"The China Syndrome" Lessons from Confucius and some others

China's stock market pattern is beginning to remind me of Japan's "irrational exuberance" as witnessed in the early nineties where a decade of fantastic growth was followed by a decade of flat to lower stock prices. I struggle many times to wonder why investment dollars flow to a country with serious human rights issues and a government that borders on oppressive. But the fact remains that China's GDP growth north of 10 percent in the last few years is big enough to wake Chinese philosopher Confucius out of the grave to take notice and teach us a few things.

"In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of." Confucius


High energy demand and pricing, a lack of corporate governance and financial accountability to shareholders, hard-lined policies with respect to a free market currency and unfair trade practices are sure to bring the flying dragon down lower to earth. Investors should remember well the events of 10 months ago when a one-day 9% meltdown in Chinese stocks rippled around the world sparking a 400 point sell-off in the Dow Jones Industrials that day. Since then, there have been two other sell-offs in Chinese stocks this year following the US Market's lead.

"He who sacrifices his conscience to ambition burns a picture to obtain the ashes." Confucius

As I write this post, China's Hang Seng Index dropped overnight by 716.45 points or (2.42%). This follows a sharp rise in the prior two sessions of nearly 2 percent. When one sees this kind of volatility near the all-time highs, its time to get cautious or face the music when something bad happens.

"He who will not economize will have to agonize. Much wealth will not come if a little does not go." Confucius


There exists well documented over-valuations of stocks that exist in this market as evidenced by the recent PetroChina deal that came public. Even Warren Buffett made a killing on this deal, but he was quoted recently saying that finding a similar great deal in China now was a struggle in China's "too hot" stock market.

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful, It's only when the tide goes out that you learn who's been swimming naked". -Warren Buffett


He, like some other Wall St mavens have now started to realize that China is overvalued now. However either there are not enough analysts out there to warn investors, or maybe they are just walking as blind as the bond ratings agencies were a year ago who failed to warn us of the sub-prime mortgage crisis. Maybe the big Wall St firms are afraid to tell the truth for fear that their mega-million dollar Chinese IPOs will come to a crashing halt if they get too bearish on the region. It does happen you know.

"An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today." Laurence J. Peter (1919 - 1988)

China now faces 6.5% inflation, a ten year high, and if that isn't enough to create some headwinds, another item I read at the Economist Website while researching this post which I thought was alarming was the under-publicized energy shortage that now exists in China. This crisis has certainly been the driving factor behind Oil's price rise to boiling temperatures and there seems to be no end in sight. (For the record I am still playing the volatility in oil with neutral options positions)

"Ability will never catch up with the demand for it." Confucius

"If inflation continues to soar, you're going to have to work like a dog just to live like one. " -George Gobel


I am initiating a position in the Proshares Ultrashort FTSE/Xinhua China 25, (FXP - AMEX ), a newly launched ETF that is designed to double the inverse daily return of Chinese stocks listed in the FTSE/Xinhua China 25 Index. It closed yesterday at $62.10 and will probably open much higher at the open, but for investors looking out six to nine months this represents a great way to play Chinese stocks to the downside. I didn't have the luxury of ETFs that short the market 15 years ago when Japan's market fell out of bed, but I see another opportunity now and the instrument to do it.

"By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest. " Confucius

To all the Chinese investors reading this post, don't worry I have high hopes for China in the distant future as an investment but near term leading up to the Olympics in August, I see a major correction coming in this market which will by then make stocks of the "asian persuasion" attractive again.

"Our greatest glory is not in never falling, but in rising every time we fall. " Confucius

As for all the other novice investors who have been jumping into the Chinese market the last few months:

"Man who run behind car get exhausted. Man who run in front of car get tired." Confucius

"Virginity like bubble. One prick - all gone!" Confucius

I will be adding a new position in FXP on the next up day in the Chinese market.

Comverse Technology - Takeover on the horizon? "The Greatest Stock Story Never Told"

In my early days as a stockbroker, I worked for a small investment banking firm who participated in underwriting small speculative growth companies that mainly traded as pink sheet stocks. Nine out of ten companies in this arena never make it, but i was fortunate enough to embrace one that was my greatest lesson in what can happen if you buy a stock for the long term.

I also learned what can happen if you don't stay with your beliefs and bail on a stock too early resulting in years of kicking myself and muttering of what I should have, could have, would have done.

The company I am referring to is my first stock pick from 1989, Comverse Technology (CMVT -OTC).

This company's storyline sounds like the trailer for the movie Gladiator where Commodus says to Maximus,

"The general who became a slave. The slave who became a gladiator. The gladiator who defied an emperor. Striking story!"

Comverse's storyline goes like this,
"The company who began as a penny stock. The penny stock that graduated to a Nasdaq listing. The Nasdaq stock who became an SP-500 component. The SP-500 component that fell from grace back to the pink sheets. Striking story!"

Unless you were a shareholder these last few years.

Even more intriguing was last year's worldwide manhunt for Kobi Alexander, Comverse's CEO for many years, who stepped down last year as a result of an improper options back dating probe that began and is still ongoing. Mr. Alexander made a lot of money for shareholders but apparently "greed" took over and he made a fortune by backdating options at low prices illegally. This was so unnecessary since he was doing what we as average investors expect a chief executive to do and that is increase shareholder value. For this he should be remembered as the model for success building a company from obscurity to an institutional darling, but for some reason he chose the path to riches by cheating rather than staying the course and continuing to build a telecom technology powerhouse.

I was buying this stock for clients at $.18c per share in the latter part of 1989. Yes, I was recommending a speculative penny stock in my early days while building a client base. Why? Because the company at the time represented what every investor looks for when they research a company before investing in it. The company was on the technological forefront developing telecommunication systems that provided messaging services and voicemail solutions. They were signing up customers left and right and these customers were major telephone giants throughout the world. Their telecom systems were purchased by governments. The company was building a foundation for remarkable growth. Growth that took this stock from $.18c a share to north of $100 per share over a 10 year time frame.

Unfortunately, I went from the penny stock firm to Lehman Brothers and began buying stocks that were more mainstream and were household names for the average investor. I stopped buying Comverse, and in fact sold what I had for clients in early 1991 and what a mistake that was. If I had held the shares for my first few clients in the early days, I would have been a multi millionaire by now with probably the greatest stock story anybody could tell. But I bailed early and watched the company woo Wall St. and begin it's meteoric ride to SP-500 status. What a lesson, the $100 million dollar lesson considering how much stock I had for clients ($10,000 turned into $8 million in about 10 years and I had about $100,000 worth of the stock total for clients). But a lesson I hope all my readers will learn about long term investing.

Today the stock trades on the pink sheets at around $16 per share and Wall St. is buzzing about a possible breakup of the company's divisions which analysts say is the best strategy that will represent good value to investors. There were even rumors of a takeover from Oracle that surfaced in September. Just in the last few months the company has announced several new telecom contracts and new product announcements that revived my memories of this active pace of new client deals 20 years ago. They still to this day provide major carriers like AT&T, Verizon and Sprint with their messaging technologies and continue to be a leader in this area supplying companies in as much as 130 different countries. Even the new Apple IPhone success has implications for Comverse.

This is not a typical Pink Sheet penny stock fundamentally with $1.43 Billion of cash on the balance sheet ($11.50 per share) and revenues north of $1 Billion. Institutions still own almost 20% and there are price targets by some analysts in the mid-twenties. So buying the stock at $16 seems like a good bargain just as it was 20 years ago at $18c.

Investors should be aware that the company still has delayed their audited financials which has been the main cause of the Nasdaq delisting, but I am anticipating they may be coming out of this two year scandal by early next year and new organizational changes will probably accelerate this process. Any potential takeover players may be waiting for these events to come to closure and the bad boys of the stock option scandal are now separated from the company. Earlier this year Comverse Technology also named a new chief executive. Former AT&T Wireless executive Andre Dahan who agreed to take the CEO job on April 30.

Whatever the end result will be, I am going to make a bold prediction that the company will be bought out next year and buying the stock at these levels could reward investors handsomely. I never made a buyout prediction before so it seems even more appropriate to make one on the greatest stock story in my investment history. I have high hopes that the company can put the past behind and move forward at doing what they do best, providing integrated software, systems, and related services for multimedia communication and information processing applications.

Could this be the beginning of a new era for Comverse? Time will tell, but considering my history with the company, I am going to give them the benefit of the doubt. Certainly, playing the stock on the market's recent weakness and a possible year end tech rally makes timing this stock now a prudent strategy.

I do not own the stock as of this post but will be adding it on the next down day for the stock market. I dont own a multi-million dollar voice messaging system.

What is in Santa Claus' stock portfolio this year? Nintendo and Apple probably

The Holiday season looks like it might be rough for retailers given that the average American family will probably be spending a week's paycheck for gas just to get to Wallmart. So what will Santa Claus be busy lugging on his carbon emission free sled? One of the CNET editor's top holiday gift picks, the Nintendo Wii.

The first thing that all investors should consider before buying stock in Nintendo (OTC:NTDOY), Japan's interactive game manufacturer, is that it trades as an ADR and is quoted as a pink sheet over the counter stock. Unlike other pink sheet stocks this stock is much more stable than the average penny stock. Another thing that investors should take notice of is that through all the market turmoil in the last year, this stock has more than doubled. Starting at about $32 per share at the beginning of 2007, it has risen to as high as $78 and has like many other stocks dropped almost 20 percent in the last couple of weeks with the market correction. Unlike some toy manufacturers whose stocks have suffered losses this year due to product recalls as a result of well publicized Chinese lead paint stories, Nintendo's got game, literally.

This meteoric performance for Nintendo stock began with the launch of their Wii product and sales have been booming as evidenced by retailer reports of shortages of the game console. Sound like an Apple story? Sure does, and speaking of Apple expect them to struggle keeping products on the shelf as gadget hungry consumers gobble of their technological marvels after the Thanksgiving weekend also.

These market corrections are a trader's paradise and an investor's opportunity. Just when it seems like there is nothing but bad news and extended bearishness, the market surprises and comes roaring back. I have seen this happen many times in the past and the end of year seasonal upside phenomenon will probably not disappoint again.

This market will probably stabilize over the course of the next couple of weeks paving the way for a Santa Claus rally at the end of the year. Of course if the average investor or the market gets naughty, then they both can expect to get Iceland's early versions of Santa Claus and a big fat potato to claim as your year end gift deduction or tax loss, whatever the case may be.

I have increased holdings over the last few days with the correction and have reduced my short positions. I currently have a position in Apple but not in Nintendo as of this post. If the market has more weakness over the next couple of days, I will be adding to my select retail positions as well as initiating a position in Nintendo.

I do not own the Nintendo Wii.

Is it time to make money at the expense of the "War Profiteers"?

As the calls for ending the war become louder, I can't help but think what the consequences could be for some of America's largest Defense contractors. As much as I don't want to see any potential cutbacks in Defense spending put our troops at a disadvantage, it seems abundantly clear some big cutbacks are on the horizon and the indexes that track this sector are sure to go lower.

I was disturbed reading today about hints of these cutbacks to come so I pulled up a couple ETFs that track the sector and couldn't help but notice performance that has outpaced the general market averages by almost two fold. The first was the PowerShares Aerospace & Defense (PPA -AMEX ) which tracks the index called the SPADE(TM) Defense index. This ETF is trading just north of $22 with a performance year to date of 27.93% and one year total of 39.41%.

The second is the iShares Dow Jones US Aerospace & Defense (ITA -NYSE) which tracks the Dow Jones U.S. Select Aerospace & Defense index. This fund's trading performance is a little better rising 30.62% year to date with a one year total return of 43.16%. This fund has a large weighting of almost 10% of one of my favorite stocks United Technologies (UTX-NYSE), but I believe this component's performance will not be enough to support this index's value.

Some components of this group have been characterized as evil "War Profiteers" and some have been exposed with amazing clarity how exactly they benefited from today's sabre rattling and war-time policies. There exists well documented scrutiny of the group as well as complete disclosure of key figures close to the Bush administration and their involvement in the War profiteering crew. Personally, I don't believe everything the Bush bashers have to say, but I am not naive either.

Whether you view these companies that make up the defense and related services as providing necessary evils, or if profiting from these entities is not appropriate for your own money because of the inherent evils that their products and services support, there can be just as much responsibility and satisfaction in profiting from a slowdown in their business which could mean a slowdown in those same evils. Either way, I can't make the case for the bullishness that existed here a couple of years ago considering today's popular anti-war climate.

From a technical perspective these two funds look overdue for a correction as evidenced by their short lived, long term charts in the last couple of years. The Ishares fund looks like a better short based on the recent market correction, but the Spade Index fund looks just as appealing and has a more concentrated focus of defense companies that are more likely to be impacted by defense cutbacks than aerospace companies that are more represented in the Ishares fund.

I would short both of them here for a longer term play to under perform the general markets in next year's pre-election anti-war rants.

I do not have a short position at the time of this post but will be looking to add positions on any near term rallies.

I do not own an airplane, missile or bomb.

Election year investing, What the next 365 days could mean to your portfolio

One year from now, I will be sipping on morning coffee while reading about who won the 2008 Presidential Elections. History has shown that the Stock Market does very well during election years, but this time around offers many more variables and an in depth study may help clear the fog.

As I witness today’s market risks and economic policy proposals as diverse as the candidates themselves, I can’t help wondering what impact these intentions will have on business, jobs, taxes, and credit.

I see an economic slowdown materializing day by day with geo-political risks continuing to rise, and an Asian bubble just waiting for a reason to burst. If Uncle Ben and his cohorts at the Fed could act with a greater sense of urgency then the recession might not come as fast and furious for the new candidates to point fingers at each other about next year. Either way our new President will have a lot on the plate to deal with and it is not looking rosy.

I decided to put together a small model portfolio of what I would like to call the Ultra Election Strategy.

Now I am not endorsing any particular candidate or party, nor am I able to predict with any certainty what new policies, foreign and domestic, will have on the performance of this portfolio. But I thought it a good time to take a look out one year from now with a few sector ETF long and short predictions. I am a big fan of the new Ultra ETFs that trade so I am tailoring the portfolio to include only theses funds.

My biggest prediction is that a democrat, probably Hillary Clinton, will win (She actually looked like a sure bet three years ago). However, contrary to the successful performance of the Stock Market under Democratic Presidents, the market under Bush has done very well and has outperformed the average year's performance while the Democrats held the big house. This could be a forewarning that times are changing and the scenario of the new President walking into a recession could make post election performance challenging for the markets. Time will tell.

I also remember with clarity the damage to big Drug stocks the first time Hillary took on healthcare, so if she moves up in the polls, I would stay clear of this group. No matter who wins, any radical new healthcare plans are sure to sharply affect these types of stocks. The following list represents the rest of the overall portfolio strategy and will be adjusted accordingly at the end of each quarter.

Prices are as of close Friday 11/2/07

$100,000 Portfolio

Cash - 20%

Bullish
Nasdaq 100 - Ultra QQQ Proshares (QLD - $120.06)
Technology - Ultra Semiconductor Proshares (USD-$82.21)
- Ultra Technology Proshares (ROM-$95.87)
Financials - Ultra Financials Proshares (UYG - $49.17)
Utilities - Ultra Utilities Proshares (UPW - $86.70)
Consumer Services - Ultra Consumer Services (UCC - $59.78)

Bearish -
Healthcare - Ultrashort Healthcare Proshares (RXD - $66.28)
Consumer Goods - Ultrashort Consumer Goods ( SZK - $64.00)
Real Estate - Ultrashort Real Estate Proshares (SRS - $98.95)


Neutral
Energy
Materials
Homebuilders

I do not own these ETFs as of this post, but I always wanted to put together an overall ETF market strategy using only the Ultra Proshares.

Sun Microsystems Inc, a cheap tech stock who lives up to its name with ambitious eco-initiatives

Sun Microsystems, Inc. (JAVA), whose stock price has been beaten down in recent years, may have found some answers to turn the tide. The company has recently been concentrating on taking the lead in many eco-friendly initiatives related to IT infrastructure and have themselves shown dramatic reductions in their own energy use.

The company provides network computing infrastructure product and service solutions worldwide which are used in many industries including, technical/scientific, business, engineering, telecommunications, financial services, manufacturing, retail, government, life sciences, media and entertainment, transportation, energy/utilities, and healthcare.

Recent developments include a new state of the art data center, new energy efficient server products, and a newly formed organization dedicated to environmental conscientiousness. Such initiatives recently earned them a $1 million incentive payment from local utility Silicon Valley Power. Wall Street is starting to take notice of how their green strategy can give them the edge on their competition

The stock traded as high as the mid-60s seven years ago and considering their new products and plans to offer solutions to help solve the problem of IT energy demands, I love the idea of buying it here under $6.00 per share.

I do not own the stock as of this post but considering Tech's history of 4th quarter performance, I will take a position once the market settles down from its recent volatility.

Why following an NFL team's success may be good for your portfolio

Suggestions of "Best NFL team ever" have been the buzz words in recent weeks and the past few years while describing the New England Patriots NFL franchise. Currently undefeated at 7-0 and past success in 3 Superbowls suggest that team owner Robert Kraft knows how to be a leader.

Now a member of the board of directors at Viacom (VIA-B) since 2005, investors should pay attention to Mr. Kraft's business success over the years and what that could mean to investors by following companies that he is directly involved in. Listed by Forbes as one of the richest men in the world by building a paper and packaging goliath, Mr. Kraft proves why management and personnel choices translate to overall top and bottom line performance. Also important to note for the socially conscious investor, his paper and and packaging businesses are very much involved in the recycling arena to compliment their overall strategy.

Recent SEC filings have shown that Mr. Kraft, probably as part of his compensation package, has been building a very comfortable position for himself by exercising and acquiring options on Viacom stock over the past couple of years. Now this provides for a pretty good incentive for him to perform well while on the board and even if the stock suffers somewhat he still comes out a winner. Now while the stock has traded in a narrow range for the last couple of years ($35-$45) I like the idea of following his lead by looking at the stock at these reasonable levels below $40 per share.

If his private business and football successes are anything to go by, investors should get in the game and score a touchdown with one of the richest men in the world.

Its October 23rd and almost halfway through the NFL season and I "expect", not "hope" that the Patriots will go undefeated this year. I expect the same performance from Viacom in the next few years as media companies thrive in the current globalization environment.

I do not own Viacom as of this post, but I will be adding it to my overall investment and trading strategies. I am also a "huge" Patriots fan.

Fuel cell race heats up for for hybrid vehicles, United Technologies powers ahead

Dow Jones Industrials component and multinational conglomerate United Technologies (UTX NYSE) offers investors diversification, as well as a solid track record of growth. But for those seeking a solid green investment pick when it comes to fuel cell technology, pay close attention to what one of their units, UTC Power, has accomplished in the race to make the hybrid vehicle market a commercially accepted reality today, not in years to come.

The company has already made great strides by supplying major auto makers with fuel cell technology for their hybrid prototypes. While these models are not being mass produced just yet the company has an appealing mix of clients including BMW, a luxury automaker, Nissan and Hyundai who are two top selling behemoths and in the larger vehicle market, they currently supply fuel cell powered buses in the state of California.

Now while the hydrogen fuel cell idea has some infrastructure issues such as the scarce availability of hydrogen filling stations, the technology has advantages over other alternative energy solutions. For one, which is probably most important, is that fuel cell technology is probably the nearest term solution to providing energy production in automobiles with virtually no carbon dioxide emissions.

Also, people who are on the "ethanol" bandwagon need to be sensitive to the fact that high volume ethanol production puts upward pressure on food prices because of the amount of crops that will have to be supplied to produce the fuel. I don't believe that is worth the cost whereas fuel cell technology does not have this problem.

Beyond the exciting rapid pace of development in this arena, United Technologies recently reported third quarter earnings of $1.2 billion dollars, up 20 percent over the prior period and well ahead of Wall St. expectations. Revenues for the quarter were just over $13 billion.

Performance like this is why they are in the illustrious Dow 30 stocks. Add to that an ambitious recipe to help solve the world's power demands absent of oil and the other dirty alternatives, this company earned the right to be one of my top holdings as a real time play on green automobile technology.

The stock pulled back with the recent market sell-off two days ago, but that what makes it attractive to me at these levels. It closed yesterday at $77.43 per share.

Visit United Technologies' website for a look at the company's environmental objectives and currently deployed power project profiles.

For a list of fuel cell vehicles in production visit this link or for those who would like to see an organized list of other alternative energy investment stocks broken down by category click here.

Fox launches business channel, CNBC and Bloomberg brace for impact

Its early this Monday morning and the new Fox business channel officially began airing at 4:00am. Now there is a new kid on the block for financial news media and my biggest problem is which channel will my television be locked on during the trading day.

CNBC and Bloomberg were the only other major business channels to watch in the past and it will be interesting to see the different programming formats that will lure viewers from one channel to the other. Hopefully this could be the end of watching late night infomercials and gameshows on CNBC or the continuous market scoreboards and scrolling tickers that made Bloomberg such a boring channel to stay tuned too.

So what can one or the other do to win the ratings game?

I miss the old days when CNBC (formerly FNN) would have guests like John Murphy, a well respected technical analyst, come on the program to highlight particular charting patterns and trends that helped me become a better technical analyst. I also miss the days of Dan Dorfman, who would highlight daily rumors and market events that would make stocks skyrocket or dive in a flash.

If any of these major networks focus not just on informing the investing public, but on actually educating investors, I believe this would be the missing ingredient that would set one apart from the rest. Many times I hear novice investors say "I don't understand anything that they are talking about, interest rates? Trade deficits? The value of the dollar?, What does this have to do with whether I should buy Google (GOOG) at $600 plus dollars per share?"

Financial TV has become just as much of an information overload, like the Internet, when it comes to the hundreds of differing opinions of what stocks and industry groups are at buying or shorting levels. Just once I would like one of these channels to set aside a time slot to explain to people actual fundamental analytics, financial planning techniques, portfolio management strategies or options strategies as a compliment to an overall investing plan. Many people are constantly told what the best stocks to buy are and why, but rarely do I see guests and analysts on these programs tell investors what to sell and the reason for their bearishness. Also, never do I see one of these market gurus say "Hey, I was wrong on this pick six months ago, but here is what I did to cut my losses and move on to the next episode."

That is the main conflict for these channels. The goal of providing news and information only without crossing the line into a third party advisory medium thereby drifting from complete objectivity and opening up liability questions resulting endless repetitive disclosure policy, is a fine line that these news providers must straddle. Today's viewer is just as much interested in what they should do in reaction to a market news event rather than just absorbing the event and letting the chips fall where they may, regardless of the impact to one's portfolio.

The future of the world of Financial news media will probably lie in an on-demand environment rather than a "shove it in your face, this is what is important" programming format. If an investor wants to know what to do about Google, it would be a better service so that when you enter GOOG into the search box, instead of a chart with company specific statistics and news headlines indexed by that stock symbol for the result, a listing of analyst interviews and opinions comes up related to that symbol or a listing of past trading strategies using that actual symbol would give investors a better overview of what move to make at any given time and what situations to avoid.

For now though, I will switch between both CNBC and Fox because they have the prettiest news anchors.

Likelihood for a Summer rally fading on Wall Street

Market players head into this trading week shortened by the holiday, but face a heightened sense of awareness that the story for stocks is about as unsatisfying as a season ending Sopranos episode.

While it is situations like this that investors look for, to grab stocks when out of favor and at lower prices, it is very important to stay overly cautious and wait for prices to stabilize before initiating new positions. At this moment, the trend is certainly downward and low participation this week will not help the cause for bulls.

The Federal Reserve board last week also helped to feed the bears by leaving interest rates unchanged and issuing a statement of their inflation concerns that was about as informative as my weekly trips to the local grocery store to buy milk at $3.80 a gallon. Of course of little highlight by Bernanke and his crew is the continued housing slump and self-imposed sub-prime mortgage mess that this illustrious group created when they raised rates in the first place that killed credit-challenged home buyers in the last few years.

Since I wrote the call to add positions to short the major market averages 10 days ago, the Dow Jones Industrials has dropped roughly 250 points or almost 2% with the SP500 following suit down about 30 points. Oil prices have revisted the $70 per barrel mark, interest rates have crept even higher as evidenced by treasury yields, and downward earnings revisions for stocks have outpaced higher estimates.

So what should you do with all these negative factors?

As a day trader, I am able to take advantage of the down days just as much as i am able to benefit from the up days. My short term trading ussually revolves around volatile stocks, indexes and ETFs. However my long term investing strategies see great situations in areas that have been bucking the downtrend and I see some great opportunities this summer to buy stocks as they are falling.

The industries and stocks I like right now are agricultural products(MON), utilities(UTH), envronmental services(WMI), oil services(OIH), financial services(NYX), and some select technology plays (CSCO,AAPL,YHOO).

Since I am overall bearish in the near term and looking to hedge any long positions in my portfolio, I like the ETFs that short the major market averages(DXD,SDS,QID).

Investors hoping for a Summer rally after the holiday week when earnings season kicks off are likely to be disappointed. They are better off to wait and see what the results look like this quarter to better guage when the market will react and head to new highs. This trader doesn't see it happening till the end of the year.

Performance table of highlighted posts:

Post Date Post Item Post Price* Current Price** Return Pct.*** Time Period****
07/02/07 YHOO NA $27.13 NA NA
07/02/07 AAPL NA $122.04 NA NA
07/02/07 CSCO NA $27.85 NA NA
07/02/07 NYX NA $73.62 NA NA
06/22/07 BX ($35.98) ($29.27) 18.6% 1 Week
06/20/07 QID $45.50 $45.69 0.4% 2 Weeks
06/20/07 SDS $51.01 $52.72 3.4% 2 Weeks
06/20/07 DXD $48.82 $50.15 2.7% 2 Weeks
Combined OIH October Strangle 2.0% 3 Weeks
06/08/07 OIHVK $6.20 $3.80
06/08/07 ODLJO $8.80 $11.50
Combined OIH July Strangle 13.6% 3 Weeks
06/08/07 OIHSM $5.20 $1.10
06/08/07 OIHGL $11.00 $17.30
06/08/07 OIH $167.03 $174.73 4.6% 3 Weeks
06/06/07 FIW $21.18 $21.73 2.6% 3 Weeks
06/06/07 PHO $20.35 $20.92 2.8% 3 Weeks
06/06/07 CGW $25.68 $25.57 -0.4% 3 Weeks
05/30/07 WMI $39.27 $39.07 -0.5% 4 Weeks
04/13/07 UTH $144.21 $141.65 -1.8% 11 Weeks
04/05/07 MON $58.30 $67.58 15.9% 12 Weeks



--------------------------------------------------------------------------------
* Post Price is the price as quoted in post or the highest price on the day of post/long positions or the lowest price on the day of post/short positions. () indicates short position.
** Current prices based on the close of trading June 29th, 2007

*** Return percentages do not include dividends, fees or commissions.

**** Time period is the time since the original post, rounded off to the nearest weekly period.

Blackstone IPO surges, Wall Street tanks

Investors saw big losses in the markets today except for the privileged few who rode the Blackstone Group LP (BX) to nice gains on it's first day of trading.



Could this be a great new divergent indicator? Everytime a private equity firm sell shares to the public, investors should dump their shares? After reading some of details of this public offering, I have to question the wisdom of why I would invest in an entity where most of my money went to a select few management individuals. Is this a complete stock swindle or what? Let's see, a firm whose specialty is taking companies private, is going public and asking investors to invest in something that may or may not make money for several years to come. Excuse me for being blunt but, not with my money! In fact, I am so convinced that this deal stinks I am shorting the stock at $35.98 as I write this post.



This event will also convince other private equity firms to go for the walk-off homerun by selling shares to "joe public", but I hope regulators and lawmakers will engage in more scrutiny to protect investors who may not understand the risks they are taking by supporting these types of firms. If my money was going to support a new promising drug, help expand an alternative energy company or finance some other worthwhile endeavor, at least there is an incentive for the company to succeed. Where are the incentives here? How many jobs will be lost in the business of buying companies and trying to turn them around?



For the most part, I am favorable towards any firm who dives into the public investment pool with grand plans to reward shareholders, but until firms like this show a track record to investors, I remain skeptical.

The Russell Index Trade

Market players will be busy today trading the stocks that will be added or deleted from the Russell Indexes. This event happens annually and investors who wish to take advantage should focus on buying the companies that are being added and shorting the stocks that are due to be deleted.



Exchange traded funds and mutual funds that track the indexes must rebalance their portfolios to match these additions and deletions so this one of the few market events that you can predict with reasonable certainty which stocks will have above average buying or selling. For a complete list of which stocks, refer to these links. (Additions, Deletions) For a complete description of the process refer to this link (Russell 3000 reconstitution).



In the past traders have taken advantage of the buy or sell imbalances near the close of the trading day that the rebalancing takes place, which takes place later today. This year will see about 277 changes to the index so there is no shortage of ideas for investors looking for new positions. Also, investors need to recognize the fact that the changes are made because the newer stocks that are added are considered to be better representations of their industry groups while the stocks that are deleted are no longer in favor as industry group representatives.



This link examines what happened in 2002 when the S&P 500 changed 9 components in it's index and the performance of those stocks around the rebalancing date. (SP500 rebalance).



Investors who are new to the game should proceed cautiously with regards to this market strategy unless they have the tools to see exactly which stocks are experiencing imbalances prior to close of the trading day. However, if an investor has a longer term objective, this event can help confirm any decisions of whether to buy, hold or sell the stocks involved.



Finally, while I was surfing the net to get information for this post, I came across David Neubert's post from 2006 in regards to this trade. (David's post)

Time to Short the Market?

Market players are facing plenty of reasons to exit positions and avoid any near term selloff in the coming weeks. Geo-political instability in the oil markets and rising interest rates are putting pressure on stocks and the lack of a strong follow through on the recent retracement has given traders a clear signal to avoid long positions while taking a breather. With earnings season around the corner, it is going to take some very strong results or hints of lower interest rates to come, before this market finds it's way to new highs.



When these occasions arise, the ultra-short ETFs that track the major market indexes are a great way to hedge current portfolios without exiting all an investor's long holdings. The three funds that track the Dow Jones 30 Industrials, the S&P500 and the Nasdaq 100 are, respectively, DXD - The Ultra-Short Dow 30 Proshares, SDS - The Ultra-Short S&P 500 Proshares, and QID - The Ultra-Short QQQ Proshares. The funds strategies are leveraged so that they track the major indices at twice the rate of their individual moves. If for example, the Dow Jones Industrial Average falls 1 percent for the day, the DXD - Dow 30 Ultra-Short Proshares, should rise by 2 percent for the day.



Now as for how much size to take in relation to your portfolio, this trader generally believes that a hedge position should not exceed 30 percent of the overall portfolio, unless the position creates a "true neutral" overall position in the market. If not, then the hedge position should not exceed 15 percent of the overall portfolio. For purposes of tracking, I will update readers on positions of 200 shares each representing a total investment just under $30,000 which would be roughly 30 percent of my model portfolio.



The positions I executed when the indexes and where the funds were trading at the time of execution.



Dow Jones 30 Industrials - 13,652.55 - 200 shares of DXD $48.82

S&P 500 - 1533.87 - 200 shares of SDS $51.01

Nasdaq - 1946.82 - 200 shares of QID $45.50

Oil reaches a boiling point

Market players should pay close attention to oil prices over the next several weeks as the recent run-up could be forecasting a difficult summer and hurricane season. However, short term traders may see opportunities on the short side assuming that seasonal conditions end up being mild. Last year the financial markets were able to absorb high prices at the gas pump, but this year could be different.



Either way, I see a great opportunity to go neutral over the next few months and take advantage of any large move, regardless of the direction. The two strategies I employ for this call involves buying puts and calls on the oil services fund (OIH) in the form of a straddle or strangle. For a more detailed description on these two strategies, visit the following two links. (Straddle, Strangle). This strategy is for more experienced investors with a higher risk tolerance for losses, however as long as the underlying instrument is volatile with a large trading range, this strategy can produce consistant profitable returns not just with this instrument I am highlighting, but with many other stocks, indexes and exchange traded funds.



For purposes of this post, I will highlight a strangle postion for the near term (1 month) and another postion for longer term (4 months). The criteria for option strangle positions I use to decide which strike prices to buy for both sides (calls & puts) is, if possible, right when the underlying instrument is right in between strike prices and at least one strike price away from where the instrument is at the time of execution. I also try to have an upside or downside bias counter to the recent short term trend and/or when the instrument is trading at a key short term support or resistance level. Finally, I have a preference for the first out of the money strangle or the first in the money strangle. Since this fund is expensive (Over $75 per share) and the postion is for one month, I prefer the first in the money strangle which would contain the in the money 160 calls and the out of the money 165 puts. For a longer term strangle position, I try to buy the out of the money options by one or two strike prices.



The fund is trading near the $165 level (Key short term support level for the past 2 weeks) and the trend has been down the past 4 of days so therefore I am buying the OIH July 160 calls and the OIH July 165 puts for the near term postion. I am also buying the OIH Oct 175 calls and the OIH Oct 155 puts for a longer term postion. My bias is to the upside, so in the first position, the 160 Calls will go up faster than the 165 puts will go down on moves to the upside. If the fund breaks it's support level and goes down significantly, eventually the puts will start to accelerate higher faster than the calls will go down. This price action is determined by what is called the delta, which is the amount the option changes in relation to the move of the underlying instrument. The more in the money the option is, the higher the delta. The highest a delta can get to is a one point representing an equal point for point move of the underlying instrument. For the longer term postion the same holds true only I need a larger move (10-15 points) one way or the other and 4 months gives me plenty of time to realize this move. As the chart below illustrates, the fund moved up almost 40 points, so i feel comfortable with this postion.





The first chart below illustrates the last 3 months trading range and near term support level.



Chart 1



The positions I executed when OIH was trading at $167.03:



One month Strangle

OIH July 160 Calls at $11.00 Needs to rise by at least $5.20 to start making money.

OIH July 165 Puts at $5.20 Needs to fall by at least $11.00 to start making money.





Four month Strangle

OIH Oct 175 Calls at $8.80 Needs to rise by at least $6.20 to start making money.

OIH Oct 155 Puts at $6.20 Needs to fall by at least $8.80 to start making money.



Trading in options involves risk and is not suitable for all investors. Consult with a professional investment advisor to determine your risk tolerance and suitability for this type of position. The writer is a full time trader and investor and owns or participates in many of the strategies he writes about.

Water: Essential to Life & Your Portfolio

Media headlines concerning climate change and the declining supplies of the world’s clean water have spawned an investment euphoria into water companies, utilities and the mutual funds that invest in them. Investment analysts have been forecasting that opportunities related to water in the 21st century could rival the same opportunities oil offered in the 20th century.

While researching data for this post, I compiled various statistics that made a compelling case for why the world’s thirst for water will generate a global call to invest and develop various systems and technologies to safeguard the availability of this precious resource.

There are various ways to participate in this industry for long term investors. A simple conservative and diversified way to approach this sector, are three exchange traded funds (ETFs) that track the performance of the three major water sector indexes. These funds are a convenient way to invest for the long term while maintaining a mix among water companies that either operate as utilities, manufacture pumps, plumbing, filters, irrigation systems, water treatment chemicals, or develop desalination technology.

The three major water indexes and the ETFs that track them are:

Index - S&P Global Water Index, (SPGTAQUA)
ETF – Claymore S&P Global Water Index, (CGW-AMEX) Price as of close 6/1/2007, $25.67
Performance & Fund Data

Index – Palisades Water Index (ZWI)
ETF – Powershares Water Resources Portfolio (PHO-AMEX) Price as of close 6/1/2007, $20.60
Performance & Fund Data

Index –ISE Water Index (HHO)
ETF – First Trust ISE Water (FIW-AMEX) Price as of close 6/1/2007, $21.18
Performance & Fund Data


Investors should be aware that the statistics measuring the historical performance of these funds are limited mainly because the Claymore and First Trust ETFs have just recently started trading. The first ETF of this group, the Powershares ETF, has been trading for more than a year and has had an impressive 18 month return of roughly 17.5% since the funds inception date of 12/06/2005.

The Palisades Water Index for which the Powershares ETF tracks has had an annualized 5 year return of over 15% outperforming both the S&P 500 which was up a little over 6% annually and the Dow Jones Utility Average which was up a little over 10% annually over the same period.

The three major water indexes all had 3 year annualized percentage returns in the mid 20 percent range. Not bad for investing in water.

Consolidation and M&A activity is picking up in this sector around the world. In the UK for example, recent water company acquisitions and privatization of companies within this group has spurred a flurry of activity and has inflated stock prices in that market. It is only a matter of time to see the same type of activity in this market and in water-rich nations such as Canada, Brazil, Russia and China.

For the more risk tolerant investor, there are many great individual stock stories in this group and it is our intention to keep readers up to date with follow up highlights of the best growth opportunities and trading strategies available in the group. For now though, if you are looking for goods reasons here are some facts gathered from various sources.

In 2002 the World Health Organization reported that:

1.1 billion people lacked access to improved water sources, which represented 17% of the global population.

Of the 1.1 billion without improved water sources, nearly two thirds live in Asia.

In sub-Saharan Africa, 42% of the population is still without improved water.

Between 2002 and 2015, the world’s population is expected to increase every year by 74.8 million people.

According to the Website http://www.water.org:
• Of all water on earth, 97.5% is salt water, and of the remaining 2.5% fresh water, some 70% is frozen in the polar icecaps. The other 30% is mostly present as soil moisture or lies in underground aquifers. In the end, less than 1% of the world's fresh water (or about 0.007% of all water on earth) is readily accessible for direct human uses. It is found in lakes, rivers, reservoirs and in underground sources shallow enough to be tapped at affordable cost.
• If all the earth's water fit in a gallon jug, available fresh water would equal just over a tablespoon.
• A person can live about a month without food, but only about a week without water.
• The average American individual uses 100 to 176 gallons of water at home each day.
• The average African family uses about 5 gallons of water each day.
• More than 200 million hours are spent each day by women and female children to collect water from distant, often polluted sources.
• Approximately 60 to 70% of the rural population in the developing world have neither access to a safe and convenient source of water nor a satisfactory means of waste disposal.
• Water systems fail at a rate of 50% or higher.
• According to the UN, 20% of the world's population in 30 countries face water shortages. This number is expected to rise to 30% of the world's population in 50 countries in 2025.
• Some of the world's largest cities, including Beijing, Buenos Aires, Dhaka, Lima, and Mexico City, depend heavily on groundwater for their water supply. It is unlikely that dependence on aquifers, which take many years to recharge, will be sustainable.
• Every $1 invested in children, including money to improve access to clean water and sanitation, saved $7 in the cost of long-term public services.

The United Nations Educational, Scientific and Cultural Organization (UNESCO) World Water Development Report (WWDR, 2003) from its World Water Assessment Program indicates that, in the next 20 years, the quantity of water available to everyone is predicted to decrease by 30%. 40% of the world's inhabitants currently have insufficient fresh water for minimal hygiene.

Ref links:
World Health Org Info
http://www.water.org/resources/waterfacts.htm
http://en.wikipedia.org/wiki/Water

“Information obtained in this post is from sources believed to be reliable. The writer is not responsible for any errors or omissions contained herein. Investors should consult with professional investment advisors and should know their own risk tolerance before investing in any items highlighted. The writer is a full time investor and day trader and engages in trading strategies with regards the highlighted items.”

Looking for Clean & Green? Waste Management picks up, delivers and recycles

If anyone were to ask me what company represents the fight for a greener planet, I would have to say Waste Management Inc., (WMI-NYSE), trading just below $40 per share. Since 1894 this company has been taking out the trash and have now built a respectable portfolio of solutions to profit from waste-to-energy implementation and recycling forethought.

I also have to admire any company who engages in a business that inherently gets the "dirty business" label yet takes on the challenge and corporate bravado to actively clean up the waste of the world. Considering the fact that environmental awareness, regulations and scrutiny are increasingly dominating today's headlines, I like the company's long term prospects. I like the name so much, I vote for a government department called the Waste Management Agency, whereby Uncle Sam could be his own best customer.

How green is Waste Management?

Taken from the company's Website they boast:

413 collection operations, 370 transfer stations, 283 active landfill disposal sites, 17 waste-to-energy plants, 131 recycling plants, 95 beneficial-use landfill gas projects and 6 independent power production plants. These assets enable Waste Management to offer a full range of environmental services to nearly 21 million residential, industrial, municipal and commercial customers.

We recover and process methane gas, naturally produced in landfills, into an energy source for generating power. We currently supply enough landfill gas to create more than 250 megawatts of green energy that could power about 225,000 homes or replace about 2 million barrels of oil per year.
With 495 vehicles now converted from diesel fuel to clean-burning natural gas, we operate one of the nation's largest fleets of heavy-duty trucks powered exclusively by natural gas.
We have taken a leadership role in promoting the recycling and reuse of materials that would
otherwise end up in landfills. Waste Management, combined with its wholly owned subsidiary WM Recycle America, is North America’s largest recycler. We process 5.8 million tons of commodities each year, saving approximately 41 million trees through paper recycling alone.
Through its waste-to-energy plants, WM uses solid municipal waste to generate power. This reduces the volume of the waste by 90 percent and saves space in local landfills while providing an economical alternative to the use of fossil and nuclear fuels.
WM partners with communities, government and industries to redevelop closed landfill sites into recreational and commercial facilities such as parks, athletic fields, campgrounds and golf courses.
Across North America, we work with environmental groups to set aside land to create and manage wetlands and wildlife habitats. Our landfills provide more than 16,000 acres of protected land for wildlife; 15 landfills are certified by the Wildlife Habitat Council.
WM helped found the Chicago Climate Exchange, an organization established to provide a voluntary marketplace for reducing and trading greenhouse gas emissions.

http://www.wastemanagement.com/wm/about/Overview.asp

The stock suffered dearly following an accounting scandal and management shakeup in the summer of 1999, but has since recovered to a solid track record of growth and shareholder value. The chart below represents a comparison of stock performance to the S&P 500. WMI in Magneta, S&P500 in green.



I do not believe this is the best price to execute entries into the stock based on the chart analysis below and an uneasy feeling that stock prices are due for a breather, but over the course of the next couple of months any pullbacks will offer a chance to get in for the long term (1-3 years) where I can see this stock north of $50 per share.

For track record purposes, the recent breakout from the previous 52 week range enables me to initiate a position here for a long term buy and hold call.



For now the company pays an investor a 2.50% annual yield in dividends and trades at a discount to it's industry peers. So for investors looking to "clean up", Waste Management makes it their business.

Stock Market at a critical level for investors

Stock Market chart watchers should pay close attention to what the major averages do in the next couple of days, especially the big daddy Dow Jones Industial Average.



If we pull back in the next couple of days then a classic double top would start to form on the daily chart which will probably lead to a second major pullback as we experienced in the end of February. Of course if we break out to new highs then that would be healthy so long as volume is strong, however already early into the first quarter earnings season, results are starting to disappoint.

I am using this opportunity the introduce the six major market average ETFs to my model portfolios. Details will follow in a later post today. For now, this may be a good time to take any near term profits and hold back to make new entries at lower prices.

I am executing long entries into 3 managed exchange traded funds that short the Dow Jones Industrial Average, the S&P 500 and the Nasdaq 100.

DXD - Ultra Short Dow 30 Proshares, SDS - Ultra Short S&P 500 Proshares, and QID - Ultra Short Nasdaq 100 Proshares. These three funds are managed funds whose objective is to move at twice the rate of the underlying moving averages.

I am also executing short entries into the three regular exchange traded funds that represent the same underlying averages only the objective is to match the indexes at the same rate of return.

These are DIA - Diamond Trust Series representing the Dow Jones Industrial Average, SPY Spyder Dep Receipts which tracks the S&P 500 and QQQQ Powershares QQQ series trust which follows the Nasdaq 100 Index.

The objective is to get a gain over any near term (1-4 weeks) correction where we will close our shorts and buy into these same funds at lower prices.

Detailed posts will follow on each of these positions.

SMI initiates coverage on UTH - Utilities Holdrs

Investors in search of a safe place to park money for the long term should consider adding to their portfolios UTH, Utilities Holdrs, a diversified mix of utility stocks.

While there are many individual stocks that offer long term growth and solid dividend returns, this basket instrument helps to take the guess work out of deciding which stock in this sector is best. Most recently this sector has been bucking the downtrend in the markets since the start of the year. The chart below displays the outperformance of the Utilities versus the Dow and S&P.




Institutions looking for some safe havens having been moving into this sector for many reasons.

The recent prospects of private equity buyouts and consolidation in the sector along with lower interest rates boosts the near term performance potential for both long term investors and short term market timers.

Analyst Thomas Chenoweth will be adding UTH to his Top Pick portfolios on any near term weakness so stay subscribed for this market call.

Why is Warren Buffett buying railroad stocks?

Warren Buffett's investments are the talk of Wall St. and once again he has created a buzz.

In a recent filing with the Securities and Exchange commssion, Buffett's investing behemoth Berkshire Hathaway disclosed a major stake worth over $3 billion dollars into Burlington Northern Santa Fe company. The position represents a 10.9% stake.

Analysts on Wall St. believe the railroad stocks are at peak valuations so, What is the "Oracle of Omaha" seeing that they are not?

As Mr. Buffett is reaching his later years, his legacy will not only be his eagle eye for good value. He has set forth in motion a legacy of giving back so much of what he gained.

Last year his announcement of his intention to donate most of his stock holdings to various foundations included a $30 billion dollar gift to the Bill and Melinda Gates foundation for health and education in poor areas of the world.

This railroad investment represents, in my opinion, a firm belief that the rail industry is about to experience a revolution of it's own, and the investment required to help transform the industry into this new millenium, might require major stakes and investment into the infrastructure which only a man like Buffett is capable of, taking a lead where the government needs to follow.

I am sure that a man like Mr. Buffett would like to see in this day and age, where global warming dominates the headlines and a failing US auto industry that is incapable of reinventing themselves, calls for a new awakening and a new investment opportunity much like the days of the Vanderbilts, America's first railroad magnates, who themselves gave much of their fortune away to good causes.

I believe there will be more news in the future of Buffett's railroad investment plans. I believe that recent events like France's new bullet train that travels 350 mph inspires a man like Buffett to have the vision to see what impact today's world problems could have on a industry such as the railroads, and how the railroad industry could impact today's world problems.

For now though the simple equation is that surging transportation demands and lower oil prices in the next couple of years will reflect handsomely in these stocks.

This was a great investment on his part and investors should be "all aboard that train", so to speak.

My CNBC Million Dollar Contest Portfolio Update

Contest Players - 543,433
My Rank - 7472 (Top 2%)

Portfolio Value - $1,282,388.39 up 28.2% in 5 weeks.

As the midway point approaches for the CNBC Million Dollar portfolio contest, I have to take some comfort in being ranked in the top 2% of the contest. I was in the top 1% last week with my portfolio up 35%, but I lost almost 7% on my third trip holding FMT stock.

If I can maintain my current pace, there is no reason why I can't be a contender for the top 20 portfolios with a few good picks. Therefore i thought it would be a good time to start a little journal highlighting my championship run to the million dollar paycheck.

The contest rules make it difficult to employ any real trading strategies, but the fun is participating with many players executing all-in positions and experiencing the large percentage swings that this risky strategy produces. If this was real money, being able to produce percentage returns in the double digits is enough to make any hedge fund jealous, and getting recognition by having your name listed in the top player's list is valuable exposure, so my mission will be considered a success if i can just get my name on the list.

The top players in the contest have been able to take advantage of earnings events and small priced high percentage movers to get to their rank levels and this seems to be the only way to get to the top but let me make a couple of suggestions to players.

First, concentrate on beating your own rank each day rather than the leaders and strive to make each trade a profitable one even if it is just 1-2 percent a day. You will watch your rank jump over 10-20 thousand people with such moves. If in the next 25 days of the contest, you can average 2% per day you should get into the top 1% of players in the contest. Then from there all you will need is a few 10-15% movers to have a shot at the finals. Stocks that are about to report earnings are "your best chances" for these types of moves. So if you employ this strategy (buy the day before earnings) you will have a chance at not only winning the a seat in the finals but you might get that little $10,000 weekly prize.

Below are two tables showing what your portfolio will be worth assuming these daily percentage factors. The first table is 25 days of 2% a day to get a portfolio value that will place you in the top 1 %.

# Days 1,000,000.00
1 2.0% 1,020,000.00
2 2.0% 1,040,400.00
3 2.0% 1,061,208.00
4 2.0% 1,082,432.16
5 2.0% 1,104,080.80
6 2.0% 1,126,162.42
7 2.0% 1,148,685.67
8 2.0% 1,171,659.38
9 2.0% 1,195,092.57
10 2.0% 1,218,994.42
11 2.0% 1,243,374.31
12 2.0% 1,268,241.79
13 2.0% 1,293,606.63
14 2.0% 1,319,478.76
15 2.0% 1,345,868.34
16 2.0% 1,372,785.71
17 2.0% 1,400,241.42
18 2.0% 1,428,246.25
19 2.0% 1,456,811.17
20 2.0% 1,485,947.40
21 2.0% 1,515,666.34
22 2.0% 1,545,979.67
23 2.0% 1,576,899.26
24 2.0% 1,608,437.25
25 2.0% 1,640,605.99

The second table assumes the same with 5 10% daily moves the last 5 days. If this happens you would be in the top 10 players for a shot at the finals.

# Days 1,000,000.00
1 2.0% 1,020,000.00
2 2.0% 1,040,400.00
3 2.0% 1,061,208.00
4 2.0% 1,082,432.16
5 2.0% 1,104,080.80
6 2.0% 1,126,162.42
7 2.0% 1,148,685.67
8 2.0% 1,171,659.38
9 2.0% 1,195,092.57
10 2.0% 1,218,994.42
11 2.0% 1,243,374.31
12 2.0% 1,268,241.79
13 2.0% 1,293,606.63
14 2.0% 1,319,478.76
15 2.0% 1,345,868.34
16 2.0% 1,372,785.71
17 2.0% 1,400,241.42
18 2.0% 1,428,246.25
19 2.0% 1,456,811.17
20 2.0% 1,485,947.40
21 10.0% 1,634,542.14
22 10.0% 1,797,996.35
23 10.0% 1,977,795.98
24 10.0% 2,175,575.58
25 10.0% 2,393,133.14

I will update my progress so you can get a measure for where you might need to be to get to my ranking, so check back.

Top players in the contest as of 4/5/2007 according to CNBC contest blog.

Name Portfolio Value
1. Parker Robinson $2,790,103.27
2. Deborah Taft 2,588,876.30
3. Ken Guillory 2,496,077.04
4. Chad Mazeika 2,433,347.81
5. Evan Scherer 2,300,624.35
6. Emmanuel Nogueira 2,269,175.73
7. James Kraber 2,257,242.52
8. George Lee 2,252,185.92
9. Joe Dondero 2,251,956.57
10. Barry Dressler 2,201,790.02
11. Chris Humphrey 2,158,211.77
12. Rob Bender 2,144,584.95
13. Maheshwari Gupta 2,104,565.91
14. Mark Dallas 2,103,758.36
15. Sacey Platte 2,097,165.63
16. Bob Stolzenburg 2,090,453.50
17. Jaems Meisner 2,083,660.01
18. Philip McKibbin 2,070,054.44
19. Doua Vang 2,069,450.59
20. William Garrett 2,067,786.42

Most actives as of the close on 4/4:
Gammon Lake Resources: Appears on the list for the first time, and the gold and silver producer named a new CEO on 4/3.
CMGI
Revlon
Crystallex International
Conexant
Sirius
Fremont General
Rio Narcea Gold Mines
Vonage
Oilsands Quest

Widely helds as of the close on 4/4:
CMGI with 4,191,717,487 shares held, down from Tuesday.
Revlon 2,084,897,505 shares held, up from Tuesday.
Conexant: 1,585,725,595 shares held, up from Tuesday.
Sirius: 1,424,673,762 shares held, up from Tuesday.
Crystallex International: 1,328,385,264 shares held, down from Tuesday.
Fremont General: 970,521,373 shares held replacing Vonage in the list.

SMI initiates coverage on Monsanto -- MON, Overall Rank -- Bullish / Investor Rank -- Buy

SMI this morning is initiating coverage on Monsanto-MON, a global leader in the agricultural products market . Trader and analyst Thomas Chenoweth is quoted as saying "Monsanto represents one of the most exciting developments in the financial markets based on the company's strategy which places them in a unique position to be a dominant product supplier encompassing the food , energy , and biotech industries . "




Tom is convinced that the company will show that bio-engineered crops could be the holy grail that revolutionizes ethanol production which will spawn a mass plantings of crops for several years to come of which the company directly benefits . Adding to that the defensive nature of providing food to the masses, Tom says, "this company can be one of the greatest growth stories of the 21st century ."

Monsanto beat analysts' forecasts yesterday by reporting higher sales and earnings for the quarter ending February 28, 2007.

Sales rose to 2.62 billion, up from 2.2 billion in the year ago period, an increase of 19%. Earnings rose to 543 million , up from 440 million , with earnings per share of 98¢ versus 80¢, up 17.5%. The company also raised guidance for the year citing strong demand for their seed products such as in Brazil , one of Monsanto's growing markets , who last year announced their nation's goal to become energy independent and have begun making large investments into their ethanol industry.

The stock yesterday rose into a new range based on the positive earnings report but we are waiting to open positions and will be soon accumulating shares during various pullbacks . Check back for updates .

Market players face stormy weather

Financial markets gave investors a rough ride in the first quarter as rising oil prices, housing sector weakness and fears of default in the sub-prime mortgage industry erased early gains realized at the start of the year (Chart 1) . These conditions should continue to weigh on market sentiment as we enter the second quarter earnings season.

.

The good news is that the Federal Reserve's neutral policy could be coming to an end and relief may be sight if the economy continues to slowdown. While the bond market's rise in rates over the past few sessions does not reflect this possibility, the recent performance in the Utility sector could be forecasting future market sentiment and a possible shift in monetary policy. The upcoming earnings period should give a better picture of where corporate profits will be for the second half of the year.

The bad news is that geo-political tensions are sending oil prices on a rocket-ride higher and unlike last year, the market will probably not absorb this pressure as easily as before. Retailers have been issuing warnings in their guidance, which means the consumer may not be the support which markets relied on in the past couple of years. Whispers of "irrational exuberence" in the Asian markets, China in particular, will most likely be the catalyst to bring the markets down, extending the current correction. This will however be healthy for the markets and will open up some good buying opportunities moving forward.

For now, Market players should be cautious for now and hedge their bets for the next few weeks.