Thursday, March 21, 2013

On the Rails

As you may know from other posts I am in favor of railroad stocks in the current economic climate.

Yesterday I had to use the train to travel to an appointment. My Amtrak train was delayed by fifteen minutes.

This may come to some as a cause to complain. For me it turned into a research opportunity.

The cause of the delay was the movement of three very long and full Burlington Northern and Santa Fe freight trains. Two were heading south through Central California, possibly to Los Angeles and San Diego. The third train was equally as long as the other two, stacked to double capacity on all of its cars with lots of CSX containers. Possibly bringing goods up to Northern California to be distributed across the mid-west and Eastern seaboard.

Just a few months ago, it was rare to see one long freight train as large as these, I estimate a mile long each, and when you did see a freight train it often had dozens of empty cars.

Of course three full trains a recovery, doesn't make. But with the visual evidence of goods moving and rail companies being able to move lots of goods at lower costs I am still happy to invest in railroads.

For the requirement of disclosure, I hold stock in Union Pacific Railroad (UNP) and CSSX (CSX).

So as you walk around or drive, keep an eye on trends you never know what opportunities for research lie in plain sight.

Friday, March 15, 2013

No Talk of Highs

I was struck this morning by how little news there is of the recent Wall Street Highs.

The markets fall and it is headline news on every television channel as pundits let fly on where, When and how the market is about to fall to a disaster.

Here we are at dizzying highs and not a twitter from local and barely a tweet from national TV, apart from CNBC and Bloomburg.

Last October and November after sufdfering a stroke, I was recouperating at home. A friend called in everyday and he is a bit of a nervous type when it comes to investing, we would watch the financial channels, and on down market days he would clamour and fuss,

"Everything's Falling!"

I would just respond, "So maybe I'll find something to buy."

Its all very comforting though. Word hasn't leaked out yet that there is money to be made on the exchanges. Why do I say that?

When word gets out everyman, woman, child with their dogs, cats and hamsters will be investing again. The markets will grow bubbles and burst amid more tears and laments about how dangerous it is to invest in the stock markets.

Ah the cycle of the markets. Enjoy the quiet while it lasts.

The silence if innocence until the talk of Highs leaks out and we start the merry-go round again.

Thanks for reading. Do you have any thoughts or comments on this post. Please leave a comment below.

Thursday, March 14, 2013

Going Financial

For a couple of years now I have looked at Technologystocks as a series of reasonable investments. Apple (AAPL) proved pretty successful, Qualcomm (QCOM) was ok I got in and out with a little profit and finally I held some Microsoft (MSFT).

Microsoft was actually a reasonable performer over the last three years I built a good holding but lately it was a little lack lustre. So looking around I decided to Sell out of my last stock in a Tech company. So I needed somewhere to park the cash for a while.

I have mentyioned my previous almost disastrous holding of Bank of America (BAC) I began investing there in 2006 for the then dividend of 50 cents per share. The investment at that time left me with average buying prices in the $50 region.. A lot of cash was tied up in an almost worthless stock a couple of years ago.

I began buying additional stock in BAC at the $5 level and this brought my averages down to the $20 then as I bought more the average has come down past $15.

Well I decided to park the Microsoft cash in Bank of America. This actuall doubled my holding and has left me with an average purchase price at just above $14.

I think this is a reasonable level to be able to take a chance at getting some of my cash back. BAC could even reach #14 by the end of this year if we only assume a 15% increase in its price. I think it can do that easily.

From there as I call back my cash I am considering buying into a Tech ETF such as the SPDR Technology ETF (XLK). Technology is getting to be a tough call with all the global corporations fighting for market share. I could not call Apple (AAPL) or Samsung, Microsoft or Apple. Qualcomm or Samsung or Intel. A tech ETF will give me a more widespread risk on an important area for my portfolio.

Intil then. I am out of Tech and going Financial.

Wednesday, March 13, 2013

End of First Quarter 2013 in Sight

Well, this year is flying, must be I am getting old. Or it may just be excitement from all the highs on the markets in the last week.

As I woke this morning my stock ticker on my phone was showing a sea of red in all areas except financials.

I think we will seee more volatility in the markets in the next couple of weeks as the quarter ends and the large institutional buyers lock in those lovely profits from the rise  in the markets this year.

This means a lot of short term swings for everyone but it will settle come May.

Wednesday, March 6, 2013

New Highs For the Dow. Where to go?

Today saw the Dow Jones Industrial Average Index of the top thirty companies in the US clase at an all time high of 14,296.

This is the second time the Dow has created new highs this week and the S&P is close behind pushing close to its old high made in September 2007.

So are we in for another crash or is this the start of a massive Bull run.

Probably neither. The massive Bull run is an ongoing phenomenon. It has been running for almost four years now. Since those dark gloomy days of March 2009 we have seen one of the fastest recoveries in any stock market, some 48 months from the low to match the previous highs of the prre crash market.

One sobering thought however is that this new highest ever high comes  less than a week after the US Government failed to act on the predicted disaster of sequestration. That policy of get nothing done was claimed by the Democrats to send the US and World economies into an immediate crash dive. Instead the markets hardly blink.

The whole deal will probably turn out only to be a propaganda disaster for the Democrats who see the world full of hungry wolves at every turn. They cry warnings of impending catastrophe and then settle back to let the dust settle.

This time though the markets and business have called the politicians bluff. The markets did not crash on a whisper or even a shout.  The markets merely showed their boredom at political fuss and feathers and just went on their own merry way.

Should we buy in a high market?

Of course. Stock picking is the watch word. A high market does not mean there are no bargains to be found so stay on the hunt for good stocks which offer good management, good income streams and good prospects for growth and dividends.

High value markets just mean you need to be careful. Sequestration will hit several sectors such as defense and large construction projects. Damn we really do need a better railroad system  and roads here in the US but guess we'll have to stick with a slow train to nowhere and the pot holes for another half century or so.


One That I Missed

Just about one year ago a relative of my wifes got all excited about one particular stock. Smith & Wesson Holding Company (Nasdaq  SWHC). At the time they were trading at just above $5.30. they were of interest to me. They make and wholesale guns and a variety of weapons, so would appear on the face of it to generate lots of lovely cash.

At that time though sales were relatively flat, there was no dividend and quite a debt load with uncertain prospects. 

My wifes aunt  was quite bullish though but I backed out gracefully saying it wasn't for me.

This week however Smith & Wesson posted massive sale and stock prices topped the $10 mark, though they have now fallen back.

According to Bloomberg TV this morning Smith & Wesson had a exceptional third quarter ending January. Sales of guns rose following the school shootings in Connecticut in December and the subsequent calls for federal gun control.

The main reason I can see for my missing this particular boat is my personal ignorance of the market for guns.

Not being an American by birth and not being immersed in a gun culture. I didn't see the calls for gun control as a positive for a company which sells guns, in fact it is a definite negative. But then I ignored the love affair many Americans have with the Second Ammendment and the right to bear arms.

In this case I missed out on an important facctor. The emotion of panic can make some people run out and buy some remarkable things if they believe they won't be freely available in the near future.

Would I buy SWHC today? No, I missed that boat and it may be a short lived boost in sales.

But it makes the point that knowing all aspects of the market is important to investors.