Groundhog Day
Investment Research for Online Traders

by John Dalt - 02/02/09

All eyes and ears are waiting on the Treasury to announce the administrations ‘bad bank’ proposal. Until there is a clear way for the large financial institutions to regain momentum and be assured of a survival other than a weekly trip to the government for more bailouts, traders are caught in a “Groundhog Day” nightmare. The market is scary bad right now. When there is no conviction, there is only chaos. 

GLD and SLV gave back some of the past two weeks worth of gains today. The dollar is too strong and treasuries strengthened. I said Friday that GLD felt ‘toppy’ and would wait for a pull back to re-enter. It seems that the ‘rescue’ legislation is dead in the water in its present form. The house democrats overreached from stuffing too much pork into their bill causing the republicans to oppose it unanimously.

OH! Bama wants a bi-partisan bill to be worked out in the senate. This will take time. If much of the pork is taken out, and it is a real stimulus, I think the market would take it as very positive.

Crude Oil (USO) fell today. The EIA energy stocks report will be out Wednesday morning. We expect inventories to continue to build. Gasoline and refiners went down today as the strike deadline passed without a work stoppage by refinery workers. Negotiations are continuing with a 24-hour notice to strike. Prices had gone up last week in anticipation of a strike reducing inventories and allowing higher margins.

Long-term investors are using the market weakness to pick up great companies at discounted prices.

Quote that caught my eye:

“If you are not willing to go to the minimal effort of reading the proxy and making basic comparisons of financial health across five years’ worth of annual reports, then you are too defensive to be buying individual stocks at all. Get yourself out of the stock-picking business and into an index fund, where you belong.”

---Benjamin Graham,   The Intelligent Investor

I can tell you, reading proxies can be enjoyable. It is like playing detective. Some are entertaining, some are boring, all are revealing. Subscriber C.F. wrote that I made a mistake on the Immersion symbol. He was right it is IMMR not EMMR. I hope it did not keep you from finding this great little company. It is up over 20% since I mentioned it!

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions. It may contain errors and you should not make investment decisions based solely on what you believe you have read here. Do your own research, it is your money. If you lose it, it is your responsibility, not ours or your grandmothers! The editor may or may not have a position in any securities discussed. The editor may have held a position in a security earlier, or in the future.

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