Econ rap

Please enjoy this Econ rap by Econstories.tv - a place to learn about the economic way of thinking through the eyes of creative director John Papola and creative economist Russ Roberts.

Its pretty funny. And probably the only rap around about economics.

http://econstories.tv/home.html

L.T. Trader

New Game

I just woke up after a few months of hibernation. Hopefully I can starting putting some money to work.

So in this market, its extremely hard to make any educated decisions when the rules keep changing. No one knows where capital gains or dividend taxes are going or if the government will decide a company can't pay a dividend or give their employees bonuses.

Short trades are the way too go until we see some light at the end of the tunnel, then we can get back to investing for the long term.

Market Craze

Can anyone imagine being a Bear Stearns shareholder. I was watching FBN last Friday when BSC took the big dive down 50%. I was there thinking this might be a buying opportunity. Luckly I was sitting on my hands and didn't buy any. So J.P. Morgan works thru the weekend and convinces Bear to be sold for $2 a share, thats $2 dollars a share. Monday morning comes around and now its down 90 some percent to a little over $2 a share. But Tuesday it closed at close to $6 a share, is the market telling us that J.P. Morgan will end up paying more for BSC then $2 a share. Only time will tell, but J.P.Morgan can throw out a few more dollars a share and still make a killing.
LT Trader

New Buys

I finally pulled the trigger and bought some CLX just north of $57.

But if you look at the rest of the market theres a firesale going on. Financials and small caps are super cheap, yet not for the same reasons. Financials got in trouble due to bad investments they made in the sub-prime or credit markets. Small cap stocks are usually the first to go in a down market due to two reasons. Small caps might have a tougher time in a recession and the second reason is that there is a flight to quality where investors trade out of the high beta small caps into the very large caps. Picking a small cap right now might be a little easier than picking a financial right now just because it seems like all financials are taking big write downs and getting their debt downgraded by the rating agencies . But I think both financials and small caps are worth a good look right now.

Later Trader

Clorox Continued

Continuing on the stock of Clorox. I started to do some more research on their products. I was pretty impressed with what I found. The Clorox company owns a tons of different brands outside the realm of bleach and other cleaning supplies such as Brita (water filters), Armor All (car-care), and Glad/Gladware. Clorox also produces a bunch of products catering to the Asian and South American markets. I saw a couple of very bright spots in their portfolio. The first one is a new line of cleaning products called Green Works. This new line would capitalize on the green movement as all the products are bio-degradable and good for the environment. The other bright spot is Brita, as more people get turned off of plastic bottled water, people will be use filters to get that water. You always want companies with products that are innovative and adapt to the current environment.
Hopefully the market opens lower tomorrow and I can pick up a few shares on the cheap. I always like to buy into a stock in phases as I continue doing my homework on the company.
LT Trader

Dividend for the Long Term

I'm starting to look at Clorox (CLX), now trading around the mid to high 50s as I try to look for a stock that can weather a possible slow down in consumer spending. From a high level view this company looks like a no-brainer, its products are used in everyday life. In good times and bad, we will still want to clean our homes and wash our clothes. And I also like the amount of free cash flow this company kicks out and how safe the dividends are (current dividend yield is 2.7%). I will continue researching this company and keep everyone posted.
LT Trader