Hi Tom,

I have to assume you meant me, John Freeman (not John Glassman) on my rant about the monolines.

I have no issue with your beliefs on this topic and you seem to cover your position well. I actually rated it as a good post. I'd have to think objectively you have made your point better than I did. It's all cool. I saw the news and how it was being portrayed as "Buffett coming to the rescue" when I couldn't imagine who would believe that. I don't. Warren is in this to make money and sees an opportunity. He's no hero when risking his money. (Now a new player is upping the bid apparently... Ross? not sure on the name but to me it just seems like the Microsoft/Yahoo mess and it seems likely he is in here to make money as well, not be a hero.) To some degree though, that was my point. I do believe that the markets would love to see the muni bonds safe from losing their tripe A rating and that's what sparked the rally IMHO. I did try to point out that it wasn't going to work either. I think we agree more than you might think as maybe in my rant mode I did not completely explain myself. I was just reacting to why "I" thought the markets rallied in vain. On other issues, I think we can calmly agree to disagree?

As far as blog comments go, I would love to get feedback and did not know that I don't have comments enabled. I'm new here, still learning and have repeately said in different posts that I am not sure if have the facts and figures right when I was unsure.

If you know, how do I turn comments on in my blog so can get both positive and negative feedback or at least corrections when I am unsure or wrong about a particular statement I make. I may have stong opinions at times but I don't believe I have ever claimed to be all knowing. I'm here to try to learn like everyone else.

Anyway, good post and thanks for your views,
Uncle_John (John Freeman)

Hey Raju,

Nice post, especially for the newer players like me trying to understand the game but more importantly, learning how to invest better by sharing ideas.

One thing as a newer player I just learned about comments is that you may not start out with the checkbox visible. Tom Armistead helped me out here by telling me to go to the new blog entry page, then select "customize the display of this page" option and then enable the comments button. Good luck.
Uncle John

What a mess to come back to huh? Last year you could just about pick a stock by throwing darts and make money. This year will be a challange and I agree, it's really about the monolines, then the housing authorities (FHA, Fanny, Freddie) and finally about Fed rates. The banks are going to feel pain for a while no matter what as well as the homeowners. One thing for sure, it's going to be a dog fight in this market.
Uncle John
P.S. I actually made a nice piece of change in my real portfolios starting last Aug by shorting the banks a number of times before earnings using the SKF once I understood that the pre-announced write downs would be considerably worse then they said. I didn't hold those long but it was a good way to make some real quick money if you were very careful and very quick.

Interesting post. I gotta learn me some of that technical stuff. /grin (Being a "natural born programmer", I seem to have a knack for seeing patterns in data and am trying to translate that to the financial markets but I don't know all the jargon yet.) I did like how you translated to english your summary of what it means.

Love the post and the references... nice job. Gotta think about this new twist for a bit to get my head around it. The only thing I'm concered with now is to make sure that they don't rob Peter to pay Paul and take money saved for the muni backing to bolster capital for the structured finance side. You might make money off this yet Tom. ;-)

Uncle John

Nice post. That seems to be the twist that I need get ahead of, the fact that you only have 6 months for your plan to come to fruition.

Nice post. The wild swings are going to be something we have to get used to but there is opportunity in those swings as you have pointed out.

Uncle John

Great piece Tom! Very well thought out and written. I never truly understood the moral hazard term in regards to finance and insurance. The more I learn about this problem, the more I realize I don't understand how complicated it is. /sigh We all know this needs to be fixed. I hope someone listens to you about the monitoring. Congrats on the spotlight as well.

Uncle John

I like this line of posts the more I read them and I agree whole-heartly about having a good thesis to support any action in the market. Without the theory, to me anyway, the fundamentals and technicals alone are just not enough.

Uncle John

Hey Tom,

I haven't posted comments to my own posts until now but you raise a couple of points I did not cover well.

How long till I determine my thesis is done or broken? For steel, the rotation out of early recovery stocks, the global infrastructure play going down hill or the inability to pass along price increases would pretty much end my thesis and make me look for an exit strategy. For a trade, like a technical trade for example, it would be breaking out in the wrong direction or to level out after a breakout to the upside to end my catalyst.

Like your bond insurance investments, you seem to take a long term approach to these and make good points for doing so. But, would an actual government mandated "reshuffling of the rules" change your opinion? I would imagine you would have to rethink your current prospects for these stocks with new information and then have to consider if your thesis still stands true. At that point I would try to mentally reset my cost basis to current trading prices and try to analyze what could I hope for either short or long term and come up with a new thesis. If I can't, I sell.

As far as when to cut a sharp loser even when you think it's still good, the one thing I try to do is use Jeff Macke's advice from Fast Money and try not to let a short term trade gone bad turn into a long term investment. Working out an exit plan for an investment gone bad is certainly still a challenge to me but I do try to cut my losses when the situation changes enough to have me reset my expectations and I cannot come up with a new reason to continue to own the stock.

Thanks as always for the input.
Uncle John

Nice post Jon. It seems to be working well for you but more importantly, I like the disciple you use to manage all these short squeeze plays.

Uncle John

P.S. I hear ya on that China short. I've been trying to unload mine and had a $95 limit placed on Friday. If you check the tape, it peaked at 95 for a couple of minutes and I only sold 20 shares. /lol Guess I just have to wait for the next cycle.

Nice post. I have to agree that I like this stock but getting in at a reasonable price seems tough and I don't know if dropping below $100 oil will affect the moment of this stock.

Uncle John

Being a programming working with Microsoft Windows for many long years and being in many beta and special developer programs, I can say yes, MS has a very good speech recognition library for use in development. Look at the "Sync" being advertised in Fords today. Thats made by MS. It kills me that I can't get that in my car. They do also buy other companies for new ideas and talent in any field they choose to pursue.

Will this payoff in the next 6 months? Only on speculation. But MS is persistant and they will, I believe, be very big in making this happen. They have so many dollars to thow at it and have proven with networking vs Novell, databases vs. Oracle, operating systems vs. IBM and Macs and now internet social and search vs Google that they take a long term approach and continue to eat away at their competitors. They rarely give up when they see a market they can own, even when they start from behind.

Good post Tom. I've been thinking about this as well, especially since last fall. Many if not most of the bank write downs (and homebulders) have come at least partially because there is no ability to "price to market" because there is currently very little or no market for some items on their balance sheets. So this concept seems intuitively true.

What I have never really understood is the concept of "book value" taken as an absolute. I mean, I get it, but unless a company is 100% in cash, there is no way the book value can be totally accurate. The concept of book value is a moving target at all times (while some may not move much since they are easily valued.) Value can cange every minute of the day so "trading to book" seems to be a slightly ambigious term.

Certainly with such huge swings of late in valuation, this concept becomes more obvious and important to the bottom line.

One company that might do well with "write-ups" could be Merrill Lynch due to the fact that once Thain took over, he was able to write a huge amount down in a kitchen sink quarter because the write downs were the responsibility of the previous CEO.

I believe that will make it easier and more possible for "write-ups" for MER once the system clears and these structured finance products become liquid and can be priced more objectively and allow MER to recoup some of it's write downs as Thain could have easily been too over-agressive.

I guess we will see.
Uncle John

Good overview post. Yes, a big Kubrick fan here too since 2001 and A Clockwork Orange. (Although I believe it's a "huge" sandwich. /lol)

I reserve judgement on Uncle Ben but I really did believe he acted too late at the time. Maybe he wouldn't have to cut rates so much if he had acted sooner (late summer/early fall?) and the system would already be seeing the benefits. Now the real fear of the devaluation of the dollar and inflation have to be figured in. I guess it's a wait and see thing for me.

I blame everyone. hehe I got married late and my wife and I didn't want to buy a house until we were married. In the 7 years we were dating, home prices went up 100% to the point where we are stuggling to afford one (assuming we wanted to buy in this market until it comes down more.)

The thing that kills me are the folks with houses for sale down the street for the last two years that are asking 2006 prices and won't take less, then take the house off the market for another 3-6 months. Honestly, I think people like that are causing part of this as well with the "privileged" attitude of not wanting to take anything less then the peak price for the house when it doubled in value over the last handful of years. Until that attitude changes or we find a really desperate seller (not a foreclosure), we will continue to rent.

I don't consider us vultures but rather, small voiceless victims of the easy credit days of yor that were able to come up with the 20% down on a 300K house that now costs 600K and don't have the cash at these levels. There are buyers out there with good credit that can't afford houses at these prices.

Enjoy the slopes,
Uncle John

I'd have to agree with most of the other comments. Expensive diet systems are usually a discretionary item (which might be sad when fast food is now a staple.)

So, yes, I see a real slow down with this company. Other than the recession/inflation fears leaving less money in people's pockets for this I haveone more observation.

Diets rarely work. Expensive diets work even worse. As soon as people lose the weight and get off, they typically regain it faster then they lose it do to thier lifestyles.

I can't believe I'm going to quote Richard Simmons but "it's not a die-t, it's a live-it!" Lifestlye, activities and good eating habits for life are what keep people fit. Not paying $20 a day for prepared meals delivered to your door for 3 months.

Walking away from this stock is a completly viable option. There are plenty of better stocks to own at this time.

I've always thought CSCO was a solid stock and own it in two real portfolios for long term. I've only made plays at trading it here because the short term outlook has been tough. (I also own INTC and MS for the same reasons and just sold my EMC in the real world due to no performance at all. lol)

Good luck,
Uncle John

I wish there were true stop orders here and not just limit sells. Once those are placed it takes some work to undo it just to sell to raise some cash or what ever. What I would really love is trailing stop limit orders but I guess that is way too much to hope for. Besides, with ths volotility, they would trigger way too fast anyway I guess.

And yes, I am waiting for the selloff as an opportunity to get back in at lower prices.

Good luck,
Uncle John

I had that same sick feeling about the market after 3 gains on bad news then a flat Thursday. Fridays and end of months usually don't work too well either as the managers are closing out their positions. Sure seemed like a triple jynx to me.

I bet the stops worked out for you. I have problems with the volaltility so I actually got up early, checked the futures and prepared myself for war at the bell. I've noticed a trend though that seems to make me wary at the bell and it seems like there is a temporary reversal around 10:30-11:00 most mornings. Bought a Dow short, and waited to start trimming my China short as it went up through the day so I could take a few stabs at stocks I had been waiting for. Did some profit taking.

As far as MSFT goes, I own it in my real portfolio and it's probably a good buy here but for longer term. They should get Vista SP1 out the door soon (most corporations won't upgrade until the first service pack of a new OS) and I believe they are also close on going gold for Windows 2008 Server. You could get a bump on either of these but to me, the key to MS is seeing how they handle Yahoo. If they walk away, pop up 3 bucks min. If they work it out, it will probably take a year to get it approved due to everyone else complaining anti-trust nonsense. Long term you have no worries (2-3 years) but it's really gonna be a trade to me until then for this game.

Good luck,
Uncle John

Great post. Let's see how you do as they adjust though. I hope they all read this. /grin

Saw your lab site up at UM. Very nice.

ILL-INI /grin
Uncle John

Hope the emergency turned out well.

Nice to see good picks can win even in these very volatile times. Looking forward to see whats in your portfolio. Nothing shows up here yet.

Good luck,
Uncle John

It's all greek to me. /grin But, I do like your post for a few reasons. You point me in the right direction to learn techincal trading. 50 and 200 day moving averages drawn with a crayon are about as far as I got so far. I really like the point of leaving emotion out of the selling sequence which is where I struggle the most and I like the discipline you show. But, having said that, to me the charts can only reflect what other people think, which is why I believe they can be useful. I would not wish to trade stocks that I don't even know what they do, what their downside risks are and why they make money. Even if I learned advanced techinicals, I'd leave it to the traders like you and only use it as a tool to help refine my ideas on investing and trading.

Even so, very good post with good info.

Good luck,
Uncle John

Good post. I have to agree with don about the fine wine comment and am ammused at the allegory to the Oz story.

Nice to see a splash of common sense on this market once and a while. ;-)

Uncle John

Nice post and analysis. My guess is Winnie and Stern will be on internet radio within a few number of years to make sure they are being heard. /sings "Skylab, Skylab..."

Great analysis.

I know the feeling of looking for something worth buying and still cheap for this game.

Good luck with PAL. With plat over, what $2200?, I remembered that palladium was used in replace of platinum for catalytic converters in cars and trucks. (Also water purification if I remember correctly.)

The problem while I held it was the realization that few cars meant fewer catalytic converters and got hammered after the numbers came out for new car sales. Maybe I didn't hold it long enough.

Good luck,
Uncle John

Thanks for the heads up Russell. I suspected something of that nature when seeing the "growth" numbers.

Jamie,

No offense but I really don't think you have until 2012 to get your numbers. The previous poster pretty much summed it up. Digital device convergence. Cell phones that play MP3s AND stream internet radio.

People already pay a good chunk for cell phones, that is the same market Sirius is trying to tap. 4 out of 5 people I know that have a new car did not continue the subscription after it expired when they bought the car.

I wish you luck with this one. I could be way off. No offense was meant by my "Get Sirius Dude" post, was meant to be funny and reminded me of the old Dell commercials.

Good luck on the newsletter as well,
Uncle John

Great post. I have to say, I am very torn in this contest. I'd like to be near the top so I take risks here that I do not take in my real portfolios but I don't want to just be chasing shorts or momentum stocks the entire time. That's not to say I don't get good ideas here or don't own anything in both, I do. But, was asked questions of the week, I always think in the time frame of the game and usually sound very bearish while I might actually hold that stock in my IRAs. I mean the difference between 6 months and 20 years is astounding on what risk you are willing to take. I guess I'm just exploring what I could try to do to create short term gains.

Uncle John

I stand corrected. I really was thinking was that the tech charts seemed to show what was happening (which I translated incorrectly into "thinking") with any given chart. I forget exactally how it was explained to me, something like the sum of the known news and current actions taken, summarized into a single chart.

Again, good post.

Uncle John

Hehe. I read the article too and posted on it last night. To me, the article was about why the "agflation" is not speculative. It's driven by demand, a theory I support. More mouths to feed, people eating better, wierd weather patterns, AND BURNING OUR FOOD in greater quantities continue to contribute to this trend.

The ag play is a trend, not a bubble. The only thing I worry about now is that others are figuring this out which makes me consider bailing. It seems we agree on opposites of the argument. lol

Uncle John

Russell: /bow I'm not worthy! Thanks.
Tom: Get your shopping list ready for Monday about 11 am. It's nice to have cash at times like this.

Jon:
To buy or not to buy, that is the question;
Whether 'tis nobler in the bank to suffer
The ravagings of cash by inflated means
Or to take stock of the market and chase
Outrageous fortunes, of the meanest paper
So dark the night, the jesters can not read
The spots upon the die, and thus they guess
Who wins the game; Of that I cannot be sure.

Good post and thanks for the reference. I do like the down stream effect in principal. Will that translate into profits for me, I'm not sure but I do hold US Steel (X) both here and for real. I was also looking at (MT) and don't remember at the time why I didn't pick it up as well. Maybe it didn't seem as cheap that day.

Steel has been big but you raise good questions on growth and future profitability. Am I riding the tail end of the wave?

Other than well talked about infrastructure plays, there were two stories I liked that got me in. Pricing power. Iron ore had gone up in price 65% but the steel companies were able to pass that pricing on to their clients. That suggests very stong demand to me. Also, very recently, ExxonMobil had just annouced they were spending $125B over the next 5 years ($25B this year) in cap ex to explore and replenish oil supplies. I figured a lot of this money was going to the drillers who need a lot of steel to do their work. This could be a trand for other companies as well.

I still believe this story but you make very good points about being overbought. It's already had a good run. I'll have to take a closer look and these holdings and maybe reconsider.

Uncle John
P.S.. Great title for your post, took me a minute. hehe

Wow, I have to check out Barrons for your letter! Congrats. I know you understand this topic better than anyone I know. I now support your view that it seems Ambac, based on an interview of the CEO, could pay a worst case scenario * 1.3 which is what it took to get Moodys happy.

Since they are no longer writing structured finance insurance and the muni market is getting crowded (along with certain places deciding not to get insurance anymore, (was it California?), are they headed toward falling revenues? I guess the question is, how is their business going forward?

There are some great rips and dips in these stocks and I bet with a little good timing you could make a large chunk of it back. I was wondering if you were selling at 8 1/4 the day after the secondary.

Good luck,
Uncle John

Reply:

John,

I had actually done the work to look at ABK's revenue/earnings going forward but was feeling low at the point I did my blog and didn't address it.

Ambac's business has premiums coming in for years into the future. Bonds often run for 30 years, with premium earned every year. So, Ambac will continue to earn premium for years, even if they don't write any new business. The information is quantifiable and is available on Ambac's website in the Quarterly Operating Supplement.

Based on that information, the new share counts after dilution, and a little guesswork I see 1.90 normalized earnings per share for 2008. That would ignore Mark to Market (which should reverse at some point) and additional developments on the sub-prime losses (predictable, I can't guess what they would be.) So this computation and the adjusted book value at 20 both point in the same area. Basically Ambac has about 2 years where they could live off their fat, then if they aren't writing business it could get to be a problem.

Actually I made a few small profits just shuffling in & out of ABK both on SLO and in my personal portfolio. In SLO I sold some at 10.12 to make room to participate in a rights offering, if one would occur. Then as the stock went down I bought it back at 9.xx and 8.xx, which reduced my average cost. A pity I didn't wait until the offering, I could have got it back cheaper. I think I got distracted by the "news," maybe I should have just watched the price. I have been thinking, my proper strategy here could be day or swing trading, not something I usually do.

Tom

Sounds like a good call. I thought I heard they were likey to get more business soon as well (Spain's new government or something?) Those solor stocks just scare the begeezus out of me.

I really like these series of posts. I am a stong believer in pattern recognition in data.

This post reminds me of programming. I have always believed some programmers are born and some are taught. The ones that were taught fail to see the patterns in seemingly chaos and thus, do not excel as well as the "natural" programmers who can find patterns that are useful without having seen the problem before. (Programming is science, great programming is art and science.)

I do try to use this ability here but... I'm still finding the rules of the game and trying to learn most of the variables.

I've been long so I've seen the opposite side and it's pretty much the same, the swings are killing me. Yesterday was a good day. ;-)

"The web site is damaged horribly and I cannot tell whether the folks that aren't playing are where they're supposed to be - but if it's somewhere near where they are currently, that itself is telling. If you took your money and didn't invest a nickel - you'd be in 20th place."

I've been howling at the web rankings but yesterday I tried to trim a position which did get filled but never acknowledged so I had no cash to implement what I was trying to do. Someday, they will sort out the rankings and you will find there are many people that are playing (investing and compliant) that still got ranked 20th because their "Current Round" gains are incorrectly listed as 0.00. I'm tired of being ranked as if I am not investing. I personally think the folks that are not yet compliant over the necessary percentage of the time are placed at the bottom.

It's also telling that only 19 people "seemed" to be above break even which leads me to believe most of these folks have been playing the shorts very successfully.

Good luck,
Uncle John

It's funny you mention the observation of gaining ground in a battle one day to lose it back the next. litterally ten minutes ago, I just mentioned to my wife that I locked in X profits today in our real portfolios only to make the comment that "I feel like I keep gaining and losing the same X dollars". lol

Well, at least by breaking even right now, I'm ahead of the market YTD.

Diversity seems to be serving folks well and I have to find a way to get short term gains on oppossing positions. Seems I should be able to hold the long and shorts and profit take from each side as needed. Have yet to find the right parameters.

Good job posting,
Uncle John

Just curious Jamie, how do you feel now about Citi?

Uncle John

I always thought of Volatility as a she. ;-) I actually watched Purple Rain (some 80s flashback weekend thing I think) and remembered a quote from the movie. "God got her cycle backwards. About every 28 days she's nice for a few days."

I think the real queston of the week is will the run on Bear Stearns infect the other broker dealers?

I don't mean to be saying "I told you so" Jamie, but this was my exact argument about why it was not time to buy Citi. While the government changes the rules, I don't want to play. There is no way to value any of these things anymore. Like I said, this thing could be worth a fortune in a few years but it is now a complete gamble.

I think you raise a very good point about P/E and value. In this market I can't really say I believe any of them.

Right now, I'd rather have my portfolio in Vegas at the $10/$20 no limit hold'em game. At least I know I'm good enough at that to win and I know what the rules are.

Good luck,
Uncle John

Tom,

I general you are right and this is just a knee-jerk reaction to the current events. But this post was just meant to be a commentary on how the US incorrectly labels playing poker (a skill game) as gambling while investing in the markets is considered "investing." Recently, it just dosn't feel like it.

Also, you do have to remember indefinate time is not on your side. I was heavily vested in stock options in 2000 being a hi tech wiz (in those days) and yet, I can now paper my bathroom with them. It's been 8 years and parts of my portfolio have never recovered. Thank God I was willing to open an E*Trade account and bet agains myself in those days with naked puts or I really would have washed out. If the market tanks and doesn't recover for over 15 years like Japan, what are the odds I live to see a recovery?

Call your 2 cents and raise all in,
Uncle John

Hey Don,

I'll take AA88 any time, every hand. It may get me killed but I'll be winning before I die.

The difference between this market and the 2000-2002 market is I saw and very much understood the internet bubble. I was in the middle of it. I knew there was trouble when the VP of sales came to me one day and asked me to design something into our product that had to do with the internet. I explained the software we wrote and sold didn't have any ".com" rational at all but he just wanted it in the company profile for when they went public. I knew right there what was about to happen.

Maybe it's the same thing today but what makes me uncomfortable is that I don't really understand in detail what is happening other than we have about 500-700 trillion dollars in derivatives (levereaged bets) and a global GDP of about 5 trillion. I don't like those pot odds.

Good post, good show, good observation. When there is "blood on the streets and you feel like you are about to puke, that's when you buy." Was that Macke'ism or Guy?

I wish I read this post BEFORE I sold my gold and worked on my NCAA picks instead. Hmmm...

Then again this could be just like 1980 when gold peaked and then dumped. I can see a good argument for either way. I don't know which way to turn other than to get my basketball picks in fast. /lol

Good luck with the gold,
Uncle John

Good thesis, nice chart and of course, Buffett! I've been playing with railroads, mainly BNI but have been trying to wait patiently for an entry price around $80 (the level Buffett was willing to pay) and have been able to get there. I may have to up my dip price here but saw a good spot on TV about how a train can deliever the same volume as something like 200+ truckers with only a handful of people running the train. Sounds like a great 3 year plus story.

Uncle John

Tom,

I hate to admit it but I might agree with Jon here although froma different angle. It's a good piece and a good conclusion, stay away from companies with a "vunerable capital sturcture".

With that said, here's the $64,000 question. What is the book value of any of these financial companies? You wrote a good piece about phantom book value where you discussed the possible write-ups of financials and homebuilders (which in due course, may very well be true) but there is the other side of the coin. What about phantom book values that are way too high? How do you determine book value for companies with large amounts of leverage at all with credit siezed the way it is and the lack of willing banks to lend right now? Isn't it possible, that at the time people thought Bear Stearns book value was $80, that it might have been closer to $10 or $20? Like I stated in my comment on your "phantom" post, it seems book value is a moving target and right now it is moving against all the companies that reply heavily on credit.

Uncle John

Jon,

I take your point well about how markets react and how you can profit from them either direction.

I think you might be missing the point on some of the laments though. The real economy is going down the tubes. Jobs are being lost. Gas and food are at all time highs no matter what the government says about inflation. Retirements funds are in danger. That is much of the mood we are seeing in the blogs.

Granted there are worse troubles to deal with like being in the Marines. Thank you for serving BTW. There is no more honor than serving your country like that (completely serious here) and putting yourself in harms way. You certainly deserve a lot of respect for that.

Relative to being put in harms way, yes, a bad economey is not a big deal. But for the average Joe six-pack out there trying to buy a house or pay his mortgage, hold on to his job, pay taxes, save for retirement and still feed the wife and kids, it's still pretty rough.

Everything is reletive,
Uncle John

I love that you not only analyze other's performance but your own. Nice! We all need a little self replection at times. If my picks and blogs weren't so scatter-brained... I might be able to do that for myself. /lol

Uncle John

The way I understand it as of 5 am this morning (I have not looked back yet to see if there was more news) was that there was a mistaken provision in the merger agreement that would force JPMorgan to absorb losses at Bear even if the share holders rejected the offer and the merger did not take place. It is still not a done deal and JPMorgan is trying to secure enough votes to make sure the shareholders pass the merger by raising the price.

You had to wonder who knew what when the shares were trading well about the $2 tender offer. Someone must have actually read the contract. It may go higher or it may not pass the vote. Hold on to your seats.

My understanding is the Fed does NOT want this to go up to $10 as it will look like an investor bailout and not a banking system rescue measure.

Uncle John

Nice! ;-)

I'm glad folks enjoyed my little April Fools prank but I really hope nobody took it seriously. I certainly didn't think anyone would.

Then, I emailed a copy of the link to my wife and told her I invested ALL of our IRAs into those 2 companies and when I talked to her a few hours later, she actually cautiously asked "That WAS an April Fools joke, right?"

The thing that caught her was the article in the WSJ about MS not negotiating the price up with Yahoo which came out hours after I posted my blog. Although she was probably 95% sure it was a gag, the luck about my comment about waiting for the announcement and the timing of that article was just enough to make her wonder.

Please don't buy anything based on this article! This was a joke. Granted, it was written with some small grains of truth in it. (I do believe it is possible, or maybe used to be possible, to "license" the Windows Mobile source and they have given it to some universities to study.) Some of the fiction might even make sense in a twisted kind of way. But there was no inside info etc...

I did send the post to a friend at MS though and have not gotten a reply yet. I thought it might amuse him and wondered what kind of reaction there would be to it there. /ROFL

That does not mean I think either of these companies are bad to own. I personally do own some MSFT but have for a while.

Later,
Uncle John

I wish you well at your airline company and really do hope that things go well for you.

Reasons I avoid airlines? Unions, gas prices, competition from fly by night start ups to name a few. What's keeping the major mergers from happening? The piots union cannot figure out a senority ranking? Is this really important to the business? Reminds me of the big three automakers where the unions basically ruined them by pricing them out of the market due to high labor costs. Certainly management had a big hand in this case as well and cannot be forgiven either. They didn't realize Americans were willing to vote with their dollars on the best product, not the best product "made in the USA."

But, if I had to quote someone on this topic, it would be Jeff Macke from Fast Money. "You know when it's a good time to sell airline stocks? When the market is open!"

That is not to say money cannot be made in airline stocks. It's just too hard to figure out how they make money for most of us (well, OK, at least me.)

Good luck,
Uncle John

Good post, good explaination. I would agree that looks like a pretty safe portfolio for while you are away. It might be more interesting to see what people would hold for 3 or even 6 months on a desert island.

Have fun on the honeymoon!

Uncle John

Notice there were only a few companies that they upgraded and more that they downgraded or left the same. I believe this is a sign GS believes the financials are due for a pullback during earnings.

Good luck,
Uncle John

I have to agree stongly with your assement of the earnings season. The longer term delay of the housing correction is very likey with more and more government involvement as well. Nice post.

Uncle John

This could be a good longer term play. I am interested enough to look into it. My fear is that the cost of creating that bio-fuel will be high and that this is a very small market. (How many french fries do the Chinese eat?) I need to do some research but it seems possible.

Good luck,
Uncle John

I have liked this stock since about mid Feb. It should do well for you. Nice pick.

Uncle John

Good quick analysis on your strategy. Nice. As far as equities goes, I think downward until earnings are over. We have a nice run up and are due for a correction and earnings will provide the catalyst. After earnings, we may very well see another attempt at a rally.

Good luck,
Uncle John

LOL Raju. You beat me to it. I was about to comment on my post.

Remember UJIA (Uncle John's Intelligence Agency) is an oxymoron.

Here's the run down so far. I called for a small beat in revenues and thought they'd be lucky to meet the downward revised 54% margin and came in at 53.8%. My flaw, they raised guidance a pittance (which is better than a sharp stick in the eye) which I certainly did not see coming. The reaction to the comments (for now) is where I really went wrong. Glad I am long for real.

But... I'm not sure I'm back on the last page yet. Yes, that huge bet on QID is gonna hurt at the open. But we have IBM and eBay next. Consider Intel was down 20% YTD so far and a meet was good enough for an after hours bump. IBM though have been red hot lately and a meet for them may not be such good news. They need a beat just to keep their stock price where its at. eBay I'm not sure of one way or the other. I really don't follow them at all.

I made the bet against the NASDAQ and I think I'm gonna hold it a little while longer. There are plenty of people coming up to bat that can still strike out or hit into that double play.

I did say I love this company longer term and I guess I was right there. I get the numbers right and the comments and reaction wrong so far. Who knows, the reaction may not last past the first 15 minutes after the open and certainly by the end of the week, things can change.

Oh well, I'm a big 0-fer so far. /grin

Don, you are correct, Sir!

Its the hafnium transistors that I'm talking about in their new processors. They will work it out. The are smaller, run cooler and faster. It was the only way after hitting the wall with the older transitors to keep Moore's Law intact. When those become second generation chips, watch out. They still have plenty of room to run before redlining.

Nice post, great homework!

Congrats on the major comeback. Everyone has an opinion but deciding which ones work for you seems to be the trick. Seems like you picked the best of each of the other traders to get out of the hole. That's a tough trick.

Glad to see you blogging again.

Uncle John

Thank you for the insights and tips in the Chicago area! I feel like you are the first real estate agent that has been willing to tell the truth lately and was wondering if I was just crazy for not believing any of them.

Good luck and thanks,
Uncle John