On Sunday evening I wrote this post about a trade I was venturing into in Citigroup (C). In that post, I stated that I was going to be buying October $4 CALLS, for $.05 - $.06. Well, I entered into the trade on Monday at $.06, the high end of my range, but I'm ok with it nonetheless.
Today, the beautiful office of the U.S. Treasury came out and said they are selling $2.2b bailout Trups in Citigroup, thereby making an uninteresting morning awesome as I watched Citi trade all the way up to $3.99, and my CALLs trade up to $.09. The article on the Treasury sale can be found here.
All of this is fine and dandy, but my thesis for why I think Citi will eclipse $4.15 by the middle of October has not even begun to take effect yet. As I stated in my prior blog post, the Treasury is going to suspend their sale of Citi common stock due to their blackout period before earnings after tomorrow's trading. From there, through the next two weeks I am suspecting that C will make a nice move upward. Even more validating, Bryan Kelly said today on CNBC's Fast Money that he entered into the stock today for the same reason that I bought my CALLs on Monday. While there is barely a mention of it on the Fast Money recap page here, you can watch the episode later this evening, or on your TiVo (if you're sick and obsessive and DVR this show like I do) and check out his recommendation.
I will keep ya'll posted on this trade in the next two weeks, with any luck, it will be very profitable.
Wednesday, September 29, 2010
Sunday, September 26, 2010
U.S. Government To Exit AIG Stake
First Citi, now this. This makes AIG an interesting stock again, potentially. I still think it may be wise to look at how Citi's stock acts as we come to the conclusion of that government sale, and take that into consideration when analyzing AIG. Here's the link:
http://www.bloomberg.com/news/2010-09-26/treasury-said-to-ready-plan-to-sell-aig-stake-recoup-taxpayer-investment.html
http://www.bloomberg.com/news/2010-09-26/treasury-said-to-ready-plan-to-sell-aig-stake-recoup-taxpayer-investment.html
What I'm Trading Tomorrow (Monday)
Tomorrow I will be buying October 15th $4 Citi CALLS. Citi is currently sitting at $3.90, and the Calls are trading at $.05. I am going to put an order in at $.05, but am willing to adjust up to $.06 if need be. I am going to see what the market futures look like later on this evening and in the pre-market tomorrow, and make a decision from there.
As you know, the S&P 500 crossed above important resistance ~1,131 this week. The S&P 500 currently sits at 1,148, and I believe is poised to test the April highs around 1,200 in the near term.
Citi will be reporting earnings on October 18th, and as such the government's blackout period for selling shares of Citi begins on October 1st, and lasts through options expiration. Looking back to July when the government had their blackout period, Citi ran from $3.80 all the way up to $4.30. I am not going to bore you with all the math, but my analysis suggests that Citi can make a run to $4.15 and maybe higher before expiration based on the market move I am expecting, and the past history of what happens during the government blackout period.
As you know, the S&P 500 crossed above important resistance ~1,131 this week. The S&P 500 currently sits at 1,148, and I believe is poised to test the April highs around 1,200 in the near term.
Citi will be reporting earnings on October 18th, and as such the government's blackout period for selling shares of Citi begins on October 1st, and lasts through options expiration. Looking back to July when the government had their blackout period, Citi ran from $3.80 all the way up to $4.30. I am not going to bore you with all the math, but my analysis suggests that Citi can make a run to $4.15 and maybe higher before expiration based on the market move I am expecting, and the past history of what happens during the government blackout period.
Portfolio up 1.94% This Week, Wilshire 5000 Up 2.13%
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The Wilshire 5000 closed at 12,062.80, up from 11,811.39, or 2.13%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,619.35, or 3.82% below today's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 41.4% BULLS, and 29.3% BEARS, for a spread of 12.1%. This is in comparison to a reading of 36.7% BULLS, and 31.1% BEARS, for a spread of 1.1% on September 14th. Bullish sentiment has now turned higher in three consecutive weeks.
The Volatility Index closed Friday at 21.71, down from 22.01 back on September 17th.
Now for the portfolio...
1) Verizon at $32.64, up 6.82% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $8.07/share, worth $56.49 to this portfolio currently.
2) AT&T closed at $27.03, up 3.01% for the year, inclusive of dividends.
3) GE closed at $16.66, up by 10.76% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $32.50, down by 25.55% since my buy.
5) January 2011 WHR $75/$85 Call spread purchased on Monday closed at $4.85, up 4.30% since my buy.
6) December 2010 SPY $102 Calls closed at $14.02, up 8.68% since my buy.
7) January 2012 DD $45/$55 Call spreads purchased Monday closed at $3.58, down 1.92% since my buy.
8) AAPL closed at $292.32 up by 50.87% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012. See a post that I am going to do later on in regards to Citi.
10) C closed at $3.90, down by 2.01% since my buy on Monday.
11) GS closed at $147.28, up by 10.93% since my buy.
Overall, the portfolio is up by 5.74% (8.74% for the DOW Dogs), versus 4.92% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 1.37% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .82% outperform.
The Wilshire 5000 closed at 12,062.80, up from 11,811.39, or 2.13%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,619.35, or 3.82% below today's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 41.4% BULLS, and 29.3% BEARS, for a spread of 12.1%. This is in comparison to a reading of 36.7% BULLS, and 31.1% BEARS, for a spread of 1.1% on September 14th. Bullish sentiment has now turned higher in three consecutive weeks.
The Volatility Index closed Friday at 21.71, down from 22.01 back on September 17th.
Now for the portfolio...
1) Verizon at $32.64, up 6.82% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $8.07/share, worth $56.49 to this portfolio currently.
2) AT&T closed at $27.03, up 3.01% for the year, inclusive of dividends.
3) GE closed at $16.66, up by 10.76% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $32.50, down by 25.55% since my buy.
5) January 2011 WHR $75/$85 Call spread purchased on Monday closed at $4.85, up 4.30% since my buy.
6) December 2010 SPY $102 Calls closed at $14.02, up 8.68% since my buy.
7) January 2012 DD $45/$55 Call spreads purchased Monday closed at $3.58, down 1.92% since my buy.
8) AAPL closed at $292.32 up by 50.87% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012. See a post that I am going to do later on in regards to Citi.
10) C closed at $3.90, down by 2.01% since my buy on Monday.
11) GS closed at $147.28, up by 10.93% since my buy.
Overall, the portfolio is up by 5.74% (8.74% for the DOW Dogs), versus 4.92% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 1.37% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .82% outperform.
Monday, September 20, 2010
Trading Update - 9/20/10
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After a weekend of analysis I posted here last night that I was going to take up positions in DuPont (DD), and Whirlpool (WHR). I also noted that I would be trading out of NLY and FXP. Well, the market helped in some regards, and hurt in others. While it was nice to be seemingly right in my research of both these names, I wish the market would have held off another day so I could get in at better prices.
If you noticed, the market was up big today, and DD and WHR were no exceptions, especially WHR which was up 7.24% vs. 1.52% for the S&P 500. As such, I didn't get into or out of any of the positions at the prices I wanted. I was able to trade out of FXP at $33.26, as well as NLY at $18.02.
With the proceeds, I purchased three (3) DD $45/$55 January 2012 CALL spreads for $3.65/each, or $1,095. I was also able to buy one (1) WHR $75/$85 January 2011 CALL spread for $4.65, or $465 total.
Due to the jump in DD options today, I was unable to buy the second WHR call spread. Therefore, I have ~$300 left in cash. I do not want to leave that money on the sidelines, so I am going to by seventy-five (75) shares of Citigroup at $3.98. As you recall, I owned this stock earlier in the year, and did quite well with it. I suspect that this name is going to make a huge move after the government sells all of it's shares. We'll see.
After a weekend of analysis I posted here last night that I was going to take up positions in DuPont (DD), and Whirlpool (WHR). I also noted that I would be trading out of NLY and FXP. Well, the market helped in some regards, and hurt in others. While it was nice to be seemingly right in my research of both these names, I wish the market would have held off another day so I could get in at better prices.
If you noticed, the market was up big today, and DD and WHR were no exceptions, especially WHR which was up 7.24% vs. 1.52% for the S&P 500. As such, I didn't get into or out of any of the positions at the prices I wanted. I was able to trade out of FXP at $33.26, as well as NLY at $18.02.
With the proceeds, I purchased three (3) DD $45/$55 January 2012 CALL spreads for $3.65/each, or $1,095. I was also able to buy one (1) WHR $75/$85 January 2011 CALL spread for $4.65, or $465 total.
Due to the jump in DD options today, I was unable to buy the second WHR call spread. Therefore, I have ~$300 left in cash. I do not want to leave that money on the sidelines, so I am going to by seventy-five (75) shares of Citigroup at $3.98. As you recall, I owned this stock earlier in the year, and did quite well with it. I suspect that this name is going to make a huge move after the government sells all of it's shares. We'll see.
Sunday, September 19, 2010
What I'm Trading Monday September 20th, 2010
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I think it is time to take some action with my portfolio. Tomorrow, I will be selling all of my shares in FXP, as well as NLY. FXP is down 22.12% year-to-date, and I suspect the shorts are going to have some fun with this one as the market trends up. NLY is up 4.04% year-to-date, and I believe it is time to invest in something a bit more aggressive. I am putting in orders to sell at $33.85 and $17.92, respectively.
In their place I am going to buy three $45/$55 January 2012 CALL spreads in DuPont (DD). I am putting in an order for $3.13 for this trade.
The second trade I am going to make is to buy two $75/$85 January 2011 CALL spreads in Whirlpool (WHR). I am putting in an order for $4.78 for this trade.
We'll see how I do in the time ahead. In the meantime, I will be writing more this week about some of the names I have recently mentioned in this blog. Stay tuned, and don't forget to subscribe! Go Colts!
I think it is time to take some action with my portfolio. Tomorrow, I will be selling all of my shares in FXP, as well as NLY. FXP is down 22.12% year-to-date, and I suspect the shorts are going to have some fun with this one as the market trends up. NLY is up 4.04% year-to-date, and I believe it is time to invest in something a bit more aggressive. I am putting in orders to sell at $33.85 and $17.92, respectively.
In their place I am going to buy three $45/$55 January 2012 CALL spreads in DuPont (DD). I am putting in an order for $3.13 for this trade.
The second trade I am going to make is to buy two $75/$85 January 2011 CALL spreads in Whirlpool (WHR). I am putting in an order for $4.78 for this trade.
We'll see how I do in the time ahead. In the meantime, I will be writing more this week about some of the names I have recently mentioned in this blog. Stay tuned, and don't forget to subscribe! Go Colts!
Saturday, September 18, 2010
Good Week For My Portfolio, Overall Market
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The Wilshire 5000 closed at 11,811.39, up from 11,698.90, or .96%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,602.84, or 1.80% below today's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 36.7% BULLS, and 31.1% BEARS, for a spread of 1.1%. This is in comparison to a reading of 33.3% BULLS, and 32.2% BEARS, for a spread of 1.1% on September 7th. Sentiment continues to turn higher since our low of 29.4% BULLS back on August 31st. The 4-week moving average of BULLISH sentiment still sits at a low for the year of 33.2%. I see these as bullish signs.
The Volatility Index closed Friday at 22.01, up from 21.21 back on September 14th.
Now for the portfolio...
1) Verizon at $31.68, up 3.68% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.96/share, worth $55.72 to this portfolio currently.
2) AT&T closed at $27.57, up 5.07% for the year, inclusive of dividends.
3) GE closed at $16.29, up by 8.30% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $33.80, down by 22.58% since my buy.
5) FXP, the doubleshort China ETF, closed at $33.86, down by 22.12% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $12.45, down 3.49% since I purchased them a few weeks back.
7) NLY closed at $17.92, up by 4.04% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $275.37 up by 42.13% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $150.98, up by 10.93% since my buy.
Overall, the portfolio is up by 3.80% (7.57% for the DOW Dogs), versus 2.73% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 4.79% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 1.07% outperform.
More later.
The Wilshire 5000 closed at 11,811.39, up from 11,698.90, or .96%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,602.84, or 1.80% below today's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 36.7% BULLS, and 31.1% BEARS, for a spread of 1.1%. This is in comparison to a reading of 33.3% BULLS, and 32.2% BEARS, for a spread of 1.1% on September 7th. Sentiment continues to turn higher since our low of 29.4% BULLS back on August 31st. The 4-week moving average of BULLISH sentiment still sits at a low for the year of 33.2%. I see these as bullish signs.
The Volatility Index closed Friday at 22.01, up from 21.21 back on September 14th.
Now for the portfolio...
1) Verizon at $31.68, up 3.68% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.96/share, worth $55.72 to this portfolio currently.
2) AT&T closed at $27.57, up 5.07% for the year, inclusive of dividends.
3) GE closed at $16.29, up by 8.30% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $33.80, down by 22.58% since my buy.
5) FXP, the doubleshort China ETF, closed at $33.86, down by 22.12% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $12.45, down 3.49% since I purchased them a few weeks back.
7) NLY closed at $17.92, up by 4.04% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $275.37 up by 42.13% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $150.98, up by 10.93% since my buy.
Overall, the portfolio is up by 3.80% (7.57% for the DOW Dogs), versus 2.73% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 4.79% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 1.07% outperform.
More later.
Thursday, September 16, 2010
Short Squeeze Screen Produces Good Results!
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Cabela's Incorporated (CAB), Retail (Specialty)
9/10/10 Close - $16.72
9/16/10 Close - $17.29
Four Day Return - 3.41%
Children's Place Retail Stores, Inc. (PLCE), Retail (Apparel)
9/10/10 Close - $47.71
9/16/10 Close - $48.21
Four Day Return - 1.05%
True Religion Apparel, Inc (TRLG), $19.07, Apparel/Accessories
9/10/10 Close - $19.07
9/16/10 Close - $19.63
Four Day Return - 2.94%
The average return for these three stocks is 2.47%. Compare that to a return of 1.36% for the same time period for the S&P 500. After Monday's close I posted here that the three picks were up 3.84%, and had I been trading them I probably would have taken profits using short dated options.
Well, today I decided to see if I could find any more of such opportunities. I have modified my stock screen criteria to be as follows:
1) Asset Class > Small Cap. This includes all asset classes larger than small cap, it just excludes the micro caps.
2) Price Performance vs. S&P 500 Last 4 Weeks = -20% to 0%. The market has been going up the last few weeks, and I want laggards.
3) Component of NYSE. This ensures these are legitimately traded companies, and should provide some liquidity assurance.
4) Beta > S&P 500 volatility. Detailed in my post from Monday morning.
5) Price/Cash Flow Ratio < 10x. Also detailed in my post from Monday morning.
6) Short Interest as Percent of Float > 20%. Also detailed in my post from Monday morning.
The results:
1) Barnes & Noble (BKS), $15.90, Retail/Specialty
2) Boyd Gaming Corporation (BYD), $7.19, Casinos & Gaming
3) GameStop (GME), $18.59, Retail/Technology
4) Genco Shipping & Trading Limited (GNK), $16.15, Water Transportation
5) Life Time Fitness (LTM), $37.51, Recreational Activities
Over the next few days I am going to watch these names and see how they do. If they perform well, that is, better than the market, this might be a strategy that I begin to employ. We'll see.
Why Do You Blog?
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This is a paid post.
I am writing this post to tell you why I blog. I needed a creative outlet where I could share my investing thoughts and experiences. While my long-term goal is to open my own hedge fund, and run money, that is not happening anytime soon. This is the next best thing.
Ironically, shortly after beginning this blog, it came to my attention that you can get paid to blog. This was a new revelation for me. There are many ways to make money blogging, some of them I use, some of them I don’t. Among them are Google AdSense, Adwords, private advertisers, or blog advertising. While my blog covers popular topics, I have found it a chore to get the word out about this page, and to use specific keywords so my blog would get noticed. (Called SEO. If you don’t know what that is, check here)
So far, the best means to make money blogging that I have found is the Blog Advertising Store. It’s easy to sign up (it took me less than a day), and they feed you opportunities for paid posts (like this one) regularly. When you’re done, you post the link to their website, and they send funds to your PayPal. It’s pretty easy. They also have a blog, check it out here.
I write this blog because I love finance, and the world of investing. The fact that blogs can make money is a bonus. If you are reading this blog, and you currently write one of your own, I encourage you to post your experiences in the “comments” section of this page for all to share.
Everybody Should Have Their Investing Rules
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I found an interesting article titled “The Golden Rules Of Investing” while I was perusing the interweb today. The basic premise of the article is that this gentleman is a mess when it comes to the market, and from the recent financial crisis he has gleaned ten (10) steadfast principles on investing. They are:
1) Thou cannot predict thy market
2) Take a long-term view
3) Keep adding to your investments – dollar cost averaging
4) Your age should not dictate how you invest
5) Rebalance your investments periodically
6) Buy and sell gradually
7) Use all-in-one funds to improve returns
8) Avoid traps in employer sponsored retirement accounts
9) Consider annuities for income, and
10) Use ETFs
While I certainly agree with most of this list, some of it, I think, is a bit misguided. For one, I think most investors should take a long-term view. However, a long-term view is not what it used to be. To me, long-term is one year, and not much more. Furthermore, sometimes a short-term opportunity presents itself, and it is too good to pass up.
Finally, I do believe it is possible to time the market within a reasonable realm. It’s difficult, but often the data will tell you it’s a bottom, or close to it. When everybody is running for the exits, that’s when I want to walk into the theatre and catch a movie. The same is true at market tops. You don’t need to catch the absolute top or bottom, but you should try to be close. Sometimes you just have to hold your nose, and go against the consensus.
On another interesting note, here is another article title “What Kind Of Investor Are You?”. I think it goes well with this article. Take a look at both, and let me know what you think.
Wednesday, September 15, 2010
New! Email Subscription Option!
Hello all. As you will notice on the right side of the page under the "Follow Me On Twitter" box, there is a new option to follow me via email. If you're visiting this page for the 1st time or the 100th time, please take the time to enter your email address and subscribe. It takes two seconds, and will give you convenient alerts on when I have posted. Thanks!
Why Invest In Treasuries? 14 DJIA Stocks Have Higher Yields!
Here is an updated list from a post I did on August 6th. Currently, the 10-year U.S. Treasury is yielding 2.74%, down from 2.86% when I last did one of these lists. Why invest in Treasuries when you can get a higher yield and the potential for price appreciation from equities? Here's a list of 14 DOW stocks that currently are yielding more than the 10-year:
1) Verizon (VZ), 6.25%
2) AT&T (T), 6.00%
3) Pfizer (PFE), 4.17%
4) Merck (MRK), 4.16%
5) DuPont (DD), 3.82%
6) Kraft (KFT), 3.67%
7) Chevron (CVX), 3.64%
8) Johnson & Johnson (JNJ), 3.54%
9) Home Depot (HD), 3.16%
10) Proctor & Gamble (PG), 3.15%
11) Coca-Cola (KO), 3.07%
12) McDonald's (MCD), 2.94%
13) General Electric (GE), 2.94%
14) Exxon-Mobil (XOM), 2.89%
1) Verizon (VZ), 6.25%
2) AT&T (T), 6.00%
3) Pfizer (PFE), 4.17%
4) Merck (MRK), 4.16%
5) DuPont (DD), 3.82%
6) Kraft (KFT), 3.67%
7) Chevron (CVX), 3.64%
8) Johnson & Johnson (JNJ), 3.54%
9) Home Depot (HD), 3.16%
10) Proctor & Gamble (PG), 3.15%
11) Coca-Cola (KO), 3.07%
12) McDonald's (MCD), 2.94%
13) General Electric (GE), 2.94%
14) Exxon-Mobil (XOM), 2.89%
DOW Dogs Beating Market By 147%; S&P Dogs?
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As you all know, I am a big fan of the use of stock screens, and specifically my DOW Dogs strategy. After yesterday's trading, the three DOW Dog stocks currently held in my portfolio are up 5.70%. You can see which stocks those are here. To date, the total market index, the Wilshire 5000, is up 2.31% year-to-date. If you do the math, the DOW Dogs are beating the market by 147%. Not too bad.
As of this morning, one new name has appeared in my stock screen: Wal-Mart (WMT). WMT is currently trading at $52.66, 8.48x price/cash flow, .46x price/sales, and 13.46x price/earnings. Wal-Mart is also carrying a yield of 2.30%. Overall, I think this is a very attractive name currently selling at a discount. If you believe the economy is NOT falling off a cliff, as I do, then this is also an interesting play on consumer spending and confidence.
"Why limit this strategy to just DJIA stocks? Can we expand this?" you say. Well, yes, yes we can. This morning I ran the same screen, but instead input S&P 500 stocks instead of DJIA stocks. The only change I made was to make the price/cash flow ratio criteria more stringent, so as to not return too many names. Here is what the screen looks like:
Criteria -
1) Component of S&P 500
2) Price/Cash Flow of 0-5x
3) Insider Activity over the last month - net accumulation
The Names -
1) Dean Foods Company (DF), $10.31, 0.00% yield, 4.26x price/cash
2) Supervalu, Inc. (SVU), $11.09, 3.16% yield, 2.03x price/cash
3) Tenet Healthcare Corporation (THC), $4.33, 0.00% yield, 3.85x price/cash
4) The AES Corporation (AES), $11.19, 0.00% yield, 3.90x price/cash
5) Time Warner Cable, Inc. (TWC), $55.17, 2.90% yield, 4.24x price/cash
6) Verizon Communications (VZ), $30.91, 6.31% yield, 3.81x price/cash
7) Whirlpool Corporation (WHR), $72.32, 2.38% yield, 3.87x price/cash
Admittedly, I am not all that interested in the names that pay no dividend. Three names on this list do not pay one: DF, THC, and AES. However, I am going to keep track of all these names, and see how they perform relative to the market. As of yesterday's close the Wilshire 5000 was at 11,762.80. I suspect the broad market, and all of these names, will be higher by the end of the year.
As you all know, I am a big fan of the use of stock screens, and specifically my DOW Dogs strategy. After yesterday's trading, the three DOW Dog stocks currently held in my portfolio are up 5.70%. You can see which stocks those are here. To date, the total market index, the Wilshire 5000, is up 2.31% year-to-date. If you do the math, the DOW Dogs are beating the market by 147%. Not too bad.
As of this morning, one new name has appeared in my stock screen: Wal-Mart (WMT). WMT is currently trading at $52.66, 8.48x price/cash flow, .46x price/sales, and 13.46x price/earnings. Wal-Mart is also carrying a yield of 2.30%. Overall, I think this is a very attractive name currently selling at a discount. If you believe the economy is NOT falling off a cliff, as I do, then this is also an interesting play on consumer spending and confidence.
"Why limit this strategy to just DJIA stocks? Can we expand this?" you say. Well, yes, yes we can. This morning I ran the same screen, but instead input S&P 500 stocks instead of DJIA stocks. The only change I made was to make the price/cash flow ratio criteria more stringent, so as to not return too many names. Here is what the screen looks like:
Criteria -
1) Component of S&P 500
2) Price/Cash Flow of 0-5x
3) Insider Activity over the last month - net accumulation
The Names -
1) Dean Foods Company (DF), $10.31, 0.00% yield, 4.26x price/cash
2) Supervalu, Inc. (SVU), $11.09, 3.16% yield, 2.03x price/cash
3) Tenet Healthcare Corporation (THC), $4.33, 0.00% yield, 3.85x price/cash
4) The AES Corporation (AES), $11.19, 0.00% yield, 3.90x price/cash
5) Time Warner Cable, Inc. (TWC), $55.17, 2.90% yield, 4.24x price/cash
6) Verizon Communications (VZ), $30.91, 6.31% yield, 3.81x price/cash
7) Whirlpool Corporation (WHR), $72.32, 2.38% yield, 3.87x price/cash
Admittedly, I am not all that interested in the names that pay no dividend. Three names on this list do not pay one: DF, THC, and AES. However, I am going to keep track of all these names, and see how they perform relative to the market. As of yesterday's close the Wilshire 5000 was at 11,762.80. I suspect the broad market, and all of these names, will be higher by the end of the year.
Tuesday, September 14, 2010
My Portfolio, Dow Dogs Beating The Market
The Wilshire 5000 closed at 11,698.90, up from 11,453.30, or 2.14%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,592.67, or .92% below today's close. The Wilshire 5000 closed above it's 200-day for the first time since August 11th.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 33.3% BULLS, and 32.2% BEARS, for a spread of 1.1%. This is in comparison to a reading of 29.4% BULLS, and 37.7% BEARS, for a spread of -8.3% on August 31st. Sentiment has turned a bit higher since we saw the lowest reading of March 2009 in the prior week. Given how the market has been trading the last few days, I would say that we will see a higher BULL reading this week, as well as an increased spread. We'll find out Thursday night.
The Volatility Index closed Monday at 21.21, down from 23.25 back on September 8th.
Now for the portfolio...
1) Verizon at $30.90, up 1.13% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.68/share, worth $53.76 to this portfolio currently.
2) AT&T closed at $26.90, up 2.52% for the year, inclusive of dividends.
3) GE closed at $16.25, up by 8.03% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $33.14, down by 24.09% since my buy.
5) FXP, the doubleshort China ETF, closed at $33.93, down by 21.95% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $12.03, down 6.74% since I purchased them a few weeks back.
7) NLY closed at $17.87, up by 3.74% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $267.04 up by 37.83% since my buy.
9) January '12 Citigroup Calls closed at $.15, down by 65.91% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $154.37, up by 13.42% since my buy.
Overall, the portfolio is up by 2.61% (5.72% for the DOW Dogs), versus 1.75% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 5.89% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .86% outderperform. A substantial portion of my performance is due to my Dow Dogs strategy. This strategy has consistently outperformed the market for me over the past 5 years, and I have no reason to suspect it won't do so for the next 40. In a future post I will detail the performance of the three additional Dow Dogs I recommended back on July 26th.
I stated in my last portfolio update that the market was due for a bounce. Since that post, the market is up over 2%. The market has been volatile, no doubt. Some people believe we are range bound. While that may be true short term, eventually we are going to break out of this range to the upside. Watch and see if we can get a few days close above the 1,140 level on the S&P, that will be the telling sign. For now, I think sentiment is negative enough, and there is enough money floating around to believe that we are poised for a move higher.
According to my post on June 20th, I believed then that the time to buy was on or around June 1st. On June 1st, the Wilshire 5000 closed at 11,184.70. As I stated before, the market is now at 11,698.90, up 4.59%. The market is only up 1.75% for the entire year. The talking heads would have you believe that the world fell off the edge during that period of time though. It's always important to keep things in perspective, watch the data, and pay attention to history.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 33.3% BULLS, and 32.2% BEARS, for a spread of 1.1%. This is in comparison to a reading of 29.4% BULLS, and 37.7% BEARS, for a spread of -8.3% on August 31st. Sentiment has turned a bit higher since we saw the lowest reading of March 2009 in the prior week. Given how the market has been trading the last few days, I would say that we will see a higher BULL reading this week, as well as an increased spread. We'll find out Thursday night.
The Volatility Index closed Monday at 21.21, down from 23.25 back on September 8th.
Now for the portfolio...
1) Verizon at $30.90, up 1.13% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.68/share, worth $53.76 to this portfolio currently.
2) AT&T closed at $26.90, up 2.52% for the year, inclusive of dividends.
3) GE closed at $16.25, up by 8.03% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $33.14, down by 24.09% since my buy.
5) FXP, the doubleshort China ETF, closed at $33.93, down by 21.95% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $12.03, down 6.74% since I purchased them a few weeks back.
7) NLY closed at $17.87, up by 3.74% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $267.04 up by 37.83% since my buy.
9) January '12 Citigroup Calls closed at $.15, down by 65.91% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $154.37, up by 13.42% since my buy.
Overall, the portfolio is up by 2.61% (5.72% for the DOW Dogs), versus 1.75% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 5.89% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .86% outderperform. A substantial portion of my performance is due to my Dow Dogs strategy. This strategy has consistently outperformed the market for me over the past 5 years, and I have no reason to suspect it won't do so for the next 40. In a future post I will detail the performance of the three additional Dow Dogs I recommended back on July 26th.
I stated in my last portfolio update that the market was due for a bounce. Since that post, the market is up over 2%. The market has been volatile, no doubt. Some people believe we are range bound. While that may be true short term, eventually we are going to break out of this range to the upside. Watch and see if we can get a few days close above the 1,140 level on the S&P, that will be the telling sign. For now, I think sentiment is negative enough, and there is enough money floating around to believe that we are poised for a move higher.
According to my post on June 20th, I believed then that the time to buy was on or around June 1st. On June 1st, the Wilshire 5000 closed at 11,184.70. As I stated before, the market is now at 11,698.90, up 4.59%. The market is only up 1.75% for the entire year. The talking heads would have you believe that the world fell off the edge during that period of time though. It's always important to keep things in perspective, watch the data, and pay attention to history.
Monday, September 13, 2010
Were You Up 3.84% Today?
I hope this posts finds all of you well. I also hope that this post finds you a little bit richer. This weekend I wrote a blog post which posted this morning before market open. In it, I detailed a new screen I was trying, and the results that it produced when I ran it. Here's what happened today...
S&P 500 - +12.35, up 1.11%
Cabela's Incorporated (CAB) - +$.58, up 3.47%
Children's Place Retail Stores, Inc. (PLCE) - +$1.49, up 3.12%
True Religion Apparel, Inc. (TRLG) - +$.94, up 4.93%
Overall, if you invested in all three in equal increments, you would have seen a total return of 3.84% today, more than triple the return of the S&P 500 which returned 1.11%. I must say, I am very intrigued by the possibilities of this type of screen. As you can see, the screen identified stocks that will move higher much harder than the overall market. In an up market, this is a great thing, in a down market, it's just as bad.
If one is able to identify short periods of time where the market is likely to trend higher, this can be a very profitable strategy. I am going to keep an eye on these stocks for a while, and will look for opportunities in the future to test this stock screen further. While I myself did not buy any of these names this morning, as this was an experiment, in the future if I were to do so I would take part with near dated options. With near dated options I will have a defined risk, and the potential for a higher percentage gain will be much greater. Had I been trading such options today, odds are I would have covered those options in the same day with a substantial profit.
S&P 500 - +12.35, up 1.11%
Cabela's Incorporated (CAB) - +$.58, up 3.47%
Children's Place Retail Stores, Inc. (PLCE) - +$1.49, up 3.12%
True Religion Apparel, Inc. (TRLG) - +$.94, up 4.93%
Overall, if you invested in all three in equal increments, you would have seen a total return of 3.84% today, more than triple the return of the S&P 500 which returned 1.11%. I must say, I am very intrigued by the possibilities of this type of screen. As you can see, the screen identified stocks that will move higher much harder than the overall market. In an up market, this is a great thing, in a down market, it's just as bad.
If one is able to identify short periods of time where the market is likely to trend higher, this can be a very profitable strategy. I am going to keep an eye on these stocks for a while, and will look for opportunities in the future to test this stock screen further. While I myself did not buy any of these names this morning, as this was an experiment, in the future if I were to do so I would take part with near dated options. With near dated options I will have a defined risk, and the potential for a higher percentage gain will be much greater. Had I been trading such options today, odds are I would have covered those options in the same day with a substantial profit.
Are These Stocks Poised For A Short Squeeze?
Over the weekend, I used the trusty E-Trade stock screener to attempt to identify some names that are poised for a short squeeze. When a stock is shorted, the investor "borrows" the stock at a high price, with the intent of "buying" it back at a lower price. When a stock with a high short percentage of the float begins to move higher, the shorts begin to lose money and thus get "squeezed" into buying the stock back to cover their losses. As a stock begins to move higher, the move is exacerbated by such unnatural buying.
Here's the screen I used to identify where the opportunities may lie:
Criteria - S&P 500 Membership
Logic - I want stocks that are at least fairly liquid. That is, I want them to trade regularly and in a relatively high frequency, this makes getting in and out much easier.
Criteria - Beta > 1
Logic - As you know if you read this blog, I believe the market is going to trend higher in the time ahead. Beta is a measure of how a stock moves in relation to the market. A Beta of 1 indicates the stock will move in correlation to the market, < 1 indicates the moves will be less than the market, and > 1 means the stock will move more than the market. For instance, if a stock has a Beta of 1.5, and the market moves up 10%, we can expect our stock to move up 15%. By choosing a Beta of > 1, I am trying to pick stocks that are really going to move once squeezed.
Criteria - Short Percentage of Float > 25%
Logic - This means that a quarter of the float, or the percentage of all outstanding shares that are traded by the public, is currently being held short. Meaning, there are a large percentage of people who believe the stock is going down who can potentially be squeezed out if the market moves higher. A high short percentage means the squeeze upward will be even more severe.
Criteria - Price/Cash Flow Ratio < 10
Logic - If you've read my Dow Dogs post from January, you know how I feel about this metric to find undervalued companies. I am not going to bore you with the explanation again.
Results (Data per www.finviz.com, as E-Trade went down for maintenance during this writing):
Cabela's Incorporated (CAB), $16.72, Retail (Specialty)
Short Interest - 27.18%
Beta - 1.09
Price/Cash Flow Ratio -2.27
Children's Place Retail Stores, Inc. (PLCE), $47.71, Retail (Apparel)
Short Interest Ratio -24.79%
Beta - 1.12
Price/Cash Flow Ratio - 6.67
True Religion Apparel, Inc (TRLG), $19.07, Apparel/Accessories
Short Interest - 25.07%
Beta - 1.71
Price/Cash Flow Ratio - 3.95
I am going to keep track of these names, and see how the do over the coming weeks. Maybe this will be a strategy worth following in the future, maybe not. I will write back with the results at a later date.
Here's the screen I used to identify where the opportunities may lie:
Criteria - S&P 500 Membership
Logic - I want stocks that are at least fairly liquid. That is, I want them to trade regularly and in a relatively high frequency, this makes getting in and out much easier.
Criteria - Beta > 1
Logic - As you know if you read this blog, I believe the market is going to trend higher in the time ahead. Beta is a measure of how a stock moves in relation to the market. A Beta of 1 indicates the stock will move in correlation to the market, < 1 indicates the moves will be less than the market, and > 1 means the stock will move more than the market. For instance, if a stock has a Beta of 1.5, and the market moves up 10%, we can expect our stock to move up 15%. By choosing a Beta of > 1, I am trying to pick stocks that are really going to move once squeezed.
Criteria - Short Percentage of Float > 25%
Logic - This means that a quarter of the float, or the percentage of all outstanding shares that are traded by the public, is currently being held short. Meaning, there are a large percentage of people who believe the stock is going down who can potentially be squeezed out if the market moves higher. A high short percentage means the squeeze upward will be even more severe.
Criteria - Price/Cash Flow Ratio < 10
Logic - If you've read my Dow Dogs post from January, you know how I feel about this metric to find undervalued companies. I am not going to bore you with the explanation again.
Results (Data per www.finviz.com, as E-Trade went down for maintenance during this writing):
Cabela's Incorporated (CAB), $16.72, Retail (Specialty)
Short Interest - 27.18%
Beta - 1.09
Price/Cash Flow Ratio -2.27
Children's Place Retail Stores, Inc. (PLCE), $47.71, Retail (Apparel)
Short Interest Ratio -24.79%
Beta - 1.12
Price/Cash Flow Ratio - 6.67
True Religion Apparel, Inc (TRLG), $19.07, Apparel/Accessories
Short Interest - 25.07%
Beta - 1.71
Price/Cash Flow Ratio - 3.95
I am going to keep track of these names, and see how the do over the coming weeks. Maybe this will be a strategy worth following in the future, maybe not. I will write back with the results at a later date.
Saturday, September 11, 2010
Wal-Mart (WMT) On My Radar
This morning, I checked my E-Trade stock screener, looking to see if anything new popped up. Well, it did. My stock screener returned Wal-Mart (WMT) and Verizon (VZ). While I have talked endlessly on this blog about Verizon, and that pick is up .87% year-to-date, I am far more intrigued by Wal-Mart.
While I generally do not like retail (I worked retail for six years in a previous life), and do not follow retail stocks in particular, I find Wal-Mart to be an interesting pick. Currently, WMT is trading at $51.97, with a 2.33% yield, 13.29 P/E ratio, and a 8.37 price/cash flow ratio. I have written here about how I do not feel the economy is really that bad, and so I could see how WMT could be a consumer confidence play. As people begin to feel better about the economy, and we get to see more job creation, like we did on September 6th, certainly we will see a rise in consumer spending.
While I am not jumping on the bandwagon just yet, I certainly feel Wal-Mart is an interesting name, and one that should deserve more consideration.
While I generally do not like retail (I worked retail for six years in a previous life), and do not follow retail stocks in particular, I find Wal-Mart to be an interesting pick. Currently, WMT is trading at $51.97, with a 2.33% yield, 13.29 P/E ratio, and a 8.37 price/cash flow ratio. I have written here about how I do not feel the economy is really that bad, and so I could see how WMT could be a consumer confidence play. As people begin to feel better about the economy, and we get to see more job creation, like we did on September 6th, certainly we will see a rise in consumer spending.
While I am not jumping on the bandwagon just yet, I certainly feel Wal-Mart is an interesting name, and one that should deserve more consideration.
Wednesday, September 8, 2010
The Market Is Suggesting A Bounce Is Coming
Hello again. I am just recently back from vacation, and studying for a CPA Exam before that. I have been eager to collect all of my data, and see what the market is doing. Let's get into it...
The Wilshire 5000 closed at 11,453.30, up from 11,203.50, or 2.22%, since my post of three weeks ago on 8/15/10. The Wilshire 5000's 200-day moving average currently sits at 11,588.05, or 1.16% above today's close. The Wilshire 5000 has now closed below it's 200-day moving average every day since 8/11/10.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 29.4% BULLS, and 37.7% BEARS, for a spread of -8.3%. This is in comparison to a reading of 41.7% BULLS, and 27.5% BEARS, for a spread of 14.2% on August 10th. As you can see, the sentiment in the market has clearly turned more negative over the past few weeks. In fact, the sentiment hasn't been so negative since March of last year. The last time the market was this negative, we saw a 70% bounce upward, just saying.
The Volatility Index closed Friday at 23.25, down from 26.24 back on August 15th.
Now for the portfolio...
1) Verizon at $30.46, down .31% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.55/share, worth $52.85 to this portfolio currently.
2) AT&T closed at $26.87, up 2.40% for the year, inclusive of dividends.
3) GE closed at $15.70, up by 4.38% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $31.90, down by 26.93% since my buy.
5) FXP, the doubleshort China ETF, closed at $36.05, down by 17.08% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $10.38, down 19.53% since I purchased them this past week
7) NLY closed at $17.70, up by 2.76% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $262.92 up by 35.70% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $147.54, up by 8.41% since my buy.
Overall, the portfolio is down by .59% (3.96% for the DOW Dogs), versus -.38% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 8.82% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .21% underperform Most of this underperformance is directly attributable to my movement into ~20% options. These investments are going to be much more volatile than actual stocks. However, with the two securities I am holding options in right now, I believe the payoff will be significant by the time their expiration comes due.
I have stated that I believe we are due for a bounce. Certainly the political environment is hanging over the market a bit, and some of that will be cleared up in November. However, the market can only become so negative given the fact that the economy is not going to fall of the face of the Earth anytime soon. This morning, I saw a quote for the 10-year at 2.58%. From 1962 when I could get data, to the present, the average yield is 6.85%. The 2010 daily average yield is close to 3.5%, and the average for the past decade back to 2000 (recall the events of the tech bubble, Enron, the credit crisis, 9/11, etc.) is 4.46%. The yield on the 10-year, the benchmark risk free rate, is a good indicator of just how negative things are. At some point, money has to flow out of the bond market, and into equities.
The Wilshire 5000 closed at 11,453.30, up from 11,203.50, or 2.22%, since my post of three weeks ago on 8/15/10. The Wilshire 5000's 200-day moving average currently sits at 11,588.05, or 1.16% above today's close. The Wilshire 5000 has now closed below it's 200-day moving average every day since 8/11/10.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 29.4% BULLS, and 37.7% BEARS, for a spread of -8.3%. This is in comparison to a reading of 41.7% BULLS, and 27.5% BEARS, for a spread of 14.2% on August 10th. As you can see, the sentiment in the market has clearly turned more negative over the past few weeks. In fact, the sentiment hasn't been so negative since March of last year. The last time the market was this negative, we saw a 70% bounce upward, just saying.
The Volatility Index closed Friday at 23.25, down from 26.24 back on August 15th.
Now for the portfolio...
1) Verizon at $30.46, down .31% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.55/share, worth $52.85 to this portfolio currently.
2) AT&T closed at $26.87, up 2.40% for the year, inclusive of dividends.
3) GE closed at $15.70, up by 4.38% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $31.90, down by 26.93% since my buy.
5) FXP, the doubleshort China ETF, closed at $36.05, down by 17.08% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $10.38, down 19.53% since I purchased them this past week
7) NLY closed at $17.70, up by 2.76% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $262.92 up by 35.70% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $147.54, up by 8.41% since my buy.
Overall, the portfolio is down by .59% (3.96% for the DOW Dogs), versus -.38% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 8.82% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .21% underperform Most of this underperformance is directly attributable to my movement into ~20% options. These investments are going to be much more volatile than actual stocks. However, with the two securities I am holding options in right now, I believe the payoff will be significant by the time their expiration comes due.
I have stated that I believe we are due for a bounce. Certainly the political environment is hanging over the market a bit, and some of that will be cleared up in November. However, the market can only become so negative given the fact that the economy is not going to fall of the face of the Earth anytime soon. This morning, I saw a quote for the 10-year at 2.58%. From 1962 when I could get data, to the present, the average yield is 6.85%. The 2010 daily average yield is close to 3.5%, and the average for the past decade back to 2000 (recall the events of the tech bubble, Enron, the credit crisis, 9/11, etc.) is 4.46%. The yield on the 10-year, the benchmark risk free rate, is a good indicator of just how negative things are. At some point, money has to flow out of the bond market, and into equities.
Wall Street Journal Subscription Discount
Much of the information that you read on this blog is news found in "The Journal". I thought you guys might like this post by a paid sponsor about discounts on the publication that everybody in the world of finance reads. I have been a subscriber for a few years and love it. Read on...
SOURCE: FedPrimeRate.com
SOURCE: FedPrimeRate.com
Sep 29, 2009 03:51 ET
Prime Rate Website Offers Wall Street Journal Subscription Discounts
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Recently, a graph which compares the target fed funds rate to the U.S. Prime Rate, the one-month LIBOR rate and the three-month LIBOR rate was added to the site. It's a fascinating and telling chart which essentially chronicles the history of the global credit crisis. As numerous banks in the industrialized world were failing as a result of exposure to toxic debt, the Federal Reserve aggressively cut short-term rates to record-low levels. Commercial banks, on the other hand, responded to the same financial havoc by raising rates on unsecured, short-term interbank loans, because the risk associated with such loans increased dramatically. The resultant and precipitous decline in interbank lending produced a domino effect which led to a chocking off of lending to businesses and consumers in the U.S. and other developed nations.
About FedPrimeRate.com
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No Exam Life Insurance
Here is an interesting article by a paid sponsor on no exam life insurance. As somebody who had to buy such coverage for both of his parents because it was too late for them to pass an exam, I can tell you that it really is a great (and useful) product. Life insurance, unfortunately, is often one of those necessary evils. Read on...
SOURCE: FedPrimeRate.com
SOURCE: FedPrimeRate.com
Jun 20, 2010 19:48 ET
No Medical Exam Life Insurance Page Added to FedPrimeRate.com Website
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FedPrimeRate.com is already the Internet authority on the United States Prime Rate, LIBOR and other key market rates like the benchmark fed funds target rate. Establish in 2005, FedPrimeRate.com has expanded considerably over the last five years to include blogs about car insurance, consumer and business credit cards, and interest rates. The site also has in-depth information about controversial loan products like online payday loans. Other popular features on the site include an impressive number of detailed and regularly updated charts, a U.S. Prime Rate frequently asked questions page and an entire section dedicated to housing and foreclosures.
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"We like and respect other finance-related websites like BankRate. Our mission, however, is to provide web surfers with the most unique and useful finance-related info that they simply won't be able to find anywhere else. We're very proud of what we've accomplished over the last five years, and we have no plans on slowing down," added Brown.
About FedPrimeRate.com
The website at FedPrimeRate.com is the Internet's premier information space dedicated to interest rates and personal finance.
Small Business Credit Cards Are Back
Hello again, folks. I have returned to the blogosphere after a few week sabbatical to study for the CPA exam, as well as a long Labor Day Weekend vacation.
Anybody have a business credit card? I do. Below is a really interesting article by a paid sponsor on the subprime crisis that we are just now climbing out of, and it's impact on credit and small businesses. Personally, I work for a medium-sized company that uses a corporate card. As my business is heavily reliant on travel and client entertainment, I am not sure how we would get buy without them.
SOURCE: FedPrimeRate.com
Anybody have a business credit card? I do. Below is a really interesting article by a paid sponsor on the subprime crisis that we are just now climbing out of, and it's impact on credit and small businesses. Personally, I work for a medium-sized company that uses a corporate card. As my business is heavily reliant on travel and client entertainment, I am not sure how we would get buy without them.
SOURCE: FedPrimeRate.com
Jul 15, 2010 22:13 ET
FedPrimeRate.com Now Recommending Small Business Credit Cards
"We're really glad to see business credit cards coming back," said Steve Brown, content manager at FedPrimeRate.com. "Small business owners all across America have been struggling to get access to loans as banks continue to hoard cash. Though the American economy is growing again, the banking sector is still hurting, with many banks still facing closure by the FDIC."
To date, the Federal Deposit Insurance Corporation (FDIC) has closed 90 banks in 2010, which, so far, is a faster pace of bank closures when compared to 2009. Between the beginning of 2009 and July 17, 2009, the FDIC closed 57 banks. The FDIC closed a total of 139 banks during all of 2009. Another troubling fact: unnumbered banks across the country are defaulting on their TARP payments.
"We like the new Ink line of business credit cards from Chase because they offer great rates, reasonable terms and conditions, and they have a very strong bank behind them," continued Brown. "Chase is on an extremely short list of banks that emerged from the banking crisis virtually unscathed. We believe that a bank as strong and responsible as Chase has the financial strength and corporate culture necessary to provide some of the most consumer and business-owner friendly credit products around."
Many factors have contributed to banks scaling back on lending to small businesses. Since the subprime mortgage-inspired financial crisis unfolded two years ago, banks have had to operate within a powerfully negative economic environment: a severe banking crisis, a devastating recession, rising unemployment and defaults, disinflation and the very real threat of deflation. As a result, the credit card industry contracted sharply. Another major factor: the market for credit-card receivables completely dried up. During the credit boom years, banks would bundle up all kinds of credit-card debt, including business-credit card debt, and sell this debt to investors on Wall Street -- very similar to the way mortgages were packaged and sold to investors. Credit-card securitization contributed much to the ready flow of credit to all types of consumers and businesses, as banks were more than happy to pass the risk associated with unsecured debt onto Wall Street. However, the fate of this market was to become another domino felled by one of the many financial shockwaves created by the subprime-mortgage crisis. Business credit cards became so risky and unprofitable for banks that many business card accounts were either closed or had their credit lines severely limited.
Advanta, a company that specialized in small business credit cards, closed all of its card accounts on May 30, 2009. Advanta Corporation filed for bankruptcy relief in November, 2009. The FDIC closed Advanta Bank Corporation in March of 2010.
Chase emerged from the global banking crisis and subsequent Great Recession as one of America's strongest and most resilient banks.
"Have you seen how complicated it is to get a Small Business Administration loan?" quipped Brown. "Business credit cards are not just a great way to get quick and easy access to short-term financing. Small businesses owners can benefit from the rewards programs that come with many business cards, and they can also stay more organized with monthly and yearly expense reports that many business credit card issuers provide. A business credit card also helps a business build its credit rating, making it more likely to get approved for a traditional bank loan in the future."
The typical small business owner who uses a business credit card for short-term financing is a responsible borrower. According to the Federal Reserve, less than 20% of small business credit card holders carry a balance.
About FedPrimeRate.com
The website at FedPrimeRate.com is the Internet's premier information space dedicated to interest rates and finance.
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