Thursday - June 25, 2009

Screenshot from http://finance.yahoo.com/

Wednesday - June 24, 2009

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Screenshot from http://finance.yahoo.com/

S&P was up slightly +2.06 points.

Monday - June 22, 2009

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The markets slide today. S&P500 dropped -3% and is below 900. It is slightly below the 200 day moving average which is about 900.76. Oil dropped -$2.52, at $67.50 a barrel.
The drop in everything is partly due to the World bank said that it expected the global economy to shrink by 2.9%. It's last prediction was 1.7% in March. When the World Bank is seeing worse in economy, one can guess the reaction in the markets - exactly what we saw today - selling from the rally we've had since March.
I see today as a reality check. Investors are jumping too far ahead of fundamentals. Less bad news are not good news.
Unfortunately to me, Apple (AAPL) is still very high at $137.17. Steve Jobs had liver transplant. It looks like there is a chance that he will come back.
When S&P hits ~850 or Dow hits just below 8000, the market will be 10% from it's year high. It will be time to get in.

Friday - June 19, 2009

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The markets closed slightly up on Friday. Over the week, S&P500 was down -2.6%, the Dow was down -2.9% and the TSX lost -3.35%.
As summer is here, the markets are expected to slow down.
By the way, happy birthday to BFM! (bones has started shrinking) :|

Thursday - June 18, 2009

Screenshot from http://finance.yahoo.com/

The fall has paused after 3 days in a row. S&P gained +0.84% or 7.66 points. Volume was low though.

Wednesday - June 17, 2009

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Three days in a row the market has dropped. S&P500 is down -3.75% since last Friday. Volume is not bad. Investors seemed to be rushing to cash out from the earlier rally as they realize that the fundamentals to lead the market higher are lacking.
Fedex (FDX) announced it's latest quarter results which are better than expected; however, they issued gloomy outlook. They expect that their first two fiscal quarters in 2010 will be extremely difficult. I see transportation as a second messenger in signaling how the economy is doing. When businesses are good, the need for transportation increases.
President Obama released his plan for financial regulation. Analysts say that the regulation could hurt banks' profits and their competitiveness. The proposed regulation demands that, among other things, an increase in capital, which lowers the banks' leverage and potential profits. However, it might take 2-3 years for negotiation before the plan turns into law. How far the changes would be remains an open question. My view is that whether there is regulation or not, banking is the biggest player in the game of economy, just like in the board game - Monopoly.

Tuesday - June 16, 2009

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The market dropped second day in a row. S&P500 has dropped -3.6% since yesterday. Crude oil fell -$0.15 to $70.47 a barrel.
Building of new homes and apartments rose 17.2% in May, highest in the last 3 months. A large percentage of it comes from multifamily housing. This raises the supply and demand issue - the unbalanced one. There is already a huge back log of existing homes which will take 10.2 months to deplete (we've talked about it in my previous blog here). Adding more new homes to one side of the equation might not be encouraging to the market. It will drag house prices down more.
The Federal Reserve said industrial production dropped a larger-than-expected 1.1 percent in May as the recession hurt demand for manufactured goods including cars, machinery and household appliances.
Bestbuy (BBY) reported a weak Q1. Earning per share is better than expected but sales fell more than expected. BBY says it is expecting a difficult environment. Its stock fell 7%. BBY is the first major retail to report Q1. I guess we have a taste of how the retail market has been doing.

Monday - June 15, 2009

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The market opened low and remained lower. It was searching for direction last week. Investors have been cautious about the stocks going higher and the fundamentals of the economy. They chose to take profits today.
Today is the biggest one-day drop since April 20th. There are a couple of reasons (other than investors taking profit) causing stocks to slide. The New York Federal Reserve's general business conditions index dropped to -9.41 from -4.55 in May. This sent the stocks lower. Commodities and their related stocks fell as the US dollar gained strength. A stronger US dollar was a result of the Russians saying that the dollar is still a good world reserve currency. Crude oil finished at $70.62 per barrel, a drop of -$1.42.
Wal-mart (WMT) got downgraded by Goldman Sachs from "buy" to "neutral". It finished at $48.46 or -2.77%. I have always liked WMT though and I still do.
There are a few earning reports to watch this week: Target, Fedex and Research in motion.

Friday - June 12, 2009

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The market was moving in a narrow range today and ended in a slightly positive zone. This is the 10th consecutive day in which the market moved within 1%. For the week, the Dow gained +0.4% whereas the S&P500 climbed +0.7%. The TSX also finished the week with +0.7%.
Gold has had a 3-week rally and investors are seeking profits. Gold prices dropped 2.2% to finish at $940.5. Crude oil pulled back a little to $72.05 a barrel finishing the week with +5.3% gain. The Organization for Petroleum Exporting Countries (OPEC) lowered it's forecast for oil consumption this year in its monthly oil report. It also said that the world oil demand appears to be settling down as the world economy stabilizes.
Consumer confidence rose again but it didn't bring the market higher. As oil (i.e. gas) prices rising, people are going to cut back in expenses. They are also concerned about inflation and higher interest rates. The market seems to be in a tug-of-war. It needs big news to push itself higher.

Thursday - June 11, 2009

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S&P500 reached new high today since November last year. Oil rose +1.9 percent at $72.68, its highest settle since October. Supply seems to be sufficient, at least for a long while. People have also lowered the consumption as well. Expensive oil probably won't help the recovery of economy as costs of running industries are higher. However, a recovering economy will consume more oil.
Retail sales has improved in May, +0.5%, but it is still 9.6% lower than same month last year. The 30-year Treasury bond auction went well. It means that the government doesn't need to raise interest rates to attract buyers for their debts. Higher interest rates mean higher borrowing costs which would temper recovery of economy.
It looks like that we are going sideway.

Wednesday - June 10, 2009

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Market pulled back a little after the government sold $19 billion in 10-year Treasury notes in a relatively weak auction. Investors are worried that rising interest rates will crimp the economy's recovery.

Tuesday - June 9, 2009

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S&P500 was up +3.29 points or +0.35% today. Volume was light again. Oil was up again, at $71.09.
Ten banks are allowed to give back the TARP money that they received. They are: JPMorgan Chase (JPM), American Express (AXP), Goldman Sachs Group (GS), U.S. Bancorp (USB), Capital One Financial (COF), Bank of New York Mellon (BK), State Street (STT), BB&T (BBT), Morgan Stanley (MS) and Northern Trust (NTRS). Details about the 19 banks that went through the stress test and received TARP money can be found in this article. The 3 banks that received the most money, Citigroup (C) and Bank of America (BAC) ($45 million each), and Wells Fargo (WFC) ($25 million) are not allowed to give back the money. I don't see it as a good thing. The money was supposed to use for lending and lubricate the economy. Now the banks are giving it back because they don't want to be labelled as the "bad" banks and get intervened by the government.
Tomorrow will have interesting data: weekly crude oil inventories which are expected to be lower and weekly mortgage applications.

Monday - June 8, 2009

Screenshot from http://finance.yahoo.com/

Dow was down -130 points, at some moment today. In the end, it recovered all of the losses and closed at +0.02%. Volume was light. In a light volume trading day, it doesn't take much to move the direction of stocks. The market seemed to be unsure where it wants to go. Investers are wondering whether the rally in recent weeks has become prolonged and whether the seemingly less-bad news have priced into the stock prices already.

In Canada, TSX was down -20 points. National housing starts is up +9.2%; however, in my home province (British Columbia) it was down -5%. Even though the starts are lower due to existing projects, I do notice movements in the local housing market in Vancouver. I am optimistic.

Crude oil fell -$0.35 to $68.09 per barrel. Angiotech Pharmaceuticlas (ANP.TO) jumped +33% to $2.38. The company has received marketing clearance from the U.S. FDA for its Option Inferior Vena Cava Filter to prevent pulmonary embolism. The device can dissolve the blockage of lung artery and preserve blood flow. Sale is expected to reach $300 million in 2012. Angiotech has had a nice run of almost +380% since early May.

Online trading broker

We have been using Questrade for almost a year. It offers low commission fees for trading stocks: a penny a share, minimum $4.95 and maximum $9.95. We have not used any other broker before. So far our experience with it has been okay, not great, not too bad.
There is a learning curve to use their trading platform. I heard it's not the most user friendly one. It serves its purpose - real time quotes and trading commands. I got used to it. The main problem I have is to read the account summary page. I still struggle to understand how much money I have in the account without going into the detail statements which are not very easy to understand either.
Funding the account from an external bank account takes a few business days, perhaps a week (too long to remember). We haven't tried transferring funds out to a bank account yet. So we have no idea how long it takes or there is any hassel.
Another problem is that you have to exchange CAD to US funds first before you purchase any US stocks. Otherwise, you are borrowing from your margin account. We got burned.
Customer service is not great according to a lot of other customers. I believe they call the 1-800 number. I call the 406 Toronto number and I am always able to talk to a person. It just happens that my stupid VOIP phone can't call 1-800 numbers.
Now I am considering opening another Tax Free Trading Account somewhere. It's kind of hard to beat Questrade's low commission fees or low minimum intial funding. Perhaps Scotia i-Trade or Interactive Brokers. What do you use?

Friday - June 5, 2009

Screenshot from http://finance.yahoo.com/

Friday, the markets were not affected much by the jobless data. Overall this week, D0w was up +3.09%, S&P500 +2.28% and TSX +1.92%. Oil was at $68.38.
The US unemployment rate in May is at the highest in 25 years, at 9.7%. When close to 1 in 10 people is out of a job, people are going to continue to cut spending and are likely to default on their debts. We, the Canadians, are not a lot better. Our unemployment rate is at 11 year high, at 8.4%. The province of Ontario is the worst due to the weakening automotive and manufacturing industries. Employment recoveries typically lag economy turnarounds. So, economists predict that the jobless rate is going to get higher.

Have we hit bottom?

Quotes from the brilliant

I would like to share with you a few quotes from Warren Buffett that I have just read. I may not buy the same stocks as he does, but I really admire the thoughts of this guy.

1. Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
2. Why not invest your assets in the companies you really like? As Mae West said, “Too much of a good thing can be wonderful”.
3. Risk comes from not knowing what you’re doing.
4. Wide diversification is only required when investors do not understand what they are doing.
5. It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
6. If a business does well, the stock eventually follows.
7. Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.
8. Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.
9. I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.
10. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

Two more that I believe every one should always keep in their mind:

1. It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.
2. It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.

You can read more from the "Investment School" website here.

Thursday - June 4, 2009

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Intel (INTC) is going to buy Wind River Systems Inc. (WIND) for $884 millions in cash. WIND's software technology is used by NASA, Apple (AAPL), and Hewlett-Packard (HPQ), etc. This deal is expected to close in the summer. This will diversify INTC's business. WIND jumped 47% to $11.76.
Retail sales fell in the month of May. Same store sales at Costco (COST) fell 7%, Abercrombie and Fitch (ANF) fell 28%, Nordstrom (JWN)fell 13.1%. Consumers are not willing to spend much yet. Note that two thirds of the US economy is retail.

In a commentary "Buffett Is Less Bullish on U.S. Than You Think: Alice Schroeder" written by Alice Schroeder, it says:

There’s evidence, though, that Buffett is awake to America’s problems. He says there will be no quick rebound in consumer spending, the economy has “fallen off a cliff,” and we are now “fighting a war.” Berkshire Hathaway Inc.’s real- estate arm just estimated that the backlog of unsold houses is double the official figures. ...
Once you disentangle all these strands -- the cautious Buffett who tends his reputation, Buffett the long-term optimist, Buffett the realist about economics, Buffett the hawk on inflation, and Buffett the domestic investor -- it turns out that Buffett is bullish, but not as bullish as he sounds. His optimism is long-term in nature, and inflation is his hedge.
Consider yourself warned.

I considered myself warned.

Wednesday - June 3, 2009

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Oil dropped more than $2 t0 $66.12 a barrel. TSX shed -298.67 points becasue of that. Of course, people are due for profit-taking as well. Chevron (CVX) closed at $68.26 and is yielding at 3.7%.

I have added USD/CAD chart and Gold chart on the side of this website. I think they are helpful.

Tuesday - June 2, 2009

Screenshot from http://finance.yahoo.com/

S&P500 was up +1.87 points. TSX was slightly down -15.27 points. USD/CAD is at 1.0814.

Pending home sale in US in April is up 6.7%, largely due to foreclosures. Yet it helped the market to go higher. Think about it. Is it really a piece of positive news?

China is the single biggest holder of US debts. Japan is the next biggest one.

My adsense is still not approved yet. Man, it takes long.

Monday - June 1, 2009

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The first day of June, we have a huge gain! I am happy but not happy enough. Humans are greedy. I am greedy. But I have been telling myself not to be greedy a million times today. Oil is at $68.4USD a barrel. USD/CAD is at 1.0921.

I am still skeptical though. I think the gain is too much, too soon. People are reacting on news that are less bad. They are jumping in fearing that the are missing out. This is the reverse of massive selloffs we saw last year.