Skin in the Game
Research for Online Investors

by John Dalt

3/16/11

The Producer Price Index (PPI) came out this morning.  It climbed at the fastest pace in the last 18 months.  The Fed has to love this coming out a day after they told us inflation was in check and they didn’t see any problems.  Earth to Bernanke, inflation is everywhere except where YOU look.

New Home starts had the biggest drop in 27 years, while building permits hit an all time low.  Sounds like everything is just peachy.  This is the start of stagflation, high unemployment, inflation, and just wait…high interest rates.  Who will be the first politician to ask, “Are you better off than you were four years ago?”

There is nothing like me buying a stock, or recommending it to our subscribers, to make it go down.  I think I am right, but it sure looks ugly sometimes.  For example, we had been watching and waiting to get in on Apple (AAPL).  I think there is still a lot of upside in this stock.  My daughter got an iPad for Christmas.  I am mystified by its popularity, but I am not their target audience.

AAPL had respected its 20-day moving average for the past six months as it marched from $240 to $360.  All it took was for us to recommend it just under the 20 day moving average.  It dropped through our recommended price by $16 bucks today.  Where are these analysts that want to shoot holes in the bottom of a perfectly good boat?  Why do they wait until AFTER I recommend a stock to downgrade it?

It happens all the time.  Our recommendations are like a dirt magnet.  We recommend ‘em, they downgrade ‘em.  Luckily, we generally have the last laugh.  It still makes it tough sometimes.  The truth is, I don’t pay much attention to analysts.  They are paid to “offer” their opinion, in detail.  But, they don’t have any skin in the game.

It is a lot like Monday morning quarterbacking.  If you are so good, get in the game.  I have very little tolerance for critics of those who have entered “The Arena.”  Sure I criticize our politicians, but mostly because I distrust their motives.  Coaches want their team to win; I am not sure about some of our elected representatives.

Do they really want the U.S. to “win?”  Sometimes, it seems more important for them to work to solidify their power and take away a few more of our vanishing freedoms.  Discussing the budget, and republican efforts to trim the deficit, yesterday; Nancy Pelosi said it ‘wasn’t about the money but the message we were sending with our cuts.’  No Nancy, it is about the money.

We have been busy in the market today. No sooner did we decide to enter our trades from SwingTrader, than some idiot EU official made a statement about Japan being “toast.” The market sold off. Then there was some confusion about today’s U.S. bond auction. The Fed said they were going to be absent. Whoops! Who is going to buy if the Fed isn’t there?

Sometimes stupid people say things that cause fear and the market drops like a tin bucket full of water.  We spilled some this morning!

As we go to press, the market has recovered from its lows.  We thought we would have a rally today after the way the market acted yesterday afternoon.  We just need clarity on the Japanese situation.  Once the radioactive steam quits streaming out of the reactor building, we may be able to get our legs under this thing and start higher.

We suggest cautious buying of your favorites that you have on your list of stocks.  We raised some cash in January and February and are slowly redeploying into undervalued opportunities.

Quote:
It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.---Warren Buffett, #5 from our Quotes Page.

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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