Birchtree's Account Talk

[Birchtree]

Re: Birchtree's account talk

I'm participating in an international fund (AEPGX) American Europacific Fund via my wife's defined contribution plan with dollar cost averaging. This fund had a last year gain of 30.60% and is up 7.64% last quarter. She has a 55% position which is a considerable sum along with a 45% position in T. Rowe Price Small Cap Stock fund. The small cap fund was up 24.81% last year and 11.16% last quarter. I'm slowly in the process of peeling off profit from the small cap to the international - but currently she is doing better than me - but one has to be patient when in accumulation mode. These positions allow me the capability to hedge my C fund at 100% and if a break out happens my way then I'll more than compensate for letting the I fund run - that's the beauty of leverage. I just don't deal well with percentages - dollars are much more meaningful.

 

[Birchtree]

All the lonely Wallflowers

From TWSJ:

Sprinting little stocks are overdue to hit a big wall.

Yes, many have called the small-stock rally long in the tooth for quite a while. And yes, they have been dead wrong. Small-company stocks, roughly defined as those with a market capitalization of $1.5 billion or less, are on track to beat shares of the nation's biggest companies for the seventh time in the past eight years, according to Russell Indexes.

Over that stretch, the small-cap Russell 2000 index is up about 81%, compared with about 7% for the Standard & Poor's 500-stock index and about 24% for the Dow Jones Industrial Average. At the start of 1999, there was about $108 billion invested in small-cap stock funds. Today, there is nearly $364 billion. But the rally is longer than any since Russell began tracking small stocks in 1979. "We feel like we're in the extra innings of this game," says Gregory McCrickard, manager of the $8.1 billion T Rowe Price Small-Cap Fund. "People have piled in, but the valuations aren't particularly compelling at the moment."

Mr McCrickard doesn't necessarily think small-cap shares are going to fall, but rather that shares of big companies likely will come back into favor. His fund is closed to new investors, and many other small-cap funds have shuttered of late, citing too much money and too few attractively priced stocks.

A common tool for determining if a stock is pricey or cheap is comparing the share price with per-share earnings. When this ratio - the stock's P/E multiple - is higher than peers or the broader market, it's said to be pricey. By that measure, small-caps aren't cheap. They trade 20% above their historical average price tags, according to Russell. T. Rowe calculates that small-cap stocks are trading at their highest premium to large-cap stocks since 1983. Small-cap profit growth typically mutes as an economic recovery wears on, favoring bigger players who benefit more from scale. With valuations high, that might leave just the momentum from rising investments in small-cap funds to keep the rally going. Investors betting on that will discover the inevitable: There are never enough chairs when the music stops.

 

[Birchtree]

Ben, will he or won't he - only his hair dresser knows for sure.

What matters is determining the direction of the prevailing trends and evaluating the context in which they are operating.

From Merrill-David Rosenberg

When thinking about what the Fed is likely to do, it's good to remember that officials are mindful of the lags with which monetary policy operates. They realize that it would be highly unusual for the economy not to slow to potential with what is about 400 basis points of tightening in the pipeline (along with the drain from higher energy costs). In the previous two cycles (2000 and 1995), it was a good thing that the Fed stopped when it did: the lags from the rate-hike cycles slowed the economy considerably within a year.

We expect the Fed to do what other central banks around the world do: pause and reflect before making another move. For some reason, the thinking is that only the Fed is supposed to hike and never stop until something breaks. B y the time something breaks, it's usually too late. Hiking rates at every meeting even after 400 basis points of tightening may satisfy the bond vigilantes, but, in our view, that would be a reckless policy because it would threaten what is already a fairly clouded economic outlook for the coming four to six quarters. The year to year trend growth in real GDP is already running near 3.5% and needs no slowing remedy.

As we see it, even if we are right and the Fed does move to the sidelines, it will deliberately say that that by no means suggests that the tightening cycle will be finished. The experience of the past 30 years shows that if the Fed stays on hold for at least four months after a tightening phase, the next move has always been an easing.

The U.S. economy has demonstrated a remarkable ability in recent years to absorb energy and non-energy commodity price shocks. We suspect that the strength of productivity growth is providing a sizable buffer against rising prices. We also remain convinced that there is little risk of a price pass through to the general level of inflation. If commodity prices retrace some of their recent increases and settle at more sustainable levels, the equity-market sectors that stand to benefit include retailing, media, transportation, financials, telecom services, consumer staples and health care.

The shares of companies with significant foreign exposure should help to support the overall market. If the dollar continues to fall and commodity prices remain strong, earnings are likely to be stronger than investors currently expect.

Equity inflows are strong and hedge funds have been net sellers of S&P 500 and Russell 2000 stocks - both short-term positive catalyst that we think should help to move the equity markets to new highs. Another factor that's favorable for the markets: individual investors are maintaining their bearish position. leaving room for the market to rally.

Experience shows that the dollar tends to weaken slightly, on average, at the end of Fed tightening cycles (1987, 1989, 1995, and 2000). However in 1995, the dollar declined substantially. The Deutsche mark strengthened by 17% against the dollar in the year before the Fed signaled the end of the tightening cycle in 1995, and it rose by 6% more in the susequent month; and the yen gained 8% the year before and 17% during the subsequent two months. We believe that the 1995 period is the most relevant to today from a macroeconomic standpoint.

I have updated my oceanic account and now reside at $1,100,236.00. And I'm only $.07 away from reaching my TSP goal for the year. The rest is unexpected gravy if the C fund performs better in the second half. And who knows where the oceanic is headed. I am going to start reinvesting some profits into other stocks as soon as I can find available time - but now the train ride is moving too fast to get off. If it's a busy summer maybe I can gain another couple hundred thousand in devalued dollars - all I care about is that they are green. Take care.

 

[nnuut]

Re: Birchtree's account talk

GOOD STUFF, he who knows alot!

 

[Single_Tasker]

Re: Birchtree's account talk

Hi,

Sorry- I'm not familiar with where to post and exactly what to ask.

I have a basic question: Why does the author of the Daily Market Talk at this site stay 100% in the F-Fund?

I'm in S, C, and I and I'm making money. The F-Fund looks like its a guaranteed loss.

Below I've pasted figures from a table found at www.tspmoney.com that seems to show that long term F-Fund will make you broke, while long term I fund does really well... What am I missing???

//////////////////////
Historical Data
(note: BEST is Left- I, Worst is Right- G and F)

5 Days of Returns 0.09% 0.19% 1.33% 1.78% 2.95%..........I G
10 Days of Returns 0.18% 0.19% 1.54% 2.24% 4.13%........I G
15 Days of Returns 0.27% 0.00% 1.26% 0.88% 4.96%........I F
30 Days of Returns 0.53% -0.66% 2.62% 3.99% 10.67%.....I F
60 Days of Returns 1.07% -0.84% 5.31% 8.76% 14.98%.....I F
100 Days of Returns 1.89% -0.56% 4.86% 10.40% 19.03%..I F
//////////////////////

Bill

 

[Wizard]

Re: Birchtree's account talk

Bill,

Since no one responded to you, I will. The person that writes the Daily Market Talk is Tom. His handle is TSPTALK.

You may want to ask your question in one of his threads or pm him directly.

You stumbled into a perma bull C fund pasture thread. Watch the manure.........LOL.

 

[tsptalk]

Re: Birchtree's account talk

Since this isn't the place to discuss this I'll make it quick...

Why does the author of the Daily Market Talk at this site stay 100% in the F-Fund?

Because the market doesn't go higher just because the past 100 days were up. And it doesn't go down just because the past 100 days were down.

Also, and I'm trying to say this without sounding obnoxious at all, I discuss why I do what I do everyday in those comments so people don't have to ask why I am where I am. Feel free to ask anytime, but your answer is probably in those market comments. Right or wrong.

Thanks!!
Tom

Hi,

Sorry- I'm not familiar with where to post and exactly what to ask.

I have a basic question: Why does the author of the Daily Market Talk at this site stay 100% in the F-Fund?

I'm in S, C, and I and I'm making money. The F-Fund looks like its a guaranteed loss.

Below I've pasted figures from a table found at www.tspmoney.com that seems to show that long term F-Fund will make you broke, while long term I fund does really well... What am I missing???

//////////////////////
Historical Data
(note: BEST is Left- I, Worst is Right- G and F)

5 Days of Returns 0.09% 0.19% 1.33% 1.78% 2.95%..........I G
10 Days of Returns 0.18% 0.19% 1.54% 2.24% 4.13%........I G
15 Days of Returns 0.27% 0.00% 1.26% 0.88% 4.96%........I F
30 Days of Returns 0.53% -0.66% 2.62% 3.99% 10.67%.....I F
60 Days of Returns 1.07% -0.84% 5.31% 8.76% 14.98%.....I F
100 Days of Returns 1.89% -0.56% 4.86% 10.40% 19.03%..I F
//////////////////////

Bill

 

[Gilligan]

Re: Birchtree's account talk

From 4-7-06
http://www.tsptalk.com/mb/showpost.php?p=41440&postcount=45

What you think is expensive today will look cheap thirty days from now - go ahead and bite the bullit - try some gentle dollar cost averaging to the upside, that way if you get caught in a correction you still have powder to even up on the down side. Skip is right - some big ones coming to make people even more nervous - and mostly to the upside.

Congratulations Birchtree on your prediction!

4-7-06 / 5-8-06

G ...... F ...... C ..... S ... I
11.29 10.57 14.13 17.73 19.55
11.34 10.57 14.47 18.27 20.84
+0.05 0.00 +0.24 +0.54 +1.29

 

[Birchtree]

Re: Birchtree's account talk

I'm just going to ride this consolidation until it ends - holding all positions. Will make a C fund purchase today via dollar cost averaging and it will be cheaper than the last buy. Remaining totally bullish at this time.

 

[vectorman]

Re: Birchtree's account talk

I'm just going to ride this consolidation until it ends - holding all positions. Will make a C fund purchase today via dollar cost averaging and it will be cheaper than the last buy. Remaining totally bullish at this time.

Unless you have some cash in the G fund in which to call upon, allocations were made for the TSP accounts last friday; next friday will be the next allocation addition.

 

[Wizard]

Re: Birchtree's account talk

Allocations were made for the TSP accounts last friday; next friday will be the purchase you may be referring to.

Please don't state facts, it ruins it.

 

[Birchtree]

Re: Birchtree's account talk

My payday is on 5/12 and again on 5/26. Not all organizations allocate on the same dates. My last purchase price of the C fund was at $14.31, prior to that was at $14.07. Hopefully today it will be under $14.20. Thanks for caring.

 

[Birchtree]

Step right up and place your bets young fellow...

From my friends at Merrill:

In our judgement, things are playing out more or less in line with the positive outlook we have had for sometime. The pace of economic growth is likely to slow from its brisk clip but remain healthy; earnings prospects are still good; and inflation is unlikely to sprout like a weed. Another plus is that Conbgress has passed legislation that extends the 15% tax rate on capital gains and dividends through 2010 and shields a sizeable number of people from the alternative minimum tax.

Overall, the fundamental backdrop appears to be fertile ground for stocks, which we continue to think will outperform bonds and cash. Indeed, our technical market analyst, has raised her price objectives for the major stock market averages. That's not to say, however, that the market won't encounter pullbacks along the way; experience shows that stocks often stumble a bit when the major averages are near milestone levels.

When it comes to monetary policy, we think that the Fed is probably done raising rates, or close to it. In addition, our foreign-exchange strategists expect the dollar to continue its recent slide. Under those conditions, growth oriented themes such as industrial, financial, and technology stocks - ought to do well, particularly when groups or individual issues have a sizable exposure to non-U.S. markets.

 

[Wizard]

Re: Step right up and place your bets young fellow...

From my friends at Merrill:

Merrill Lynch & Co will pay a US$100 million fine to settle charges its analysts misled investors by touting shares in companies so the firm would win highly profitable investment banking business from the same companies.

http://www.taipeitimes.com/News/worldbiz/archives/2002/05/23/137339

With "friends" like that...............

 

[Wizard]

Re: Step right up and place your bets young fellow...

Another plus is that Conbgress has passed legislation that extends the 15% tax rate on capital gains and dividends through 2010 and shields a sizeable number of people from the alternative minimum tax.

Birchy these idiots are total morons. The tax cut is "unfunded". It is being taughted as to "stimulate the economy". If the economy needs to be stimulated why is the Fed raising rates? :nuts: Since this "unfunded tax kick back" has been passed in Congress the USD has tanked.

Connection? Can wait to hear your Kudlow copied one liner.

Have I told you how good this economy is? :blink:

 

[Wizard]

Re: Step right up and place your bets young fellow...

When it comes to monetary policy, we think that the Fed is probably done raising rates, or close to it.

Wrong, but thanks for playing our biggest B.S. game. :nuts:

 

[Birchtree]

Re: Birchtree's account talk

Wizard,

You are most welcome - it's going to be a long night. That gold index looks like something from an emerging market - count me as a cluck, cluck. I have my 15 coins and that is all I want. As always,

Dennis - permabull #1

 

[Wizard]

Re: Birchtree's account talk

You have posted articles the last 14 rate hikes "the fed is done, or close to done" from these "experts". And you still listen to these smucks?

Look at the insider trading. Retail investors are piling in that "the fed is done, or close to done" NOISE, while the insiders are bailing faster then 2000.

Insider Transactions Get Insider Transactions for GOOG:

NET SHARE PURCHASE ACTIVITY

Insider Purchases - Last 6 Months
Shares Trans
Purchases N/A
Sales sold 7,645,870

Shares purchased n/a - SOLD over 7.6M.

They all look like this.

Fed job is to protect the USD - NOT stocks prices.

Think about it.

 

[Birchtree]

I need some BEAR porridge...before Goldilocks gets it all.

From Mary Ann Bartels - Technical Research Analyst, MLPF&S.

Strong earnings and abundant liquidity are a potent combination, one that we think will help drive the equity markets higher. Accordingly, we have raised our targets for the major indexes from 11300-11500 to 12400-12600 for the DJIA and from 1350-1400 to 1450-1500 for the S&P 500. Our thinking does not rule out the possibility of a correction of 15 to 20%. If one occurs, we suspect that it might happen sometime in the fall, a seasonally weak period for the market.

The overall health of the market seems to be very strong, with year to year earnings for the first quarter up by 14.6%, and with the financial sector also having recently hit new all-time highs. There has been no change in the intermediate-term technical indicators, suggesting that the internal health of the market is poor. It is important to note that if the markets do have a 15 to 20% correction, we would view that as a temporary pause within a trading range that should resolve itself to the upside. For the week ended May 3, 2006, AMG Data Services estimates that domestic equity fund inflows were more than $7 billion, which is well above the levels of the previous three months.

Equity long/short hedge funds have moved to a slight underweight in their equity exposure, becoming net short the S&P 500, NDZ 100 and Russell 2000. Hedge funds have proven to be a contrary indicator, if the markets continue to rally, we think that those funds are likely to increase their equity exposure and close their short positions.

 

[Wizard]

Re: Birchtree's account talk

These so call strong earnings are coming from the energy companies.

That is NOT a good thing.

Keep posting em Mr Big.