rovo's Market Journal -- 2011

[ModE98]

Rovo, agree, if you hate those ADRs, this is no place to bring them up. If the spirit moves you, it is just as easy to discuss such trash on the ADR thread. Mea Culpa.

[lovetobike]

Rovo - too late! I got a position at $17.50. Considering I only purchased 350 shares, $.50 isn't a big deal for my purchase. thanks for the tip!

[livinincali]

I agree with rovo from a technical perspective the first major support for F is right around the 50 day moving average at $17/sh. F has certainly gotten rather overbought and could fall further before it gets oversold but that would be my first spot for a decent risk to reward long play. After 17 looks like there might be some support in the 16.50 area, but the more significant support is probably somewhere around 15.50 which is the first major low after the big breakout. It would be natural to see F retrace into the 15's after such a large move over the next couple of months but you never know. We could see another burst to a new high before a more significant move down.

[rovo]

Since the decline started yesterday I have quietly been accumulating shares of TQQQ. I don't think this dip is going to hold and have buying in anticipation of at least a partial recovery from the dip. Needless to say, I now have a substantial holding of TQQQ.

[yclept]

Do you still have the FAS from a few days ago? I hope you're right about this being the end of the beginning rather than the beginning of the end!

[rovo]

Do you still have the FAS from a few days ago?

Yes. I'm in FAS for the short term. Wish I wasn't but such is life. In for 2K shares at $30.805. I might have to hold this for several days to get out with a tiny profit.

I'm also under water on my total TQQQ purchase of yesterday and today but the gap is closing quickly. Odds are, it will be profitable by this time tomorrow. JMO.

[livinincali]

Today is a tough day to figure out what to do. If this is the start of a major move down today's rebound is going to be the only good opportunity to get out in the near future. Of course it's starting to feel like we just had a minor correction and we're heading to new highs soon. Looking for a break of today's low (1271) or a break above 1287 to confirm direction. Today is either going to be a great buying opportunity or going to leave quite a few people trapped in bad positions.

[rovo]

The port was positive today and moved up from 3.61% MTD to 3.97% MTD. The increase does not involve big dollar amounts but is at least the right direction and went up when the indexes all closed down.

[rovo]

I have entered order for GLL in both accounts at $29.75 and $30.00. I'm actually expecting an upward blip in gold at some point this morning and I want to be there with the orders on the books. I do not believe the orders will fill at my current bid prices but I'll go in and adjust the price as needed for them to fill providing I still like the action in GLD.

[rovo]

oops. Forgot to mention. Don't forget today is options expiration and the market may be more than a little erratic as the big boys try to manipulate stock prices to make money on the options.

[rovo]

I now have a starting position in GLL. I'm already under water on it. Only a few cents per share though. I'll be adding to this position as I get more comfortable with gold declining.

Anybody notice the ISRG I was trying to buy for the last few weeks? It kept out running my bids but in hind sight I should have just bought it.

Port is up substantially already this morning. Time will tell if the gains stick or not. My feeling is they will.

[rovo]

I'm out of here for an hour or so to meet with Township people. Hold down the fort in my absence.

[IPAfan]

I haven't been active in my trading or posting lately. I'm basically sitting on the same portfolio with a very large position (over 50%) in TTT, then ENH, FRFHF, and about 6 3-4% positions.

I'm about at breakeven on my TTT position if you add in the value of the KHDHF shares I got in distributions. However, I think TTT is very undervalued right now where the KHDHF component of my original investment seems to be at a fuller value. I could see KHDHF performing well, but I suspect that I will sell my KHDHF stake and reinvest in TTT which seems to me a safer bet at these prices.

I am very impressed with the leadership at TTT and its ability to create value in its "mothership" public companies for at least 15 years. Right now you can pick up TTT at a 15% discount to NAV (even though the company seems to be able to grow NAV by around 20% a year+) This number doesn't include possible upward revisions in the value of the iron ore royalty or the results from Mass Financial in the 2H of 2010. So it's possible that the current price could be as much as a 25% discount to NAV.

I believe in the long term this company can maintain ~20% ROE, and grow NAV by 15%+ per year, pays a slightly above avg. and growing dividend. I've got no idea where the stock is going tomorrow or in 2011. However, if the business continues to perform well I think the stock SHOULD be worth a multiple of book value. I think 1.5-2X NAV might be a fair price for TTT. That doesn't mean I expect it to reach this level.

Still, I should make a good long term profit if I can make an investment at a discount to book value, where the book value continues to grow at a healthy rate (without huge leverage), and can also eventually sell these shares at even a modest premium to book value.

My portfolio is small enough that I've considered re-allocating my entire investment portfolio to shares of TTT while focusing most of my wealth building effort on growing my own business.

[lovetobike]

My Ag stocks got hammered yesterday, they are starting to make some improvements today.

On another note, last week I put in a small position in GE last week and that decision has served me well - it reported a 51% profit and has jumped ~7.5%.

[rovo]

I've learned something new today. Do not turn the market over to your posting group when leaving the office. It was very green when I left but ended the day very red. ;D

[mtntigger]

But, but, you said that you would only be gone for an hour.
(I think it's Mod's fault. How else could he have won the weekly game?)

[ModE98]

Sure, SBS, blame Rovo's woes on me. Like I fouled his horse at the turn for home. Shame on you! I plead "not guilty". it was a clean race. See my comment on the contest thread.

[livinincali]

I hate to say it but the market looks really good for a prolonged decline down a slope of hope. Almost everybody here is still pretty heavily invested long and looking for opportunities to increase long positions or take new long positions. The economy is improving and it's just a correction dominate the headlines. Yet when was the last time you saw stocks dropping 15-20% on an earnings release. See CREE or FFIV this week. This is the situation that tops are made of. Everybody thinks everything will be ok, everybody is looking for spots to get long and we just see the market decline and decline.

Even some of the bearish blogs are follow are being super cautious with this move down. It will make a new, high time to go long. I have no idea what will happen but just be careful. Pick some point where you'll take profits and don't keep waiting for the market to get back to where it was. It's extremely tough to do, but I've seen massive gains evaporate as people keep clinging to some ideological value and chase the market down. Remember that a lot of fund managers are operating with other peoples money so they aren't nearly as emotionally attached when it comes to hitting that sell button. There's only one thing they care about and that is out performance of the S&P, cash is better than a losing position.

[yclept]

I don't know how long it will take for ICI www.icifactbook.org/ to update their data to include 2010. I think it will be valuable to know where money has been shifting. As of the end of 2009, equity funds were holding 44.5% of all mutual fund assets as opposed to a 10 year average of 50.25%. These assets that came directly out of the hide of equity funds were sitting in bond funds (2009 = 19.84%; ten yr avg = 15.61%). Of course ICI only addresses allocations within the bond industry. I don't know of a source for data that would include allocations outside of the bond funds, but I believe allocations within mutual funds is one of the best indicators of what the slow/dumb money is doing.
So, as of the end of 2009, substantial fund money had been moved out of stocks and into bonds (compared to 2008):

Year	Total	Equity funds	Hybrid funds	Bond funds	Money Mkt Funds
2007	12000.64	54.30%	5.99%	14.00%	25.71%
2008	9602.6	38.58%	5.20%	16.31%	39.91%
2009	11120.73	44.58%	5.76%	19.84%	29.82%

The "total" column above is billions of dollars.

What I take from the above is that in 2008, money switched from equity to money market funds (too late -- the losses in equity funds were already extant). Then in 2009, a lot of it switched from the money market funds to bond funds (also too late most of the bond rise was already achieved). If that "too late" syndrome is continuing (conventional market wisdom/myth is that the little guy is always late to the party) then maybe that money started to shift out of bonds last year. I suspect that is not the case. I think a lot of it is still in bonds, and for that reason I'm awaiting the ICI update with bated breath.
Personally, I tend to suffer more from a "too early" syndrome. I often think a trend is over-extended and move away from it well before the slow money catches up and gives the big push to over-valuation. I tend to get out as assets near fair valuation without waiting for the maniacal run-up at the end where a great majority of profits are made.

Right now I'm experiencing a rise in cash. My best value screens are dropping more tickers than they are picking up. I can counter this by increasing position sizes in the stocks that are picked (and I'm doing that to a certain extent), but that doesn't seem like the best solution. If the screens are finding fewer screaming values, then there are fewer screaming values. I have to either buy issues that are less undervalued, increase position sizes, or allow the cash to build. I don't like any of those choices.

I'm hoping the general market condition indicator I use (5-15-50, belabored on another thread) will keep me out of serious trouble. I'm also watching the fed pretty carefully. If they give any indication of seeing need to curb inflation either by raising interest rates or withdrawing QE, I will be watching carefully for the sell signal. Though the last month or so I've been suffering the consequences of getting out too early on some investments, on others it has proved to be a good move (it seems the screens dropped them at the right time). I'm trying to not suffer the "too early" syndrome on the full portfolio which means that my bias is still positive for stocks whenever I can find decent ones to buy. I recognize that waiting for the general signal to turn negative insures that I will incur loses due to the lag in the signal, and am ready to accept them rather than to run too early and automatically forfeit potential profits from the move to overvalued status.

[rovo]

re: Message 248

So this morning I decided to look at the charts of my holdings using a "weekly" tick instead of the normal daily tick. I like to do this sometime every week end when the weekly stats have been updated. I'm going to have to side with Cali in that things look a little bleak. Everything appears to be rolling over and it looks like the decline has begun.

I have no intention of exiting my core positions as they are long term investments but I will have to re-evaluate two of my short term plays, especially since they are leveraged ETFs. The two I'm referring to are FAS and TQQQ and both are already slightly under water. After hours on Friday saw further declines in both.

Things can change quickly come Monday morning but a little caution is advised.

The price earnings ratio, PE, for the Qs was at 17.92 as of 12/31/2010. Prices have gone up quite a bit since then but the earnings have also, so I don't know what the current PE is. If it is still under 20 it doesn't set off any alarms in my head as growth has been decent. There is no doubt some issues are pushing the upper limits of PE and some of the "smack downs" mentioned by Cali fall into that category.

CREE still has a PE of 27 after the price fell $18 to $51. This puppy was ripe for a decline. AAPL, PE=18, and GOOG, PE=24, both were hit hard last week but the hit was way over done.

Apple at a PE of 18 and a forward PE of 13 should not be at the current price of 327. $375 is a reasonable price for Apple in my opinion. I won't make any estimates on GOOG because I'm not very familiar with it.

[rovo]

Currently my largest holding is Ford at 30K shares and a few hundred options contracts to boot. Ford was beaten down a bit last week after setting a new 52 week high of $18.97. Ford closed the week at $17.95.

Ford reports earnings on Friday morning before the market opens (around 7:00 AM) and I'm expecting some excellent stuff in the report. The expectation on earnings is $0.48 for the 4th quarter. I expect they will meet or slightly exceed expectations but will not announce a blow out quarter. They will also probably again show a loss in Europe for the quarter. If they meet expectations the 2010 earnings will be $2.09. Assume a reasonable PE of 10 and then the stock price should go to $20.90.

But, more important than the earnings, providing they at least meet expectations, will be the other things they say in the year end report. I expect they will announce they are making better inroads in China as they have lagged in this potentially huge market. The most important thing they could announce is they have paid down, or have the cash to pay down, the giant $12 billion debt they had on the books entering 2010. This is extremely important to the company as it will allow them to be rated as "Investment Grade" and open up a huge market for the stock.

The above are just my thoughts and opinions.

[rovo]

For what it's worth, the following from Bloomberg:

The U.S. Conference Board’s confidence index rose to 54.2 in January from 52.5 in December, according to a Bloomberg survey before the report tomorrow. Gross domestic product climbed at a 3.5 percent annual pace last quarter, from a 2.6 percent rate the previous three months, a separate survey showed before a Jan. 28 report.

[rovo]

Futures are slightly green this evening, nothing exciting but better than being in the red and not so green as to be scary.

I put a bunch of good-till-cancel buy orders in tonight for some new stuff for me. The orders are all well below Friday's closing prices and if we get the much advertised pullback they might fill. These are all relatively small positions for me and represent $20K per order. I'm just trying something different with equal $ weighting of each buy. Stocks are CLF, ALTR, BRCM, AAPL, and CAT.

Out on a limb here but I think we will have a positive day tomorrow. The Qs have been lagging the S&P500 and the Dow for a couple of days. Tomorrow is "QQQQ" day.

[rovo]

WHX has been collapsing the last six trading sessions with current decline for today of 6.92%. During the six days it has dropped from $24.72 down to $20.18. No news that I can find, just a general collapse. USO is also down over the same period but not nearly as much percentage wise as WHX.

My under water holding in FAS is looking a little better as FAS is up about 0.40%.

TQQQ is surging (+3.44%) along with the Qs (+1.17%) as I expected. I still have a ways to go before this TQQQ play is in the green as it wasn't the smartest thing I've done lately.

[lovetobike]

Rovo - I was just getting ready to ask you if you could find anything on WHX. I can't find any news either. I'm getting pretty concerned.

this is the best I could find and it is written by a "benzinga" staff writer:
As we reported earlier, Citron Research criticized Whiting Trust USA (NYSE: WHX) in a blog post earlier today. According to Citron, the small cap energy company is "handsomely overvalued," and will decline appreciably in the near future. Citron's analysts argue that Whiting has been inappropriately grouped with "'real' dividend and cash flow stocks that has an enduring asset base." However, declining gas prices, which make up to 40 percent of WHX's energy production, will likely prevent a profit windfall.

Citron claims that any valuation above $12.00 would "require a huge leap of faith" from investors. They rate the stock at $8.56 per share, citing the companies lack of on going enterpize value.

The market may already be correcting this oversight. Whiting is down over 10% percent from Friday's close, and trading at $19.35 per share.

Read more: www.benzinga.com/trading-ideas/Short%20Ideas/11/01/801919/whiting-usa-a-futures-trust-without-a-future-whx#ixzz1ByfyCXKI

[lovetobike]

I'm trying to sell my WHX position in my Vanguard account and it is claiming that the symbol "WHX" doesn't exist. I find Vanguard to work like a dinosaur and is horrible for a brokerage account.

Yep, this is great. I'm watching the stock continue down as I wait for a "brokerage associate" to pick up my phone call. I'm about ready to move all of my money (granted it is a piddly amount), out of Vanguard and into TD Ameritrade. I've never had this happen over there.

[rovo]

WHX: As of 12/31/10 short interest was 4.99%. Rather high. The article you cited is somewhat suspect as it correctly states a decline in natural gas prices but fails to take into account the increase in oil prices. Nat gas may be 40% of revenues but oil is 60% of revenues.

Since it is paying out $2.38 in yearly dividends (TTM) it is hard for me to envision a price of $8.56 per share. This looks to me like an attempt to drive the share price down. It also appears to be working. It will be interesting to see where the stock ends up when it bottoms and if the bottom sticks. It may well appreciate as rapidly as it declined. I'm down about $16K today on this stock.

[lovetobike]

Well, I totally acted on emotion but went ahead and sold all of my WHX position in the Vanguard account. I bought it at $16/share and if I'm so inclined, can purchase more if it dips below that. It turns out that "Vanguard's brokerage account" was down and no one was able to make any trades. I find that completely unacceptable. Am I overreacting to that?

[rovo]

Over reacting to the Vanguard account being frozen and can't make a trade?

Call them up and give them hell. Tell them to make good on your trade. I had one problem with TD Ameritrade and they compensated me $500 in free trades because I was upset with them. It didn't cost me any money in the delayed trade, it actually saved me some money.

[rovo]

I sold off 1,000 shares of my 2,000 TBT holdings which was a swing trade entered into in mid December. Sold at $39 even and netted 2.59% out of the trade.