Category Archives: Stock Picks

Oil Demand Falling off a Cliff – (I’m still bullish on oil over the next 18-24 months)

An article by the AP on newsmax.com stated “Oil consumption will this year fall at the sharpest pace since 1981 due to the crisis afflicting world economies, the International Energy Agency said Thursday as it made new cuts to its forecast for crude demand.”

My Comment:  Thank You So Much Captain Obvious!  Global GDP is rapidily contracting, for exmaple, GDP (Annualized Q1 GDP from Q4 2008) US -6.3, Germany -14.4, Japan -15.2, Mexico -21.5.  With the major economies around the world contracting, demand for crude should be falling.  Will it continue to fall?  In my opinion no.  The global economy will recover over the next 12-18 months and demand for crude should rise again.  OPEC and other oil producers have been cutting supply and taking drilling units offline to stabilize the price of crude.  This will result in reduced supply (for a while) and at some point increased demand when the global economy rebounds.  The price should rise with less supply and more demand!  I recommended on this blog to buy oil in the mid 50s and I continue to think that is the right trade.

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Filed under Economy, Stock Picks

GE use of the term “great” plunges along with the stock price

ge-great

My Comment: Okay this is not scientific, but kind of funny.  Morgan Stanley created the “GE Greatometer” which basically tallied all of the times the word “great” was used during their quarterly investor call.  You can see as the use of the term “great” falls so does GE share price.  My question is, doesn’t Morgan Stanley have anything better to do right now?  On a serious note, pay attention to GE’s earnings announcement on 4/17, this will be a big announcement for the overall market and GE.  GE’s CEO has mounting pressure to deliver because large and small investors alike are losing confidence in GE.

 

 

 

Chart Source: www.bloomberg.com

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Filed under Credit Crisis, Economy, Humor, Stock Market, Stock Picks

Corporate earnings season starts tomorrow. It will be ugly.

burningmoney

My Comment: Q1 Earning season start tomorrow with Alcoa (AA) and will conclude with Wal-Mart on May 14. This season will be ugly. I expect both the top and botton lines to fall off a cliff. The common theme will be weak consumer demand and no cap ex spending as corporations continue to cut spending on computer upgrades and machinery. I’m on the record as saying this rally isn’t real and the next few weeks will prove it, or I could look like a donkey. Here are some of the impact earnings annoucements coming up: Alcoa (AA) 4/7, Intel (INTC) and Johnson & Johnson (JNJ) 4/17, JP Morgan (JPM) 4/16 and Citi (C) and (GE) General Electric 4/17, IBM & Bank of America 4/20. The financials component of the S&P 500 is expected to show a 40% year-over-year decline in profits. Analysts and investors are braced for crappy numbers, but what will either make this rally succeed or fail will be what companies have to say about the outlook moving ahead.

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Filed under Economy, Personal Finance, Stock Market, Stock Picks

IMF Chart On continued weak commodity prices – I’m not so sure

 

 commodty-prices

My Comment::  Watch copper and crude, they should rebound first.  Two weeks ago in this blog I said I like crude for the medium to long-term in the mid-forties.  Crude will bounce around on news of demand shifts, economic outlooks, etc.  However, over the next couple of years, it should move higher as the global economies rebound and supply cuts from OPEC. 

IMF Report: Commodity price declines have not abated and have led to massive
terms of trade shifts.  Looking forward, commodity prices are unlikely
To recover while global activity is slowing. (IMF Report)

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Filed under Commodity Prices, Credit Crisis, Economy, Investment Ideas, Stock Market, Stock Picks

Insight into today’s Consumer Sentiment reading

consumer-sentiment

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Filed under Asset Allocation, Credit Crisis, Dividends, Economy, Personal Finance, Stock Market, Stock Picks

Target date asset allocation funds miss the mark!

 

In theory I have always been excited about target date asset allocation funds because I have seen the bizarre and down right scary portfolios individual investors have constructed.  I get asked by inexperienced investors how they should allocate their retirement accounts and usually start with telling them to take a look at target date funds.

 

However, I was wrong.  This bear market has shown these funds to be disappointments. Target date funds providers are cheating!  Shorter target date funds are much too heavily invested in stocks.  For example, those retiring in 2010, which is about a 1 year time horizon have anywhere for 59% to 48% percent of their portfolio in stocks.   Why would these fund families allocate so much to stocks?  Mutual fund shops sell performance numbers and the marketers realize in bull markets you get better performance numbers by investing in stocks compared to boring old bonds.  As a group, target date fund providers invest too much in stocks because they need competitive performance numbers. Without strong performance numbers what will those NFL halftime commercials of the guy rowing a boat, riding a bike or climbing a mountain have to tell you about how their funds?

picture7

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Filed under Asset Allocation, Investment Ideas, Personal Finance, Stock Market, Stock Picks

Random thought of the day

jim_cramerThe S&P 500 is up almost 20% over the last 12 trading days? I suspect even Jim Cramer’s followers made money!

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Filed under Humor, Jim Cramer Sucks!, Stock Market, Stock Picks