Yesterday, we added telephone giant Verizon Communications (VZ) to the Under Loved, and Under Appreciated Stock List (Value) portfolio, with a buy limit of $29.

We added Verizon through the Flash Alert area in the "Newsletter" portion of the website. If you want to get these timely ideas, go to the "Newsletter" link at the top of the page, sign up by establishing your own username and password.

Verizon is a classic Under Loved, and Under Appreciated Stock that you hope one day will fall into your lap. Like any stock, you have to wait on the right entry price.

Verizon has all the characteristics I look for in a great investment. Also, I've found that companies who dominate their industries, or at least compete aggressively year in and year out, have a higher predictability rate for earnings growth and success. Verizon has a dominate business that is very predictable.

The company is a dominant provider for wire-line, wireless, and broadband communications. Formerly known as one of seven Baby Bells, Bell Atlantic changed its name to Verizon after it acquired GTE in June 2000. The company made other strategic moves by acquiring MCI and Alltel, and forming alliances with Vodafone's AirTouch.

When you look at the numbers, the company is even more impressive.

Verizon has over 91 million wireless customers, and picked up 13 million of those subscribers after the Alltel merger closed in January. The just company added more than 2.2 million new net subscribers in the fourth quarter of 2009 by taking market share from its competitors.

Taking about a cash cow, the company generates on average $52 per user, which translates into a quarterly cash generation of $4.732 billion per month. With this cash, Verizon increased its dividend by 3%, bringing the current dividend per share to $1.90 per share, or 6.51%.

Despite a terrible recession, the company has managed to grow their dividend. In fact, since the economy began to weaken in 2007, Verizon has managed to raise their dividend from $1.65 in 2007, to $1.90, an increase of 15.1%.

Stop and think for a moment. Everywhere you go you see someone using a cell phone. In the past, cell phones were a luxury item. Today, they are part of our everyday lives. The younger generations, teens, and young adults, would rather do without food, than do without a cell phone.

The dominance of cell phones is so wide spread that city, state, and federal governments are trying to pass laws to limit their use while consumers drive. What does that tell you?

Wireless phones are not only an extremely popular item in the US, but around the globe. Many US household now have cell phones for everyone in the family. Corporations now require cell phones for all their employees. Since time is money, cell phones have allowed corporate America to become more efficient. They will never have to worry about missing an important call, or making a timely call to an important client.

In short, the time is now right to buy Verizon !

We are adding another beaten down blue chip to the Under Loved, and Under Appreciated Stock List (Value) portfolio today. The stock currently sports a 6.51% dividend, and shares a monopoly status with another royal blue chip.

For further details, go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

Predicting the potential rebound of a quality Blue Chip stock is pretty easy to do. You don’t need to be an analyst with a CFA designation to figure them out. In fact, all you really need to look at is the company’s track record, and have a boatload of common sense. This is why I Like GE.

Let’s take a look at the company through the eyes of someone with common sense. Track record will tell you a lot since great companies almost always seem to find their way out of a tough situation. The advantage that a major Blue Chip has is…Predictability!

When you look at a company’s track record is you can see how they have performed in good economic times, bad economic times, and how they have rebounded or languished after a recession.

When Warren Buffett evaluates a company, he looks at the big picture. As an example, are earnings, dividends, and return on equity “generally” rising, or falling. It’s only natural to assume a company’s numbers will contract during recessionary periods, but it’s the general trend overtime tells the real quality of a company.

GE’s problems have been well documented, but I feel they have addressed the key issues, and are managing them effectively.

Recently, the company announced quarterly earnings of 0.28 per share, 7.3% above the consensus estimate of.26. As the recession continues into 2010, the company will continue to work its way through the issues at GE Finance, but we feel these problems are only temporary.

While earnings could be flat to slightly up for 2010, we are taking a longer term view of 3-5 years. With the problems of NBC Universal off its back, the company can now focus on its key businesses.

1998-2009 Earnings per Share

Earnings: .93, 1.07 1.29 1.41 1.51 1.55 1.61 1.72 1.99, 2.20, 1.78, .95

The average Earnings per Share over the past 12 years = $1.31

My 3-5 year Prediction: GE earnings will once again reach $1.31/ share, or possibly higher. The last time GE had earnings of around $1.31/ share, the stock was trading in a range of $28 to $60.

Continue reading "General Electric: A Common Sense Look, at a Common Sense Stock, for the Common Sense Investor" »

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

The Dynamic Growth "Weekly Briefing" can be accessed through the Newsletter portion of the website.

To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

In Monday's newsletter briefing, we sold our two oil refiners, Valero Energy (VLO) for a +16.3% gain, and Sunoco (SUN) for a +6.07% gain. Both stocks were in the Under Loved, and Under Appreciated Stock portfolio on the website.

Our rationale was simple. Both companies are losing money, and we felt that one or both would be forced to cut their dividends. In light of tighter environmental regulations, both companies are losing money. This is a repeat of what we saw during the Clinton years which lead to tighter gasoline supplies due to lack of refined goods. It's just a matter of time before the consumer is once again choking on extremely high gas prices.

Yesterday, Valero posted a $0.28/share loss in the 4th-Q09, and cut the annual dividend from $0.60/share to $0.20/share.

The real concern going forward are the eventual effects from Goldman Sachs concocted carbon credit scheme. This scheme forces companies who produce greenhouse gas to buy carbon credits if the produce carbon dioxide. This is a major expense for oil refiners, so instead of losing money they close refineries. This eventually jacks up gasoline prices.

Goldman Sachs is not alone in the rush to profit from the bogus carbon credit market. Many of the big investment banks like Barclay's, Citigroup, and Bank of America's Merrill Lynch are rushing in to get a piece of the pie.

Despite Mr. (Community Organizer) Obama's speech last night, you can clearly see, as was the case with George W. Bush, Bill Clinton, and George H.W. Bush, they don't work for you and I. These politicians, and many in congress answer to a higher power. And this higher power is not God.

Despite all the bank bashing, we believe that the financial sector is poised for a major rebound over the next 3-5 years. We are buyers of Bank of America (BAC) at current levels. We are also buyers of General Electric (GE) since the company's stock price has suffered because of its financial arm. I believe these two "Blue Chip" company's will be great stocks to own over the next decade.

On a more speculative note, I also like CitiGroup (C).

The Dynamic Growth "Weekly Briefing" was posted to the Newsletter portion of the website on Sunday.

To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

The Dynamic Growth "Weekly Briefing" can be accessed through the Newsletter portion of the website.

To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own Username and Password.

After last week's initial "Shock and Awe" sell-off, many are beginning to learn that the stock market doesn't go straight up. In fact, after an initial burst up from the March 2009 lows, stock prices have caught up, or surpassed the current earnings abilities of most companies.

At least in the short run (3-6 months), it's going to be difficult for companies to continue to growth their earnings in light of the macro environment.

Going forward, in order to grow earnings, the unemployment picture must dramatically improve. I don't think that will be the case over the short run. To make money in a market that stalls, or is range bound takes creativity.

The strategy I like to use in a sideways, range bound market is one of generating cash flow. I do this buy selling options.

Here's the strategy;

Becoming a Cash Flow Machine

One of the biggest fallacies about Warren Buffett is his slow and steady long-term approach to investing. Let me tell you something, there is nothing slow about Warren Buffett. Steady yes, slow, not a chance.

Investors think when Warren Buffett buys a stock that he’s in for the long haul. Well, that’s only partly true. He’s in for the long haul on only a handful of stocks. The others are actively added, reduced or eliminated like middle managers.

Most investors are so wrapped up in Warren’s stock picking strategy that they fail to see the real secret to his success. Brokers, and armchair investment gurus have been shouting "“Invest like Buffett”" for years now. They also yell “"Buy, Hold and forget about it".” Well, let me tell you my investing sports fans; you’re only hearing part of the story. The other part…… of the story is...CASH FLOW.

That’s right! Tons and tons of cash. If Warren Buffett is a “Buy, hold, forget about it” type guy, then where does he come up with the cash to buy more stock...Cash flow! Very rarely, if ever, do you hear Warren Buffett talk about cash flow. You hear him say, “Our problem is we have too much cash and very few places to put it.”

Continue reading "Bird's Eye View: Tuesday, January 26, 2010- Collecting Cash in a Range Bound Market" »

The Dynamic Growth "Weekly Briefing" was posted to the Newsletter portion of the website on Sunday.

To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own Username and Password.

Is the Fed Propping up the Market?

There are some very influential market guru's suggesting that the huge market rally we have witnessed since March 2009 was due to government intervention. The most notable was Charles Biderman of TrimTabs, suggesting that the "Plunge Protection Team" may be involved.

The "Plunge Protection Team" is also know as the "Presidents Working Group on Opening Markets".

Here is a video of Biderman suggesting this may be the case.

Biderman makes a compelling arguement since;

- Small Investors have withdrawn $32 billion out of U.S. stock funds over the past year.
- Small Investors have withdrawn $18 billion out of U.S. ETFs over the past year.
- Corporate stock buybacks are at their lowest levels over the past 10 years.
- Insiders Selling.

Even CNBC contributor, and professional futures trader Larry Levin (Video) went to record to say "the Visible and Invisible Hand is Everywhere."

Week in Review

The Dow closed down 216 points on Friday, the third straight triple-digit loss on the week. The Financials were weaker on news that Fed Chairman Ben Bernanke may be facing trouble being reconfirmed.

The S&P 500 lost 24 points to 1091. The Nasdaq was down 60 points at 2205. Declining issues beat advancers by 9-2 on the NYSE and by 5-2 on the Nasdaq. The 10-year Treasury note was down 2/32 to yield 3.59%. For the week, the Dow dropped 437 points, or 4.1%. The S&P 500 lost 44 points, or 3.9% and the Nasdaq was down 82 points, or 3.6%."

President Obama is trying to save face after the democrats were dealt a stunning defeat in Massachusetts. He attacked the financial institutions on Thursday, saying if they got too big, he would break them up, and proposed prohibiting and/or taxing the proprietary trading.

Dow component General Electric (GE) held up well after reporting earnings that beat analyst forecasts. GE was up 0.6% at 16.11.

American Express shares fell 8.5% to 38.59 despite announcing that profits beat forecasts.

I added a new stock to the Under Loved, and Under Appreciated Stock List this week. We added Yahoo with a Buy Limit of $18.

I've had my eye on Yahoo ever since Microsoft offered to buy the company at $33 a share. Personally, I love to use Yahoo Finance over Google Finance, and even Bloomberg. Yahoo fits all the descriptions of an "Under Loved, and Under Appreciated Stock", and has been the redheaded step-child of the internet search engine space. Microsoft saw something it liked, and we do too.

Even after last week's sell-off, the Under Loved, and Under Appreciated Stock portfolio is up +13% since late November.

My top 2 blue chips in the UL & UA stock portfolio are General Electric (GE), and Bank of America (BAC). Both companies are vital players in our nation, and Valueline says there are tremendous gains to be had over the next 3-5 years. The key is patience.

The Dynamic Growth "Weekly Briefing" was posted to the Newsletter portion of the website on Sunday.

To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

Today, President Obama called for a semi return to Glass Steagal Act. I have criticized law makers for repealing the Act since it was first abolished in 1999. But, the President failed to lay blame for who was really responsible for the repeal. During today's announcement he should have turned to the Senators behind him, and said, "The collapse of the entire banking system was the fault of the Congress, and President Clinton, for repealing Glass Steagal back in 1999".

Here's how it happened.

Senator Phil Gramm (Republican of Texas who's now hiding under a rug) and Representative Jim Leach (R-Iowa) introduced the legislation. The final bill passed by a 90–8 margin in the Senate, and 362–57 in the House. President Bill Clinton signed the legislation into law on November 12, 1999.

I'm sure the banks lobbied heavily for the legislation, but if these politicians were truly working for people like you and I, it would have never passed.

If the semi-reintroduction of Glass Steagal is done properly, banks will no longer be allowed to own and operate brokerage businesses. This means shareholders of stocks like Bank of America (BAC) will reap a windfall if the company eventually spins off Merrill Lynch.

As a standalone bank, I believe BAC is worth $45 a share. This of course is assuming sometime over the next 5 years the economy stabilizes, or returns to it's normal growth. Merrill Lynch, prior to the financial meltdown hit as high as $90/ share, and was bought by BAC for under $30.

In all honesty, Ken Lewis (former CEO of BAC) really didn't want to buy Merrill, but was forced to do so by former Treasury Secretary Hank Paulsen, and Fed Chairman Ben Bernanke. I don't think Bank of America will have any reservations if they are forced to spin-off Merrill Lynch.

But, let's get real here. The chances of President Obama's announcement passing, and severely impacting the banks, is slim and none. A lot of what we heard this morning was political grandstanding in light of the democrats stunning defeat in Massachusetts. Sure, there will be some reforms, kind of like the "Chinese Wall" farce they came up with in 2001 after the investment banks and brokers had conflict of interest problems during the dot-com craze.

Anyway you cut it, stocks like Bank of America (BAC), and Wells Fargo (WFC) (both own brokerage operations) should be worth 2 or 3 times what they are currently trading at 5-10 years down the road.

The Dynamic Growth "Weekly Briefing" was posted to the Newsletter portion of the website on Sunday.

To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

Here are a few comments from this weeks Newsletter Briefing.

When the Congress and President began talking about stricter regulations on Wall Street and the big investment banks, I could couldn't help but laugh. After-all, who do you think controls these guys?

In 1999, when the Glass–Steagall Act was repealed, it wasn't Wall Street and the banks who introduced the legislation. The bill was introduced by Senator Phil Gramm (Republican of Texas) and Representative Jim Leach (R-Iowa). The final bill passed by a 90–8 margin in the Senate, and 362–57 in the House. President Bill Clinton signed the legislation into law on November 12, 1999.

Glass–Steagall (The Banking Act of 1933) was a depression era protection that was put into law after the collapse of the American banking system in 1933. Had it not been repealed, I seriously doubt we would have witnessed the collapse we saw in 2009-2009.

The repeal of Glass–Steagall allowed large investment banks to underwrite and trade mortgage-backed securities (MBS) and collateralized debt obligations (CDO's) and make up risky products like structured investment vehicles (SIV's).

So, now you know why I couldn't help but laugh when our fearless leaders said they were going to impose stricter regulations.

The Congress and Senate can pass all the laws they want. We have laws on the books for murder, drugs, and rape, but people still kill, do drugs, and rape. No law can regulate human nature. Since 1987, human nature has morphed into excessive greed, and a quest for power that is beyond a common man's intellectual capacity. We hear about the greed, and we hear about the power, but we sit in front of our TV sets stunned when we hear stories of very evil acts.

President Obama talked about a 10 year tax on the banks that got us into the financial crisis. Joe six pack watching the news is yelling "go get'em" while shaking his fist at the TV. What he doesn't realize is every penny of the so called tax will come directly out of his pocket. This was not a tax on the banks. This was a new tax on the consumer.

Be Careful Out There!

Stocks are getting overvalued. As we look at the Relative Strength (RSI) of a large majority of stocks, we are seeing more stocks overbought, than oversold. The RSI of every stock, and stock index has a range from 0 to 100. As a stock approaches a Relative Strength number of 70 or above, it is considered overbought, while an RSI of 30 or under suggests a stock is oversold.

You can gauge the RSI by using this simple to use tool from Bloomberg.

I would also be careful of the cheer-leading on the financial channels as the stock market becomes more overbought. This morning I laughed when CNBC's Erin Burnett was reading off the teleprompter. She called Iran's, "Republican Guard", an "elite" military unit, and very dangerous.

The last time I heard how tough or dangerous the "Republican Guard" was, was just prior to the US invasion of Iraq. Shortly after the bombing started, the "elite" military unit was waving white flags, and surrendering to crews from FOX news, and CNN.

Here is an example of the media getting you to buy stocks at the top. Once again, Erin Burnett was reading off the teleprompter-Video- on January 31, 2007, saying "Goldilocks move aside, we have Economic Nirvana." Jim Cramer on February 25, 2007 was saying the economy would be fantastic.

All I can say is...Be Careful Out There!

Okay, NASCAR fans, "start your engines."

International Speedway Corp (ISCA) has been on my radar screen since the economic decline began. I haven't pulled the trigger and bought the stock yet, but I do have some sincere interest. Why? I'm not a NASCAR enthusiast, but I am fascinated with their business, and massive following.

Rule #1 in starting a successful business is to market and sell to the masses. While NASCAR is a niche business, it does have a massive fan base.

Here's what interests me;

Living here along the "Red Neck Riviera" (Panhandle of Florida), I see NASCAR fans everywhere I go. If you are not familiar with their existence, they are the drivers you see everyday with numbers such as 8, and 24 on their back windshields. This number displayed on the car or truck is the number of a persons favorite driver. For example, number 24 is Jeff Gordon, 88 is Dale Earnhardt Jr..

Non NASCAR fans may not believe this, but car racing is no longer just a redneck sport. According to a 2004 NASCAR survey, about 75% of the fan base have attended college, over 25% own their own homes, and 36% make more than $50,000 a year.

International Speedway Corp (ISCA) founded in 1953 and is by far the biggest, and most successful car racing business in the world. They own, promote, or operate 13 race sites throughout the United States.

Here are some you might be familiar with;

* Daytona International Speedway® in Florida
* Talladega Superspeedway® in Alabama
* Michigan International Speedway® located outside Detroit
* Richmond International Raceway® in Virginia
* Auto Club Speedway of Southern CaliforniaSM, near Los Angeles
* Kansas Speedway® in Kansas City, Kansas
* Phoenix International Raceway® in Arizona
* Chicagoland Speedway® near Chicago, Illinois
* Route 66 RacewaySM, near Chicago, Illinois
* Homestead-Miami SpeedwaySM, in Florida
* Martinsville Speedway® in Virginia
* Darlington Raceway® in South Carolina
* Watkins Glen International® in New York.

International Speedway also promotes more than 100 events during the race season. The company makes a ton of money through radio, television, and merchandise sales.

In my opinion, International Speedway fits the description of a highly predictable business with a recurring, and loyal revenue base. A weak economy, and consumer spending concerns have hurt the stock price as ticket sales have slowed. But once the economy begins to show signs of life, sales will rebound.

The impressive part of ISCA's business is its growing popularity. NASCAR is the second highest rated sport on television, and corporate sponsorship has found that NASCAR fans are 3 times more likely to purchase a sponsor’s product or service than non fans.

Percentage of total revenues are fairly diverse. On first glace one may assume ticket sales are the bulk of the revenue. Here is the actual breakdown;

Television and Ancillary- 33%
Sponsorship and Hospitality- 26%
Food, Beverage and Merchandise- 10%
Admissions/ Ticket Sales- 30%
Miscellaneous- 1%

Earnings Per Share

2004- $2.46
2005- $2.99
2006- $3.24
2007- $2.85
2008- $2.80

During this economic decline, ISCA insiders have been accumulating their stock of International Speedway Corp. (ISCA) steadily through open market purchases and stock grants.

If and when the economy improves, I believe ISCA will be off to the races again. A rebound in the economy could see the share price climb back to 2007 levels of $50 per share, a gain of 75%.

The Dynamic Growth "Weekly Briefing" was posted to the Newsletter portion of the website today.

To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

Here are a few comments from this weeks Newsletter Briefing.

Bringing up the rear!

This is exactly what our Under Loved, and Under Appreciated Stock List has been doing lately. As of last Thursday, the 11 stocks listed on our Under Loved, and Under Appreciated Stock List is up an average of 15.73% since November 24, 2009. Most investors hope to achieve results like this in a year, (Our list has been in existence for a little over a month) we feel their is much more upside to this group in the years ahead.

The Top 10 Fidelity Sector Fund Portfolio is handily beating the market, but the Top 10 ETF portfolio seems to be lagging behind. We are investigating the anomaly since both portfolios have similar holdings. We are looking into the possibility that hedge fund managers could be buying the actual stocks in similar sectors while shorting the ETF. If this is the case, we will need to make some adjustments to the ETF portfolio.

For the week, the ETF portfolio was up +.545%, while the Fidelity Sector Fund Portfolio was up +3.62%.

For the week, DJIA was up +1.82%, while the S&P was up +2.68%.

The DJIA gained 190 points (+1.8%), despite news over Friday's disappointing jobs report. The S&P 500 hit a new 52-week high. The NASDAQ struggled later in the week after recording a new recovery high as Apple (AAPL), Research in Motion (RIMM), and Google (GOOG) saw some profit taking.

On my radar screen, it looked as if traders were skimming some froth off the techs, and repositioning the assets into the financials.

On Tuesday (January 4, 2010), I wrote a journal entry entitled "3 Stocks for the Next Decade".

Since putting together this small list, the three stocks combined, GE (+8.11%), C (+9.28%) and BAC (+12.4%), are up an average of 9.93% in just a couple of days.

These three stocks are part of 11 stocks on our Under Loved, and Under Appreciated Stock List, which is up an average of 15.73% since November 24, 2009.

With almost every investment guru promoting tech, and bashing financials, we felt very comfortable with taking a contrarian approach. I believe in the old saying, "when everyone is lining up their deck chairs on the sunny side of the boat, it may be wise to go to the other-side of the ship because the sun will eventually come around to you."

To access this portfolio, as well as our Top 10 ETF's, Top 10 Fidelity Sector Funds, and our Top Stock Portfolio (Momentum), go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

Today, the market is resisting some selling pressure on renewed interest in the financial sector. Jeremy Siegel of the Wharton School of Business recently said “their evidence is building that the world economy is headed for a substantial recovery from the worst financial crisis since the Great Depression.”

In addition to Siegel's comments, the head of the IMF said the group is likely to increase its forecast for global growth later this month vs. its October forecast of 3.1% global growth in 2010.

Continue reading "3 Stocks for the Next Decade- Update" »

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

The weekly newsletter briefing is for members only, and was posted to the website on Monday. To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

Like yesterday, sellers tried to take the market down but were unable to gain any traction.

This morning a report released by ADP estimated the economy lost 84,000 jobs in December, the smallest decline since March 2008. The ISM non-manufacturing index showed that the services industry had expanded for the third time in the last four months.

Despite the rosy news, several items continue to concern us. We must see more evidence that the economy is "really" improving. Here's what's bothering us;

1) The consumer, in our opinion, is the real driver behind a sustainable recovery. We are seeing personal incomes, as well as other sources of incomes, like interest and dividends falling.

2) Unemployment is still very high, and we will have to wait and see if the temporary lift in jobs was due to hiring workers for the holiday's. Also, the labor force continues to get hit with furloughs and part-time jobs, while others are seeing their wages and salaries cut.

3) Consumers are shifting from credit cards to debit cards, and Visa reported that consumers used debit cards more frequently than credit cards for the first time ever. This shows us that a fundamental shift has taken place in the spending habits of consumers.

4) Preliminary reports show that 2009 Christmas sales rose to 3.6% from 2008’s when sales fell 3.4%. Oddly, much of 2009’s rise came from a 15.5% increase in internet sales.

5) The deleveraging of financial sector is hurting consumers access to credit. Credit card limits have been reduced or totally eliminated, auto loans have declined, and home equity lines of credit are almost a thing of the past.

6) The government has already anticipated another economic decline. Currently, the House of Representatives is working on a $154 billion jobs package. $75 billion is slated for infrastructure projects such as highways and transit, water projects, affordable housing and school construction and renovation. If the economy is truly recovering, why would they need to do this?

So, you tell me. Recovery? or temporary recovery which includes a bear market rally?

Before I get started, have you ever heard the story of the Chinese Bamboo
Tree?

Here's how it goes;

If you take a little seed of the Chinese Bamboo tree, plant it, water it,
and fertilize it for a whole year, nothing happens. In the second year, you
water it and fertilize it, and still nothing happens. The same thing happens in
the third and forth years, you water it, and fertilize it, and end up becoming very
discouraged! But by the fifth year, if you had continued to water and
fertilize that little seed, sometime during the fifth year, the Chinese bamboo
tree sprouts and grows NINETY FEET IN SIX WEEKS!

This is what we think will happen with these three stocks. Sure there will
be many discouraging moments over the next 5 years, but I believe these
three big named stocks have a better than average chance of returning to
their former positions of dominance.

Some of the biggest money made in the markets happen when the price of
very influential stocks fall to ridiculously low prices. What these 3
stocks so attractive in my eyes (besides their political influence and low
stock price), is you probably couldn't find three stocks more hated and
shunned.

There is an old saying in the investment world, "when everyone is lining
up their deck chairs on the sunny side of the boat, it may be wise to go to
the other-side of the ship because the sun will eventually come around to
you."

We all are aware of the problems surrounding CitiGroup (C), Bank of
America (BAC), and General Electric (GE). This is why the stock prices are
where they are today. I believe all three will eventually work their way
through their problems. I believe all three will have much higher stock
prices in the years ahead.

CitiGroup (C)

CitiGroup (C), if it remains independent, will probably take 10 years to
get back to its days of glory. For those of you who remember the savings
and loan crisis of the 1980s and 1990s, you may also remember that
"CitiCorp" (now CitiGroup) stock crashed, and today is nothing more than a
expanded version of the past.

Here are a few reasons why I believe CitiGroup (C) will survive, or
merge;

1) CitiGroup (C) may eventually merge with with another investment bank
like Goldman Sachs.

In October 2008, when the credit crisis was in full bloom, news broke that
Treasury Secretary Hank Paulsen, tried to get Citigroup and Goldman Sachs
to merge. What happened is Goldman Sachs CEO, Lloyd Blankfein, did indeed
call Citigroup CEO, Vikram Pandit, to discuss a merger. But the pieces were
not in place yet to allow this to happen.

The Financial Times broke a story that Blankfein and Pandit were talking
to lay the groundwork for a possible merger. But, CitiGroup and Goldman
needed to make several strategic moves to clear the way before a deal could
get done.

First, Goldman had to become a bank holding company (which they did).

Secondly, Goldman has no interest in owning a retail brokerage operation.
Oddly, Citigroup sold 51% of Smith Barney to Morgan Stanley.

Third is the connection within CitiGroup to Goldman Sachs. Former
Citigroup advisor, Robert Rubin was once a chairman at Goldman Sachs, and
also a former US Treasury Secretary. If Goldman buys CitiGroup, it would
wipe out a big competitor. I find it odd that former Goldman CEO, Hank
Paulsen, who was at the time the US Treasury Secretary, provided TARP funds
to CitiGroup and not Bear Sterns and Lehman Brothers.

Since Bear Sterns and Lehman Brothers had no former Goldman alumni guiding
their ships, was Paulsen wiping out Goldman competitors, while protecting
their alumni at CitiGroup?

In addition to the above, in August 2009, the CEO's of Citibank, N.A.,
and Latin America bought 1 million shares each at $3.41, and $3.21
respectively. Other purchases have taken place as well.

In November 2009, we learned that hedge fund manager John Paulson's made a
humongous purchase of CitiGroup stock. Paulson bought 300 million shares of
Citigroup, while selling all its shares in Goldman Sachs.

CitiGroup has begun returning the TARP money it received from the US
government. I believe this says a lot. Whatever happens in the months and
years ahead, I would say the statements above warrant taking a chance in
CitiGroup stock.

Continue reading "3 Stocks for the Next Decade" »

Today, Alcon (ACL), the maker of eye care products, has announced this morning that Novartis was buying the remaining 52% of Alcon that was held by Nestlé. What's odd is Novartis has offered 2.8 of its shares for ACL which works out $153, a lower price than the $164.35 Alcon closed at on Friday.

Our cost basis for Alcon is $159.51, and the stock is currently trading at $159.55.

We are selling shares immediately from the Top Stock Portfolio.

The Dynamic Growth weekly newsletter briefing will be posted later this morning. To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

The weekly newsletter briefing was posted to the "Newsletter" portion of the website earlier today. To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

The major market indexes closed higher for a sixth-day on light holiday volume. Despite today's news from a MasterCard Advisors unit (SpendingPulse) saying that retail sales advanced 3.6% this holiday season, the evidence suggests sales are still way off their torrid pace of 2006-2007.

Bear market rallies can be very rewarding, and so far, the S&P 500 has retraced about 50% off the losses from the March lows of 666.

The key levels we are watching will give us a good ideas of where the market is going. If by Thursday's close, the major indexes close above the key levels identified below, we think the market can climb much higher than many are expecting.

Key Levels:

DJIA: A close above 10,800 by year-end will be a major positive, and suggests we could see a much stronger move to the upside. This level could clear the path for a move to 11,500 fairly quickly.

S&P 500: A close above 1140 on the S&P would also be a very positive sign. This could clear the way for a move up to the 1220 level.

NASDAQ: The NASDAQ has been stuck in a 10 year bear market, just like the one we have now forecast for real estate. The NASDAQ has seen numerous rallies, but still remains way below the highs of 2000.

The NASDAQ has already broken above key resistance levels, and looks poised to lead, particularly after the 10 year anniversary of its crash which occurred in March of 2000.

In January, I am looking for a 10% correction that could immediately, or certainly by mid month.

To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

Several new features have been added including a list of our Top Growth Stocks, a list of Under Appreciated Value Stocks, and enhancements to our ETF and Fidelity Sector Fund portfolios.

Today, we are selling Synovus Financial (SNV) out of the Under Loved, and Under Appreciated Stock List (Value) at price of $2.02 for a 38% gain. The financial picture for SNV is not very clear to us, and despite the opportunity for further gains, the risks remain too high for us to make an accurate judgement.

We are also making changes to the Fidelity Select Sector Fund Portfolio, the Top Stock Portfolio (Momentum), as well as our Top 10 ETF list.

To access these changes, go to the "Newsletter" link at the top of the page and sign up by establishing your own username and password.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

Several new features have been added including a list of our Top Growth Stocks, a list of Under Appreciated Value Stocks, and enhancements to our ETF and Fidelity Sector Fund portfolios.

The rules are different for us- "The Serf's", and the real rulers of our country -"The King's". Let's see you try this;

Morgan Stanley:

Bloomberg;

Morgan Stanley plans to relinquish five San Francisco office buildings to its lender two years after purchasing them from Blackstone Group LP near the top of the market.

The bank has been negotiating an “orderly transfer” of the towers since earlier this year, Alyson Barnes, a Morgan Stanley spokeswoman, said yesterday in a telephone interview. AREA Property Partners will take over the buildings. Barnes declined to say when the transfer will occur.

“This isn’t a default or foreclosure situation,” Barnes said. “We are going to give them the properties to get out of the loan obligation.”

CitiGroup:

Washington Post;

The Internal Revenue Service, an arm of Treasury, ruled last Friday that Citigroup could keep $38 billion in tax breaks that otherwise would decline in value as the government sells its stake in the company. Federal law lets companies shelter profits from taxes in good years based on the amount of losses in previous bad years. But the law restricts the use of past losses if a company changes hands, to discourage profitable companies from buying unprofitable firms to avoid paying taxes.

Treasury's plan to sell its $25 billion stake in Citigroup would have qualified as a change of ownership under the law. The sale was postponed Wednesday after Citigroup's stock plunged in value, but Treasury officials said they still planned to sell the government's shares over the next year.

Treasury officials said the government needed to grant the tax break in order to sell its shares in Citigroup because the company could not afford the loss. Officials also said that preserving the tax break would help the government sell its shares at a higher price. And they said the law was never intended to apply to deals involving the government.

Dennis Kucinich (D-Ohio) is very angry, but is also considered a "lightweight" to the power elite.

We need to understand that America is dominated by a tight group of families and financial organizations with a globalist agenda. They could care less about the concerns and needs of everyday Americans.

This is why they have the ability to pick and choose politicians who say one thing on the campaign trail, and do another when they get into office. It's not about you, it's about them!

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

Several new features have been added including a list of our Top Growth Stocks, a list of Under Appreciated Value Stocks, and enhancements to our ETF and Fidelity Sector Fund portfolios.

Unless we are headed toward a socialistic society here in the US, I believe CitiGroup (C) and Bank of America (BAC) hold substantial appreciation potential for long term investors. The big question of course is can you tune out the noise, and flash forward your thinking 5-10 years.

Here's my thought process;

CitiGroup (C)

CitiGroup is huge. They have a global footprint that provides a wide range of financial services to consumers and corporate customers in more than 100 countries. This being said, I believe one of two events could occur. In my opinion, the second event has a greater probability of happening than the first.

1) Citi eventually restructures and works they way through their exposure to risky assets, and deteriorating credit problems internationally as well as here in the US. Given the extent of these problems, it's a 50/50 bet as to whether they can regain the earnings power it once had.

If CitiGroup had been a regional bank, it would have probably been seized by the Federal Government. Given the politics behind the curtain, and all the powerful players involved, Citi has been saved from this embarrassment, and is probably being restructured to be acquired by someone like Goldman Sachs who was allowed to become a bank holding company during the credit crisis.

Here is the Goldman Sachs connection;

Goldman Sachs is a powerful force in government, as well as Wall Street. Many of its former employees have secured top level jobs in government, politics, and corporations around the globe. Their ability to pull strings, put people in high places, and crush their competition is truly amazing to watch. And, they always take care of their own.

2) Goldman Sachs (or someone else) buys CitiGroup

- In the case of CitiGroup, former Treasury Secretary, Hank Paulsen was once Chairman and Chief Executive Officer of Goldman Sachs. Former Citigroup advisor, Robert Rubin- who was paid $62 million in fees between 2004 and 2007- was also a former Treasury Secretary, and another chairman at Goldman Sachs.

- In October 2008, when the credit crisis was in full bloom, news broke that Treasury Secretary Hank Paulsen, tried to get Citigroup and Goldman Sachs to merge.

- Later that month, the Financial Times broke a story that Goldman Sachs CEO, Lloyd Blankfein, did indeed call Citigroup CEO, Vikram Pandit, to discuss a merger.

What I believe happened, and I have no solid evidence to support this, is Blankfein and Pandit were merely talking to lay the groundwork for an eventual merger. CitiGroup needed to make several strategic moves to clear the way before a deal could get done.

-First, Goldman had no interest in owning an operating a retail brokerage operation. The risks were high, and the rewards were low. So, Citigroup sold 51% of Smith Barney to Morgan Stanley.

In a twist of irony, I read today where Sen. John McCain introduced legislation that would ban investment banks, and commercial banks from engaging in retail brokerage activities.

-Secondly, CitiGroup had to be removed from the DJIA (Dow 30 stocks) so an eventual merger could be looked at as a strategic alliance, and not a takeover of a global financial powerhouse. CitiGroup is no longer a Dow stock.

- Thirdly, if Goldman bought CitiGroup, it would wipe out a big competitor. When former Treasury Secretary, Hank Paulsen, provided a portion of the TARP funds to CitiGroup and not Bear Sterns and Lehman Brothers, he was essentially wiping out the competition for Goldman Sachs.

- Forth, In August 2009, the CEO's of Citibank, N.A., and Latin America bought 1 million shares each at 43.41, and $3.21 respectively. Other purchases have taken place as well.

- Fifth, is hedge fund manager John Paulson's humongous purchase of CitiGroup stock. Paulson bought 300 million shares of Citigroup, while selling all its shares in Goldman Sachs.

For those familiar with what happens to company shares during a buyout know that most of the time the shares of the company being acquired goes up, while the shares of the buyer goes down.

- The sixth and final point is CitiGroup's is trying to return TARP money. While it's being reported that it won't be easy, the deal will eventually get done.

Because of the points made above, we are adding CitiGroup to the Dynamic Growth Under Loved, and Under Appreciated Stock List (Value).

Checkout the other Goldman Sachs Connections and Alumni

Ed Liddy of AIG, former Vice Chairman of Goldman Sachs.

John Thain, former CEO of Merrill Lynch (now BAC) was co-President at Goldman Sachs.

Robert Steel, interim CEO of Wachovia (now Wells Fargo) was a former Goldman Vice Chairman.

Neal Kashkari, head of the $700 billion Troubled Assets Relief Program (TARP), VP at Goldman Sachs.

Robert Zoellick, head of the World Bank, was a managing director of Goldman Sachs.

Mario Draghai, who is leading the European Union response to the crisis is another Vice President of Goldman Sachs.

Jon Corzine, former New Jersey Governor, former Chairman and co-CEO of Goldman Sachs.

I'm just follwing the money. It's amazing where it will take you.

We bought AmBev (ABV) at $97.25, and Baidu (BIDU) at $429.00 in the "new" Dynamic Growth Top Stock Portfolio on November 24th. We are selling both today at it all today at $98.54, and $424.21 respectively. We had a slight gain in ABV, and a slight loss in BIDU.

Hold the proceeds in cash for now.

The Dynamic Growth "Weekly Briefing" was posted to the Newsletter portion of the website today.

To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.

Several new features have been added including a list of our Top Growth Stocks, a list of Under Appreciated Value Stocks, and enhancements to our ETF and Fidelity Sector Fund portfolios.

Thanks
John Mugarian

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

I hope that you and your family are enjoying this wonderful time of the year. I’ve always enjoyed the days leading up to Christmas. I especially enjoy the spiritual time of going to church Christmas Eve, and watching the lights twinkle on the tree before I go to bed. It reminds me that all was once good, and can be again.

The Economy and Stock Market

While I enjoy its challenges (particularly when I’m right), my 21 years in this business has been quite an education.

As an investor in the 1980’s, I was fascinated with business, how corporations operated, and how the financial markets reflected what was happening in the world. Oddly, as my experience grew, and my relationships with some of the nation’s top financial authorities expanded, I no longer viewed the markets through rose colored glasses.

After seeing many fortunes made, and many fortunes wiped out, my philosophy towards investing changed. No doubt, the most important thing I learned about the financial markets is this;

The financial markets don’t belong to us. We are only invited guests. We cannot control the outcome unless we pick the correct time to participate, and the correct time to leave.

The stock market is similar to someone else’s backyard. It’s like your neighbor telling you that you are welcome to hop the fence, and visit his yard anytime you wish. But what your neighbor doesn’t tell you is they have a Pit-bull in the house, and a Doberman in the garage. At anytime, one, or both of these animals will be released into the backyard without notice. This my friends is how the stock market works.

How the Really Rich Make Money in the Markets

I’ve always sensed that the best investment legends, the ones that made their fortunes in the stock market knew something that the average investor didn’t. I didn’t realize that my senses would be so accurate until I met one.

We all have met millionaires. I’m not talking about your average millionaire. I’m talking about multi-millionaires, and billionaires.

Don’t you find it odd that the people you know, the average investor, or even a local millionaire lost tons of money during the technology boom of 1999-2000, lost tons of money in real estate after 2007, and also lost tons of money after the 2008-2009 stock market decline? For the sake of this discussion, we will call these people- “The Public”.

What I find odd is the people or investors that made money during these times, or were able to sidestep the declines before they even occurred. For the sake of this discussion, we will call these people- “The Private”.

“The Public” always gets their information from public sources (financial TV, newspapers- Barrons, Wall Street Journal, Money Magazine, neighbors, friends, etc). “The Private” doesn’t get their information from these sources, nor do they rely on them to make decisions. This is a big deal since we are talking about people who lose money versus people who make money.

“The Public” always seems to get caught up in manias. Call it what you will, but often times its greed. Like gamblers in a casino, when the dice are hot, the roulette wheel is landing on the right color, or the cards are in their favor, people like to double-down.

“The Private” investor is very different. They know when to walk away. They watch the actions of the “The Public” investor very carefully, and take their cues from them.

While the “The Public” investor was buying worthless dot-com stocks in 2000, and paying elevated prices for stocks and real estate in 2006-2007, “The Private” investor was selling.

During the October 2008-March 2009 time-frame, while the “The Public” investor was selling, and running scared, “The Private” investor was buying.

Continue reading "Bird's Eye View: Thursday, December 10, 2009- The Public & Private Investor" »