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Ford Motor Co. Is Off Course…

Fri, 8 Nov 2008 05:27:16 GMT

posted by JoanneGreco

photo by FordRacing
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…and has been for some time, unfortunately we’re only starting learn about it now in the last few months. To add insult to injury to the American people, so is General Motors and Chrysler.
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The CEO’s from the three automakers along with the head of the United Auto Workers union went to Capital Hill today to get more financial aid from the government for their failing companies, even willing to go so far as to give their right arms for it.
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This not the first time either, earlier this year they received $25 billion from Congress to help with the cost of manufacturing equipment that they said they needed. Now the new request is for $50 billion, double to what they already received so they can build more efficient cars. It never seizes to amaze me that for the last 20-30 years we’ve heard that better fuel efficient cars are on the way, but decades later vehicles are still getting roughly the same gas mileage. Foreign automakers have been beating the U.S. makers for many years and are so far ahead of the curve, it will be just short of a miracle if they can ever catch up.
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Nancy Pelosi suggested in an interview before the meeting that any aid to the companies should be tied to making improved fuel efficient vehicles. She suggests? There should be no other way than that. The companies are so behind and have been for some time now that they should scrap most, if not all their current designs and start from scratch.
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Ford said that it continues to invest in smaller, better fuel efficient vehicles, but also stated that except for “few select vehicles that will be deferred until industry volumes recover.” Ford said it will, however, reduce spending for large vehicles in declining segments. Are they out of their minds?
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Who are they trying to fool? In this year alone they’ve bought-out nearly 7000 hourly employees. I know that there will be major lay-offs in the manufacturing side as well. They got themselves into this mess because of bad management and decisions, that they now have more cars than they will possibly sell in the next year or so. With the way the economy is, no one is running out to buy a car and with the condition of the credit crisis, the one that want to can’t even get a loan to do so.
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In my opinion, the quickest way for the big three to get back on track is to stop all manufacturing, get the government’s (our) money, rebuild their plants and start designing the hybrids and engines that can run on natural gas. I know that will never happen though, it’s too drastic of a move. It would many people out of work in Detroit and other areas of the U.S.
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I just wish the stocks were worth more than they are because I would be shorting the hell out of them. Stay away from these stcoks unless you don’t need the money for about 10-15 years.

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Safe Investments

Thu, 14 Nov 2008 05:14:46 GMT

posted by JoanneGreco

Now a days it’s really hard to find any decent safe investments. The old buy and hold routine doesn’t work in these trouble times, and as for trying to day trade, you’re taking your hard earned money in your own hands.
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A safe Investment right now seems to be in CD’s, bonds and Treasury bonds, but the problem there is that the return is quite low. After having your portfolio, need it be a discretionary one or your 401K/IRA, beaten up as bad as it has in the last year. Some may not want to deal with a 3% return on their money and have it tied up for nine months or longer to get it.
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High yield safe investments like junk bonds aren’t any better. They involve alot of risk and again after what we’ve gone through, do you really need more risk?
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The only safe investment advice that I would be comfortable giving you is to do your research into strong companies (of course you won’t know they’re strong until after the research) that have been beaten up because of the market as a whole brought the price down.
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One company that has taken a beaten because of the hedge fund redemption is Quanta Services Inc. (NYSE:PWR). The company has a great balance sheet and has orders out until 2010. They are expecting great numbers in this quarter. Thursday the stock hit a new 52-week low at $12.27. A level that hasn’t been seen since February of 2006.
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I don’t consider too many stocks to be a safe investment the way the markets have been moving. Monday morning the DOW opened at 9,141.01 and the intra-day low on Thursday was 7,979.60, but then closed Thursday at 8,835.25.
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The safest investment right now might be not investing.

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Reading Stock Market Sentiment

Tue, 11 Jul 2007 11:10:00 GMT

posted by Dmerkel
Gold stocks have had quite a spectacular run over the last 2 weeks. The XAU, for example, has appreciated by about 10% during this time. To many people, this rapid ascent came as a surprise. Two weeks ago, when silver declined about 60 cents in one day, there were many that thought lower prices were in the cards.

I usually like to browse investing forums because I usually learn something when I do. One forum I visit often is the Kitco Gold Forum. Browsing this forum is a great way to judge sentiment. It allows me to evaluate if the public is bullish or bearish, and let me tell you, 2 weeks ago, the public was bearish. Here is a link to one thread of many that was brimming with bearish sentiment. There were some astute forum members that did not let fear cloud their judgement, but overall, throughout many threads, the consensus was bearish.

One June 26, I made the following comment on the Kitco Forum:

"With some forum members saying that they think gold will go into the $400 area, I feel compelled to write this post. Here are some facts about the charts:

1)Gold is at its 50 week moving average right now. Gold has bounced off this area of support many times over the past 3 years, and has never broken it. If gold breaks this line, then, and only then, would I be bearish.

2)The XAU has just this morning bounced off major gap support from the gap formed in mid March.

3)SLV is deeply oversold, and due for at least a relief rally.

4)The Euro is at a major area of support. This should keep the US Dollar in line."

Lets have a look at a chart to see how gold stocks faired. Below is a chart of the HUI, a major gold stocks index, with some comments I have taken from the Kitco Forum. The day in question in June 26, so please have a look at that date.

I don't mean to brag, but I made 4 points about the charts, as quoted above, and all 4 points turned out to be accurate. As well, as the above chart shows, if you had bought gold shares on June 26, you would have made a lot of money, and gold bullion itself bottomed at this time.

The point of this post is that you should never let your emotions, like fear, impair your judgement, and when you do detect fear amongst the public or the media, then it may be a sign that a bottom is place. I have seen this work time and time again. People are greedy at tops, and fearful at bottoms. Through various techniques, it is possible to exploit this fact of life.

I will have more about judging sentiment, and how to profit from it in further posts.

Another Look at Stock Market Sentiment

Fri, 14 Jul 2007 11:49:00 GMT

posted by Dmerkel
I used to subscribe to a service that would mail me educational DVDs on trading and technical analysis, and, once I was finished watching them, I would mail them back, all for a monthly fee. Most of the DVDs I watched were not very good, but one DVD, by someone named Jake Bernstein, really caught my attention. Since then, I have watched about 6 DVDs from him.

In the DVD I first watched, Jake Bernstein talked about stock market sentiment. He explained that his company would phone several hundred brokers and traders, and survey them on their thoughts on the markets. What Mr. Bernstein found is that when the respondents were unusually bullish, the market was due for a correction, and when they were unusually bearish, a bottom was likely in place.

While most people don't have the time to survey people, this example illustrates one important fact, which is that the public is usually wrong. There are some creative ways to exploit this fact, and today, I will share one of them.

What I have done is look at the statistics of a popular Gold website called Kitco. Through a website named Alexa.com, you can find out how popular a website is, and graph this data. I have made a graph of how many people visited Kitco.com over the last year.

Below this, using my graphic design skills (MS Paint), I have placed a graph of GDX, the Gold Stocks ETF, beneath it. The result is shown below.

This may be a bit of a stretch, but I have shown that spikes in web traffic at Kitco have resulted in tops in GDX chart. This worked really well during 2006, but not so well in 2007, and this is because Gold Stocks have been trading sideways for so long, that the public may not be interested anymore. Incidentally, this fact, that the public has lost interest, is actually a bullish development for Gold. This chart hopefully proves that when the public is interested, you shouldn't be.

Think about the Dot Com boom. Was everybody interested in Tech stocks in the early 1990's? No, nobody was. Was this a good time to buy? Yes, yes it was. Was the public interested in Tech stocks in the late 1990's? Yes, and I was too, but it was the worst time to get into that sector.

I will have more about gauging sentiment in further posts, I hope.

Bailout And Rescue Plans

Mon, 11 Nov 2008 19:54:59 GMT

posted by JoanneGreco

What is the difference between a bailout and a rescue plan? There really isn’t one. It’s just a matter of how you want to get the message across. The AIG bailout is what they were calling it, but then the government was getting too much slack for how it was being presented.
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So when Hank Paulson went to Congress to get $700 billion to save the financial sector and the credit markets, he first called it a bailout. Then Congress went ahead and didn’t pass the bill, which in turn caused the stock market to plunge. By the end of the week they repackaged it and pitched it as a rescue plan.
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Either way you look at it, it’s still the same thing.
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Now it’s General Motors (NYSE:GM) and Ford Motor Corp (NYSE:F) turn. What will happen is still not clear. There is still two and a half months before Obama takes office. President Bush and Obama sat down yesterday in the oval office to discuss several things that need to be hashed out. Rumor has it that the auto industry was talked about, but neither of the men will reveal what was discussed, even though it seems that Obama’s aids have leaked the information out.
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If we are to save this economy we will need to save jobs and create new ones. Letting the the two auto companies to fail and possibly close some or all of their factories will not help this country bounce back any quicker.
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If we can go ahead and save the white collar jobs of Wall Street, why wouldn’t we save the blue collar ones of Main Street. What’s your opinion on this topic? I’d like to know.

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