About a third of the S&P set to report earnings this week — what’s your execution plan?
July 26, 2010

For those of you who sent me comments thanking me for your fortune of trading McDonald’s after you did some DD after reading my last post — you’re welcome.

For those of you who have been frozen on the sidelines afraid to make a move and you read my last post about watching McDonald’s — I hope you watched closely, because that’s how this market has been trading.

By the time the street is buzzing about a name in this market, it’s almost too late — you have to be a step ahead of them.

Do your homework.

Know when your companies are set to report earnings.

Read every single thing on them leading up to earnings.

Size it up.

And if everything appears to be positive, make a calculated decision on how to execute your trade — before the street starts buzzing.

Leading up to last Thursday, everyone was buzzing about Amazon and Microsoft, but many of the traders already executed their trades before the actual earnings reports, so when these companies actually released their earnings — there were no grand moves in the market — the traders had already been in and out of those positions.

Meanwhile, McDonald’s had a stellar day — trading ahead of its earnings.

In this market, you better be moving with stealth-like precisions, knowing precisely what numbers you’re looking for — or you’re going to get slaughtered.

Now that you see how this market is moving, you’ll have a better idea how to trade this week, as about a third of the S&P is set to report their earnings.

Fasten those seatbelts and be prepared to act like a lion and pounce on your trades with lightning speed — and get the heck out before it’s too late.

But don’t you dare make a move if you haven’t done some solid DD on every single execution — as I can pretty much guarantee that the only thing that will get executed will be yourself.

Just remember the usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence, or at least enough research to pick the right professional to do it for you.

The street will be buzzing about Bernanke, unemployment rates, Amazon, Microsoft and Starbucks — but my eyes are focused on McDonald’s
July 22, 2010

Let me pop in here this early Thursday morning before the opening bell to answer some of the questions I’ve seen people trying to post over the last couple of days.

To those of you wondering what the heck happened to in Wednesday’s market, let me make this short and sweet. The market was having a good rally, moving on good earnings reports from some good companies.

Then Congress once again started asking Bernanke for a weather report, and he told them exactly what they already knew, we already knew, and most people on the street already knew — the economy doesn’t look exactly rosy, and he doesn’t have high expectations for the unemployment rate improving anytime soon.

But the traders who are moving the markets these days, don’t like any sort of bad news at all — even if its news they already knew — and they dump many positions, causing the market to take a little nosedive.

Not a big deal.

If you’ve been watching or participating in this market at all — you should be used to this.

My guess is, the traders will sleep on it, wake up this Thursday morning, wait for the opening bell, listen to some analysts calls on this big earnings day and week with Amazon and Microsoft — and if the news is rosy about the Kindle, which I believe has been doing fairly well in the marketplace since they slashed the price in June, and Microsoft — my guess is the market will will have a nice day.

As for what’s at the very top of my watch list — the very same name that’s been on my list for a long time — McDonald’s.

If you’re someone who’s sitting on the sidelines trying to watch and figure out what’s going on in the market — just watch this baby over the next day or so, as it will give you a good gauge for how to play this overall market.

But everyone must heed my usual disclaimer: Don’t base any of your investment decisions on anything you read here — do your own due diligence — or at least enough research to pick the right professional to do it for you.

Give yourself some “options” in this market
July 1, 2010

As most of you know, I haven’t been checking in on this site too frequently, because I’ve been more focused on my main site, Let’$ Talk Money, as I believe the best way to trade in the current market conditions is to do so with the protection of options, so you can put your head on the pillow every night and know your exposure to turmoil in the market is limited.

I’m no longer surprised when I stop by and read comments that some of you tried to post here while I was MIA (despite the fact I’ve mentioned numerous times on here that I block responses from being published).

This response is not directed at the majority of you who get it and ask specific questions about the best ways to go about doing your own due diligence, but rather the individuals who claim they’re frequent readers here, yet they’re still asking for “a hot tip.”

That question is so ridiculous that I have to just shake my head and laugh.

It’s a telltale sign to me that you really haven’t either read a single word I’ve written here, or you need improvement on your comprehension skills.

If you’re looking for “a hot tip” — you’ve come to the wrong place.

In fact, this is the forum where I jump atop the proverbial milk crate and preach relentlessly that there is no such thing as “a hot tip.”

The best tip you’re ever going to get from me is this — do your own due diligence.

Just as important of knowing what to buy and when to buy is knowing when to sell — and you’re not going to know that, if you don’t do your own due diligence.

I strongly encourage those of you who are prone to jump around the Web looking for hot tips to read some of my past columns explaining why you really need to do your own research on a company — and its competitors — before buying a single share of its stock.

As for those who complain that I’ve “abandoned” you in this market — you’re nuts.

I never have — and never will — hold someone’s hand as they walk up to the window to buy or sell a stock.

Let me make this crystal clear, this forum is aimed at those investors who are leery of having all their money tied up in mutual funds.

While I have some of my money in mutual funds in my retirement account — I’m not a big fan of investing in funds, as inevitably there will be one or two of its top holdings that I feel are dogs, so I’d prefer to own single stocks of companies I do want to own, rather than have to “take one for the team” of holding something I don’t want that I feel holds my fund back from performing to its full potential.

I also can’t stand the fees associated with owning mutual funds, so a word of caution is to pay close attention to whether, and how much, any loads are that you will pay for a mutual fund. Just a sidenote, is that there are certain fund managers who have a fantastic record of way out-performing the market, and it may at times be better to pay a higher load that they deserve, than to be penny-wise and pound foolish by trying to go with a no-load or low load fund where the returns are dismal.

Remember the name of this column guys – This Ain’t Your Daddy’s Market Anymore, Baby! — and that means you can no longer stick your money in some fund somewhere, pay no attention to it, and think you’re going to retire in X number of years it you’ll have all the money you put into the fund plus tons of gains waiting for you.

You have to think like a trader and know where your money is every single day.

Do you know how much money you have in your wallet, and do you pay attention to what you spend it on?

I am constantly dumbfounded by people who will go with a lower price item on the lunch menu to save themselves a buck or two — but have absolutely no idea what are the top stocks they own in a mutual fund.

They’re positively clueless.

Some think they’re actually doing good if they read their quarterly statements.

Give me a break.

I call that the “too late now” mail.

If you are monitoring your fund on a regular basis — you can switch your money into a different fund if your fund manager suddenly makes a move you don’t approve of, or if he’s not making moves when he should be.

Fire him and take your money elsewhere.

I swear that I will absolutely, positively never understand people who will drive 10 miles out of their way to pay $10 bucks less on an item closer to home — but they can’t be bothered to take two minutes while sitting in their own home and look up what their fund’s top holdings are, and make appropriate moves with hundreds of thousands of dollars in their retirement account.

I swear — it completely baffles me.

Try it sometime.

Ask a friend what the top holdings of the funds are that they have in their retirement account.

Get ready to be blown away when many times they not only don’t know what the top holdings are — but they don’t even know what funds they’re in.

If I hear one more person say to me “Oh, I just checked off that box for my age group, and the nice people who take a nice chunk of my check every week said they’ll take care of diversifying it for me.”

Ugh.

I have a zero tolerance for that type of ignorance.

And, trust me, those will be the same people who will get their quarterly fund performance notices and run around complaining that “they” (as in someone else) lost all their money.

Give me a break.

So, again, my feeling about mutual funds is they’re perfectly fine for people who just don’t know have the aptitude or patience to diversify or invest their money on their own — but owning a mutual fund is not a license to ignore what’s going on with your money — you’re still responsible for making sure the funds you select are the ones you should stick with.

Then there are the people who comment that they’ve done their research, have picked a company they want to buy, but they’re afraid to actually make the purchase because they’re absolutely terrified that the second they buy it — the whole market will take another dip and they’ll lose money.

That’s not an uncommon fair, and a legitimate one, especially in this market.

For those people I have two responses.

Are you going to be the same people who on the other side of the coin will be afraid to snap up some shares when we are in a bull market and stocks are soaring, as you’ll be afraid that you’ll be paying top dollar for a stock, and you’re afraid there will some sort of a pullback after you buy?

As my mother taught me about investing many years ago — the market is not designed to sit still — it’s always moving — sometimes higher and sometimes lower.

Would you really want to put your money into something that just sits there stagnant?

But for those who do enjoy doing their own due diligence and understandably, and legitimately, have concerns about jumping into this market buying straight stocks, I strongly advise you to start reading about other strategies for buying stocks.

A good book I’ll recommend to get you started on your learning venture is Jon Najarian’s “How I Trade Options.”

Great-great book — but, again, I don’t want you to just read that one book and think you’re ready to go primetime and start trading options on your own.

You won’t be by a far shot.

But it will hopefully give you some basic information and set you on your quest to want to learn more about this means of trading, which I think is the best way of trading in this market.

As for me, I have many of the same names on my due diligence list that I’ve mentioned before, and I’ve added a lot of tech stocks and Hewlett Packard and DuPont to the list. Again, this just means they are all on my DD list — this is not a recommendation to buy or sell any of these names.

And whatever you do, please heed the usual disclaimer: Do not base any of your investment decisions on anything you read here. Do your own due diligence, or at least do enough research to pick the right professional to do it for you.

Don’t be fooled by news of Boston Properties $215M construction loan
April 29, 2009

If you hear a quick soundbite that Boston Properties has obtained a $215 million construction loan to complete it’s 854,000 square-foot mixed-use project in Boston — don’t assume it’s a sign that the tight credit markets are loosening.

As usual, the devil is in the details.

According to the Wall Street Journal, this past January BP was hoping to borrow $320, but some potential lenders who BP seemingly thought would be willing to open their pocketbooks, ended up opting out, forcing BP to dig deeper into its own pockets.

The 5-year loan comes with a floating interest rate that’s equal to the London interbank offered rate, plus 3 percent annually.

Though he declined to give intricate details, BP’s cfo admitted that the loan also has a “recourse” provision, which means if BP can’t raise sufficient proceeds to service the debt — they’re personally on the line to make the repayment out of their own pockets.

There is a good chance that some lenders likely were more willing to loosen their purse strings for this project because 81-year old institutional asset manager Wellington Management Co., estimated to have about $420 billion under management, is planning to habitate in about 450,000 square feet of the office space of the Boston waterfront building due to be completed in 2011..

In other news, all eyes this morning are on Bank of America and Morgan Stanley, who are both meeting with their shareholders today.

On the Bank of America front, most will be particularly interested to see if there are any voices raised to have CEO/Chairman/President Ken Lewis give up his chairmanship side of his tri-titles.

My guess is the shareholders wimp out of forcing the issue and give a lot of lip service.

As for Morgan Stanley, many will be interested in listening for any clues on whether they may need to raise more capital, especially following the recent stress tests.

Meanwhile, Citigroup is dealing with its own issues regarding concerns pay restrictions might be tearing apart its energy-trading unit. They’re asking the Treasury to greenlight their request to give special bonuses to many of their employees.

I’m resisting the temptation this morning to go off on a tangent about that.

Same names on my due diligence list.

Just remember the usual disclaimer: Don’t base any of your investment decisions on anything you read here — do your own due diligence — or at least enough research to pick the right professional to do it for you.

How will the street feel about today’s “stress test”?
April 24, 2009

Try as I might, I just haven’t been able to get myself over to this forum on a more regular basis. As most know, my main loyalties are with my Let’$ Talk Money site at EAM, which has been absolutely bustling with activity.

And since I’ve received lots of notes from readers here accusing me of just trying to drum-up business on this site for my EAM site, where there is a paid membership — let me just point out that we capped the membership over there a while back due to the IRC chat feature only being able to handle a couple of hundred participants per session. That doesn’t mean that somewhere down the road I won’t start steering people that way. I’ll do completely unapologetically, as there’s no shame in charging for what I consider to be one of the best sites on the Web.

And, yes, although I don’t allow responses to appear on this site, because I don’t have the time to monitor all the messages in a timely manner, I do try to read as many of your messages as time allows. The reason I don’t allow responses to appear automatically, is because, since I am not here on a regular basis, I won’t be able to monitor in a timely manner those who could maliciously be hyping or dissing a position for their own personal greed. As you know, my motto is to never disclose my own personal positions, and to encourage each and every investor to do their own due diligence.

Enough on that — let’s take a look at where we are this early Friday morning:

The futures are a little below fair value, down by about 20 points.

We’re expecting earnings from Ford and Honeywell later this morning.

Crude oil is up by 34 cents.

Gold is back above the 900 level at 909.70.

And all eyes on the street are glued to see what officials have to say about the “stress test,” particularly whether it means some banks may need another shot in the arm of capital from the Treasury.

Today’s news should be particularly interesting, coming on the heels of analysts at Keefe, Bruyette and Woods saying U.S. banks, such as JPMorgan Chase, Wells Fargo and Bank of America may need to raise $1 trillion of capital.

New to my due diligence list this week has been ANR and eBay.

Just remember the usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence, or at least enough research to hire the right professional to do it for you.

Here come the earnings — hold on tight newbies!
April 6, 2009

Good early Monday morning everyone.

Just a quick reminder that we are entering earnings season tomorrow, starting with Alcoa.

The market has been moving lately, not on fundamentals, but on artificial news based on what the fed is doing.

It’s going to be quite interesting to see what happens when it starts getting some fundamental guidance this week.

Will we get some solid guidance?

Will the market react to either good or bad news?

Is it time for the much anticipated pullback?

Is the rally going to continue ignoring the fundamentals, and enjoy more of a bear market rally moving on news from the fed or discussion about reinstating the uptick rule?

Are the shorts going to start taking some profits?

Those are the questions — now do your homework — and hold on tight, newbies!

The usual reminder: Don’t base any of your investment decisions on anything you read here — do your own homework — or at least enough research to pick the right professional to do it for you.

C’mon newbies — stop all this woulda-coulda-shoulda crap!
March 26, 2009

It’s time to repeat one of my core messages once again — there are no guarantees in the stock market.

Zero – zip – nada – none.

Period.

If you’ve got some years of investing or trading under your belt — you already know this.

But most of the people reading this particular forum — as opposed to my main business forum Cathleen’s Corner, which is now hosted on a private site at EnterActive Media — are newbies.

That’s why I tend to keep things a little more simple here.

I don’t dwell as much on puts, calls and options trades as much as I do at Cathleen’s Corner, because, quite frankly, it’s a bit over the heads for most readers here..

Therein lies the problem.

Many readers of this forum, who claim their intention is to be in the market for the long-haul as an investor, want a surefire-can’t-miss “If I just hold on to it for a year, it will likely go up” pick.

Although I block all the messages on this board — except for a few by EAM members with passwords — many so-called potential long investors here are already in a state of panic over the past week-and-a-half — and they haven’t even invested a single dollar in the market.

Unbelievable.

It makes me shake my head in frustration realizing that while they may be reading what I write — something tells me they’re not comprehending it — and are just scanning to the bottom to see what’s on my due diligence list.

I can’t tell you how many newbie investors have seen the sudden burst in the market and are throwing their hands up in the air that they missed out.

Let me state this very clear — if this is how you are feeling — you have a whole lot more homework to do before you ever invest a single dollar.

If you’re panicking because you think you missed a sudden pop in a stock — how in the world would you have been reacting if you had invested some hard-earned money and the market took a sudden nosedive?

Holy crap – I don’t want to be in the room with those people.

Here’s the thing:

If you liked the ABC company two weeks ago when it was trading at 5 bucks a share, but you didn’t invest any money and it is now trading at $6.50 a share — there is no reason at all to be panicking with fear that you missed-out.

If you truly are going to be a long-haul investor — and you’re really looking for companies that are going to look great a year from now when the market may not be as volatile — and you honestly did your due diligence and you really like what you see — then you should still be just as interested in buying the company now, as you were two weeks ago.

The only question is — how do you actually invest in it?

When a stock rises with a sudden pop across the entire market, I, personally believe it’s best to wait for a little pullback.

Let me address that further — although there are certainly no guarantees in the market that any stock or sector will have a pullback — it usually does happen.

The “trick” is to cost leverage your way into a position.

So, for instance, if you have your first $1,000 that you’re ready to invest in the ABC Company, but it is now trading at $6.50 and you’re stomach can’t handle it if it suddenly plunges to $4 when you buy at the peak — but yet you’re going to be kicking yourself like crazy if next week it jumps to $8 — then here’s what you do:

Find a good online broker where they give you the first 10 or so trades for free — and make sure there are no hidden transaction charges.

Put in a buy order for $250 worth of the ABC Company at $6.50/share.

Again, make sure you place a limit order at your price target, otherwise, there’s a damn good chance you’ll be paying a whole lot more for a whole lot less.

Then sit back and wait.

If it suddenly surges in the next few days to a week — good for you — you just made a little extra money — and resist the urge to kick yourself because you didn’t invest your full grand.

However, if the stock pulls back to $5.75 — don’t kick yourself because you didn’t wait — pounce on the opportunity to buy another $250 worth of the company at a better price.

If it pulls back even further to $5.25 — again, don’t panic — if the due diligence is still showing you this is a strong company with a good balance sheet and has no bad buzz behind it — then jump up and down with joy as you buy another $250 worth of the company at an even better price.

And then when the stock suddenly has another pop to say $6 — buy another $250 worth of the company.

Stocks are going to go up and down — that’s how it works.

Even more so in a volatile market.

There’s a lot of smoke & mirrors going on right now.

While the market is enjoying the influx in cash from the fed, and private equity investors are snapping up some great deals — the street is not fooled for even one split-second that the influx of cash on companies’ balance sheets did not come from earnings — and instead came as a loan with restrictions from Uncle Sam.

The street wants to know what these companies are going to do in order to start making money on their own, so they can repay the loan.

The street knows the jobs reports are not looking good.

You can’t fool the street.

And if you try to ride their coattails — you’ll get crushed.

But you can be just as smart as the street.

The only sure-thing you can count on is your own homework in doing the due diligence.

Read a company’s balance sheets. If it’s full of fuzzy numbers — don’t buy it.

Listen to the analysts calls.

Don’t be too concerned about what already happened — focus on what the company looks like going forward — that’s what the street primarily cares about.

And get over any of your coulda-woulda-shoulda crap!

The best investors don’t second-guess themselves.

They cost leverage into a position — and hold on to a stock until the fundamentals change.

If you truly are looking to buy cheap in this bear market with the intention of holding what should be a strong company in a year — then stop acting like you’re a day trader and you missed a sudden pop or feel crushed by a sudden pullback.

Follow two rules closely:

Do your due diligence and cost-leverage into your position.

Same names are on my due diligence list as mentioned in previous recent columns.

The usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence, or at least enough research to pick the right professional to do it for you.

How Wall Street is Affecting Smalltown America
May 22, 2008

As part of an on-going series spotlighting how Wall Street affects Main Street, and vice versa, I have been shining the focus on Hull, Massachusetts, a small town located between Boston and Cape Cod.

The reason I selected Hull is because of its off-the-beaten trail location¬†that doesn’t derive the same drive-by traffic the way neighboring towns do.

It is, however, the home of beautiful Nantasket Beach, which makes it a destination community in the warm summer months.

However, even then, since the public parking lots are located at the beginning of the town, many visitors never bother venturing further into the town and generating any sort of boost for local establishments.

Therefore, businesses in this seaside community rely heavily on locals and those who make favorite establishments a destination.

So far, you’ve seen videos on the local supermarket’s plans to expand and followed the progress through the passing at the community’s recent town meeting; you’ve learned that a dining/entertainment business, The Red Parrot, recently prevented the auction block, and you’ve heard from the owner of Schooner’s Restaurant on how tough this past winter was and her hopes that local board of selectmen will bend their rules mandating she keeps her kitchen open as long as alcohol is being served at her bar, which enjoys a Cheers-type “where everyone knows your name” feeling.

This week we hear from the owner of Family Ties Dry Cleaners, located in the middle of the town’s business district.

The owner is no novice to how tough it can sometimes be to run a business in a town that relies heavily on locals and the occasional summer tourist to keep the lights on, as she previously ran a candy store in Hull’s same business district that opened in April of 2007 and closed due to a lack of business in September of the same year.

With her dry cleaning business she’s offering more than just cleaning of clothes under one roof, as customers can also drop-off clothing for alterations — or even purchase a children’s gift from amongst her adorable displays of books, toys and stuffed animals at the front of her shop.

She admits to feeling the ramifications of the economy on her business, and believes people are now dropping off clothes for cleaning less frequently than they did before crude oil shot-up to all-time highs.

She avoids the coupon-cutting route many dry cleaners use to reel in customers, instead prefering to simply offer what she says is some of the best prices around on a consistent basis.

But why am I telling you all this, when you can watch the video and hear from the owner yourself?