NYIM May 5th Meeting; Oil Report; Swine Flu Update

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

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We would like to thank our guest, best selling author William Cohan for a great interview at the New York Investing meetup last night. The discussion of his recent book, "House of Cards" touched on many of the major issues currently facing Wall Street and the financial system. Cohan was mostly critical of Wall Street during his talk as he was in his book. There was also a talk at the meeting about stocks, oil, gold and silver and where the opportunities currently lie. To find out even more about this topic, we urge everyone in the New York Metro area to attend the New York Hard Assets Investment Conference next Monday and Tuesday. Registration is free and can be done by going to: http://www.hardassetsny.com/. Meanwhile, more news about swine flu is coming out, but the medical authorities are finally being somewhat more responsible about informing the public about what is really going on.

While there are many point of agreement between the New York Investing meetup and William Cohan, some divergences of opinion come out during his interview. Cohan stated quite clearly that he believed significant reform was on the way for Wall Street and that he had high hopes for Timothy Geithner's tenure as Treasury Secretary. While there is certainly a strong movement for reform among the American populace, little has been done so far and anyone who reads this blog regularly knows we are not fans of Timid Tim Geithner. We certainly agree with Cohan's criticism of Congress and the large campaign donations that it accepts from Wall Street has corrupted our system. We don't agree with Cohan's favorable views of TARP, something we vehemently opposed and consider to be one of the biggest wastes of government money ever. Cohan did provide some interesting insight into the failure of Lehman Brothers saying there was really no clear answer why the authorities let it fail other than the timing of its demise (if it had been first, he believes a bailout would have taken place) and it wasn't a favored institution of the government as is Goldman Sachs. We hope to have at least excerpts of the interview out on video shortly.

The weekly oil storage report came out from the EIA this morning and it looked pretty bullish. Oil in storage was up only 600,000 barrels, while analysts has expected a rise of 2,000,000 barrels. Gasoline was down 200,000 barrels and the high demand summer driving season is just about to begin. In the meetup last night we showed how oil was well below its 200-day moving average and predicted it needs to get to that level before the current rally will end. Oil jumped up to a new 5-month high after the inventory report with light sweet crude reaching $55.55 a barrel. There is probably at least $20 more upside to the commodity, if not more, before a 2009 high is hit.

In today's media coverage, the first actual American death of someone who tested positive for swine flu was reported. Read the articles carefully however, they do NOT say that the woman who died on the Texas/Mexican border died of swine flu. Indeed the medical authorities refuse to state that she did and said that she had other 'critical underlying medical problems'. The little Mexican boy who died in Houston also had other significant medical issues. In Mexico, the current count is 42 deaths (still nowhere near the originally reported 160). No medical history is available for most of these people, who were poor and had limited access to health care. It is quite possible all of them had other medical issues as well and swine flu was not the primary cause of their deaths. This would explain why there are no swine flu deaths outside Mexico in places where advanced health care systems and accurate record keeping exist. There is no substantial proof that the current outbreak of swine flu is deadly, nor that it is even a serious disease.

NEXT: A Rally Frothing at the Mouth

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Market Getting Frothy; Meeting tonight for New York Investing

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

The stock market indices were all up over 2% yesterday. Nasdaq crossed its 200-day moving average and closed 13 points above it. We are now at the point where many stocks have had substantial rallies and are moving up sharply. Watch out when this happens! While the average person wants to buy when this occurs, unless you are a short-term trader, selling is the more appropriate reaction. Stocks that are floating 20% or more above their 10-day moving averages should be considered particularly worrisome if the stock has been in rally mode for some time (if it is moving sideways in a base that's another story).

A good general rule of thumb is to sell at least half of your position when you have 100% profits. That way you can't lose. If the stock is also around an important resistance point and the technicals are at overbought levels, you probably wish to sell all of it. Sometimes for severely oversold stocks, especially low-priced ones, the stock can move up 100% and still be in a base and in this case you should NOT be selling (DXO and HWD would be examples of this). The sell rule is only valid for a stock that has been rallying. A lot of money is lost in the market because profits are not taken. Many sell offs take place gradually, so any given trading day doesn't raise an alarm bell. Taking profits is tricky and there is a tendency to sell much too early or much too late. However, don't aim for perfection - this leads to trouble. Your goal should not be to make the maximum amount of profit possible, but a reasonable amount. What is reasonable depends on your time frame. A couple of percent is good for a day trader, but meaningless for Warren Buffett.

An important part of the art of selling is to have a good idea of overall market conditions. We are still in a rally. Currently, there are reasons to think this rally will continue into June. After that, the probabilities are likely to turn against the market. When the market turns down, most stocks will go with it. Oil might last a little longer because of its seasonal trading pattern. There are a few things, like natural gas (UNG), that are still bottoming and haven't rallied yet at all. Gold (GLD) and silver (SLV) frequently trade counter to the market and should be rallying while most stocks are selling off. There are always opportunities in the market.

Tonight, May 5th, is the monthly meeting of the New York Investing meetup. I will be interviewing William Cohan about his latest best seller, "House of Cards". Cohan will be signing his book after the interview. There will also be a talk on the state of the market. The meeting starts at 6:45PM and will be held at PS 41, 116 West 11th Street.

NEXT: NYIM May 5th Meeting; Oil Report; Swine Flu Update

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Banks Get Swine Flu; William Cohan at New York Investing

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

The long awaited bank stress test is scheduled to be out this Thursday. There have already been more leaks in this government PR gambit than in a sinking ship. Meanwhile, the Swine Flu panic is winding down, with an article by TIME magazine this morning questioning whether all the hoopla was justified (see the Sunday and Saturday entries for this blog for a detailed analysis for why it wasn't). And finally, I will be interviewing best-selling author William Cohan at the New York Investing meetup tomorrow. Whether or not you saw him on the Daily Show with John Stuart or elsewhere on TV, this is your chance to see him in person.

In the news out today, Citigroup and Bank of America are stating that they are going to be raising $10 billion more in capital to shore up their reserves. Didn't both of these banks say they were profitable in the first quarter and planning on returning TARP funds? Something seems to be inconsistent with this story. Wells Fargo and PNC Financial also need more capital. The U.S. banking system is by no means stable yet and if the Fed withdraw all the funding it is providing from its half dozen or so programs, almost every major U.S. bank would collapse immediately.

While it is difficult for the average person to understand how poorly the government has handled the Credit Crisis, it is much easier to see how badly they have handled the current outbreak of swine flu (the 1976 outbreak was bungled as well and had tragic consequences for hundreds of people who participated in the government's vaccination program - there was only one supposed swine flu death). A number of the top government medical authorities made dire warnings of impending tragedy and sounded the alarm bells at top volume in the last two weeks. Not only is there no rising death toll as they warned us about, but there are no deaths at all outside of Mexico. Even the supposed deaths that have taken place in Mexico are questionable. Over a week ago, Mexico claimed 160 deaths from swine flu had taken place, the current claim is 20. Mexico's health care statistics seem to be about as reliable as most U.S. banks financial statements (see the previous blog entry for more about this).

If you are in the New York metro area, you should be coming to the May 5th meeting of the New York Investing meetup tomorrow (PS 41, 116 West 11th Street at 6th Avenue, starting at 6:45PM, for more details see: http://investing.meetup.com/21). I will be interviewing William Cohan about his latest book, "House of Cards", which is about the demise of Bear Stearns (New York Investing was the first major group to predict that this would happen in August 2007). Cohan doesn't make a lot of personal appearances, so this is your opportunity to not only hear what he has to say about the Credit Crisis, but get him to sign of copy of his book for you.

NEXT: Market Getting Frothy; Meeting tonight for New York Investing

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.