wearmanyhats

GSK:  Told you to buy in around $47,  dropped a little to just under.  Remember, the market overall is sliding south.  Stocks like GSK will naturally slide with them.  Where you will make your money is whenever the market has a temporary sideways run.  If you do not want to invest during bad times even in good stock like these, stay out of the market.

WTS:  Today will be the only day I discuss WTS in a weekend roundup.  It really is just a throw in the portfolio for the kids and forget about it.

ABR:  Sadly, we wave this one goodbye with a loss.  It was a great dividend, though.  But the financials are no longer that good.

TELOZ:  Don’t buy yet, watch carefully.

RTP: I told you to buy in around $5 less than the stock closing price that day, which should have gotten you in at $375 or less.  It went up a bit then closed down.  Remember, this is a highly volatile stock, and you can expect a wild ride.  You need to have the stomach for it.

ARG: Like many other stocks, it is sensitive to market drops.  Too bad.  You can grab any time under $59 and be patient.

WIN:  Was the winner in the “How Fast Can A Little Stock Run” category for the week.  I mentioned to grab under $10 share and it closed well over $12/share, even was stable on Friday. Yay!

ERF: I had a profit number on Saturday of 48.  Well, it took off, like a bullet this week, starting off at $40 and ending the week over $43.  Wait to take profits.

BPT:  This bad boy is head of the class since we told you to buy in under $80 not more than three weeks ago.  Friday it went wild and closed up over $92.  There is no set date to take profits right now as oil will be running up again and we can ride that tidal wave with a surfboard.  Hang on and enjoy.

FRO: Here’s another star pupil.  I told you to grab at $56 ten days ago and Friday it closed at $60.  I liked it so much I told my Dad to grab it.  No sell order in sight. Enjoy the 14% dividend.

RBS: It has remained pretty stable in the $4 zone, and even went up this week compared to last.  Is it finally going to turn around?  We’ll see.

GLD, SLV:  I told you to buy in around $80 for gold.  It’s up for the week to $81.  I told you grab SLV like crazy at when it was at $13.28.  It’s up to $13.37.  Patience.  It’s still finding its feet.

OIH: I mentioned buying in under $186.  Well, it’s $184.  It could take a long time for this one to go north.  If you haven’t bought it, go with a few other star pupils.  If you have, be patient.  When oil starts up again, then it will come along for the ride.

PCU: Because of its poor green policies, I will no longer cover them.  I do not recommend them, though I did notice that they closed up overall for the week.

ESEA:  I told you to pick up at $11.90.  It’s been a good friend by running up to $13.43 at its close on Friday.  Hold and enjoy.

MMM: I told you to grab in at $70.  It closed up slightly for the week.  I noticed it is market sensitive.  If you can’t handle swings, this is not the stock for you.  Still, it seems to be headed in the right direction.

 Above all, watch real estate deals.  Be prepared to fund them with your own money or on contract for deed.  Have a good holiday!

It’s good to know there are stocks that don’t obey my desire to move upward like I command them to otherwise I’d my head would have to be hauled around in a truck.  Arbor Realty gave me an eye-popping $248 dividend recently, but shortly after I recommended it, the company released information about the restructuring of the loans it has out there.  It’s hit the stop loss area, so with a tearful goodbye, we must wave it on its way. When we see it head north, we can give it a grab.

After bidding a fond farewell to ABR, we turn our sights south to where Hurricane Gustov is inconveniencing the residents of New Orleans. Ever mindful of history , let’s examine an oil trust called Ted Offshore Trust (TELOZ), which has its off-shore drilling operations in the path of this newest hurricane menace.

I have watched TELOZ for years, and for many of those, the trust didn’t really move out of a certain price range, so jumping in and out on lows and highs made no sense.  Then one day after hurricane Katrina, TELOZ dropped to well under $10, which made it a screaming deal.  The rigs had been damaged in the storm  but investors had no idea how long it was going to take before it was fixed, nor how much those repairs would cost.  Then there was the dividend to consider. How would all this affect the dividend?  Investors bailed like crazy. At the time, I had no experience with how the TELOZ folks would respond to this kind of crisis.  They came through famously.  Everything was fixed quickly and within six months the healthy dividend was restored.

Fast forward toward today.  TELOZ reached a new 52 week high of $42 in late June when the price of oil was so high.  It began naturally correcting after oil took a dive, but now it’s dropping like a rock.  This is one stock that deserves to be grabbed soon, as its dividend yield is already a wonderful 14%.  If we have a repeat after any big storm, we need to buy with both hands, because the bounce upward and the high dividend yield will be tremendous.  I will be watching for you.

“You got an offer,” said my agent, Bob, over the phone. “It’s fair. And let’s face it, you don’t have a long line of people wanting to buy it.”

Thrilled, we accepted the offer, only to have another phone call later that night.  “There’s some issues,” explained Bob.  “Their credit isn’t too good.  But we’ll let the bank worry about it.”

I leaned back and thought about this “flip.”  It had not gone as fast as I had wanted.  The building had housed a factory, and we picked it up in the dead of winter for what I believed was a song.  It was packed to the rafters with “stuff.” There was an old motorcycle, portable fishhouses that never quite got made and sold, and hundreds of linear feet of wood.  The most daunting thing was 17,000 lbs of polypropelene/cotton mix that the former owner had used in his factory. No one wanted to buy the batting, as it burst into flame the second a match touched it.  Yes, it had been a chore to get it cleaned up, lengthened out by a sudden addition we had to build on our own house.  When the cleanup was close to done, we put it up for sale.  In the time we had held it, the real estate market had its expected correction.  We could still get a reasonable profit for this property. The best part of owning it was the adventure our sons had while we were working over there.  One had set up his archery set and gotten in good practice.  The other found grasshoppers, sticks that became his swords, and explored the long tall grass on the six acres.  We needed it sold, but the boys were sorry to see it go.

Within the next five days there were a flurry of phone calls.  One bank thought that it was no brainer, that there was enough collateral. Hours later they were not interested. Then there was our bank who was stopped cold by a medical bill judgement on the buyers’ credit report.

In the end, my agent was kind enough to negotiate a lease/option to buy, and a huge problem in my life was solved.  The mortgage was getting paid, and the place had a security presence.

Suddenly, my brother’s house had sold, and he was carrying the note.  Another property sold down the road, with the owners being the primary to the bank.  The banks, who have suddenly become tighter than a bowstring, are suddenly out of the loop of what used to be common transactions. Unless buyers have sterling credit, banks won’t touch them.  Sellers who want to  their property gone, take on the risk.

How does that affect you?  First, the profitability of banks will not be the same, nor will the losses.  That’s something to keep in mind when investing in bank stocks in the near future.  Once the foreclosures have evened out, and the banks get more solid, their bottom line numbers will be effected.  P/E ratios will be significantly changed, net profits may be lowered, but banks will be more stable.  Also, there will be more debt on individuals, which will slow down investors who normally grease the movement of our country.  There will be more rentals, and there’s a good chance interest rates will creep up. 

Though we are going to see some stability for a while, expect another round of higher gas prices, perhaps more foreclosures if the war isn’t dealt sooner.  The health of our financial system and normalcy in the real estate market will return when the financial drain of our wars overseas has gone away.

There is one sector that I hate to invest in and that is the drug companies.  But there’s not doubt that whenever there is a correction and then the sector turns around, you can sometimes hop on the coat tails of one of them and go for a good ride.  Such is the case of GlaxoSmithKline (GSK), which seems to be on the upswing.  This is a great time to jump in, then pull the gains off of the table when you feel the ride is over.

Why GSK and why now?  Well, the health sector is truly on the move upward, and has been for a little while.  GSK’s turn around seems solid.  The economy has relaxed since  the short term drop in oil prices, and this gives other sectors a chance to rise as well.  GSK’s net income seems to do nothing but go up.  Its P/E is a respectable 14 and the overall financial health of the company seems fairly strong. Schwab listed its profitability at 34%, a number I have not been able to verify elsewhere. But one thing was certain, the other companies that I compared them to did not have nearly that profitablity margin.

  While it would be better to see insiders buying like crazy, they aren’t really doing anything in the way of selling, either, so this would be a case of riding a short term bull in healthcare. If you can buy in under $47, then place a sell at $56, that might be what you can get out of it. You might have to sell out earlier at $54, but I’ll keep an eye on it, too.  Place a stop loss of five dollars under your enty price, then move it as the stock goes up five dollars.  This should protect your portfolio against any sudden weird foreign events which might spook investors and drop the market expedentially.

So why do I hate buying drug companies?  Because if there’s anything that will go wrong with a product, a whole slew of people sue and cost the company their profitability. There is also never a good time to buy in, truly.  For example, if you could have bought in on JNJ when there was Tylenol scare, that would have been great, perhaps.   But what about other drug companies where they have had to pay out for the damage their drugs caused?  Their share prices suffered terribly. The biggest hope for a drug company investor is that while their money is in the stock, no one gets sick off of the drug.

It’s a bit like chicken racing.  If you don’t do it very often, you might get lucky and win once.  If you do it often, you’re bound to get creamed. This is a get in and out situation, not a buy and hold.  Be sure to put enough into it to cover more than your commissions!  And good luck!

Back in 1999, the good folks at Charles Schwab held a series of workshops in Anchorage, and I was smart enough to jump at the chance to attend.  To give you an idea of how important of a transition period this was, let me tell you that online trades were at $29.99, (versus the 12.99) and there were still audience members who were raging about spending $120.00 going in and out of their trades at their traditional brokers. Online trading was still somewhat suspect.  The attendees were mostly retired, and some of them marveled at how young I was.  Most commented that they wished that they had started young with investing.  At that time, I had already been investing ten years and had been trading online for quite some time.

During a break, I entered into a conversation with an old gentleman who left an impression upon me that he must have been a risk taker of sorts.  “Yeah,” he said, “I bought a bunch of shares in The Chunnel.”  My eyebrow shot up.  “You know what that is?” he asked.  I nodded.  “Well,” he smiled, then shrugged.  “It didn’t cost me too much and I know I’ll never see it be worth anything in my lifetime, but I’m gonna leave it to my grandchildren.  It’ll be worth something in their lifetime.”

 That conversation left quite an impression upon me.  I wondered many times what stock I would buy and then throw into an account and never look at it again.  Could there ever be such a one? 

Today I came across one that I could feel good about tossing into an account and forgetting about.  It is one of the few that I think would probably be doing very fine in twenty years.  It’s Watt’s Water (WTS) and I think it will be worth far more in the future.

Now I can already hear the protests from the back of my brain.  The Chunnel stock was worth only pennies when the man bought it.  How does that compare with Watts?  Well, it is true that the comparison seems odd, but think about how important clean water will be in fifty years or even sooner.  Watts is one of the few stocks which benefits from the quest of what some folks call “Blue Oil.” 

There is a belief that water will become the most sought after commodity in the next twenty years or sooner.  There is evidence to support that hypothesis.  For example, consider that T. Boone Pickens and other such investors have been putting their money into private placements which are buying up water rights all over the world.  What will happen when the aquifers are owned by private companies?  It’s hard to say if that is what is best for the population of the United States, but that’s the wave of the future.

Watts supplies the materials to deal with water issues.  It purchases businesses that also manufacture water related devices.  It’s product is represented worldwide and every country on earth relies on some of their components to supply safe drinking water to their people.   And if you think about the sheer quantity of countries that are updating their water supply, someone like WTS will have an open door to generate more revenue.

So why do bring up WTS now? Consider that wonderful run up in oil price recently.  What if that were the price of water?  The shortage of good, drinkable water has not hit yet. How long will affordable water be there when we have eight billion people on the planet and more to come?  Right now WTS is still inexpensive now and on the rise.  It has a P/E under 20 and the insiders are trading like crazy.  They aren’t necessarily only buying, they are selling, too. So it is not a steal of a price, but it sounds as though the people who make a difference in the company know that this is a stock that will be doing well in the future. 

I bought Watts Water at 27 and got impatient.  I’m one of those people that like my numbers at the end of the month to be up significantly.  But if I had patience, if I had an account I didn’t see a lot, Watts is one I toss in and forget.  The future is brighter for and because of them.

It’s hard watching a stock try to find its feet.  You wonder when it’s a good time to buy in.  Such is the case of Rio Tinto Gold (RTP).  In a past blog or two, I told you to keep an eye on it.  Now might just be the time to act, putting in a buy at less than what it closed last night.  You can decide how much less, $5 or so less, but be prepared that at some point in time, it will probably go up.

 There were good reasons to have waited a bit before buying. First, it needed to find a bottom, and it had dropped to under $370.  But it didn’t stay long and has seemingly turned around.  But that alone doesn’t have my attention.

There’s the P/E, which has become a more reasonable 16.  It had been slightly over 22, and now has corrected into a better place.  There’s the fact that in yesterday’s press release has shown a huge increase in revenue as the company has adjusted its mining operations to meet the demand of a variety of different natural resources.  Those are all good reasons.  There’s the fact that gold is taking a well deserved breather, and eventually should push its way up even further as a new President will struggle with the headaches left behind by President Bush.  There’s a new agreement that Rio Tinto signed with Walmart, agreeing to supply gold that has been mined to a set of greeen standards, that looks very good. Anyone supplying Walmart is going to sell on volume alone and be profitable.  All these reasons alone should merit RTP to be in a portfolio.

But there’s more, and it involves a nasty fight between Billiton and RTP.  RTP doesn’t wish to be bought out by Billiton.  Billiton wishes to have them and a hostile takeover is on.  Unlike the 1990’s, where hostile takeovers can happen quickly and with little a company can do to stop it, this is stuck in the legal and governmental arenas.  Countries are now making it illegal to buy up the companies that harvest natural resources, so this battle will be in the hands of governmental officials. 

In the meantime, Rio is continuing to do business, but in a wise way.  It’s well diversified in everything from salt to uranium, coal to iron ore. It’s looking into expanding into copper in Arizona, a sure sign of a company that’s not sitting around waiting to be bought out.

No doubt the Billiton takeover has everyone nervous.  Not too long ago, they released a statement saying that Rio’s share price had no chance to stay so high if their company were to back off.  That’s probably a good reason why there is no insider trading, no fund trading. 

Larry Edelson, of the Martin Weiss Research group, is always pounding the table to buy gold. Although he hasn’t recommended Rio Tinto specifically, he believes that this dip in gold is a mere correction. He is probably right when he says that resources worldwide will stay in strong demand as the Far East continues to acquire economic clout.  If that’s true, and all points to that, then when gold again takes off, companies like RTP will move sharply upward.  It’s time to get on that train.

In 1978, I worked at a little ice cream shop, helping customers when they wanted to buy a cone or banana split.  It was just a little walk up shop in a small town in central Minnesota and was my first job.  First jobs are funny; you get to see people from all walks of life.  And one person I saw periodically was the dirty little man who walked all by himself around town. 

He never seemed to wear clean cothes, and he was skinny, though not emaciated.  His blue jeans and dirty coat arrived to the nose of people on the street before he did.  His face was whiskered, cut so that it looked like he took care of it himself without a mirror.  I heard later that he lived in a small, unasuming house with an outhouse in the back. I don’t remember his name, but there was no one else like him in town.

Then several years later, he died, and since he had no heirs, the representative for the state went into his house.  Inside the walls, in the mattress, and pretty much anywhere you looked was money.  The final number yielded over $1.2 million dollars just lying around, to be picked up as he needed.  He died without the comforts of our modern life, floating in money, and never even used it to install an indoor toilet.  I wonder about those days when it was forty below zero, and him sitting out there.  Did it ever cross his mind to put one in?

Fast forward twenty-five years. That’s how long I lived out of this area.  And more than once I brought up the subject of this dirty, little old man to various people who have lived most of their lives in the area.  My father, when I recalled the man, nodded his head respectfully.  “Yeah, I remember that.”  Then he shook his head, and I thought about how frugal my father was.  Yet even he could see the sense of a running toilet, or keeping his money in the bank.

Longtime residents who recalled the newspaper article always shake their head when I bring it up.  It is beyond comprehension for many of us to simly allow our money to lie around. Theft of fire could have changed this man’s fortune at any time.

My father reminded me of the man’s age.  “You see, toots,” he said.  “The old codger had lost his money in the bank in the 30’s.  Where should he have put his money so it was safe?”

How appropriate then, that we recall this dirty little old man today.  Friday night, late, the Feds closed another bank and began going through the process of handing out coverage for only the $100,000 in the insured accounts.  This is the ninth bank that has failed this year in this country and there will probably be more.   Will these failures lead to a whole new generation of eccentric mattress stuffers?

The Feds are not thinking of this little old man when they make a move on a bank.  Instead, they have been operating in a fairly interesting manner. They always wait until Friday night or a Saturday to shut down the bank, then they have a certain amount of time to get a handle on the books.  How terrible it must be for the people who know that on Monday morning, they might have only a third, or a fifth of their life savings left.

Five companies contributed to half of the problems that led to the failure of this bank, according to the Associated Press.  Imagine being the owner of one of those small businesses, or the shareholder in one of those development firms.  Imagine knowing that you were one of the people that cost this institution its downfall.  Imagine being the loan officers. 

The dirty little old man in the small town where I used to work kept life very simple.  Yes, he took risks with his money, foolish risks.  But they were just as calculated risks as anyone else took in some of these failed banks or some of the local banks that have not failed.  In many respects, we have more in common with that paranoid, frugal little old man that any of us care to admit. I will bet that in a few hours from now, there will be even more people who will have wished they stuffed their matresses with their funds than ever before.

These past two weeks have seen many stock recommends run through.  How are they doing?  Well, let’s take a look at a few:

 ARG:  Buy under 58.50 if possible, but you can settle for 59 if you want to get in on it. It’s been going up.

WIN:  It’s going down a little bit but should see a bottom.  The nice dividend will prop up profitability while it turns around to run north.  If you buy under 11, you can sell out probably around 14 and do well. Stocks like this usually run up before the ex date.

ERF: This is the time to buy them.  Sell out at 48.  Remember, their return is muted by the new tax law in Canada.  If you don’t want to deal with that, don’t buy them.

BPT:  Here’s the clear winner.  I recommended the grab at $79 or a bit above.  Thursday it closed well above $90.  If it blitzes up past $110 in a short time, take profits.  Otherwise, hold and enjoy the dividends while it grows. 

FRO: It’s hard to say if it has found its total bottom or not, but it is probably in the area.  Grab now if you wish at $56 with eyes to review for sale at $83 down the road with good dividends in between.  They had a great quarter and always reward shareholders handsomely.  Their dividend should be announced with an ex date in September.

RBS:  I recommended a buy in $4.22.  It’s down now to $4.02.  Martin Weiss is insinuating that another big bank will fall soon.  That will kill this shareprice.  If you can’t stomach the drop, sell.  If you can, remember it does pay a handsome dividend a couple of times a year.  But that’s only if it is making money.  I’ll probably put in a sell at $3.80,

CALM:  I got nervous at $47 and recommended that you sell.  Good for me, because yesterday it closed at $41.96.  It’s a little higher than the five day low, but not enough for me to believe it is a good grab now.  Wait, and if it gets good, I’ll bring it up again.

MMM:  Obviously it wiggling around and trying to find its bottom. But if you have bought in, don’t panic.  It has a perfect up and down chart pattern.  Put in a stop loss at $65, and take profits if it gets over $92.  Patience, patience.

GLD, SLV:  It’s just now starting to run.  Be patient, steel your nerves against wild swings.

OIH:  It’s swinging upward this past few days.  It iwll be a good long term hold.

PCU:  If you think copper is going up and you want to be a part of that, you’ll be happy to know that PCU turned around and started back up. 

ESEA:  On the 11th, I recommended ESEA for $11.90.  Today it closed a dollar higher.  It has quietly been creeping up.  It has an ex date on the 3rd for a very nice dividend.  Oil transportation is out of favor right now.  Wait to sell until it hits $16, and that could be a while.

Next week,  we’ll check on a few more.  Now go out and have a good weekend.

Anyone who has dealt with precious metals knows that gold will go up.  It’s just about to run again.  It took a brief dip into the $700 zone, and now it’s streaking back up.   Look at Kitco, which as posted a red warning:

“IMPORTANT NEW NOTICE: Demand for bullion products has increased significantly in recent days. As a result, we may experience delays in supply and possibly delays in processing and shipping by our vaults. We apologize for this inconvenience and will do everything in our power to service your orders as quickly as possible. While cancellation fees still apply, prices are guaranteed regardless of the length of the delay. We remain committed to providing you the best service no matter what market conditions prevail.”

Common folks and hot shot investors alike know that when a dip happens you should stock up.  Gold is most likely on its way to $1200 next and probably not in short order.  Grab some now  for your bank box, and then look at how you can benefit your portfolio.

 Some folks have struggled with why they should buy.  Let’s go through this logically.  First, the mass media will discuss anything to fill airtime and a magazine.  If you read this blog or subscribe to several key newsletters, then you know that the general media does not always give cutting edge financial advice.  This blog and most good financial newsletters are not emotionally tied to any one investment.   Instead, anyone worth their salt is looking at the overall picture.  In this case, government mismanagement of our fiscal policies has occurred, doesn’t matter who is to blame, and inflation is about to go higher.  Doesn’t matter how high right now, just higher.  When that happens, people flee to gold.

Another logical reason:  the shortest bull run in precious metals lasted sixteen years.  We are in year five or so.  So it stands to reason that we are going to see more upward movement in precious metals.

Finally, with our planet overstuffed with people and everyone demanding food, fuel and goods in general, sooner or later commodities are simply going to rise in price to meet that demand.  We don’t have enough of anything to go around, and watch for more wars to actually be fought over resources. 

So how much should your portfolio be?  Well, average financial advisors recommend 10% of your holdings should be in something like precious metals.  But right now, some folks like financial advisor Larry Edelson is advising 30% or more.  I would never recommend anything higher than 45% in commodities,  but I probably have that much myself or more.  It just depends on your risk tolerance and what you want.

How about your portfolio?  Well, you can add silver (SLV) for hyperspeed.  You can add GLD (which follows gold fairly close.)  And you can get a whole passel of good commodities by buying Powershares DB Commodity Index Tracking Fund (DBC).  It seems not too long ago that I mentioned I sold on a stop loss.  Well, it’s turned around, and should do nicely the rest of this year.

Good luck stocking up while it’s on sale!

It might come as a bit of shock to some of you that my day job is a part-time reflexologist.  It is one of the myriad of hats I wear, along with mother, small business owner, investor, wife, church member, etc.   Sometmes, in between clients, I can be found sitting in a small internet cafe, doing a dozen things on the net.  One day, the woman who worked in the flower shop came in muttering about the price of balloons.  They had gone up, you see, and no one was prepared for the price hikes.

“So why are they up?” I asked.

“It’s the firggin’ helium,” she said.  “They need it in the hospitals, too, you know, and the supplier says it’s going through the roof.”

Ever mindful of Peter Lynch’s habit of watching things around our world and using them to make money, I surfed over and researched Airgas (ARG).  Convinced that it had an exceptional  P/E, excellent numbers, and a chart to die for, I grabbed a bunch at $46, then watched it blizt on a sudden move to $59.  Seventy-seven days after buying, I sold out at $59, a bit nervous about its sudden streak upward.  But I was ecstatic over the run and gave the balloon lady a hug.

But I have never forgotten ARG and have watched it like a hawk ever since.  Now I think it might be ready to start gliding upward again.  Why?  Well, consider that all during the downward drag of the dow in the past recent months, ARG really didn’t suffer much of a decline.  It dilly dallied around the mid 50’s since I sold out in May, leading me to believe that it has found its bottom.  Plus the P/E is now adjusted back to 20 after the last company quarterly statement revealed new income growth. 

Is it just helium and hospitals that are making this stock go up?  No, it’s inflation, and especially of a commodity in limited supply.  All gasses are limited, and the world is using up gasses on an industrial scale unlike time has ever seen.  Look at the gasses used in places like body shops, where body men use them for welding.  There are refrigerants and dry ice, all of which are either made by Airgas or by one of its subsidiaries, plus dozens more. 

I checked to see if insiders are buying, and it didn’t surprise me that they are not.  ARG is trading at an all time high, but I noticed that darned few insders were selling.  Clearly they expect the worth of their shares to still go up.

ARG’s numbers look good all around.  Income is up, and their net profit has skyrocketed.  They just completed another subsidiary buy and that means more profits on their balance sheet in the future. 

 Finally, few financial prognosticators are going to even notice ARG, but if any or several do, the stock should start to take off.  

 So I’m going to set my buy order at 57.75 and see if it can grab.  Then we’ll check back on it in another blog later to see how it is doing.