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I posted a new BLOG today
on CREE (NASDAQ: CREE)- my large cap end of August pick that has
just rocketed up the charts in the last couple of days. For those of you
who were paying attention at the end of August, I suggested taking a position
in CREE at $25- coincidentally on August 25th. Three weeks
later, and with a little help from Ben Bernanke and GE Rumors, the stock
is trading at $34. My thoughts in today's BLOG. I
haven't posted a lot of other content lately- my apologies- I am just buried
getting ready for this weekend's new idea launch.
The BLOG is your opportunity
to ask questions and offer comments. I will make an effort to answer every
legitimate question. If I don't know the answer, I will contact the management
and get the answer. Alternatively, if you have questions you don't want
publicly displayed, you can always email me directly at editor@otcjournal.com.
To use the BLOG, simply go
to the home page at www.otcjournal.com
- the BLOG scrolls down from the upper right hand corner. The most
current journal entries appear on the right hand side of you screen. Check
back frequently for updates particularly when stocks are moving to overbought
or oversold levels in volatile markets.
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One
Last Reminder |
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Here's one last reminder about this
weekend's new idea. Not only am I excited about the idea, I am very excited
about the way it will be presented. It's a new way of bringing you up close
and personal with this idea. I am going to give you a chance to see company
and meet the entire management team. Invest the half hour I've asked for
and decide for yourself- is this idea for you? Get ready to check your
inbox on Saturday. I believe there is a reasonably easy double in this
one from current levels.
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It's A New Game
as The "I" Word Replaces the "E" Word |
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All of a sudden, I love Ben Bernanke.
This past week when the FED surprised the market and lowered the
discount rate by one half point, the whole game changed. It's blast off
time.
It's amazing how quickly the rhetoric
changed out of the talking heads in the media spotlight. On Monday, the
"R"
word
was plastered all over CNBC. Here's how the argument goes. The lack
of liquidity in the system has forced banks to raise mortgage rates. The
gigantic raft of foreclosures in the exotic, sub prime mortgage market
was causing a meltdown. It's a proverbial hang over from the last housing
boom.
This massive bubble of mortgage death,
along with a very slight increase in the unemployment rate, was going to
send the US consumer to the sidelines, thereby causing a RECESSION (the
"R" Word). Earnings would then fall apart, and the market would follow
suit.
Here's what cracks me up- on Wednesday,
one day after the FED's move, there was a new bunch of talking heads out
there spewing forth the "new" problem. On Monday it was falling property
values and "deflation" or "disinflation". On Wednesday, the "I"
word was being bandied about by every market genius capable of getting
his or her mug front and center in the media. "I" stands for INFLATION-
INFLATION is going to destroy our economy now- after all, gold and
oil are both pushing to new all time highs. It's going to be 1979 and Jimmy
Carter all over again.
Not, it's not- it's more like 1998
all over again. However, this time it's without AOL trading at a PE of
200 or JDSU with a PE of 700. It's the S&P 500 trading with a PE of
15, and forward looking operating profits over $100 per share.
Bernanke's move sets us up for a
whole new game in the market. Look for major PE Expansion over the remainder
of the year, more aggressive earnings forecasts, and stocks breaking out.
Large caps will be first, followed by smaller names as money starts to
flow down to stocks that haven't moved in a while.
This next leg up in this bull market
could be the strongest. This could make 1998 to 2000 look weak- why?- one
word- Globalization. There is more money chasing less ideas on a global
basis. There's more demand for goods and services than there has ever been.
There is more expansion capability thanks to emerging markets. We're starting
from much more reasonable valuations.
Tuesday was a complete game changer.
Sure, we'll have some non-believers whining about inflation, the falling
dollar, and rising oil prices. Don't listen. Once again, the doom and gloomers
will end up with egg on their faces.
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