Sprint and Motorola in Wireless Broadband Development Pact
Wireless broadband is on the way and soon! I like the analogies drawn between the car boom of the roaring 20's and the computer of the 1990's. The coming of wireless broad band is the equivalent of the building of the interstate highway system. Before interstate 95 was built it took a lot of hours to get from New York to Miami. This one road has had a dramatic effect on the economy of points all the way from New York to Miami.
Right now, many folks have no idea what they are missing. The pocket computer of the future will boost productivity tremendously.
Sprint has announced deals with Motorola and with INTC to develop broadband systems. INTC is also working with Nokia. Our family has long term holdings in MOT, NXTL and FON. We believe FON is positioned to gain market share.
Yesterday, I wrote about the municipal systems being installed via parking meters. Corpus Christi Texas is installing a system that will cover 147 square miles. Still, it is likely that the final system will require the use of a cell phone company for access. Citizens of towns where broadband is widely available are excited. The ability to check the internet from anywhere is changing their lives for the better.
BUY THE BULL! PRODUCTIVITY IS EQUAL TO THE CREATION OF WEALTH! WE ARE LIVING THROUGH DECADES OF VERY HIGH PRODUCTIVITY GROWTH! CONSUMERS AND BUSINESSES WHO TAKE ADVANTAGE OF NEW TECHNOLOGIES ARE BENEFITING THROUGH HIGHER PROFIT MARGINS AND LOW INFLATION RATES!
Thursday, June 30, 2005
Sprint and Motorola in Wireless Broadband Development Pact
Posted by Jack Miller at 6/30/2005 05:04:00 PM
Bank of America to buy MBNA for $35 billion - Banks - Financial - Financial Services - M&A
Oops! I just missed this one. A few days ago I told a reader that my favorite credit card company is MBNA. Capital One may have the best commercials but MBNA has the best policies. The MBNA affiliation program has caused my family to have more than one MBNA card.
MBNA has been a "fair dealer". Our experience with Citi-Bank has been the opposite. Citi-Bank will find the way to sneak an extra charge onto your statement if you are not watchful.
NationsBank appears to be on another roll. The old North Carolina National Bank grew-up under the leadership of Hugh McCall. I am not familiar with the current management but the bank is making moves to expand world wide.
The real point is that if you buy good stocks in this market you stand a good chance of hitting a take over stock. This includes international companies as well as US companies. European mergers have been substantial.
THE BULL IS GRAZING BUT IT COULD CHARGE ANY DAY. BUY THE BULL.
Posted by Jack Miller at 6/30/2005 01:34:00 PM
Wednesday, June 29, 2005
Houston is using parking meters to dispense WIFI to its citizens. Corpus Christi has lit up 24 square miles with free WIFI and is on the way to 147 square miles. The citizens love it, SBC does not!
SBC and other telecoms are trying to block municipal WIFI. I picture a man with a pitchfork trying to stop an avalanche. The benefits are too good and the cost are low.
On the way home from the beach, I fumed when I went through a cell phone dead zone. I was frustrated that our car is not internet equipped. Once one is in the habit of being always connected, one suffers withdrawal pains when one is not connected.
WIFI is going to be another biggie! BUY THE BULL!
Posted by Jack Miller at 6/29/2005 06:06:00 PM
My forecast is that Google Pay or what ever the product will be called is going to be very big. Based on comments by the company and by other bloggers, my best guess is the Google approach will be very different than the PayPal approach. EBay has raised the price of doing transactions. The price of listing the product, the auction fee and the payment fee. In my opinion 2.9% is a steep fee for making a payment. The online payment costs should be less than the cost of using a credit card at a gas pump!
EBay has been one of my families core holdings for several years. The stock has been good to us and we believe it has a great future. On the other hand, we believe the Google approach to online payments will be significantly better. In the long run the competition will likely be good for EBay. When the transaction costs go down, millions of new accounts will be opened and trillions of transactions will occur!
The business is tougher than it looks. EBay could not crack the business so it bought PayPal. I suspect Google find it easier to build a payment business. Millions of advertisers already make regular payments to Google and millions of host sites receive payments from Google. Many web sites send and receive payments. It wouldn't require much encouragement to allow the payments to accumulate in an online account.
It is my hope that the Google "cut" will be low enough to finally make "micro payments" attractive. If someone could toke a web site $.25 with the click of a button, folks may be willing to pay for content. Subscriptions might be for one article, an hour, day, week, month or year. Online news, video, music and blogs might be sampled for a modest fee by millions of folks. Most sites would likely offer a free viewing before the payment clock starts to tick.
What if you could subscribe to the Wall Street Journal for 5 hours and use those 5 hours in any increment? This trial subscription might last some folks a long time. It might cost them $5 to check the headlines once a day for several months. Chances are they would get hooked on reading a good article and decide to upgrade to a longer term subscription at a lower hourly usage rate. It might cost those who read a newspaper from cover to cover $1 but those who only check the sports page a quarter.
I am one of many folks who are frustrated by too much advertising. A lot of time could be saved and a lot of clutter could be eliminated if one could pay a modest charge for advertising free content.
A friend of mine sold a little piece of Google yesterday. He asked me if I have been lightening up? NO WAY! I HAVE BEEN THINKING ABOUT BUYING MORE! My families portfolios have done very well. For example, our AMTD holdings passed our Google holdings in value. Our airlines were super hot, down a couple of days and now hot again. Google is not our biggest holding and not our biggest winner but we love the company. The strength of the company is still being underestimated. The comparisons of Google to TWX have been a big joke. With Google's earnings and growth it will likely pass the enterprise value of TWX. TWX has the assets but it is a slow moving battleship without air support next to the fleet moving Google.
Only aggressive investors should have more than 5% of their portfolio in a high priced stock like Google but those who have not committed 5% are missing the boat. Google is changing media systems around the world. EBay is too.
The cost of newspaper classified advertising was reasonable when there were no alternatives. The coming Google Payment system will make it all the more easy for content to be provided at lower cost over the internet. Google Pay is going to be BIG.
BUY THE BULL!
Posted by Jack Miller at 6/29/2005 03:27:00 PM
SELLING REAL ESTATE!
This week my wife and I will spend a lot of time preparing for the big move (Time for just a blog or two each day). We will hold a moving sale this week end. It is amazing how much "stuff" one can accumulate in 33 years of married life. It is emotionally draining to make decisions about what to keep and what to sale.
We hope to travel extensively the next couple of years. There is not much point in our owning a "first" home during this time. We will likely rent a small apartment or condo to serve as home base. We will spend a few months each year in our "second" home at Myrtle Beach. We will work online where ever we go.
In 1986, Stan Salvigsen, the Chief of Research at Merrill Lynch, sold his home and rented it back. Five years later he was able to buy it back at a discount. He invested his equity for five years and doubled his money in the markets.
My wife and I are down-sizing. Our children are grown. We do not need a 4 bedroom 4.5 bath home. We do not believe we are at the top of a real estate bubble but we believe price increases will be relatively modest in comparison to the gains of recent years. We expect to make more in the markets than we would by renting the house for the next few years. When we settle down again, it will be in a cluster style community with amenities for "seniors" (we are currently 55 years of age).
The baby boomers are currently 46 to 59 years of age. Both my sisters and brothers have started shopping for "retirement homes". My older brother is considering the purchase of two cluster homes each near a set of grandchildren.
Marilyn and I will visit a number of "hip" retirement communities in the next couple of years. Everything from Aspen Colorado to Whistler British Columbia. Just because we have sold and are selling a substantial portion of our real estate holdings, does not mean that we have lost interest in studying and learning about real estate trends. Those who were smart enough to buy in Aspen 30 years ago have made a killing. We hope to identify the next "hot" communities in the next cycle. We think the current cycle is getting long in the tooth for speculation. Again, we do not believe a bubble is about to pop but we seen better opportunities in the stock market.
The fact that the current market is treading water, does not mean the BULL is over. Everyone from Greenspan on down is confused by the strong economic growth and low long term rates. It was about 500 years ago when the printing press changed the world. The internet is just as revolutionary!
BUY THE BULL!
Posted by Jack Miller at 6/29/2005 01:46:00 PM
Tuesday, June 28, 2005
Yesterday, my wife and I spent the day in remodeling activities. The good news, she allowed me to sit in furniture stores reading while she selected new sofas, chairs, tables, etc.
I read about the roaring 20's. GM, the hot-hot company during the roaring 20's, continued to make a profit every year of the great depression! Ford made the two most significant innovations in car building but GM was the more successful marketer. Ford standardized the parts to make the Model T in 1907 and invented the assembly line in 1914. The dramatic increase in productivity allowed Ford to double the wages of his employees and to cut the cost of the cars in half! GM caught up and passed Ford primarily through the use of installment credit.
Harry Dent makes a great comparison between the computer and the auto. Although the auto was improved with many add-on features such as automatic transmissions and air-conditioning over the years, it was many years before the auto lead to the massive construction of interstate highways. The boom years of the 50's and 60's were a direct result of the auto boom in the 20's.
The internet highway would not be possible without the computer. The internet highway is about to "take-off". My ability to blog wirelessly from Myrtle Beach is small but large at the same time. If I can execute my plan, over the next two years, I will blog from many different communities in several states and even countries. Whole communities are being built around the telecommute concept.
Dent lists a number of towns such as Aspen CO. where the majority of residents work at least part-time from their second homes. One of the reasons for the discrepancy in the payroll reports is because many online businesses are new small enterprises. In the past 3 or 4 years, there have been 2 to 3 million new jobs created but 9 million new bloggers.
One problem that has held back internet commerce has been fear of identity theft. PayPal has been one of the few surviving payment systems and it is largely confined to payment of auctioned items. Etrade now offers a password generator to help secure customers accounts. I for one am ready for biometric identification. I, as an old man, 55 and aging fast, cannot handle 15 user names and 15 passwords. I want my computer to smell me coming and log me on.
Based on my experience with Google, I believe its payment system will be a fine product. I look forward to the day of an integrated online payment system. Online banking systems we currently use still need work.
The efficiencies being gained through the use of internet and cell phone communications are still in the early stages. Last week was an interesting vacation week. I observed my daughters, their cousins and friends as they enjoyed a fun time at the beach without losing touch with their friends back home. Marilyn and I also enjoyed a great vacation but we never stopped working either. More than once, one or the other of us took calls while sitting under a beach umbrella. While watching Batman Begins (the best Batman Movie), we cut the cell phones off. Our youngest daughter, her first cousin and three of their friends do not have home phones. It is very natural for any of them to make a "long distance" cell phone call to ask a simple question. I still tend to explain to callers that I am not at home but at the beach. These young folks simply asked and answered business questions without mentioning their location. They are never out of touch and two of these young folks continued to work all week through an occasional phone call.
Yes, the internet and cell phone networks are like internet highways for cars. A lot more work will be accomplished at lower costs as we move into the final adoption phase of the internet.
I believe in investing in all sorts of industries. Even those that will benefit in only indirect ways from the internet. In the same way that interstate highways reduced the cost of supplies for all businesses, the internet will lower the cost of all businesses. Some businesses will be hurt but consumers will win.
We ate at Smokey Bones the other day. We like this middle of the road, moderately priced restaurant well enough that we will probably increase our stake in DRI ( Olive Garden and Red Lobster). We also very much enjoy Logan's Roadhouse and may add Cracker Barrel to our holdings.
The airlines have pulled back as the price of oil has risen. This is a buying opportunity. Be sure to diversify into several legacy carriers to give yourself great upside while keeping the risk as low as you can.
We will close on three more real estate deals this morning and then head for home. More blogging tomorrow.
BUY THE BULL!
Posted by Jack Miller at 6/28/2005 08:16:00 AM
Friday, June 24, 2005
No one knows if an index break out will be soon. I believe it will happen by November. Those who think it is funny that I keep writing about a BULL market are obviously invested in the wrong stocks.
BUY THE BULL. IF YOU NEED HELP FINDING THE BULL LET ME KNOW; I'D BE GLAD TO HELP!
Posted by Jack Miller at 6/24/2005 10:54:00 AM
The Big Picture: Politics
Like Barry, part of my bullishness late last year was partly based on guarded optimism that Social Security reform would pass; the big difference is that I have said it will take until October to pass. My close friend who knows politics better than most said the Dems would never pass a bill that diverts money from contributions. He said they will only accept an "add-on" account. So far, he appears to be correct.
However, the latest versions offered give participants ownership of the existing surplus. There is no cost to this proposal and yet participants will have a guarantee of at least some return from social security. This plan may get traction. It may become difficult for Dems to oppose any reform. The fact that will be used against them is the 11 trillion dollar deficit. Voters know the "train wreck" is years away but some will be very upset if Dems block all reform proposals.
Barry, Kudlow uses the correct analogy of getting the Camel's nose under the tent. The idea of "lock-boxing" the surplus is an Al Gore idea. Lock boxing into individual accounts is the best way to protect the owners. It is also the way to get the Camel's nose under the tent.
BUY THE BULL! THE CATALYST TO THE NEXT MOVE IS NOT KNOWABLE. IT COULD BE STALLING SHORT RATES, DECLINING OIL PRICES, PASSAGE OF AN ENERGY BILL OR PASSAGE OF SOCIAL SECURITY REFORM. WITH STOCKS CHEAP RELATIVE TO BONDS AND REAL ESTATE, ONE CAN CONFIDENTLY FORECAST A GOOD MARKET AHEAD. KNOWING WHAT WILL KICK OFF THE MOVE IS NOT POSSIBLE. THE S&P SITS VERY CLOSE TO BREAK OUT TERRITORY. MY BET IS THE MARKET WILL DO LITTLE DURING JULY AND AUGUST. NEVER-THE-LESS, WE ARE AND PLAN TO REMAIN FULLY INVESTED.
Posted by Jack Miller at 6/24/2005 10:40:00 AM
Various family members left for home yesterday afternoon. Our vacation has been fun and it is a shame it has to end. My youngest daughter will stay until Sunday and my wife and I will stay until Tuesday. This vacation was the Hanes "family reunion". The third week of July it will be the "Miller Family's Turn".
Few of you appreciate the advantages of sharing ownership in a beach property with 9 other families. It is a sweet deal because the overhead cost are dramatically reduced, tax advantages on second homes are better than on rental property and because 10 families can all get great weeks with conflicts in usage being extremely rare.
As a retired investor, I would be happy to talk with you about investments in real estate or in stocks or bonds. In full disclosure, my wife and I are in the process of selling off the 29 properties that we leased or owned. Running a rental business involves more work and heartaches than we can recount but owning a second home at the beach is hard to beat.
Our top investment advise, no matter the investment vehicle, is to keep the transaction costs as low as possible. If you can buy real estate without paying a 6% real estate commission, you will be a giant step ahead. If you buy stocks without paying hidden mutual fund charges or high brokerage commissions, the long-term difference in your account value will be astounding.
Use the SEC mutual fund calculator to see how much hidden fees will cost you over long periods of time. On a $100,000 account over 40 years the fee cost can exceed $400,000.00!
Posting will continue to be limited for the next few days. I can talk on the phone while sitting in a rocking chair watching the waves roll-in. Call my office at 336-778-0543 9 to 4 if you want to chat.
BUY THE BULL--YOU DON'T WANT TO MISS THE AVERAGE GAIN OVER THE NEXT 3 YEARS!
Posted by Jack Miller at 6/24/2005 09:30:00 AM
Citigroup, Legg Mason swapping assets in $3.7 bln deal - Banks - Financial - Specialty Finance - Financial Services - M&A
Citigroup, Legg Mason swapping assets in $3.7 bln deal - Banks - Financial - Specialty Finance - Financial Services - M&A
Merger activity continues at a brisk pace. This morning, in addition to the LM deal, the Unocal deal is in the news. Unocal now has two bidders. The Sprint-Nextel deal will be approved by the voters on July 13. The J&J Guidant deal will be renegotiated. The FAA approved the AWA USAir deal. Many other deals are in the works.
Warren Buffet says we should expect additional purchases by China. He is correct. The country is selling a lot of goods and the companies involved are making high returns. Like the Japanese "invasion" in the '80's, we can expect the Chinese "invasion" not to stop with computers or oil.
Investors should understand that the way to make money is to invest prior to the next take over. Spread your investments into good companies in various industries and you will hit your share of take overs. I can help you set up your portfolio if you like.
Once you hit a winner, it pays to be patient. When a company agrees to sale, the board of directors is compelled to accept the highest offer, not the first offer. When the ET bear-hug letter was sent to AMTD, traders suggested the $15 bid should be hit. My family was patient and we now own an $18 stock that is paying a $6 special dividend. We know own the leader in online trading. A firm that has completed 7 prior deals that were all accretive to earnings. In the mean-time, our ET shares have traded up another 30%.
My daughter will close on the sale of a beach property today. She will loan me a portion of the proceeds to support other real estate projects. With another portion, she will add to her stock portfolio.
Stocks are cheap in relation to bonds and real estate. Many professional money managers believe that stock market returns will be below the long-term average over the next few years. They may be right but stock market returns should be the returns on bonds and real estate.
MY FAMILY IS BUYING THE BULL! YESTERDAYS DROP DID NOT KILL THE BULL. WE EXPECT THE S&P TO RETURN 25% OR BETTER FOR THE YEAR. THE MARKET HAS DONE VERY WELL IN THE FACE OF INCREASING SHORT INTEREST RATES AND INCREASEING OIL PRICES. THESE INCREASES WILL NOT LAST FOREVER. STOCKS WILL GO UP EVEN FASTER WHEN IT IS CLEAR THAT SHORT RATES ARE ABOUT TO STABLEIZE.
Posted by Jack Miller at 6/24/2005 09:28:00 AM
Thursday, June 23, 2005
Simple Return: 1.74%
Simple Return: 4.07%
Big performers include airlines stocks (AMR up 46% and CAL up 76% over purchase prices)GME continues to soar at 62% growth and USG at 35%. Be sure to check out Kupsky's review of this weeks Stock of the Week to see if it's a pick you want to include in your portfoio.
Posted by Jack Miller at 6/23/2005 07:53:00 AM
Wednesday, June 22, 2005
There is nothing much better than a multi-thousand dollar nap at the beach. This morning, I enjoyed bocce ball on the beach, had a good lunch and a great afternoon nap. While sleeping the AMTD deal was announced. Six dollars per share in cash and the stock is up $2.65 per share. I should go back to bed!
As a bonus, ET is trading up $1 per share. The talk is that other deals will follow. It is possible that SCH, ET and AMTD will become the "big three" discounters. Scott trade, BrownCo, Harris Direct and others may have other plans.
The big swap brewing between CITI and LM indicates that the industry restructuring is not over. I see the day when most investors will use independent fee based advisors and discount brokers.
The health care index is on a nice run. The market is rotating through the sectors in the normal pattern. Buffett is getting a lot of press in regard to utilities. Utilities have had a nice run. I will focus more on health care.
BUY THE BULL! STOCK AND BOND INVESTORS ARE MAKING MONEY. MONEY MARKET INVESTORS ARE NOT. BILL GROSS IS CALLING FOR A 3% LONG-BOND. I WILL STAY WITH STOCKS. I EXPECT 25% GAINS IN THE S&P OVER THE NEXT 12 MONTHS. BONDS REPRESENT THE DISCOUNT RATE ON EARNINGS. IF BONDS YIELD 3% STOCKS MIGHT TRADE AT PRICE TO EARNINGS RATIONS OF 25 TIMES! BUY THE BULL AND HANG ON FOR THE RIDE!
Posted by Jack Miller at 6/22/2005 03:14:00 PM
Summer has arrived. The stock market is in its traditional slow down. Folks will talk about a summer rally but between now and October, don't expect too much to happen.
My family will stay fully invested. We know that bottoms are often made in October but stocks are cheap. It is a mistake to get out now with hopes of buying at lower prices in the fall.
Many folks have declared SS reform to be dead. When the Senate is willing to block the Presidents staff appointment to the UN, it is easy to assume that the Senate will not cooperate on fixing Social Security.
The battle is not over. Americans understand that Social Security is underfunded. It needs to be fixed. Indexing benefits as proposed by a Democrat and supported by the President may be the next step. After the "fix is in", the idea of personal lock boxes for the current surplus will be difficult for Democrats to oppose.
Energy legislation is moving forward. Buffett and others are ready to invest billions in modernizing our energy infrastructure. New laws will turn capitalism loose to solve the energy problem. Middle East oil will be imported for many years to come at competitive prices and as a declining percentage of our total usage.
In summary, it is hard not to be positive. The weather is outstanding in Myrtle Beach, the markets are behaving and world wide the average standard of living is increasing. Life is good.
BUY THE BULL! BULL MARKETS DO NOT GO UP EVERY DAY! THE DON'T GO DOWN A LOT EITHER. A MARKET THAT PULLS BACK, LETTING BYSTANDERS GET ON BOARD IS NOT A BULL MARKET. THIS MARKET HAS SEEN ROTATING SECTORS BUT THAT DOES NOT MEAN IT IS A GREAT TRADING MARKET. IT CONTINUES TO TRADE LIKE A BULL. A BREAK OUT TO NEW HIGHS WOULD CONFIRM THE BULL. SEVERAL OF OUR ACCOUNTS ARE SITTING NEAR ALL TIME HIGHS. WE LOOK FORWARD TO THE BREAKOUT.
Posted by Jack Miller at 6/22/2005 12:32:00 PM
This morning the reports indicate that AMTD will announce the purchase of TD Securities today. Hidden behind the announcement was the announcement that ET has raised its bid for AMTD to $17 per share.
For many months, I have written that investors should realize that companies are buying back stock, raising dividends or buying other companies. This activity will continue because companies are rich with cash. Cash is an under-performing asset. Any investor including mutual funds and corporations, who holds excess cash is going to kill his market performance 9 times out of 10. Those who think they can short-time the markets and hold cash when values of stocks, bonds and real estate are declining are badly mistaken.
Allocating substantial resources to cash is a sure way to lose in the long-run. Companies holding low debt and high cash positions are inviting take-over. The smart investor will buy stocks before the take-over bid is announced.
This is not written to suggest that one invest in take over rumor stocks. One should buy good values and the take overs will come.
CNBC just reported that the ET bid is $17.50.
BUY THE BULL! THE BULL IS GRAZING--GATHERING STRENGTH--THE NEXT RUN IS NEAR!
Posted by Jack Miller at 6/22/2005 09:36:00 AM
Citigroup, Legg Mason reportedly near $4 bln asset swap - Banks - Financial - Specialty Finance - Financial Services - M&A - Mutual Funds
Citigroup, Legg Mason reportedly near $4 bln asset swap - Banks - Financial - Specialty Finance - Financial Services - M&A - Mutual Funds
Legg Mason is the best run of all the regional brokerage houses. It has gathered assets like non other. From memory, I believe the proposed deal will double the money under management.
The Legg Mason Value Trust is the only fund to beat the market for 14 years in a row. Legg manages fixed income and stock accounts.
My family generally avoids mutual funds. We know that the fees represent a significant drag on returns. Regardless of our attitude, we have owned shares in the value trust for the past 17 years. We trade through discount brokers but we own a number of the same stocks held in the value trust.
Chip Mason has built a great management team. I have no knowledge in regard to succession plans. Those who invested with Mr. Mason 30 years ago have done well!
BUY THE BULL!
CNBC JUST REPEATED MY OLD REFRAIN--US STOCKS ARE CHEAP AND BONDS ARE NOT!
Posted by Jack Miller at 6/22/2005 09:35:00 AM
Tuesday, June 21, 2005
This morning my 8 year old nephew learned about the pocket fishing pole company. It must have been 50 years ago when my Dad taught me about the pocket pole fishing company. It is a pleasure to pass the story along.
The women in our group have gone for a speed walk on the beach. My youngest is in training for a half marathon and is driving the rest to exercise daily. My oldest is normally the ring leader in the exercise department.
A few of the young guys are still in the bed at 9:30 but a beach vacation is all about doing what you want when you want. These guys sure did miss a good breakfast.
Later today the men are going fishing while the women go shopping. Again, each to his own. I will only fish to help with the nephews. It will be a fun time and we may even catch a fish.
I kept the pocking fishing pole company history short and sweet. My nephew understood the point. I have offered his married older a 10% match on his savings for the next two years. Good habits sometimes need a push. My Mom offered me and 4 siblings a 50% match from the time we were 6 to 14. By the age of 14, we all saving for cars, college and life.
By the way, it does not get any better than being with family for a week at the beach. We are in a beautiful condo, valued at $900,000 or more. We own 10% of this property and recommend 10% ownership as the best way to own vacation property.
We also own a time share purchased at a deep discount to its opening price but we do not recommend time shares or beach rental property. Few folks appreciate the over-head expenses involved in time shares or resort rentals.
Tonight after dinner, we will have a family Texas hold'em tournament. All family members are interested because there is a cash prize for the top five players. Tomorrow will be a bocce ball day. Some will play and some will relax. Beach chairs and umbrellas are among my favorite things. I am thankful for the pocket fishing pole company. I can't tell you the author but, again, a good story for the young to hear.
BUY THE BIG BULL! THIS MARKET IS TRYING TO GO UP--EVEN IN THE FACE OF $59 OIL.
Posted by Jack Miller at 6/21/2005 09:23:00 AM
Monday, June 20, 2005
The new environment is a healthy one. Property values are still going up but at a more reasonable pace. Investors who purchased rental properties a year ago now appreciate that cash flow is negative in the early years of beach resort property ownership. One must be prepared to carry properties until rents increase enough to cover costs.
Demand is still growing. Many folks are buying second homes away from the beach because costs on the beach are high--big mistake. When buying at the beach, smart investors step up to the plate. Ocean front properties are always in demand. Second row or golf course communities can not match the growth in rents or values of ocean front properties.
Many a seller has been scared into selling before the bubble pops. Those who buy this year are likely to see 25% increase in property value by next year. The leverage means the return on investment after expenses will come close to 100%. The current "soft patch" is just like the ups and downs of the stock market. The market does not go up in a straight line.
The slowing growth in the economy is ready to give real estate another big boost. Mortgage rates have lowered the costs of second homes by substantial amounts. Those who are willing to speculate on multiple properties can refinance purchases made only a year or two ago to pull out substantial equity.
Some of those who are not ready to buy 100% of a second home, have purchased 10% shares or other partial ownership partnerships. My family enjoys owning 10% of several ocean front properties. This allows us to enjoy the use of several condos when our families get together.
Time to go take a nap under a beach umbrella. There is nothing so rare as a day in June; then if ever comes perfect days!
BUY THE BIG BULL MARKET! STOCKS ARE CHEAP--RELATIVE TO BONDS AND REAL ESTATE!
Posted by Jack Miller at 6/20/2005 01:39:00 PM
Millions of AdWords and AdSense users make payments to and receive payments from Google. Many months ago, I wrote that a Google electronic payment system is an obvious extension to the services offered by Google. Google's mission of organizing information includes financial information.
Pay Pal has been and will continue to be "the" payment system for online auctions. Ironically, while both EBAY and GOOG traded down on the news, the competition will help both companies. Identity theft has been a big problem and even bigger news. Having two big names offering the service of online payment will cause the growth to be dramatic.
The stocks have traded down, this is an opportunity. As I have written before, you don't have to be an aggressive investor to own these stocks. If your position size is $3,000, you can invest $1,000 each in GOOG, EBAY and YAHOO. Your upside from any one of the three would be substantial and your downside would be limited.
BUY THE BULL!
I will write sparingly this week while I spend time with the family at Myrtle Beach. The weather is gorgeous here You should be here! (We enjoyed several hours of entertainment at Jimmy Buffets Margaritaville Saturday Night!)
Posted by Jack Miller at 6/20/2005 01:38:00 PM
Friday, June 17, 2005
WSJ.com - OPEC Lifts Quota But Urges Increase In Refining Power
UPSIDE DOWN OIL MARKETS!
What a turn around? Thirty years ago, OPEC had power. Now they push a string. OPEC is pumping crude at high levels while begging for more world wide refining capacity. Meanwhile the "energy" in energy is going in other directions.
LNG importation to the US has doubled in two years. Coal production is at all time highs. Canada is digging tar sand at record levels. Electric powered vehicles are the rage. The recent strength in the US Dollar has "exported" higher oil costs to other countries world wide. Nuclear power plants are under construction in various parts of the world and are in the planning stages in the US. Repeal of depression era laws will increase the production of electricity and lower the cost. Drilling in ANWR will be allowed and the caribou will still mate. Time of day electricity pricing will increase large scale production at fuel efficient sites.
Crude is back near the peak price but supplies are good. The senate is loading up its version of the energy bill with poorly conceived non-market and inefficient incentives and non funded mandates to require a 10% level of renewable fuel. The situation is like the fellow who had ice cream and pie on the table but demanded that his wife bake a chocolate cake. There really was no need to waste the ice cream and pie but this man was in control of his house. Had he enjoyed the ice cream and cake and thanked his wife for it, she would have been happy to bake a chocolate cake for the next feast.
Consumers must hope and it is a safe bet that the conference committee will eliminate some of the more ridiculous provisions. We don't need the US congress to force high cost alternatives upon consumers. California and other states have already demonstrated how misguided such policies are. The "corn" states offer swing votes and are thus politically powerful. Thus it does not matter how many pesticides must be used to grow corn or how much top soil is depleted, the final bill will probably subsidize corn oil. Compromise is ugly but democracy is beautiful!
The bottom line is that oil stocks have made a major run. I am not a buyer of oil stocks at today's prices. A mini cycle economic cycle has started. Even consumer cyclical such as GM and F are making a run. The BULL IS LOOSE! RIDE IT COWBOY! The Dow and S&P are near break-out levels.
Summers are traditionally long and slow in regard to stock markets. There is traditionally talk all summer about a summer rally but big money really does "sale in May and go away". However, in case you have not noticed, the market is in BIG RALLY MODE. Large stocks, mid cap stocks and small stocks are participating. Right now those who are sitting out while agonizing over which stocks to buy are making a big mistake. The key to making money in this market is to invest in the market. Huge amounts of money are being lost as it sits suffocating under low yields in money market style accounts.
BUY THE BULL! YOU DON'T NEED TO BEAT THE MARKET TO MAKE A FORTUNE, YOU SIMPLY NEED TO EMBRACE IT!
Posted by Jack Miller at 6/17/2005 10:01:00 AM
Thursday, June 16, 2005
Delta Air Lines Boosts Fares Above $499
Delta and other airlines are bumping up fares. More importantly, CAL is expanding the first class seat section. The demand for highly profitable first class seats is strong!
BUY THE BULL!
Posted by Jack Miller at 6/16/2005 11:51:00 PM
Bond Report: Treasurys end higher after boost from Fed report - Financial - Banks - Financial Services - Economy - Currencies - Bond Market
A negative manufacturing report--the first in two years! This is good news. Moderate interest rate rises means the housing market will continue to fuel economic growth until manufacturing expansion leads the next few years.
BUY THE BULL!
Posted by Jack Miller at 6/16/2005 04:55:00 PM
Pension-Shortfall Study Finds Winners and Losers - New York Times
Articles like the linked article in the times are interesting but not particularly useful for investors. We are in a market that goes up no matter what the news. Goodyear tire is on the list of companies that will have to invest much more in pensions but the stock is up strong.
Good news is good news and bad news is good news in this market. Don't be scared away. A break out could happen at any time. Energy stocks are on or close to highs but many other groups are doing well in the face of high oil prices.
BUY THE BULL! HOLD ONTO A NUMBER OF BUCKING BRONCOS! DON"T LET GO!
Posted by Jack Miller at 6/16/2005 04:15:00 PM
Dow Corning's Newest Conductive Grease Qualified for Use in AMD Microprocessor Packages
GLW is well on the way to being a 10 bagger for may family. We purchased shares around $2, $4, and $9. The company continues to produce innovative products. Name a device with a viewing screen and it probably has GLW solutions inside. Traffic over broad band cable is about to explode. Analog TV signals will die soon. LCD glass is in high demand.
Did you see the Best Buy numbers? Consumers are buying flat screen TVs.
BUY THE BULL! GLW came down a very long way during after the bubble and it has gone up a long way recently. My family has no plans to sell this one for several more years.
We encourage you to communicate your purchases to us. We maintain a contact list for those who would like to know when we sell. Better still, allow us to monitor your discount brokerage account. We can offer suggestions at no charge.
Posted by Jack Miller at 6/16/2005 04:11:00 PM
Oil price is up. NYSE price is up. Dow price is up. NASDAQ price is up. RUSS 2K is up. Gold is up. Tech is up. The list is too long to post.
Lets go the other way, t-bill rates down, defensive issues such as consumer staples and drugs are down. Almost every other group is up.
THE BULL IS SNORTING!
A couple of months back, I wrote about how the shorts were like frogs in warm water that is getting hot. When the water is heated up slowly, the frogs will fall asleep until cooked. The amount of money sitting in money market accounts and short term bond funds is incredibly large. The pot is almost ready to boil and this money still sits like a sleeping frog. When the frogs start to jump the BULL will stampede. Are you getting cooked or are you enjoying the bucking bronco ride?
Posted by Jack Miller at 6/16/2005 04:11:00 PM
The Big Picture: Chart of the Week: Dow Jones Trading Range
Another great chart posted at the Big Picture. I thank Barry again because a good chart is worth more than 1,000 words.
The chart shows the Dow locked into a trading range--don't fall into the trap. Many an investor will attempt to sell at the top of the range and buy at the lower band. The problem is that they will sell out or buy-in right when the break out occurs.
Consistent short-term trading success is as rare as winning the lottery. Don't fall into the trap!
Barry's take away is different from mine. He suggests, like many a technician, to wait until the break out occurs and then jump on the market. This approach leaves one with cash just in-case the market breaks down instead of up. Historically these type of calls are too tough. Those who stay 100% invested in markets like this one will do well. Those who trade in and out will miss much of the big move.
I mentioned earlier today that my GLW has moved from $2 to better than $16 in about three years. Another big mover has been AMTD. We have held it from around $4 to over $15. When the recent ET offer for AMTD was made, some said it is time to hit the bid but we continue to hold. The offer has been increased and both ET and AMTD are trading up in this wonderful market.
I have missed a lot of winners. I played the oil market poorly, never owned a share of Apple and have not traded semiconductors smartly. However, we are hanging in with large unrealized gains this year on top of the great returns compounded since October of 2002. We are off the peak levels reached a couple of weeks ago but we are not far from net new high values.
When the Dow finally breaks-out of the trading range, my family will be riding a long list of bucking broncos. We don't know which ones will run the fastest or the farthest but when the Dow Breaks our accounts will not fall.
BUY THE BULL!
Posted by Jack Miller at 6/16/2005 01:06:00 PM
Blogger: Stock of the Week :: Edit Post ' Stock of the Week '
Our Stock of the Week portfolio has returned 18% more than equal investments in the S & P 500. Visit our companion site to see the selected stocks and the performance.
Posted by Jack Miller at 6/16/2005 08:41:00 AM
Tar sands from Canada and Natural Gas from Qatar are moving to the US. The growth in use of LNG is huge. We import double the amount in just two years. The energy bill approved by the house and the Senate Energy Committee includes provisions to dramatically increase the importation of LNG. LNG cost about half per BTU than oil!
A few years ago, who cared about Canadian tar sands? A few years ago, who would want to invest billions on LNG ships and terminals? We have known that there is probably much more oil in Canada than in Saudi Arabia. Now we are willing to pay enough to dig up the sand and squeeze out the oil. Fifty dollars per barrel makes billions of tons of sand worth squeezing.
Investors are making the mistake of fearing inflation. They do not understand that oil at $55 is not inflationary. The price per barrel is lower now than it was months ago. Yes, oil could go to $80, but labor is the biggest inflation factor and labor rates are increasing moderately. Capital costs are also moderate. Oil could go to $80, but folks around the world are buying more fuel efficient cars and production of energy is increasing.
Supply meets demand at a price; the world wide economic expansion is too strong to suggest moderating oil prices in the near term. Lower consumer demand and increasing supplies will moderate increases in the near term. Over the long-term, with history as our guide, we can be thankful that energy inflation will average less than wage inflation. Standards of living will continue to rise as we become more and more efficient in the use of energy. Open flame fire places hold a nostalgic place in many hearts but the total cost of heating a home today is a small fraction of the total cost of years gone bye.
BUY THE BIG BULL MARKET! HIGH ENERGY COSTS ARE NOT A SIGN OF ECONOMIC WEAKNESS BUT A SIGN OF ECONOMIC STRENGTH. AGRESSIVE INVESTORS SHOULD EVEN BUY SMALL POSITIONS IN SEVERAL AIRLINE STOCKS!
OPEC HAS HAD ITS 15 MINUTES OF FAME. THE PERCENTAGE OF WORLD ENERGY CONTROLLED BY OPEC HAS DECLINED FOR 30 YEARS AT AN INCREASING RATE OF DECLINE. EVEN NATIONALIZED FIELDS IN MEXICO NEED A GOOD OLD CAPITAL INFUSION.
Buy the way, although the costs to produce ethanol have declined 50% in the past ten years, we must hope the energy bill does not offer excessive subsidies. The current federal subsidy of about 54 cents per gallon makes ethanol a competitive product, but at a high cost to the taxpayers. Furthermore, the external costs of growing corn for fuel are large. The crop requires heavy doses of pesticides and extensive irrigation. Although modern tillage methods have reduced the damage to top soils, continued farming takes a steady toll on an American valuable resource.
In regard to alternative energy sources, the public should understand that the free market price will ultimately determine which source should be used. Subsidies destort the free market and cause unintended harmful consequences. Burning biomass for fuel makes sense when there is a steady supply of excess biomass. Subsidizing the production of biomass for the purpose of producing fuel makes no sense at all. Experiments have often led to the expenditure of two gallons of fuel to produce one gallon of fuel.
INVESTOR CAN MAKE HIGH RETURNS WITHOUT GAMBLING ON THE LATEST CRAZE. A COMPANY LIKE GOODYEAR WILL MAKE MILLIONS OFF THE BIG TIRES USED IN THE DIGGING AND HAULING OF TAR SANDS! BUY THE BULL!
Posted by Jack Miller at 6/16/2005 04:31:00 AM
I have never heard of Julian Robertson. I appreciate Barry bringing the clip to my attention. It is nice to know when market observers are so confused that they talk in circles.
It is amazing that those who love fear and negativity can be fearful of inflation and deflation at the same time. Is the US trying to "inflate our way out"? The last I heard is that many folks are worried because Greenspan is going to over-shoot and tighten too much. The last I heard, tax revenues to state and federal governments are going out the roof. The deficit is shrinking (as a percentage of GNP).
The problem Japan has had is similar to the problem the US had in the 30's, too much money in the hands of the government and not enough consumer willingness to borrow and spend. Don't tell me the American consumer or our government is ready to stop spending. My wife, daughters, sister-in-law and nieces are ready to blow a wad while shopping at the beach next week. You can count on the American consumer to spend. Homeowners are currently lowering monthly mortgage payments by refinancing homes at low rates. They will have hundreds of dollars per month extra to spend for the next 30 years.
Furthermore, we are in the second half of an economic expansion. In this phase it will be businesses that spend and spend some more. Corporations have increased cash to an average of 11% of assets. This is up from 6%. Debt to equity ratios have dropped and extra cash is still flooding corporate balance sheets. Capital spending is strong. Companies must buy back shares, increase dividends, buy other companies or risk hostile take-over bids.
Investors don't even have to guess which companies are going to buy back shares. Take MOT as an example. The company announced a 4 billion dollar buy back and the stock has been inching up steadily.
We currently have a very favorable business climate. Low cost of labor, low cost of capital and even moderate cost of supplies. Profits have been consistently under-estimated for two years. Historically the best time for business is during a time of low inflation. Even the price of oil at $55 has been at a zero inflation rate for several months (I will not bother to look up the date it hit $58 but since that date there has been disinflation in the price.)
Give me a break. Make a sound argument for inflation or deflation but don't try to scare me out of the stock market with talk about both.
BUY THIS BULL MARKET AND LET MR. ROBERTSON WORRY FOR US ALL.
Posted by Jack Miller at 6/16/2005 03:54:00 AM
Russ Towne's InvestmentThoughts: A Delay that Saved Me from a Terrible Investment
For many years, the front cover of Business Week indicator has been an excellent contrary indicator. If any of the major popular magazines have a front cover about "The Death of Equities" it is time to buy stocks and if the front cover is about "The Big Bull Market" it is time to sell. Articles are much the same way. One should avoid stocks with glowing reports in magazines. One should buy stocks that are at least temporarily out of favor.
Right now the public is negative on the economy and on stocks. This is reflected in many magazines and in many financial blogs. It is a good time to own stocks.
BUY THE BULL!
Posted by Jack Miller at 6/16/2005 03:19:00 AM
Russ has presented good data about under-funded pensions. However, BULLS are aware of how fast these pension funds can recover. The obligations grow slowly for short-term employees. When employees reach 20 to 25 years of service, the obligations grow geometrically. Therefore, many big companies go through a ritual of scaring long-term employees every so many years. These employees are faced with a potential lay-off or they might choose to take an early retirement bonus. The obligations to the company pension plan are cut sharply when these long-term employees leave.
When growth occurs and young workers are hired, money is contributed for the new workers but many of those do not ever work long enough to draw a pension. Furthermore, in a good market the pension assets enjoy capital appreciation. The amount of under-funding can drop during a good market and in a very good market the company might take excess contributions out of the fund. Company earnings thus look extra strong during a good market.
It is commonly reported that $1,500 of every GM car made now goes to pay retirement and health benefits. This is old news. Most of the money required to be paid was accumulated years ago. The rate of increase in the problem has dropped. In the years ahead, as more of the long-term employees retire, the percentage of cost in this area will decline.
Stock investors should worry when pension accounts are over-funded. This is when stocks trade too high based on the extra pension account earnings. When there is "blood in the streets" in regard to pensions, it is time to buy stocks.
BUY THE BIG BULL BOOM BUBBLE. A LOT OF MONEY WILL BE MADE IN THE NEXT THREE YEARS.
Posted by Jack Miller at 6/16/2005 03:11:00 AM