This time of year, newspapers and magazines are filled with predictions and stock recommendations and trading ideas. I have repeatedly explained why these are terrible ideas and you should ignore them.
Sometimes, you just have to let the performance speak for itself. And for that, I present Fortune: 10 Stocks To Last The Decade A few major trends will likely shape the next ten years. Here’s a buy-and-forget portfolio to capitalize on them.
August 14, 2000
1. Nokia (NOK: $54)
2. Nortel Networks (NT: $77)
3. Enron (ENE: $73)
4. Oracle (ORCL: $74)
5. Broadcom (BRCM: $237)
6. Viacom (VIA: $69)
7. Univision (UVN: $113)
8. Charles Schwab (SCH: $36)
9. Morgan Stanley Dean Witter (MWD: $89)
10. Genentech (DNA: $150)
Closing prices December 19, 2012:
1. Nokia (NOK: $4.22)
2. Nortel Networks ($0)
3. Enron ($0)
4. Oracle (ORCL: $34.22)
5. Broadcom (BRCM: $33.28)
6. Viacom (VIA: $54.17)
7. Univision ($? )
8. Charles Schwab (SCH: $14.61)
9. Morgan Stanley Dean Witter (MWD: $14.20)
10. Genentech (Takeover at $95 share)
The portfolio managed to lose 74.31%, with 3 bankruptcies, one bailout, and not a single winner in the bunch. Even the Roche Holdings takeover of Genentech was for 37% below the suggested purchase price. The lesson is that valuation matters. (Update: Forgot about Univision takeover — i’ll pull the TO price and recalculate when I get into the office)
Had you merely bought the S&P500 index via the Spyders, you would have seen a gain of 23.43%.
Have fun forecasting!
JUST LETTING YOU KNOW
It was somewhat of a quiet day. Not a lot going on. We drifted lower. We were down about 70. Then we were only down about 35 or 40. And then they got the little smack-a-doodle into the close.
And, of course, I can tell you what happened into the close. At 3:30, let’s just say we lost 61 points in the Dow in the last 20 minutes. So we were down 99 points at 13,251.
A lot of red
Oils were strong early and then pulled back and ended up red.
27 Dow stocks were down. The culprits? American Express, Home Depot and Exxon.
Financials were strong early with a lot of red at the end.
Gold and silver were down again.
Just overall, a blah day.
Maybe one would say – due…I don’t know.
Volume was not that heavy.
The major indices:
- The S&P remains above the 50-day moving average. Remember, on Monday, we came off that 50-day moving average.
- The same goes the Dow, which looks somewhat the same as the S&P.
- The Nasdaq and the Nasdaq-100 came through the 50-day and are maybe starting to pullback a little bit.
- Today was, overall, not a Distribution day in the market.
- The NYSE is back up near the old highs because of its make-up. Remember when the NYSE was lagging as badly as badly can be? That’s because a big part of those areas that were lagging were the foreign market type of commodities. But they’ve had a bid recently.
- Transports continue to go up the right side of a base, but still have not broken out yet. Definitive improvement there.
The market itself:
- Wide swinging
- News driven
The last drop was about 9% – 10%. This rally up, as of this second is about 6% – 7%. We’re talking major averages here. The moves have been sudden and very news-driven.
Today, the Fiscal Cliff this and the Fiscal Cliff that. And now they’re saying they’re not even close.
The past 10 months have been wide-swinging. We rallied up into mid-March and since then, no progress was made whatsoever.
Just a drop and a rally, a drop and a rally, and a drop and a rally…
We’ve had a lot of growth stocks with big gigantic tops. Not much left growthwise.
We’ve had strength recently in the Financials as they’ve come on off of the “We’re going to print $85 billion a month now.”
I’m just letting you know what I’m preparing for. First off, Gold is down to the 200-day moving average now. With a break below there, we’ll probably see another 5-10% drop – not the end of the world.
The thought process still remains. It was in August 2011 that Gold topped out. We’re now going on about 16 months. The bear market in the late-1970s was longer and deeper. I don’t think it’s going to be as deep this time because of all the money that’s being printed.
If we get a climatic move, three things have to happen:
- Gold will get back above the 50-day moving average and stay there.
- The 174 on the GLD gets taken out.
- Then after that, the 186 from September 2011 gets taken out.
And then we’re off to the races.
Stay in gear with that.
There is a potential, but it is an “If.” We don’t know if history will repeat itself. We just know that most secular bull markets end in climactic moves, where if you catch them – WOW!
If it continues to go down deep and goes longer, the disinterest in Gold will get louder and higher…and that’s great. The more people that get off the track, the better when it moves, because they’re the ones who’ll be buying into that climatic move.
So I just wanted to bring that up.
My guess (which we don’t act on) is sometime in mid- to late-2013 — is when it starts up, if form stays true. I repeat, we are predicting nothing. We are outlining what happened in the late-1970s when a gigantic bull market in the Gold occurred.
I can’t guarantee.
I can promise that I’m going to do my best to be all over that bad boy in a sizeable fashion, if it happens.
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Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.
The American taxpayers stand to lose billions as General Motors today announced a plan to buy back 40 percent of the company owned by the federal government.
“The Detroit automaker said it will purchase 200 million shares of GM stock held by Treasury for $5.5 billion — or $27.50 per share — nearly $2 above the stock’s closing price on Tuesday,” the Detroit News reports.
However, the break even price — the price that GM would need to pay for each share in order to pay back the money the government put in to the company —was $53 a share. That number has now risen dramatically.
“As a result of GM’s buy back, the government has recovered about $28.6 billion of its $49.5 billion GM bailout, which means it will most likely lose billions when selling its remaining shares,” MLive.com reports. “The government would need to sell its remaining shares at a price of $69.72 to break even. That’s up more than $15 from earlier this year, when the U.S. Treasury would have to sell its 500 million remaining shares at about $53 per share.”