Gadda's Garbage Truck

Well, double take and take two on almost everything.

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Location: Salt Lake City, Utah, United States

I am an amateur investor, playing with a little money on the side, and trying real hard to make genuine sense of the macro economic conditions, the Markets etc. Important Note: The writer of this blog is an amateur. I invest and write for personal enjoyment. I do not recommend stocks. I offer free consultation but you must be responsible for your own investment decisions!

Saturday, April 30, 2005

A funny toon on Greenspan!

Hilarious!

Friday, April 29, 2005

MDMONE BLOG

Great stuff. The 26 things to do in an elevator is hilarious!
mdmone blog

Thursday, April 28, 2005

Markets

Well, what did we have here - A softer than expected GDP - but it is ok since the whisper number was lower anyway, said the traders. The whisper number? And when did the market factor this in? It did factor in so far, the increase in energy prices (I believe that is a lagging indicator), Inflation, increased jobless claims, two of the most weighted DOW components thrashing the street (IBM and AIG - and for different reasons). But apparently it ignored the GDP.

One thing I heard some perma bulls mention in CNBC is how the EU interest rates are lower in their bunds and their treasuries, that the dollar will actually gather a rally - and - if the rally stands in the dollar, there might be some short covering in the dollar! We are actually hoping for a short squeeze for the dollar to go up. 'Nuff said.

Three things which cannot go on - 1. Iraq War without an exit strategy. 2. Higher energy prices 3. Weakening dollar. We have all these three rampant - a classical recipe for a downturn, and most probably a recession. In theory, back to back recessions are almost deadly in terms of growth. I am sure that the Fed has some tricks up its sleeve and that sort of convinces me that the Fed will NOT raise rates by 50 in the coming FOMC meeting and stick to the 25 basis points thing - although inflation is there - "Cost-Push Inflation" - 70's anyone?

SCSS

On the other hand, sold my position in SCSS. I held it longer than 12 hours and that is an acheivement by any standards for me - just kidding - I think the stock covered its trading range for the next 3 months just after the earnings day. If it goes till 25, I will buy some more to sell @ 32.

Plays

I am considering playing PCU and PKZ/PTR/PBR in the commodities sector. Phelps Dodge came up with some kick ass earnings and PCU sold off. PKZ/PTR/PBR might get back on track come summer. The only thing I dont like about these companies is that they are ADR's. I have not had any particular good experience with ADR's (ITIG, DRL). So I might just wimp out and play something local like COP, CVX or XOM. Not that they are bad companies, but their volatalties (excluding COP) are less.

??

Finally, is the current price of GOOG justified? That I will rant on the weekend.

Have a kick ass Friday!

Wednesday, April 27, 2005

AMZN, SCSS Part II

Well Covered my AMZN short today. Holding on to SCSS.
My take on CME still holds. They are dual listing on NASD where the exposure increases, and hence might show an increase in volume - which might lead to a stock split. - it is still a huge buy below 200. Stop @ 190. Day trade it till you get your premium for the insurance option taken care of.
Dont be greedy, be smart!

Tuesday, April 26, 2005

AMZN, SCSS

AMZN is one company I love. But it has been VERY hard on my pocket in terms of investing in this stock. How can any company miss the estimates for 4 quarters straight? I mean, you would think that they would talk to the ANALysts at some point.
SCSS is one company I hate to love. I always sold out early in this stock - for I am not a fan of an air bed, and not the expensive ones. But they do seem to have a very rich Clientile (like Kevin Garnett of the Minnesotta Timberwolves) and very cost effective marketing and sales strategy, for e.g., late night ad spaces (cheap TV time, and watched exactly by those who would most likely need a good night's sleep)
Well. This time I took a position in each of those just before they come out with the earnings - I am not telling which side of the position I am in - and sure hope it is time for redemption.

Going Bo(e)ing again!

In the second multi billion dollar deal in as many days, Boeing is suddenly IN business. Full report here. What I, being a novice dont understand is where the anticipation of growth is in the market.

Mauldin talks about Minski

MINSKY'S INSIGHTS
Professor Hyman P. Minsky (1919-1996) studied at the University of Chicago and Harvard. He became a leading economist and advanced our understanding of the linkages between the financial markets and the economy. His work was influenced by the wisdom of John Maynard Keynes, Irving Fisher, Henry Simons, and other prominent economists and scholars. Among his many achievements is the Financial Instability Hypothesis (FIH): that stability is destabilizing.

Minsky found that financial systems naturally evolve from a position of stability to a vulnerable position of instability. Financial positions within the system evolve from "hedge" to "speculation" and finally to "Ponzi," a bubble-like stage. This evolution occurs when participants become increasingly optimistic about the future and complacent to risk. The resulting stability generates a false confidence, ultimately leading to financial positions that are increasingly vulnerable to conditions or events that do not meet expectations.

In the first stage, investors in pursuit of returns remain always cautious to the risks around them. The approach is vigilant against unwarranted risky exposure. Investors hedge by buying protection, actively diversifying, and maintaining cash reserves. In the second stage, during periods of low volatility and generally rising markets, investors become desensitized to potential risks and begin to increase their risk profile in order to enhance returns. This can be done by taking positions that are more concentrated, investing in high-risk securities, adding leverage through margin, and selling options. At times, yet not very often, investors disengage from rational investment thinking and make decisions based upon the expectation that someone else will buy their overvalued securities at even higher prices--this is stage three, the Ponzi phase...remember the recent bubble of the late 1990s?

Most cycles never reach the Ponzi stage. Markets more often remind investors of this cycle during the "speculation" stage and restore balance in advance of the carnage from a bursting bubble. Today, spring 2005, we are well into the "speculation" stage and the conditions are ripe for realignment. Let's explore the indicators.

More of this article can be found here

Enjoy!!!

Plays of the day!

CME and DNA in and out for a quick couple of hundred bucks.
I was right on on CME, but did not have the balls to hold it through its earnings (esp. on Margin!).
DNA's herceptin has +ve results (these results were published by the National Institute of Health Sciences) among women in their early stages of breast cancer (20-30% of the diagnosed cases)
Vulture play of the day: ISE
Make money on good news.

Monday, April 25, 2005

CME

Something tells me, the way ISE beat the street today, CME is going to make a killing tomorrow. I hope I am wrong, as I closed my position today.
One more play I am currently in, is a short on yahoo, for a quick coupla hundred bucks. I might get slaughtered in the open tomorrow, but will hold on till the GDP report on thursday (04/28/2005)helps me out.

If it is raining in Brazil, buy Starbucks

Needless to say, "If it is Raining in Brazil, buy Starbucks" is by far one of the best written and the most interesting books on macro-economics I have read (for a beginner). It is concise, clear cut and most importantly, informative.

Kickkus Buttus Maximus!

Market Overview

The market rallied decently today with the DOW getting a lift from BA (Canadian air orders 14 777 and some dreamliners + something else which will pay Boeing 6 billion by the end of 2010)
Nasd got a lift from oppressed trading in the last week - and no fundamentals have improved over the course of the weekend. Oil prices were low, but they are a lagging indicator. This means, that there is a rally coming in the NASD and DOW and we might see it till 10,500 - by no means a sustenable rally - but this one will give a good out for a lot of people from the market - and WILL precede a bear market that is going to arrive in September/October.
My 0.02 dollars.

Sunday, April 24, 2005

Valero merging with Premcor

Valero (VLO) is merging with Premcor (PCO). Cutting the fluff out the basic deals important for someone trying to make a couple of quick bucks out of this one is
The transaction is structured to be half cash and half stock and gives Premcor shareholders a premium of about 20% based on the recent 30-day trading range of Premcor's stock price. The assumption of Premcor's $1.8 billion in debt will be offset by $800 million in cash, according to the report citing people close to the deal.
So if you can get the first trade of asking of 69.69 on 04/25/2005 as early as possible, you can make a maximum of $1.11 with the least hassle. Of course I will be on it, so you got to beat me to get there. :-)

Always remember, there is risk involved in all forms of trading.

Fun stuff about Overstock.com

I had to put this in. Someday when I read back in my archives, I think I will just laugh harder. (That is me saying in defiance, that I dont care if anyone does or does not stumble in my private nook here)

Herb Greenberg's comments (he is a journalist @ CBSMarketwatch.com) on the OSTK's conference call on 04/22/2005 when the company almost had double losses than the ANALysts expected). Comments in parenthesis are mine.

"Given the stock's performance, a better way to put it would be that he's (Patrick Byrne) the least effective stock-managing CEO in America. The announcement of a stock repurchase program coupled with his personal purchases of shares in the high $40s and low $50s while at the same time continuing all efforts to discredit the critics are usually signs of stock management.

However, in the end, stock-managing is irrelevant if the numbers are bad, which they were at Overstock. Its loss in the first quarter was nearly double what analysts were expecting. April isn't starting any better. On the company's conference call Byrne said he wasn't sure if the April slowdown was the result of "tax day" or "the Pope." Tax day or the Pope? I rest my case, your honor. (As for the stock's 8% slide Friday: must be those darned naked short-sellers again.)"

LOL. What an idiot! I wish I could read some more news letters on this puppy and have the nuts to sell this thing short to the ground! ,I have more than one reason to do so.

Friday, April 22, 2005

Futures look shifty

Futures look -ve, as expected after yesterday's manic buying in the market. My predictions for this evenings headlines -
If the dow ends +ve, they will cite oversold conditions and maybe talk about market reaching fair value levels (is all bullshit in my opinion)
If the dow ends -ve, hey it's ok. Its going to be "The markets ended mixed to lower on friday after some investors tried to take profits following the 2% rally on Thursday!

I sure love explanation for some stuff, but what amazes me is that we know the answer (a.k.a the reason) either when the market goes up or the market goes down.

I won't buy into this one if I am not in yet. I would still watch oil very very carefully.

On a seperate note, Congress passed a 81 billion dollar war package for Iraq. I ask one more time - do we have an exit strategy? I sure hope we do - coz that is the only thing that saves a man butt - both in war and investing.

Have a good friday.

Thursday, April 21, 2005

Market Schizhophrenia?

Sometimes I sit and wonder, can all existing fundamentals change overnight in a market? People and perma-bulls @ CNBC seem to think so. Let me recap the events which have led me to believe that the market is in a very clueless mood.
1. Wednesday morning - we had the PPI results announced (Producer Price Index) and which came out to be 0.7% - vs a market expectation of 0.6% - this is normally high and not what the market wanted to hear. So, the market heard it as 0.1% and discounted the factor of the other 0.6% attributed to food and energy (are those not we rely on - at the core of our existence?) - The market had a rally - dow was up close to 60 points.
2. Thursday morning - we have the CORE CPI and the Fed beige book reports - the core CPI came out to be 0.4% vs a market expectation of 0.2% (the analysts missed by 100% - go figure) and the stocks got slaughtered. In my opinion the slaughterfest was a carryover from the previous day. The PPI needed to have some attention and it rightly got it. The fed beige book summarized the current economic condition by stating "Reports from all twelve Federal Reserve Districts indicate that business activity continued to expand from late February through early April". This added to the massive sell off. I was watching when the dow flirted with 10000 (it was actually 10000.4) and hoped that S & P would hold the Art Cashin level of 1136 (after which "we dont know where it is going to end" - Cashin says). It did - and we officially lost 900+ points in the DJIA less than 5 weeks. (Note that the selloff volume was 9-1 in sellers favor on the 20 April sell off - a classic Zweig sell sign)
3. The weekly Jobless claims come out and they are 36K less than expected. Almost every company beats the street - Tech seems to be in oversold levels. I wake up and pre-market futures looked nutty. The DOW ended up 206 points - its biggest one-day move higher since April 2, 2003. NASD (recording its biggest one-day point gain since March 25, 2004) was up 48+ points. Now my question remains - Within one day we forgot 3 very important things - 1. The current oil shock we are in 2. The PPI and the Core CPI and 3. The increasing deficit and increasing expenditure to keep the war in Iraq going.

I believe that the market needs direction - and till more direction is seen in how the OPEC is going to deal with the oil prices situation - there is no way we can tell how the market is going to go. The only technical thing we can rely upon is the correction to the oversold conditions (dont even ask me about the 200 DMA for the DOW).

Any comments will be appreciated.

Wednesday, April 20, 2005

CPI and the Internals

The market is behaving wierd today. The earnings have been very good, but not stellar (but that was in the past) - most of them re-iterated their guidance for the rest of the year. However, the Core Inflation was the highest in 5 months and the US oil inventory was down 1.8 million barrels (that is a swing of 2.8 million barrels from expected - and this increase in inventory has been currently priced into the market IMHO). I dont understand why people disconnect food and energy and read the same indicator as positive (also there is no confirmation on yesterday's PPI). Common sense tells me that increase in price of one commodity affects the other, there is always a carryover.
I continue to be pessimistic about the market short term till I see some indication of oil prices going down.

Tuesday, April 19, 2005

Looks like the Yahoo short has gone bad just after YHOO announced earnings (they beat the street by 0.03). The online revenue surge size somehow escapes me, even though I constantly work with computers and pro-actively try to block adverts. Anyways, I still cannot get myself to invest in YHOO or GOOG for that matter.
Anyways, hoping that the news about stock dilution and the unjustifiable P/E for ebay should enable a new short term low near earnings (also note that ebay has just recently hit a fresh 52 week low). I still continue with my short recommendation for eBay.
Flash did good for INTC and killed AMD. AMD should move in sympathy with INTC in the garbage trucks opinion.

Monday, April 18, 2005

Stock Recommendations for 04/19/2005

Short

YHOO
EBAY

Long

AMD