Some Commentary

So I know it's been a minute since a last updated my blog reason being I was away on vacation and didn't do anything to the portfolio--however since I returned I have been made alot of changes which I will go over. First of all while on vacation--I kinda made it a habit of getting up at 9:00am and throwing on CNBC and than fall back asleep listening to the markets. I normally don't get to watch CNBC during market hours because I am at work--the one thing that I caught me off guard was how optimistic everyone sounded last week when the Dow hit 14k from the traders to the analysts. One of the major rules of investing is whenever the media starts getting too optimistic thats generally a bad sign---this was evident this week as the markets are down 6% in a week. So I am going to share with you my thoughts from my portfolio (buys & sells) to whats going on with the markets.





The Market

-As much as it sucks losing money sometimes it's really important for the markets to go through what happened this week. One of the major reasons was well we went too high too fast an indication was the Dow hitting 14k--the pull back brought the markets to a respectable 7% gain for the entire and in my opnion should finish in the 10% - 12% range for end of year. Nobody really knows how big this whole sub-prime thing is however what I do know is that as long as the FED doesn't start raising rates--we should be fine. Remeber the market thinking is very short term as an investor you gotta thing long term at the end of day it's a good thing that banks are making lending guidelines stricter.



My Sell (s)



Apple - Another rule of investing or trading whatever you want to call it is that if a stock has made a nice run before it's earnings sell it--trust me even though you might think it will go higher and will have an awesome quarter SELL IT! Most of the time and trust me I've got burnt on this the stock will tank because analysts expectations are extremely high into the call. Buy the stock back a couple days after the calls cause generally one or two days laters the analysts start changing their EPS estimates on the stock and this generally is positive or negative either way if you made profits no reason to risk--most ppl risk it because they are greedy bottom line. So that said my Apple position was up over 50% since January and so I closed my position taking a nice gain. I will probaly buy back once the dust settles and it comes back to mid or early 130's which it should. The call had a very bullish undertone the biggest being Steve Job's saying there are more products in the pipeline :) The stock went higher after the earnings which is fine with me...i rather lose out on 8% than possibly losing 20% on my gain.



Canadian Pacific - Wow big surprise last week while on vacation closed my position on this railroad one of my best trades and core positions. This was just a matter of taking my profit and waiting until the stock comes down before the whole LBO thing which won't happen TRUST ME. CP has said it and UP won't buy them out and the CAD gov't won't be happy. I will buy it again once it settles in the 70's



Buy (s)

iShares S&P Latin America 40 - I've had my eyes on the index fund for about three weeks now after I sold my holdings in HET & AQNT. I had diversification in Asia (SHG), Eastern Europe (EWO) and Europe (EWD) these were my foreign plays and all three positions have done well for me. The index fund has a large exposure to Mexico, Brazil, Argentina and Chile. My biggest conviction to buy the fund was diversification but I was not going to pay a huge premium for my position so I waited out for a nice downturn in the market which I got and built a position at 10% below it's 52 week high.

Canadian Pacific & Union Pacific - As mentioned above I had sold my holding in CP only to buy it back at much lower price in this case I bought it back under 8% of what I sold it at saving myself around 1k not bad eh? I also built a position in Union Pacific probaly the best performing railroad of late due to it's strong pricing power which is very important because revenue off shipments has been off. I split my position between both the companies and now I have three names in the sector (CNR, CP & UNP).

All in all mixed feelings about this week I am glad to get a good deal on (ILF) and (UNP) however it sucks when the market craps out like it did this week atleast I can say I played the week well and glad I was sitting on alot of cash :)

Commentary On Portfolio

Wow...what a week or last couple weeks! For the week the portfolio is up roughly 7k and I am glad that some of my investments are finally paying off such as SHG a South Korean Bank. As you can see I am still sittin on cash as it's never wise to buy into strength plus I am still contemplating what route to take. I am leaning towards either Emerging Markets or Latin America--however I do not like chasing returns--so I am going to weigh my options while the market digusts the gains we just had.

As you can see I no longer hold ANZ (Australia & New Zealand Bank) basically ANZ has de-listed from NYSE and now trades on OTC. I cannot hold any OTC stocks in my portfolio--so unfortunately I had to sell it. So than I placed a position in WBK (West Pac) another Australian Bank which I will go over in a future post. Now what to have for dinner...

Portfolio Update - 07/12/07

Sector Allocation
Financials - 28%
Consumer/Retail - 12%
Tobacco - 11%
Transportation - 11%
Cash - 10%
Technology - 8%
Foreign ETF - 6%
Energy - 6%
Gaming - 3%

Portfolio Update July 11th

Sector Allocation

Financials - 28%

Consumer/Retail - 12%

Tobacco - 11%

Transportation - 11%

Cash - 10%

Technology - 8%

Foreign ETF - 6%

Energy - 6%

Gaming - 3%

Sold my positions in AQNT & HET

Pretty uneventful week in the markets--same old theme (M&A Activity, Treasury Yield , Fed Rates and Energy Prices) any one of those themes have been moving the market one way or another this week. Like I mentioned last week--I was going to sell my positions on AQNT & HET as both of these companies have been bought out. It's kinda funny because when I took a position on both of these companies I never had the intention that they were going to be prime candidates to be taken over. So as you can see by the sector allocation the proceeds of the disposition is sittin in cash--which currently makes up 10% of my portfolio. Don't worry I'll be using the cash to good use however I feel that we are at the fork at the road in terms of where the US Economy is going. Some analysts say that the "housing market" will spill over into the rest of the economy and that we are in for weaker growth which will lead to a rate cut. This means that basically any industry that is sensitive to GDP growth will tank an example of this would be Transportation--however if we see a rate cut Financials would probaly rally. Now some analysts forecast that the economy will pick up in the later part 0f 2007 and we are either going to see a rake hike or rates being level to what there are now. So as you can see it's a little bit more complicated and maybe the best answer is to just sit on the cash and wait until we get a clear direction. Stay tuned and I will let you know what I decide to do....

Portfolio Update

Sector Allocation

Financials - 28%
Consumer/Retail - 12%
Tobacco - 11%
Transportation - 11%
Cash - 10%
Technology - 8%
Foreign ETF - 6%
Energy - 6%
Gaming - 3%

Apple Stock (Buy, Sell or Hold)

If you have been living under a rock for the last couple days you would've not known that Apple will be releasing iPhone today. Since Apple announced they will be coming out with the iPhone the stock has been up over 30%--which is the exact % Apple is up in my portfolio. So here's how I think the stock is going to play out--since we didn't see a huge runup in the shares in the last couple weeks of the release date we might see Apple hit fresh 52 week highs based on the iPhone selling out at some stores. However, this will be short lived as I think the stock will trade between 110 - 140. Heading into next quarters conference call I think that stock will sell off as analysts still try to figure out how to price in this new revenue from the product. I will most likely add some more to my position at this time. After that I couldn't tell you...I do know that christmas season will be a big teller to how popular this product is so expect within the next six months to be very violatile. One more thing alot of analysts will be looking to see how the iPhone affects the iPods #'s if we see iPods falling off this could be potentially bad. Here is a writers take on Apple & iPhone...

500 phone, $200 stock Right now, analysts on average expect Apple to earn $4 in fiscal 2008. Now let's figure that the analysts have blown it again by the average amount that they have been mistaken over the past four quarters, which is 27.5%. So you add 27% to the $4 consensus number to get an estimate that we'll just call $5 to keep it simple. If that's the right number for 2008, then the stock is currently trading for just 23 times our new estimate. That's pretty darned cheap for a company that has been growing at better than 30% for the past few years and is actually on the verge of a whole new product cycle.
If you apply the company's current 37 price-earnings multiple to $5 you get a target of $185. Which is not bad, but then if you are looking out two years, you need to speculate that Apple will grow by another 30% over the next 12 months. So add 30% to $5 to get a 2009 estimate of $6.50. Multiple that by 35 and you get an 18-month target of $240, or double the current price. Shares have doubled in the past year, so that's unlikely but not totally outrageous.
Although that sounds like a lot, and it is a lot, it's a target that only assumes the company's current pace will continue and does not include any possible new devices or product cycles -- or, to be fair, any risks like the potential for a total meltdown in consumer spending. So I'll ratchet down my target, and add more time, to account for any mischief and overheated assumptions out there. Nibble on Apple now for my 18-month target of $200, but add materially if and when it trades down into its 10-month moving average to around $110-$115 over the summer.

Bought Some Royal Bank

So like I mentioned yesterday--I reduced my holding in Bank Of America by about 10k bringing my position to about 18k or roughly to about 10% of my porfolio. I used the proceeds to place a position in Royal Bank Of Canada the largest bank in Canada. Here is some info on my thoughts on this trade...

Why - The mortgage market in the U.S is completely different than the mortgage market in Canada. There is not a huge "sub-prime" market and the Canadian Economy has been humming along. Which has actually caused the Bank Of Canada to most likely raise interest rates in July which was unexpected and caused the banks to give up some of their gains for the year. Royal Bank has a superiour Wealth Management arm the largest out of the Big Banks in Canada--also RY is less reliant on net interest income which is the margin deprived from deposits & mortgages than any other banks in Canada. The price drop has presented an excellent long-term buying opportunity to get into one of the best run banks in Canada.

Building a position - I put 50% of my position into Royal Bank which is 8% off it's 52 week high. I will take a wait n see approach for adding new funds depending on where Bank Of Canada is going with interest rates after it's July meeting.

What analysts think about Royal Bank courtesy of financialsector.blogspot.com

Analysts' ratings and target prices for RBC:• BMO Capital Markets maintains "outperform," 12-month target price has been raised from $62.00 to $63.00• Blackmont Capital maintains "buy," 12-month target price has been raised to $65.00• CIBC World Markets downgrades from "outperform" to "sector perform,"• Desjardins Securities downgrades from "buy" to "hold," 12-month target price is $60.00• National Bank Financial maintains "sector perform," 12-month target price has been raised to $64.00• RBC Capital Markets maintains "sector perform," 12 month target price is $64.00• Scotia Capital maintains "sector outperform," 12 month target price is $75.00• TD Securities maintains "action list buy," 12 month target price is $67.00• UBS maintains "neutral," target price has been raised from $65.00 to $66.00UBS analysts mentioned that RBC has reported its results for the 2nd quarter short of expectations due to a decline in trading, expenses associated with several acquisitions, and volatility at the insurance unit. UBS analysts expect RBC to post robust results in the forthcoming quarters, with the performance of the core global wealth management and domestic banking operations continuing to be impressive

My First Post

Sector Allocation

Financials - 30%

Technology - 12%

Tobacco - 11%

Transportation - 11%

Gaming - 9%

Retail - 7%

Foreign ETF(s) - 6.5%

Energy - 6%

So finally after months of laziness and oh ya I'll do it tomorrow I am FINALLY writing my first post. I've been running this portfolio since November 2005 and have used up all my $175,000 in cash. I try not to make many changes unless there is a material change in the economy or interest rates are either staying pat, going down or going up. However that said it's time to make some overdue changes to my portfolio which I will outline below.

Aquantative - An online digital company that was recently bought out by Microsoft I saw a nice 158% gain and now will be selling my position with a market value of over 17k

Harrahs Entertainment - I believe the largest gaming company in the world was bought out by private equity--on this position there was a gain of 30% and now will be selling my position which has a market value of 13k

Bank Of America - When looking at forecasts at the beginning of the year alot of analysts had predicted a rate cut within the end of 2007 or early 2008. BAC is by far my largest position at roughly 17% which in general is a little too big for me. I am currently down 6% on my position which is not much at all however I am going to reduce my position and here's why--I have a strong belief that a.) the subprime fallout has only begun and we might see this thing flush out over the next year or soo bringing anything that is even closley related to mortgages back down b.) I do believe that we might see a rate increase than a rate cut in 2008 which will not be good for Financials. Based on these three factors I am going to reduce my position by about 8 - 10k. BAC is a solid company and a well run bank however I am sure I will be able to pick up some shares even cheaper than where they are right now.