Birchtree's Account Talk

[Birchtree]

Re: Birchtree's account talk

We are fast approaching the time for decisions, either pay up to play or miss the opportunities. Because there are rowdy times ahead for the bull. And there are very few that are talking bull or spreading that superlative manure - just the way this contrarian junkie likes it. After Monday's action, we now have the possibility of bull divergence with both the NYSE MCO and the NASDAQ MCO when compared with the full stochastic tool. Something like this doesn't happen too often, in fact, the last time this happened was only with the NYSE MCO in October of 2005 and that led to a 1300 point NYA advance. Let's see 1300 + 11669 = 12,969. Your head is about to spin.

I now have to dig and find some stuff on the inverted yield curve - the latest wall of worry on everyone's mind. Does it mean anything in an ongoing mega trend bull market of the secular kind? And if you are waiting for a pull back you might as well get a picnic basket and a blanket - you may have to wait until all the shorts stop bleeding and there are record numbers of them in the process of exanguinating as the days pass. Can you tell I'm an RN? And unfortunately we all reap what we sew and I have absolutely no remorse for their losses. Just two weeks ago I spent an additional $98,000 buying some of my favorite stocks - will I be rewarded for my risk, if not I can indulge myself in the numerous body blows I'll receive. Snort all the way. It's like being Airborne - all the way.

 

[Birchtree]

Re: Birchtree's account talk

The Dow Composite Index, which includes the 30 Industrials, 20 Transports, and 15 Utilities, has now broken to the upside from a symmetrical triangle at 3932.58. The measuring objective of this breakout is the 4150 level which would take out the all time highs seen last May at 4018.12. Surely would like to see a buying panic set in tomorrow. Kinda like the 390 points on the Nikkei would be just right.

 

[Birchtree]

Re: Birchtree's account talk

I'm not ready to tackle the inverted yield curve yet - besides it's mostly negative, so who needs negativity. With the DJIA now above its May high we no longer have a failed annual cycle - from the view of the 4-year cycle this is more positive. This tends to reinforce my thinking that we are infact in the first quadrant of a new 4-year cycle with the bottom back in June/July. Do you know how many TSPtalk folks are currently bullish - you can count them on one hand if you can find them. We do have non-confirmations with the R2K and NDX 100 - they are not part of Dow Theory, but they are nonetheless telling us that this advance is not currently broad based and non-confirmations are not sell signals. This Bullmeister has no fear yet. These non-confirmations are telling us that the participation in this advance is selective, which in turn is a warning, not a sell signal. I suspose Wheels already is aware - he's been a small-cap thermometer. The Wilshire 5000 is not confirming the industrials. This is just not good pin action and serves as a warning that something is wrong with this advance. My friends they call it the SMP wall. And after seven years it's pretty tall. Lower interest rates can help the housing market find if not a bottom than a much softer landing. We are in the midst of a historically significant decoupling of the U.S. economy from the U.S. stock market. U.S. corporations are becoming increasingly global entities, what may matter more is the state of global economics via hometown. From overseas there's plenty of earnings to be had for U.S. companies - and therefore a possibility that their stock price performance may not reflect the U.S. economic conditions. Remember the C fund companies derive 40% of their earnings from global competition. By the grace of Allah, may the dollar not rally too much - competition favors a weak dollar.

 

[Birchtree]

Re: Birchtree's account talk

My friends at Merrill think the expected recovery highs in the DJIA and S&P 500 are unlikely to be confirmed by a broad array of technical indicators. What? They expect the non-confirmations to lead to a fourth quarter correction of about 15 to 20%. They're a hard nose bunch. They think such a decline should correct the technical excesses that have built up during the past four years and provide an important buying opportunity. Maybe the Shark gets some of his data from the Merrill back office - really who cares. They are such great contrarian indicators and unfortunately seldom get it right. That's why this bullmeister is stll on the lonesome road to Dow 12,600.

 

[Birchtree]

Re: Birchtree's account talk

A dash of good news to let some know that evil is sometimes put to permanent rest. There was a routine traffic stop here in Florida and the perpetrator shot a deputy 8 times. He also shot the police dog. This is all very sad but there is an ending of finite retribution. When the swat team caught this criminal in the woods they fired 110 rounds and 68 of them found the target. The Sheriff said he would have been hit more but they ran out of ammunition. Those guys must have truly respected their commrad and loved the heck out of that dog. Anyway, it helps restore my faith in justice.

 

[Show-me]

Re: Birchtree's account talk

Sympathies to the family of the slain officers. Good riddance to a piece of trash.
http://www.gainesville.com/apps/pbcs.dll/article?AID=/20061001/LOCAL/210010355/1078/news

 

[Birchtree]

Re: Birchtree's account talk

That was an excellent message from Tom today regarding the strategy of buy and hold. Since I currently am a practitioner of this strategy I thought I would opine briefly. Being a buy and hold doesn't mean you forget the future. I tend to be very future oriented and a contrarian as well which makes my job as an individual investor no easy matter. As an independent you must remain aware of choices to be flexible. I tend to operate about six to twelve months ahead of what is normally ocurring and this requires a great deal of time and effort. I'm probably one of the older salty dogs on the board at 59 - so I'm familiar with the concept of time and I'm usually never in a hurry. Planning regards the future provides a buffer to isolate oneself from too many surprises. There will always be blind sides and an eclectic set of negative circumstances - but mostly temporary. I own many stocks and only a few mutual funds, so I have to separate the mind skills in the way the two subsectors are approached. Today I will be selling one of my beauty queens to raise cash to make a few more wall flower purchases that came under the hammer last week - this opportunity requires sacrifice to let a profit go and then reinvest to increase the dividend income - not to mention taxes. But this is a sacrifice I'm willing to make because my ultimate goal is to increase income that never ends. So I'm in the mutual fund buy and hold groove for now but that is always subject to change - and with one IFT it can easily change.

 

[Birchtree]

Re: Birchtree's account talk

Would anyone like to know what stocks I spent money on today? Here they are: TKR, RES, HAL, GE, LYO, NL. Just small bites that I'll try to continue as a DCA as long as we can go. There are so many that need my attention.

 

[CountryBoy]

Re: Birchtree's account talk

Hey Birch,

I always follow your stock purchases, as I'm getting ready to take my own small bite of individual stocks via sharebuilders, as part of my Roth IRA, here in about a month or so. Right now leaning to purchasing shares of DUK, GE, DLM, as cornerstones, and 2 so-called wallflowers GEL and SYNM.

I appreciate your recommendation of various stocks you gave me awhile back. I researched them all and a few of my own and have tentatively settled on the above. So keep your stock purchases coming, as I always check them out and keep track of them and being a newbie at purchasing individual stocks,

I'm always open to suggestions from you and the other gurus here, it's been a great help and I sure do appreciate all the insight offered in allocating my TSP funds. Though I do sit on the old lilypad sometimes to marshall my money, thoughts and courage.

A big thanks and thumbs up to Tom also, for running this site.

CB
Oh yeah, I like your politics also.

 

[Birchtree]

Re: Birchtree's account talk

CountryBoy,

You simply can't go wrong with Sharebuilders - owned by Buffet, Warren not Jimmy. Put stocks in there that pay reasonable dividends and they will likely increase over time. Set the auto-pilot and let them dividends do there work. It won't be long and you'll have pages of dividend hits. I know one guy in the deferred comp program with Sharebuilders that collects 187 dividend hits/year. He's buying stock even when he's not thinking about them. And what's great is that it becomes a self feeding system. You got a simple plan that will be exponential down the years. My daughter will be joining when she finishes looking around. Already got her in TSP and she wants me to IFT her money. If I do that she'll tell her friends and eventually force me to give up my egg business. pun.

Dennis

 

[Birchtree]

Re: Birchtree's account talk

Jeffrey Hirsch recently studied past cyclical bulls trapped in secular bears. In those instances, the Dow rpose by only 35% on average, going back to 1929. By comparison, cyclical rallies with in secular bull markets have typically pushed stocks higher by 110%. For the record, the Dow is up about 60% in the current bull market. My decision was made several years back and I continue to invest accordingly. I can't help those that refuse to listen.

 

[FundSurfer]

Re: Birchtree's account talk

Would anyone like to know what stocks I spent money on today? Here they are: TKR, RES, HAL, GE, LYO, NL. Just small bites that I'll try to continue as a DCA as long as we can go. There are so many that need my attention.

Birchtree, when you say small...how small? You get too small and transaction fees will begin to eat your profits.

You said earlier that you have 75+ stocks? I don't know how in the world you could do justice to that many stocks in an individual retirement account.

This really doesn't make sense to me at all. With that many stocks I think you'd be better off in a mutual fund. I could be wrong. It just seems like you would have to have a bunch of money in these funds to make it worth while. Enough that you "power account" would not be worth talking about.

 

[Birchtree]

Re: Birchtree's account talk

Fundsurfer,

I don't pay any individual commission fees - I get 400 free trades per year. I presently have to burn 214 more before the end of the year. But that buying requires I produce cash and the only way I can get it is to sell another position. I currently have 178 individual equities and I plan to add some new ones before the year has ended. A small position is usually anywhere from 50 shares up to 200 shares. A goodly number of my stocks are income producers such as utilities, chemicals, industrial and agricultural machinery - I'm all over the board. I mean there are over 8,000 different stocks - I'm a collector and I play long term. At this point all my dividends are reinvested for free - so I usually benefit in some way every time we have a correction. The TKR(Timken) has been hammered back about 5 points recently so I took opportunity to add at lower prices. When we have a nice rally I might mention that the pin action was good today - meaning I had many more going up than down. When you think about it I've actually built my own mutual fund, only I have the ability and flexibility to cull them like working in the garden. I mean when you can choose the equity to sell the options are mine. At my age it's not really difficult because I know many of the companies I buy from years of partnership. I seldom stray to the NDX, I can loose all the money I need to loose on the NYSE. Does that help clarify.

And here is the hook for the board members that will keep them out of this rally. Usually when a new bull move starts we see wide participation right at the very start. It is very, very rare for a new bull move to start narrowly and widen later on. Consequently, past history suggests that the latest rally is more likely the end of something instead of the beginning of something. I'm deep into the beginning of something scenario. If Im correct the dollars will multiply. Snort.

 

[Birchtree]

Re: Birchtree's account talk

Fundsurfer,

My Oceanic account is not an IRA. Which means some day it will be elligible for a step up in basis when it becomes available to my beneficiaries. At some point the money coming out in dividends and capital gains will be taxed at 5%.

 

[Birchtree]

Re: Birchtree's account talk

Swampdog,

All the way! I'm offering a promotional program that is incentive based that you and some of the platoon members may be interested in. I will mail each member a bag of MMs for every Shiite extremist member of the Mahdi Army that is zeroed between the eyes. I mean it's fair play when their snipers are firing at your patrols. As an added bonus I'll mail the member that knocks the rag off the head of Muqtada al-Sadr a coupon for a free meal at Long John Silvers. How great is that. This is the one last chance to take that radical cleric down into the dirt. I am only punning here, but I know you are in serious peril and I appreciate the fact that these extremist militias and death squads and terrorist cells are due for some justice. Turn the 82nd loose and may they achieve Victory. Take care.

Dennis

 

[Birchtree]

Re: Birchtree's account talk

Go Gator Nation!

 

[Birchtree]

Re: Birchtree's account talk

The closer we get to Halloween the more investors will look to see what is hidden in the closet: the trade deficit. Already the I funders are in harmony for a weaker dollar. Although economists have studied the sensitivity of import and export volumes to changes in the exchange rate, there is still much uncertainty about just how much the dollar must change to bring about any given reduction in our trade deficit. But that should not be interpreted as saying that the deficit reduction will not happen in response to a lower dollar. Common sense says it will. Rather, it says that we cannot know how large the fall in the dollar must be to bring the trade deficit down to a sustainable level. But the primary reason for wanting the dollar to become more competitive in the near future is that we may need an improved trade-balance over the next few years to sustain the economy's expansion. Sounds like large-caps to me.

The assets of money-market funds have been rising since the middle of 2005. The flat yield curve is a big factor in the appeal of money funds; yields on money funds are close to yields on long term securities. But if the Fed cuts rates next year, yields on money-market funds are likely to decline. I'm talkin almost $800 billion that might be shifting for another home - large cap dividend payers would be my bet.

 

[FundSurfer]

Re: Birchtree's account talk

Go Gator Nation!

Sweet win over LSU! Next up is Auburn.

 

[FundSurfer]

Re: Birchtree's account talk

.....what is hidden in the closet: the trade deficit.

I've been watchin the trade deficit reports for a while and they rarely affect the I-fund the day the report is released. What makes you think that October will be any different? Our deficit has been hugely impacted by lower oil prices. I think that is what has led to the recent increasing trend in dollar value. I think this drop in oil price will be short lived which is why I think the dollar will fall short term.

 

[Birchtree]

Re: Birchtree's account talk

Fundsurfer,

The logic is certainly sound. Let's serenade for a continuation of the Goldilocks story that suggests that we will artfully and profitably dodge both inflation and recession as we hop from sweet spot to sweet spot in search for profits and growth. If only I were prescient.