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Dear Reader,
The stock market has come along way since the dark and dismal days of
March this year when most investors were of the opinion we were headed
for a very deep recession, some even thinking “depression”….. Not a
lot of fun.
Since then we have seen not only the market come good (to a certain
extent) but we have also seen great improvement economically, even
though some dark clouds linger. Dark clouds in the form of weak
employment and retail sales.
The stock market, as you may or may not know is a “leading indicator”
of the economy. The market guesses where the economy will head and
this has always been the case, and probably always will be. In effect,
it’s a bunch of people betting which way the economy and individual
sectors within the economy are heading, that’s the theory anyway.
The only way of proving the efficacy of this theory is at earnings
time. This is when the true direction is known. If profits and
revenues of companies are up, then it’s a pretty safe bet that the
economy is following behind.
Well, it’s truth time in the United States at the moment and most
companies have to report their quarterly earnings (both American and
international companies, if they are listed in New York). So, how’s it
going? Are we really on track for a economic recovery?
The answer is 100% yes!
So far, 79% of companies that have reported have reported better than
expected earnings and 65% have reported better than expected sales –
Top line growth is back, despite unemployment. Technology is booming,
as are several other industries.
The recent lift in the markets will attract the attention of the
general public, who haven’t really participated in this rally. In
addition, fund managers who have been skeptical or even short the
market all year will be forced to buy into the rally as their clients
will be doing year-end comparisons at the end of this current quarter.
That means that there could be a lot of big money chasing returns for
the next couple of months, resulting in higher prices.
However, with all the good news coming out regarding earnings, there
are still “experts” trying to scare you with talk of massive
collapses, banks going broke, currency crashes etc. Before you take
this stuff on board, think about what’s in it for them to say this
negative stuff. Are they promoting a book, selling a seminar or trying
to garner interest for their particular investment strategy? I think
you’ll find they have something to sell, so my advice – ignore them
and just follow the market. Our stop loss strategies will protect us
and our “aggressively conservative” stock picks will ensure we
outperform the market, pretty much all the time.
Let me tell you about a well respected “perma-bear”, not my old mate
Nouriel Roubini, I won’t pick on him today. No, this guy actually
makes a lot of money being negative – but there’s a sting in this
story – his investors lose money in real terms – He’s rich, they’re
not. Doesn’t surprise you does it. And no it’s not Bernie Madoff
(pronounced “made off” as in "made off with your money").
Seriously, David Tice manages the Federated Prudent Bear Fund and he
said this week that the Dow will bottom when it gets to book value,
which is about 3,100. The reporter interviewing him thought he was
mucking around, but he was serious. “Our long-term target, which we
expect to reach in 2012, is Dow 3,800, and that is no joke..” You know
if the Dow goes to 3800 we’ll be almost living caves. Well, you can
guess what I think about those opinions – but why would he have such
an opinion? What does he know that we don’t? The answer is nothing.
The man gets rich by scaring the daylights out of you and getting you
to invest in his “Bear Fund”. He’s made a lot of money taking a
management fee, based on the funds he has managed, not the profits he
makes (obviously). But what about his investors?
In the last 14 years since he started the fund he has returned 0.04%pa
(that’s less than 1%, then take off inflation, tax etc – not much
left, eh?), but in the last 5 years he has done quite well in
returning 5.18%pa thanks mainly to the events of 2008 (but only 5%?, I
made 23% in 2008, and I’m an optimist and “bullish”). He has over $1
billion under his management – that’s a lot of pessimistic investors!
So, my lesson for today is that being pessimistic and bearish will not
make you $1 over the long term. To make money you have to be
optimistic – seek opportunity – act when the opportunity lands in your
lap and keep looking forward, not back – find solutions, don’t stumble
over problems. This applies to all aspects of your life, not just the
market.
As most of you well know, even during the worst of the GFC from
September 2008 to March 2009 I have remain positive (sometimes
annoyingly, I know) but it has resulted in a return this year of over
105% for Trident Confidential subscribers. Optimistic = Wealth (in all
things, not just money).
So, next time a “dark cloud” person wants to “bend your ear” – just
ignore them. You know, if there had been a few less people telling us
the world was coming to end, the crisis would not been anywhere near
as bad. Consumer sentiment has a lot to do with recessions.
**********************************************************************
Opportunities are Still Out There
**********************************************************************
As stock prices have moved up strongly in recent months, you may be
wondering whether you wait for a correction or pullback or leap in a
buy a few shares now?
A good question. My answer to a potential investor would be to choose
the stock you invest in very carefully and buy it now if the valuation
is good. You could be waiting for a correction that may never comes or
when it does, it could still leve you paying a higher price for your
selected stock than you could pay today.
Many stocks, the bigger blue chips especially are getting close to
fair value in my opinion. However, it is now the time to seek out
smaller or medium sized companies that have been overlooked to a great
extent by the rally. I'm constantly digging up companies with great
businesses that have had their stock price decimated, but their
business is close to record earnings and sales. Yes, stocks that have
an historical valuation based on their current earnings, 2,3 or even 4
times higher than it is now. That means in time, their stock prices
will return to their historial "mean valuation" and provide investors
with great profits - even now.
This week's little Australian health related stock is a perfect
example. In my opinion, it's valuation is three times higher than it's
stock price. In my Hidden Gems portfolio (micro caps), I find even
greater extremes of undervaluation.
So, if you are seeking out opportunities of your own, think small and
micro cap stocks at the moment - the rally has missed many of them.
In time, the market will catch on - it always does and by then your
stock will be much higher.
**********************************************************************
To Join Trident Confidential and Read our Latest Stock Tips, The
Hidden Gems Portfolio, Receive all Lance's Books on CD and Have Access
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Until next time.
Kind Regards
Lance Spicer
Editor, Trident Confidential - Still...The World's Highest Returning
Newsletter since 2005.
Lance Spicer is qualified and licensed to provide investment advice on
Managed Investments, Equities and Derivatives.
Trident Investment Management Pty Ltd is an authorised representative
(No 339798) of The International Securities and Derivatives Group Pty
Limited (ABN 22 103 552 683) holder of Australian Financial Services
License (AFSL 227544)
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2009/10/24
2009/10/13
Advanced vetronics hit the ground running...
SPECIAL REPORT
Advanced vetronics hit the ground running...
:: Advanced vetronics hit the ground running
By Courtney E. Howard
Industry heeds the warfighter’s call for innovative, responsive, and reliable electronics in combat vehicles on the ground. Today’s warfighters require an ever-increasing amount of electronics systems to meet various mission objectives. At the same time, military ground vehicles, the warfighters who operate them, and the onboard vehicle electronics are required to perform missions in demanding, sometimes hostile environments. Ground combat vehicles integrate myriad complex electronic components, which deliver command, control, and communications; intelligence, surveillance, and reconnaissance; and defensive and offensive weapons systems, as well as operate the vehicles themselves.
Advanced vetronics hit the ground running...
:: Advanced vetronics hit the ground running
By Courtney E. Howard
Industry heeds the warfighter’s call for innovative, responsive, and reliable electronics in combat vehicles on the ground. Today’s warfighters require an ever-increasing amount of electronics systems to meet various mission objectives. At the same time, military ground vehicles, the warfighters who operate them, and the onboard vehicle electronics are required to perform missions in demanding, sometimes hostile environments. Ground combat vehicles integrate myriad complex electronic components, which deliver command, control, and communications; intelligence, surveillance, and reconnaissance; and defensive and offensive weapons systems, as well as operate the vehicles themselves.
2009/10/02
Is this recovery real or Imagined?
Pick up any newspaper or read any report and you'll read that the stock market has run too hard and is ahead of the real economy. Is this correct? Yes, it is! But is it any surprise? Seriously?
The stock market is always ahead of the real economy... always!
What's wrong with these people? Haven't they been around long enough to know that the stock market always looks 6 to 12 months into the future. You never buy a stock based on todays' earnings.. always the future earnings. These "economists" really surprise me. No wonder so many fund managers have completely missed this rally with such pessimistic views in abundance.
Look, the reality is the smart money is looking at earnings and economic growth in late 2010 and 2011. You should buy stocks that have real earnings growth potential next year and the year after not get bogged down with what's happening now.
At the moment this recovery seems to be based on two factors:
1) A business driven recovery.
Businesses have trimmed down and become leaner and meaner and are now looking ahead (as investors should) and restocking inventories. When the "revenue increase" kicks in, we are going to see the best managed businesses provide very good earnings and widening operating margins. Unemployment will start to come down once business really is straining to keep up with demand, and not before.
2) A China driven recovery
China is booming again and not off the back of the US consumers (who are currently "hibernating"). China is probably growing at 8-9%pa currently and it's doing it off the back of internal Chinese economic demand. This is great news for Australia, as long as we don't keep annoying them with not allowing them to invest capital in our companies. It's also great news for US companies who are selling the "brands" and products the Chinese middle class want. There are approximately 350 million middle class Chinese that want all the things we westerners have, the other billion are determined to join them. As an investor, I'm tracking down the best Chinese opportunities for the next few years and as Trident Confidential Subscribers know, we have discovered some "pearlers", but I know there are more out there and I'm going to find them - well-managed companies going cheap but with revenue and earnings growth set to soar - that's what I'm after and you should be too.
While everyone is waiting for a correction in the stock market, and it may or may not come, smart investors are tracking down "tomorrow's" winners today and investing in them before the "crowd" finds out. That's the best way to make money in the stock market - beat the crowd.
As an example, last week I wrote to my subscribers and told them of a great little Australian company that has one of the simplest but best medical products in the world today. Fully patented, it currently has no competitors that come close to matching it's innovative product. What's more a global company who is the biggest user of these products has just handed over tens of millions of dollars just for the "right" to use the product.
This company is in such a powerful position that companies are paying for the "opportunity" to buy the product!
A dear friend of mine, we have been exchanging news for the past 20 years, even if under different companies. I thing he has alsways something good to say:
It's been a while since I saw an Australian company and invention with such a massive future. Like so many companies of recent times they are going to announce a capital raising so they can immediately go into full scale global production and in the next few days you'll have an opportunity to buy this stock, before it reaches my 2011/12 earnings based valuation of around $4.00, which is around 210% return from where it is now. However, this could increase, if as I suspect, they announce more deals.
In the weeks and months ahead, you'll be hearing of a relatively new and very exciting Australian medical company becoming a dominant global player. When you see a company like this, you don't pass up the opportunity. As I was saying you invest in the future - not the past - economists and analysts please note.
Trident Press: Press@mail.vresp.com
The stock market is always ahead of the real economy... always!
What's wrong with these people? Haven't they been around long enough to know that the stock market always looks 6 to 12 months into the future. You never buy a stock based on todays' earnings.. always the future earnings. These "economists" really surprise me. No wonder so many fund managers have completely missed this rally with such pessimistic views in abundance.
Look, the reality is the smart money is looking at earnings and economic growth in late 2010 and 2011. You should buy stocks that have real earnings growth potential next year and the year after not get bogged down with what's happening now.
At the moment this recovery seems to be based on two factors:
1) A business driven recovery.
Businesses have trimmed down and become leaner and meaner and are now looking ahead (as investors should) and restocking inventories. When the "revenue increase" kicks in, we are going to see the best managed businesses provide very good earnings and widening operating margins. Unemployment will start to come down once business really is straining to keep up with demand, and not before.
2) A China driven recovery
China is booming again and not off the back of the US consumers (who are currently "hibernating"). China is probably growing at 8-9%pa currently and it's doing it off the back of internal Chinese economic demand. This is great news for Australia, as long as we don't keep annoying them with not allowing them to invest capital in our companies. It's also great news for US companies who are selling the "brands" and products the Chinese middle class want. There are approximately 350 million middle class Chinese that want all the things we westerners have, the other billion are determined to join them. As an investor, I'm tracking down the best Chinese opportunities for the next few years and as Trident Confidential Subscribers know, we have discovered some "pearlers", but I know there are more out there and I'm going to find them - well-managed companies going cheap but with revenue and earnings growth set to soar - that's what I'm after and you should be too.
While everyone is waiting for a correction in the stock market, and it may or may not come, smart investors are tracking down "tomorrow's" winners today and investing in them before the "crowd" finds out. That's the best way to make money in the stock market - beat the crowd.
As an example, last week I wrote to my subscribers and told them of a great little Australian company that has one of the simplest but best medical products in the world today. Fully patented, it currently has no competitors that come close to matching it's innovative product. What's more a global company who is the biggest user of these products has just handed over tens of millions of dollars just for the "right" to use the product.
This company is in such a powerful position that companies are paying for the "opportunity" to buy the product!
A dear friend of mine, we have been exchanging news for the past 20 years, even if under different companies. I thing he has alsways something good to say:
It's been a while since I saw an Australian company and invention with such a massive future. Like so many companies of recent times they are going to announce a capital raising so they can immediately go into full scale global production and in the next few days you'll have an opportunity to buy this stock, before it reaches my 2011/12 earnings based valuation of around $4.00, which is around 210% return from where it is now. However, this could increase, if as I suspect, they announce more deals.
In the weeks and months ahead, you'll be hearing of a relatively new and very exciting Australian medical company becoming a dominant global player. When you see a company like this, you don't pass up the opportunity. As I was saying you invest in the future - not the past - economists and analysts please note.
Trident Press: Press@mail.vresp.com
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