Buy What You Like and there is nothing wrong with that. Lots of investors get caught up in studying charts, fundamentals and annual reports (or doing what the herd is doing), and forget the most basic of investment criteria is to buy what you and others really like. Peter Lynch, the fabulous Fidelity manager, who made Magellan a must buy mutual fund back in the day, would say his best stock buys were those he found when he really liked the service and product of the company. Lynch found The Gap when his daughter came back from a shopping trip gushing about the store. A client of mine discovered Panera Bread stock because she so loved the cafe that she had to own a few shares. Another client called and said he loved Amazon, and so we bought a few shares and they’ve held up remarkably well through the sell-off and some experts believe there is more room to grow. I bought MasterCard back in the day (and sadly sold it too soon) because I loved the system that had no credit risk. Insurance companies were another sector I liked when interest rates were normal. If you find something you really like and others do too than maybe you should see if you can buy stock in the company.
Asian stocks jumped this Monday on news that the Greek pro-bailout party voted over the weekend to keep the euro zone intact. This confirmed two days last week of gambling by domestic traders that Greece would not leave the union. It was a narrow victory for the EU but it doesn’t mean all is well. Italy could well be next under the microscope and the G-20 meeting gets underway today for a 2 day meeting in Mexico. Europe will be on the agenda. On Wednesday the Federal Reserve meets and economists expect the central bank to explore more domestic easing.
If You Are A Daily Stock Watcher or Just One That Looks At Your Quarterly Statement the news lately hasn’t been pretty or nice. Daily stock watchers are loading up on anti-
ulcer pills and quarterly readers wonder what the hell their broker is doing to earn his keep. Surely, they say, there has to be ‘something’ that’s making money. The fact that all equity indices have broken down since May 2012 tells you there isn’t much that hasn’t been touched by fear of European contagion. Even the darling stocks of 2012 have fallen on hard times, and here I’m writing of Apple that has given up 40% from its 2012 high. But, as we learned in 2009 not all bad things last forever. According to Tom Kilgore of Dow Jones, the markets may be ‘carving’ out a bottom much like what happened in 2009. ‘The daily volatility within a narrow range’, he writes June 14th, ‘is one characteristic of a bottoming process.’ Technical Analyst Bob Dickey explains, ‘The longer the bottoming out process the better the uptrend can be once the market breaks out.’ And as we all learned in basic money management – missing only a few days out of the year can make all the difference between huge profitable returns or no return at all.
Time Magazine Explored Global Misery
Writer/reporter Rana Foroohar, in the June 18th issue, concluded that the global economic mess is being served by bad global leadership and tepid tactics they employ. Instead of curing the patient leaders seem to be more worried about symptoms and trying to make them better. Monday last
markets tumbled 250 points from top to bottom. They opened on positive news but when the news was examined markets pulled the plug and allowed it to sink. Whomever put together the loan to the Spanish made the contract so one-sided that once everyone understood the conditions they could see it for the joke it was. The WSJ reported that instead of building confidence the bailout terms reflect repayment terms that fundamentally don’t address the economic environment. Loans would not be made directly to the banks but to Spain, which in turn would be responsible even if the banks fail. In other words lenders want to save the system but be guaranteed to have their loans repaid even if banks should fail.
John Hussman, 
portfolio manager of the Hussman funds, said the current financial system employed by global leaders is warped and stupid. ‘To restore the economy to growth there is no substitute for ‘allowing bad investments to work out badly.’ ‘The way to restructure a bank is to take it into receivership, write down the bad assets, wipe out the stockholders and much of the subordinated debt, and then recapitalize the remaining entity by selling back into the private market. Depositors don’t lose a dime.’
Who Loves Us, Baby? 
Foreigners love buying our homes at a discount is what’s happening…Five states are seeing huge number of foreign buyers. These are Florida, California, Texas, Arizona and New York. Richard Smith of Realogy Corp said foreign buyers are picking up two and three homes at a time and paying cash. 
Home prices in Miami, after falling by 50% from their 2006 peak, have turned up in recent months and were 2.5% above their year-earlier level in March. Survey shows that 55% of all buyers came from five countries: Canada, Mexico, China, India and the U.K.
Markets zoooomed Tuesday! Investors think that the news is so bad that the Euro Leaders and the Fed have no choice but to up the ante for more of a stimulus, so sayeth Mark Hulbert at MarketWatch.com. The Dow jumped 163 points and the S&P added another 15 points. What leaders are doing may not be what’s in the best interest of anyone investors just don’t care. The world didn’t end in previous sovereign debt crisis and may not when this one finally comes to a head. 
- The Mexican peso devaluation.
- The government debt crisis in Thailand in 1997
- The Russian ruble devaluation in 1998
- Argentine debt/currency crisis in 2001
And more suppositions…Still it could get ugly with Finland saying ‘adios’, and leaving the Eurozone to go it alone, according to European news watchers who think the small country has had enough. 
What they don’t teach at those Investment Seminars…Stocks reaching 52 week lows could very well go lower as Shorts pound them while stocks reaching 52 week highs could go higher…’ 
From one extreme? to another. Rating Firms rubber stamped bundled mortgage products with nary a peek under the hood. 
Only because they didn’t understand what they were examining. Now, working overtime, Moody’s, the rating agency, is on a path to downgrade banks such as Morgan Stanley, ultimately costing the firm as much as $9 billion. Downgrades cost firms more in borrowing costs. The frustration for the firms/banks is that fighting the raters is a losing battle.
The chart above was published in Wednesday’s June 13th WSJ from Moody’s Investor Services Information.
Don’t Expect Much Going Forward…At Least For The Next Six Weeks. This from Bottarelli Research who completed their analysis of what’s happening with the admonition of ‘Not Buying Stocks Here’. The good folks and analysts concluded that in September the Bulls will attempt to take control. 
Until then there is little to do unless you want to invest in cash. Markets fell Wednesday. Treasury Geithner said it would be fruitless for the United States to pressure Europe to solve their banking and sovereign debt crisis. He reasoned that the Europeans had plenty at stake and more would be explored at the G 20 meeting being held later in June at Big Sur.
A New Marketplace for Bonds? The WSJ reported that some institutions are looking at expanding the bond network. Thinking is not to replace the current over-the-counter trading of bonds but add a new electronic network to make bond trading easier for individuals to buy and sell bonds and reduce cost. The problem is that those organizing are the Big Traders and their needs may be in conflict with smaller ‘fund’ managers and the individual investor. The bond market dwarfs the stock market as for its listings but not for its activity as the below charts illustrates. The information came from the Securities Industry & Financial Markets Association and published in the June 14, 2012 WSJ.
Don’t Bet on Apple! Writes Hilary Kramer of 
Kramer Research. The stock is off 40% and she doesn’t think it’ll hit $1,000 a share. Kramer gives a laundry list of potential stumbling blocks and I’ll share a few here:
- Competition is everywhere
- Cannibalization of the Mac by the iPhone
- Apple TV =unprofitable
- Overzealous expectations on China market
- Unsustainable margins
She doesn’t see where the value is even though she calls it a terrific company! There was no mention of price target just that there were serious reasons why Apple wouldn’t reach the $1,000 a share price. eventually, as long as they keep on-trucking…they very well may see that target price. Morningstar likes it to $740 and sez sell at $940.00.
Drama
It was that and more on Thursday as rumors hit the markets and shares soared on news that Central Banks were prepared with a ‘plan’ if the Greek vote goes against the wishes of the Eurozone. This is not how markets usually function (only in the oddest of occasions), but it’s becoming a permanent form of investment management. 
Stocks cheered the supposedly ‘intervention’ news. In the meanwhile stocks were up significantly on news that the economic picture was so bad that someone, somewhere in high places, had to do something. Plus the WSJ reported Foreign Investment in U.S. markets surged $28.7billion in the first quarter of this years, marking the 12th consecutive quarter of positive in-flow. The chart was published in the WSJ from info from the Commerce Department. 
Interesting…
Louis Navellier wrote that investors should pay more attention to the CPI numbers that were released last week. The drop in Consumer Price Index was primarily due to the price of gasoline. The more money folks have the more they’ll spend. 
Lou writes that time after time consumers have proven that when they have a little cash they’ll spend it. And, since American consumers are the engine of growth, their spending is the V-8 engine of the U.S. economy (and probably the world).
Year-to-Date Sector Performance: 
Markets staged a remarkable rally Friday. It seemed traders were laughing at a possible Greek default. Almost like river boat gamblers the market ignored the unknown and placed chips on the table that common sense would raise its head, and even if it didn’t the Central Banks would come running to the rescue.
For the week markets were up and for the year the S&P was positive over 6%. Some would prefer the collapse of the euro and get rid of the nonsense of range bound markets and get on with the business of real healing and growth. Charles Gave of GavKal Research is one. He said money would flow to companies that didn’t depend on government spending. Those he liked would be J&J, IBM, Texas Instruments and SAP.
Questions, call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.
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