too late.
A lot of folks don't remember the housing bubble we had in the mid to late 1980's but this one is similar. The fact is that prices of homes did not drop during the early 1990's the way commercial real estate dropped. Second homes are more volatile than first homes so resort areas may see actual drops in prices during the next real estate recession; not from current prices but from higher prices. My guess is the next real estate recession will occur sometime between 2009 and 2013. This is consistent with the history of an average of about 20 years between real estate recessions. The last real estate recessions were in 1990-91 and in 1973-74.
Calling the top of any market is very difficult. Bottoms are easy relative to tops. Bottoms are likely to be V shaped where as tops can take a long time to develop. Conditions are nearly perfect for continued high growth in real estate prices. Mortgage rates are very low, demand is very high and productivity has dramatically lowered the costs of construction. One can afford very much more home today than one could just a few years ago.
THREE LEGS OF THE HOUSING STOOL--COST OF MONEY--COST OF CONSTRUCTION--DEMAND
COST OF MONEY
Only a few years ago, folks were quick to trade-up to a bigger home when mortgage rates dropped below 9%. The cost of a $500,000 mortgage dropped to only $4,023 per month. Today the same $500,000 at 4.5% cost only $2,533 per month! THIS IS LIKE A 38% OFF SALE! THE SAME AMOUNT OF MONEY COST ONLY 62% OF THE PREVIOUS COST. The price of this money is now less than half of the costs during the housing boom of the 1980's! A 50% OFF SALE!
COST OF CONSTRUCTION
The changes in the construction costs of homes in the past 15 years are almost as big as the changes made in car construction by Henry Ford. When Ford invented the assembly line, he was able to double the pay of workers while cutting the cost of cars in half! Ford put thousands of companies out of business by taking huge market share. Millions of small home builders have been put out of business in the past 15 years as the "big boys" have turned home building into a science. Those of you who purchased and rode the home building bucking broncos have made fortunes. My family enjoyed huge profits on shares in this area but I must admit that we did not buy enough shares and we sold too early.
Even after years of dramatic productivity enhancements, most folks do not get the fact that in real dollars one can buy double the house today for the same real amounts.
DEMAND
We currently have more people in the United States who are at peak earnings than at any other time in history. Peak earnings typically happens for 50 year old workers. There are currently 76 million people between the ages of 46 and 59. The children have grown and the parents suddenly discover they are relatively rich. Parents are prime prospects to buy second homes and their children (the echo boomers) are at prime ages to buy first homes. The prior baby boom generation (those born after World War I) is transferring wealth at levels never transferred before. It is common for boomers to pass along an inheritance to an echo boomer for the purpose of buying a house.
The Elderberries cartoon makes another great point. It says that according to the UN 58 million people are between 80 and 90, 7 million are aged 90 to 100, 100,000 are between 100 and 110 and Dusty did not want to know how many were over 110! The point is that 30 years ago if grandma was still living at 70, she was probably living in the home of a relative. My Mom is 83 and she owns four homes! She bought three of them as first homes but kept two of them as rental property after she moved. She charges below market rents but the income is still better than bonds at 4%.
SUMMARY
Investors should not worry so much about FOMC policy. We have a master in charge who is standing on the shoulders of the past Chairman. During the Volcker-Greenspan years, short rates have gone from 21% to 3.25%. The current whining about an increase from 3% to 3.25% is unwarranted. The cost of money is very low, the cost of home construction is the lowest ever in real terms and demand has never been higher. While it is difficult to call any top, it is clear that we are not at a top at this moment. Indeed we are nearing the end of a FOMC tightening cycle which means we are closer to a medium term bottom than to a top. When it becomes clear that the FOMC has completed the job of beating back inflationary pressures, we are going to see a beautiful stock market. Ironically, the end of the short-term rate increases will mark the beginning of the end of the housing boom. Long term mortgage rates will go up when the market perceives that the FOMC is going to let the economy run. Business construction will increase and squeeze out the home buyer.
BUY THE BULL NOW! INVESTMENT CONDITIONS CANNOT GET MUCH BETTER! STOCKS ARE CHEAP! A CHART OF HISTORICAL P/E RATIOS SHOWS THAT THE S&P 500 OFTEN TRADES AT MULTIPLES OF 25, 30 AND EVEN 35 WHENEVER TEN YEAR BOND YIELDS ARE BELOW 5.5%. INDEED IT IS RARE FOR P/E RATIOS TO BE ANYWHERE NEAR CURRENT MULTIPLES AT EVEN 6% OR BELOW! INDEED IT IS VERY RARE FOR TEN YEAR RATES TO BE SO LOW IN THE FIRST PLACE. BONDS OFFER VIRTUALLY NO COMPETITION FOR REAL ESTATE! STOCKS ARE CHEAP RELATIVE TO REAL ESTATE! AVOID BONDS, REDUCE REAL ESTATE EXPOSURE, BUY STOCKS!
InformationWeek > Mobile Java > Sun, NTT DoCoMo Team On Java For Mobile Data > June 29, 2005
Wireless broadband services are set to take off. NTT DoCoMo and Sun have teamed up to offer next-generation mobile data services. RIM and Palm One have each exceeded earnings estimates. The power of mobile computing should not be underestimated.
Sun, Rim and Palm One have survived the dot.com crash. Investors should realize that the shake-out is over. The second phase of growth has started. This is part of the natural cycle of events.
When affordable cars were hot around 1914 to 1919, many folks bought cars. Investors in many companies were burned. Those wise enough to stick with the leaders such as Ford and GM made fortunes. Many other companies did well in the second surge. Note that while Ford had a big jump on GM, GM dramatically outperformed Ford during the second surge.
Surviving companies are well positioned to make big money for the next 50 years. Some will do better than others but it is a mistake to set out the second phase. The BULL is alive. He is resting in front of a major resistance area but he is alive. FON, MOT, NOK and others will do well in the coming surge. Some companies, such as VZ and SBC may lose more business in the "old line business" than they gain in "new line business". Consumers and almost all businesses will benefit from the productivity created by the new technology.
BUY THE BULL!
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