Sold St. Jude...Bought More Delphi

I heart Delphi...as evidenced by all the times I've written about it.

I sold St. Jude Medical (STJ) to fund yet another purchase of DPHIQ.PK just this week. Again, the reason for selling St. Jude was that it was the most dispensable of my holdings. And really, are medical devices going to be that hot in the future? Aren't solutions derived from stem cell research and nanotechnology going to be the answer for cardiovascular health problems? I dunno. I was able to sell at an 18% gain - which, as my dad would say, is better than a kick to the head.

Here are my updated current holdings and their respective percentage of my portfolio. Needless to say, I believe in all of these stocks - until I sell them. Enjoy.

Southern Copper (PCU) 9.59%
Delphi (DPHIQ.PK) 8.28%
Fording Canadian Coal (FDG) 7.63%
Intuitive Surgical (ISRG) 7.19%
Aluminum Corp. of China (ACH) 6.66%
Fuel Tech (FTEK) 5.87%
Annaly Capital Management (NLY) 5.67%
PetroChina (PTR) 4.92%
Frontline (FRO) 4.83%
Google (GOOG) 4.38%
Rite Aid (RAD) 3.90%
Under Armour (UA) 3.90%
Apache (APA) 3.89%
Capstone Turbine (CPST) 3.77%
Ace Limited (ACE) 3.57%
Alliance Resource Partners (ARLP) 3.21%
NYSE Euronext (NYX) 2.86%
Infosys (INFY) 2.80%
Nokia (NOK) 2.77%

Ben Bernanke Will Have His Revenge On Wall Street

This is going to sound kind of bearish, but here goes nothing.

This is the list of things we learned after the Fed decided to cut the discount rate by 50 basis points on Friday:

• The Fed isn't oblivious to the crisis that began as "subprime", but now includes highly-rated debt, and is affecting businesses' ability to properly function.
  

That's it.

Here's the list of things we don't know:

• The scope of the crisis. So far, it has hit several companies in the banking, brokerage, homebuilder, and mortgage lender industries. What other companies within those sectors, or even worse, additional sectors, will be affected in the future?
• The duration of the crisis. Will it take weeks to play out? Months? Years?
• Collateral damage of the crisis. There could potentially be: millions of empty homes and their displaced former owners; many hundreds of thousands of jobs lost in the previously listed industries; and many millions of consumers, and thousands of companies, who will have exhausted their lines of credit. What further problems to the broader U.S. economy will manifest? Will the growth of the global economy be affected?

And most of all:

• The future actions of the Fed. The market is fairly certain that federal loan rate cuts (you know, the substantial kind) are imminent. When will they begin? How far will the Fed go?

That's a lot of unknowns. And the market hates uncertainty.

I'm not bearish though. I haven't sold anything, and history tells us that now are the times that we should be buying (and indeed, the "smart money" is starting to sift through the rubble). If you are thinking about bottom-fishing, just remember that every investment is just a foot in the door...and that the Fed owns the market, whether they want to or not.

The most frustrating part of this crisis is that it basically repeated the S&L bailout of the 1980's: greedy lenders making bad loans to undeserving or uninformed borrowers. It's amazing to me that history repeated itself so quickly. Both parties are to blame: the lenders shouldn't have taken on the risk, and the borrowers shouldn't have entered into a contract which they didn't understand or couldn't fulfill. I think a big part of resolving this current crisis will be finding an agreement satisfactory to both sides, ideally brokered by the government (Fannie Mae/Freddie Mac), allowing most homeowners to stay in their homes.

Welcome To The Market Capitulation

The market's getting clobbered today.

My portfolio is currently down seven and one-half percent for the session.

I'm happy.

We're finally making some progress here, by washing out all the trash speculation. Maybe Countrywide (CFC), Thornburg Mortgage (TMA), and the weakest of the brokers (Lehman (LEH)? Bear Stearns (BSC)? The supposedly bullet-proof Goldman Sachs (GS)?) all go under.

Yippee. Bernanke wins, we get a recession, and thank goodness, inflation is held in check.

Sometimes I wish the Fed Chairman would just come out and say what their policies really effect - "Sometimes our economy needs to be in recession, and unfortunately now is one of those times. We are keeping rates higher than they should be in order to ensure the economy's health in the long term." I mean, he isn't an elected official or anything. Just say it, Ben.

Anyway, I don't think "Dow 14,000" is going to be as infamous as "Nasdaq 5,000". I do think there will be more volatility in the near future. And, I'm going to hold on to my stocks - and eventually buy some more.

It does look like Deplhi's (DPHIQ.PK) stock-as-a-call-option scenario is coming true. Since I didn't do so before, I'll nominate it as August's stock of the month, since I did buy some in July as described here. It seems like as appropriate of a choice as any, with its 58% decline this month. Obviously, the risk side of that "high risk, high reward" investment is winning for now.

When Bernanke says enough is enough, things will be alright. Until then, welcome to the market capitulation. And do try your best to enjoy your stay.