World Of Wallstreet

Best Of The Web: Not Scared, Or Not Scared Enough?

Here's (click here for temporary page, here for MP3) the best gloom and doom I've found since the Bear Sterns embroglio. Its a fifty minute interview of Jim Dines, "legendary" market analyst, hosted on Jim Puplava's Financial Sense. I had never heard of him before, but he is purportedly the first guy to recommend uranium stocks (before their tremendous mania peaking about a year ago) as well as several other great calls.

I listened to this thing about four times this weekend. Quite stunning. With several tradeable ideas to pursue.

Monty

Weekly Inventory Update, 5/16/2008

Zinc inventory levels are clearly falling. I don't think its a seasonal pattern. I'm starting to edge back into zinc-only (not zinc-lead) mining stocks. Copper looks hard to read at this point.

Leave me a comment with your thoughts on the outlook for copper and zinc prices at this point.

 

MontyHigh

Best Of The Blogs: Less Hours, Not Less Jobs

It's been a while since I sent anything out on the economic outlook. I think this is relatively insightful and important. Its down there near the lower end of what I send out so feel free to skip it if you are busy.

Monty

Companies Cutting Hours Aggressively

I have over the years discussed what a poor economic recovery this cycle has been in terms of job creation. Given the lack of robust job creation, its not a huge surprise that layoffs typical of most recessions have yet to appear.

Merrill Lynch's David Rosenberg notes it has become "economic myth" that the April employment report was benign. In particular, he notes that hours worked, one of the employment metrics reported by the BLS, is rapidly declining. In the April NFP release, hours worked plunged:

"Companies did not cut as many positions as expected, they cut the hours instead. The average work week plunged 0.3% (and, aggregate hours worked were down at an annual rate of 1% in the past three months), which, by the way, would be the equivalent of 400,000 job cuts."

Here's the link: http://bigpicture.typepad.com/comments/2008/05/companies-cutti.html
 

Check It Out: GoldStockStrategist.Com

Here's a nice site (http://www.goldstockstrategist.com/ )that covers the same kind of stocks World Of WallStreet covers. I'm hoping to check out some of his picks myself and perhaps develop a closer relationship with the author of this site, Scott Nystrom.

MontyHigh

Firecracker Top Pick: First Metals (FMA.TO)

I've seen a lot of undervalued stocks in my day, but this one beats them all.

Thanks to a tip from someone on the Investor Village RNO board I just bought some First Metals(FMA.TO or FSTMF).

Yesterday they reported a $2.1M profit for their first month of operation after declaring commercial production. Production should be higher in April, May and June. I am expecting a second quarter profit of about $8m or about .19 per share.

I thought that EZM, RNO, Lionore, Quadra and Capstone were undervalued. Quadra should have revenues of $800M with a market cap of $1.5B. Capstone should have revenues of $150M with a market cap of $350M. FMA.TO should have revenues of $100M with a market cap of $50M.

This is probably the most undervalued stock I have ever seen. Whats unbelievable is that they have another mine on the way that is expected to produce copper, zinc, silver and gold.

The biggest negative is a $17M loan that has a 14% interest rate. That amounts to about $2.4M in interest per year. The good news is that they have a current cash flow of more than $3M per month and they should be able to pay this loan off in a year.

They should earn about .80 pretax over the next year.

I don't know when I've been this excited about a stock. For more information EMail me at firecracker7445@aol.com or check the FMA stockhouse message board. JMHO This stock is easy to buy in the U.S. using the symbol FSTMF

Firecracker

[Editor's Note: The stock has popped quite a bit lately and I'm looking for an entry point. I recommend you do your own due diligence (there is one issue worth considering which I won't mention here) and make your own decision. It has definite possibilities.]

The Good Stuff: Tobinator's May 2008 Update

It is my great honor and delight to make available on World Of Wallstreet the highly respected Toby Hansen's (Tobinator's) quarterly update, a review of general market conditions, the market outlook for each of the precious and base metals and a collection of recommended precious and base metal mining stocks. Toby is as good as I've found (subscription service or free) at precious metal stock investing and the technical analysis of mining stocks. He makes this available freely to all with the understanding that everyone must do their own due diligence.

I hope Toby will allow me to make available future editions, but if you'd like to go straight to the source and get on his email distribution, send an email request to tobinator00@yahoo.com. Getting on Toby's email list will also give you access to his newsletter about a week sooner than you'll get it from World Of Wallstreet.

Finally, Toby has started what looks like its going to be an excellent message board for precious metal investors. Please drop by if you can add some real value to the discussion (here's the link: http://www.investorvillage.com/smbd.asp?mb=144&pt=m).

MontyHigh

Juicing The Stock Market For The Election

Ann Coulter isn't exactly my favorite news source, and what she covers isn't usually on-topic for World Of Wallstreet, but here's some interesting quotes from a recent column (click here for the whole thing):

"Clinton's vice president, Al Gore, lost an election that should have been his in a walk. In fact, he was the first incumbent president or vice president in 100 years to lose an election in peacetime with a good economy."

"As election predictors go, the Dow Jones has been remarkably accurate. If the Dow goes up from the end of July to the end of October, the incumbent president or vice president wins; if it goes down, the incumbent loses. It has been wrong only four times since the Dow was created in 1896.

Thus, on Nov. 1, 2000, an article in The New York Times began: 'The verdict of the Dow Jones industrial average is in, and it says Al Gore is headed for the White House.'"

This clearly illustrates why we can expect an all-out push by the Republicans in the executive branch (controlling the treasury, bureau of labor statistics, etc) and their political allies, the big banks and the federal reserve, to pull out all the stops to juice the stock market between the end of July and October.

It will be very interesting to see how far the Republican's international allies: Saudi Arabia, Kuwait and the smaller gulf states, go to help with the election. These allies depend on the US military for protection and I would presume that they would prefer to have a hawk like McCain, who will continue the protection, rather than "pull out immediately" Obama in the White House.

So, I'm expecting to hear about OPEC increasing production in the August / September time frame and to see falling oil and gasoline prices in September and October.

Of course, not all oil exporters are sympathetic to an assertive US foreign policy. What will the other big oil exporters do? I would presume that Russia, Venezuela and Iran may prefer to see the less assertive Obama in the White House. Will they decrease their production to counteract Saudi production increases and keep oil prices high through the election? Hard to tell and I guess they won't, but we'll see.

Its going to be interesting and I'm hoping to find an opportunity to "get long" in oil (probably via long-dated futures contracts) immediately prior to the election.

Leave a comment if you see any good trading opportunities coming from the upcoming election.

MontyHigh

Weekly Inventory Update, 5/9/2008

Bad week for copper. The strike in Chile ended, the bounced off of and fell away from the 4$ resistance (who were the suckers who bought at $4.25 in NY on Monday?) and, then on Friday, there was a major up-tick in the London inventory levels and Shanghai reported a weekly up tick on inventories.

So, what do you think? Was all the copper news bullish with the price overbought and now coming back down or are the Chinese pulling a fast one with the inventories trying to manipulate the price down? I don't really know.

Now how about zinc? The price is getting dangerously close to breaking down (a close below $.95/lb would be signal such a breakdown) and yet... the inventory levels seemed to have topped and have fallen for two consecutive weeks. The five year chart shows that this might be part of an annual cycle. I'm watching closely to see what happens next and may move part of my portfolio into zinc mining stocks if I like what I see.

Leave me a comment with your thoughts on the outlook for copper and zinc prices at this point and whether you think there may be manipulation of the copper inventory numbers.

Weekly Inventory Update, 5/2/2008

Despite all the bullish news for copper this week, total net warrants copper inventories rose this week (and the price of copper fell). Leaving out warrants (Total Deliverable) copper inventories fell pretty hard. So, I'll be watching copper carefully going forward. Zinc inventories fell. I'm getting interested in the zinc situation. Zinc mining Jrs have been hit pretty hard lately.

Leave me a comment with your thoughts on the outlook for base metal prices and which copper miners you like.

The Good Stuff: Nassim Taleb, Author Of "The Black Swan" Interview

How many books are so good that you've read them more than once? For me, not many lately. An exception is Nassim Taleb's "Fooled By Randomness". I expect its sequel, "The Black Swan", will fall in the same category. The guy's thinking is so powerful, unique and relevant to the trader that there is no comparison.

Here's (click here) a link to an hour long interview of Nassim Taleb by Russ Roberts of Econtalk. This is probably the best interview I've ever found on the Internet. I listened to it again (actually twice) this last week. The concepts are so fascinating and so relevant for a trader.

My favorite quote is "Fifty sigmas, no problem". Just try to get Excel to calculate the probability of a 50 sigma event with a normal distribution!

By the way, if you want to try something cool, go to trends.google.com and try out "Black Swan".

Enjoy,

MontyHigh