This Week in Barrons - 5-26-2013

This Week in Barrons – 5-26-2013

What’s The Fed got to do with it?

First off - I want to wish all of you a very wonderful Memorial Day holiday.  I hope you spend it with friends, family, some good food and drink, and remember those that sacrificed so that we can celebrate.  

I received an email the other evening: ”You say that the market gains are all because of Federal Reserve money, but I've been reading that Companies are so flush with cash that they're buying back their own stock and pushing prices higher.  So what's the Fed have to do with it?”

There are many ways that Federal Reserve funds make their way into stock prices.  Currently The Ben Bernanke is printing $85 Billion a month, and using it to buy up Treasuries and Mortgaged Backed Securities (MBS’s).  By being the buyer of last resort, they have driven interest rates to virtually zero.  Buying up MBS’s does a couple of things:

-       First, it lets banks off the hook.  A large portion of the big meltdown was because banks got caught with junk mortgages.  So, one of The Ben Bernanke's first jobs in 2009 was to relieve the poor banks from all those trashy MBS's.  But, not only did the Fed buy them (freeing the banks from deadbeat borrowers), they bought them at “par”.  In other words, because there were so many garbage loans, an entire purchase may have been worth 39 cents on the dollar, but the Fed gave the banks the entire dollar.

-       Secondly, when The Ben Bernanke buys Treasuries (at $45B / month) it reduces interest rates.  It also hands money over to the primary dealer banks.  You see, Benji just doesn’t walk down the hall in DC and buy Treasuries from the Treasury Secretary.  If he did that, the banks wouldn’t get their cut.  He buys them thru the 18 Primary dealer banks so that they get their ‘processing fees.’  

On one hand we have the banking system taking in massive amounts of Fed cash, with no place to put it – so they play cowboy in the market.  And on the other hand (due to the insanely artificially low interest rates) companies have realized they have the perfect Ponzi scam to buy-back their own stock.

The market runs on ‘Earnings per Share’ (EPS).  Assuming you’ve increased your profits / earnings as far as you can – the only way remaining to increase ‘earnings per share’ is to reduce the denominator – reduce the number of shares outstanding.  Back in 2007, companies went on a buy back binge like never before – trying to keep the 2005 - 2007 market rally alive.  Now (in 2013) they are trying to exceed that buy-back binge.  This year, big U.S. companies have given the go-ahead for $286 billion of buy-backs, up 88% from the same period last year.   Currently, U.S. companies (not counting banks and financial firms) have bought-back more than $1 trillion of stock in the five years through 2012.  

So companies are increasing their EPS by buying back stock and therefore making the denominator (the float) smaller.  However, there is a catch.  Companies are BORROWING the money to do it.  Why are corporations borrowing the money – because interest rates are virtually at zero!  So if Corporations couldn't borrow money for free, they wouldn't be buying back stock.  On top of that, the Fed's ZIRP (Zero Interest Rate Policy) has allowed corporations to sell their own corporate bonds (for a couple percent higher than treasuries) and take the proceeds and buy-back even more stock.  Virtually all of the corporations announcing buy-backs are not using corporate savings to buy-back stock, they're issuing debt.  Corporations are not expanding, not hiring, not re-tooling – they are buying back stock (to the tune of $3B/day) to goose their EPS. 

None of this insanity could happen without the Fed pushing a trillion dollars a year into the system.  Corporations couldn’t be offering buy-backs if interest rates were anywhere near normal (i.e. corporations wouldn’t want the risk of trying to pay out 7 or 8% interest on a couple billion dollars.)  So, between handing the banks big bucks for MBS's and Treasuries, The Ben Bernanke's interest rate policy has pushed companies into playing the "Get it while it’s hot” game.  

This is why just the rumor that the Fed may taper off the juice, sent the market into spasms of selling this week.  Imagine what happens when it really hits?  No more buy-backs.  Banks will have non-performing loans again.  Trading desks won’t have free money to play with.  This is why The Ben Bernanke's so trapped in a box.  If he stops this insanity, we crash.  If he doesn't stop, the distortions become so huge, we implode from within.

Look at Japan.  They've had to halt their bond market 9 times in the past week.  The Yen injections are tossing their entire system into spasms, and it’s getting quite dangerous.  The Central Bank currency wars are causing distortions that are not easily fixed.  When Japan announced their big monetary push, their stock market gained 40% in just weeks.  That is not normal.  It feels like each day the distortions are bigger, and the feelings of panic grow stronger.  So do the Boy Scout thing – Be Prepared.  

The Market...

Back in April ‘The Powers that Be’ arranged a massive hit on Gold.  The bullion banks and the gold warehouses were critically short of inventory and needed to shake people out of their gold holdings.  I said then – do NOT buy this dip, because if their first attempt didn't work they will do it again.  Sure enough after the GLD bounced from a low of 130 on April 12th, it ran to 142.50.  Then they stepped in again, and smacked it right in the face, sending it down from 142.50 on May 8th, to 130.88 on Monday.   

Prior to Monday, for 7 sessions the GLD hovered around 142.50.  Since then, we have received at least a dozen absolutely lousy economic reports, from the Philly Fed to the Durable Goods report.  Logic dictates that due to strong demand, bad economic news, and global unrest the metals should have gone higher.  But after consolidating for 7 sessions the metals went down, because the Central banks and Bullion banks wanted them to go down in order to increase physical selling.

Gold is currently being purchased by anyone with big bucks, and that includes the Central Banks, Bullion Banks, and people like George Soros.  FYI: It was widely reported that George Soros sold his GLD shares (the ETF that ‘presumably’ tracks to the price of Gold).   But Mr. Soros didn’t ‘sell’ his GLD shares like I would sell my GLD shares.  Mr. Soros (the large player that he is) sold/redeemed his GLD shares for physical gold.

This attack on the metals will exhaust itself, and when it does I will be a buyer again.  I feel the time is close, because the physical demand has increased during this latest pull down.  Don't forget, with paper assets you can manipulate a market to conform to virtually any silly notion you want.  But in the physical market, you need a live buyer for every seller.  Currently, there are 4 buyers for every seller!

On Friday I ‘gambled’ and purchased a small amount of DIA calls.  Why do I call it a ‘gamble’ rather than an investment?  Because I did it for all the wrong reasons – none of which have anything to do with ‘logic’ and ‘investing’.

-       The market has not experienced 3 consecutive down days this year.

-       Fridays ahead of a 3-day weekend have been green 70% of the time.  And on this Friday (although we opened down over 100 points) we finished a +8!

-       And given we come back on Tuesday, we haven’t experienced a down Tuesday in 2013.  

Having said that, we’ve been set up 11 times this year for what appeared to be a correction, and the market just pushed higher.  One day that record will fall, and I think the fall will be fast and furious.  So, while seeing the market run wild is fun, not many want to talk about what happens when it ends.

  

Tips:

We made some trades this week, we sold out of:

-         GS – in at 157.00 – sold @ 162.14

-         UA – in at 60.19 – sold @ 64.20

-         SBUX – in at 60.70 – sold @ 64.70

-         NSC – in at 77.03 – sold @ 79.00

DS sent us a hint to watch CCJ going forward.  Canada is the #2 supplier of uranium to the world, and the largest supplier in Canada is Cameco Corporation (CCJ).  It’s one of many companies that will ride the uranium bull.  Cameco mines are responsible for about 14% of global uranium production.  It owns mines in Canada, the United States and Kazakhstan – which collectively hold 465 million pounds of proven reserves.

My current short-term holds are:

-         SIL – in at 24.51 (currently 13.40) – no stop yet

-         GLD (ETF for Gold) – in at 158.28, (currently 134.16) – no stop ($1,386.80 per physical ounce), AND

-         SLV (ETF for Silver) – in at 28.3 (currently 21.60) – no stop ($22.48 per physical ounce).

To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there! 

Disclaimer:

Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to <rfc@getabby.com> to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:http://www.youtube.com/watch?v=K2Z9I_6ciH0

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/> 
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@getabby.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 5-19-2013

This Week in Barrons – 5-19-2013

Mr. Collins – I just don’t know...

Mr. Sam Collins – a technical market analyst for 45 years writes:  “Never in my over 45 years in the investment business have I seen such a lack of enthusiasm for one of the biggest, boldest bull markets in history.  Even the major institutions talk down the potential for higher prices.”

Mr. Collins:

-       Maybe people aren't very enthusiastic about this market because the last two market bubble crashes took all of their money?

-       Maybe they remember the late 90's where every analyst would come on CNBC and tell us stocks could only go up, until (of course) the didn’t in March of 2000?

-       Maybe people got tired of Bank manipulations concerning housing, and they bought a house for $500k in 2006 that was $79k in 2002 because the experts told them that real estate can only go up, until (of course) it didn’t in 2007?

-       Or just maybe it's because CNBC has folks like Henry Blodget on, pushing stocks 24/7, and you find out that people like Mr. Blodget have either been fined, or have admitted financial misconduct.  In 2002, New York State Attorney General Eliot Spitzer, published Merrill Lynch e-mails in which Mr. Blodget gave his actual assessments about stocks which conflicted with what he was publicly publishing.  In 2003, the U.S. Securities and Exchange Commission charged Mr. Blodget with civil securities fraud.  Mr. Blodget agreed to a permanent ban from the securities industry and paid a $2 million fine plus a $2 million disgorgement.

-       But it gets better, Mr. Blodget (on CNBC on Friday) was interviewing Charley Rangel.  Mr. Rangel (a member/chair of the House Ways and Means Committee) has been charged 5 times for Ethics violations, and has been tax delinquent for over 3 years.

So maybe, Mr. Collins, people aren't racing toward stocks because on any given day we have a guy who paid $4 million to the SEC to keep his story quiet, interviewing a powerful crook who happens to be the U.S. Representative for New York's 13th congressional district on the most well known Financial Station.  (I can't make this stuff up!)  And maybe, Mr. Collins, we should all just believe The Ben Bernanke when he says:

-       (2/15/2006) "Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise."

-       (2/15/2007) "Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low."

-       (3/28/2007) "At this juncture, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency."

-       (1/10/2008) "The Federal Reserve is not currently forecasting a recession." AND

(When asked directly during a congressional hearing if the Federal Reserve would monetize U.S. government debt) "The Federal Reserve will not monetize the debt.”

The Ben Bernanke is a very smart man, but pardon me if I don’t believe him when he says:  (a) we’re not in an asset bubble, (b) there is no inflation, and (c) the economy is looking pretty good (when we hit an all time high for food stamp delivery last month).  Or maybe I should just Google: “Goldman Sachs Fines” and see (on the first page alone):

-       Goldman Sachs fined $16 million for pay-to-play scheme...

-       Mistakenly Released Documents Reveal Goldman Sachs Back-Stabbed Investors...

-       Goldman Sachs to Pay Record $550 Million to Settle SEC Charges...

-       Goldman Fined for Failing to Block Trader's $8.3 Billion Bet...

-       Goldman Sachs among banks fined over lobbyist payments…

-       U.K. regulator fines Goldman $31m...

-       Goldman Sachs FINED $27 Million By U.K. Agency - Huffington Post

So, Mr. Collins, (short of visiting a Chicago politicians meeting) can you find a more criminal group to recommend?  But you are right about one thing, not everyone is agog at this market run up.  Anyone with a functioning brain is not very excited about this recent market bubble because it isn’t based upon growth or earnings or opportunity.  A stock that misses earnings, warns for the future, and lowers guidance is NOT a reason for that stock to go higher.  Every bubble meets its pin. Tech hit it.  Housing hit it.  Credit hit it.  I get really scared when I hear The Ben Bernanke say: "No fear, there's no bubble and if there was, I can let the air out slowly."

The Market...

Every person that I talk to (who has been in the business longer than 10 years, and doesn’t have an agenda to push) believes that we have entered the end game.  Thus far, in 2013, if you would have invested in the market on a Monday and sold on a Tuesday you would have accumulated over 70% of the market’s gains.  There has not been a ‘down Tuesday’ in 2013.  Is it ‘normal’ that Tuesdays and Fridays account for over 90% of the market gains in an entire year?

As long as The Ben Bernanke, the ECB and Japan are willing to print – then money will end up in the markets.  A recent art auction at Christie’s broke all-time records.  Real estate (in certain areas) is commanding all-time highs.  The rich would rather get something for their dollars than watch them inflate away.  The stock market makes an all-time high, virtually every day – with a 40-point drop being viewed as a "horrible correction".

But while prices of food, medical, education, and clothing are rising considerably – elements like lumber (which is used to build all the houses) are crashing.  Iron Ore is down 20% and in a bear market.  Oil is sloshing around everywhere, as there's no demand.  And gold and silver (the two best metals to offset currency devaluations) are falling.  

I’ve seen this movie before.  I continue to lean long into the market, taking profits as I go.  I am just about to make another purchase of physical gold and silver.  My guess is that since the ‘safety stocks’ (that pay big dividends) have been played out, the materials and cyclicals will become popular.  If I’m right, names like CLF, JOY, UYM, and BAS should move.  I'm getting ready to push the ‘buy’ button on the miners – specifically the GDX and GDXJ.  The latest attack on gold and silver has pushed the miners to a point where they're bordering on ridiculously cheap.  When this particular attack is complete, I'm buying both.  I said a while ago that if gold dropped into the high 1,200's and silver to 22, I would be a buyer of the physical metals for delivery.  Gold is getting there and silver is already in the high 22's.

This summer, the market needs the financials to pull it higher.  Goldman Sachs (GS) and JP Morgan (JPM) are setting up for breakouts.  JPM’s breakout is around 50.45 with GS is around 157.00.  If both break through those levels and hold them for 2 days – we will NOT see a ‘Sell in May and Go Away’, but rather a market that will drift higher through the summer.  Right now GS (on Friday) hit 158.27, and JPM hit 52.48.  Watch over the next two days to see if they can hold those levels.  So for this rally to really continue, JPM and GS need to hold their breakout levels.  If they fail, it could be the "one thing" they use for a correction.  

Tips:

We made some trades this week.  We sold out of SLB +$0.25, ANF + $1.25, CAT +$1.50, and TJX +$1.50.

My current short-term holds are currently:

-         GS – in at 157.00 (currently 158.27) – stop at entry

-         UA – in at 60.19 (currently 62.34) – stop at entry

-         SBUX – in at 60.70 (currently 64.13) – stop at 63.00

-         NSC – in at 77.03 (currently 80.10) – stop at 78.25

-         SIL – in at 24.51 (currently 12.84) – no stop yet

-         GLD (ETF for Gold) – in at 158.28, (currently 131.46) – no stop ($1,364.90 per physical ounce), AND

-         SLV (ETF for Silver) – in at 28.3 (currently 21.46) – no stop ($22.34 per physical ounce).

To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there! 

Disclaimer:

Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to <rfc@getabby.com> to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:http://www.youtube.com/watch?v=K2Z9I_6ciH0

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/> 
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@getabby.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 5-12-2013

This Week in Barrons – 5-12-2013

A Game Changing Experience:

First and most important – Happy Mother’s Day.  The job of being a mother is the most important, and often the most underappreciated – and certainly deserves its day of recognition!

Personally, the “Internet” has been one of the single, biggest, “game changing” events that I have ever witnessed.  Then came the smart device – for not only it’s informational abilities but also it’s GPS / locational accuracy.  But not long ago, a technology morphed into something (that while not completely a stand-alone concept) is a game changer.  That technology is 3-D printing.  Basically what happens is that you pour a powder into a machine, and then feed the machine's computer a 3-Dimensional drawing.  The computer then goes to work "laying" that powder down in the same exact places that the drawing says it should go.  When a layer of the material is laid down, a laser or a heat source hits the material and solidifies it.  Then the machine makes the next pass over the item, depositing more plastic or powder where it's supposed to go.  Add another shot from the laser for solidification, and so on.  Layer by layer a real 3-Dimensional, tangible item is produced.

In the beginning of its very short history, 3-D printers were able to make simple things like toys, army men, and game pieces.  Then came the first "wrench", and then onto the first moving parts like gears, cogs, cranks and fan blades.  Next medicine got involved by creating model limbs, bones and jaws.  In very rapid fashion the amount of things that people were making were pretty amazing.  But there was (and to some extent still is) a problem.  Most of the media used in the process is some form of plastic.  So even a wrench made from your local 3-D printer, although it looks perfect, just can't take the stresses of being used like a “Craftsman” wrench from Sears.  The material just isn’t strong enough.

Now, let’s suppose there is a material that will allow a dot matrix layering – that when heated (or lasered) becomes as strong as steel.  What if an element like Graphene (or some alloy of it) makes things that are actually stronger than steel?  Suddenly the entire manufacturing process for small items is completely disrupted.  You would never need to go to a Home Depot for a screw or a screwdriver again.  Did you break the wheel on your desk chair?  Print one.  Do you need a new case for your iPhone?  Print one.

Well, the news was buzzing this week about the 3-D gun that was successfully printed and fired.  A handful of people were working on creating a gun out of a printer that could hold up to the pressures created inside a gun when the chamber is fired.  Previously, the plastic would fail due to those excessive pressures.  Well, this week it worked.  A working, functional firearm was created from nothing but plastic powder and a $2,000 printer.  And then the plans were put ‘on-line’ for the world to see and use.  The plans were in a CAD (Computer-Aided Design) format; therefore, anyone could take the plans, feed them into a 3-D printer, and produce a functioning firearm.  Now that’s a game changer in many ways.

Mayor Bloomberg (of New York City) is currently pushing legislation through that would make it a crime to own a 3-D printed gun.  This week the State department demanded that the plans be taken down (off the Internet).  Factually – the plans have been downloaded over 100,000 times and reside on servers all around the world, so the technology and solution are out there.  But that isn't the real point.  The point is that as materials get stronger, anyone with a CAD program and a printer can (and will) produce everything – even elements as sophisticated as a firearm. 

3-D printing could truly be one of the most disruptive technologies of our time.  Not only does it eliminate entire classes of machinists that turn metal on lathes; it changes the entire landscape of small parts manufacturing.  It (obviously) opens up a black market in the weapons industry.  While it might not be feasible or economical to make many of the elements with these printers (even if we had the ingredients that would work) – but there’s little doubt that 3-D printing is a game changer!  Linking this to investments, look at companies that exist in the space like:  DDD, XONE, and PRLB. 

The Market:

Friday was a funny day.  All day the averages seemed tired, and sorely in need of a rest.  But as usual, in the last 40 minutes the buying started and pushed the averages up to end another record week.  I remember when setting a record was exciting.  Now that we set one daily – it’s becoming mundane. 

So the music is still playing and there are still musical chairs available on the deck of the Titanic.  How long this can last is anyone's guess.  But it seems to me that when they do decide to yank the rug on the government funding, it's going to be faster and sharper than most will imagine.

I sold some half positions on Friday.  We had really nice short-term gains on several names and I wanted to lock in some of that profit.  By selling half positions, I get to lock in a good gain, but still keep some “skin in the game”.   While I'm not against picking up more stocks if they look ready to make a move, let's all remember we're in a bubble, and bubbles are irrational.

In the meantime, gold was beaten down again – but the attempt wasn’t nearly as successful as it was a few weeks back.  While it was down $50/ounce at mid-day, it rallied back to close down just $24/ounce.  I see signs that ‘potentially’ they're going to let gold and silver run a bit here.  If that's correct, we'll want to jump on some gold and silver stock plays.  ABX over $22 sounds reasonable as a decent short-term trade. 

I received some emails asking about "penny" stocks.  I don't really play penny stocks – simply due to the risk involved.  While I may dream of buying a stock at 70 cents and having it go to $20, the number of them that actually do – is pretty small.  More times than not, the penny stocks are the domain of the day-traders – the gents that buy 20K shares at 10 am and sell them at 10:50 for a two cent gain.  Normally my investing line is $5, but (I must admit) when I first bought SLW it was $3 and ended at $46 – so there are exceptions to every rule. 

If you’re into penny stocks, look at MJNA.  It’s a ‘medical marijuana’ stock that ran from 4 cents to 35 cents recently.  I honestly find picking penny stocks a ‘stretch’ for my skill set.  For example: There is a tiny company with the ticker symbol APDN, trading around 20 cents.  They have a very interesting security application that marks elements for identification using your DNA.  Your DNA is unique, and therefore if your Rolex watch gets stolen – your DNA could identify it as being yours.  In Europe, where all the exit doors of jewelry exchanges have "DNA Sprays" above them, it works very nicely.  And, in the stores that use it, crime has become "non existent".  But guessing whether a company like that could make the same impact over in the US – that’s beyond my comfort level.

A shout out to DS a reader that introduced us to the following chart for Median Household Income – showing a steady decline from 2000 thru 2013:

We learned last week that the average workweek declined in the number of hours worked, and it was the largest decline since April 2009.  Often companies reduce hours at the early stages of economic contractions, prior to laying-off workers.  Not to mention that the quality of the jobs created by this economy continues to be horrible.  At the current rate, the majority of Americans are going to be tending bar, waiting tables or holding multiple temp jobs to make ends meet.  Salaried positions with benefits are becoming a dying breed.  Even the banks, which are the recipients of the Fed's generosity, are laying-off workers – such as JP Morgan just shedding 17,000 positions.

Unfortunately, wealth disparity (which has grown demonstrably over the past decade) is distorting the personal income figures that are often used to measure the health of the US economy.  As shown above, the median family income has declined over the past 10 years.  Median household income declined 1.1% in the month of February, and it is down 5.6% since the recovery began in June 2009.  So the devil is (once again) in the details. 

Tips:

We made some trades this week and our short-term account is listed below.

My current short-term holds are currently:

-         ANF – in at 52.59 (currently 53.84) – stop at 53.10

-         CAT – in at 87.12 (currently 88.62) – stop at 88.25

-         SBUX – in at 60.70 (currently 63.09) – stop at 62.00

-         TJX – in at 48.77 (currently 50.95) – stop at 49.25

-         NSC – in at 77.03 (currently 79.01) – stop at 77.90

-         SLB – in at 75.18 (currently 76.29) – stop at 75.20

-         SIL – in at 24.51 (currently 14.30) – no stop yet

-         GLD (ETF for Gold) – in at 158.28, (currently 139.96) – no stop ($1,436.80 per physical ounce), AND

-         SLV (ETF for Silver) – in at 28.3 (currently 22.98) – no stop ($23.63 per physical ounce).

To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there! 

Disclaimer:

Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to <rfc@getabby.com> to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:http://www.youtube.com/watch?v=K2Z9I_6ciH0

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Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/> 
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@getabby.com>

<http://rfcfinancialnews.blogspot.com>