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>>I have not held the rudder firmly. belief is important<<
Brianlessone, Good point. Listen, It's been tough for me. I'm not use to holding stocks this long myself. Holding a bunch of these less than $5 stocks has really hurt my margin buying power. My thiniking is this.
Several months ago I reserched this group fairly thoroughly. These issues have debt but that's the nature of the business. The Enron deal put a real pall over the whole industry and the industry was way oversold IMO. Many of these issues were making big moves and i was trying to trade them but only winning as much as I was losing. Since I strongly beliefed in the longer term I decided to take some and buy and hold. When RRI got down near a buck I thought this is ridiculus and loaded up. Since then I have asdded several other at there lows. Every trading day I'm tempted to take profits but they keep delivering and I keep holding. That's why my targets are based more on book value. All I'm asking for is one times book. Try to find industry wide values like that in any other sector.
On a smaller scale I'm doing the same with gold now. Trading in and out was costing me. I firmly believe in the fundies so I'm going to ride these few that i own out and add along the way.
On the dark side I'm looking at homebuilders short. Still trading in and out there but I'm nearing a point where I'll jump on the saddle and try not to get bucked off. Conviction is impaortant.
BTW, added GM short today for position play based on the pension news.
Joe
DJ GM/Pension -2: Retirement Plan Is Seriously Underfunded
By Arden Dale Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--General Motors Corp. (GM) is poised to announce later this week that it will lower its expected rate of return on its multi-billion dollar pension fund, a move that could reduce the automaker's earnings significantly.
GM plans to discuss its pension fund with analysts in a conference call on Thursday. The company has reported this year that its pension plans are seriously underfunded, possibly by as much as $23 billion.
"I can't provide specific figures today, but it is likely that General Motors on Thursday will announce it's reducing its asset assumption rate for 2003," said spokesman Gerry Dubrowski.
(GM rate is currently 10%)
Paula, My upside target is around one times book value which I think is around 15. This is a longer term position play for me as I believe it is greatly undervalued. I do have some trading shares that I'm going to let run with about a 15% mental trailing stop.
Joe
*DJ Tyco Says Option Exercise Raises Debt Offer To $4.5B
Whoa, strong demand for that paper.
Joe
The beaten down power providers are doing very well today. ILA up 18% also. MIR up 15%. Even the MIR preferred is up over 5%. This group has really been working well for me. Better than GOLD! <VBG>
Joe
PublicHeel- About the converts. I don't recall your question exactly but I may add this. What you do is by the convertibles. Then you short the stock. You can put the converts to TYC in year 5. They have to pay you in cash or stock. If the stock is cheaper you get more shares per dollar. You cover your short with cheaper shares and sell the remainding shares. Of course that works better if the stock goes down. If it goes up you locked in at today's price and collect the 3+% coupon and have stop loss protection on the other end by the convertible price. I looking forward to seeing the details of the convertible.
Joe
From optionInvestor: interesting viewpoint.
>>Falling asleep last night, I was thinking that we've seen the US Dollar Index get hammered during the past year. Forex is the largest of all capital markets- over 1 trillion dollars per day of volume. We've seen the fed's ownership of US securities increase steadily all year since 9/11/01, with a large spike in October coinciding with the rally in equities and the selloff in the USD. If US equities are up but the US dollar is down, that tells me that it's very likely that the US or the fed has been buying equities from foreigners who are cashing out of US denominated assets. If so, that is not mid- to long-term bullish for US stocks. Unless, of course, I have it wrong, but that's how it makes sense to me so far.<<
>>>I remember seeing my one and only major game back in 56 and Ted Williams hitting a home run.<<
Hey, guys. The market is open. Please take this stuff to the politics board. <VBG>
DYn- Flying again this morning, up 16%. MIR looking good too , up 9%. CPN up 5%. CPN got a new California contract yesterday.
Joe
>>Why do we have a tax deduction for Charity, or interest on mortgages, or depreciation.<<<
Charity- gives us a choice of where we want our tax dollars to be spent versus the government picking all the charities.
Mortgages- For our economy. Homebuilding drives our economy like nothing else. WE all share an interest in having a vibrant economy.
Depreciation- Just keeps you from taking the whole write-off all at once.
MVL- [MVL] MARVEL UPS 2002 REV ESTIMATE TO AT LEAST $280M
Bearmove, Nice pick on MVL.
Joe
>>>The estate tax is a gentle way of reminding people that you can't take it with you, and you shouldn't even try.<<<
I guess I missed the government class where it tells of the Constitution having the authority to use the tax code for social engineering.
Joe
<>>>Kids & their spouses have set their own careers so all we can do is add a few additional smiles to their lives & be thankful we are able.<<<
Amen to that!
Foreclosures- Interesting that the press release from the Mortgage bankers only talked about percentages. I think we would all be shocked at the raw numbers as the number of loans have increased greatly so although the percentages may remain the same (remember many of these loans are new) the raw numbers are more than likely much larger this year than last.
Joe
>>With the new dividend tax cut, an S-corp can pay almost all its profits in dividends and avoid tax altogether.<<
Give me a break. Now you are grasping for straws. IN a S-corp "all" profits are passed through to the shareholders. One may think of it has a dividend but technically it's not as if you keep those profits in the corp they have already been allocated and taxed and are part of your estate whether a dividend has been declared or not.
Joe
Syl, I don't think you can compare a public company like WMT to a smaller private company. In every situation the heirs will "do just fine". That does not mean the tax law is fair because the Waltons are rich but no longer in control of the company their father founded and grew. I'm talking about property that is a family asset and the heirs wish to keep it in the family control but are forced to sell because the death of the person who wants to pass it on.
Joe
Captain Jack, Thanks for the advice. My personal situation is pretty much taken care of. I plan on spending all my money before I die. <VBG> My main point is that the I feel that the inheritance tax is unjust and one should not have to employ tax attorneys to find ways to get around tax code. I have no problem paying taxes but they must be fair. I think if one thinks they are fair they must ask themselves why a certain amount is exempted from taxation. If it is fair to not tax someone that has a net worth of $900,000 why is it fair to tax someone with a net worth over a $1 mil. (I don't know what the current limits are.)
I know of a couple families here in Georgia that sold their family business to HD for tax reasons. Sure this family is wealthy now but maybe that son would have liked to have continued running the family business that his mother and father built from scratch. Maybe he would have liked to pass that business down to his son. There are some things that money can't buy. I don't see why that father could not pass his business down to his son without the government stepping in at the point of a gun and forcing them to sell to raise some revenues.
(Point of a gun? If you refuse to pay your taxes that is the ultimate result as the government confiscates your property.)
TYC- Did some quick, back of the napkin calculations on TYC today. After the debt repayments in Feb, based on their last 10K, theie shareholder equity will go down to $21 bil from $24.8 bil. Of this goodwill is $26.6 bil and other intangibles are $6.6 bil. This gives them a tangiable net worth of a negative -$7.8 bil.
Why these folks want to buy convertibles paying 3.5% is beyond me. Probably why it's a private placement.
Joe
>>Hey Joe, you like RRI at all?<<
LOL! Next think you know I'll have a picture of the CEO on my signature line. <VBG>
Joe
Syl, My point is why should the tax laws be distructive to a family business. There is a family business here in town that has been in the family for nearly 50 years. It's now worth close to $100 mil...and yes, these folks are now rich. However, why should they not be able to continue the family business as it is today? Under current tax laws they will have to sell the business at the point of a gun to pay the taxes after the old man dies.
Joe
>>>Re: Inheritance tax - unfortunately you may have already paid taxes on that income but many people have not. Appreciation of assets doesn't generate taxes unless they are sold.<<<
I wouldn't have a problem if the assets were passed on at the original cost basis. I just don't see why my hiers would have to sell our family business to pay the tax man when I pass away. If they want to sell later let them pay the capital gains then.
Joe
DYN- Show ya how good a deal RRI is, DYN is now selling for 17% times book or more. RRI is selling for 15%. RRI has a larger percentage of it's assets in tangibles than DYN.
Joe
Marv, What I don't understand about the dividend argument is why there is any debate on it at all. Taxes on dividends is just plain wrong. It's double taxation and shouldn't be there in the first place regardless if it will help the economy or not. It's just like the inheritance tax. I have a small business and pay my taxes. Why should my heirs be taxed again when I pass it on to them? The dividend tax should be eliminated because it is just bad law.
JMO
Joe
*DJ Lazard Cuts Verizon To Sell From Hold >VZ
DJ Lazard Cuts SBC Commun To Sell From Hold >SBC
*DJ Lazard Cuts BellSouth To Sell From Hold >BLS
DJ Federal Crt Dismisses Mkt Manipulation Suit Vs 8 Elec Cos
LOS ANGELES (Dow Jones)--The U.S. District Court of Southern California Monday dismissed a lawsuit against nine electricity suppliers that sought monetary damages for excess power prices caused by alleged market manipulation, according to a copy of court documents seen by Dow Jones Newswires.
The lawsuit was filed last July by the Snohomish County Public Utility District in Washington State against Reliant Resources, Inc. (RRI), PG&E Corp (PCG) unit PG&E Energy Trading, Duke Energy Corp (DUK), Williams Companies (WMB), Xcel Energy, Inc (XEL), Dynegy Inc (DYN), Sempra (SRE), Mirant Corp (MIR) and BC Hydro unit Powerex.
Snohomish accused the power suppliers of conspiring to manipulate power markets by fixing prices and withholding electricity supply, thus driving up electricity prices.
bethere, I'm not playing it only because I got too many of the others and they are still subject to a bad headline here and there. If I had to rank them my price appreciation potential they would be RRI first, then MIR, CPN, ILA. ILA DYN, WMB would be toss-ups for me or the more risky.
Joe
*DJ Cisco CEO Still Sees Conservative 2003 IT Budgets >CSCO
KSS- Putting in a new intermediate term low. Short.
TYC- Looks like the lipstick is being applied as I type. <VBG>
Joe
>>YHOO is behaving strong.Do they know something?<<
Who knows why these dot.coms move they way they do. That's why I don't trade them. I don't follow YHOO, AMZN gives me enough headaches. LOL!
Joe
>>Do you play all of the utils??<<<
The beaten down utilities and gold are my main theme in position trades on longs. I mainly short about anything else right now. I pretty much just daytrade QQQ. I also do cobered call plays with some of the utilities for additional income.
Joe
DYN-up 17%. Announcement relieve most bk fears IMO.
Dynegy Provides Liquidity Update, Announces 2003 Guidance; Company Expects Strong Operating Cash Flow in 2003
HOUSTON, Jan 7, 2003 (BUSINESS WIRE) -- Dynegy Inc. (NYSE:DYN) today announced its liquidity position as of Dec. 31, 2002 and 2003 guidance for earnings per share, earnings before interest and taxes and operating cash flow for its generation, natural gas liquids and regulated energy delivery segments:
-- As of Dec. 31, Dynegy's liquidity was $1.47 billion. This consisted of $915 million in cash, including $137 million in escrow relating to the Illinois Power bond offering, $1.4 billion in bank lines and $258 million of remaining highly liquid inventories, less $228 million of draws against bank lines and $878 million in letters of credit posted for collateral relating principally to third-party aspects of the company's marketing and trading business; -- In addition to maintaining a $1.47 billion liquidity position during the fourth quarter, the company reduced its bank exposure and debt by approximately $850 million and will re-pay an additional $100 million later this month; -- Earnings per share is estimated to be $0.08 to $0.15 in 2003; -- Earnings before interest and taxes is estimated to be $465 to $500 million in 2003; and -- Operating cash flow, including working capital changes, is estimated to be $1.2 to $1.3 billion in 2003. This consists of $635 to $665 million from the three operating segments and $595 to $600 million from risk management roll-off and the return of cash collateral, less corporate-level general and administrative, interest and other cash expenses.
TYC- Underwriters are going to have to find a way to pump this one up to sell the convertible. Looking at today's action so far looks to me that they have a tough job ahead of them. Watch what happens after the convertible is priced and sold.
Joe
EP- Closed up over it's 50 and 20ema on rising volume. One of the highest dividend yields in the sp500. Could be seeing resolution in the FERC case within a month or so. Selling for less than 50% of book value witha PE of less than 7.
BZH new home orders down 1.2% in December from a year ago. Looking at numbers for the quarter it appears that new orders dropped off quickly. With RYL warning for 1Q, KBH saying they will no longer report monthly new orders and now BZH showing a slowdown, we appear to be seeing a few cracks in this industry. Also, new purchase mortgage apps are trending lower although interest rates are at record lows.
For the Month Ended December 31,
2002 2001 Change
Southeast 282 307 -8.1%
West 227 299 -24.1%
Central 53 89 -40.4%
Mid-Atlantic 160 128 25.0%
Midwest 91 0 n/a
Total 813 823 -1.2%
New Orders (Units For the Quarter Ended December 31,
2002 2001 Change %
Southeast 1,015 953 6.5%
West 939 973 -3.5%
Central 232 232 0.0%
Mid-Atlantic 452 352 28.4%
Midwest 503 0 n/a
Total 3,141 2,510 25.1%
Institutional in blue, individual in red.
>>>You think there is something fishy about the tick numbers (and a number of other similar anomalies in this market) but the simplest explanation is often the best - market manipulation by the Fed/PPT, entering in on all potential selloffs. That gives the positive extremes and prohibits the negative extremes from occurring. It has been very obvious the past few sessions.<<<
Mlsoft, I agree with you there. I use the tick now more to tell me when to step aside short and possibly go long intraday. When I see one surge in the one-minute tick chart after another at just the right times I conclude that the PPT is there to support and attempting to drive prices up. I think it's odd that we have so many days now that the market tends to go up with little pullback and then straight down with little with little upside blips. I trade the QQQ's a good bit. Use to be that on any given day I would have several trades both long and short. Now, once you take profits it seems to be harder for me to make or find a new entry in the opposite direction as the intraday trends seem to go just one direction.
BTW, I love the way that SYL has been playing the QQQ's. He got more staying power and conviction than I do. That's what appears to be needed here as I find that is sworrking better on my position trades.
Joe
>>>The reader notes that the S&P dividend yield is currently 1.75%. Many
analysts think the yield for the S&P could be boosted to 3% or even 4% . Not
so. Currently S&P companies pay out 53% of their earnings in dividends. In
1981, at which time the S&P yielded 6%, its companies paid out 45% of their
earnings in the form of dividends. But currently, this can't happen. There
just aren't enough earnings. If the current S&P corporations boosted their
dividends to just 3.5%, their payout rate would be 106%.
There are only two other ways the S&P companies could increase dividend
yields to 3.5%. They would have to double their earnings or decrease their
current share prices by 50%, taking the S&P from about 900 to 450. Thus,
it's doubtful whether we'll see any real increase in S&P dividends over the
foreseeable future. By the way, even if the yield on the S&P did rise to
3.5%, that figure, 3.5%, used to be characteristic of a TOP in the S&P, not
a bear market bottom!<<<