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I posted a couple of new BLOGS
on Friday for your review. In light of last week's rather vicious sell
off, I thought it might make some sense to look at good entry pullback
levels for two OTC Journal ideas that have been streaking- specifically
Apple
Computer (NASDAQ: AAPL), and Titan Global Holdings (OTC BB: TTGL).
The post Labor Day market is always interesting, and presents some wonderful
opportunities. Another note worthy stock is PhotoChannel Networks (OTC
BB: PNWIF). Despite the monster sell off in the market on Friday, the
stock managed a nice gain, and closed back above $3 for the first time
since July 31st- A very bullish sign.
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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Coming
Attraction |
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The majority of my time of late has
been spent on a very special project. You will all be learning about a
new idea the weekend of September 22nd. I have been very involved in the
company for two years, and I will be using ground breaking technology to
put you, the investor, right into the heart of this company. You will have
an intimate, first hand understanding of the power of their business model.
About this time last year there were
several new ideas introduced which went on to be huge wins. It's deja vu
all over again with one exception- this upcoming idea offers you, the investor,
a unique opportunity to jump right in and judge for yourself- is this company
going to be a huge win? Stand by, learn, and decide for yourself.
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The "R" Word-
What, Me Worry?- Part II |
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Alfred E. Neuman is back.
My pal who refuses to worry. After all, worrying about what might happen
never got anybody anywhere. He's not worried, and neither am I.
I was astounded on Friday as I watched
the talking heads on CNBC repeatedly throw out the "R" word
as if it were a foregone conclusion over one weak jobs report.
Is our economy really falling apart
as Friday's action in the stock market would tend to support? Not likely.
The talking heads in the media would have you believe the world is coming
to an end due to the debacle in the sup prime lending market. Yes- lots
of mortgage brokers and construction workers are out of jobs, and the unemployment
rate ticked up for one month. Those out of work mortgage brokers were all
selling shoes at Saks three years ago, and they'll be back there again.
Tough markets are very Darwinian- it's survival of the fittest and most
experienced.
Consider the true impact of the sub
prime fall out on our economy:
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75 million homes in the US are owned
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40% of those homes are owned free and
clear (mostly between the coasts)
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Ony 14% of the remaining 60% are considered
sub prime
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About $150 billion in mortgages are
sub prime
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Assuming a 50% default rate- $75 billion
go mortgages bad
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The banks foreclose on $75 billion,
and probably recoups about 1/3- leaving $50 billion in loses
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The mortgage market is $10 trillion-
if $50 billion defaults, it's a small loss (someone do the math for me).
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There's another $18 trillion in stock
market value and another $30 trillion in bond value for the market.
Therefore, the whole sub prime default
issue is a very small piece of the entire pie, and relegated to a relatively
small number of investors. True, it's creating a ripple effect in the bond
market, but sanity should prevail before too long.
Over 97% of people over 30 with some
education who want to work have jobs. That's a fantastic number. It's a
much higher number than in 2000 when tech bubble burst.
Are property values hurting consumer
spending? Probably- to some extent. After all, investors poured out of
the stock market in 2000 and 2001 when the tech bubble burst. Money started
chasing real estate, and many homes doubled in value from 2000 to 2006-
20 years of appreciation was condensed into 6.
Now, the real estate developers,
home construction, and the mortgage industry are having a recession. Their
bubble burst. And, while that's a significant part of the economy, it's
far from the whole economy.
Consider the following fact. In September
if 2001 the American economy was slammed by 911. The country came to a
virtual stand still for 30 days. Half the legacy airline carriers were
forced into bankruptcy thanks to skyrocketing oil prices and reduced travel.
Hotels, restaurants, department stores- all kinds of industries suffered-
so, did we have a recession? it was more like a brief slow down. Within
4 months the Goldilocks economy got back on track. Can this be worse? I
doubt it.
So, why did the market get hammered
post Labor day. I have a theory about September, and the facts back me
up. Did you know that statistically September is the worst month of the
year for the stock market? Yup- Despite September being ok for the past
two years, the market has actually been down an average of -6.5% over the
past 12 Septembers.
Things don't just get magically better
because we are past Labor Day. I believe September is generally a lousy
month because calendar Q3 numbers are generally the worst of the year,
and the market is pricing this in. Have you ever tried to get anything
done business wise in August?- No, it just doesn't happen.
Calendar Q4 tends to be great because
people and companies come back from summer vacations and try to make up
for lost time. We work twice as hard through to the end of the year, and
lots of commerce happens. The market starts pricing in growth in October.
Calendar wise, September is one of
the best months of the year to be a buyer.
Recession? It didn't happen in 2001,
and things are better now than they were then. Globalization had not matured
to the same extent. Great American companies like Caterpillar, Boeing,
and Exxon are benefiting from the massive global expansion. They hire people.
The market is betting the FED will
lower interest rates 1/2 point later this month, and a 1/4 point twice
more this year. That sounds like a pretty favorable environment for stocks.
What, me worry? Not likely.
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