The Contrarian

[viseu]

People laugh at me when I say that Russian stocks are dirt cheap and worthwhile to have some allocation to a portfolio. Sure, there is risk, corruption, Putin, etc But good news is the antitheses of great value, so the great value needs to be looked where news are clearly overhyped on decent companies. And Russia is not an Argentina or a Russia of 1999. Russia has a debt of 11% GDP and has around of $500 billion of foreign reserve currency (in contrast of $7billion and debt of 162% GDP in 1999).

I still remember when friends were telling me that I would be mad to have invested in Japanese companies 4 years ago. They claimed it would be dead money for generations. I acknowledge that they could be right (I am not a fortune teller or have a time machine), but they looked such a great value that I could not resist. So I bought some and in the end it turned ok. In the end the biggest risk would be to have listened to other people without looking myself at the figures.

What am I owning in Russia? Gazprom at P/E of around 3 (give or take) and knowing that Putin is enforcing the companies to pay more dividends. Putin's idea is to force companies to give away more profits to shareholders so that those companies start to be more efficient with the remainder and stop misallocating the current amount of surplus.

This is my 10 cents. The probability of being right is 50%, the same as a fund manager but without charging you a commission :)
Off course never invest the farm. There will be always events that cannot be predicted.

[aim hier]

Several ways to buy stocks at a discount.

First, are closed end funds. Some deserve to sell at discount, lousy performance, high fees. But, at times, well managed funds sell at good discounts. Currently, PEO is at a 15% discount to Net Asset Value.

Secondly you could do covered call writing or naked put selling, to potentially acquire most, heavily traded stocks, at a discount.

[aim hier]

No one can currently project what the revenues and costs of ACA will be in 2014. It's a huge operation, which means we're facing unprecedented uncertainty with regard to the deficit and National debt, not to mention, how does this mammoth program affect the economy?

But Obama is not satisfied, he wants to use his momentum from re-election, to push for amnesty to illegal immigrants. How much will that add to our costs? If you think it will be positive for economy, where is the proof?

My foreign investments have done well, and I sleep better at night, than I would, if I were invested in U.S. stocks or government bonds.

[aim hier]

ls,

Not all countries are still expanding their government scale of operations. Canada and Norway, for example have actually shrunk their federal governments as percent of GDP.

In any event, my anti-U.S. portfolio has done well. Basically, I'm investing in natural resource companies, and operating companies outside of U.S., including foreign real estate companies.

While many countries will try to depreciate their currencies, to boost exports, the U.S. dollar is going to depreciate, simply because it will become too difficult to finance our soaring debt.

If I sound like a goldbug, it's because I've become a gold and silver believer. In my opinion, you can't go wrong with copper, an industrial necessity, and not abundant in the world.

[ls7550]

but basically I'm investing on the theme that U.S. economy will lag the rest of the world for quite some time, and the dollar will underperform as well. Thus, other than some natural resource stocks, I'm invested in international equities only, with just a very small amount in international bonds.

As long as the U.S. continues to print money, and increase its national debt to truly stupendous levels, I see no way for the economy to grow. GDP figures show small growth, but virtually every month, the figures are revised downwards. There is no growth.

It's becoming very dangerous out there Aim Heir. I wouldn't be so sure about the US $ declining that much, if at all - other than more usual fluctuations. As the US prints to suppress treasury yields the intent is to inflate away the debt. Yields down, dollar down etc. But other central banks aren't daft and simply print more of their own currency to buy more US T's - which pegs their currency and maintains the same (similar) level of yield (income) as though no US QE had occurred. The US doesn't like that and press others to refrain from such activity - but that just falls on deaf ears.


http://www.gold.org/download/value/stats/statistics/xls/gold_prices.xls

QE continued onwards and ultimately there wont be enough T's to support demand and whilst there will be a migration of the debt to being more internal to the US, a breaking point could suddenly be reached when all other 'foreign' holders suddenly demand that the T's be backed by physical gold or some other tangible real asset(s). That could lead to gold soaring and a loss of faith in US $ and a massive exit to an alternative 'safer' choice - with no other option than very high US yields. The breaking point will be when real yields are too negative that others start losing out in a big way. Foreign bonds wont be much of a haven either and some countries will be the losers with bankruptcies/bailouts/debt revisions etc.

Where the loss of primary reserve currency will move to ??? China has the reserves, but not the skill. My guess if it did get that far it would be for some kind of return to a gold standard. Whilst physical gold might come through ok, paper forms of gold could evaporate.

My guess is it wont get that far, and that the US is in the last throws of QE, perhaps until a new Fed chairman steps up to the mark with 'new ideas'. But you just never know, the safety line could break before then and typically when such events occur they do so hard and fast with little hope of any reversal until after all of the dirty linen has been cleared.

Wall Street Crash years, when banks were allowed to fail, and Iceland 2008 where they let their banks fail, resulted in a big down and a few years of pain before a recovery occurred. In contrast the current way is just prolonging and extending the final pain that will have to be endured if things do turn out bad. The best outcome is a possible extended period of flat, sideways zigzag - that could extend across a decade or two.

Central banks et al are more concerned with the return of money rather than the return on money. Safe haven's are difficult to find and when you do find one likely there will be a negative real yield associated to it. Countries with a surplus trade and who are only printing/devaluing to peg to US $ are perhaps a good choice. CHY, AUD, CAD or even Japan (who were a bit late to the printing more Yen game). And China of course - provided you can avoid corrupt activities. Interesting times!

[aim hier]

Haven't posted in a while, but am so pleased with my results over past several weeks. Using several strategies, but basically I'm investing on the theme that U.S. economy will lag the rest of the world for quite some time, and the dollar will underperform as well. Thus, other than some natural resource stocks, I'm invested in international equities only, with just a very small amount in international bonds.

As long as the U.S. continues to print money, and increase its national debt to truly stupendous levels, I see no way for the economy to grow. GDP figures show small growth, but virtually every month, the figures are revised downwards. There is no growth.

[aim hier]

Nice to have cash, but will wait. Americans made a stupid decision yesterday, and interest rates are near zero. But I'm waiting for lower prices before investing.

[aim hier]

Took advantage of some strong market days to raise a great deal of cash. Always love that position. I'm torn as to where the market goes next. If it continues to rally, I'll make money, just not as much. And, if it retreats, I'll lose money, just not as much. But, I will be able to employ all that cash in better opportunities.

The unemployment rate released Friday, was an obvious erroneous measurement. I see from many sources, that the report could not have been manipulated by the Administration for political purposes. I guess I'll have to accept that. But it is one heck of a coincidence that a report with an error of this magnitude, comes out a month before the election, and boosts the re-election chances of the administration.

I still lean towards a weaker market next week, as the market digests the employment numbers and reflects on what a 2nd term for Obama means. The bullish case, is stil, alternatives don't look good either. Interest rate remain at zero, global economies are largely weak as well.

[aim hier]

A health care stock, I do like, is PRGO. However, it doesn't really look like a contrarian stock pick, and may never be, it has had an impressive track record. But the short interest is high, and if the market weakens, PRGO might become more attractive.

The problem with this sector, is that there is going to be massive regulation and taxes imposed by the federal government, and it's impossible to know what things will look down the road, even in a year or two. You could invest now, and wait until things are more certain, before cashing out. The problem is that big players will know well before you, what is coming.

PRGO should do well regardless, as a manufacturer of generic drugs, they should be able to capitalize on the demographic trends, as well as be favored by government panels.

[aim hier]

Praveen,

I agree that the demographics favor health care stocks, I'm ahead of you in the ageing curve, and that's part of my problem. I'm avoiding health care stocks, at least directly. It's the politics that concern me. The so=called ACA places penalty on health care insurers that don't pay out a high enough percentage of premiums to providers. That smacks of defense department kind of accounting, and will result in higher costs, not lower costs. It also means that there is no financial incentive for insurers to lower costs beyond a limited range. Similarly, device makers are subject to a new tax, drug companies are going to find that they have little ability to negotiate prices, with basically just one buyer. Regardless of how the election turns out, I'll sit it out.

If I see a free market approach may be taken, and a sector gets beaten down, I'll take it. But till then, I don't see any health care stocks that can't potentially be taken down to zero. Insurers are the least loved, politically. If ACA fails, and Democrats remain in control, I'd expect a single payer system, and insurers would appear to be worth zero in that case. Do you know what happened to insurers in other Western countries? Not a rhetorical question, I don't know the answer, but I suspect that it's not a happy one.

I also am not a fan of much of conventional medicine. I see the federal takeover, an establishment of conventional medicine. I'm in a medicare advantage plan, like a quarter of all seniors. My plan will be cut next year (conveniently after the election). If I were to want to see an Ayurdevic provider who lacked western medical credentials, I'd have to pay out of pocket, in addition to any premiums for health care.

The most attractive health care stocks to me, then, in the interim, would be those, who derive most of their profits outside of the U.S.

[PraveenP]

You also might want to look into healthcare. The demographics of the U.S. and other developed countries are getting older.

Also, the 1990's bull market was driven by industries and their logistics being affected by technology, but health care was an exception because the doctors, etc. resisted. It's only a matter of time before technology drives change to health care.

At first, Romney said he would repeal Obamacare, but then he said he would keep the parts that people like.

Even if Romney wins and does repeal Obamacare, and they switch Medicare to vouchers, health care stocks should still do good.

[aim hier]

The travails of trading illiquid stocks. I held 700 shares of a CEF that has made me a nice profit recently. Since the discount had narrowed quite a bit, I placed the shares for sale, I was able to sell only 100 shares a few days ago.

Today, I again, placed all remaining 600 shares of the fund, at a little higher price. My first sale was for the grand total of 1 share. I would have demanded that this sale have been commission free, but ultimately, I sold another 100 shares. Eventually, I sold all of the shares, but never for a lot greater than 100 shares. So, it's nice to make good money for a quick turn in an illiquid stock, but generally, I prefer more liquid stock.

Praveen, this is actually a plus for you, your system at your levels, would not encounter much difficulty in trading such a stock.

[aim hier]

Praveen,

I would respectfully disagree with you that the odds are very likely that Obama will win re-election. Actually, I think that Romney is slightly more likely to win re-election. Given that I don't feel Obama has succeeded in anything he has attempted, that is a little disappointing to me.

As for Fisher's analysis, that assumes that Republican and Democrat Presidents are fungible. There has been no President anything like Obama. So, I'm actually expecting Romney to win by a large margin.

But if we get close to the election, if it does appear that Obama will win, I expect the market to tank. The problem for investors, will be to find any possible place to hide. I don't see such a place. Almost all Western democracies have adopted socialist policies, and their economies are in decline. A possible approach is to invest in developing nations that are still more heavily into developing capitalism. And that's probably where I'll be putting my money, if I decide that I'm in error about the election.

Of course, I think you are a Chicagoean (I'm actually a native of Chicago, but moved away as an infant) and you may well hold a different viewpoint, and that's okay with me. I appreciate your view and opinion.

[PraveenP]

The odds are very likely that Obama will win re-election, so I think that is probably already priced in the market.

If Romney wins, then the market might get an initial bump, but will probably fade.

I learned from reading Ken Fisher that the markets are contrarian when it comes to presidential elections. I wrote about it on my blog:
http://simple-trading-system.blogspot.com/2008/08/how-will-presidential-election-affect.html

[weiweiwei]

Never Mind

A drunk phoned police to report that thieves had been in his car. "They've stolen the dashboard, the steering wheel, even the brake pedal!" he cried out.
However, before the police investigation could start, the phone rang a second time "Never mind," the drunk said with a hiccup, "I got in the back seat by mistake."
More jokes, pls visited hilarious short jokes

[Toofuzzy]

>>>> it's hard to see a catalyst that could maintain the market's valuations.<<<


Ummmmmm Money printing but it won't help the economy! We needed a massive infrastructure repair project but congress saw its sole job as getting Oboma out of office.

I would much rather have Bloomberg as president than Romney but it obviously won't happen.

toofuzzy

[aim hier]

Read an analysis today of sectors, that concluded that the market expects Obama to win re-election. I don't agree. The market is strong because there may be a new White House occupant in January. If there isn't, it's hard to see a catalyst that could maintain the market's valuations. Certainly, the Fed has done all it could do to keep interest rates at a zero level, so anyone who wants to make more than 2 percent, almost has to consider the stock market.

I see no sign that Obama has changed his views about economics. The next four years may well be radically different than any other 4 year period in our history. This might well be a great time to be in cash, but I'm not, at the moment. Tomorrow, I may try to raise a little more cash.

If Romney wins the election, or better times ahead? Not necessarily. The federal government has expanded in size and scope, during all recent presidencies, Republican or Democrat. But, at least, Romney has some familiarity with the private sector. The economy should grow, but it's long term health is dependent upon what corrective measures are taken.

[aim hier]

Hi all,

Been gone from I-Hub for a while, and have just read some old messages. I'm doing well, and am enjoying the recent runup of stock prices.

I changed my phone and internet providers, and some of you have been unable to contact me, and I'm not a premium member of I*Hub, so I can't contact you. If you will message me with your email address, I'll get back in touch with you, and let you know what I'm doing these days.

Next week, if market continues to advance, I will probably increase my cash balances, which is a little less than I'd like with this kind of rally.

We are in an election year, which is normally bullish. This election though is a potential watershed, the economy is not showing much signs of life. I won't be surprised to see the market tank in the next few weeks.

[aim hier]

Praveen,

I am heavily invested in natural resources. They're getting clobbered in the markets now, but I feel that they will be great investments. Not only because of systemic inflation, but the fact that supply is unlikely to keep pace with demand once globall growth resumes.

Unless the world enters a great depression, I expect to do well.

[Toofuzzy]

Hi Praveen

I agree with everything you wrote and in fact own Southern Copper. Though if interest rates / inflation increases fast enough then all bets are off and stocks will sink.

I though SCCO having a major shareholder was a good thing until they tried to merge an overvalued subsidy in to SCCO and undervalue SCCO and dilute the value of other owners.

Toofuzzy

[Toofuzzy]

Hi Praveen

I agree with everything you wrote and in fact own Southern Copper. Though if interest rates / inflation increases fast enough then all bets are off and stocks will sink.

I though SCCO having a major shareholder was a good thing until they tried to merge an overvalued subsidy in to SCCO and undervalue SCCO and dilute the value of other owners.

Toofuzzy

[PraveenP]

If interest rates go up, all the people currently piling into treasuries and bonds will get hammered. Bonds will lose value as interest rates rise, because the existing bonds will return less than newer bonds.

Stocks keep up with inflation, so funds will start to increase their allocation of equities.

I think it might be a good idea to start looking for bargains among the companies whose products do well in the early stages of inflationary periods - though I think we have time - at least a year or two. These include agriculture, copper, oil, and uranium.

Some possible examples include Archer Daniels Midland (agriculture), Southern Copper (copper), Cameco (uranium), Titanium Metals (titanium), and Viterra (agriculture). Southern Copper is based in Peru, but the other companies are headquartered in the U.S. and Canada. They are easily available from any broker.

These companies all have the added benefit that, besides protecting you against inflation, they provide excellent hedges against a weaker dollar. This is because they all have substantial foreign product sales and own undeveloped land outside of the United States.

[Toofuzzy]

Hi Aim Hier

I suppose what can go wrong is that interest rates can only go up. As they go up stocks will be worth less. If the economy is still slow earnings may decrease as borrowing costs go up.

Just one option not a prediction.

Toofuzzy

[aim hier]

For a contrarian, lots of good signs. The average investor is fleeing equities. Charts do look bearish, a lot of economic data is discouraging.

On the other hand, many U.S. corporations deleveraged during the recession, haven't reloaded, are profitable at current GDP levels. Interest rates are at zero. Looking out 3 years, can Treasuries possibly outperform equities? I wouldn't think so, but I'm not the brightest bulb in the package, maybe I'm missing something.

Financially strong, successful companies would appear a no-brainer compared to the anemic yields of Treasury bonds. We could see some modest earnings growth, even without much growth in the economy. That's the way I'm playing it. Has always worked in the past, maybe this is the one time, the world is truly ending.

[aim hier]

Praveen,

I'm upset at myself for not being more disciplined, a chronic failing. Actually, my methodology allows me to make adjustments during market declines, that raise cash and reduce my overall risks. I put on too many positions in too short a period of time. I have raised some cash, however. How well I fare, depends upon how quickly the market rebounds. I am endeavoring to become more disciplined. At my age, I should have fewer positions outstanding.

[PraveenP]

Hi Aim Hier,

I think most of our portfolios peaked a few months ago.

Don't fret too much about buying too soon - making perfect investment decisions is hard - especially under the volatile conditions we are now experiencing. All we can try to do is learn and do better next time.

But since we buy low, I'm sure we will take advantage of this down cycle and our portfolios will hit new peaks as the economy starts to recover.

[aim hier]

It is disturbing to note the growing economic illeteracy of Americans. no wonder, we are well on our way to becoming a European styled socialist state, though most Americans would insist that they aren't socialists.

But they seem to think the government should play a greater and greater role in promoting 'fairness', and that businesses can't be trusted and are the source of all that is evil.

But today, I just want to treat one of the 'urban myths', that I hear over and over. America doesn't make anything anymore, greedy corporations have transferred all of the manufacturing jobs overseas. This is universally believed. In fact, the U.S. manufacturing output is as great as ever, we are one of the largest exporters of manufactured goods in the world. But we are manufacturing far more efficiently, with much less labor. For heavily unionized rust belt communities, jobs did go overseas to countries that could operate plants more efficiently.

But the economy is also far more diverse today, software is a major player, that barely existed thirty years ago. Other industries have seen labor forces shrink from improved productivity. IN colonial times, agriculture was the principal occupation, today, it is a very small number of people producing gargantuan crops.

Many decry the 'unfairness' of international trade. A concept, 'comparative advantage' is found in every economics text which explains the benefits, is nowhere to be found in the popular media accounts. We are all enjoying a higher standard of living today, due to the results of international trade. Are there some things that could be done better in our various trade agreements? Of course, but that is true of everything our governments are involved with.

To paraphrase Reagan, business isn't the problem, government is. If the government really wanted to create jobs, it would reduce taxes and overly restrictive regulations on businesses. The alternative is to create make-work government jobs that will actually impair our quality of life. Does anyone really think that a government agency is going to produce I-Pad types of innovations

[aim hier]

The last few weeks have been humbling. My peak portfolio value was at the end of April. The ensuing selloff depleted my portfolio somewhat, but then it came back, and I was sitting pretty with some large cash balances. The last 3 weeks have been brutal. I invested the cash too soon. Will I ever learn. The last 3 days have helped, but a long way to go, to get back to the end of April numbers.

[aim hier]

There are probably not as many contrarians as there are investors who think they are contrarians.

Take stock selection for instance. How does the average investor select stocks? Chances are high, that they are selecting stocks that they have read about in the media, or saw a money manager touting them on CNBC, or read an analyst report in Barrons or the like.

These are all examples of sheepish behavior, not contrarianism. Call me cynical, but many media stories I feel are intended to misdirect you. IN any event, by the time you read it, most of the investing world already knew that information and it's in the price. The same could be said of an analyst's report. Indeed, I like buying stocks after they've been downgraded (provided other data is supportive) or selling after they've been upgraded. As for what money managers are suggesting, let me say I'm especially sceptical. Are they really telling me what they are currently accumulating? If so, it would seem a disservice to their clients. More likely, they are telling me of stocks they have a large position in, and would like to trim their holdings. If you'll buy some, you'll help them out. They do believe in these stocks, just not at current price levels, they'd be buyers again at lower levels.

The best bargains may be quiet stocks that aren't attracting any attention. Another may be the stocks that everyone hates, they may well be oversold. If they aren't terminally ill, these stocks can be great investments, but most investors will be scared away.

[aim hier]

TF,

I take what the market gives me. I will do a covered call, buy a call, sell a put, or buy/write a spread, whatever appears to offer the best risk/reward opportunity. I own a couple ETFs, I have had some puts where I chose to have them exercised. If I were to name a favorite strategy, it is to sell puts, but, I am involved in buying/selling both puts and calls.

I liked Lichello's books, but he was a better writer than an investor. I prefer an approach more like Mebane Foster's 'The Ivy Portfolio' which had some threads over on the AIM board. The biggest problems with AIM, are that you wind up investing all of your monies in stocks with large drawdowns, while you sell too many shares of the best performing stocks. Sometimes that works out, often it's the reverse of what you should do.

Still, if I really believe in a company, I will buy more on a market pullback. Even a great company's stock can become overpriced, in which case I will probably sell out completely, rather than just a little. But I do invest somewhat like AIM. However, I will put on a position, even if the stock has climbed quite a bit, if i think the fundamentals support a much higher valuation. I trade more frequently than a typical AIMer.

[Toofuzzy]

Hi Aim HJier

Are you mostly selling Puts and Calls or do you mainly buy them?

Do you end up in a position because a PUT is exercised.

I mostly AIM ETF"s so they are unlikely to go to zero but I have had that happen with two individual stocks.

Toofuzzy

[aim hier]

Hey TF,

I don't AIM. As I have frequently posted, I don't think AIM is a very good system, though it certainly may be better than no plan at all. I've corresponded with several folks who blew up using AIM on very volatile stocks, that sucked up all their cash reserves but continued to decline.

My system is AIMlike, in that I'm not opposed to adding to positions when prices decline, or taking some monies off of the table when prices go higher.

I don't actually own many stocks, most of my positions are established using options. My downside risk is partially hedged, so I tend to not have as large a drawdown as a stock investor. Additionally, I currently have a large cash position, but am not adverse to putting it to work, when I think I have attractive opportunities. Being retired, I am somewhat more concerned with the return of my money, than with the return on my money (per Will Rogers). That said, I have done very well the past couple of years, and am the most comfortable financially, that I have been for many years.

Hope you are faring likewise.

[Toofuzzy]

Hi aim hier

1) As long as you keep using AIM you will be OK

2) I have the fantasy of buying enough stock in selective industries that their dividends cover my expenses in each company.

So

my local ultility
Honda
an oil company
Travelers (auto insurance)
GHI (health)
Labcorp (blood work)
Verizon
Shoprite
Hain
Heinz
Cample Soup

???? What do I need to buy to pay my school and county taxes

very
Toofuzzy

[Toofuzzy]

[aim hier]

Nothing like losses to focus the mind. May was a disappointment, took a small loss after a long string of monthly gains. June has been worse, though the last 3 days has brought me mostly back.

Could the market be more manic/depressive than the past several weeks. We were facing a worldwide depression, now the economy appears to be growing, even if at an anemic pace.

I'm open to whatever is coming. I'm not smart enough or with adequate resources to know which of the experts is correct, if any of them are. I expect that the developed world will continue to grow, albeit, at a much slower rate than the historic norm. This is simply a result of pretty much all of the Western nations continued move to a more socialist political economy. Instead of vibrant entrepreneurial economies, we will see economies, largely controlled by large central governments, large corporations, and large labor unions. But much of the developing nations, will grow rapidly.

A major theme of my portfolio continues to be natural resources. Whether we reenter a recession or not, I expect the future will create demand/supply inbalances in many resources. Whether we have a reduction in demand for a quarter, two, three or four, it's crazy to discount resources in the ground, to the extent that we have. So, I'll continue to add to my holdings. But I maintain a sizeable cash position, should the market bears regain their command, and will hedge existing positions.

Living in a retirement community, I hear many people brag about how they have their money safe, and won't risk any in the stock market. They may feel safe, but they may be at great risk. Inflation isn't licked, in my opinion, and today's low rates make fixed income investing a nonstarter. I still believe you need equity exposure, whether retired or not, at least in my humble opinion. Certainly the last couple of years have been great for me, and I'm delighted that I didn't seek the safety of bank CDs.

[Toofuzzy]

Hi Aimhier

I am putting in some GTC orders in for IBB and IYC per AIM's directions.

Toofuzzy

[Toofuzzy]

Hi Aimhier

I am putting in some GTC orders in for IBB and IYC per AIM's directions.

Toofuzzy

[aim hier]

We've had a nice run of almost daily gains. My portfolio values have swollen. I'm feeling like a genius. Past experience has taught me that this is a dangerous state of mind. I've raised some cash, and would look to raise more in the coming days. It's not that I'm predicting a stockmarket crash, it's that I think I see complacency in the marketplace, making it vulnerable to a crash if any of many possible catalysts materialize.

The biggest factor is my own mindset. Raising cash, gives me a chance to sit back, and view the landscape, take my time to discover my next investment opportunity. If the market continues to rise, I will profit, not just as much as if I had been fully invested. But should it correct even modestly, I'll be in good position to redeploy some capital.

[Toofuzzy]

[Toofuzzy]

Hi Aim Hier

I don't know about over the road trucks but it would make a whole lot of sense for short distance delivery vehicles, city taxis and busses to use propane. Maybe either in hybred vehicles with regenertive braking or fuel cells.

Toofuzzy

[aim hier]

TF,

Yes, both producers and users of natural resources, frequently hedge the prices using futures contracts and the like.

On the transportation side, I don't know why anyone operating big rigs doesn't convert to natural gas as a fuel, the savings are substantial. Some trucks are commercially available that can run on both diesel or natural gas.

If the environmentalists don't shut down nat gas drilling, it's got a bright future, whatever happens on the oil front. Technology is developing so fast, it's hard to tell what's coming down the pike next.

[Toofuzzy]

Hi Aim Hier

Many of the new power plants built in this country since the demise of nuclear power (in the last 20 years) have been gas plants and many older coal plants can also burn gas depending on the price of coal vs gas. Gas plants are faster to build and are good "peaking" generators and are very modular.

A few years ago there was a worry about a shortage of gas because all new power plants being built were gas plants.

If I were either a producer of gas or power, I would enter in to a long term contract for gas. I would develop a field AFTER I had a contract. As a power producer I would garentee myself a steady supply at a set price that wouldn't have the volatility that gas usually has.

Toofuzzy

[Toofuzzy]

Hi Aim Hier

Many of the new power plants built in this country since the demise of nuclear power (in the last 20 years) have been gas plants and many older coal plants can also burn gas depending on the price of coal vs gas. Gas plants are faster to build and are good "peaking" generators and are very modular.

A few years ago there was a worry about a shortage of gas because all new power plants being built were gas plants.

If I were either a producer of gas or power, I would enter in to a long term contract for gas. I would develop a field AFTER I had a contract. As a power producer I would garentee myself a steady supply at a set price that wouldn't have the volatility that gas usually has.

Toofuzzy

[aim hier]

Natural Gas continues to be unloved. Oil prices continue to spike, while natural gas gets cheaper and cheaper. The U.S. is totally dependent upon hostile, unreliable foreign sources of oil, while it has huge supplies of natural gas, that the government just ignores.

Natural gas is still a sizeable part of my portfolio, I'll continue to build my investment in the sector, it may take a few more years, but, ultimately, we have no choice but to take greater advantage of our bounteous supply of natural gas.

[aim hier]

Ugh,

Gotta stop watching Television. Saw some liberal tonight explaining why the fact that so manypeople are unemployed, is that businesses are sitting on cash and not hiring people. No consideration was given to the fact that people generally don't start businesses just to create employment. Profits are the desired goal, and hiring necessary labor is just a means to an end. If government creates barriers to entrepreneurial success, one should not be surprised that employment stagnates.

Of course, the government can always hire, and it has been doing so. Anyone who thinks that that is the answer to prosperity, has been ignoring over a century of history.

But lots of Americans seem to buy into the liberal theology. Where are they learning these ideas, that are totally unsupported by any objective analysis?

[aim hier]

TF,

Firstly, most of my positions involve being short call or put options, which are a partial hedge to a downturn. So, in that respect, my portfolio is a little less risky than an all-stock portfolio.

My 'Reserves' correspond to AIM's cash reserves, but they contain no cash or bonds. Because they cover many asset classes, they will not all go down together, or at least down to the same degree. The reserves also, in effect, have a stop loss, so that if we face a severe downturn, I will have a fair amount of cash to invest in cheap stocks at the market bottom.

Since, my overall thesis, is that we will see a continuing strengthening of the economy over time, higher interest rates, and further inflation in commodities, that's the way I'm investing. I'd rather put my money in stocks offereing potential for high returns, than to put them in bonds, which will be net losers over time.

I think the odds are with me, but as always, nothing is guaranteed, I monitor the markets every week, and am always tweaking the portfolio. My systems are only about 70% mechanical, and abut 30% discretionary.

[Toofuzzy]

Hi Aim hier

I did 17 returns in 11 hours today.

How do you have money to buy when your equities go down? Cash?

I found that in the last two downdrafts (2000 - 2003 and 2006 -2008) that everything that I owned went down together and that it would have been prudent to have owned some more stable assets like bonds or have held more cash.

Toofuzzy

[aim hier]

TF,

Are you busy with tax season starting?

I don't even hold short term bonds, though I agree that I'd be more likely to hold them than longer term bonds at the moment. There are closed end funds that invest in convertibles, but they trade more like equities than bonds.

I'm looking to maximize my portfolio gains, even though I'm retired. Over long time periods (hopefully, they are in my future), equities tend to way outperform bonds. I have several means to address a major correction. I'm diversified over a number of asset classes, just not any fixed income assets. I have sometimes invested in convertibles, and floating rate funds (loan participations).

the last two years have been great for me, I am certainly following the markets closely, and will become more defensive when conditions warrant. Most of my income comes from the sale of options, which also serve as partial hedges.

[Toofuzzy]

Hi aim hier

I agree for the most part but you want at least some short term fixed income to dampen the drop in stocks when interest rates increase.


Toofuzzy

[aim hier]

Why is anyone holding bonds? My feeling is that bonds are a clear loser. The seeds of future inflation have been sown for some time. When those seeds sprout and lead to the harvesting of an inflationary crop, is what is unknown. This is not a contrarian view, almost all experts acknowledge that bond yields must rise sometime in the future, and when they do, bond values must correct.

Yet almost all financial advisers recommend that people allocate a percentage of their portfolio to bonds, to dampen volatility. Especially for us older, retired people.

I hold no bonds, and don't plan to, anytime in the near future. There are other avenues to follow- hold a number of different asset classes, especially those which may be expected to benefit from inflation, whether mild or not.

I expect at least a mild correction from equities, they've run so strong, and there is a lot of complacency manifested in the market. But earnings are rising. Companies are so lean, that any improvement in the economy is going to the bottom line. People who are awaiting better economic news, have missed one hell of a bull market. By time, everything is lining up favorably, and the unemployment rate has fallen to below normal levels, it will be time for a rip roaring bear market.