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Category: Other Stock Tips (Page 1 of 3)

Berkshire Meeting 2010

Last year I took the mini-van provided by Berkshire to the 2009 Berkshire Hathaway Meeting. I was staying in the middle of Omaha, NE. I thought I was running late when I left the hotel but the vans did not arrive yet and there was a bunch of people waiting outside. I ended up getting to the Qwest Center like 10 minutes before the meeting started. All the seats were taken and I had to stand for the first hour.

This year I rented a car and the goal was to get to the Qwest Center by 7:00 AM. I ended up getting there around 7:30 AM but there were still plenty of seats. I’d say it was at 60-70% full. I snagged a seat in the back of the arena in the top section. I figured most of the people that entered the arena would take the seats at the beginning. Apparently those seats are reserved for managers.

The setup is the same like last year. There are two seats for Warren Buffett and Charlie Munger. There are three big screens so we don’t have to squint our eyes on them the whole time. They talk from 9:30 AM – 3:30 PM and then have a half-hour business meeting. They added 2 more screens and more overflow rooms to manage the increase in stockholders.

This year’s meeting seemed more like a good basic approach to investing, answering the questions on Goldman Sach’s, and value investing. The meeting seemed very targetted to the new stockholders of Berkshire and showing them their philosophy to buying and holding companies with good fundamentals.

To sum up a few of the main points:
– China and India will continue to prosper and work hard to have the ‘American’ culture prosperity
– Berkshire Hathaway will not grow as fast as it has in the past. Reason is they are so huge in market cap now. However, they assured us they will always bring good shareholder value even when they pass on the company to other managers.
– Goldman Sachs was only an underwriter to the actual fraud charges that happened. They took contracts from banks that would insure the mortgage securities and took investors’ bets to short these CDOs. Here’s a good interview that explains it.

Charlie Munger and the Death of Capitalism

Just like his cohort Warren Buffett, Charlie Munger has stories to tell himself.  There’s been a lot of discussion of the one he recently posted about the ‘Death of American Capitalism.’  To sum it up, he states that America’s time is over.  The global economy will grow and we will finally have to take a step on the sidelines.  He also states that it’s all downhill from here.  He says the ‘financial derivatives of mass destruction’ will continue to spoil ‘Wall Street’ to gamble their money in ‘bucket shops like the 1920s’.  This will have a mass effect giving ‘25% of our GDP’ to the casinos and a profit of 22% to the casinos.

Charlie and Warren Buffett are the biggest capitalist and most powerful ones running the US engine.  They would both like to continue this engine moving forward, but Charlie’s article is made towards gaining an audience and giving a conclusion to a path that we can still solve.  The government might have to step in and prevent some of this ‘free market’ like these derivatives from occurring in the future.  There are already steps in place like separating banks from being brokerages.

His article is mostly to tell a future that he does not want to see but it possibly might happen.  We can do everything to stop it, but there will be gambling.  We will be heading towards a lower status in the global market.  Other countries will finally have their time to prosper.  However, if we can keep pulling through engineers, we can continue to have our time.  We’ve had economic problems every decade.  We’ve always found a way to break through with innovation and creativity.  We just need that magic system again.  It won’t come through manufacturing like it has in the past.  It will be through green energy, advanced technology, something the world needs and something only Americans would think of.

Here’s the article with his story:
and Marketplace’s interpretation

Video Games Will Prosper Once Again

Activision (ATVI) and Electronic Arts (ERTS) will regain their strength once again.  Once said to be recession proof stocks, they have rapidly dropped to 5-year lows and they have continued to get bad press for missing out on analysts estimates.  They still make a profit quarterly and will continue to make cash flow in the years ahead.  2010 looks to be a good year for their video games line-up.  I’m in it for the long-term and I will be patient to sell.

Activision is the best prospect to play the long-term.  After last week’s earnings release, their stock popped up 10%.  It went from $10 to $11 and many investors sold their gains.  I’m holding on.  They just released Starcraft II on beta and they expect a release in the summer time.  If anything, this is probably the best time to get in.  Starcraft I sold over 4 million copies in Korea alone.  It’s a game played globally for it’s great single-player and multi-player action.  They even have television channels made exclusively for the game.

Activision is also planning on releasing a few more big hits later this year such as another Call of Duty game.  The fan base for this first-person shooter will definitely be buying again for 2010 after seeing the showing for Modern Warfare 2.  Spider-Man and James Bond are going to have another video game release also.  There will also be a few Guitar Hero releases.

Have you heard of World of Warcraft? (NTES), World of Warcraft’s china provider for MMOG, has been allowed to put their expansion Burning Crusade out to the public.  Last year, the government stopped WOW subscriptions since they needed better regulation.  This pretty much means the government wants a way to control a foreign commodity that has tons of potential in their market.  This had an immediate drop in the Activision price.  With the announcement of WOW subscriptions being allowed again, you can bet the profits will pick up for Activision.  Most people have not heard any news about this, but you will definitely see it with the earnings.

Electronic Arts (ERTS) has been on a bad streak for the past year.  They have lost profits and have given gloomy reports for the next quarters.  I think they are releasing estimates that are at the ‘worse-case’ scenarios.  This is especially since their line-up has been doing quite well recently.  Their Battlefield Bad Company II just broke the record for the most downloaded demos.  It has over 3.5 million downloads.  This will definitely be another big hit such as Activision’s Modern Warfare II.  They already have a hit with the release of Mass Effect 2.  It has glowing reviews and everyone who’s played it is hooked.  It hit second on the most sales for the January video game charts.

Another couple things to look forward to is Tiger Woods return back to golf and FIFA Online.  Tigers Woods should help get their golf game back to action.  I’m not too sure how they will monetize online soccer but I’m sure they have sponsors that will back this game and I doubt their are that many fees to hosting these servers if it does not follow through with success.

I think the worse case scenarios have already been priced in these two stocks and look to make some big cash with each.

Western Union – Global Growth Stock

Western Union, WU, has recently hit bottom lows reaching as far as the march 2009 lows.  There’s no particular reason for this stock to have gone this far low.  Of course, it had it’s rough patches but being part of the financial industry it was sold off as the other bank securities and other financial stocks were dropped off the radar.  This particular stock continues to show growth, quarter over quarter and year over year.

Look at the quarters for the past three years:

Just look at the 10-year:

It continues to impress with better EPS and net income even as the stock market continued to rise the past 2009.  So how do you trade this stock?  It’s a short-term and long-term trade.  Both are worth getting into now.

This is a global business.  They trade money all around the world.  You go to any country and you can bet they have a Western Union in that city or town.  The name is well recognized.  Just by looking at the financial results, it shows their business have thrived throughout the downturn.  They will have competitors, but just like Coca-Cola, other companies cannot compete against the top branded business.

People love money.  They love transferring money.  People need money in depressionary and inflationary times.

Stock Market Reaches a Bottom

With the SPY sitting at 108, we have reached weekly and daily lows on the stock market.  Last friday we hit the bottom at 105 meeting the same low of November 2009.  It appears that the bottom has already been matched and it’s time to continue the rally furthur up.  The market appears to have a good chance of moving up monday with good news from the Japanese stock market.  Their GDP has increased 4.5%.  This is a much improved increased from what forecasters thought it would be.

As we have already been on an upward trend for the past year, I highly doubt we will have the continued strength from the past.  Look for continued consolidation as the economy continues to improve but bounce back-and-forth with multiple job loss forecasts.  I will post up some good stock trades later this week.

Prosperous Times are Ahead for 2010

We have just went through one of the worse periods ever in the United States.  The second great depression has finally past.  It’s time to rebuild.  We, as a nation, will continue to have a flourishing economy.  Better times are ahead, and with that, we will have continued stock growth.
Commodities will continue to become a key player.  The billions of dollars being produced will bring us out of one of the worse catostrophies in US history.  It will bring on an offset of inflation that will beset to become another problem the government will have to control.  We can use this to our advantage.  Oil, gold, platinum, palladium, silver, all these commodities will become more valuable.  We’ve already hit $1200 gold.  We still haven’t seen this record growth in the ‘useful’ metals.  I’m talking the commodities that are used to build things.  As the global economy continues to grow, we will see another surge of industry booms.  This means more demand for oil, more tools to be built with silver, and platinum and palladium being used to build more cars.  Don’t listen to the naysayers.  The dollar might be strengthening now but long-term commodities will become more valuable.
As we continue to get away from fossil fuels we will become more dependent our clean resources.  Natural gas will continue to get more popular.  We have stockpiles of natural gas.  Fractural drilling has brought on one of the largest stock piles of natural gas in the US.  We saw the prices hit rock-bottom in 2009.  Watch the natural gas stocks start moving up like oil has for the past 30 years.
Alternative energy will continue to prosper.  We are in no period to which we can reverse.  It’s not the 1980s where we will hit rock-bottom oil prices.
China is growing at a record pace.  It will need more oil.  Same as other growth counties.  As we use up the last stockpiles of oil we will need to adjust our demand for fossil fuels and move into alternative energies.  Look for wind power, solar power, geothermal energy, and nuclear energy to grow.  We are still figuring out the potential of each.  With Obama money you will see continued growth in all these alternative energies.  Climate change will furthur strengthen the cause for alternative energies.  Diversify.  Put money into good companies and watch your stocks grow as the economy improves.
Healthcare will again become a growing industry.  We have a bunch of boomers that have reached retirement age.  They will need healthcare, retirement centers, and bring another influx of necessary services to help the seniors.  We also have a new government funded health plan that will bring insurance to all the people.  Demand for generics will increase.  Look for major healthcare companies to find ways to make money in these areas.
As people begin working again look for retail to increase.  Look for major stores that will produce affordable goods.  Look to supermarket stocks such as Kroger to grow.  They produce affordable perfumes and other items that people would normally go to malls to buy.  They have diversified their inventory base to produce for affordability and the frugal consumer.  They are producing for the future where we will become a saver nation. Watch for major department stores such as Wal-Mart to continue to be key leaders in their industry.
The banking industry will continue to grow once again.  Banks have finally paid off their TARP money.  Small and medium size banks will consolidate to the bigger Wells-Fargo, Citigroup, JP Morgan, and Bank of America.  Major banks will become the defining financial companies to run our country.  Agree to disagree.  The government will make sure these financial companies stay in business to keep us running.
Prospering times are ahead.  We will have our normal corrections, but let it be known, we have reached the bottom of the economic cycle.  It might take a while to start moving up, but it’s time to position your investments for the future.  Now, let’s make some money!

Add Gas to Your Portfolio

I’m not talking about the gas you get from food or drink consumption.  It’s time for gas commodities to move up: crude oil and natural gas.  MarketClub has given me access to a technical analysis video for crude oil: check it out.  I think we hit a nice bottom, and it’s time for oil to move up.  It has reached such a low price for a commodity that will continually be needed in this world.  It’s like black gold.  I’d expect to see $60 per barrel of crude oil within the next few years again.  Although I expect it hit $60 probably within this year maybe even this summer when gas prices start moving up.

The Market Club video establishes that is a great time to get into USO.  I’m not too much a fan of this ETFs especially with so many undervalued gas stocks.  I’d suggest looking into PWE, Penn West Energy, a stock giving a dividend of over 11%.  It is able to sustain this dividend as long as oil stays above $50.  This is a great stock that is priced very low and it will easily double up as oil starts moving up.  You can’t see this type of action with the big oil companies.  If you are a more conservative investor, I’d suggest looking at BP, British Petroleum, at a price of $48 currently.  I earlier stated around $40 that it was a great buy, but if you have not got into it and your money is sitting in a bank account, you might as well buy some of this stock and get a nice 7% dividend.

On the natural gas commodity, there are multiple companies that are deeply in debt and it’s risky to buy any of them that can go bankrupt.  However, we can still play this market with the UNG, United States Natural Gas, a hedge on the natural gas.  Summer is coming up and natural gas will not be used that much, but with the recession ending and wide spread inflation coming up, expect commodities and natural gas to finally make its move up.  It’s reach lows such as $4 million British thermal units.  Just a few years ago, this would have been $12 mbtu.

Remember, we’re looking at the long term.  These are easy plays to make money within a few years time.

Heading for Another Downturn

Adam, from MarketClub, stated that this trend is still going down.  He believes the S&P will hit a target of 500 as a bottom.  At the current S&P, I think it is time for the market to drop.  We have had a rally lasting almost 1 month.  This will definitely show if the stock market is headed to go up or it will continue its downturn.  Here is the video from Market Club, it’s called Is the S&P running out of gas?, Enjoy!

Is it time to put our money back in?

Dow Jones moves up +379.44 to a magnificent 6,926 points.  This is an absurdly high increase in the DOW.  Two reasons are a big boost in Citi (C) and Bank of America (BAC) which are both part of the DOW top 20.  A profit report from the bank is huge, expect many more green things to be happening from stocks.  Short sellers will start getting more money out as they are seeing the bottom of the Dow.  However, this is not the bottom yet!  We haven’t hit below 6,500.  Once the stock prices hit below this mark, it will be a great time to start getting in the market and investing again.  I see the big boost as just a starting point of good things to happen, but don’t expect any big gains for at least another year.  We will see many more hills that look like ‘the rally’, but don’t be fooled.  We have a lot of rich people with tons of money that can manipulate the market every way they feel fit.  If you know how to play the short-term, you could probably make some dough selling on highs and buying on bottoms.

Let the Carnage Pan out…

Ouch!  Another eye-sore!  The dow has hit a all-time low of 6,793, something not seen since 1997.  I, for one, are starting to feel the fear in the market.  I thought things were bad enough when we broke 10,000, but at this rate, we are hitting new lows like there is no tomorrow.  There are still lots of quarterly earning reports that have to be reported, and I bet they are not looking good.  I’d hold off unless you are going to get some dividend stocks and just wait it out.

I wouldn’t expect anyone to start any purchases until the DOW hits 6,500.  It might be tomorrow, it might be in a month, but if you have the patience to wait it out, there will be good investments in the end.  Look for big names such as Wal-Mart (WMT) or Colgate (CL) to put your money in.  These names have continued to prosper during this time since their products are always necessary no matter what is happening in the economy.

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