Tales From the Financial Fringe

Monday, October 17, 2005

What About Newsletters?

Valid question, there -- the minute you get into the stock market, everyone and his puppy shows up at your door offering to sell you stock picks. If you're as busy as I (and as risk-averisve), the first thing you think is "hey...I like the idea. But are they any good?"

Many of them give you free samples, and I've checked out some recommendations. While the stocks might be good for the long haul, they are not guaranteed winners. They certainly aren't "short-term" winners. One company peaked in price the day it was mentioned and hasn't been back up since then. Other gains were equally ephemerial.

Now, this is a down market. It's difficult to make money in the current stock market (unless you have several thousand dollars and you're shorting everything) and even my good long-term portfolios are down (arrgh.) But the recommendations I've seen on the newsletters aren't much stronger than my own picks. Right now, I haven't seen anything worth spending $300/year on.

I'd like to find a good one, frankly, because it's time-consuming to do research. The Motley Fool ones have turned up some gems (and this is a free newsletter I'm talking about) but so far I haven't been impressed with most of the ones that have come along.

Tuesday, September 27, 2005

STOCKS: IT HELPS IF YOU'RE CRAZY

So here's the latest research from a trio of universities: It really DOES help if you're nuts and you're playing the stock market. Well... sorta. Actually, it helps if you're a psycopath or you just hand your money over to Hannibal Lector and say "go and make a killing in the market."

Uh... then again, maybe not.


==========
September 19, 2005
Wanted: psychopaths to play the stock market

By Martin Waller

CITY brokers have never enjoyed the best of reputations. The popular image is of a brash and boastful twentysomething with more money than sense or sensitivity.

But now a study by a group of eminent American academics suggests that star performers on the stock market may be even worse and could best be described as “functioning psychopaths”.

In a study of investors’ behaviour, the team from three US universities suggest that people with brain damage can make better financial decisions than the rest of us.
Market traders may feel slighted, but this study comes from the growing field of neuroeconomics, which investigates the mental processes that drive financial decision-making.

More here:

http://www.timesonline.co.uk/article/0,,11069-1786949,00.html

Friday, September 23, 2005

STOCKS: Taking Advantage of Hurricane Katrina & Rita?

It seems like a pretty reasonable idea -- hurricanes hit, things happen afterwards, surely you should be able to figure out what stocks are going to rise. The truth is that it ain't that easy, and if it was, everyone would be making money doing this and it'd be a well-known formula. You can certainly guess that some things will be up and some companies will be up and others will be hard hit.

For example, this probably wouldn't be the best time to get into airline stocks. Gas is going up, airline costs are going up, prices for tickets WILL go up, and a few airlines are going to go out of business. When the economy comes back, they'll be back because we need air transport. But unless you're cost averaging (a stock strategy that I personally don't like... it means you buy stocks regularly, whether or not the price goes up or down and in the long run you make money...) this really isn't the best time to get into this.

So what about the other industries? We know that construction will be up. That's a given. However, betting on this could be costly.

Take a look at Home Depot. They're a wonderful company and we shop there more than we should. If you were one of the ones lucky to get their stock in 1980, you would have gotten a yield of nearly $10 for every $1 you spent (more, actually, because there's a number of stock splits) plus the annual dividend.
http://finance.yahoo.com/q/bc?s=HD&t=my&l=on&z=m&q=l&c=

But, if you haven't held the stock for 30 years, your purchase could have been a total disaster. From a high of nearly $50 in January 2001, it slumps to just a shade over $20 in January 2003. And no 40 cents/share dividend can take the sting of your stock dumping over half its value.
http://finance.yahoo.com/q/bc?s=HD&t=5y&l=on&z=m&q=l&c=

We do know that some industries will be more profitable... snack foods (because people working repairs have to eat), building materials, some tool manufacturers, cement makers, people who do remediation and cleanup of polluted areas. We also can observe that when a hurricane heads for an area that has to do with the oil industry, that oil stocks in general take a nose dive. While the costs of gas and fuel will rise, most of that rise will be eaten up in companies trying to repair damaged drilling rigs and storage tanks and plants.

Companies such as Orleans Home Builders may show profitable quarters as they gain rebuilding contracts, though industry analysts aren't too bullish on the stock:
http://finance.yahoo.com/q/bc?s=OHB&t=1y&l=on&z=m&q=l&c=

If you think you want to pick some stocks in this industry, a good way to do this is to look at who the industry leaders are. On Yahoo, there'll be a link on each stock to the industry overview that you can click and it will lead you to a page that looks like this -- clikc on it to have a look at the industry:
http://biz.yahoo.com/ic/630.html

Here we find LaFarge, Pulte, DR Horton, Lennar, and Centex. Of those, Pulte has the most stable chart for the past year and a consistant upward trend. If I was investing in homebuilding stocks (I"m not right now), I'd go with them. Their dividend is nothing to write home about, but they seem to be efficiently managed and the analyists' expected 52 week range hasn't been met yet:
http://finance.yahoo.com/q/bc?s=PHM&t=1y

Wednesday, September 21, 2005

UPS AND DOWNS

Today, I'm looking at the stocks that were price gainers today that are also up in afterhours trading. Here's the list from all three exchanges.

Streicher Mobile Fueling Inc. (FUEL)
DECTRON INTL INC (DECT)
COP Digital Inc. (ICDG) - this one's up considerably
Sierra Wireless Inc. (SWIR)
PetroQuest Energy Inc. (PQUE)
Magellan Petroleum Corp. (MPET)
Abatix Corp. (ABIX)
Energy Partners Ltd. (EPL)
Frontier Oil Corp. (FTO)
Hecla Mining Co. (HL)
Companhia Vale do Rio Doce (RIO)
Harmony Gold Mining Co. Ltd. (HMY)
Tesoro Corp. (TSO)
Coeur d'Alene Mines Corp. (CDE)

GOING FOR THE GOLD?

On my local National Public Radio station this morning, I heard the news about gold hitting new highs this month, and thought I might review some of the stories in the news today. For the record, I've enjoyed investing in gold and silver coinage (but love the coins so much that I haven't sold many of them) but I found that investing in gold and silver metals themselves wasn't a very good idea. The price didn't move much, and you could sit on $7.00/ounce silver (or $440 ounce gold) for a very long time and in the end do more poorly than if you'd put that same money into stocks.

Will gold be a good investment? Who knows. I'm not an economist... I'm just a stock market hobbyist. But here's a roundup of some of the latest news on gold:


A 7.7% price increase in gold revives interest in Australian mining company (interesting article):
http://www.bloomberg.com/apps/news?pid=10000081&sid=aWeGy8VlvHOc&refer=australia

A press release from GoldMiningStocks.com -- I'm always a little leery of people who are in the business of recommending this kind of stock dancing up and down and promising the moon. We see lots of "pump and dump" schemes from some of these folks.
http://www.24-7pressrelease.com/view_press_release.php?rID=8389

Gold may have moved upward, but gold stocks are lagging according to a Canadian news report:
http://www.canada.com/businesscentre/story.html?id=71710b1c-0f4f-4d9a-9e3b-77a7ac13610c

Australian supply of gold may not meet demand over the long term:
http://www.theage.com.au/news/Business/Gold-Council-hails-price-jump/2005/09/20/1126982048443.html

US interest rates may affect the price of gold:
http://www.smh.com.au/news/business/gold-stocks-on-move--price-best-in-17-years/2005/09/18/1126981947973.html

So there you have some tales, both positive and cautionary. This would be a good time to sell a few coins that aren't top-of-the-line, looking-fresh-minted to the market.

Tuesday, September 20, 2005

SO HOW DID THE MONDAY BOARD PICKS DO?

Stock boards are a mixed bag. Books advise avoiding them, but in a few years of prowling the boards for long-term investments, I've noticed some folks make good suggestions and do an excellent job of analysis. Many boards will recognize those who are good at finding stocks to invest in. Everyone has some bad picks, but there are some who can beat the averages.

Those are the ones to watch and learn from. And it' s free. A word of warning, though... when they recommend a stock on the penny boards, it's not something to buy and hold onto. You want to buy it and sell it within a day or two (swing trading.) This means the stock needs to be cheap enough that you come out ahead if it gains only 5 cents.

So, let's see how the picks did on the morning after:

Note... the market as a whole is rising. These would have changed if the market was falling.

GTW - Gateway. It was up about 10 cents yesterday. Starts today with a slump but is rising again.

GTCB - GTC Biotherapeutics. I called this one correctly... it was flat yesterday and isn't showing much sign of life today.

OPLM - Actually, OPLM.OB... over the counter stock. I wonder if this is a pump and dump recommendation. The stock peaked right at the opening on Monday and dropped after that. You'd have lost half the value of the stock (2 cents/share on a 4 cent stock) if you bought on Monday.

ATML - Passing on this one was another good idea. It sagged 10 cents/share yesterday (on a $2.00 stock) and rebounded this morning. It's sagging again. You'd have had to caught the sale at the end of yesterday and sold today. If you bought first thing Monday, you'd have still lost money.

QEE - Queenstake Resources. If you bought first thing on Monday morning, you could have made 2 cents/share IF you caught it at a 22 cent mark (the peak). if you sold just before the closing bell, you'd have gained a penny. If you waited till today to sell, you would have broken even but lost $14 in brokers fees.

FLT - Flight Safety. Might have looked decent to me, but you'd have lost money on it! It dropped about 30 cents/share yesterday. Ouch!


HOKU - Rose about $1.00 yesterday. The 1 year target estimate by analysts is $9 and it's at $11 but dropping. Will sit on the sidelines and watch this one, thanks.

Sunday, September 18, 2005

TIPS FROM THE STOCK BOARDS

While making the rounds of the stock boards, here's what the daytraders are looking at for Monday:

GTW - Gateway. Hmm. Follows a Friday report that they're expanding their presence in Japan. Don't like their previous financials, though.
http://finance.yahoo.com/q?s=GTW&d=t

GTCB - GTC Biotherapeutics. Was down on Friday. No big news... I don't see why they'd go after this one.
http://finance.yahoo.com/q?s=gtcb

OPLM - Actually, OPLM.OB... over the counter stock. Too risky.

ATML - Up last Friday, butdown in after hours trading. Pass on this one:
http://finance.yahoo.com/q?s=atml

QEE - Queenstake Resources. Heavy Volume on Friday, up slightly, no afterhours activity. Possible....:
http://finance.yahoo.com/q?s=qee

Over at The Lion,
FLT - Flight Safety. Up on Friday, week is up, looks decent.
http://finance.yahoo.com/q?s=flt

HOKU - looks real good. Up in afterhours, up dramatically since it was launched.
http://finance.yahoo.com/q/bc?s=HOKU&t=3m

Thursday, September 15, 2005

What's Looking Interesting Today

I'm a little biased toward energy stocks, probably because I've always done well with them. I'm taking a look at Calpine right now (CPN), one that came to my attention this year because of a tip on a stock board. I've looked at them before and was only mildly interested -- and lost interest as the stock fell.

A poster on the Raging Bull Stock Board put up an article about gas prices and the cost of power going up (yet again) in California:
http://ragingbull.lycos.com/mboard/boards.cgi?board=CPN&read=52704

Power companies aren't a guarantee of profit, though. Calpine's in one of those "it's so cheap I can buy a bunch of shares" price ranges (at today's opening price of $3.25/share). But the overall chart looks kine of like a bell curve, spiking up to $60/share in 2001-2002 and then dropping like a rock when deregulation hit.

It's headed up in pre-market trading this morning, but analysts aren't real gung-ho on it. I'm thinking about this one as a short term buy.


CONSIDERATIONS FROM THE PAST

I keep several "paper trade" portfolios of stocks that I've seen and liked but didn't buy because I don't have a million dollars to toss at five thousand different stocks. Here's a couple from the Energy paper trade portfolio that looked good:


Duke Energy: Longterm, it's a pretty good performer and has gone up 30% in the past year. I'm bookmarking it for my BuyAndHold (the brokerage) portfolio:
http://finance.yahoo.com/q/bc?s=DUK&t=1y&l=on&z=m&q=l&c=

Another one I'd earmarked in an older "paper trading" portfolio is WEC. http://finance.yahoo.com/q?s=WEC&d=t

GreyWolf: GW shows up on a lot of recommendations, but never actually goes anywhere. A number of years ago, Yahoo ran contests to see who could do the best paper trading portfolios. GW was one recommended at the time and I was one who did paper trading portfolios on it -- and found out that the stock just staggers all over the place.
http://finance.yahoo.com/q?s=gw After five years of indecisions, it's back at the same price. It might excite some of the column writers but it just makes me yawn.