2007 Positioning
Monday, January 8, 2007 | Jason JovineRating:
2006 HousecleaningHappy New Year to you all!
Before I get into 2007, I need to "pull out the broom", so to speak, and address some issues from 2006 so that we can move on to 2007 and the future in general. I read most, if not all, of the feedback that I receive from you all, and I take it all very seriously. This is why I need to address some feedback right here and right now.
Before I start, I want to say that the overwhelming amount of feedback that I receive is well thought out, constructive, and sometimes entertaining. Of course, there are always those comedians out there, as well. I don't know what they are on to write some of the stuff that they do, but whatever it is, I will give you the address where to send it to after I'm done writing. Just kidding (or am I?)
ISSUES
1. MY 2006 PERFORMANCE
I received feedback from many skeptics out there that basically said to me (I am paraphrasing, of course,) "You always only talk about your winners, but you never talk about your losers."
For the 100th time, every single stock that I recommended in 2006 subsequently went higher after I recommended it. This is not hype or sales pitch; it is documented fact. I don't know what else to say.
I, of course, want to stress that this WILL NOT be the case all of the time. I will be wrong at times. When this happens, I will admit it like a man and move on.
2. I DON"T HAVE A NEWSLETTER
I have said this before, but I will reiterate. At this point, I wear many hats here at Tycoon. One of them is that I write for the Tycoon Report ONLY ONCE per week (usually on Mondays, now.)
Under that constraint, the best that I can do for now, at least, is to give you recommendations, and you have to manage them after that. Since making money on stocks, etc. is a function of timing, and since I only write one time per week, I can't tell you the exact right time to sell a position unless it happens to fall on a day that I write.
If I had my own newsletter, then I would issue "trade alerts" as to exactly how to play a position, but until that day comes, this is the best that I can do.
The good news is that I can have a newsletter in the future if enough of YOU want it. From a business point of view, enough of you have to speak up loud and clear and make it known that you would be interested in subscribing to my newsletter for it to make sense for me to change my current role(s) here at Tycoon.
The bottom line is if you rate my articles as "so so" or don't bother rating them at all, then our relationship will continue in its current manner. If you want things to change, then you have to rate me very positively and very often. If you are reading this right now, and you are too lazy to do this, that is fine with me.
I make a decent living doing what I am currently doing. If you want me to help you put some money in your pocket, then this is up to you all and how badly you all want it. Now you're starting to get it...
3. KNOW WHO WE ARE
There are currently five people who write for the Tycoon Report. They are Chris Rowe, Dylan Jovine, Wayne Mulligan, Teeka Tiwari and me, Jason Jovine. The other four have their own newsletters; I don't.
Shockingly, to this day, there are people who still mix us up and get us confused. For example, one of my colleagues mentioned above got an e-mail the other day asking a question about a stock that I recommended. Do you believe that?
This is your money, folks, and I hope in 2007 that you all make it a point to keep better track of everything and anything that has to do with it. We're not playing with Monopoly money here. This is the real thing.
2007 (finally)
While many people were hanging out with their families over the holidays, my neurotic personality had me in the office thinking most of the time. I gave most of my family gift certificates as Christmas presents because by the time I was ready to shop, there was no time left, so I had to take the quick and easy way out (sorry, Kathy.)
I was thinking about how is the best way to position myself in 2007, and I am close to having an answer. Business positioning is the same as any other positioning except that it is business related, of course.
We all position ourselves every day in life. At work, for example, you may be known as the boss' butt kisser, maybe, or the tech geek problem solver guy. Maybe you're the pretty lady who sleeps with people to get ahead; maybe you play the fool, etc. I think that you all get the point.
Now, how do we position ourselves in 2007 to make money like we were able to do in 2006? The first part of the answer is that we must understand where we are now.
A few things are crystal clear right now to me. GDP (Gross Domestic Product) grew at 5.6% in the first quarter of 2006, 2.6% in the second quarter, and 2.0% in the third quarter. We are still waiting to see how the year ended. The economy has clearly slowed.
Has it slowed so much as to make the Fed cut interest rates? This remains to be seen. Is inflation enough of a concern from the Fed's point of view to make it want to raise interest rates? This also remains to be seen. The Fed's comfort zone is generally between 1-2% for inflation. It has been higher than this.
The Democrats took control of both houses of Congress last week with Nancy Pelosi becoming the first female Speaker of the House in history. We can assume that they will want to increase the minimum wage, make student loans and health care more accessible and affordable for the American people. I am sure that they will also have it in for George Bush's friends at the oil companies and other big business and special interests.
How will these changes affect the businesses and the stock market? We will see.
The world population is quickly approaching seven billion! This will clearly increase the demand for energy and all commodities across the board for the many millions moving from poverty to the middle class over the long term. What about the short term? We will see.
Iran and North Korea remain a threat. The Bush administration sent a couple of warships into the Persian Gulf recently as a show of force directed towards the Iranian regime. Will there be another war? What will happen in Iraq? We will see.
Global warming is certainly an issue. This is one of the reasons for the short term decline in energy prices recently. The demand in the North and Northeast is not as great as expected. It is just warmer there. So people don't have to spend as much money on heating their homes as they used to.
I remember being a kid in Queens, New York, and it was always freezing outside in the winter time, and it would always snow. Now in the winter up there, the temperature is in the 50's and 60's. What does it mean for the alternative energy market? Are there opportunities there? Where? We will see.
Many global markets, especially in Europe and Asia, have outperformed the U.S. stock market in 2006. Will this happen again in 2007? We will see.
I could go on and on, but I am thinking about 2007 positioning, and you should be, too. "What and where do I invest?" is the question to ask. I will give you ideas throughout this year to put money in your pocket and help you make the right decisions. Strap on your seatbelt, and don't forget that if you want more, then you know what to do. If you don't, then that is fine for me as well. Get clear on what you want this year, and MAKE IT HAPPEN!
Until the next time, folks, spend your hard earned money wisely,
(Please let us know what you think about Jason Jovine's article.)
Rate his article here »
Rate his article here »
Jason Jovine
Contributing Editor
The Tycoon Report
MARK YOUR ECONOMIC CALENDAR – What’s ahead for the week of January 8th.
Monday, January 8th, 2007
15:00 Consumer Credit: Consensus $5.5B
Big Picture: Tax cuts and cash out mortgage refinancing provided consumer funding in past years as 6% yoy income growth now provides the means outside of credit. Credit cards (revolving credit) make up 36% of total consumer credit which stands at $2.4 trillion. Nonrevolving credit helps finance auto purchases, tuition (including Sallie Mae), vacations and other forms of consumer spending. Annual growth of 4.2% now at the low end of the last 13 years.
Wednesday, January 10th, 2007
8:30 Trade Balance: Consensus -$59.5B
Big Picture: August topped the record July 2006 deficit as lower energy prices left the October deficit -14% lower and the lowest in over a year. The rapid drop is tied to oil prices and should add a very welcome boost to Q4 GDP. The swing of petroleum import prices mask the weakening domestic demand for foreign goods as the weaker dollar slowly reduced demand. Exports feed a stronger world economy. From a year ago exports have risen 14% as imports have risen just 4%. Import growth carries a larger effect on the deficit than exports given that imports are more than 50% larger. China commanded a record 41% of the entire deficit in October. The massive size of the deficit is eyed for effects on the dollar and interest rates. The trade deficit demands an equal but opposite investment inflow from abroad as the record size urges caution regarding foreign demand. But foreign demand remains exceedingly strong given the return of petrodollars and as Asian export markets protect strong trade flows with dollar buying.
10:00 Wholesale Inventories: Consensus 0.5%
Big Picture: Wholesaler inventories growth of 10% yoy compares to 6% yoy growth in sales. The inventory to sales ratio bottomed at 1.15 month in May through July as weaker sales growth in recent months have left a lift to 1.20 months. Longer term trends reflect some comfort at those I/S lows as technology allows for continued improvement in just-in-time inventory management. The smaller inventory swings from rebuilding and draw downs leaves a steadier pace of domestic growth.
Thursday, January 11th, 2007
8:30 Initial Claims: Consensus NA
Big Picture: Initial claims broke above the remarkably tight range held in the 4-week average for 5 months but have returned after the holiday spike. Continued claims showed a five year low in the 4-week average in mid May but now stands 90K higher. The continued low levels reflect the thin available labor supply which make a qualified hire difficult to find and therefore leaving less layoffs. A good read on the labor market as net hiring slows with the economy.
14:00 Treasury Budget: Consensus $21.0B
Big Picture: Tax receipts continue to run strong and left a -$248 bln FY06 budget deficit. Strong tax receipt growth has returned with the stronger economy, profits and income growth. Spending remains stronger than desired (7% avg 12 month yoy growth) as fiscal discipline is needed. The FY05 improvement sliced away a quarter of the record $413 bln FY04 deficit as FY06 sliced away another $71 bln -- far better than expected given the Gulf Coast spending, war costs and government spending restraint not yet demonstrated. Far more progress is needed to continue to slim the budget. The government's outlook is for a larger deficit in FY07 but on track for another year of improvement.
Friday, January 12th, 2007
8:30 Export Prices ex-ag.: Consensus NA
Big Picture: Ex-petrol import price gains have fallen off Oct's decade high of 3.8% yoy to just 1.3% yoy. With the recent declines petrol import prices are up just 1.5% yoy to leave a 1.2% yoy rise in total import prices. China and Japan and now Canada show outright yoy declines in import prices.
8:30 Import Prices ex-oil: Consensus NA
Big Picture: Ex-petrol import price gains have fallen off Oct's decade high of 3.8% yoy to just 1.3% yoy. With the recent declines petrol import prices are up just 1.5% yoy to leave a 1.2% yoy rise in total import prices. China and Japan and now Canada show outright yoy declines in import prices.
8:30 Retail Sales: Consensus 0.7%
Big Picture: Retail sales are slowing under the weight of higher interest rates as lower gas prices seem to have provided a boost in November. Strong retail sales growth had been fueled by low interest rates, vehicle discounting and mortgage refinancing as those forces faded in late 2005. Despite the improved employment and income growth the Fed tightening and high energy prices have had a deflating effect on consumer spending and big ticket durable goods purchases particularly. Income growth provides support and is the best read on the future sales pace as the downward revision to annual income growth steals some of the growth potential of sales. Retail sales at 6% yoy pace.
8:30 Retail Sales ex-auto: Consensus 0.6%
Big Picture: Retail sales are slowing under the weight of higher interest rates as lower gas prices seem to have provided a boost in November. Strong retail sales growth had been fueled by low interest rates, vehicle discounting and mortgage refinancing as those forces faded in late 2005. Despite the improved employment and income growth the Fed tightening and high energy prices have had a deflating effect on consumer spending and big ticket durable goods purchases particularly. Income growth provides support and is the best read on the future sales pace as the downward revision to annual income growth steals some of the growth potential of sales. Retail sales at 6% yoy pace.
10:00 Business Inventories: Consensus 0.4%
Big Picture: The inventory to sales ratio returned a record low 1.25 months in May as inventory gains (7% yoy) compare to a 4% yoy rise in sales. The historically lean inventory supply compared to sales is intended and shouldn't require rebuilding as the I/S ratio trend argues that technology continues to shorten inventory delivery times and need. While the low inventory levels are having a positive effect on production and adds to the pace demanded by sales. Longer term rebuilding should be modest given continued improvements in inventory management which don't require as much stock in the warehouses and lots.
(Source: www.Briefing.com)
