New Stock Market Terms

New Stock Market Terms

CEO – Chief Embezzlement Officer

CFO - Corporate Fraud Officer

BULL MARKET – A random market movement causing an investor to mistake himself for a financial genius

BEAR MARKET – a 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no kool-aid

VALUE INVESTING – The art of buying low and selling lower.

P/E RATIO – The percentage of investors wetting their pants as the market keeps crashing.

BROKER – What my financial planner has made me.

STANDARD & POOR – Your life in a nutshell.

STOCK ANALYST – Idiot who just downgraded your stock.

STOCK SPLIT – When your ex-wife and her lawyer split your assets equally between themselves.

MARKET CORRECTION – The day after you buy stocks.

CASH FLOW – The movement your money makes as it disappears down the toilet.
YAHOO – What you yell after selling it to some poor sucker for $240 per share.
WINDOWS – What you jump out of when you're the sucker who bought Yahoo at $240 per share.

INSTITUTIONAL INVESTOR – Past year investor who's now locked up in a nuthouse.

PROFIT – an archaic word no longer in use.
LIQUIDITY - When you look at your investments and wet your pants.

# # # # #
If you had purchased $1000 of shares in Delta Airlines
one year ago, you will have $49.00 today.
If you had purchased $1000 of shares in AIG
one year ago, you will have $33.00 today.
If you had purchased $1000 of shares in Lehman Brothers
one year ago, you will have $0.00 today.

But---- if you had purchased $1000 worth of beer
one year ago, drank all the beer,
then turned in the aluminum cans for recycling refund,
you will have received $214.00.
Based on the above, the best current investment plan
is to drink heavily & recycle.
It's called the 401-Keg.

The Financial Crisis & Bailout Explained in Drinking Terms

Heidi is the proprietor of a bar in Berlin. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).
Word gets around and as a result increasing numbers of customers flood into Heidi's bar.

Taking advantage of her customers' freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively.

A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi's borrowing limit.

He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank's corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items.

One day, although the prices are still climbing, a risk manager (subsequently of course fired due his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Heidi's bar.

However they cannot pay back the debts.

Heidi cannot fulfill her loan obligations and claims bankruptcy.

DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80%.

The suppliers of Heidi's bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor.

The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties.

The funds required for this purpose are obtained by a tax levied on the non-drinkers.

Finally an explanation I understand ......

That story almost makes me want to take up drinking again!

Torture?

And I though President Obama was going to outlaw torture when he took office. But ever since he arrived in the Whitehouse it has been nothing but bad news and the market does not like his stimulus plan or the banking rescue plan. The new fear is the nationalization of the banking system. It has brought the market straight down and as 2009 starts off it looks like the “lost decade” as we are now at the lowest levels in the new millennium.

But short term, I think the bad news is behind us and we can expect at least a “dead cat bounce” off the latest low of 755 for the S&P 500. I expect at least a 10%-20% rally that could last at least a couple of weeks.

Friends Don’t Let Friends Buy Financial Stocks

Hart thumping, jaw dropping and ear popping. That had to be your reaction if you have had any financials in your portfolio in the last year.

Look at the chart below, the average financial stock has lost over 90% of its value in the last couple of years. When will the pain end?

2009 Predictions

Here are a couple predictions for 2009, good riddance to 2008 which saw a dismal economy and a negative 38.5 % downward move in the S&P 500.

1. Stock market up at least 25%. The market will rally at least 25% in 2009 but may not finish the year up that much as the bear will continue to hit the market well into 2010.

2. Madoff takes a bullet. Former hedge fund manager Bernard Madoff, whom stole 50 billion dollars in a fraud scheme won’t live to tell about it. Not sure if it will come from a disgruntled investor he stole millions from or the Russian mafia he was rumored to launder money for but there is a bullet out there somewhere with his name on it.

3. Housing market bottoms. The government finally is focusing on the right things to bring a bottom to the market – interest rates. If the government can get long term rates down to a target of 4.5% and keep it there, then housing can finally bottom.

4. Almost all public builders go bankrupt. Most of the big public building companies will dry up and blow away in 2009. That means the DR Horton’s, Centex, Pulte Homes and the like. This will actually be a plus for the economy as it will dry up the supply of new homes on the market- and that is needed to make #3 come true.

5. Huskies win a game. 2009 will be a break through year for the Dwags as they actually win a game.

Blast-Off

You can not afford to be out of the stock market – not even for one single day. The market is going to start a rally very soon and I expect it to carry the DOW to over 11,000. Hop on board and enjoy the ride.

Plump Juicy and Tasty

Tasty was the market this week as it went up for 5 days in a row- something it has not done in all of 2008. I hope this is the beginning of the mother of all bear market rallies. The market has gone down so far and so fast in the preceding 11 months it is due for a major rally. Historically, December has had the largest returns and I expect that to continue in 08.

I have added a couple more buys to the list and now the boat is fully loaded so no more passengers can get on unless a couple get off. So for now we will see where the market takes us.


Ticker........ Buy Date...........Price

UVT .................11/14...................$15.50
QLD ..................11/14 ..................$29.00
UUPIX ..............11/14 .................$7.40
AMD …………….11/28.. ………..$3.28
UYG ………………11/28………… $6.16

Long Dong Ding Dong

The market must not know that I went all in last week; otherwise it would have gone up. I guess I need to send Mr. Market a singing telegram to let him know I have been waiting over 6 months to get long.

Patiently waiting, watching day-after-day as the market continued to fall. At last I saw my chance, as the market made a double bottom and there was blood in the streets I decided to go all in and even leverage up with some 2:1 funds. I was quickly rewarded by the market as it fell another 15% in a week- making my losses 30% with the leverage. No risk no reward. Nothing to do now but pray to the market Gods for that year end rally we so desperately need.

It’s Go Time

The economy is terrible, a deep recession has already started and stocks have been in a bear market for over a year. It’s a perfect storm for a bear market rally. The following stocks have been purchased and I expect at least a 50% gain from them in the coming months.


Ticker........ Buy Date........ ..Price
UVT .................11/14................... $15.50
QLD ..................11/14 ..................$29.00
UUPIX ..............11/14 .................$7.40

Slapping Punks

Slapping punks, smacking losers, and knocking out chumps. That’s what the market was all about in October. Not kind to anyone.

Some of the statistics for the month of October as compiled by MarketWatch:
In spite of the big double-digit gain this week, mostly on one-day, the Dow was down 14% for the month, the worst October since 1989.
October had the most down days in a month since 1973, in the 1973-74 bear market.
It was the most volatile month since 1929.
In one 8-day period early in the month the Dow lost 2,396 points.
The MSCI Emerging Markets Index lost 30% for the month.
Gold lost 18%, its biggest one-month decline sine 1983.

The fist week of the month is usually the strongest part of the investing cycle. My recommendation is to buy QLD at $35 on Monday morning and watch it run up to $45 later in the week at sell for a quick 28% profit.

$$$$$$$ HAPPY INVESTING $$$$$$$

Wild Week

In a Bear Market “Nobody get out alive.”

So if you have followed my advice since March you are in cash and have a nice big watermelon smile on your face. If not, and you are still in the market then you are either looking for a second job to make up for the losses and/or are on welfare (my condolences).

The markets pretty much had their worst week in history, as the chart of the Dow below indicates. Markets are now where they were 10 years ago. So that means if you are a buy and hold investor you officially have made 0% on your money and are in the red if you count in inflation.

The good news is there is a gift horse buying opportunity coming in the next couple weeks. Follow my picks and you will be making triple digit gains (that’s over 100% for those of you who attended public schools). How can you make 100% in the stock market? Buying leverage and on margin – only recommended after the market is at 10 year lows, as it is now. Follow my advice and you will soon be taking up new hobbies like yachting, squash, and aggressive spending. You may even have enough cash to replace your above ground pool with a real one or buy your hideous teenage daughter those braces she needs so she can finally get a date to the prom. As soon as this market is ripe for the picking I’ll post those picks and then you can watch those profits flow.

Market Down 10% This Week

That would be a big number for a year’s worth of losses, but it’s gigantic for one week. The market got its wish with the $700 billion dollar government rescue package but that was not even enough to stop the endless selling pressure.

The real kicker in this market is housing prices which continue to fall on a monthly basis. In addition to lower home prices the unemployment rates are rising along with credit card and mortgage delinquencies. I think both will continue to get worse and companies start laying off large numbers of employees to help reduce overhead cost.

The market will continue to stay weak and we still have not seen the ultimate lows in 2008. The good news is I expect we will put in the low for the year in the next 2-6 weeks and that will be followed by a powerful rally heading into 2009.

Uncle Sucker

A bail out package of $700 Billion will cost the average American family over $10,000.

Is this fair? Consider the pay package of the new Washington Mutual CEO, who has been on the job for 3 weeks.

“NEW YORK (CNNMoney.com) -- Washington Mutual Chief Executive Alan Fishman could walk away with more than $18 million in salary, bonuses and severance after less than three weeks on the job, according to the terms of his employment agreement.”

Wow, the stock is worthless. WAMU is bankrupt and stockholders all got burned. An $18 million dollar payday for 3 weeks on the job? Is it any wonder that polls overwhelmingly show the average taxpayer does not support the current wall street bailout package? Washington's bailout plan is apparently in trouble. With lawmakers saying their e-mails and phone calls from constituents back home are running as much as 100 to 1 against the bailout, it may be difficult for them to vote for it and then go home to run for re-election. But something has to be done before they break for the election recess this weekend.

One interesting note on the economy is new home prices plunged 11.8%, not in a year, but from July's level. That is going to lead to more defaults and foreclosures, which were already soaring.

The only question is which banks will be going out next? Wachovia is the next big bank rumored to be teetering on the edge.

What a Week!

The stock market was down 8% from Monday to Wednesday and up 8% from Thursday to Friday to finish the week flat.

This is a period in the financial markets you will be telling your grandchildren about, the closest the U.S. financial system has come to meltdown since 1931, and the first time in its history the U.S.A. moved so far and abruptly from democracy and a free market system toward socialism, government control of markets, and nationalization of its financial institutions.

My current recommendation is to take 50% of your portfolio and burry it in the backyard and take the other 50% and hide it under a mattress in the upstairs bedroom.

Waiting for Godot

Waiting for Godot is a play by Samuel Beckett, in which two characters wait for someone named Godot, who never arrives.

Waiting for a market to bottom feel a lot like waiting for Godot. You are always wondering when he will show up. I think we are closer to the end of the play then the beginning and patience is our friend. The market will bottom and there will be a great buying opportunity but we must wait for a couple of things to take place. First and foremost the market must make a new bottom. This mean the S&P must break down below 1,200. Second, we must see a reading of over 30 on the VIX (Fear) Index. As the chart above shows we are currently at 25 so 5 more points up and we have a green light to be a buyer.

Sit and Do Nothing

That’s my current recommendation – better to be in cash earning 2-3% then watching the market go down day after day. This market sure looks like it wants to continue falling. Looking at the below chart and see the pattern of lower highs and lower lows. I think the current market will bottom sometime in October – November and then it will be time to put your cash to work – but for now it’s all about patience.

Here Comes September

September has been, on average, the worst performing month for the stock market with an average return of negative 1.13 percent since the Dow inception in 1896. This market sure feels like it is due for a major correction of somewhere between 10%-20% as we head into the last part of the year. I think the market will bottom for the year around the October – November time frame.

Georgia's Integrity Bank is Closed by State Regulators

Integrity's closure is the 10th bank failure so far this year. The bank had $1.1 billion in total assets and $974 million in total deposits as of June 30, the FDIC said. The bank had $1.1 billion in total assets and $974.0 million in total deposits.

The Next Crisis

It’s only a matter of time before the next shoe drops and you will start hearing about the massive defaults in consumer credit card payments. The stock market has not produced any wealth in the last 8 years. Home prices have come down sharply and will continue to fall for the next couple of years. The only place left to turn for the average American to maintain the world’s highest standard of living is their credit card.

Unfortunately, credit cards are the highest priced debt on the menu. The average balance and delinquency rate has been rising steadily in 2008. As the credit crunch moves from the 3rd to the 4th inning banks will start to tighten credit standards and raise the interest rate on the current credit card balances. None of this will be good for the economy or housing prices. It is going to take years to unwind the credit mess.

Time to Buy Gold?

Gold has come down faster than the market has risen in the last month. The 52 week high for gold is just a little over $1,000 an ounce. It is now currently trading at around $770 an ounce. That’s down over 23% in a little more than a couple months. No matter where the long term trend for gold is headed it should at least see a short term bounce up to the $850 an ounce level.

The Dollar Continues to Rally

The dollar is at a five month high and it is causing the US market to celebrate by having a summer rally that is also fueled by the falling price of oil.




Oil is now under $116 a barrel, and down 21% from its peak at $147 a barrel. It was only a couple months ago that many were forecasting oil at $200 a barrel. It has gone down so far so fast that I would not be surprised to see it bounce back up to at least the $120 mark before heading back down to under $100 a barrel.