Galt Stock

Independent Investment Research for IRA’s and 401K’s

Sept, 19, 2008

Buy Gold, Silver, and Commodities, Put clothes on Naked Shorts!

So you thought you lived in a Capitalist country.  A trillion here, a trillion there, pretty soon your talking real money!  Speaking of real money, buy gold and silver.  Even better buy gold and silver miners.  A 20% increase in their commodities price translates into 50% increase in profits.  No matter what the government does, gold and silver goes higher. 

If congress (taxpayers) “backstops” all the mortgage debt and money market funds, Bernake has to run the presses for another trillion.  Just imagine how many earmarks and pork can be attached to that bill.  All for “the good of the country”.  Gold and silver goes up!

If cool heads prevail, the SEC could enforce the law and stop “Naked” Short selling.  The Fed keeps the discount window open, Treasury backstops money markets and the SEC prosecutes “Naked” predators.  Bernanke has to keep the presses running for less than a trillion, but still more dollars than are in existence today.  Gold and silver goes up!  

Either way, more money = inflation.  Inflation = higher gold, silver and commodities.  Be careful, gold is gold, silver is silver, all commodities are not equal.  We’ll save that for another article. 

An exciting day on Wall Street.  Dow -372.75 @ 11,015.75.  The market doesn’t seem excited about Congress nationalizing all the toxic waste that is hiding on the banks balance sheets.  As I called on Friday, Gold and Silver were both up, with the miners getting exponential volume and valuation increases.  Oil was up $20 a barrel settling at up $16.  Rumors and appearance of a short squeeze at work.  Expect it to be down tomorrow.  Some poor devil woke up this morning thinking it would be a great day.  Commodities in general were up, with attention returning to the ag stocks. 

It will be interesting to see if buyers return tomorrow.  I wouldn’t count on it, but Gold and Silver should continue their run.  I am going to watch some ag stocks like POT.   Morgan Stanley cut guidance on AAPL to $178, it dropped to 131.05, I’m not into catching falling knives but.   CDE, a miner I have played multiple times hit a 52 week low last month.  It’s headed back up, I’m going to watch it. 

Gold, Silver, Ags, tomorrow will be fun! 

Today we closed out one position in Gold,  GG for an 23% profit.  Gold and Silver were both down for the day.  I would rather close out the position with a profit and buy back after consolidation than sit on it till it was a loser.  I am looking at Apple.  It is down to 126.84, last seen on 3/11/08.  They evidently have problems with the new iphone, a chip that is not able to handle the thru put required.  They tried to fix it with a software upgrade, but may require rebuild of the phone.  This combined with Google introducing the Gphone may split the consumer market.   Does that mean we have a play on RIMM?   I am watching it, Blackberry caters to business and doesn’t appear threatened by the iphone, probably the same will hold true for the gphone.  This may leave RIMM as the dominant player as the other two fight over the consumer market.  Also, I watched Raytheon today.  It’s a great defense contractor, with lots of backlog. At close today they are within 3.5 percent of 52 week low.  A great value play that should give us a nice pop if money flows back into the market. 

Oil, natural gas, gold, and silver went lower today bringing most of the commodity sector down.  We closed another position in AUY today with a 12% profit.  I will look to buy back into miners after consolidation in the metals prices.  GLD and gold stock volume is high, SLV was low volume on the day.  CDE is a great old company that has silver and gold production.  They don’t hedge their production so will see an immediate bottom line bump from increased commodity prices.  Among the miners, GG was up big, AUY closed even, CDE was down.  I had a buy on CDE but did not get filled, I think GLD and CDE will bounce tomorrow.  If not, I might get in, but other opportunities will present themselves.

New stocks I am looking at are MOS and TDW.  I like MOS, cheap Natural Gas expands their margins.  TDW reported higher profits for the second quarter, but is trading  at a 20% discount from highs.  They supply transportation and logistics to offshore drilling rigs.  It now appears Congress will let the ban expire, rather than enacting a new law.  I think this is the best case scenario.  No ban means the administration can start auctions for drilling rights.  I am looking for information to see if this will occur.  I have an alert @ 58 to watch below that level.  I will look for strength from there before buying. 

So the dirty deed is done.  Reportedly, the Barney (N.Y. finest), Chris and Harry have negotiated a deal on the $700 billion bailout package.  We are now left to pay for their “Excellent Adventure”, and our kids, and our grandkids…   This appears to be punishment for being from a red state.  Do they really think FDIC regulations are going to allow banks to loan money on real estate in the near future?  That’s like trying to get your grandma to a strip joint. 

One of my standing rules is “Never buy in the first hour of trading”.  This has served me well over the past few years. 

Rimm and CDE opened down but buyers came and ran them up.  I wrote two days ago about RIMM being the dominant player for business with Blackberry.  Apple and now Google will fight over the consumer market.  I’d like to get in on RIMM at the right price.  RIMM reported second qtr after close today.  Revenue was up 15% from previous qtr and up 88% over the same qtr last year.   Net was up 2.6% from previous qtr and up 72% over the same qtr last year. 

Raytheon was up pretty strong today, it’s a great long term play at the right price.  Wars are not going away, even with OBAMA! 

TDW dipped under 58, but not enough for a buy.  I like the $55 area.

MOS dipped to $80.75, support @ $80 is sweeter for me.

MA dipped to $188.51 with ten minutes left in the day, I was able to grab @ 189.50 on the way back up.  Visa has been a good play in the past, MA is a great company with lot’s of upside. 

If you like information overload, and fast action, today was the day for you. 

The day started out with RIMM down 24%, over 3^rd qtr. earnings projections to be off by .01 per share!  This company will reward us before the end of the year.  Blackberries will not suffer from consumer discretionary spending cutbacks, if the economy slows.  I could see their new flip phone being THE hot Christmas gift.  I didn’t wait for the price to settle, there is still time for you to fill your stocking with RIMM!

I grabbed a piece of Raytheon for long term holdings.  This is a great company.  As long as we have enemies, Raytheon will build weapons to “reach out and touch” them.

Mosaic dropped 10% at open this morning.  I am happy to wait for earnings announcement for this investment to pay off.   There was a warning on POT and CF, which drove both nitrogen companies down.  MOS was sucked down the same drain.  It doesn’t have to make sense, just pick up the money when you find it!

QQQQ Power shares were trading below $41 for a time this morning.  Gloom and Doom….  With a Bailout pkg sure to get through congress we could see $44 easily in short order.  Just a quickie.

Have a great weekend!

May you live in interesting times.  We certainly did today!  The market is not broke; it is reacting to too much 24 hour TV News.  Traders are waiting on “Uncle Sugar” to limit their exposure to that mean old free enterprise system.

I picked up positions is Visa, QQQQ, CMO and TDW.  I made most of my trades today when the DOW was “only” down about 300, before the defeat of the Bailout package was decided.  I believed it would pass and an afternoon rally would give us some quick profits.

GLD is headed up; it didn’t drag our gold stocks with it, today.  But, it will.  SLV was down slightly today, expect that to change tomorrow. 

The VIX index hit 48 today!  Now is the time to look for bargains on your favorite stocks.  Quality companies are being priced at a tremendous discount.  Tomorrow may offer even better values, but these prices are not going to last forever.  Cash, gold and silver are wonderful assets to own now.  Use your cash to make strategic purchases that meet your long term goals.

Sept. 30, 2008

We had a nice bounce today after a large sell off yesterday.  Remember the market was down over $350 BEFORE the Bailout bill went down to defeat.   The market reaction was another $400 down.  Today we bounced up $485.

I played it as a “dead cat” bounce.  Low volume was evident as prices slowly moved up.  Buyers were waiting on evidence of strength before they jumped in.  The first hour was up about $185 and tried $200 then back, it took time but once it got started it steadily climbed.  This tentativeness convinced me to put in sell orders at a 4% gain.  Most of these came on stocks I had bought yesterday, but some of my others were close.

My buy list for tomorrow will be the ones I sold today, if they drop back, and Google.  It dropped $43 in the last 10 minutes on no news.  Institutional buyer dumped!!!  I’ll buy under $350.

I expect a fall tomorrow but politics will take front and center.  We are in a bear market, take small profits and buy back in lower. 

WARNING:  The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it’s your money.  If you lose it, it’s your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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