Investor Marc Faber, publisher of the Gloom, Boom & Doom Report, talks about the future of Fannie Mae and Freddie Mac, the global economy, and the outlook for stocks and commodities. Faber said Freddie Mac and Fannie Mae should close down their business or split into private companies and not get government aid.

click for video

00:00 "The world is in recession already."
01:35 Earnings to "decelerate"; technology stocks
02:59 Need to close down or split Fannie, Freddie
05:11 Concerns about technology stocks
05:41 S&P 500 forecast; outlook for interest rates
07:50 "The Fed is totally ineffective."
08:39 Outlook for oil prices, commodity markets
10:35 Credit crunch, impact on economy
11:24 Overseas interest in U.S. assets; China
13:46 U.S. resource companies "attractive" to Asia
14:47 Worst case: "colossal bust with inflation"

Source:
Faber Says Fannie, Freddie Should Split Up, Not Get Aid
Bloomberg, July 23, 2008 07:22 EDT
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=af89KR4uyEGI

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Today was a good day because I worked the entire day. It’s now 2:00am and I woke up at around 9:30 and I worked the whole time except for a brief break to go for a run with my wife and eat dinner. I made potatoes with rosemary. Rosemary is my favorite herb. Life without rosemary would be a lot less enjoyable.
I hadn’t been paying attention to the market at all for the last few months because I wanted to make sure that I concentrated on work. But the person I’ve been working with has been talking to me about the market and so I am becoming more interested. I had no money in any stocks for months, but I may start to get back into it as long as it does not interfere with my work.
I looked over a list of stocks from a scan that I created and trust, and there weren’t many charts at all that I was enthusiastic about. I think the only one that I made a note about was Woodward Governor Co. (WGOV).

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Based on Birinyi Associates' sector data, which dates back to 1962, the S&P 500 financial sector has had its best six day move ever.  The move puts the sector in the middle of its trading range, at the 50-day moving average.

Comment or Read More at Ticker Sense

Nice interactive chart on the Beige Book accompanies this realistic article on the precarious conditions of State finances:

"The stumbling U.S. economy is forcing states to slash spending and cut jobs in order to close a projected $40 billion shortfall in the current fiscal year.

That gap -- identified Wednesday in a survey by the National Conference of State Legislatures -- is more than triple the size of the previous year's. It is the result of broad economic weakness at the state and local levels that could cause pain throughout this year and into 2010. Sales-tax collections, for example, have been hurt by the housing slump and high gasoline prices, which are prompting cutbacks in consumer spending. Personal income-tax collections have been hit by rising unemployment, while corporate income-tax collections have been eroded by falling profits...

Several state-university systems are being forced to raise tuition and tighten their belts...States are also reducing their payrolls and programs. Vermont is cutting about 400 jobs through attrition, while Tennessee is using buyouts and possibly layoffs to eliminate about 3,000 government jobs. Social services have been hit hard. Ten states have made targeted cuts in Medicaid, while three have cut contributions to the Temporary Assistance for Needy Families program."

Of course, it all comes back to Real Estate. Declining housing sales cuts into transfer taxes, Construction spending is down, and employment is way off. The cascading effect of less sales means fewer durable goods sales, home improvement expenditures, etc. As virtuous as the cycle was no the way up, its now that vicious on the way down.

>
Click for interactive chart

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Source:
States Slammed by Tax Shortfalls
CONOR DOUGHERTY, AMY MERRICK and ANTON TROIANOVSKI
WSJ, July 24, 2008
http://online.wsj.com/article/SB121682740001077489.html

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We work with a very talented graphic designer -- Remo over at Synergy -- he did the Fusion Website, as well as the forthcoming redesign of The Big Picture.

Its important to keep him busy, cause when ever he has down time, he ends up doing stuff like this:

Here is some more of his recent work (these are all guys I work with in the office)

Pete, our head trader

My Partner Kevin, during his "let's-do-something-crazy-midlife-crisis:

Petey, all growed up:

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“It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.” - William O’Neil

Symbol		Price	Volume	Avg. Volume	% Vol. Increase
AGO		11.15	7925872	3025550	161.96%
FORM		16.3	2799252	796143	251.60%
EVC		3.18	741753	395629	87.48%
SBSA		0.709	664592	233453	184.67%
AOG		0.3903	545171	402498	35.44%

– Click here for today’s full list –

Comment or Read More at uglychart.com: a blog about stocks

“It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.” - William O’Neil

Symbol		Price	Volume	Avg. Volume	% Vol. Increase
WU		27.78	11090429	6898770	60.75%
PHLY		58.43	8469128	588015	1340.29%
NSC		69.96	5420349	3855600	40.58%
JBHT		38.25	4950779	2778870	78.15%
GIS		65.17	3845413	2957350	30.02%

– Click here for today’s full list –

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And now for something completely different: Very cool visualization of Geographically-based Economic data:

via Flowing Data (also, here's the flickr set)

Comment or Read More at The Big Picture

Actually, the dollar is off of its recent lows, but this email, via Hong Kong, was too cute not to pass along:

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A
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From Canada, who may end up being more Capitalist then us Socialists in the USA:

Two major related threats loom over the world economy: credit crises and rising inflation. What do these two menaces have in common? Bankers, hedge-fund managers, speculators and capitalism in general have been taking the hit for the economic turmoil, both for credit risk and inflation. But the looming collapse of Fannie Mae and Freddie Macin the United States should help change the focus a little. We are now getting down to the heart of the matter, which turns out not to be rampant capitalism but out of control back-door socialism.

- Terence Corcoran, The culprits behind credit, inflation risks

>

Source:
The culprits behind credit, inflation risks
Terence Corcoran
National Post, July 16, 2008
http://www.nationalpost.com/story.html?id=cf306bf6-4d57-4f21-8fca-442268368aff

Comment or Read More at The Big Picture

President Bush’s recent comments about the current economic mess — “Wall Street got drunk,” he said, in what he thought were off-the-record remarks at a Houston fund-raiser — have inspired all kinds of commentary. Much of the more serious-minded reaction was along the lines of the question posed by Portfolio.com’s Megan Barnett: “Who does he [...]
Comment or Read More at DealBook

There is no small amount of irony in this:

"John Paulson, the money manager whose wagers against the U.S. housing market helped him earn an estimated $3.7 billion last year, is now seeking to profit from Wall Street's search for capital to offset mortgage writedowns.

Paulson plans to open a hedge fund by December that will invest as the world's biggest banks and brokers add to the $345 billion they've raised in the past year, according to two people with knowledge of the matter. His Paulson & Co., which oversees $33 billion, hasn't set a size target for the fund, said the people, who declined to be identified because the plans aren't final.

The New York-based firm's credit funds rose as much as sixfold last year, helped by bets that rising defaults on subprime home loans would pummel the value of mortgage-backed securities. The meltdown has forced the world's biggest banks and securities firms to take $467 billion in asset write-offs and credit losses and led to the collapse of Bear Stearns Cos.

"Investors who are able to make money in a declining market and then rapidly turn around and profit from a rising market is highly unusual,'' said Thomas Whelan, president of Greenwich, Connecticut-based Greenwich Alternative Investments, which advises clients on investing in hedge funds. Paulson declined to comment. His 2007 earnings made him the highest-paid hedge-fund manager, according to Institutional Investor's Alpha magazine."

Note that Paulson was early in shorting Mortgage back securities, but had the conviction and the patience to wait out the eventual sell off. I would expect something similar here . . .

>

Previously
Those Damn Short Sellers Are Just Killing It!
http://bigpicture.typepad.com/comments/2008/07/those-damn-shor.html

Source:
Paulson & Co. Plans Fund to Provide Capital to Banks
Saijel Kishan
Bloomberg, July 23 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=aANbt26C4Kuk&

Comment or Read More at The Big Picture

While the real estate bubble has popped on Main Street, the party is still going strong at 15 Central Park West, the newly built, Goldman Sachs-backed condominium complex that is home to many of New York’s financial moguls. According to recent reports, some of the condos there are going on the market for several times what [...]
Comment or Read More at DealBook

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.

If you have been following my ongoing 'saga' with Meridian (VIVO), you will know that last week, after the 17% decline in the stock price from about $29 to $24, I chose to put on my 'contrarian hat' and bought 2000 shares of Meridian (on margin!).  The stock didn't decline further, actually had an upgrade to "long-term buy" and managed to rebound to its current level. (VIVO is trading at $26.00, down $(.37) or (1.4)% on the day as I write (last quote as of 12:27 pm EST).

This kind of "trading" is not my forte.  I work my portfolio as more of a system trader until every once in awhile I get the 'bug', and take a shot at what I believe is an opportunity I should not ignore.  I have been wrong as often as I have been right.  As one reader told me "stick to your system"....and I generally do.

Anyhow, I wanted to update you on the last 500 of the 2000 shares that I sold just a few moments ago (leaving me with my 171 shares of Meridian (VIVO) that I shall continue to manage in my usual fashion).  This morning I sold my last 500 shares in two lots:  250 at $26.531, and 250 at $26.1854. 

Unfortunately, my Fidelity account does what is called "first in first out" accounting,  It really isn't bad like I say because long-term gains are taxed at a lower rate than short-term gains.  So I saved a bunch of money....at least a little :). 

However, I have been using those % numbers on the website to figure my own sale points.  So go figure. 

Needing to figure my sales points is important to my own idiosyncratic trading strategy.  Going back to my entry of June 29, 2008, "Trading Portfolio Update", I summarized my current status on the 171 shares of Meridian (VIVO) that I own:

Meridian Bioscience (VIVO): 171 shares, purchased 4/21/05 at a cost basis of $7.42.  VIVO closed at $27.74 for a gain of $20.32 or 273.9% since purchase.  I have sold portions of VIVO eight times (!) at levels of 30, 60, 90, 120, 180, 240, 300, and 360% appreciation targets.  Thus on the downside, if VIVO slips further to the 180% appreciation level or $7.42 x 2.8 = $20.78, then I would sell all of my shares.  On the upside, a partial sale would next be at a 450% appreciatio level or 5.5 x $7.42 = $40.81.

Boy am I glad I had written that one up!

So thanks again for dropping by and visiting.  Trades like the above are quite dangerous and prone to loss.  Especially buying shares of a declining stock.  But getting lucky is probably helpful.

Perhaps I should have held on longer.  I am not interested in getting away from my own investment strategy that has been working.  I just would like to try to dabble in 'trading' and see if I can master any of those skills.  And I know, I should 'stick to my system' and shall try very hard to do that as well!

If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Yours in investing,

 

Bob 

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Lehman Brothers‘ stock seems to have stopped its free-fall for the moment, but Wall Street is still seriously concerned about its future. The firm, led by longtime chief Richard Fuld Jr., pictured above, continues to hold a mountain of risky, hard-to-value securities tied to mortgages, real estate and buyout loans, and its clients are watching carefully [...]
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What is a dead pledge?

Well, that is the literal translation of the word mortgage:

1390, from O.Fr. morgage (13c.), mort gaige, lit. "dead pledge" (replaced in modern Fr. by hypothèque), from mort "dead" + gage "pledge;" so called because the deal dies either when the debt is paid or when payment fails. O.Fr. mort is from V.L. *mortus "dead," from L. mortuus, pp. of mori "to die" (see mortal). The verb is first attested 1467.

The term comes from the Old French "dead pledge," and apparently meaning that the pledge ends (dies) either when the obligation is fulfilled or the property is taken through foreclosure:

Coke, Edward. Commentaries on the Laws of England. “[I]f he doth not pay, then the Land which is put in pledge upon condition for the payment of the money, is taken from him for ever, and so dead to him upon condition, &c. And if he doth pay the money, then the pledge is dead as to the Tenant”

Now you know . . .

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It didn’t get too much notice outside of the oil patch, but Tuesday’s bankruptcy filing by SemGroup LP — which Forbes.com last year called the 12th-largest private company in the United States — was one of the bigger corporate flame-outs of late. And there could be more where that came from. A recent report from Moody’s [...]
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A
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Carl C. Icahn wants you to know that, now that his proxy battle with Yahoo is over, he intends to blog more often. And he hinted that an upcoming post will be inspired by a recent article in The Wall Street Journal. Writing Tuesday on his freshly launched blog, The Icahn Report, the activist investor, who [...]
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Kleiner Perkins Caufield & Byers has led a considerable $29 million round for Zynga Game Network, which makes casual games for social-networking Web sites like Facebook. While The Wall Street Journal cited the financing as a sign of investors’ growing interest in into social network plug-ins, paidContent.org noted that the V.C. heavyweight’s participation in the round [...]
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Paulson & Company, the hedge fund firm whose founder, John Paulson, made a mint on bearish housing bets last year, is starting a fund to provide capital to financial firms hurt by mortgage writedowns, Bloomberg News reported. Bloomberg said the fund hasn’t set a fund-raising target but hopes to open as soon as December. Go to [...]
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