Sniffing Aeroplane Glue and Stock Market Investing Don't Mix

[tabs]

What would I do without my Mother? I'd probably be lieing in a gutter in Calcutta.

This whole Stock Market thing has got me in a panic, and I was about to piss my pants, so I called Mother and said, " Sell, sell, sell everything...NOW!"

Mother was beside her self and said,
Have you started sniffing airplane glue again? I knew that ***** would rot your brain. Boy what a dumb fk you turned out to be. This is the correction I have been waiting for and I'm happier than a pig in *****, don't you fking know that Beverly Hills Mansions are on sale cheap? Take a look at Bank of America, Citi Group, Hersheys, Disney, Coca Cola, Cheese Cake Factory all strong companies with low debt ratio and lots of cash or are growing fast. Its low risk to reward time. " Calming down a bit I quiered, "Well then Mother what is causing this Global Meltdown of Stocks?" Mother said, "Geez Boy, I don't know could it possibly be that it was caused by the FED raising the MARGIN RATES on Commodities (oil and metals).. that has ended the party of easy money and the cockroachs (Speculators) have scurried away. Leaving Blue Sky and Pie ahead for the rest of us. "Oh" I said. She said, "And my favorite piece of pie is Eastman Kodak. Bill Miller has scooped up 9% of the Stock and he is no dummy with 15 straight years of profit for his clients." I said, ""Who is Bill Miller." She said, " Look him up, you can do that can't you?" I said, "Yeah!" http://www.leggmason.com/ With that I felt so much better I decided to call it a day and build myself another model aeroplane.

[M.D. Holloway]

Buy 10,000 shares of TAH on the Toronto exchange - I will collect my 7% commission when you sell!

[tabs]

I guess I'm not the only one sniffing the glue. Why would I pay $2.48 for a $0.50 stock with 250,000 shares a day volume?

[tabs]

I'm really surprised my little fable hasn't gotten more play, I guess more of U boyz have bin at the aeroplane glue for longer than I thought, as it has clouded your vision.

I tell U all somethin I got postions in every one of the stocks I mentioned..so Daddy my money is on the line. Mother is no dummy when it comes down to the biz, as can be testified to by her friends and clients. This is literally the first time in 10 years that I have been so heavily weighted in Blue Chip Stocks and why is that? Because this is the first time that they have been on sale. As Mother said Beverly Hills mansions on sale cheap. Take a look at the dividend yield, it approachs Money market yields. The move has allreaady been on for most of these issues, but it has gotten no air play. Its all been on the quiet. When a very successfull big Instutional Money Manager picks up 9% of Kodak the game is afoot my dear Watson. However I guess its not flashy enough for the glue sniffers, they would rather be the sheep and make plays off of yesterdays news.

[M.D. Holloway]

Originally posted by tabs
I guess I'm not the only one sniffing the glue. Why would I pay $2.48 for a $0.50 stock with 250,000 shares a day volume?

Tabs - this time next year it will be trading at $6. Best look at INCO as well...

[tabs]

Lubby U havn't answered the question of WHY? Why is it going to be trading at $6 a share? The Oil and Metals sector have had their day. With the Fed raising the margin rates the energy and metals bubble is deflating as we speak. As U know when a sector is out of favor even the fundlmentals of a company don't matter much. Nobody wants it.

This is a $0.50 stock that over night jumped to $2.50 and it is thinly traded at 250,000 shares. If one day everybody decides to dump their shares, there is NO FLOOR. Why do I want to take the RISK? I might as well be playing Poker, a $100 can get me $300 on a good night.

[GDSOB]

Watch the thinly traded stocks - Price may be propped up by employees trading within their retirement/401k funds. I worked for a company that offered no fee trades on the company stock. Order taken were executed at market open at the previous days close. A group of guys were trading enough at the same time to move the share price at the opening to cover the sell order. They thought they were frickin geniuses until corporate put the kabosh on it.

[einreb]

Originally posted by tabs
I'm really surprised my little fable hasn't gotten more play, I guess more of U boyz have bin at the aeroplane glue for longer than I thought, as it has clouded your vision.

Your 'reasoning' isn't any more sound than Lube's. History points to another run into the 8000's.

Maybe mother is trying to simplify it for you. There is a dead cat on a trampoline that will eventually hit the lawn. Could be another ten years to a solid bull again. Serves the f'ing earth salting boomers right. They'll all be to senile to enjoy their money.

B.T.W. if you use a BBQ sauce with corn syrup as a sweetener... WAYSA?

[scottmandue]

Originally posted by tabs
What would I do without my Mother? I'd probably be lieing in a gutter in Calcutta.

You say that like it is a bad thing.

[tabs]

Scott didja ever taste Calcutta gutter water?

I'm the one who simplifies and embellishs what Mother says.for dramaitc effect. Those companies that I listed above have allready provided me with a nice return for the year, and not only that they are defensive in nature, so I havn't given back much of my gain in this latest Market decline. Going forward they are also going to be the ones that will do the best when the Market rallys. As Mother says the money has quietily been going into those stocks. Also this is the 1st time in 10 years where I have had been so heavily weighed in Blue Chip Stocks.

I have equated some of the Boyz who are DABBLING in Shorts to sniffing aeroplane glue. I have done so because I don't take their efforts as being a SERIOUS investment because of the risk involved, and they get more or less of a high in taking that risk. Its kinda like playing Roulette. However what I have posted are where I have put some serious money, these are the for REAL investements. Mothers job is not to play around with risky investments but to provide me with solid returns, and to do that you have to manage your exposure to risk.

[M.D. Holloway]

Originally posted by tabs
Lubby U havn't answered the question of WHY? Why is it going to be trading at $6 a share? The Oil and Metals sector have had their day. With the Fed raising the margin rates the energy and metals bubble is deflating as we speak. As U know when a sector is out of favor even the fundlmentals of a company don't matter much. Nobody wants it.

This is a $0.50 stock that over night jumped to $2.50 and it is thinly traded at 250,000 shares. If one day everybody decides to dump their shares, there is NO FLOOR. Why do I want to take the RISK? I might as well be playing Poker, a $100 can get me $300 on a good night.

Tahera (TAH) consolidated, drove the price up a little. They signed a contract to supply Tiffneys with 50% of their roocks for the next 10 years. The Jericho project is yeilding at least 1.5 carots per ton (public knowledge) in actuallity it is more (not so public knowledge). The have been mining better than 28,000ct per month. They have held their operation dollors to a scant minimum. Tehy are fix'n to start pick'n at the Kimberlite pip at MuskOx in the fall - good time cuz the ice roads will be backl to get fuel and equipment in. They run real thin - for starting a mine on 10mil and pulling profit before the 1st fiscal year? Pretty impressive - also, for what itr is worth, when yopu have the ops personel et al throwing plenty into on their own makes you want to give it a look.

Hay TABS, its always a gamble but seeing the ops first hand and knowing someing about the biz, I would say it is better than even that the stock will go up. As for the other minerals, the appitite for nickel is big, need Ni (lok at INCO and Falconbridge) for steel and China is going full bore. Also, the potash and coal mines are going crazy - potash is a base for the ag industry and coal, well I don;t have to bring and intel to that arena.

Oh ya, the last reason I am telling you this is because I am just the type of rumphead who will say "Toldyaso!".

[beepbeep]

Stock market is vaguely cyclical with hints of randomness and also sensitive to external effects (crisis etc.)

It has been climbing for quite a long time, It's time for it to go down to sane levels again.

[tabs]

Corn syrup adds no flavor, just sweet.

Now I know the reason to buy some.

[jyl]

tabs, only have time for a quick reply - so can't do your post justice. But, quickly -

I'm bearish on the stock market, for the medium-term at least. I'll do a cut and paste below, don't have time to retype.

In the longer run, I think the market starts a substantial and sustainable rally. New economic cycle starts. Oil and commodities rollover (speculators' comeuppance, new extraction/reuse technology, or simply demand destruction). Housing in multi-year decline, people need somewhere else to put money (you've been saying this for a long time).

But that could be a year or more away.

During that year, I think there is some risk of a 1987-style event (only small risk, but more risk than usually) and high risk of a grinding bear market. If we don't get those, my bet would be on a choppy market that is volatile, exhausting, and goes nowhere.

For the market to quickly stabilize from here and resume a strong rally seems like the least likely scenario to me. Why should P/E multiples expand? There's no denying we're late in the econ cycle and growth is slowing. When your P/E goes from 20X to 18X, that cancels out a lot of EPS growth.

So, in my outlook, I think you're absolutely right that the big bluechips with international exposure will outperform the market. But I'm not convinced they will outperform cash.

Cut-paste:

From 4/25/06 The real reason gas & oil prices are so high (not a joke)...

The stock market is counting on the Fed being done, or one more rate hike away from being done.

Oil is feeding inflation into the economy. Govt economists deliberately disregard much of this by focusing on the so-called "core rate" of inflation (ex food and energy), but even by that artificial measure inflation is bumping up against the upper level of what the Fed would like to see. In the real world, inflation is already past that upper comfort level.

The Fed may keep raising rates, longer than the market expects. That's bearish.

Or the Fed may stop raising rates and lose control of inflation. Long-term interest rates will then take off, reflecting expected future inflation. That's bearish.

Corporate profit growth is very strong, corporate profit margins are at near-peak levels, and corporate balance sheets have record amounts of cash. Where do you go from "very strong", "peak" and "record"? Most likely, you go down. When corporate profit growth stops accelerating, margins fail to hit new peaks, and cash balances fail to set new records, that's bearish.

I look at a couple of different stock market sectors. In tech I see the semiconductor cycle peaking with inventory levels rising and demand slowing. In healthcare I see high valuations and growing political and insurer push-back on drug and service costs. In consumer I see an over-extended consumer with zero real income growth, record levels of debt service, spending outgrowing income for too long, and the home equity ATM about to shut down. In financials I see rising rates pressuring spreads and the mortgage business about to roll over. Cyclical companies are doing great, blowing out the earnings, and the rule with cyclicals is that when business is great you've got to sell the stocks because the next move is down - that's why they're called cyclicals. This is bearish.

I guess I feel pretty bearish.

From 5/17/06 Wall St. is such a SCAM - See chart

ome thoughts in no particular order:

Government is quietly but actively pursuing a weak dollar campaign in hopes of reducing the trade deficit.

Political tensions in oil-producing regions are not abating, Iran being the prime example.

High oil prices are starting to dampen demand, but not much yet. US is still on track to use more oil than 2005, China too.

Global economy's demand for raw materials, especially metals, is not yet being dampened, and commodities prices are high.

After 4 years of economic recovery, wage inflation is finally starting to appear.

Weak dollar, high oil prices, rising wages, high raw materials prices are all feeding through to consumer prices, in other words inflation.

Inflation is slowly warming up, not just headline inflation but even core inflation which has food and energy excluded.

Bernanke's job 1 is to be viewed as an inflation fighter. Fed will continue raising rates as long as inflation remains a threat.

Market has been prematurely celebrating the end of Fed tightening for a year now, driving higher in anticipation of rates finally stopping their rise. Well, Fed isn't done. (And market was probably going to sell the news anyway.)

10 yr treasury yield is currently around 5.5% (don't have exact # here). Looks like headed to 6%, at least.

The last time 10 yr was yielding 6%, in early 1990s, S&P trailing PE was 2 points lower than today. Multiples stll have room to contract. 2 points off 15X is -12% ish.

In early 1990s, economy was recovering from a major recession. Year over year growth of forecast EPS peaked in 1995.

The current economic recovery is getting old. Put another way, we are getting late in the economic cycle. Remember, economy bottomed 4 years ago.

Late cycle sectors typically include the industrials and materials. Industrials and materials have soared in past year. They may have come too far too fast. No other sector appears ready to take over leadership.

So market internals have been awful. The chart of S&P looked great, going up like a ruler. But things like advance-decline ratios, % of new highs, etc have not been good. I am not a market technician, but the smart technicians I know have been telling me about the bad internals for 6 months now.

Fundamentally, stocks are also losing steam. Year over year growth rate of EPS forecasts peaked 1 1/2 years ago. Forecasted growth has been fading ever since. The peak in momentum is visibly well behind us - not in front of us as investors thought in 1995. So why shouldn't we go to P/E of 1995?

This is also a mid-term election year, with a very weak President. Investors dislike uncertainty, and market often struggles in election years. Won't see action on budget deficit in election year, party in power tries to buy votes with spending and tax cuts.

We are also entering summer. Market often struggles during summer months. I'm not clear why. The old cliche is that Wall St goes to the Hamptons so volume shrinks, seems too simple. Another possible reason is that we enter the year with over-optimistic forecasts for EPS, and those forecasts get taken down each quarter until they are too low by 4Q, then companies beat the numbers and market is strong in 4Q. Not realy sure.

Then add the housing bubble, if you are a believer there. I am.

These are all some explanations for the stock market weakness since March.

I'm short the NDX w/ rest in cash, have been so late Feb, so I was too early but I am now making some money.

I do not know if we are headed into a genuine economic slowdown or worse, a mere so-called "mid-cycle correction", or simply a quick selloff followed by a resumed rally. I personally think it is one of the first two, actually leaning to the first. But anyway I figure the trend is now my friend. COMP has broken down, through 50 day MVA, 100, now the 200. NDX looks worse. SPX broke through 100 day now approaching 200.

You can argue market is oversold. VIX and VXN have shot to highs, RSI is at lows, I'm guessing market bounces this week, COMP and NDX go back up to 200 day. I bought some stocks today, trying to hedge my NDX short. If COMP and NDX can't break back above 200 day, then I expect to see the market really get scared.

Anyway, probably more than anyone really cared to read, sorry.

I agree BTW that if you have a reasonably long investing horizon, more than a few years, then this stuff isn't really important. As long as you're not investing at the top of a historic stock market bubble - which this isn't, that was 6 years ago - your chances of making money are very good.

Disclaimer: Not investment advice, merely my personal thoughts, and so on.

[Moneyguy1]

Eastman Kodak?

As a former resident and one time employee (way back, I confess), I wonder about the viability of the company. For decades, only those who had never been employed elsewhere were considered for management jobs. At the ripe old age of 28 with a new Master's, I was told "If we hire you, don't think you will ever be considered for upper management."
Their management was inbred and brain dead. Until the late 60s, their balance sheet was "Assets = Net Worth". They had no corporate debt and 64,000 employees. They got into the instant camera market, were sued by Polaroid for patent infringement and lost Polaroid's contracts for film and lenses. They were approached by a gentleman who had an idea for a copier. They turned him down: "We already have one." He went to a little company called Haloid. They gave him a little lab, modest funding and the result was Xerox. In 1970, they built a manufacturing facility in an adjacent town and by 1998, had abandoned the entire site. Shall we go into the denial that digital photography was the wave of the future? How about their selloff of their Vitamin division or more recently a large part of their R&D? How about their current strength of about 16,000 employees with news that another round of layoffs is on the horizon?

They may be available for purchase by some other company, but who would want them? The City of Rochester has become a shadow of what it was in the 60s when it was referred to as "Smugtown USA".

[M.D. Holloway]

Originally posted by tabs
Corn syrup adds no flavor, just sweet.

Now I know the reason to buy some.

Times are good - people buy Diamonds cuz they can

Times are tough - people buy Diamonds to feel better or to show that they are not affected by the tough times.

Gold has risen, Diamonds are pretty strong - both look like a winner for many many more years.