Equity Markets Go Lower

I honestly feel we are headed for a huge downturn.  I think we have a good chance of seeing a crash within the next 90 days.  I haven't been a bear in a long long time, but all signs point to it. 

Our deficits are huge ( budget and trade).  We have sent many jobs overseas and continue to do so. Our savings rate is non existent.  We don't really manufacture much here anymore except for Airplanes. Yeah we make cars, how many people still in the market for a car consider American made ?  Detroit is hurting. We dont make TV's. Remember Zenith ?  

Huge amounts of capital have flowed overseas by us consuming oil and goods. Just ask the chinese who continue to finance our mounds of debt with the dollars we have paid for electronics, toys , and clothing. 

Obama, If elected wants to raise the capital gains tax. Yeah that will really help our financial markets. Housing and real estate is in bad shape with no end in sight. Banks have to write off trillions. 

All signs point to a long deep recession. In some ways it may be good. We need something to jolt us in to correct fiscal habits. 

I see the equity markets going down.  I would be afraid to be long any stock. Very afraid. 

Oil Slick

The stock market over the last few weeks has been a dog on a leash. The price of oil has been the holder of the leash.  Oil has come down to a price of about $113.00 a barrel thus why the stock market has improved.

I was watching a week old broadcast of the The Larry King show yesterday. He had T. Boone Pickens as his guest. We all know that he is a very wealthy oil man. He was discussing his plan to reduce our country's dependence on foreign oil. His plan is to use wind power and natural gas as an alternative to oil. He was saying how natural gas is the only alternative that can reduce a large number of barrels we consume every day.  

Mr. Pickens mentioned a stat that caught my attention. He said the world produces about 85 million barrels of oil per day and the US consumes about 20% of that. Production is not increasing. They cant make more than that. Basic Supply/Demand scenario comes to mind. If they can't make anymore, I would think the suppliers of oil would want higher prices.  I foresee higher oil going forward. 

I also saw a headline saying that OPEC will not be raising production. Oil goes higher. 

With oil being higher, our ongoing housing and credit crisis, the overspent american consumer and more and more jobs being outsourced, I dont see good times ahead for the US. 

Our standard of living will fall as compared to the Asia.  Its possible we can see an end to the American empire. 

I see the stock market lower till we find some serious solutions. 

Starting up the blog again

Havent been able to post for a few months.  Its been a hectic summer with trading, travel and taking on new clients.  

 I have been able to post regularly on twitter ( screeen name anthonydadlani). I find micro blogging much easier to fit into my hectic schedule. 

I am going to attempt to restart this blog. Rather than post daily and discuss short term ideas, I will focus more on a weekly format. 

If there are any fellow bloggers our there who would like to co blog on this site and contribute their expertise please contact me. 

Regards, 

Haven't been able to post

Sorry but my schedule over the last few weeks has been quite hectic. Trading in markets has taken up all of my time both during market hours and after. Also have been following up on many real estate deals that have been offered and come across my desk. 

Will resume regular posting shortly. 

Hope all of you are still continuing to create wealth for yourselves :)

Is First Solar(FSLR) going to the Moon ?

With oil prices reaching new highs daily, it is no surprise that the solar power industry stocks are too jumping higher. 

I love the prospect of solar power. Love the industry. I think it would be fantastic  to have an alternative to oil and be less dependent on the middle east. 

However, I don't understand how investors can keep bidding up the price of FIRST SOLAR (FSLR). The multiple on this stock is insane. Its projected to earn approximately $5.00 next for 2009. Thats close to a 58 PE in recent trading. Even at stellar growth its pricey. 

Furthermore, there just aren't that many shares sold short on the stock to create a squeeze. I wouldn't want to be long on this stock at this time. Matter of fact, I think being short makes a good trading choice here. Yes, on a pullback I would reevaluate, but at these multiples SELL. 

Disclosure- I have a short position on FSLR. 

McDonalds(MCD) is a real estate company.

Most people don't realize it, but McDonald's(MCD) is not a burger-flipping restaurant chain; it is one of the world's best real estate portfolios. Franchisees flip the burgers. McDonald's simply owns the best commercial property all over the world. 

Although McDonald's first opened its doors in 1954, it wasn't until 1956 after courting many an investor did Ray Kroc consider and implement an idea put forth by Sonneborn, to tap into the real estate market. Shortly after Sonnenborn made his pitch to the investors , the Franchise Realty Corporation, McDonald's Real Estate subsidiary was born. 

In simplified terms, McDonald's makes money on real estate via two methods. First, it buys and sells properties, as one might suspect. Often these are restaurant lots, but such is not necessarily always the case. McDonald's will buy properties that it feels are , or will be, hot locations, and it of course sells properties that are under performing or otherwise not doing so well. Again all of this seems pretty normal. 

Secondly, on top of the franchise fee ( usually 8% ) which McDonald's charges its franchisees to use the " McDonald's " name, it charges rent to the franchisees to use the corporately-owned properties. 

One of these days some large fund or investor will buy up shares of these golden arches for the purpose of spinning off its real estate division. This stock will go tremendously higher. There is a large underlying value in McDonald's shares. 

Hows that for a Happy meal ?

Disclosure- I do not own shares of McDonalds (MCD) neither for myself or clients however I do plan on accumulating it. 

Baidu (BIDU): Chinese for Google.

A little know company outside of China, Baidu(BIDU) is a Google carbon copy. It is a portal, a search engine and the goto start page for many millions of chinese internet users. 

This stock has gone from the low 90's to a 52 week high of $429.19.  In recent trade its around $350. 

Stay away. Stay far away. Due to a very low float this is not a stock for a weak stomach. It normally has intraday ranges of $12 - $20.   Baidu(BIDU) trades at a trailing PE of 138.  Its forward PE is still a pricey 58. Google(GOOG) on the other hand is alot cheaper and much more established throughout the world. 

If the chinese government allows Google to flex its muscle, this stock will be worth $50.

This is a great short if you can handle the roller coaster. 

Sell Baidu. Buy Google. 

Confession- I currenlty have a short position on BIDU and will trade both BIDU and GOOG from time to time for clients and myself. 

Jetblue (JBLU): The Yankees and WIFI at 30,000 Feet

I like tech. I like toys. And I like traveling.  Jetblue (JBLU) has it all. 

I remember my first Jetblue flight. It was a trip to New Orleans. That was one amazing trip, but thats another story. I remember sitting down at my seat and watching a Yankee game. I was in heaven.  It was like I never left my living room. Live TV has been around for awhile now on Jetblue but still very few other airlines offer this amenity. 

I've been hearing alot of chatter recently about WIFI becoming available on every flight soon. That would be something even better then live tv. Imagine having the ability to check stock quotes, reply emails, write this blog at 30,000 feet. I would certainly not have the feeling of anxiety when I am not connected to internet as I do now onboard a long flight. 

Wouldn't it be great to carry on a live chat argument with your girlfriend while crossing the country ?

Jetblue(JBLU) stock is close to its 52 week low. No surprise as the price of oil is at an all time high. Air travel is not going away anytime soon. The large legacy carriers have a high cost structure with older planes, pension liabilities and hub and spoke routes. Jetblue is a great company and will be ahead of the industry once the economy rebounds. 

FLY and BUY Jetblue !

Confession- I do not have a position in Jetblue for myself or clients. However, I am a die hard Yankee Fan. Hotdogs anyone ?

Netflix(NFLX): Will movies in my mailbox continue ?

Netflix (NFLX) delivers. Matter of fact, it delivers exactly what we would expect a home dvd service to do. Great movies in the mail at super fast speeds.( Usually two days or less).

I have been a member of Netflix since its inception. Their service is amazing. I create a list of movies I want to watch and they send them out. They send me an email when the films are shipped and also provide a postage paid return envelope (Xmas Red). Seamless.

But, will we need a physical disc to watch our movies in the near future ?

There are many more options available today to get our content. Video on demand, the internet, and itunes can all provide instant movies with a press of a button. Of course the libraries are not as vast as what Netflix has. Also there is very little high definition content at this time. However, that will all change. I think in the next 12 mos we will see expanded variety, faster speeds, and a wide variety of on demand choices. 

Netflix is a great service today, but its delivery service may soon become obsolete. Netflix does offer selected content for on demand viewing on its website. It will be one of many in the future.

Shares of Netflix are close to their 52 week highs as of this posting. I remain a subscriber, however I will not be an investor. Love the service. Not the stock. 

Confession- I am a Netflix movie addict. I do not hold any position on Netflix (NFLX) neither for myself or clients. 

This stock is not playing games.

Electronic Arts (ERTS), the maker of the Madden Football series, Tiger Woods PGA, and NBA Live for lack of a better phrase is a SLAM DUNK !

In a bad economy, people cocoon themselves. They stay home. They watch TV. They rent movies. And, they play video games. Electronic Arts (ERTS) is the king of video game makers.  Yes we have a variety of platforms to choose from, Playstation (SNE), XBOX 360 (MSFT), the Wii, and of course PC and MAC(AAPL). Guess what ? Electronic Arts makes games for all of them. 

EA has a built an annuity with its sports franchise games. Every year they release an update, with new features and most importantly updated rosters. People who play sports games HAVE to buy the update. Its no fun playing a basketball game when the most current player to choose from is Magic Johnson. 

The next big catalyst for game makers will be the mobile sector. Mobile gaming will be huge. People want to play while waiting at the doctors office, at the airport, in line at unemployment. The iphone (AAPL) too will become a huge mobile gaming platform.

Get in the game and buy shares of this industry gorilla.  It will be back to its 52 weeks highs. Now excuse me while I get back to scoring a touchdown against that 12 year old in Omaha over XBOX LIVE :)

Confession- I do own most of the stocks mentioned above. I do trade them from time to time for myself and clients. And I am addicted to XBOX live. I will beat that 12 year old yet.