Is the recovery real?

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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.

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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.



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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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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.

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

Spies in the sky

Warfare
Spies in the sky
Mar 25th 2009
From Economist.com

Blimps equipped with remote-sensing electronics are cheaper than drones

Aerostar International

SPYING is supposed to be a sophisticated operation. But that can make it expensive. Gathering military intelligence using unmanned aircraft can be prohibitively so. Predator and Global Hawk, two types of American drone frequently flown in Afghanistan and Iraq, cost, respectively, about $5,000 and $26,500 an hour to operate. The aircraft themselves each come in at between $4.5m and $35m, and the remote-sensing equipment they carry can more than double the price. Which is why less elegant but far cheaper balloons are now being used instead.

Such blimps can keep surveillance and ordnance-guiding equipment aloft for a few hundred dollars an hour. They cost hundreds of thousands, not millions, of dollars. And they can stay aloft for more than a week, whereas most drones fly for no more than 30 hours at a time. They are also easy to deploy. No airfield is needed. A blimp can be stored in the back of a jeep, driven to a suitable location, launched in a couple hours and winched down even faster.

Unlike other aircraft, blimps do not need to form a precise aerodynamic shape. This means they can lift improbable objects into the sky, such as a dozen metres of dangling radar equipment. At altitudes of just a few hundred metres, a blimp carrying 20kg of remote-sensing electronics (including radar and infrared thermal-imaging cameras) can seek out, track and provide images of combatants dozens of kilometres away—day or night. It can also help commanders to aim the lasers that guide their missiles.

Blimps often operate beyond the range of machine guns and rocket-propelled grenades. Even if they are hit, though, they do not explode because the helium that keeps them lighter-than-air is not inflammable. (Engineers abandoned the use of hydrogen in 1937 after the Hindenburg, a German airship, was consumed by flames in less than a minute.) Moreover, they usually stay aloft even when punctured: the pressure of the helium inside a blimp is about the same as that of the air outside it, so the gas does not rush out. Indeed, towards the end of 2004, when a blimp broke its tether north of Baghdad and started to drift towards Iran, the American air force had some difficulty in shooting it down.


At least 20 countries use blimps—both global military powers, such as America, Britain and France, and smaller regional ones, including Ireland, Pakistan, Poland and the United Arab Emirates. Many are employed in Iraq. In November 2008 Aerostar International of Sioux Falls, South Dakota, began filling a $1.8m order for 36 blimps to be deployed by American forces in Iraq. But Afghanistan may prove a bigger market. That is because it is difficult to pick satellite signals up directly in the valleys of that mountainous country.

This message will self-destruct, part 2

I have been writing some time ago on this very subject, but it is very intriguing, thus I dare to follow on. A new way of keeping private correspondence private

AP (the Economist) WHEN Barack Obama became American president, one of his first tussles with White House lawyers was over whether he could keep his beloved BlackBerry. (Yes, he did.) The reason why the lawyers were wary was that e-mail cannot be destroyed. People do not know where the information they are sending is being stored and when, if ever, it is deleted. Such unknowns make it possible for seemingly long-gone data to turn up in a court under the order of a subpoena, or worse, in the hands of a hacker. On August 13th, though, a team of computer scientists led by Roxana Geambasu of the University of Washington, Seattle will unveil to the 18th USENIX Security Symposium in Montreal an e-communications system that destroys messages soon after they have been sent.

http://www.economist.com/sciencetechnology/tm/displaystory.cfm?story_id=14162535

Mercedes introduces its new safety idea the Braking Bag

At the International Show in Stuttgart, Mercedes presented its ESF2009 model featuring vast improvements in car safety. One of the novel ways to do that is so called Braking Bag. Once a car decelerates just before crash the Bag located between front wheels is released and raises front end and by the same time increases its friction with road surface increasing car deceleration by up to 20m/s2. Action increases tension on safety belts reducing potential for injuries. The systems works already from min. speed of 50km/h it is not known when Mercedes is going to introduce this technology into series models.

Embedded Systems at Defense Shows in London and in Kielce

Executives from Acromag EMEA, lead by its Managing Director, Dr. Stefan Baginski have visited two defense conferences this month. The biggest was taking place in London last week, and it is the biggest in the industry. The DSEi 2009is the premier defense show, with over 1300 companies exhibiting on +32,000 m² with expected 26,000 visitors. The news were several and interesting to Embedded Systems: VOIP Radio Transceiver, Combined Navigation and C2, Fast Marine Target Drone and several UAV`s in various applications. For more please click here>>
Another show, smaller but with many major players (like US companies) present and flying afterwards directly to London was in Poland. The host country was for a number of years and the leading buyer of US made equipment, and even now made it to the biggest 5 countries upgrading its technology and capabilities from Washington.
The show featured some 400 exhibitors and Defender Prizes were given to PIT, for IFF solutions, WB Electronics for its mobile PC solution for polish tanks T-72 and TP-91 by Bumar (another Polish contractor known on markets from Brazil to Indonesia) . This solution was spotted promptly by US based Harris, who bought license and world-wide distribution rights for it. For more click here>>
The DSEi was presenting united upbeat posture, expecting more visitors than last year. There was a however a talk among industry insiders about “Cocooning” another word for mothballing the company to survive till better times.

Company Sunlux a leading embedded system vendor has introduced its newest Protocol Converters. Protocon is a protocol translator or converter that enables communication between devices supporting dissimilar communication protocols. A typical situation is when a Modbus TCP based SCADA System must communicate with a device supporting Modbus RTU.
This product marketed by IMU Group Swiss a company specializing in business development in EMEA and in North America, with offices in Germany, France, Italy, Canada and the US. For information please contact Mrs. Jenny Ann below:

This newsletter is included in the S. Baginski Embedded Europe b log, and can be twitted accordingly. Dr. Baginski can be reached at s.baginski@bluewin.ch

Jenny Ann
Marketing Manager
IMU Group Swiss
+41 62 758 3222
+41 62 758 3223 fax
www.imugroup.eu
jenny.ann@bluewin.ch


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