More blogs about Stock Picks Bob's Advice.



Invest like me - only at Covestor.com

Invest like me - only at Covestor.com


Robert Freedland Individual Investor



Business Blog Top Sites Add to Technorati Favorites Try PicoSearch to locate Previous Entries
PicoSearch
Seeking Alpha Certified
newsflashr network



follow me on Twitter

BlogBurst.com
Great Rates, No Banks. Prosper.

Blog Carnival Index - browse the archives

Rate this Blog at Blogged

BlogRankers.com



Blog Directory for Wisconsin
moolahblog
Blog Tools
Edit your Blog
Build a Blog
RSS Feed
View Profile
30 Jun, 14 > 6 Jul, 14
12 May, 14 > 18 May, 14
5 May, 14 > 11 May, 14
24 Mar, 14 > 30 Mar, 14
20 Jan, 14 > 26 Jan, 14
6 Jan, 14 > 12 Jan, 14
23 Dec, 13 > 29 Dec, 13
16 Dec, 13 > 22 Dec, 13
9 Sep, 13 > 15 Sep, 13
1 Jul, 13 > 7 Jul, 13
17 Jun, 13 > 23 Jun, 13
10 Jun, 13 > 16 Jun, 13
1 Apr, 13 > 7 Apr, 13
25 Mar, 13 > 31 Mar, 13
18 Mar, 13 > 24 Mar, 13
7 Jan, 13 > 13 Jan, 13
24 Sep, 12 > 30 Sep, 12
30 Apr, 12 > 6 May, 12
16 Apr, 12 > 22 Apr, 12
9 Apr, 12 > 15 Apr, 12
2 Apr, 12 > 8 Apr, 12
26 Mar, 12 > 1 Apr, 12
23 Jan, 12 > 29 Jan, 12
16 Jan, 12 > 22 Jan, 12
2 Jan, 12 > 8 Jan, 12
21 Nov, 11 > 27 Nov, 11
10 Oct, 11 > 16 Oct, 11
3 Oct, 11 > 9 Oct, 11
8 Aug, 11 > 14 Aug, 11
18 Jul, 11 > 24 Jul, 11
27 Jun, 11 > 3 Jul, 11
13 Jun, 11 > 19 Jun, 11
23 May, 11 > 29 May, 11
16 May, 11 > 22 May, 11
31 Jan, 11 > 6 Feb, 11
24 Jan, 11 > 30 Jan, 11
27 Dec, 10 > 2 Jan, 11
20 Dec, 10 > 26 Dec, 10
15 Nov, 10 > 21 Nov, 10
18 Oct, 10 > 24 Oct, 10
30 Aug, 10 > 5 Sep, 10
23 Aug, 10 > 29 Aug, 10
16 Aug, 10 > 22 Aug, 10
9 Aug, 10 > 15 Aug, 10
26 Jul, 10 > 1 Aug, 10
19 Jul, 10 > 25 Jul, 10
28 Jun, 10 > 4 Jul, 10
14 Jun, 10 > 20 Jun, 10
24 May, 10 > 30 May, 10
10 May, 10 > 16 May, 10
3 May, 10 > 9 May, 10
26 Apr, 10 > 2 May, 10
12 Apr, 10 > 18 Apr, 10
5 Apr, 10 > 11 Apr, 10
15 Mar, 10 > 21 Mar, 10
8 Feb, 10 > 14 Feb, 10
11 Jan, 10 > 17 Jan, 10
28 Dec, 09 > 3 Jan, 10
21 Dec, 09 > 27 Dec, 09
30 Nov, 09 > 6 Dec, 09
16 Nov, 09 > 22 Nov, 09
9 Nov, 09 > 15 Nov, 09
26 Oct, 09 > 1 Nov, 09
5 Oct, 09 > 11 Oct, 09
28 Sep, 09 > 4 Oct, 09
21 Sep, 09 > 27 Sep, 09
7 Sep, 09 > 13 Sep, 09
24 Aug, 09 > 30 Aug, 09
17 Aug, 09 > 23 Aug, 09
10 Aug, 09 > 16 Aug, 09
3 Aug, 09 > 9 Aug, 09
27 Jul, 09 > 2 Aug, 09
15 Jun, 09 > 21 Jun, 09
1 Jun, 09 > 7 Jun, 09
25 May, 09 > 31 May, 09
18 May, 09 > 24 May, 09
11 May, 09 > 17 May, 09
4 May, 09 > 10 May, 09
27 Apr, 09 > 3 May, 09
13 Apr, 09 > 19 Apr, 09
30 Mar, 09 > 5 Apr, 09
16 Mar, 09 > 22 Mar, 09
2 Mar, 09 > 8 Mar, 09
23 Feb, 09 > 1 Mar, 09
16 Feb, 09 > 22 Feb, 09
9 Feb, 09 > 15 Feb, 09
2 Feb, 09 > 8 Feb, 09
26 Jan, 09 > 1 Feb, 09
19 Jan, 09 > 25 Jan, 09
12 Jan, 09 > 18 Jan, 09
5 Jan, 09 > 11 Jan, 09
22 Dec, 08 > 28 Dec, 08
15 Dec, 08 > 21 Dec, 08
8 Dec, 08 > 14 Dec, 08
1 Dec, 08 > 7 Dec, 08
24 Nov, 08 > 30 Nov, 08
17 Nov, 08 > 23 Nov, 08
10 Nov, 08 > 16 Nov, 08
3 Nov, 08 > 9 Nov, 08
27 Oct, 08 > 2 Nov, 08
20 Oct, 08 > 26 Oct, 08
13 Oct, 08 > 19 Oct, 08
6 Oct, 08 > 12 Oct, 08
29 Sep, 08 > 5 Oct, 08
22 Sep, 08 > 28 Sep, 08
15 Sep, 08 > 21 Sep, 08
8 Sep, 08 > 14 Sep, 08
1 Sep, 08 > 7 Sep, 08
25 Aug, 08 > 31 Aug, 08
18 Aug, 08 > 24 Aug, 08
11 Aug, 08 > 17 Aug, 08
4 Aug, 08 > 10 Aug, 08
21 Jul, 08 > 27 Jul, 08
14 Jul, 08 > 20 Jul, 08
7 Jul, 08 > 13 Jul, 08
30 Jun, 08 > 6 Jul, 08
23 Jun, 08 > 29 Jun, 08
9 Jun, 08 > 15 Jun, 08
2 Jun, 08 > 8 Jun, 08
26 May, 08 > 1 Jun, 08
19 May, 08 > 25 May, 08
12 May, 08 > 18 May, 08
5 May, 08 > 11 May, 08
28 Apr, 08 > 4 May, 08
21 Apr, 08 > 27 Apr, 08
14 Apr, 08 > 20 Apr, 08
7 Apr, 08 > 13 Apr, 08
31 Mar, 08 > 6 Apr, 08
24 Mar, 08 > 30 Mar, 08
17 Mar, 08 > 23 Mar, 08
10 Mar, 08 > 16 Mar, 08
3 Mar, 08 > 9 Mar, 08
25 Feb, 08 > 2 Mar, 08
18 Feb, 08 > 24 Feb, 08
11 Feb, 08 > 17 Feb, 08
4 Feb, 08 > 10 Feb, 08
28 Jan, 08 > 3 Feb, 08
21 Jan, 08 > 27 Jan, 08
14 Jan, 08 > 20 Jan, 08
7 Jan, 08 > 13 Jan, 08
31 Dec, 07 > 6 Jan, 08
24 Dec, 07 > 30 Dec, 07
17 Dec, 07 > 23 Dec, 07
10 Dec, 07 > 16 Dec, 07
3 Dec, 07 > 9 Dec, 07
26 Nov, 07 > 2 Dec, 07
19 Nov, 07 > 25 Nov, 07
12 Nov, 07 > 18 Nov, 07
5 Nov, 07 > 11 Nov, 07
29 Oct, 07 > 4 Nov, 07
22 Oct, 07 > 28 Oct, 07
15 Oct, 07 > 21 Oct, 07
8 Oct, 07 > 14 Oct, 07
1 Oct, 07 > 7 Oct, 07
24 Sep, 07 > 30 Sep, 07
17 Sep, 07 > 23 Sep, 07
10 Sep, 07 > 16 Sep, 07
3 Sep, 07 > 9 Sep, 07
27 Aug, 07 > 2 Sep, 07
20 Aug, 07 > 26 Aug, 07
13 Aug, 07 > 19 Aug, 07
6 Aug, 07 > 12 Aug, 07
30 Jul, 07 > 5 Aug, 07
23 Jul, 07 > 29 Jul, 07
16 Jul, 07 > 22 Jul, 07
9 Jul, 07 > 15 Jul, 07
2 Jul, 07 > 8 Jul, 07
25 Jun, 07 > 1 Jul, 07
18 Jun, 07 > 24 Jun, 07
11 Jun, 07 > 17 Jun, 07
4 Jun, 07 > 10 Jun, 07
28 May, 07 > 3 Jun, 07
21 May, 07 > 27 May, 07
14 May, 07 > 20 May, 07
7 May, 07 > 13 May, 07
30 Apr, 07 > 6 May, 07
23 Apr, 07 > 29 Apr, 07
16 Apr, 07 > 22 Apr, 07
9 Apr, 07 > 15 Apr, 07
2 Apr, 07 > 8 Apr, 07
26 Mar, 07 > 1 Apr, 07
19 Mar, 07 > 25 Mar, 07
12 Mar, 07 > 18 Mar, 07
5 Mar, 07 > 11 Mar, 07
26 Feb, 07 > 4 Mar, 07
19 Feb, 07 > 25 Feb, 07
12 Feb, 07 > 18 Feb, 07
5 Feb, 07 > 11 Feb, 07
29 Jan, 07 > 4 Feb, 07
22 Jan, 07 > 28 Jan, 07
15 Jan, 07 > 21 Jan, 07
8 Jan, 07 > 14 Jan, 07
25 Dec, 06 > 31 Dec, 06
18 Dec, 06 > 24 Dec, 06
11 Dec, 06 > 17 Dec, 06
4 Dec, 06 > 10 Dec, 06
27 Nov, 06 > 3 Dec, 06
20 Nov, 06 > 26 Nov, 06
13 Nov, 06 > 19 Nov, 06
30 Oct, 06 > 5 Nov, 06
23 Oct, 06 > 29 Oct, 06
16 Oct, 06 > 22 Oct, 06
9 Oct, 06 > 15 Oct, 06
2 Oct, 06 > 8 Oct, 06
25 Sep, 06 > 1 Oct, 06
18 Sep, 06 > 24 Sep, 06
11 Sep, 06 > 17 Sep, 06
4 Sep, 06 > 10 Sep, 06
28 Aug, 06 > 3 Sep, 06
21 Aug, 06 > 27 Aug, 06
14 Aug, 06 > 20 Aug, 06
7 Aug, 06 > 13 Aug, 06
31 Jul, 06 > 6 Aug, 06
24 Jul, 06 > 30 Jul, 06
17 Jul, 06 > 23 Jul, 06
10 Jul, 06 > 16 Jul, 06
3 Jul, 06 > 9 Jul, 06
26 Jun, 06 > 2 Jul, 06
19 Jun, 06 > 25 Jun, 06
12 Jun, 06 > 18 Jun, 06
5 Jun, 06 > 11 Jun, 06
29 May, 06 > 4 Jun, 06
22 May, 06 > 28 May, 06
15 May, 06 > 21 May, 06
8 May, 06 > 14 May, 06
1 May, 06 > 7 May, 06
24 Apr, 06 > 30 Apr, 06
17 Apr, 06 > 23 Apr, 06
10 Apr, 06 > 16 Apr, 06
3 Apr, 06 > 9 Apr, 06
27 Mar, 06 > 2 Apr, 06
20 Mar, 06 > 26 Mar, 06
13 Mar, 06 > 19 Mar, 06
6 Mar, 06 > 12 Mar, 06
27 Feb, 06 > 5 Mar, 06
20 Feb, 06 > 26 Feb, 06
13 Feb, 06 > 19 Feb, 06
6 Feb, 06 > 12 Feb, 06
30 Jan, 06 > 5 Feb, 06
23 Jan, 06 > 29 Jan, 06
16 Jan, 06 > 22 Jan, 06
9 Jan, 06 > 15 Jan, 06
2 Jan, 06 > 8 Jan, 06
26 Dec, 05 > 1 Jan, 06
19 Dec, 05 > 25 Dec, 05
12 Dec, 05 > 18 Dec, 05
5 Dec, 05 > 11 Dec, 05
28 Nov, 05 > 4 Dec, 05
21 Nov, 05 > 27 Nov, 05
14 Nov, 05 > 20 Nov, 05
7 Nov, 05 > 13 Nov, 05
31 Oct, 05 > 6 Nov, 05
24 Oct, 05 > 30 Oct, 05
17 Oct, 05 > 23 Oct, 05
10 Oct, 05 > 16 Oct, 05
3 Oct, 05 > 9 Oct, 05
26 Sep, 05 > 2 Oct, 05
19 Sep, 05 > 25 Sep, 05
12 Sep, 05 > 18 Sep, 05
5 Sep, 05 > 11 Sep, 05
29 Aug, 05 > 4 Sep, 05
22 Aug, 05 > 28 Aug, 05
15 Aug, 05 > 21 Aug, 05
8 Aug, 05 > 14 Aug, 05
1 Aug, 05 > 7 Aug, 05
25 Jul, 05 > 31 Jul, 05
18 Jul, 05 > 24 Jul, 05
11 Jul, 05 > 17 Jul, 05
4 Jul, 05 > 10 Jul, 05
27 Jun, 05 > 3 Jul, 05
20 Jun, 05 > 26 Jun, 05
13 Jun, 05 > 19 Jun, 05
6 Jun, 05 > 12 Jun, 05
30 May, 05 > 5 Jun, 05
23 May, 05 > 29 May, 05
16 May, 05 > 22 May, 05
9 May, 05 > 15 May, 05
2 May, 05 > 8 May, 05
25 Apr, 05 > 1 May, 05
18 Apr, 05 > 24 Apr, 05
11 Apr, 05 > 17 Apr, 05
4 Apr, 05 > 10 Apr, 05
28 Mar, 05 > 3 Apr, 05
21 Mar, 05 > 27 Mar, 05
14 Mar, 05 > 20 Mar, 05
7 Mar, 05 > 13 Mar, 05
28 Feb, 05 > 6 Mar, 05
21 Feb, 05 > 27 Feb, 05
14 Feb, 05 > 20 Feb, 05
7 Feb, 05 > 13 Feb, 05
31 Jan, 05 > 6 Feb, 05
24 Jan, 05 > 30 Jan, 05
17 Jan, 05 > 23 Jan, 05
10 Jan, 05 > 16 Jan, 05
3 Jan, 05 > 9 Jan, 05
27 Dec, 04 > 2 Jan, 05
20 Dec, 04 > 26 Dec, 04
13 Dec, 04 > 19 Dec, 04
6 Dec, 04 > 12 Dec, 04
29 Nov, 04 > 5 Dec, 04
22 Nov, 04 > 28 Nov, 04
15 Nov, 04 > 21 Nov, 04
8 Nov, 04 > 14 Nov, 04
1 Nov, 04 > 7 Nov, 04
18 Oct, 04 > 24 Oct, 04
11 Oct, 04 > 17 Oct, 04
4 Oct, 04 > 10 Oct, 04
27 Sep, 04 > 3 Oct, 04
20 Sep, 04 > 26 Sep, 04
13 Sep, 04 > 19 Sep, 04
6 Sep, 04 > 12 Sep, 04
30 Aug, 04 > 5 Sep, 04
23 Aug, 04 > 29 Aug, 04
16 Aug, 04 > 22 Aug, 04
9 Aug, 04 > 15 Aug, 04
2 Aug, 04 > 8 Aug, 04
26 Jul, 04 > 1 Aug, 04
19 Jul, 04 > 25 Jul, 04
12 Jul, 04 > 18 Jul, 04
5 Jul, 04 > 11 Jul, 04
28 Jun, 04 > 4 Jul, 04
21 Jun, 04 > 27 Jun, 04
14 Jun, 04 > 20 Jun, 04
7 Jun, 04 > 13 Jun, 04
31 May, 04 > 6 Jun, 04
24 May, 04 > 30 May, 04
17 May, 04 > 23 May, 04
10 May, 04 > 16 May, 04
3 May, 04 > 9 May, 04
26 Apr, 04 > 2 May, 04
19 Apr, 04 > 25 Apr, 04
12 Apr, 04 > 18 Apr, 04
5 Apr, 04 > 11 Apr, 04
29 Mar, 04 > 4 Apr, 04
22 Mar, 04 > 28 Mar, 04
15 Mar, 04 > 21 Mar, 04
8 Mar, 04 > 14 Mar, 04
1 Mar, 04 > 7 Mar, 04
23 Feb, 04 > 29 Feb, 04
16 Feb, 04 > 22 Feb, 04
9 Feb, 04 > 15 Feb, 04
2 Feb, 04 > 8 Feb, 04
26 Jan, 04 > 1 Feb, 04
19 Jan, 04 > 25 Jan, 04
12 Jan, 04 > 18 Jan, 04
5 Jan, 04 > 11 Jan, 04
29 Dec, 03 > 4 Jan, 04
22 Dec, 03 > 28 Dec, 03
15 Dec, 03 > 21 Dec, 03
8 Dec, 03 > 14 Dec, 03
1 Dec, 03 > 7 Dec, 03
24 Nov, 03 > 30 Nov, 03
17 Nov, 03 > 23 Nov, 03
10 Nov, 03 > 16 Nov, 03
3 Nov, 03 > 9 Nov, 03
27 Oct, 03 > 2 Nov, 03
20 Oct, 03 > 26 Oct, 03
13 Oct, 03 > 19 Oct, 03
6 Oct, 03 > 12 Oct, 03
29 Sep, 03 > 5 Oct, 03
22 Sep, 03 > 28 Sep, 03
15 Sep, 03 > 21 Sep, 03
8 Sep, 03 > 14 Sep, 03
1 Sep, 03 > 7 Sep, 03
25 Aug, 03 > 31 Aug, 03
18 Aug, 03 > 24 Aug, 03
11 Aug, 03 > 17 Aug, 03
4 Aug, 03 > 10 Aug, 03
28 Jul, 03 > 3 Aug, 03
21 Jul, 03 > 27 Jul, 03
14 Jul, 03 > 20 Jul, 03
7 Jul, 03 > 13 Jul, 03
30 Jun, 03 > 6 Jul, 03
23 Jun, 03 > 29 Jun, 03
16 Jun, 03 > 22 Jun, 03
9 Jun, 03 > 15 Jun, 03
2 Jun, 03 > 8 Jun, 03
26 May, 03 > 1 Jun, 03
19 May, 03 > 25 May, 03
12 May, 03 > 18 May, 03
Entries by Topic
All topics  «
Unrelated to Business but Great Blogs
sugarmama
Jimmy Gillman.com
go fug yourself
Sponsored Links
Elliott Wave Int'l
Other Interesting Websites
Band Biographies
60th Cycle Band Website
General Investing/Financial Blogs of Interest
Neville's Financial Blog
Pitpop
Stock Picks Bob's Advice
Saturday, 18 October 2008
National Oilwell Varco (NOV) "Trading Transparency"

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.

With the market moving higher (at least temporarily yesterday), I visited the lists of top % gainers and since I was under my 5-position minimum, I had a 'permission slip' to be buying a new position, I was looking for a possible new holding.

Seeing National Oilwell Varco (NOV), an old favorite of mine, moving ahead strongly, I purchased 210 shares at $28.796, near the high for the day.the company's latest quarterly report was strong, and their Morningstar.com "5-Yr Restated Financials" are also impressive.

Even I wasn't prepared for the same-day price volatility in this stock.

Reviewing the Yahoo Finance Chart for NOV for 10/17/08, you can see the wide price swing of this company yesterday as it swung higher and then dipped in an almost as strong fashion.


National Oilwell Varco (NOV) actually closed at $25.58, up $2.05 or 8.71% on the day.  But my performance was obviously rather less than that.  Based on that purchase price of $28.796, I already have a loss of $(3.216) or (11.2)%.

Should I be selling at this point?  Somehow I don't think so.  Maybe this amateur is learning something.  My entire strategy is based on avoiding compounding my losses by stepping away from the market when times are bad.  So called 'sitting on my hands'.  However, I am getting clobbered in the extreme portion of my own strategy, my insistence on keeping myself at 5 positions is allowing me to compound my losses, buying stocks in sequence after they hit sales points on losses, instead of avoiding reinvesting in a declining market.

Something is very wrong with my approach!  

Two proposed changes.  In the bottom five stocks of my range, that is when I am down to five or less holdings, I shall continue to sell portions at the same intervals as they appreciate.  In addition, on the downside I shall be doubling my loss tolerance to (16)%.  

Next change.  When I am adding stocks to get to my '5 minimum' holding, I shall decrease the size of my purchases.  That is, if my 'average' holding is approximately $5,000, then my purchases that I make 'just to get back to 5' shall be 1/2 that size, or $2,500, for example.

These holdings shall still be good as indicators for my portfolio, but they haven't really shown that the market is truly ready for a new holding.

Will this help?

I don't really know.  This is all new territory for me.  For us all.  And while my overall performance has been above the S&P for the last 18 months, I am quickly declining to match the mean, if I haven't done so already.

Thanks for bearing with me.

If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Yours in investing,

 

Bob

 


Posted by bobsadviceforstocks at 9:18 AM CDT | Post Comment | Permalink
Updated: Saturday, 18 October 2008 9:19 AM CDT
Thursday, 16 October 2008
Rollins (ROL) "Trading Transparency"

I keep looking for the right picture to describe my own feeling of being whipped around in this market.  Would a bucking bronco from National Geographic explain it properly?

This is far worse than any roller coaster I have ever been on.  The daily gyrations are enough to give anyone motion sickness.  The lurches and dips are a challenge for a professional investor, let alone an amateur to deal with in any rational fashion.

After being led to dump shares in holdings on losses, the market took me for another ride moving higher this afternoon, the Dow closing at 8,979.26, up 401.35, and the Nasdaq finishing the day at 1,717.71.

Noticing that the market was lurching in an upwards direction, I took a look at the lists of top % gainers, trying this time to stick with my own rules, and with a "permission slip" to be buying a position (since I was once again under my minimum of 5 holdings), I saw that Rollins (ROL) was making a nice move higher, and with a brief inspection of the latest quarter, the Morningstar.com "5-Yr restated", it appeared to be appropriate and purchased 350 shares at $14.67/share.

Just one position for today.  No more "all in"!

Anyhow, wish me luck.  I shall try to hang onto this bronco at least for a few more hours.

If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Yours in investing,

 

Bob


Posted by bobsadviceforstocks at 4:34 PM CDT | Post Comment | View Comments (1) | Permalink
ResMed (RMD), Newell Rubbermaid (NWL), and Ecolab (ECL) "Trading Transparency"

Oil and vinegar!

They don't mix well do they?  I could have said oil and water, or some other analogy, but that is what I have been doing the past few days in my own amateur fashion.

What do I mean?  What qualifies me as an amateur, is my ability to change my previously developed strategy on a virtual hunch, for all of the wrong reasons and believe that 'this time, somehow things are different.'

My trading strategy has generally been about a disciplined approach to equities involving identifying high quality companies hitting the top % gainers list that met my own criteria. 

If you didn't notice, when I went 'all in', I simply picked some of my 'old favorites' from this blog and simply added them en masse to my portfolio.  So much for anything very disciplined, rational, or consistent with my past picks.  I justified each of them really on the basis of value, not momentum.  That these were great growth stocks of the past that were beaten up beyond real recognition and were a 'great price' at these levels.

Like 'oil and vinegar', I was mixing a value approach to a momentum approach.  And I am not really a value investor at all.

A value investor must identify stocks of great value and purchase them (as I see it) and hang onto them if they should decline without any particular fundamental reason presented.  In fact, many value investors would consider adding to their investment on a decline, as the stock considered would be an even more attractive investment for them.

It isn't a bad approach at all.

But it isn't my approach. 

It is one thing to be flexible, it is another to be erratic.  Consistency is the key to any approach one wishes to employ in dealing with investing.

Earlier today, with the market continuin to show an anemic performance, I unloaded my 154 shares of ResMed (RMD) at $33.04.  I had purchased them 10/14/08, two days ago!, at a price of $36.396.  Thus, I had a loss of $(3.36) or (9.2)% since purchase.

Similarly, I sold my 154 shares of Ecolab (ECL) at $37.0824.  These shares also were purchased 10/13/08 at a cost of $40.646/share.  Thus, I had a loss of $(3.56)/share or (8.8)% since purchase.

Finally, I sold my 420 shares of Newell Rubbermaid (NWL) at $13.5222.  These shares were similarly purchased 10/13/08 at a cost of $15.20.  This represented a loss of $(1.68) or (11)% since purchase.

It is hard being an amateur investor and sharing with you readers my own foibles and expensive lessons.  I hope you are learning alongside with me without losing your own money as well!

I shall not be putting any buy, sell, or hold ratings on these stocks.  My own sales are a reflection of my desire to continue to implement my investment strategy in a coherent fashion.  I shall continue to limit losses, but I shall refrain from rushing to buy shares even if I have a "permission slip" from my own trading system, unless the requirements I have previously established are met. 

If I am not finding my kind of stocks on the lists of top % gainers, perhaps that suggests it is not my kind of market to be buying stocks!

In the meanwhile, I hope that all of you are learning from my own blunders as I struggle to deal with the incredible volatility of this market that humbles the cockiest of individual investors who might believe that he is able to develop a strategy to deal with investing that might apply to any kind of market and any kind of investment.

If you have any comments or questions, please feel free to leave them here on the website or email me at bobsadviceforstocks@lycos.com.

Yours in investing,

 

Bob
  


Posted by bobsadviceforstocks at 2:10 PM CDT | Post Comment | View Comments (3) | Permalink
Updated: Thursday, 16 October 2008 2:11 PM CDT
Wednesday, 15 October 2008
Coach (COH) "Trading Transparency"

With thanks to Hellkvist.org for the photo of the Japanese Roller Coaster!  Thanks Stefan!  I do not think I found a better picture illustrating my own vertiginous feelings as the market has soared and swooned in an increasingly volatile fashion day after day!

After climbing 900 points Monday, and sitting near that peak Tuesday, the roller coaster turned south once again and the market dropped more than 700 points today.

I should know better than to go "all in" in this environment.  I guess that is what makes me an amateur when cooler hands are around.

Before all hell broke lose in the last hour of trading, I pulled the plug on my Coach (COH) stock that I just wrote up, selling my 280 shares at $17.6142.  I purchased these shares yesterday at $20.0454, giving me a loss of $(2.43)/share or (12.1)% since purchasing these shares just hours ago.  Ouch.

My Newell Rubbermaid shares were purchased yesterday at $15.20.  They closed today (still in my account) at $13.87.  They now have incurred a loss of $(1.33)/share or (8.75)%.  This stock, if it holds at this price or moves lower tomorrow, shall also be history.

These (8)% loss limits are not very helpful in these wild swings of stock prices.  But then what is?

Frankly, I do not know what to rate these stocks---Buy? Hold? Sell?

I shall keep you posted regarding the continued progress or lack thereof in my dealing with the market. 

If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Yours in investing,

 

Bob


Posted by bobsadviceforstocks at 4:51 PM CDT | Post Comment | Permalink
Tuesday, 14 October 2008
Coach (COH), Ecolab (ECL), Newell Rubbermaid (NWL), and ResMed (RMD) "Trading Transparency"

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.

Yesterday with the Dow up 500+ points (on the way to a 900+ point gain), I decided that it might be wise to go "all in" with my investments.  That is, after my partial sale of Graham (GHM) at a gain, I had another 'permission slip' to be adding a position.  With two positions in my portfolio, my minimum being 5, that meant I could move my holdings up to six positions.

These are different times, and while I chose stocks that are generally "growth stocks" and stocks that were indeed moving higher yesterday (weren't all stocks moving higher?), they were what I would call 'favorites' of mine.  Stocks that I have owned in the past either in this account or elsewhere and stocks that I have written up here on the blog.  All of them were what I would call 'value/growth' investments---that is stocks of great value due to their decline in price and yet shared many of the growth characteristics that I have written about in the past.

On October 13, 2008, I purchased 154 shares of Ecolab (ECL) at a price of $40.646.  As I write, ECL is trading at $44.03, up $.02 or 0.05% on the day today.  This represents a gain of $3.384 or 8.3% since purchase.

ECOLAB (ECL) IS RATED A BUY

On October 13, 2008, I purchased 280 shares of Coach (COH) at a price of $20.0454.  As I write, Coach is trading at $20.67, up $.43 or 2.12% on the day.  This represents a gain of $.625 or 3.1% since purchase.

Coach (COH) is an old favorite of mine.  I have owned shares of this stock in the past and have written up this investment previously as well. Trading as high as $50/share in mid-2007, the stock is well below its recent price levels and may represent a 'value' purchase. 

 

 

 

COACH (COH) IS RATED A BUY

 

 

 

 

 

 

 

Newell Rubbermaid (NWL) is an old favorite of mine, a stock that my kids have owned shares in and a stock that I have owned on and off in the past.  I don't believe I have written this one up on the blog previously.

On October 13, 2008, I purchased 420 shares of Newell Rubbermaid (NWL) at a price of $15.20.  NWL is currently trading at $15.64, up $.51 or 3.37% on the day.  This represents a gain from my purchase of $.44/share or 2.9% since purchase.

Newell Rubbermaid is also a 'value' investment with an underlying growth profile.  The stock has been beaten up pretty severely both with the economic slowdown and the soaring price of oil driving up resin costs for all of their plastic products.  NWL currently trades at a trailing p/e of 10.08, and yields 6.6% in dividends.  Over the past two years, this stock had been trading just above $30/share.

Boy do I sound like a different investor today!

NEWELL RUBBERMAID (NWL) IS RATED A BUY

Finally, I chose to pur ResMed (RMD) back into my portfolio.  I purchased 154 shares of ResMed (RMD) at a price of $36.396.  As I write, ResMed (RMD) is trading virtually unchanged from my purchase at $36.42, actually down $(.12) or (.33)% on the day.

ResMed which traded as high as $55 in early 2007, has not traded at these levels since 2005.  But then again, most stocks are trading at multi-year lows as well!

RESMED (RMD) IS RATED A BUY

If I get a chance, I shall try to write up each of these individually to give you a better assessment of my own view of the prospects.  They are not my usual picks; I promise you I shall be getting back to my usual 'strategy' as more 'usual' times return!

But I shall be managing them in my usual approach of limiting losses and taking gains when appropriate.

Thanks again for visiting!  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Yours in investing,

 

Bob


Posted by bobsadviceforstocks at 9:42 AM CDT | Post Comment | Permalink
Updated: Tuesday, 14 October 2008 10:31 AM CDT
Monday, 13 October 2008
Graham (GHM) "Trading Transparency"

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.

One of my favorite gurus in the investment world is Martin Zweig.  Zweig's philosophy rings true today.

As his website points out:

"Martin Zweig's objective is to ensure his money is fully invested in the market at the right time - he wants his money to be exposed to major bull markets but not to be exposed to major bear markets."

Isn't that what we all would like to do?

He is also a big fan of earnings rather than the Peter Lynch style of 'knowing what they do'.   As this article reports:

"In his analysis of individual stocks, Zweig is first and foremost concerned with the company's earnings. "I don't get that much involved in the product being produced," he wrote in Winning on Wall Street. "If a company can show nice consistent earnings for four or five years, I don't care if it makes broomsticks or computer parts."

Unlike many investors, however, Zweig doesn't simply look at earnings growth over one fixed period; instead, he dissects a company's earnings from a variety of different angles, trying to find firms that have shown steady and "reasonable" long-term growth that has been accelerating in recent quarters."

That's what I try to do in my humble fashion utilizing the Morningstar.com "5-Yr Restated" financials on each of my write-ups.  I am certainly NOT in Mr. Zweig's league at all.  But I am truly a fan of his.

I bring up Zweig, because as this Wharton Alumni Magazine article points out (and where I found his photo), he is the guru attributed to the "Do not fight the Fed" philosophy.

"He had started his newsletter in 1971 and his hedge fund in 1984, well before those limited high-end-investors became the rage. While still a professor, his by-word was, “Don’t fight the Fed.” That meant, according to Zweig’s theory, that if interest rates were going down, stocks would go up, and vice versa. He also claimed the way to make money was to be risk-averse, rather than taking chances on the upside. He said he was a big poker player while at Wharton, but had stopped playing when he became a money manager because he hated losing, even at cards. One of his major pieces of advice was never to hold stocks, even of the best companies, in a bear market, since even they could disappoint."

I wrote this up because I wanted to talk about fighting the Fed and the fact that the Fed and the Treasury Department are throwing everything they can at the market and the economy, including rate cuts, buying paper, and now injecting capital directly into banks.

The stock market appears to be responding.

As I write the Dow is trading at 8,970.97, up 519.78, and the Nasdaq is at 1,752.57.  And it doesn't appear to be trading with much volatility today.

At least so far.

In the midst of this big move, my Graham (GHM) stock really took off this morning.   I purchased my Grahm shares last week at $16.34.  This morning I sold 60 shares of my 420 share position (1/7th) at $22.50/share.  This represented a gain of $6.16/share or 37.7% since purchase.  (My next sale on the upside would be at a 60% appreciation level or 1.6 x $16.34 = $26.14, or on the downside, instead of waiting for an (8)% loss, after a single partial sale of a holding, my sale point for ALL remaining shares would now be moved to break-even.)

GRAHAM (GHM) IS RATED A BUY

Since I was only at 2 positions, well under my 5 position minimum, and I now had a 'buy signal', that moved my 'permission slips' up to a 6 position level.  I went ahead and purchased shares of Ecolab (ECL) and ResMed (RMD), two stocks that were not on the top % gainers list, but were moving higher and are the kinds of stocks I want to have back in my account.  I shall write something about them later when I get a minute or two :).

ECOLAB (ECL) IS RATED A BUY

RESMED (RMD) IS RATED A BUY

Thanks again for dropping by and visiting!  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.  If you are interested, please feel free to visit my Covestor Page where my actual trading account is monitored and my performance evaluated, and my SocialPicks Page where my write-ups on the blog and my 'picks' are reviewed.  I also have a podcast page, which is crying out to me for another show!  

Yours in investing,

 

Bob


Posted by bobsadviceforstocks at 10:43 AM CDT | Post Comment | Permalink
Updated: Monday, 13 October 2008 10:46 AM CDT
Saturday, 11 October 2008
A Reader Writes "...I'm trying to figure out where to look....."

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website!

After writing about the terrible market conditions that we have been experiencing, especially the last week or two, it is nice for a change to answer a question from a new investor, a reader who also happened to visit my stock club this past month.

Mike A. is trying to figure out how I go about 'picking' stocks and where he can find the information both about my process as well as the actual data underlying my decisions.

He wrote:

"Hey Bob,

I was looking at GHM, and I'm trying to figure out where to look to
find the number of shares outstanding? That's what you look at
right? Of course that'd in addition to the other criteria
(increasing positive free cash flow, increasing dividend).

-Mike A."

Thanks so much Mike!  As you may know, I have been in and out of shares of Graham (GHM) several times now.  I am currently a shareholder, but with the volatility of the market, that could well change!

Let me try to briefly answer your questions.  There are just a few places that I tend to go to get the information you are asking about.  I shall give you the links which will be 'hyperlinked' so you just need to 'click' on the words which should be in blue or purple to get you to these pages for the information.

Let me review again with you (and the rest of the readers) some of the key things that go into my selection of a stock for inclusion in this blog and possible inclusion into my own trading account.

First of all, I start looking for stocks on the top % gainers lists.  I generally stay with stocks near $10 or higher so as to avoid getting stuck with the inherent volatility (in these volatile times) of lower priced stocks.  (As I got stock with Servotronics (SVT)).

From there, I check the latest quarterly results.  I have personally found Yahoo Finance to be the most helpful.  (Other people might prefer Google Finance which also is rich in information.)

Working with Yahoo, I enter the symbol for Graham which is the three letters GHM into the box for the "get quotes".  That will get you here.  To find the latest quarter, I go to the "Headlines" link along the left side of the page which is below the section head of "News & Info".  Clicking on that gets you here.

Scrolling down the list of headlines, you can see the headline titled on "Fri, Aug 1, 2008" "Graham Corporation Reports Net Income More Than Doubles on 38% Increase in Sales for First Quarter Fiscal 20009"....a Business Wire story which is found here.   It certainly was a strong report from my perspective.  You can peruse it further to see if there is anything in that story that should have drawn my attention.

Going back to your question.  I then look for data.  Most of the data can come from my longer-term view which I find on Morningstar.com.  If you click on the "Direct to Morningstar.com" or simply wait, it will open up a page that looks like you need to register.  You don't. 

Up towards the upper left on the page under the Morningstar logo, is an empty field where you can enter symbols for "Quotes".  Enter GHM there and you will get to this page.  (You can close the annoying pop-up for the Economist Magazine).

Now head over to the "Financial Statements" section by clicking on those words along the left side of the page in the box of terms headed up by "Snapshot".  If you click on "Financial Statements" it should get you here.

You should be looking at the "10-Yr Income" for Graham (GHM).  I find the "5-Yr Restated" the easiest to utilize....at least for me.  You can find that page by looking at the tabs above the blue bargraphs with the yellow background titled "5-Yr Restated".  If you click on that page, it should get you here.

This page is really helpful imho.  Here we can get the data that really provides me with the bulk of my analysis:  the revenue growth, earnings growth, dividends--which I don't require but like and if they do pay dividends, I like it even more, like you say, if they raise them on some regular basis--outstanding shares....which here have been 4 million 2004 to 2005, and 5 million since then---relatively stable.  I also look at free cash flow, which for Graham is positive and growing, and the balance sheet, checking the cash and current assets relative to the current liabilities and then inspecting the long-term liabilities.  Graham checks out just fine in this regard.

Returning back to the Yahoo Finance Page for Graham,  I usually like to loook at the Yahoo "Key Statistics" which is found along the left side under the section in bold called "Company".  For Graham (GHM), it is located here.

On that page, I can get some basic 'value numbers' like the Market Cap, the p/e ratio, the PEG ratio, the Price/Sales ratio (which I like to compare to other companies utilizing my Fidelity.com page, the outstanding shares, the short interest----indicating the number of shares out short relative to the daily trading volume, and the latest stock split and yield.

If you look at a few of my past write ups of stocks, you can follow along as I link to this information and discuss it over and over again.

Finally, I like to look at a chart.

I utilize Stockcharts.com which may be found here.  Again, if you enter "GHM" in the light blue box titled "Easy as 1-2-3. Create a Chart Now!", and choose "point & figure" you will get here. And see a chart which looks like this company's price has totally broken down:

Mike I hope that answers your questions about finding information on stocks.  If you talk to some other investors, I am sure you will find and identify other sources of similar information.  This is just what I like to do.  Many people like to look at other pieces of information that are probably equally important including insider buying and selling and other technical charts.

Explore some of these other approaches as well, utilize anything I do to your own advantage, and with time you will easily pass my own simple grasp of stocks without too much effort or time on your own part!

Thanks for inquiring.  Let me know if you would like me to discuss my portfolio management strategies or my general and idiosyncratic rules for buying and selling portions of stocks at varying price levels.

If you have any comments or questions, please feel free to leave them right here on the blog or email me at bobsadviceforstocks@lycos.com.

Yours in investing,

 

Bob


Posted by bobsadviceforstocks at 10:39 PM CDT | Post Comment | Permalink
Updated: Saturday, 11 October 2008 10:45 PM CDT
Friday, 10 October 2008
LDK Solar (LDK), Servotronics (SVT), and Potash (POT) "Trading Transparency"

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor (!), so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website. 

Getting away from the market and the workplace, I had a nice dinner last night at Hackberry's in La Crosse.  If you are driving through this town, stop by and visit our Co-Op and get a bite 'upstairs' at the restaurant.

(And no I don't get paid to mention these businesses...they are just places I like and am happy to mention them right here on the blog!)

You probably aren't wondering, but I had the 'Brown Rice Sir Fry' with the chicken added on top :).  For $10.75, it was more than enough for dinner!  I like this restaurant because it is relatively easy to walk right in and eat, has reasonable prices and good food, and a view of the downtown.

Getting back to work today, I checked the portfolio realizing that some of my stocks (as I wrote last night) had likely hit sale points. 

Indeed, I was starting to feel a bit 'banged-up' by this vicious correction!

First of all my LDK Solar shares were acting less than sunny, and in fact were trading below my (8)% loss limit.  I sold my 280 shares of LDK at $20.43, having just purchased these shares YESTERDAY at $23.82 (!)----OUCH----for a loss of $(3.39) or (14.2)% in about 24 hours!

LDK SOLAR (LDK) IS RATED A HOLD

But the disaster that was the stock market didn't stop there! 

Servotronics.  Another purchase from YESTERDAY of 700 shares at $8.45/share; these shares were unloaded this morning at $7.05.  This was a QUICK loss of $(1.40) or (16.6)% in about 24 hours.  YIKES AGAIN!

SERVOTRONICS (SVT) IS RATED A HOLD 

But wait, the disaster wasn't complete! 

Potash Corporation (POT), that I have been ribbing my good friend Jerry H. who I walk with in the morning about HIS problems with this stock, well, I couldn't help myself and get in there and bloody my own nose on this stock.  In fact, I haven't even had the time or made the time to write this stock up after purchasing 70 shares 10/8/08 (two days ago!) at a price of $95.84. 

Potash (POT) dipped quickly and my shares were sold at $84.67 for a loss of $(11.17) or (11.7)% since my purchase.  The market is crazy enough that the stock flew back later in the day to close at $91.08, down only $(1.77) or (1.91)% on the day.  Too late for me as I was no longer a share-holder.

POTASH CORP (POT) IS RATED A HOLD

Not all was lost as my recent purchase of Graham (GHM), a stock that I thought I might be also selling today, closed at $19.70, up $4.15 or 26.695 on the day.  I had purchased my 420 shares of GHM two days ago as well at $16.33.  Thus, I now have a gain (for the moment) of $3.37 or 20.6% since that purchase. 

GRAHAM (GHM) IS RATED A BUY 

Now down to two positions (Graham (GHM) and Covance (CVD)), I do not think I shall be that quick to spend that nickel in my pocket and get back to my alotted 5 positions.  Of course.....you know I never do have much self control so if there is some large move on the upside....well you know I shall be checking out those top % gainers lists no matter what I tell you this evening!

Thanks again for visiting!  This kind of market only brings to mind one image for me.  My desire to climb under my desk as all hell breaks loose as I did so many years ago during the 'cold war' when we all needed to be ready for a 'drop drill' on a moment's notice!  I guess that kind of comment is rather revealing of my age!

 

I hope you all have a nice weekend and that next week finds us in a market that is acting a bit more sensibly than what we have experienced this past week of trading!

If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Yours in investing,

Bob


Posted by bobsadviceforstocks at 5:43 PM CDT | Post Comment | Permalink
Thursday, 9 October 2008
Is This Time Going to Be Like 1929?

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on this website.

How do you describe the trading action on Wall Street?

A "correction"?  A "Bear Market"?  Or is it more like a slow-motion crash.  A crash that isn't really that slow at all!

Let's take a look at a 2-yr chart on the DJIA:

 


And 1929-1930?


The difference thus far is the degree of the fall.  By the end of the crash in 1932, stocks has declined by 91% from their peak.

There are some spooky parallels between 1929 and today.

Looking back on 1929, the Pecora Commission was established to try to determine the cause of the collapse in equities and the problems that bank faced subsequently:

"Following the Wall Street Crash, the U.S. economy had gone into a depression, and a large number of banks failed. The Pecora Commission initiated major reform of the American financial system. As Chief Counsel, Ferdinand Pecora personally examined many high-profile witnesses that included some of the nation's most influential bankers and stockbrokers. As the Commission's first witness, Richard Whitney, president of the New York Stock Exchange, declared that "The Exchange's refusal to pay heed to popular demand for reform was simply a manifestation of courage to do those things which are right, regardless of how unpopular they may be for the time being." Other important members of the Wall Street financial community to give testimony before the Commission included investment bankers Otto H. Kahn, Charles E. Mitchell, Thomas W. Lamont, and Albert H. Wiggin, plus celebrated commodity market speculators such as Arthur W. Cutten. Given wide media coverage, the testimony of the powerful banker J.P. Morgan, Jr. caused a public outcry after he admitted under examination that he and many of his partners had not paid any income taxes in 1931 and 1932.

As reiterated by SEC Chairman Arthur Levitt during his 1995 testimony before the United States House of Representatives, the Pecora Commission uncovered a wide range of abusive practices on the part of banks and bank affiliates. These included a variety of conflicts of interest such as the underwriting of unsound securities in order to pay off bad bank loans as well as "pool operations" to support the price of bank stocks. The hearings galvanized broad public support for new securities laws. As a result of the Pecora Commission's findings, the United States Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934, instituting disclosure laws for corporations seeking public financing, and in 1935 formed the SEC as a means to enforce the new Acts."

One of the major reforms to come out of the 1929 crash and the Pecora Commission was Glass-Steagall:

"Following the Great Crash of 1929, one of every five banks in America fails. Many people, especially politicians, see market speculation engaged in by banks during the 1920s as a cause of the crash.

In 1933, Senator Carter Glass (D-Va.) and Congressman Henry Steagall (D-Ala.) introduce the historic legislation that bears their name, seeking to limit the conflicts of interest created when commercial banks are permitted to underwrite stocks or bonds. In the early part of the century, individual investors were seriously hurt by banks whose overriding interest was promoting stocks of interest and benefit to the banks, rather than to individual investors. The new law bans commercial banks from underwriting securities, forcing banks to choose between being a simple lender or an underwriter (brokerage). The act also establishes the Federal Deposit Insurance Corporation (FDIC), insuring bank deposits, and strengthens the Federal Reserve's control over credit.

The Glass-Steagall Act passes after Ferdinand Pecora, a politically ambitious former New York City prosecutor, drums up popular support for stronger regulation by hauling bank officials in front of the Senate Banking and Currency Committee to answer for their role in the stock-market crash.

In 1956, the Bank Holding Company Act is passed, extending the restrictions on banks, including that bank holding companies owning two or more banks cannot engage in non-banking activity and cannot buy banks in another state."

And the rest of the same article:

 

1960s-70s

First efforts to loosen Glass-Steagall restrictions

 

Beginning in the 1960s, banks lobby Congress to allow them to enter the municipal bond market, and a lobbying subculture springs up around Glass-Steagall. Some lobbyists even brag about how the bill put their kids through college.

In the 1970s, some brokerage firms begin encroaching on banking territory by offering money-market accounts that pay interest, allow check-writing, and offer credit or debit cards.


 
 

1986-87

Fed begins reinterpreting Glass-Steagall; Greenspan becomes Fed chairman

 

In December 1986, the Federal Reserve Board, which has regulatory jurisdiction over banking, reinterprets Section 20 of the Glass-Steagall Act, which bars commercial banks from being "engaged principally" in securities business, deciding that banks can have up to 5 percent of gross revenues from investment banking business. The Fed Board then permits Bankers Trust, a commercial bank, to engage in certain commercial paper (unsecured, short-term credit) transactions. In the Bankers Trust decision, the Board concludes that the phrase "engaged principally" in Section 20 allows banks to do a small amount of underwriting, so long as it does not become a large portion of revenue. This is the first time the Fed reinterprets Section 20 to allow some previously prohibited activities.

In the spring of 1987, the Federal Reserve Board votes 3-2 in favor of easing regulations under Glass-Steagall Act, overriding the opposition of Chairman Paul Volcker. The vote comes after the Fed Board hears proposals from Citicorp, J.P. Morgan and Bankers Trust advocating the loosening of Glass-Steagall restrictions to allow banks to handle several underwriting businesses, including commercial paper, municipal revenue bonds, and mortgage-backed securities. Thomas Theobald, then vice chairman of Citicorp, argues that three "outside checks" on corporate misbehavior had emerged since 1933: "a very effective" SEC; knowledgeable investors, and "very sophisticated" rating agencies. Volcker is unconvinced, and expresses his fear that lenders will recklessly lower loan standards in pursuit of lucrative securities offerings and market bad loans to the public. For many critics, it boiled down to the issue of two different cultures - a culture of risk which was the securities business, and a culture of protection of deposits which was the culture of banking.

In March 1987, the Fed approves an application by Chase Manhattan to engage in underwriting commercial paper, applying the same reasoning as in the 1986 Bankers Trust decision, and in April it issues an order outlining its rationale. While the Board remains sensitive to concerns about mixing commercial banking and underwriting, it states its belief that the original Congressional intent of "principally engaged" allowed for some securities activities. The Fed also indicates that it will raise the limit from 5 percent to 10 percent of gross revenues at some point in the future. The Board believes the new reading of Section 20 will increase competition and lead to greater convenience and increased efficiency.

In August 1987, Alan Greenspan -- formerly a director of J.P. Morgan and a proponent of banking deregulation -- becomes chairman of the Federal Reserve Board. One reason Greenspan favors greater deregulation is to help U.S. banks compete with big foreign institutions.


 
 

1989-1990

Further loosening of Glass-Steagall

 

In January 1989, the Fed Board approves an application by J.P. Morgan, Chase Manhattan, Bankers Trust, and Citicorp to expand the Glass-Steagall loophole to include dealing in debt and equity securities in addition to municipal securities and commercial paper. This marks a large expansion of the activities considered permissible under Section 20, because the revenue limit for underwriting business is still at 5 percent. Later in 1989, the Board issues an order raising the limit to 10 percent of revenues, referring to the April 1987 order for its rationale.

In 1990, J.P. Morgan becomes the first bank to receive permission from the Federal Reserve to underwrite securities, so long as its underwriting business does not exceed the 10 percent limit.


 
 

1980s-90s

Congress repeatedly tries and fails to repeal Glass-Steagall

 

In 1984 and 1988, the Senate passes bills that would lift major restrictions under Glass-Steagall, but in each case the House blocks passage. In 1991, the Bush administration puts forward a repeal proposal, winning support of both the House and Senate Banking Committees, but the House again defeats the bill in a full vote. And in 1995, the House and Senate Banking Committees approve separate versions of legislation to get rid of Glass-Steagall, but conference negotiations on a compromise fall apart.

Attempts to repeal Glass-Steagall typically pit insurance companies, securities firms, and large and small banks against one another, as factions of these industries engage in turf wars in Congress over their competing interests and over whether the Federal Reserve or the Treasury Department and the Comptroller of the Currency should be the primary banking regulator.

 
 
 

1996-1997

Fed renders Glass-Steagall effectively obsolete

 
 

In December 1996, with the support of Chairman Alan Greenspan, the Federal Reserve Board issues a precedent-shattering decision permitting bank holding companies to own investment bank affiliates with up to 25 percent of their business in securities underwriting (up from 10 percent).

This expansion of the loophole created by the Fed's 1987 reinterpretation of Section 20 of Glass-Steagall effectively renders Glass-Steagall obsolete. Virtually any bank holding company wanting to engage in securities business would be able to stay under the 25 percent limit on revenue. However, the law remains on the books, and along with the Bank Holding Company Act, does impose other restrictions on banks, such as prohibiting them from owning insurance-underwriting companies.

In August 1997, the Fed eliminates many restrictions imposed on "Section 20 subsidiaries" by the 1987 and 1989 orders. The Board states that the risks of underwriting had proven to be "manageable," and says banks would have the right to acquire securities firms outright.

In 1997, Bankers Trust (now owned by Deutsche Bank) buys the investment bank Alex. Brown & Co., becoming the first U.S. bank to acquire a securities firm.


 
 

1997

Sandy Weill tries to merge Travelers and J.P. Morgan; acquires Salomon Brothers

 

In the summer of 1997, Sandy Weill, then head of Travelers insurance company, seeks and nearly succeeds in a merger with J.P. Morgan (before J.P. Morgan merged with Chemical Bank), but the deal collapses at the last minute. In the fall of that year, Travelers acquires the Salomon Brothers investment bank for $9 billion. (Salomon then merges with the Travelers-owned Smith Barney brokerage firm to become Salomon Smith Barney.)


 
 

April 1998

Weill and John Reed announce Travelers-Citicorp merger

 

At a dinner in Washington in February 1998, Sandy Weill of Travelers invites Citicorp's John Reed to his hotel room at the Park Hyatt and proposes a merger. In March, Weill and Reed meet again, and at the end of two days of talks, Reed tells Weill, "Let's do it, partner!"

On April 6, 1998, Weill and Reed announce a $70 billion stock swap merging Travelers (which owned the investment house Salomon Smith Barney) and Citicorp (the parent of Citibank), to create Citigroup Inc., the world's largest financial services company, in what was the biggest corporate merger in history.

The transaction would have to work around regulations in the Glass-Steagall and Bank Holding Company acts governing the industry, which were implemented precisely to prevent this type of company: a combination of insurance underwriting, securities underwriting, and commecial banking. The merger effectively gives regulators and lawmakers three options: end these restrictions, scuttle the deal, or force the merged company to cut back on its consumer offerings by divesting any business that fails to comply with the law.

Weill meets with Alan Greenspan and other Federal Reserve officials before the announcement to sound them out on the merger, and later tells the Washington Post that Greenspan had indicated a "positive response." In their proposal, Weill and Reed are careful to structure the merger so that it conforms to the precedents set by the Fed in its interpretations of Glass-Steagall and the Bank Holding Company Act.

Unless Congress changed the laws and relaxed the restrictions, Citigroup would have two years to divest itself of the Travelers insurance business (with the possibility of three one-year extensions granted by the Fed) and any other part of the business that did not conform with the regulations. Citigroup is prepared to make that promise on the assumption that Congress would finally change the law -- something it had been trying to do for 20 years -- before the company would have to divest itself of anything.

Citicorp and Travelers quietly lobby banking regulators and government officials for their support. In late March and early April, Weill makes three heads-up calls to Washington: to Fed Chairman Greenspan, Treasury Secretary Robert Rubin, and President Clinton. On April 5, the day before the announcement, Weill and Reed make a ceremonial call on Clinton to brief him on the upcoming announcement.

The Fed gives its approval to the Citicorp-Travelers merger on Sept. 23. The Fed's press release indicates that "the Board's approval is subject to the conditions that Travelers and the combined organization, Citigroup, Inc., take all actions necessary to conform the activities and investments of Travelers and all its subsidiaries to the requirements of the Bank Holding Company Act in a manner acceptable to the Board, including divestiture as necessary, within two years of consummation of the proposal. ... The Board's approval also is subject to the condition that Travelers and Citigroup conform the activities of its companies to the requirements of the Glass-Steagall Act."


 
 

1998-1999

Intense new lobbying effort to repeal Glass-Steagall

 

Following the merger announcement on April 6, 1998, Weill immediately plunges into a public-relations and lobbying campaign for the repeal of Glass-Steagall and passage of new financial services legislation (what becomes the Financial Services Modernization Act of 1999). One week before the Citibank-Travelers deal was announced, Congress had shelved its latest effort to repeal Glass-Steagall. Weill cranks up a new effort to revive bill.

Weill and Reed have to act quickly for both business and political reasons. Fears that the necessary regulatory changes would not happen in time had caused the share prices of both companies to fall. The House Republican leadership indicates that it wants to enact the measure in the current session of Congress. While the Clinton administration generally supported Glass-Steagall "modernization," but there are concerns that mid-term elections in the fall could bring in Democrats less sympathetic to changing the laws.

In May 1998, the House passes legislation by a vote of 214 to 213 that allows for the merging of banks, securities firms, and insurance companies into huge financial conglomerates. And in September, the Senate Banking Committee votes 16-2 to approve a compromise bank overhaul bill. Despite this new momentum, Congress is yet again unable to pass final legislation before the end of its session.

As the push for new legislation heats up, lobbyists quip that raising the issue of financial modernization really signals the start of a fresh round of political fund-raising. Indeed, in the 1997-98 election cycle, the finance, insurance, and real estate industries (known as the FIRE sector), spends more than $200 million on lobbying and makes more than $150 million in political donations. Campaign contributions are targeted to members of Congressional banking committees and other committees with direct jurisdiction over financial services legislation.


 
 

Oct.-Nov. 1999

Congress passes Financial Services Modernization Act

 

After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic.

On Oct. 21, with the House-Senate conference committee deadlocked after marathon negotiations, the main sticking point is partisan bickering over the bill's effect on the Community Reinvestment Act, which sets rules for lending to poor communities. Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference. Serious negotiations resume, and a deal is announced at 2:45 a.m. on Oct. 22. Whether Weill made any difference in precipitating a deal is unclear.

On Oct. 22, Weill and John Reed issue a statement congratulating Congress and President Clinton, including 19 administration officials and lawmakers by name. The House and Senate approve a final version of the bill on Nov. 4, and Clinton signs it into law later that month.

Just days after the administration (including the Treasury Department) agrees to support the repeal, Treasury Secretary Robert Rubin, the former co-chairman of a major Wall Street investment bank, Goldman Sachs, raises eyebrows by accepting a top job at Citigroup as Weill's chief lieutenant. The previous year, Weill had called Secretary Rubin to give him advance notice of the upcoming merger announcement. When Weill told Rubin he had some important news, the secretary reportedly quipped, "You're buying the government?"


 

 

And what of the current crisis?

As reported two days ago:

"Radical steps by the Fed under chairman Ben Bernanke — all in the name of seeking to halt the panic sweeping financial markets — are turning it into a financial colossus. They're also putting the government deeper in debt and taxpayers further at risk if the various moves fail.

And it's being done with little direct interaction with Capitol Hill. The Fed does not depend on Congress for its budget, including its payroll, and is as much a creature of the nation's banking system as part of the federal government.

On Tuesday, the Fed announced it will buy vast amounts of corporate debt, some of it unsecured, in hopes of renewing the flow of money in so-called commercial paper markets. That is where many companies turn for short-term loans to finance their most basic day-to-day operations, such as purchasing supplies or making payrolls.

That action came just a day after the Fed increased a short-term loan program to as much as $900 billion by the end of the year — exceeding even the government's $700 billion bailout plan enacted on Friday.

"Almost every day there's a new program. It's almost Rooseveltian, if that's a word," said David Jones, chief economist at DMJ Advisors in Denver and a longtime Fed watcher. He was referring to bold federal programs undertaken by President Franklin D. Roosevelt in the 1930s to battle the Great Depression.

"Certainly, the Fed is pressing against the bounds of its territory as the central bank. But we got into the Depression precisely because the Fed then stood by and watched most of the banking system fail, watched the money supply contract by a third, and did nothing about it. You cannot criticize this Fed for trying to do something about a crisis which has basically shut the flow of credit down to a trickle and poses a threat to the economy," Jones said.

Wall Street was not yet impressed. The Dow Jones industrials sank an additional 508 points.

The Bernanke Fed first invoked rarely used 1930s powers to intervene — with taxpayer backing — in March when it provided a $29 billion loan as part of JPMorgan Chase & Co.'s takeover of Bear Stearns. Since then, it has launched programs to extend loans to nonbank financial companies, to provide backstop insurance for money-market mutual funds and a $85 billion taxpayer-backed loan to bail out American International Group, one of the world's largest insurers.

Bernanke on Tuesday defended the Fed's steps, along with the huge separate bailout program to allow the government to take over hard-to-sell mortgage-related securities now clogging bank balance sheets."

 

Once again is about bank balance sheets.  About securities and derivatives of questionable value threatening the viability of our banking system.  

It has taken us 75 years to destroy Glass-Steagall, and in days we are seeing our financial systems now self-destruct as they are overwhelmed with CMO's, CDS's, and an Alphabet-soup of paper of questionable value.

On a political note, it is interesting that it is Phil Gramm, one of John McCain's tightest advisers who led the recent (1999) Republican moves against Glass-Steagall---as this report (earlier this year) points out:

"The general co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today’s economic turmoil.

“A regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed,” the Illinois senator running for president said in a New York economic speech. “But by the time [it] was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.”

Gramm’s role in the swift and dramatic recent restructuring of the nation’s investment houses and practices didn’t stop there.

A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS’s new investment banking arm.

Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006.

During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages.

For his work, Gramm and two other lobbyists collected $750,000 in fees from UBS’s American subsidiary. In the past year, UBS has written down more than $18 billion in exposure to subprime loans and other risky securities and is considering cutting as many as 8,000 jobs"

 

But certainly the Democrats have been almost as much at fault as the Republicans in this matter.

Are we headed for a 1929 debacle?  I hope not.  I really do.  But I am afraid that those who pushed hard to deregulate, to get government out of monitoring what banks did, who tried to separate banking and investment activity failed due to the greed of some who sought to maximize profits and stock prices at any cost.  So much like they did in 1929.


Posted by bobsadviceforstocks at 11:27 PM CDT | Post Comment | Permalink
LDK Solar (LDK) and Servotronics (SVT) "Trading Transparency"

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.

'Egg on my face' anyone?

After spending the last 5+ years on this blog repeating endlessly the mantra of 'listening to my portfolio', what did I do?  The darndest thing about this blog is that I have to do all of these dumb things so publicly!  My portfolio was down to one position, my Covance (CVD) stock and I knew that I had these 'permission slips' to be buying shares.  So with the first sign of a bit of strength in the market the last couple of days, I was in there full bore, moving back up to my minimum of 5 holdings.

And you know the rest of the story.

As reported: (10/9/08)

"Stocks plunged Thursday, sending the Dow Jones industrial average down 679 points -- more than 7 percent -- to its lowest level in five years. Stocks took a nosedive after a major credit-rating agency said it might cut its rating on General Motors and Ford, further rattling investors already fretting over the impact of tight credit on the economy."

Specifically, the Dow closed at 8,579.19, down (678.19) or (7.33)% on the day, and the Nasdaq dipped to 1,645.12, down (95.21) or (5.47)%.  And the S&P dropped to 909.92, down (75.02) or (7.62)%.

And I was buying this morning.  WHAT was I thinking?

My own portfolio was talking to me.  It was SHOUTING at me!   And was I listening?  'course not.

This morning LDK Solar (LDK) was acting well.  It was even on the list ot top % gainers.  I purchased 280 shares this morning at $23.7511.  LDK went almost straight down from there.  (Do I need to tell all of you once again that I am an amateur investor?)  In fact LDK closed at $20.53, down $(.95) or (4.42)% on the day.  Thus, I have already racked up a loss of $(3.22) or (13.6)% on the day.

Unless the stock opens up sharply, I shall be selling this stock tomorrow morning shortly after the opening of trading.

So much for owning a Chinese solar stock :(.

With my own probable sale of stock, I cannot rate this a 'buy', yet the selling has gotten so overdone,

LDK SOLAR (LDK) IS RATED A HOLD

Bit that wasn't enough.  Totally a glutton for punishment today!

In the same moments as buying shares of LDK, I became convinced of my brilliance in catching the turn of the market, and purchased 700 shares of Servotronics (SVT) at a price of $8.2785.  SVT closed at $7.15, actually up $.15 or 2.14% on the day.  But this was well under my own purchase price.  In fact, I am currently at a loss of $(1.13) or (13.6)% since purchase.

Similarly, while I cannot possibly suggest a "buy" on this stock, the selling is also overdone, and even though I have may well be selling my own shares, I feel it appropriate to deal with this stock:

SERVOTRONICS (SVT) IS RATED A HOLD

I have never (that I can remember) lost money so fast on initial purchases.  Ouch.

This position will also be sold tomorrow morning unless it experiences a sharp rebound-- as it has also exceeded my own arbitrary (8)% cut-off for losses.

These really are both interesting stocks, I would love to tell you about their wonderful prospects, the great recent reports, but in this fiasco we call the Stock Market, I shall once again need to retreat with my tail between my legs.

Servotronics (SVT) also has an interesting, if speculative financial record and prospects.  My own probably sale is not that I do not like SVT.  Or that I don't like LDK.  Or any other stock I hold.

Losing money is painful.  And limiting losses is essential to any investor who is interested in being around tomorrow and the next day to try once again to divine some rational approach to the endless pain in the world of stocks.

If you have any comments or questions, please feel free to email me at bobsadviceforstocks@lycos.com or leave them right on the blog.

Yours in investing,

 

Bob

 


Posted by bobsadviceforstocks at 10:12 PM CDT | Post Comment | Permalink

Newer | Latest | Older