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Posted by Martin April 24, 2013
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Is AT&T a buy now?


AT&TToday AT&T dropped some 5% after trading down for almost 6% during the trading session. It then recovered slightly. My position and thinking about this stock is quite mixed. Is it a buy, or is it a sign of a trouble?

The company reported in my opinion good results. It reported, in their words, strong earnings per share and solid cash flow. In wireless network the company shined and grew data revenues by 21%, service revenue up 3.4% and total wireless revenue up 3.4%. The customer base, mainly the postpaid base grew significantly as well (by 72%). U-verse subscribers increased by 31%, etc,. However, it seems the numbers didn’t impress the market and investors heavily dropped the stock. Could slowing of revenue growth or Operating Income Margin (which was down as well) impact today’s trading? Maybe.

Was this price drop yet another overreaction? Is this price drop an opportunity to add more shares?

As a dividend growth investor I am interested in the dividend, how secure and sustainable the dividend is. I do not care much of the price action. I am only interested in price action of a stock, if it is providing a good opportunity to buy more shares.

However, such price action can be a result of a problem with dividends. This is the only task a dividend growth investor needs to find out. Is the dividend in jeopardy so investors are dumping the stock? Or is something else behind the drop? If something else, for example the company missed a revenue expectation, then I do not care about that. From the long term perspective, one missed quarter doesn’t make me worrying at all, mainly with a good solid dividend paying stock with a great dividend history, which AT&T definitely is.

What makes dividends available? Cash flow! So is AT&T the cash cow? If you had a chance to listen to the conference call and see the data, it seems AT&T is the cash cow you are looking for.
AT&T
But, on the Internet I found one item which bothered me. A rumor goes that the company offered to sell some assets to fund the dividends. That is a big RED FLAG, which would cause me either to hold the stock, or even sell it.

Is this an issue with AT&T? Well, I listened to a conference call carefully, mainly the questions at the end of the conference and nothing has been mentioned or even asked by participants. Although there are still risks (as with any company), the information I could find is, at this point, a rumor to me and I found no evidence that the company made such an offer.

Today’s situation around AT&T is just an overreaction to me and an opportunity to add more shares to my current holdings. I decided to take advantage of today’s price and entered a conditional limit order to buy AT&T shares.

Trade detail

I entered the following trade:

When this condition occurs:

The last price of (T) is greater or equal to $37.36

Trigger an order:

Buy to open 26 shares of T Limit at $37.36
GTC (Good Till Canceled)

If the price continues sliding tomorrow, I will be moving my entry point lower with the price. If however the stock reverses tomorrow and grows up or above the trigger price of $37.36, the order becomes live and should execute. If any of that happens, I will post it.
Photo courtesy Aurich Lawson / Embassy Pictures




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Posted by Guest April 23, 2013
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Why Despite Debt Downgrade the US Stocks Have Appealed the Economy?


PartnershipCelina Jones is a skilled economist with years of experience. Working with the government has given her sufficient exposure to the current economic problems. For any other debt related issues, the info at www.consolidatedcredit.org gives great insight into what makes a great debt management program.

The debt burden is a global problem nowadays. Most countries are suffering from debt or are unable to handle their fiscal problems, impacting their economy and other financial aspects of the country as a result.

What is Debt Downgrade?

A debt downgrade is a negative change or a decrease in the rating of a particular security. This usually happens when analysts believe that the security’s future prospects may not be as strong as recommended initially. This can be a result of a fundamental or material change in the operations of the organization, the industry or its vision. Countries have debt management programs and are permitted to tighten or ease their fiscal policies as required using tools like these.

Debt Downgrade in the US

Due to the competition between political parties in the U.S., many credit rating firms in the U.S. believed that the confidence in the ability of the government to manage its financial issues properly seemed to weaken and reduce.

Many credit rating firms like Fitch and Moody’s warned that they may downgrade the U.S. credit rating if the government was unable to find a solution to avoid the fiscal cliff in the economy at the year end. However, Standard & Poor (S&P), one of the three major credit rating agencies of the country, downgraded the rating of the federal government of USA to a rating of AAA to AA+. The rating AAA implies outstanding credit security while the rating AA+ falls below that and implies excellent credit security. The agency has done this for the first time ever in the history of ratings. U.S. was given this credit rating since as long as 1917.

Reasons for Debt Downgrade in the US

The reason that S&P have given for the debt downgrade is that the deficit reduction plan that the government presented did not help in any way to stabilize the debt situation of the country. Moreover, the policy making system is also not efficient enough to cater to the current challenges of the economy.

S&P also stated that the debt-to-GDP ratio of the government was very unsustainable. Also, the lawmakers responsible for controlling the situation were not able to make the tough decisions that were required to rectify the problem.

The Impact of Debt Downgrade on the Economy

One of the major impacts of the debt downgrade would be the increase in the cost of borrowing. The federal government of the U.S. will find borrowing more expensive than it was before the downgrade. The action taken by S&P also left Wall Street surprised and shocked. Most people in the U.S. consider Treasury Bonds to be very safe but were left in shock after the downgrade.

Why Us Stocks have Appealed the Economy

Initially, due to the debt downgrade in the U.S., the 500-stock index of S&P dipped almost 7%. But when things cooled down, the main effect was felt on the financial markets of U.S. the fiscal policies have tightened up and the financial market is now restricted to perform freely.Coworker

Overall, the debt downgrade in the U.S. is an event that has now deflated. The negative results have worn off and the decision of debt downgrade has emerged to be quite positive with positive effect on the bond market.

Conclusion

The recent global financial meltdown left the entire world in a lurch. Every country, including the U.S., underwent the tough phase of recession and had to make difficult choices to cope with the prevailing scenario.

A few instruments were used to rectify the problems that occurred out of which, one was a debt downgrade. This has brought the country’s economy back on track by tightening the fiscal policy and has ultimately had positive implications on the overall economy. The effects of the unprecedented event will diminish with time but have made their mark where they needed to.

Image courtesy of imagerymajestic / FreeDigitalPhotos.net

 




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Posted by Martin April 23, 2013
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Supper quicky note #4


A great article by Tim Iacono, a founder of the investment website ‘Iacono Research‘, providing market commentary and investment advisory services specializing in natural resources, was published recently in Seeking Alpha in regards to Gold.

Those who bought their GLD shares last fall are selling at steep losses.

This appears to be a classic case of not understanding what you own as most institutional investors and money managers who bought GLD late last year probably never really liked the idea of buying gold and, now, they just want out.

Presumably, many bought GLD on the recommendation of investment banks such as Goldman Sachs who, last fall, were predicting further gains for the yellow metal as the next round of Fed money printing got underway.

That didn’t work out the way investment banks thought it would.

So, here we are, a full week after the gold price plunged to almost $1,320 an ounce in panic selling and GLD investors continue to sell gold, many of them believing that they’re lucky to be able to get out now, at slightly higher prices than last week’s lows, making their realized losses a little less painful.

This is a classic example of how markets work and why an investor should stay calm and do not panic. Remember, if you pick a good stock, a good company, which pays dividends, has a solid dividend history, growth, makes money, you do not have to be worry about the attitude in the market. In case of Gold, this drop was a classic panic selling bringing a great opportunity to buy.

 

 

I also looked at the Fear & Greed chart (see below). Interestingly, the market mood was moving towards fear, but the S&P 500 doesn’t correspond to the market sentiment at all. Are we really seeing an exhaustion in the market? A potential lack of buyers? Who knows. This can also indicate that the market participants are just taking a break before more buying hits the market. The future will see, where we are heading.

Fear & Greed




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Posted by Martin April 23, 2013
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Supper quicky note #3


(JNJ) – a few minutes later, look what is going on with Johnson & Johnson company on a daily chart.

Is it just an error in my charting software or did we just saw a minicrash?

Check the chart of JNJ

JNJ

Click to enlarge

What do you think? Could you see a similar drop in your charting tool?

 




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Posted by Martin April 23, 2013
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Supper quicky note #2


(JNJ) – is Johnson and Johnson heading into a parabolic run up to crash later?
Although JNJ is excellent company with a wide moat and a great dividend payer, the recent trend is too close and similar to a parabolic uptrend. Trend like this always ends up with a crash. I would be however happy with it because I want to add more shares of JNJ to my portfolio.

Check the chart of JNJ

JNJ

Click to enlarge

Pay attention to a 5 year chart on the lower right corner which resembles an image of a parabolic run up. I may be wrong, but try to get ready in case to correction comes.

 




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Posted by Martin April 22, 2013
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Supper quicky note #1


Remember the market last week? All looked like we are going into a correction. I was anticipating it and hoping for it, since I wanted to add more shares to my current holdings. But, it didn’t materialized. Today the market reversed and marched up at earnings.

Last week everybody in media was freaking out what a bad earnings season we have and this week an optimism overruled the trend again. Another bump on the road up, though.

But nothing is lost. The market can create a lower high this time and then we will witness a trend reversal. So what to do now? I am sitting tight hoarding cash for the next major correction. The only exception was Gold (GLD) which I bought last week.

Once again I was able to beat the market last week. With gold and other stocks falling sharp I expected my account taking a blood bath, so I was quite surprised when I saw my account down only by -0.67% compared to S&P 500 which tanked by -2.11%. If this trend continues until the end of the year, I will have a very successful year.

If you want to see my trades and quick notes in real time (or almost in real time) check my Facebook Fan Page. I am posting my ideas there a lot faster than here.

My GLD trade from last week seems to be working well and I am seeing nice gains already (this was probably the reason for my account beating the market). Some analysts out there however say, that the gains in Gold may be temporary. I do not believe them, but we will see. If the gold market tanks further, I will buy more shares.

A massive wave of Asian buying of precious metals is emptying dealer shelves across the region. “I haven’t seen this (kind of) gold rush for over 20 years,” says the head of the HK Gold & Silver Exchange, adding that old-timers haven’t seen anything like this for 50 years.

 




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Posted by Martin April 21, 2013
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My inspiration in the last week #18

My inspiration in the last week #18

This week I would like to present the following interesting web sites and links.

I often browse the internet to find ideas about investing, trading stocks, options, investing opportunities and strategies. I like to read about investors and what their investing/trading approach to create income you can live on is.

 

 
 




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Posted by Martin April 18, 2013
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Market outlook, trend still unchanged


Market Market slid again today and the “we-know-the-future” experts out there are competing among themselves who comes up with the best reason why. All of them are united however that the reason is a fear of the US economy slowing down after weak earnings reports.

I believe if you go out there and ask any average American how he or she feels about economy, all of them will tell you what those “I-hear-nothing-I-see-nothing” experts discovered just this morning. When I was browsing the internet, all discussions are full of post saying one thing – the economy isn’t good, companies aren’t hiring and macro data definitely do not match the growth of the market.

Recently my friend blogger Marvin was asking on his blog an interesting question in his post “Open Letter About Real Estate“. He was asking how increasing interest rates, which would hit us potentially in the near future, would affect people’s ability to purchase a house. When I was answering to his question with my rhetoric question-response I was thinking that with rising interest, we may see also our salary rising and that would offset, at least partially, the negative effect of higher interest rates.

His response struck me. He said: “…I certainly haven’t gotten a raise the past 2 years.”

That still indicates that the economy is fragile and companies very cautious in hiring and raising salaries. And this may take for a long time, because of artificial money pumping into the economy. I understand the reason – to support and encourage customer spending. But if people are not secured in their salaries and do not know what may come tomorrow, they will not spend. At least those savvy ones.

And that brings up the question, will the market continue in its fabulous bull trend, or will we see a long time anticipated correction? Is the trend over? Will the weak economic data finally open eyes to investors blindly jumping in the market at any bump on the road?

SPX

Click to enlarge

The metrics I usually watch, such as Chaikin Money Flow indicate the market still has money flowing in and ultimate oscillator indicates the market in somewhat oversold territory. The new low the market is forming is higher than the previous, so from this perspective I am seeing the trend unchanged and I would expect the trend to continue, unless something changes. For example the new high the market will create would be lower than the previous one. In that case we may witness a market reversal. It is not happening yet however.

Regards and happy trading!

Image courtesy of Zuzzuillo / FreeDigitalPhotos.net

 




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Posted by Guest April 17, 2013
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Record Gold Sale At The U.S. Mint


By: Kenneth Schortgen Jr.

US Mint

On April 17, the U.S. Mint reported a record 63500 ounces of gold being sold to the public in one day, despite central banks driving down the paper spot price by over 9% in the past week. This record one day sale brings total Mint sales for April to 140000 ounces, and is already twice the total amount of sales for the previous two months combined.

According to today’s data from the US Mint, a record 63,500 ounces, or a whopping 2 tons, of gold were reported sold on April 17th alone, bringing the total sales for the month to a whopping 147,000 ounces or more than the previous two months combined with just half of the month gone. – U.S. Mint via Zerohedge

The disparity between the spot price, and the physical price of gold, proves that the disconnect is official, and paper no longer represents true value in the precious metal markets. While central banks dumped 500 tons of paper gold on Friday, leading to a spot price drop of more than 9%, most physical gold and silver dealers like Kitco and SQ Metals were selling out of stock very quickly as investors and collectors rejoiced in the falling prices.

Besides the U.S., Asian central banks and investors are purchasing physical gold in high volume due to the price drop. Australia, China, and Japan all saw daily sales of precious metals nearly doubled from their biggest dealers, and shortages were occurring for many reputable online retailers.

As Western central banks are forced to short or sell paper gold in the markets to cover margin calls on other investments, the additional volume is quickly being bought up in the physical markets, with the U.S. Mint alone selling an all-time one day record of 63500 ounces.

This post was originally published at Examiner.com




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Posted by Martin April 17, 2013
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Trade adjustment – Gold (GLD) addition #2

Trade adjustment - Gold (GLD) addition #2

I am posting this trade a few days later than when I actually opened it. If you want to see my trades earlier, you can do so on my Facebook page, where I typically post my trade at the same time when it happens.

Yesterday I added a few shares of GLD into my portfolio as Gold suffered a huge sell off. Some analysts call it the biggest sell off in Gold history. Although many of them predict further drop in price of the yellow metal, I decided to take a trailing buy price approach. Last Friday I entered a conditional order, which didn’t materialized and on Monday I lowered the price. The trigger fired yesterday and I bought 7 shares of GLD. You can see the trade history on my Facebook.

I wrote in my older posts and on Facebook that I believe that this sell off is an overreaction of investors once again, caused by panic and stop loss triggers.

I added shares to my portfolio:

04/16/2013 09:44:52 Bought 7 GLD @ 134.43

If the stock continues falling as is predicted by some, I will be adding more shares.




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