Wow! A slow down in China!
China has built a lot of manufacturing capacity, the world energy crunch has made it too much. The good/bad news for traders is that metals prices are about to take a dip, a deep dip. The CRB has turned down and several of the big miners have been downgraded.
A decline in metals will allow interest rates to fall. A decline is needed because US housing construction is ready for a long fall. The number of unsold homes on the market is as high as ever. The most recent new home sales number was super strong but will likely be revised. New home sales cannot stay strong with a glut of used homes on the market.
Wednesday, November 30, 2005
Wow! A slow down in China!
Posted by Jack Miller at 11/30/2005 11:36:00 PM
Tuesday, November 29, 2005
For Google to take a thump on the head is not a big deal after such a fantastic run. The bigger implication is that the pull back has started.
Yes, the Dow was up today, so what? Big money often flows into the Dow at the start of a correction. The bond market also took a good thumping today; another sign that there may be a stock market correction in the cards.
The market is no doubt over-bought after a nice long rally. However, the sentiment numbers are not out the roof. Therefore, I do not expect a big down-draft. The exception could be in gold and other mining stocks. Even the oils may get hit a little harder than the average stock. It is hard to guess when the gold correction will begin. There could be one more strong blow-off rally or the prices could drop from here.
If you own Google at lower prices and are the type that will panic if it breaks prior support areas, then you might want to lighten up now with plans to buy back later. Don't complain to me if you never get the chance to buy back. There are any number of positive events that could take the stock back up strong. One of the exciting areas is the possibility of ala cart TV channels. It is clear that internet video is going to grow by leaps and bounds. It makes sense to allow Google to catalogue content. Google has made a number of recent moves to negotiate content deals.
Google was thumped today but the long term prospects are excellent. It is a high priced stock by most any measure but it has the potential to grow like few other companies. For me and my house, we will ride the bucking bronco. We will hold on tight. There may be a rough week or two ahead but 2006 should be another great year for Google.
Posted by Jack Miller at 11/29/2005 04:00:00 PM
The economic numbers today showed a heck of a lot of strength. Durable goods orders were strong and the housing numbers were supper strong. Housing is gaining a reputation as the new Energizer Bunny. Yesterdays drop in sales of existing homes gave the market pause but new home sales just keep on keeping on.
The stock market and inflation sensitive metals markets remain strong and bonds are getting thumped. The uncertainty created by the retirement of Greenspan continues to weigh on the market. The part that is not often mentioned by the talking heads is that the FOMC must make its moves more gradually now-a-days because the entire world is in sync like never before.
The correlation coefficients of world markets have moved to higher and higher levels since world trade has been expanded. The latest numbers are up around 70% for much of the world. The America's are now leading the way but even Japan is now on board.
Additional moves by the FOMC will force other countries to increase rates or see even higher inflation rates. Exporting countries do not want to be the first to act but the pressure to at least follow at a distance will grow.
I project that the FOMC will not stop raising rates until the Gold spiral is broken. The good news is that the distance is not great. There is now a divergence between the price of Gold and the US inflation rate. The break in Gold will be accompanied by a long bond rally. The European Central Bank meets on December 2 and the FOMC meets of December 13, stay tuned for the exciting conclusion to the Greenspan era!
Posted by Jack Miller at 11/29/2005 02:23:00 PM
InformationWeek > Travel > Struggling Airlines Try Portals For Business Travelers > November 28, 2005
CAL,DAL and NWAC continue their integration progress. Earlier I mentioned that each has made its airport clubs or lounges open to the others passengers. The move not reported is the plan to offer small businesses a combined online booking portal.
The internet has changed the airline business forever. The middleman or travel agents have been bypassed for lower cost online reservations. Travel agents will continue to serve the public but the percentage of tickets booked directly online will continue to grow.
Expedia, Travelocity and other agencies are up against stiff competition. With each of the majors building their own portals, the best deals will often be found by using the carriers site.
Prices of airline stocks have stalled after a major run. One risk being discounted is the possiblility that fuel prices are down for the traditional winter slow-down. Should prices hold at current levels, the stocks are under-valued by 30% or more. The market is clearly concerned that crude will return to the low $60 range. The irony is that the price of the integrated oil companies such as XOM appears to be discounting $40 oil.
The markets focus on oil prices is simply over-done. The airlines will make money even at $60 because they will gradually adjust fares to the price. The oil companies will make money at $40 as oil is a very profitable business at $40. I prefer the airlines but stocks are the place to be.
The bottom line is that investors are still risk averse. They continue to hide a lot of money in short-term cash holdings; the fear of loss is still the major emotion driving the market. It will take a solid break-out for greed to takeover.
Earnings have made a peak like none seen since 1965! The indications are that earnings will continue to grow. A huge number of companies are currently in the position that they can buy back shares to increase earnings. Many will issue corporate bonds to reduce shares. The operating leverage for most businesses is currently such that profits are easy to come-by. The process of "leaning-out" is into the 4th or 5th year for many businesses.
On a nominal basis and percentage basis, the airlines have probably done as much as any other industry. Auto, auto-parts and pharmaceuticals are in the recent news for their efforts. Unions are not likely to push up wages or cost in this environment. Airlines will continue to lower operating costs at a time when revenues are soaring; good times ahead!
Posted by Jack Miller at 11/29/2005 02:17:00 PM
Steve Leisman of CNBC posted an excellent chart this morning. His chart was a comparison of the core inflation rate next to the price of Gold. I believe he pushed the price of Gold 15 months forward. The point is that the two have tracked each other very closely until the last few weeks. The price of Gold is out of sync with the market. The treasury bond market continues to forecast moderate inflation and the reported numbers are moderate. The world wide inflation rate has jumped relative to the US rate. The strength in the US dollar is hitting our trading partners hard.
The European Central Bank will consider raising rates this week. Higher rates will slow the world economy, bring down the price of gold, bring down long-term interest rates and boost the stock market. Short-term, the market is over-bought. It is over-bought by a number of measures. One should avoid focusing too much attention on short-term considerations. The likelihood of a pull-back is high but catching it just right is more luck than skill. If you have new money, you might want to wait for a pull-back to invest. Only aggressive traders should sell current holdings with a hope to buy them back cheaper. If you own a poor performer, you might consider selling it now and waiting for a pull-back to reinvest in a better stock. In any event, stay at least almost fully invested in stocks. We may be near peak earnings but the economy is strong and stocks are likely to out-perform bonds or real estate over the next few years.
Posted by Jack Miller at 11/29/2005 01:22:00 PM
My faith in the airline bounce continues. It is built on powerful premise but is also helped by the potential for fuel price reductions.
The powerful premise is that airlines have traditionally done well during the expansion phase of the economic cycle; the phase we have been moving into for the past few months. Airlines make their money when business travel is strong. Consumer traffic does not hurt but supply demand does not boost yields until business travel kicks-in. The recent conversion after conversion of planes to increase business and first class seating along with historically high load factors makes it clear that business travel is taking up all the slack.
After a 62% run in the price of Continental, the market has traded around the $57 crude oil fulcrum. Oil at $57 translates into airline fuel of about $1.70. Most analyst have made their projections of airline profits on average fuel costs of better than $2.15. Should the price level off at $57, CAL should make (according to JP Morgan) $2.94 per share in 2006! Obviously many analyst assume that fuel prices are near a winter bottom and will go back up in the spring, otherwise they would not be estimating losses for CAL in 2006.
I happen to believe that before 2006 is gone, fuel prices will be below $50 per barrel and below $1.50 per gallon for jet fuel. Should fuel prices average $1.60 for 2006, JP Morgan estimates that CAL will earn $4.32 per share!
CAL still has plenty of problems but the sale of more shares has boosted cash reserves. An IPO of a foreign carrier will produce additional liquidity. The company may need the cash to help ward of a potential strike. The dead line for a deal with the sterwards is December 7. I believe the company is ready to operate without the current union labor force for as long as it takes.
The ties between CAL, NWAC and DAL continue to grow. The companies just made a deal to open their airport club lounges to each others passengers. This makes 90 airport clubs available. These lounges are important features to attract and hold the high dollar long-distance traveler.
The code sharing and lounge sharing cause one to wonder if a merger will take place. LCC is the merger of American West and US Air. This combined firm is now the cheapest of major carriers on an enterprise basis as the debt of US Air was largely shed during bankruptcy court. CAL, NWAC and DAL code share as a marketing agreement that allows each to avoid duplication of services while selling both legs of many trips. The leap from code sharing to a merger is a big leap but the bankrupted carriers best chance of long-term survival is through merger.
Recent regulation changes allows a higher level of foreign ownership of US carriers. It appears that British Airways and others may have interest in combining operations with American carriers.
By the way, don't be surprised at 4th quarter losses. The airlines make their money during the spring, summer and fall. They are always very busy during the year end holidays but traffic is otherwise relatively low during the cold weather months. The following are a few estimates from JP Morgan:
Fuel Cost CAL 2006 EARNINGS
A nickle a gallon can increase earnings $.69 per year. A decline in crude of $1 per barrel, at current levels, converts into a decline in jet fuel of about $.03. It is not a smooth relationship as the crack spread is a higher percentage as the price goes down. However, $1.75 per gallon is the equivalent of $58.50 per barrell with a crack spread of $12 which makes current cost about $1.70 at current crude prices of about $57. Put another way, it will take prices of about $53 per barrell to produce earnings greater than $4 per share. $53 oil could push the share price of CAL to $40 or higher!
Posted by Jack Miller at 11/29/2005 12:51:00 PM
Friday, November 25, 2005
The girls left to hit the outlet malls early. Myrtle Beach is famous for having more than 100 golf courses which perhaps correlates to the large number of outlet malls.
The weather is beautiful, the turkey was delicious and life is good. It is clear that real estate firms are gearing up for the coming season. Mortgages rates are finally trending down and demand for second homes is getting new life. A side unit here in the South Hampton Building recently sold for around $750,000. The unit is not the prime location so the sale is a good indicator that front corners may hit a million dollars this spring.
Some folks think the real estate "bubble" has popped. The reality is that of the 78,000,000 baby boomers in this country, only a small portion have purchased a second home. The second reality is that no matter how negative many folks are more families can afford two homes than ever before.
My family has enjoyed being in Myrtle Beach 18 of the last 19 Thanksgivings. One cannot ask for a much better environment to enjoy a holiday with family. With a granddaughter on the way, the shopping is all the more fun. My son-in-law and I will visit the Bass Pro Shop today. We will avoid the mall.
As far as the market goes, it is trading up a little. Sometime in the next few weeks, I believe there will be a break in gold and industrial metals prices. There will be a jump in bond prices. Earnings may drop a little as the most profitable companies, the oil companies, are now experiencing very low crack spreads. With the exception of miners and oil companies, the market should do well. The current overbought situation must be worked off. The market does not have to go down a lot to cause sentiment to switch. For example, the switch could be part of a rotation where energy stocks decline. Happy Thanksgiving!
Posted by Jack Miller at 11/25/2005 10:25:00 AM
Thursday, November 24, 2005
Progress toward building a new refinery in Arizona continues. Mexico has agreed to allow a pipeline to be built so that Canadian oil can be unloaded in Baja California and piped accross Mexican territory.
The refinery is expected to cost $3 billion, to produce 150,000 barrels per day and to be opperational by 2010. Every little drop in the big bucket is a big help. Prices are set based on marginal supply and demand. Speculators may get tired of hoarding supplies if signs of new supply are clear.
Posted by Jack Miller at 11/24/2005 08:09:00 PM
Would you like to see a magic trick? Do you know how to turn a nickle into 70 cents? I know how and I am willing to tell!
Operating leverage is a neat trick; legacy air carriers have operating leverage. This means that if they increase their revenues (or yield) a little, their earnings go up a lot.
For example, according to JP Morgan, if AMR, CAL or LCC were able to lower their fuel cost by a nickle, their earnings would go up by about $.70. Guess what? Jet fuel prices dropped $.07 today! Guess what? In the past month or so, since many a projection was made, jet fuel prices have dropped about $.60! Guess what? Jet fuel supplies are now higher than before hurricane Katrina! The decline in fuel prices may continue. Instead of losing a little money, these carriers may make a lot of money. AMR and CAL could easily make $3.50 per share in 2006. LCC could easily make more.
Should AMR and CAL trade at 10 times earnings and earn $3.50 per share in 2006, we might be talking about $35 stocks; about 100% higher than current prices. Believe me, I know that AMR and CAL have already made big moves. Riding these stocks for the past three years has truly been a Ken Fisher "bucking bronco" ride.
Ken wrote about bucking bronco's in Forbes during the recession of 1990-91. I heard the message and learned from it. I do not know Ken's attitude about airline stocks but Ken is bullish on the market. He and other smart folks like Don Hays, Ed Yardeni and Harry Dent have noted that many corporations are currently able to increase their earnings buy issuing corporate bonds and using the money to buy back shares.
Stan Salvigsen used to write about clearing prices. The current situation is a great example. If a corporation can issue bonds, buy shares and increase earnings, why not? Ironically, one of the concerns that has driven folks away from stocks is that the US Government is currently practicing the same strategy. We are currently borrowing money at such low rates that we are profiting from it. Those who are whining about the trade deficit do not realize how profitable it is! Ken has written similar statements about the government deficit.
As always, statistics can be used to tell big lies. A common lie being told today is that Americans are more in debt than ever before. The problem with the statement is that it ignores the increase in American wealth. It is like saying that the person who owes $150,000 on his home is in debt twice as much as the fellow who owes $75,000 on his home, when the home of the person who owes $150,000 is worth $500,000 and the home of the person who owes $75,000 is worth $150,000. It also ignores the incomes of the two homeowners. If a person owes $150,000 but has an annual income of $150,000, he is probably in pretty good financial shape. If the person who owes $75,000 is retired, he may be in a bind.
Now is the time to turn nickles into dollars. It may take a few years. It took 29 years for the airlines to rationalize their business. Deregulation has been tough. None of us should blame the airline employees for bargaining for excessive wages and benefits during the regulated oligopoly phase. We can all understand why Delta and NWAC employees are trying so hard to hang onto excessive payments. We can also appreciate how much more affordable it is to fly.
Early in my career, I was the General Manager of a credit union. The motto of the credit union movement is, "Not for profit, not for charity, but for service". This simple concept has been routinely abused by many a credit union board of directors. It is a simple concept but only a relative few understand. The common mistake is to assume that credit unions are very different from other businesses. The reality is that every business needs to keep its net operating costs as low as possible and to charge a competitive price to the customers. The margin between the costs and the prices must be used to "fund" the business. Credit unions must make a "profit" to support growth of services. New employees must be hired, office space must be acquired, equipment must be purchased. Some credit unions practice charity by loaning money below the cost. Others make excess "profits" while performing a disservice to the customers.
The airline business is finally close to being rationally structured. New entrants can no longer gain business rapidly by under-cutting the wages of established companies. The middle class American traveler is no longer paying airline employees triple their own wages. Investors in the companies can now rationally expect to receive a return on their invested capital. The free market is not perfect but it consistently beats all other systems. Those airline employees who retired wealthy in the past many years are entitled to their fat pensions. Those who invested their earnings in the US Air, UAL, DAL, NWAC and other failed carriers cannot expect a refund. What was gained is gained and what was lost is lost. The smart investor will catch the long ride up no matter if he was on board for the long ride down.
Posted by Jack Miller at 11/24/2005 01:53:00 AM
Wednesday, November 23, 2005
Those who have expected oil to hit $100 soon (including Goldman Sachs) are having to eat crow; Goldman reduced its year end price projection to $62. Crude oil supplies in the US are far above the historical averages. More importantly, proven reserves have reached a record of 1.2 trillion barrels; more reserves are being found.
A number of years ago, a university scientist (my memory for names is terrible) put forth the theory that oil is being constantly "manufactured" in the depths of our planet. He believes centrifugal force is pushing the oil to discoverable locations.
The theory has not been proved but it explains the fact that former oil pools that were "played-out" keep filling back up! Some wells have yielded dramatic increases and estimated proven reserves were never higher.
Peak oil alarmist keep telling, time and again, about depletion of reserves. There is no doubt that many wells have been pumped virtually dry, however, rig counts are at the highest level in years and "new" oil is being found daily. Regardless to the validity of the theory, the chair of XOM estimates that there are more than 3.5 trillion barrels yet to be easily found. He estimates that there are just as many more in difficult places to find.
In Japan, horizontal drilling is being used to collect oil from beneath major city populations. Russia has seen the largest increases in production in the past 10 years.
It will be 2007 before the first of several plants to produce liquid fuel from coal will be in operation in China. Senator Robert Byrd has proposed the construction of similar plants in the US.
The current price of crude includes as much as a $20 premium because of hoarding or speculation. As long as there are investors who believe the price is headed to $100, hoarding will continue. However, the cost to the hoarders keeps going up dramatically. They are suffering from higher interest costs and from capital losses now that the price has headed down. The dike is now leaking in several places. Pretty soon, another speculator or two will tire of plugging holes and the flood of crude will drive prices down.
Last year, the week after Thanksgiving, crude market prices dropped. Historically, December is a down month. The focus of bloggers is on US supply and demand, but while the US has been adjusting to tighter markets for many years, China and other developing nations have recently made rapid adjustments to higher prices.
For the past couple of days, the price of crude has climbed in the face of, surprise, surprise, surprise, cold weather that hit the northern hemisphere. This price bump is a temporary phenomena as Gulf production continues to recover and supplies continue to rise. Short-term projections can never be more than educated guesses but the current circumstances lead me to believe a break in prices is near.
Should oil break, gold and other metals will break to the downside and bonds will break to the upside (lower yields). Transportation, retail and technology stocks should do well. On the other hand, the current rally is long in the tooth. Markets typically consolidate or even pull back a bit after such strong runs. Many, who were major bears two months ago, are now extremely bullish, a negative short-term market indicator. Without a break in oil prices, I expect the market to struggle to make new highs over the next two or three weeks. Should the price of oil NYMEX oil break below $55, all bets are off; you will be thankful to hold large stock positions.
Posted by Jack Miller at 11/23/2005 10:13:00 PM
AltEng: Tankard to gas tank
The law of substitution continues to work its magic. Coors is converting beer residuals into ethanol. Millions of gallons of beer is spoiled in the production process; using it to make ethanol is good for the environment, good for the Coors bottom line and good for helping bring down the cost of fuel.
Posted by Jack Miller at 11/23/2005 10:12:00 PM
A number of bloggers have reported that Google Click-to-Call service is now being tested on a number of web sites. When you click on the phone icon a box appears where you put in your phone number, Google calls the advertiser while blocking your caller ID info. The advertiser pays for the connection.
The system allows the advertiser to know which ads work. The total cost to the advertiser is cheaper than offering an 800 because the leads per ad is much higher.
The integration with Google Talk with be the next interesting event. Folks who want to post a free classified ad with Google Base and those who want to make a free Google Talk call will need to sign up for a free Google account. The number of folks who sign up for Google accounts is going to expand rapidly throughout 2006.
Posted by Jack Miller at 11/23/2005 09:05:00 PM
Tuesday, November 22, 2005
Metals Stocks: Gold within striking distance of $500 an ounce - Mining and Metals - Natural Resources - Commodities - Markets/Exchanges - Market News
Gold is in striking distance of $500; "buyer beware". If I thought gold was going to continue to rise, I would buy gold stocks which rise faster than gold when times are good. Of course, gold stocks will come down by a bigger percentage move if the price declines. If I were forced to take action today, I would sell gold stocks short rather than buy.
The evidence around the globe is that interest rates are on the rise. Pressure is on the Chinese to raise rates, the ECB is considering a rate increase and the US is considering rate increases. The cost of holding gold is the real cost of money. Inflation hawks are willing to argue that inflation is out of control. They are likely to use the rising price of gold as the foundation of their argument; circular reasoning at best.
The bull market in energy is making another run today with "surprise" cold weather hitting the northern hemisphere. In the past several weeks, I have time and again shown that new supplies and new refineries are being built. We all know that it will take a couple of years for these projects to have their effect but we also know that the market will move in anticipation. Hoarding of oil supplies is now the norm. Like holding gold, there is a cost to holding oil.
The costs are going to go up on December 13 and probably again by February. If I were going to trade, I would sell miners short. For now, I'll avoid this market as I believe the oil price is going to lead the gold price down.
Posted by Jack Miller at 11/22/2005 11:33:00 AM
Simple Return: 4.54%
Simple Return: -1.96%
As we have been writing for the last two years, Individual Stocks are the place to be. Stocks continue to outperform equal investments in the S & P 500 (4.54%)and the TLT Treasury Bond index (-1.96%). This week, Kupsky has been researching Air Methods, a leader in air medical emergency transportation services and systems throughout the U.S., as our Stocks of the Week. Be sure to check out other Stocks of the Week to see if it's a pick to include in your portfolio.
Posted by Jack Miller at 11/22/2005 11:28:00 AM
So far, it is only a rumor that Google will open a facility in the RTP, Research Triangle Park of North Carolina, but it seems reasonable. The RTP is smack in the middle between NC State, Duke and UNC Chapel Hill. NC State graduates large number of engineers and the RTP is the home of numerous high tech companines. It would be an appropriate location for a company that is hiring talent at a record pace.
Posted by Jack Miller at 11/22/2005 11:16:00 AM
Boeing just experienced 5 years of double didget declines in airplane sales. According to Morningstar, the decline has been better than 11% componded for 5 years. The good news for BA is that it that the decline is distributed half to defense contractors and half to airplane builders.
Morningstar projections for the next 5 years are for sales increases of 8 or 9% compounded. Based on the announcements coming out of the Dubai Air Show, Boeing is jump starting this growth phase. New sales include 40 planes to Arab Emerants and a total of 157 to China.
In the last cycle, BA stock did extremely well through 1997. The significant down-turn during the recession of 1990-91 was finally washed out by 1997. As with all industry, production grows until demand is saturated and there has to be a digestion period.
BA stock has already done extremely well during this cycle having come from $24 in 2003 to $69 in 2005. The cycle is not nearly over but one must remember that the stock cycle leads the economic cycle. One does not want to wait until earnings peak to buy the stock.
Me nor my family own the stock but as owners of AMR,CAL and LCC we watch as interested parties. We know business travel demand has pushed current capacity to its limits. Load factors around the world are at historic peaks. Demand for flights to and from China continues to grow at double digit rates.
The environment for making money in the airline business is about as good as it will ever get; soaring business demand and rapidly declining costs. The fly in the ointment will eventaully be when capacity overwhelms demand. I know that it will take years to fill the plane orders that Boeing signed this week. For the next three years, fares will rise and load factors will stay high.
Before the peak in airline stock prices, there will be many an article posted about the tremendous turn the airline business has made. Of course, we don't currently know if DAL, NWAC and others will survive bankruptcy court. The more capacity whitled away during court, the more profits will be made over the next sereral years.
Planes sold by DAL and NWAC will go into service with other carriers. Gradually these old planes will be sent to the parts graveyard. Airbus and BA are ready to build new but DAL and NWAC are not the only carriers around that need to retire old stock. Capacity growth will be slow at first. Again, the next three years should be a very profitable time in the airline business. The cycle could last longer and it will take discipline to start scaling out long before the peak is reached.
Posted by Jack Miller at 11/22/2005 10:34:00 AM
Much continues to be made about the Google market cap. Followers note that the market cap is now 1/3 the size of MSFT. Why not half? MSFT no longer has an iron fisted lock on the PC and millions of us use Google routinely. Google is just starting to role out products and MSFT is in the process of changing its business to the Google model.
No doubt, MSFT, a big and powerful company, is willing to throw its weight around. It was able to demoralize the mighty IBM and to take over businesses established by Netscape, Lotus and others. But all of that was then and this is now. After taking over the business, MSFT did little to innovate. The browser of today is little different from those of yesterday. The failure to block out viruses and spam are MSFT failures. Besides, the PC is no longer the key, the network is.
I am truely excited about Google Base and the prospects of other products in development. These products will connect me in infinite more ways to the world around me. While Google has made it much easier to find something I have stored on my computer, it continues to dramatically add to what I can find stored on other computers. The information age is finally hitting another gear.
To be sure, I am frustrated daily when I can't find information. This morning, I was looking at US Government Census and other sites. They are not indexed by Google and have no search facility at all. I spent an hour going from tables of content to various pages and never did find the information I wanted. It would cost the government nothing to allow this information to be indexed! The benefit to the world would be the savings of millions of hours annually.
A recent article told of the scanning project being performed by those opposed to the Google book scanning project. One lady told how much she is enjoying scanning the books. She said it is not as boring as it looks as she reads a lot of material as she goes. She earns about $10 per hour. Contrast that to the large machines used by Google to scan. The machines use special vacumns to carefully turn the pages of 500 year old books, takes care of the books and scans them in a fraction of the time.
Libraries were invented to share information, not to hoard it. Google is all about sharing information. Google is not out to steal any information but is out to catalogue what information is located where.
When a fellow told me in horror that Google is now worth more than Coke, I said that I don't drink a hundred Coke a day but I use Google more than a 100 times a day. The profit margin on a Google advertising link is about 4 times as high as the profit margin on a Coke. MSFT has suggested that it averages making $9 per year on its average sale of software. It has further suggested that $9 is not a huge hurdle to jump if the firm switched to an advertising supported plan. In five years, which software will you be using most, Google or MSFT?
At its peak, MSFT had a market cap of $400 Billion and currently has a cap of $300 Billion. I project that the next 5 years will be good years for MSFT and the stock has an excellent chance of doubling in value. During that time, Google will make up a lot of ground. It may not catch MSFT in 5 years but it should at least come close. If MSFT is a $600 billion company in five years and Google is a $500 billion in five years, MSFT will be selling for about $50 per share and Google will be selling for about $1,600 per share.
A lot can happen and there are no guarantees. What I know is that there are so many ways the computer and the internet could be making our lives better. My church struggles with the internet are illustrative. Our web site at MapleSprings.org is a fine site and if you live near Winston-Salem NC you should come to visit. However, the potential for better communication of the members through new services such as Google Calendar is huge.
Email has helped church members be in touch and stay in touch; email is a good start. The church newsletter and website serve great purposes but much more information needs to be made available to the members. All members should have an easy way to add a person to a prayer list, to give the details of when and where a member will be in a hospital, to add a meeting to a common schedule and to find-out what is happening at the church at any point in time. It may sound silly but members should not need to go to a web site to find information but the information should be made available routinely through an RSS feed to the member.
Schools, churches, businesses and all other groups need better communication solutions. As a scout leader, I learned how much work goes into preparing for one weekend camping trip. What a blessing an online registration and infomation system would be for the scouts. An interactive list for transportation needs, grocery needs, equipment needs, a map to the location, a departure and arrival schedule, etc. Expand this interactive system to the entire scout program and keeping up with which boy needs what would be a scoutmasters dream come true.
The computer is a great tool but right now it is like a dull ax. The good news is that Google is putting a file on the ax and progress is going to be made. Billions of people are benefiting from the new tools and many more are on the way. One of the many exciting areas offering great promiss is in the area of heath care. Much information will be shared, many problems will be concured. Google is on a path that could lead it to do more good for more people than any other company has ever done. Yes, Google MSFT!
Posted by Jack Miller at 11/22/2005 06:06:00 AM
Carrier Seeks Deal With Vietnam Airlines: Financial News - Yahoo! Finance
While UAL sits in bankruptcy, AMR continues to make deals. The latest plan is for Vietnam Airlines and AMR to share code. This means each will be able to sell the others ticket. For example, AMR would be able to sell tickets from the United States to Japan and then to Hanoi. The second part of the trip would be on a Vietnam Airline plane.
Code sharing deals are important for a couple of reasons. One being the increased traffic it brings and the other being the reduction in costs. If AMR is already selling the one ticket, it pays no fees to travel agents to sell the second ticket.
The world has started a "business expansion"; we are no longer in an economic recovery. New plants are being built, new deals are getting done, new contracts are being signed and joint venture participants and trading partners are getting to know one another. International travel is growing like US travel grew decades ago.
AMR and CAL are each participants in international code sharing consortums. Any business that needs to send employees to spots around the globe can do one spot shopping with these major carriers. LUV does not fly there. The business is competitive but not cut-throat. Profits are going to grow!
Posted by Jack Miller at 11/22/2005 06:02:00 AM
Monday, November 21, 2005
One must wonder how many socks China must produce and sell to the US to earn 20 Billion Dollars. China plans to buy 20 Billion Dollars of planes from Boeing. How would you like to have the long-term parts contract for these planes?
For many months, I have felt battered by those around me who suggest China is taking all the "good manufacturing jobs". I point out that China has lost far more manufacturing jobs than has the US to no avail. One point I have often made is that the Chinese ultimately have to buy bonds with the US cash they generate through trade or they have to buy goods from us. In the recent past, they have loaned us our money back at rates that are very profitable for the US. Now they are buying more and more goods.
A very strong economy lies ahead. The stock market is pushing to new highs even in the face of the most negative political environment I have seen in years. I constantly hear false statements from all sides but the whine is particularly severe from the liberal left. Many of the whinners do not see themselves as being a part of the liberal left but they are reading the popular news and supporting positions based on false information.
In a discussion last night, I was surprised to learn that many folks who are living comfortable lives and working at good jobs believe that we must lower our standard of living or suffer great consequences. It seems that the belief is common that we are about to use up all of the earths resources. In the US, we have added 80 million acres of trees in the past 50 years and we have millions of hectares of land that is lying fallow.
As a conservative, I certainly do not wish to waste resources. However, I believe in using what the Good Lord has given us. His abundance last forever and ever. The growth in carbon deposits on the planet is as strong as ever. Malthusians said we would use up all the food in the 19th century. Now we are going to use up all the energy. One tricky part is the law of conservation of energy; you can't get rid of the stuff. Energy does not go away!
Posted by Jack Miller at 11/21/2005 05:07:00 PM
Google shares seen surpassing $500 mark
UBS analyst Benjamin Schachter is the first of the "big firm" analyst to project $500 or more per share. A lot is made of the market cap of the company but I cannot think of another company that is likely to have as many regular customers.
Members of my family have purchased shares around $90, $190, $290 and $390. We expect to buy more as the price goes up. Today, a friend purchased another 15 shares at $403. It is our belief that more and more information will be found more and more often by more and more people for many years to come.
Posted by Jack Miller at 11/21/2005 05:06:00 PM
The Sun News | 11/20/2005 | Hilton Head: We don't want an oil refinery here
Meanwhile back at the ranch, US communities continue to say NOT IN MY BACKYARD. The good news is that more and more work can be done over the internet. Those living in Hilton Head will do more from their computers and pay out the nose to get on and off the island.
Posted by Jack Miller at 11/21/2005 04:56:00 PM
Buy That Earnings Yield - Forbes.com
Ken Fisher always has a few good stock ideas to share. In his latest article in Forbes, Fisher tells about how many companies there are that can currently borrow money in the bond markets to buy back stock and to boost the companies earnings per share. Of course, another company could borrow money to take these companies over and see an accretion to earnings the very first year.
One of the stocks he mentions is NSC. This one has been a good one for my family to own. The company is running full tilt hauling coal and other goods. One of these days, I expect it to be taken over, but I'm in no hurry. At 15 times the most recent 12 months of earnings, the company is throwing off a growing earnings yield of better than 6.5%. Bonds yields do not grow but railroad earnings do! Coal will stay in high demand even if oil goes back to $40.
Jump on board and ride one or more of Ken Fisher'sbucking broncos. Hang on with all your might because the temptation will be to get off in the middle of a great ride!
Posted by Jack Miller at 11/21/2005 11:17:00 AM
A Base Hit for Google? [Fool.com: Motley Fool Take] November 17, 2005
DO YOU UNDERSTAND WHAT GOOGLE BASE DOES?
Google base is much bigger than it looks. What Google basedoes is puts human intelligence into web crawling!
At first glance, Google baseappears to be nothing more than an indexed and searchable classified advertising vehicle. Indeed, I have tried the system and it is easy to post a notice about a service available, an item for sale or an event that is planned. The option to post such items for free must certainly have newspaper publishers in a stoic state of "what will the internet do to us next?".
I have stated that Google baseis going to be big. It is in the sense that billions of notices will be posted for free and billions of folks will be able to find these notices far more quickly than by searching though newspaper ads. However, there is another very important way that Google baseis going to be big.
Right now, web crawlers such as Google and Yahoo do the best they can to index the web to assist all of us in finding the information that we want. Google basewill fine tune this process for Google by applying human intelligence to the indexing process.
Those who own web sites are likely to place free ads on Google base. The ads will of course include links back to the owners web site. By "tagging" or "labeling" (Google must be afraid of copyright suits as they use a different word for the tagging process), the ads, the owner of the site has helped define the site more precisely.
A lot has been made over the fact that Google's market cap has passed Yahoo, TWX and Coke. I don't see the reason for the "surprise"; everyone in the whole wide world needs to look-up and find information daily. Coke is a very good product but folks have lots of alternatives, TWX puts out some great movies but most are not seen by most people. On the other hand, no one is coming close to Google in its capacity to help people find information quickly. A little more than half the world uses other search products but none of them are improving as rapidly as Google.
Maybe that last statement was a little over the top. MSFT has been making great strides to improve its search product and it is improving rapidly. However, it is so far behind that when it "catches up to Google" Google is going to be gone somewhere else.
When Google had just come public, a Swiss investment advisor and I emailed our thoughts about Google. He said the stock was dramatically over-priced at $90 per share. He called me an "American Cowboy". I asked him a question that he refused to answer. My question was, "Where does the demand curve cross the supply curve when a company offers its service for free?".
Trying to imagine how big Google baseis going to be is like trying to imagine what is at the edge of space. When billions of computers are daily sending from one or more manual postings each to thousands of automatic uploads each, one can appreciate why listings expire in 31 days.
Google's goal is to organize the worlds information. There are two major changes that must be made for this to happen. One, more of the worlds information needs to be made available to the web and the information on the web needs to be cataloged better. The amount of information posted to the web is about to explode upward. The cataloguing of that information is about to take a great leap forward. This will be a great benefit to mankind.
It is amazing how many inventions were made, used and then were lost prior to the invention of the Guttenberg printing press. For centuries, the Chinese and Mongolian governments actually suppressed the spreading of information about new technology. It is no coincidence that within 75 years of the invention of the printing press that scientific, cultural and religious revolutions were under-way. Google's organization of information is just as powerful as the Guttenberg press.
The amount of information that is not used today because it is not readily available is far more than what was lost before the press was invented. Google's work in the heath care area is going to be worth more than we can currently imagine. One of the areas that health data will change forever is in the area of tracing and understanding the genetic code.
For something like 15 years, a large group of nurses have input data about their lifestyle and health practices. This data has started making a difference. Doctors are discovering surprising links between habits and health problems. Google is lending its tremendous "super computer" to help in this important and massive health analysis.
Some of the information I am relating comes from "The Google Story". I don't have a copy yet but I was able to read a portion online and I browsed a copy at a full price store (it was $26.00 there and I have not checked AMZN yet).
Years ago, I listed to a self development tape that suggested that one should always "think big". I just did a Google search and the list of books on the topic is too long. I did not take the time to find the tape. However, it is clear that the Google guys are thinking big.
Sceptics are writting blogs about how Google is trying to take over the classified advertising business. Well, classified ads are only a drop in huge bucket of information that needs to be organized and reachable.
Google Print has been renamed Google Book Search. Those who are fighting Google on this issue are generally the very people who love books. They love books because they love what books do, which is make information available to the masses. Google Book Search is making information available. Never again should one have to drive 10 miles to a library to look in a card catalogue. Doing so is a huge waste of time and resources.
Authors and publishers will get paid for writting and printing books. Google base is going to help billions of people find relevant books. Books they will enjoy, learn from and what more.
GOOGLE BASE IS BIG; VERY BIG; HUGE!
Posted by Jack Miller at 11/21/2005 11:16:00 AM
Friday, November 18, 2005
Stock Market News and Investment Information Reuters.com
Stock markets in the US, Europe and Japan are all sitting at multi-year highs. European Central Banks are finally considering raising short rates. Yield curves are still quite positive in Europe. Other countries are faced with the problem that the soaring dollar is dramatically raising the price of oil. Inflation rates in a number of countries has soared to levels not seen in 20 years. Of course, this will prove to be a relatively short lived situation as the FOMC is leading the way to higher rates.
Gold, copper and other metals are likely to turn like oil did a couple of months ago as interest rates tick up. Many folks are mis-reading the inflation situation. Interest rates in America are higher than the inflation rate. There is a real cost to hold gold.
In the past 22 months, the NASDAQ index has increase 6% while the earnings of the NASDAQ companies have gone up 30%. In the same way that Gold and oil will not stay "uncoupled" for an extended period, prices of stocks must move in line with earnings or vice versus. Indications are that earnings growth rates are moderating but they are still going up much faster than prices. A clearing point is at hand.
Technical studies continue to suggest that the market may pull back before making the big break out. However, most investors are well served to avoid trying to play the short term moves. My projection on the S&P from now until 10 years from now is a compounded rate of 11%. Right now, Americans are making a very risky bet by holding more than 5 Trillion Dollars in short term securities. Chances are good that they will under-perform the market.
Posted by Jack Miller at 11/18/2005 04:51:00 PM
Interesting reading from the world of Blogs:
Mike Bryan Vice President of the Federal Reserve Bank in Cleveland gives a short lesson on understanding the Consumer Price Index as a guest writer on Macroblog
Bryan reports that fresh fruits and vegetables, bakery goods, natural gas, airfare, and lodging away form home—posted double-digit (annualized) price hikes in October, while meat, infants’ apparel, shoes, used cars, telephone service, personal computers, and tobacco products—cost you less in October than they did in September.
The US leads in subscriptions to Broadband according to the Computer Industry Almanac. THe US claims a 21.6% market share with worldwide Internet users projected to top 1.8 Billion by the end of 2010.
In "Lessons for the Apprenticed Investor ,"Barry Ritzholtz comments in his article for The Street .com that it’s not really the stocks in your portfolio, but stock management that helps investors make money. “Stock selection is not where investors run into trouble. Managing the positions after they become part of the portfolio is where people typically discover their investing shortcomings. And that's before we get to a wealth of other important issues, including how and when to make purchases, how much of a given stock to buy (position-sizing), when to add to existing holdings, how to handle bad markets, when to use leverage, how to use options, how to hedge, when to use stop-losses, etc.“ I’m happy to talk stocks anytime you want—write me or give me a call
Posted by Jack Miller at 11/18/2005 01:07:00 PM
Thursday, November 17, 2005
Many folks worry more about being diversified than about making money. Don't take me wrong, diversification is an important technique used to reduce risk. However, some of the greatest money masters the world has ever known did not or do not like to be overly diversified. John Maynard Keynes liked to own no more than 6 stocks. He once said that with perfect diversification there is zero profits.
Warren Buffet owns concentrated positions in a relatively few stocks. He has the confidence to invest heavily in what he believes will do well. He has made some big mistakes but he also can boast of the best long term track record ever. "Uncle Bill Miller" of Legg Mason Value Trust fame is also known for concentrated positions. Despite a heavy load of better that 1.75%, he has beaten the S&P 500 for an incredible 14 years in a row.
I am pleased to report that a good friend of mine has made a very high return this year. While looking at his account earlier tonight, I was surprised at just how persistent he is. When he grabs onto a good stock, he locks on like a snapping turtle and will not let go. In the past 18 to 20 months, he purchased AMR 8 times,GOOG 9 times and CAL 33 times! He has not ever sold a single share of these three stocks. With almost every addition to his account, large or small, he purchased shares in one of these stocks. He owns other stocks that have done well but these three are clearly his favorites.
He has made more money this year than many folks will make their entire lives. He made the most on CALbut his purchases of ,GOOG are the most remarkable. Of the nine purchases, 4 of them were made at the approximate prices of $90, $190, $290 and $390. I am confident that he will buy more before the stock gets to $490 and I am confident that he will buy more when the stock gets to $490.
Another friend has made a huge gain on ,GOOGLE this year while losing a little on the airline stocks. He took a beating on NWAC but his recent gains on CAL and AMR are pushing him toward a break even on the airline portion of his portfolio. It is also interesting that a friend with a retirement account largely positioned in index funds has his biggest gain in LCC. After the bankruptcy court helped this company dramatically reduce its operating costs, it looks to be on the way to a number of profitable years ahead.
I don't often write much about some of my families long-term holdings because we have not added to these in a good while. A number of these are at or near 52 week highs. I may have given a bit of a wrong impression about my position on the market as emails and phone calls have asked if I am selling out. Nothing could be further than my position. I believe that after 23 months of sideways consolidation, the market is ready to break-out into a full blown BULL MARKET STAMPEDE. I have simply said that aggressive investors who are willing to bet on their ability to time the market (typically a bet with poor odds) that the market is approaching over bought conditions. The sentiment is too strong. The problem is that if this current rally is the break-out rally then forget about sentiment and stay on board for a heck of a ride. In aggressive accounts that are trading on margin, it makes a lot of sense to take a little off the top. These accounts will still make a lot of money if the rally continues.
OIL and other commodities are the big question marks. Oil has broken down below the 200 day moving average. This could be a bear trap or it could signal an upcoming swift drop of another 10% or more. With the curbs on demand in place in the very populous countries of China, India, Indonesia, Malaysia and others, I suspect that the drop will continue. However, there is a divergence between oil and gold.
There are a number of ways of looking at the strength in gold but perhaps the best thought is that the move is a "flight to quality". It is a flight to quality in countries like France which is facing riots in the streets, Italy which is facing a recession and many other nations which are experiencing the worst of inflation.
In America, short interest rates are currently considerably higher than the core inflation rate. Thus gold is expensive to hold here. However, the strength of the US dollar coupled with the huge spike in oil prices has hit our trading partners very hard with a mega dose of inflation. Any goods bought from the US cost more and, since oil is traded in dollars, the cost of oil has gone up by the nominal price and the currency swing; a double whammy that has many folks running scared.
Which brings us back the the thought of MAKING MONEY. Warren Buffets adage in regard to fear should be heeded in times like these. Warren said that fear and greed drive the market and the secret to making money is to buy when others are fearful and sell when others are greedy. In this case, the fearful are afraid to buy stocks and the greedy are jumping on the "big move" in gold.
Emotions are strong so the run in gold could last a little longer. However, another bump in the Fed Funds rate is going to put all the more pressure on central bankers around the world to "protect their currencies" by bumping their short rates. Gold, which does not pay a dividend, cannot hold up to higher and higher short term rates.
One of the reasons so many folks can't understand why the FOMC can't set a tight target and stick to it is that they do not appreciate the degree that the interest rate game is a relative game. Short rates in Australia have been well above rates in America for quite a long time. Short rates in Canada have been bumped recently. Folks get all bent out of shape about current account surpluses and deficits and suggest the world is coming to an end. The humorous part is that the citizens of the one country are whining about the surpluses just as loud as the citizens of the other country are whining about the deficits. The fact that the citizens of a very wealthy country can buy a lot of goods is seen as a terrible condition. The citizens of the poor country only wish they could have it so good.
The US is the manufacturing engine of the world. We produce more goods per capita than anyone else. We own more assets than anyone else. Individuals in America who learn how to invest can make a lot of money. I congratulate my good friend on the success he has had this year and I wish him and all of you the best in the years to come.
Posted by Jack Miller at 11/17/2005 11:52:00 PM
GOOGLE BASE VERY BIG!
I have said it before but it is worth repeating that Google Base is going to be very big. Go take a look at the car listings. How much better can a service be? A free listing of cars that includes a map to their location, pictures, contact information, etc. Can anyone tell me why they should pay for a classified advertisement rather than post the item into Google Base ?
The program is a beta version; it will only get better. Does anyone want to venture a guess as to how many postings will be made in the first year? I am afraid to put out a number because I might miss badly. For the past 16 months, skeptics have responded to my rantings about Google . They have said that I am so enthusiastic that they know they should short the stock. I hope the didn't. I hope they will not above $400 either. The price move is just getting started!
Google Calendar, Google Wallet and Google Finance are anxiously awaited programs. One can already see glimpses of the potential Google Finance holds. The Google Sidebar is great for following a few stocks but Google Finance should blow away the competition. Google Calendar will be especially good for organizations. My church, Maple Springs United Methodist, spends considerable time posting various activities and events to a common calendar. It is our hope to avoid as many conflicts of scheduling as possible. There will always be times when members cannot be at two places at one time but Google Calendar should make the sharing of calendar information so much easier.
Google Wallet should open many more doors for web based commerce. The web is small relative to what it could be. There is far more information not available on the web than what is. Google hopes to change this situation and part of the way is to make it easy for providers of special information a way to get paid. For example, it is only fair for a magazine publisher to be paid for publishing a widely distributed article. It is fair for the public to pay if the wish to read the article. It is silly to have to buy the entire magazine to read the one article.
There is no question that those looking for a certain item on Google Base will sometimes click on advertising on those pages. In many cases, the item one seeks will simply not be found in Google Base, however, the lead to the site that has the item may well be found. EBAY will likely be the biggest advertiser on Google Base . EBAY is also in the process of offering similar a similar service.
Looking at my own habits, I can see how big Google Base is going to be. I routinely hit the instant replay when watching TV channels and find myself watching many shows on a short delay. Then when the commercials come on I fast forward and catch up quickly. However, every now and then, when I want to buy something, I start searching the internet and I frequently click on advertising leads. I often make my final selection in a store but I use the internet to decide which store to visit.
Big advertisers are moving more and more to internet based ads. They have discovered that internet ads work. One day, most of all advertising will be done via the internet. Some of it will be video, some audio and some print ads but the ads will be internet based. GO Google GO!
Posted by Jack Miller at 11/17/2005 11:15:00 AM
The three week old market rally has resumed this morning after a few days of consolidation. The rally is getting a bit long in the tooth. As a long term investor, I suggest staying fully invested in stocks but aggressive investors might want to sell into additional strength; not yet, I said additional strength.
Short term trading is impossible to get right consistently. In a market where stocks are cheap relative to real estate and to bonds, most should stay fully invested in stocks. Aggressive investors who trim a little as the rally progresses will be taking a chance to never see these prices again.
There is without question a bias growing that this is "the year end rally". It may or may not be. Generally one wants to trade with the trend until it is clear that the majority are all jumping on board. When the majority get a little excited, one should expect for the market to go too far too fast. Again, I don't think that has yet happened in this case but a little more strength could cause technitions and others to jump in with both feet. I believe the "BIG BULL" is getting close to a big run but one would expect sentiment figures to be very negative right before the start.
Posted by Jack Miller at 11/17/2005 11:05:00 AM
New Snags in Oil Talks by Indonesia And Exxon - New York Times: "Pertamina once controlled Cepu, but concluded that the field was depleted and sold the rights to drill there. That company later sold the rights to explore Cepu to Exxon Mobil, which in 2001 discovered that, far from being depleted, Cepu was one of Indonesia's largest oil resources."
The above paragraph copied from the NY Times article illustrates that investors should trust the forecast of XOM over those of the ranting Peak Oil Cassandra. The chair of XOM estimates that there are upwards of 3.5 Trillion Barrels of oil that have not been discovered. In Indonesia, the state owned oil company, sold a depleted field. XOM explored it and found massive reserves.
US technology can find the oil. Many countries have signed joint ventures with US companies to find oil. Oil is being found. From everywhere from Libya to Zimbawae to South America to Russia to North America.
My forecast a few months back was that oil would drop to around $55 per barrel and then dance around the price for a while before going lower by next fall (after hurricane season). It appears that $57 has become the pivot point. There is pretty strong support in the $57 range but I don't think the price will hold $57 for more than another month or so. When it does break $57, the next dance might be around $50.
Posted by Jack Miller at 11/17/2005 11:03:00 AM
Five questions non-Muslims would like answered - Los Angeles Times
Radio talk show host, Dennis Prager, has listed five good questions for law-abiding Muslims to answer. It certainly does seem like it is time for peace loving members of the faith of Islam to speak out against terrorism. It will take courage to visit Jordan and other areas of unrest but the need is apparent. I pray that good folks will do good deeds to help others
Posted by Jack Miller at 11/17/2005 10:34:00 AM
MyWestTexas.com - Oil & Gas - 11/13/2005 - Mexico: International funding available for Mexico-Central America refinery
This article is one of many telling about a new oil refinery to be built. This one will be built in a Central American country.
Posted by Jack Miller at 11/17/2005 10:33:00 AM
Description of Selected News
$40 The list of oil refineries being built around the world continues to grow. Do I smell $40 oil in the not too distant future? It will be three years before many of these new plants are built, but according to Exxon(XOM) there is a $20 speculation premium currently built in the price of oil. Sounds like we could get to $40 well before the actual fuel hits the market.
Posted by Jack Miller at 11/17/2005 10:32:00 AM
News-Record.com - Greensboro, North Carolina: Sports: Moonlighting: UNC basketball could get walk-on help from football
After winning the National Basketball Championship last year, the Tarheels lost their top 7 players. The NBA got some great talent. The Heels will use football players to fill some spots this year.
Long-term fans of Roy Williams are hoping for his greatest coaching miracle yet. A lot of this hope revolves around Tyler, Terry and Thomas, a freshment big guy, an athletic reserve and a sophmore point guard who was erratic his first year. Danny Green, another freshman holds promise and high school football star--basketball walk-on, David Noel, may get 30 minutes or more per game.
Other names you may see from time to time include Jesse Holley and Brooks Foster from the UNC football squad. A former Mr. Basketball of Mississippi rode the bench last year and saw limited action the prior year. Another freshman is out with knee injury. In the first intramural game, Mike shot one open three pointer and was immediately benched. Yes, Roy has his work cut out.
Not to write this season off, but it is comforting to know about next years class. Roy has signed a six member class that is ranked number 1 in the nation. If these guys will stay around a couple of years to learn the fine points of the game, who knows, with a lot of luck, Roy could get his second NCAA Championship!
Posted by Jack Miller at 11/17/2005 10:28:00 AM
Scout.com: UNC-CC: Roy Williams Quotes + Audio
The Heels warmed up for the season against Catawba College today. Another player, I failed to mention in a prior post, who will see significant playing time was Bobby Frasor. Bobby started when Thomas missed practice due to an injured foot.
Posted by Jack Miller at 11/17/2005 10:26:00 AM
Scotsman.com News - International - Al-Qaeda on defensive as bombs begin to backfire
O.K. BACKLASH EXPLODES ON AL-QAEDA!
This may be the best news we have heard in years. Muslims are speaking out against the indiscriminant bombing of innocents.
The "bad guys" have been willing to bomb the innocents because the targets are "soft". When they go after the troops, the troops shoot back.
Before and after the revolutionary war, America teetered and tottered. Before the war, many believed the states should do whatever necessary to make amends with the British. After the war, our curency was virtually worthless. It took a lot of give and take to make the new nation work. A small example is that George Washington was opposed to a two party system and the reality is there is nothing in the constitution that suggest a two party system should be developed.
The point here is that Democracy is tough to achieve. The vast majority of the governments in the world today are not democracies. Iraq has a chance to be one of relatively few. The indiscriminant bombing by the lawless terrorist is heartbreaking. We must hope that the people around the world rise to speak. The people can shout these guys down, turn them into the authorites and make the world a better place.
Posted by Jack Miller at 11/17/2005 09:52:00 AM
Wednesday, November 16, 2005
The crude production lost as a result of the hurricanes has been hyped to the max. The following is reality.
The cumulative loss of crude production in the Gulf as a result of the hurricanes is one day! The world uses 81 million barrels of oil per day. The IEA coordinated the release of approximately 60 million barrels of emergency reserves after the hurricanes hit. The net loss of available crude is one fourth of one day!
In the meantime, China has reduced its crude demand growth rate from 15% in 2004 to ZERO. The reported numbers do not show ZERO but again do you believe the hype or do you believe what is real?
Take the reported numbers in the linked article and you can see that the current growth rate is approximately ZERO. The IEA reports that through March, the projection on growth in usage was 7.9%. The past 4 months in a row, the IEA has reduced world wide demand figures and in particular the demand from China. They now project the annual growth in China to be 3.3% for this year. To get from 7.9% annual growth to 3.3% growth during the same year, the last few months of the year will have to be about ZERO.
The bottom line is that those who think the world is going to run out of energy are as off course as the Malthusian who thought the world was going to run out of food. Sticking with china as the example, China has approximately 104 million hectares of arable land available. Technology exist to grow beans for fuel.
For better than 20 years, Ken Fisherhas written solid common sense articles. A month or so ago, he suggested that to do well as an investor you should discover what is believed by the majority that is not true. The majority believes that oil will never come back down below $50 per barrel. The reality is that it will. The reality is that inflation is not as bad as commonly believed. The reality is that stocks do very well during periods of low inflation.
Tomorrow the CPI for October will be announced. I can not tell you that the number will be large or small. These monthly numbers are very volatile. They are mathematically seasonally adjusted. They are often revised time and again after they are reported. The trend since July is that the numbers are down.
Oil reserves will also be announced tomorrow. Will the size of the reserves continue to be dramatically out of whack with the current price? Again, the numbers for any one day do not prove much. However, the potential for a bond market and stock market break-out is present. For those of you who are riding Ken Fisher's bucking bronco hold onto your hat. Wednesday November 16 could be an exciting day!
Posted by Jack Miller at 11/16/2005 06:56:00 PM