A Brutal Opening
Steve Cook on Disciplined Investing

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Have You Seen This?

Economics

 

   This Week’s Data

 

            Weekly jobless claims rose 15,000 versus expectations of a 1,000 decline.

 

   Other

 

            More on the current tax structure--this from the congressional budget office:

            http://www.american.com/archive/2008/october-10-08/america-has-a-highly-progressive-tax-system

 

            A historical look at recession longevity:

            http://bespokeinvest.typepad.com/bespoke/2008/10/us-economic-recessions-1900---2008.html

 

Politics

 

  Domestic

 

More on ACORN:     

http://www.cnn.com/2008/POLITICS/10/22/voter.fraud/index.html

 

  International War Against Radical Islam

 

The Market

           

    Technical/  Fundamental

 

 

            On the surface, yesterday’s pin action was great.  But this morning the futures are telling us that my speculation about the technical trading pattern of the Averages meant little and my speculation that much of the forced selling had been done was wishful thinking.  Indeed, the futures are suggesting that we are in for an ugly, ugly day.  At the moment, futures are limit down.  This means that stocks are likely, at a minimum, to test October 10 lows and quite possibly set a new low.  While there is  lot of noise about the credit crisis and the global recession as causes for the sell off, the traders I talk to say it simply more forced liquidation; and until that is over fundamentals don’t matter.  The disarray is so widespread that selling makes no sense at this point.  If we are lucky, prices will hold the DJIA 7853, S&P 839 intraday lows.  This is going to be another gut wrenching day but remember (1) our Portfolios have a solid cash position, (2) they own good quality companies with sound balance sheets, (3) after the dust settles, we will likely look back and marvel at the low valuation of stocks today; I don’t know when the forced selling will be over, but unless the end of the world is nigh stocks are likely already discounting the worst.

 

             A look at how circuit breakers on trading work:

            http://bigpicture.typepad.com/comments/2008/10/futures-look-ou.html

 

            Some trading advice for a grim day:

            http://traderfeed.blogspot.com/2008/10/five-trading-behaviors-im-seeing-among.html

 

            An up dated chart of the volatility index:

            http://econompicdata.blogspot.com/2008/10/vix-spikes-again.html

    

    News on Stocks in Our Portfolios

 

            Altria (High Yield Portfolio) reported third quarter operating earnings per share of $.46 versus expectations of $.44 and $.40 recorded in the comparable 2007 quarter.

 

            And some mildly positive comments:

            http://www.thestreet.com/p/_htmlrmd/rmoney/retail/10443971.html

 

            Dow Chemical (High Yield Portfolio) reported third quarter operating earnings per share of $.60 versus estimates of $.57 and $.84 reported in the third quarter of 2007.

 

            Alcon (Aggressive Growth Portfolio) reported third quarter operating earnings per share of $1.26 versus expectations of $1.57 and $1.36 recorded in last year’s third quarter.  The company attributed much of the earnings shortfall to currency related problems.  Unfortunately, the stock opened down 30+% with no opportunity to Sell.  My inclination is to add to this holding; but I want to be sure where the bottom is before doing so.  I will let you know via Subscriber Alert when the Aggressive Growth Portfolio takes any action.  The good news in this tale is that our Sell Half Discipline pushed our Portfolio out of almost 2/3 of its original position when the stock traded at new highs in the past.

 

            Microsoft (Aggressive Growth Portfolio) reported its first fiscal quarter earnings per share of $.48 versus expectations of $.47 and $.45 reported in the comparable 2008 fiscal quarter.

 

  More Cash in Investors’ Hands





Posted 10-24-2008 8:24 AM by Steve Cook

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