The Tycoon Report

A money idea for you, and more ...

Hello, to all my Jason Jovine readers (you guys are hands down the best.) I hope that you are all well.  In case you were wondering, so far, so good in Florida.  In New York I was used to seeing squirrels running around (and, in some of the poorer communities, rats,) and in Florida I have to get used to seeing lizards running around, instead.

I am probably going to swim with the dolphins sometime over the next several weeks, while in New York, I was used to swimming with sharks.  The swimming with the dolphins, of course, is optional; the swimming with sharks in New York, of course, was not (if you know what I mean.)

So, overall, life in Florida is generally easier than it is in NYC.  Besides the fact that my allergies are driving me crazy down here (not exactly sure why,) Florida is really nice.

I HAVE A RECCOMEDATION FOR YOU TODAY!

I am going to talk a little bit about geopolitics, the economy and, of course, the stock market, and then I will tell you specifically what I believe that you should buy right now. Let’s get started, shall we?

Geopolitics, the economy, and, of course, the market

The big news on the geopolitical front is, of course, North Korea.  After the UN passed a resolution on Saturday, the North Korean ambassador to the UN actually walked out!

The resolution rules out the military option (for the time being at least.)  This is China’s and Russia’s doing, of course, but it did impose several economic sanctions for which a regime that spends most of its money on guns instead of butter, so to speak, could prove disastrous.

The last thing that the South Koreans or the Chinese want is for the North Korean regime to collapse and for millions of refugees to come pouring over their borders. The Chinese and South Korean have flourished compared to the North Korean economy and this could be a setback for China and South Korea.

The bottom line is that from a business point view, the North Korean economy is a horrible “business model,” and it is not a question of if, but rather when it will fall. The question remains, does the world want to get it over with now or keep putting it on hold.

I am personally a believer in getting things done and over with and moving on.  We should impose very tough economic sanctions on them and force the regime to collapse. The world should give China and South Korea their word that they will help with the aftermath so that they don’t have to shoulder the entire burden themselves.

China and South Korea want to do it more slowly which I disagree with, but they are scared of what effect this disaster can have on their countries and economies.

This North Korea problem is everyone’s problem; make no mistake about it.  Think about the countries in the area.  They include Japan (the world’s second largest economy,) China, South Korea, and Taiwan just to name a few.

We do a whole lot of business with these countries.  From an economic and from a national security point of view this is a BIG DEAL.

Iran and other countries are watching closely to see how the world handles this.  I was impressed with how fast the resolution was passed.  Now it’s time to see if it has any teeth. We will see.

On the economics front

Retail sales were down 0.4% last month when the street expected them to be up 0.2%. This sounds bad at first, but you need to look behind the scenes.  This decline takes into account the decline of revenue from gas stations.

In, other words gas station revenue was down 9.3% last month due to a decline in gas prices.  Consumers took their savings from gas prices and spent these savings elsewhere which is just fine.

So if you take retail sales and exclude the gas and automobile industries, they rose 0.8% last month.  This is good news.

The housing market has slowed, but it is making a soft landing instead of a hard one.  This is also not a problem.  Gas prices are down, and this is, of course, good for the consumer.  Remember what I have said many times:  the consumer makes up around 70% of our economy.

Corporate profits this week have been very good overall.  Companies such as McDonald’s and General Electric have impressed analysts on Wall Street.  The stock market followed all of this good news but hitting new highs.

The market closed at another new record on Friday.  It closed at 11,960.51.   

I predicted back in April that the Dow would hit 12,000 (http://www.thetycoonreport.com/tycoon_report/20060407.html).  I must admit that I knew it would happen relatively fast, but it has happened faster than I expected.

The University of Michigan’s consumer confidence figure was also impressive.  It came in at 92.3 for October, when the street expected it to come in at 86.5. Consumers are generally happier and are spending more.

The holiday season is fast approaching and, barring a catastrophe, it looks to be a decent one.

I STILL REMAIN CAUTIOUSLY BULLISH!

Up until my last article, I have just said that I was bullish.  I have now included the word ‘cautiously’ because the market ran up so quickly, and some things are getting overpriced.  I am still bullish, and you could still make good money out there, but you need to use a little more caution and think a little bit more before buying something. That was a good segue into what I want to say next …

Let’s get into a position to make money right now!

The company that you want to own right now is CVS Corporation.  The symbol of course is CVS. The stock should be trading at around $31 per share.

I really like this company as an investment. They are well positioned to take advantage of the long term geographic and demographic trends in the U.S. economy.

On November 2, 2006, they will announce their Q3 earnings.  The consensus is 30 cents per share.  I wouldn’t be surprised if they beat this number.  Even if their earnings come in up or down a penny or two, I still believe that long term, this is a good company to have in your portfolio.

I assume that most of you are familiar with CVS because they are very well known, but for those of you who aren’t, please visit their website for more info (www.cvs.com).

If you are more of a risk taker and want to play the options on this baby, go right ahead. Since I hate to lose money, I would buy longer term in the money options.

I won’t tell you what options are best for you because this depends on your risk profile and many other factors.  Just remember options are generally riskier than stocks.  The longer term the option is, the more time that you have for something to happen.

Until the next time, folks, spend you’re hard earned money wisely.