Birchtree's Account Talk

[Birchtree]

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Tom,

Thanks, but no deletions while school is in session - we are all cool. No detention necessary Sky Pilot.

Greg,

Betsy is my female cow girlfriend - she told me she would come back to me when the sp500 reached 1700 - I would have enough money by then for us to have a big cow wedding. Ferdinand and Betsy forever - sounds good doesn't it - moo and snort.

DMA,

I hope you haven't gone off to sleep. If so sleep tight - I know you sleep good every night when you are hold up in the shelter. It's so cozy and comfortable. But I view the C fund the same way - deep in 500 large capitalization stocks, getting ready to blow the door off the shelter. When I think growth I'm looking at: Pfizer, General Electric, Johnson&Johnson, PepsiCo., Microsoft, Estee Lauder Co, Procter&Gamble, Medtronic, Intel, WalMart Stores, Cisco Systems, Merk, GlaxoSmith Kline, Hewlett-Packard, Eli Lilly, Home Depot, United Health Group, Aetna, Zimmer, Medco Health Solutions, Well Point, Stryker, and heck probably even an old member of the nifty-fifty 70's Avon Products.

I took a look at your recommended web link - and what is the first thing I see under the S fund heading? Small Capitalization Stock Index Investment Fund. It is a blend of small cap and mid cap funds - no guess work there. A portion of Extended Market Index Fund assets is reserved to meet the needs of daily client activity. This liquidity reserve is invested in the futures contracts of the sp400 mid cap index and the Russell 2000 small cap index. Go read it for yourself - plain english - I told you it was just a matter of semantics. See if any of the above mentioned stocks are part of the Wilshire 4500 index.

The link also mentions in black print that as of 12/31/04 the largest 100 companies in the DJW 4500 index represented 24% of the index's market value. I would say any large stocks that could be mistaken for large growth stocks contribute only a minor amout to total market value. Sorry to repeat myself - but school is in session.

Suggest again that you abandon the desire to retreat to the G fund and come join me and Paulk in the C fund - the smell of fresh manure from the bull arena will invigorate your portfolio. I wish Jack in the Bean stalk was around - I'm ready to go any way I can get there. Paulk - discuss your situation with the wife and let it rip. If you assume some moderate risk you can make some serious money - I'm talking tripple digit - not a penny here and a penny there - grab some silver with your cash. If you think the politics of this country is correct mode - then you will succeed.

Dennis - permabull #2- out of control contrarian

 

[Birchtree]

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All Interested,

A few more words on the growth versus value category - it's currently open for discussion. Historically, growth shares carry a higher price/earnings ratio than do value stocks for a very simple reason: earnings that are growing faster than the overall market typically command a premium. Yet this premium has narrowed significantly in recent years: the spread between the P/E ratio of the Russell growth index and the P/E ratio of the Russell value index is at its lowest level in more than 20 years - according to Ned Davis Research. If indeed the trend is now returning to growth, then value stocks that have outperformed in recent years could begin to underperform. This is not an absolute, only an educated guess- these cycles routinely go through phases. That's why I stick with the C fund - it is cheaper relative to the S fund and will provide more shares going in as well as on allocation contributions. We may only be at the begining of this category shift - it may take another year before the outperformance is recognized. Till then keep buying.

 

[Birchtree]

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All Interested,

Some pertinent recent comments from Don Phillips of Morningstar:

"There are opportunities in this market. One thing is to not look at all equities in the same light. There has been a profound difference in the performance of large-cap growth stocks and small-cap value stocks over the last five years. Over the past five years, according to the Morningstar style indexes, large growth stocks have declined 15.5% a year, while small-cap value stocks have risen 18.4%. That's just a phenomenal performance differential.

In many ways we're at the inverse of where we were in late 1999. In the late 1990s everyone loved large-cap, high-visibility growth, technology-oriented funds and stocks and no one wanted to buy things like REITs or small-cap value or commodities. Yet those were exactly what you needed to add to your portfolio if you wanted to survive the next five years.

Today we're at the opposite position. Real Estate has had a great run, small-cap value has done phenomenally well and if there is a discount in the market, it's in the larger-cap, higher-quality names. It seems to me that there is real opportunity to perhaps tilt your portfolio that way. If nothing else, it makes sense to be looking at your portfolio and making sure that market appreciation hasn't tilted you very heavily towards things like real estate and small-cap value and make sure that you've got some balance in the portfolio".

Sure makes good sense to this contrarian bull - I actually started buying GE and HD back in 3/04 ahead of the crowd trying to preempt the future. I plan to hold my value plays and add more growth on a pay as you go basis. My problem as a contrarian bull is that I like to do things alone - it seems I will have more company as others realize this shift is happening- these are long cycle moves so there is plenty of time to consider future strategy. A busy week coming and I have several dividends trying to get in the door-so will take the chips where they fall this week. See ya

 

[grandma]

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Birchtree - I don't see your spreadsheet in Pyriel's Tracker. Am I looking cross-eyed?:h

 

[Dave M]

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<<...makes good sense to this contrarian bull...>>

Manyof the things you say make good sense to me, but not your characterisation of yourself. I would think one could be a contrarian OR a bull, but not both, at least not all the time. To be a contrarian one would have to be bearish at times. Right? How can one be a "perma-anything" and yet also be contrarian? Enlighten me.

Dave

 

[Birchtree]

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DaveM,

I won't become bearish until we approach much higher levels from here - when the majority become bullish - then I start easing my positions out. My goal is sp500 of 1700, and Dow of 13,000. But even then I'll be waiting for other opportunities to buy depressed stocks or maybe bonds if the rates are right. Thanx for the question.

My guess on the sp500 close for this week would be anywhere over 1210. Is that bullish enough - most folks think we end lower.

 

[biggdog1]

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Birchtree I love how you stand by your guns, however I was wondering just how long until sp500 hits 1700 and the Dow 13000. I would still like to gamble a little before Iretire in either Dec05 or May06. I don't have too much to ride with butIwould to have some extra bones to chew on.

 

[Guest]

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If you are that short to retiring then your gambling days may (should) be over.

But good luck with whatever you choice to do.

 

[biggdog1]

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DMA, I'm Civil Service so my retirement is safe. My TSP is extra and I'm planning on paying all my creditors off with my TSP money and taking the 20% tax hit when I retire. I feel like I can gamble a little as long as I wind up with enough to to this. Thanx for your input, it's appreciated.

 

[Birchtree]

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biggdog1

This will be my third post to you - the next one will have a stamp on it. Taking a position in the TSP funds is not gambling - it's investing. Gee I hope those previous posts turn up at some point, they are lost in cyberspace for the moment. Use your cash to increase your leverage. Example- you need multi-thousand shares to be effective. The C fund bottomed 4/29 or so at $12.25, it's now $12.90 - that $.65 can mean a lot of money depending on the number of shares owned.

Dennis

 

[biggdog1]

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So Dennis am I to understand that you would stick to the C-Fund until the cows come home?

 

[Guest]

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biggdog1 wrote:

DMA, I'm Civil Service so my retirement is safe. My TSP is extra and I'm planning on paying all my creditors off with my TSP money and taking the 20% tax hit when I retire. I feel like I can gamble a little as long as I wind up with enough to to this. Thanx for your input, it's appreciated.

No worries Bigdog.

I appreciate you being opened minded.

Had a lot of friends that had to go back to work 2002 after they "retired".

Was very sad. Do not anyone have to do that. Good luck!!!!!!!!!

 

[biggdog1]

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Aint't gonna happen !!! Once I retire that's it. I'll get a cardboard sign before I get back into the working world.

 

[Birchtree]

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biggdog,

Perhaps you should consider leaving as much of your funds in TSP for as long as you can. Let your cash work for you - consider how long it took you to accumulate that balance - now you run the risk of maybe doubling that sum. You can concentrate in the C fund which is widely diversified with large cap companies - 500 of the best the good ole USA has to offer. Take advantage of it for awhile - once you have a profit you can relax a bit.

Yes, I plan to stay in the C fund until the cows come home - I actually hope they take their time too- I would like to see C fund in the $15-$16 level before I even think about easing on out - as a contratrian bull I don't need much company to be happy. Going 100% C fund is not gambling in my opinion - you would be hedged to the economy and I think this expansion will continue for a number of years going forward- get in early and let'er ride. You can even play shooter a long the way up if you are quick on the draw- but looking back at 03 there weren't many deep corrections like the last one we just experienced. And besides you gotta have some fun to go with the occassional pain that is ultimately delivered. Pain is usually my gain, I try not to shrink from it as long as I am on the right side of the curve. Good investing. Read my post to a fellow named Paulk - similar advice.

Dennis

 

[Birchtree]

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Here is my oceanliner account update for those few that are interested.

As of yesterday the long market value is now $860,000 which is up from the low of $797,000 on 4/20. I'm still down $75,000 from the high of $935,000 on 3/07/05, but have come back to the tune of $63,000. Redemption is on the way- if the matket stays up this week I'll be a wee bit closer. Considering taking a little profit eventually to recirculate into other stocks. Still comtemplating - would like to hit the million and get some extra free trades. Patience is virtuous. If we get a few multi-hundred point days I'm in trouble if I don't plan ahead - don't want to be overly complacent.

I notice Tom will be 100% G tomorrow - must admire that courage - will be watching to see how deep any correction may be going forward. I'd be careful in these summer doldrums - they can surprise on the upside. How long can he handle the neck strain from looking up? Good investing Tom.

 

[Guest]

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Got to use some historic prospective and ask:

When was the last time stocks did well during a fed hiking schedule?

Hmmm???

He took the 50% lose during a fed hiking schedule.

Should I set the electric fence up now or next week?


And when was the last time we had a summer rally that was not induced by dividend tax cuts where 90% went to the rich?

 

[Birchtree]

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DMA,

You awake- I absolutely delight in being a member of the 90%, I plan to have my numerous dividends taxed at 5%, buddy that is 95% tax free.

The question about rate hikes has already been answered - look at 1995, then 1997 and then finally 1999. I have more history than you might be aware. Sorry you missed the rally today. Sorry you will miss the rally tomorrow. Sorry if you miss the next 300 Dow points. Still short WMT?

 

[Guest]

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Low volume bounce. That was a rally? Low volume bounces have been sold off.

If the PPI was so great where is the stock movement?????

Rate hikes started in 1999.

Rate hikes started in 2004.

What happened in 2000?

What will happen in 2005?

 

[Birchtree]

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Today was rather a nice rally - don't worry about the volume - the A/D line was again rather positive with 1900 up - 1100 down, volume was 2to1 on the upside. I'll take another one just like it tomorrow and be satisfied. As a matter of fact I'll talke anything I can get this week and besatisfied. The BEARS are so confused and that is the way the plan works - the Bulls want them to stay in the shelters. That way they conserve capital and have no gains - I'll put my capital at risk and may give some back, but if the markets cares to rally from here I'll have the money - not the Bears.

And when they feel safe enough to buy I'll be glad to lighten my load some and sell some positions the remaining way up. Just a little at a time for Yogi, Chicken Little, and yes DMA and perhaps Greg. Keep up the vitriolic work - I may actually end up the bigger fool, but my money is where my big mouth is. I have Larry Kudlow and Elaine Garrazarelli on my side. OK DMA have fun with them - but remember I'll be waiting at higher levels. Good luck

Dennis

 

[Guest]

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Oh no.

This time is different? :s

Do not worry about the volume? :s

Do I have to go define rally now too?

That was a spike at the open and a slow sell offto the close. (Buy the rumour - sell the news).

That is bear market action. Go back to 2000 and look at the trading action. :s

:^ :^ :^