Jimmy's Excellent Adventure
Research for Online Investors

by John Dalt

8/26/10

N. Korea’s Dear Leader, Kim Jong-il, arrived in China overnight.  The Dear Leader will not fly, and was reported to be accompanied by his son, Kim Jong-un on a presidential train.  Authorities in China will not confirm the trip but police are guarding a hotel in Jilin, a city straight north of Korea in the Northeast corner of China.

Speculation centers on a possible plan for the succession of il’s son to the presidency at a Workers’ Party (WPK) meeting in September.  China is North Korea’s ally, and this trip is seen as a courtesy to inform and gain consent to Kim Jong-un taking office.

Kim Jong-il is 68-years old and has maintained an iron fist rule over N. Korea since after W.W. II.  There is evidence the country is “hurting for cash aid and assistance” according to Daniel Pinkston.  Mr. Pinkston is a N. Korean specialist with the International Crisis Group, based in S. Korea.  He added, “If the succession is being accelerated, then of course Kim has an incentive to address the economic problems and other issues which will be helpful for his son in the transition to taking power."

Kim Jong-il is believed to have had a stroke in 2008, and is in poor health.  Past U.S. president Jimmie Carter is on an 'Excellent Adventure' to N. Korea seeking the release of Aijalon Mahli Gomes, sentenced to eight years hard labor earlier this year for illegally entering the isolated state.

Carter did not seek State Department approval ahead of the trip according to Mark Toner, State Dept. spokesman.  N. Korea wants to resume six-party talks on nuclear disarmament, and will use Carter's trip to gain leverage.

N. Korea wants the six-party talks to resume.  Washington and S. Korea’s official position is that N. Korea must admit responsibility for torpedoing the S. Korean warship Cheonon in March, before talks can resume.  N. Korea seeks to use the talks to gain economic aid in return for promises to slow or abandon nuclear arms.

N. Korea agreed to free Gomes if Carter visited to retrieve him.  Carter was met at the Pyongyang airport by N. Korea’s nuclear envoy Kim Kye Gwan.  Gomes was an English teacher in S. Korea.  He is originally from Boston.

Another victim of public schools,  Show us your compass!

The U.S. State Dept. sent a four person envoy to N. Korea earlier this month to secure Gomes release, but they were unsuccessful.  Gomes was sentenced to eight years hard labor in March, after crossing into North Korea from the northern border with China.  N. Korea reported he tried to commit suicide in July.

Sources for MarketToday are: Reuters, N.Y. Issues, N.Y. Daily News, Reuters, and another Reuter’s article.

The markets were up nicely at open this morning but have turned and seem to want to retest the lows.  When we write about unforeseen problems affecting the market; N. Korea, Iran, China and the Eurozone countries are not far from our mind!  If the market closes below 1044 today, it gives us a bad feeling in the pit of our stomach.

To the mailbag:
McAfee (MFE) is going to be in high demand.  When you have young children, you wind up with something wrong all the time.  Kids just don’t listen!---paid up subscriber T.M.

John’s reply:  They don’t listen when they get older either!

I hope you are right.  I did exactly that yesterday-sold 10% of Vanguard IT Treasury Fund, before receiving MarketToday.---paid up subscriber D.J.

John’s reply:  Being right is a matter of timing.  There may be some time left for lower rates, but…it will change.  Better to get out early with a profit than under pressure as prices fall.

Which other fixed investments do you suggest we sell besides treasuries?  Enclosed is my list!---paid up subscriber B.C.

John’s reply:  For my portfolio, TIPS are ok because they adjust with inflation.  GNMA's would be a sell because you can get more than face value in today's interest rate environment.  Corporate bonds would be good if short term (less than two or three years).  U.S. denominated foreign= I would probably sell because of currency fluctuations as I expect dollar to fall in the future.  Foreign currency bonds would depend on the currency, for example Swiss Franc would be ok….others?  This list is not inclusive and I don’t have great experience in bonds.  I held some years ago and sold on an interest rate play.  I have not traded in this area in some time.

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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