Dirty Diana

On Monday, I recommended Diana Shipping (DSX) as one of my stocks of the month for November, specifically because of their large dividend yield.

On Wednesday, Diana announced the indefinite suspension of their dividend payments.

On Thursday, I executed an indefinite suspension of ownership of their stock.

Stocks Of The Month: DSX, FRO, TSO

I'll make this short and sweet.

I sold all my stock of Vestas Wind Systems (VWSYF.PK), Hansen Medical (HNSN), and Nintendo (NTDOY.PK), because they do not have dividends. Not because I don't believe in wind turbines, catheter robotics, or gaming platforms.

In their place, I bought more stock of Diana Shipping (DSX), Frontline (FRO), and Tesoro (TSO), because they have substantial dividends.

Cash is king.

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Dominion Resources Black Warrior Trust (DOM) 15.43%
Terra Nitrogen (TNH) 12.29%
Frontline (FRO) 10.20%
Google (GOOG) 10.09%
Ace Limited (ACE) 10.00%
Apple (AAPL) 9.41%
Southern Copper (PCU) 9.16%
Tesoro (TSO) 7.13%
Diana Shipping (DSX) 7.10%
Tidewater (TDW) 5.20%
Apache (APA) 4.02%

The Unwinding Of Greed

"But when the bailout that nobody wants, but everybody needs, is finalized, things will soon be back to 'normal'."

The Dow Jones has set two records for single-day decreases within a week. The volatility ("fear") index is at an all-time high. Perma-bull Jim Cramer capitulates: "Whatever money you may need for the next five years, please take it out of the stock market right now, this week."

But something else is going on here, beyond a financial meltdown. Something that might not be solved by throwing $700 billion at the problem.

All the greed of recent American history - whether its the past decade, 20 years, 40 years, post-WWII - is unwinding.

Wall Street invented "financial engineering", creating derivatives on top of derivatives, accelerating profits and ignoring risk; creating the false consensus for the new rules of doing business and making money. It paid itself unconscionable bonuses when things went well, and golden parachutes when things went poorly. It exhibited a brazen disregard for corporate transparency and personal accountability.

But its not just Wall Street in need of a "bailout".

Main Street has been living beyond its means, borrowing against tomorrow to get what it just "has to have" today. Living in homes and driving cars it can't afford. Scraping to get by, paycheck to paycheck, no matter the salary. Saving money is old-fashioned, and spending money is compulsory behavior. All the while, feeding the Wall Street casino, seduced by promises of fast money without risk.

The U.S. government has been unable to curb its spending, while lacking the political will to tax its citizens accordingly. Its ambitious foreign policy has proven to be unsustainable. It has destroyed the value of the dollar, effectively putting America up for sale and inviting sovereign wealth funds to buy assets at deep discounts. All the while, implicitly backing Wall Street, by stripping away regulations and "letting the free markets work".

What we are experiencing is failure of a society - its government, its citizens, its industry - all parties complicit. A society in default, unable to meet its obligations.

All due to greed.

The unwinding has begun. When it ends, no one knows.

Stocks Of The Month: AAPL, GOOG

You might have noticed that there was no Stock Of The Month for September 2008.

That's because I didn't buy any stocks - and hopefully you didn't either. But when the bailout that nobody wants, but everybody needs, is finalized, things will soon be back to "normal".

I sold two stocks last month. On Sept. 19th, Companhia Siderurgica Nacional (SID) was down 38% and its dividend wasn't compelling (i.e. large) enough to keep. On Sept. 23rd, Goldman Sachs (GS) was down 39% and went from the best investment bank in the world, to just another regulated bank. (Full disclosure - I'm very much in favor of increased regulation/transparency/accountability; I just don't want to own a stock whose future profit potential significantly diminished overnight. But if you need to own a bank stock, GS is the one.)

Apple (AAPL) and Google (GOOG) are arguably the two best brands in the world today. Their stock, like everyone else's, was washed out over the past month, declining 33% and 14% respectively. However, their long-term prospects are intact - Apple owns consumer electronics, and Google owns the internet. One bad month won't change that.

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Dominion Resources Black Warrior Trust (DOM) 13.27%
Google (GOOG) 10.01%
Terra Nitrogen (TNH) 9.66%
Southern Copper (PCU) 9.31%
Apple (AAPL) 8.34%
Ace Limited (ACE) 8.06%
Frontline (FRO) 8.01%
Tesoro (TSO) 5.54%
Tidewater (TDW) 5.21%
Hansen Medical (HNSN) 5.21%
Diana Shipping (DSX) 4.95%
Nintendo (NTDOY.PK) 4.28%
Apache (APA) 4.17%
Vestas Wind Systems (VWSYF.PK) 2.91%

Stocks Of The Month: FRO, TNH

When tasked with finding the best of large-dividend stocks, I quickly discovered I already owned two of them.

Both Frontline (FRO) and Terra Nitrogen (TNH) have positive cash flow; great return on assets and even greater return on equity; significant growth in revenues and earnings; large insider ownership; and most importantly, massive dividend yields (18.7% and 14.3% respectively) backed by hard assets (oil tankers and fertilizer). The dividends are somewhat lumpy, but that lumpiness always seems to be to the upside - even if management decided to halve them, the dividends would still be quite large.

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Dominion Resources Black Warrior Trust (DOM) 12.64%
Southern Copper (PCU) 10.72%
Frontline (FRO) 8.72%
Terra Nitrogen (TNH) 8.49%
Ace Limited (ACE) 6.41%
Diana Shipping (DSX) 6.29%
Goldman Sachs (GS) 6.15%
Google (GOOG) 5.80%
Apple (AAPL) 5.78%
Tesoro (TSO) 5.22%
Tidewater (TDW) 4.81%
Hansen Medical (HNSN) 4.26%
Nintendo (NTDOY.PK) 4.25%
Apache (APA) 4.11%
Vestas Wind Systems (VWSYF.PK) 3.36%
Companhia Siderurgica Nacional (SID) 2.78%

Capstone Turkey

When I re-bought Capstone Turbine (CPST) back in April, I feared it was going to be a buy high, sell low story.

On Monday CPST missed yet another quarter's earnings, and I decided to bail this morning at $2.35.

Today the market celebrated the company's inability to manufacture its primary product growing backlog of orders for its microturbines, to close at $2.73, a gain of 16% from where I sold earlier in the day. This, even though manufacturing costs increased significantly. So how is Capstone going to ever meet demand? Won't prospective customers just buy someone else's microturbines? Will they ever be profitable?

Bygones.

So, to recap my entire CPST trading history:
2/23/07 - bought at $1.05
2/28/07 - bought at $0.90
1/8/08 - high of $1.92
1/22/08 - exited at $1.20
4/15/08 - bought at $2.65
6/23/08 - high of $4.42
8/12/08 - exited at $2.35

There's an incredible lack of vigilance/discipline/strategy being demonstrated above. I've had similar experiences in other small-cap stocks as well, and have therefore concluded that I don't have what it takes to trade them...because I don't want to be a trader. I'm all-too-willing to hold on to a stock that, for example, has nearly doubled in two months time, because I'm more afraid to sell a winner "early" than to see that winner turn into a loser.

What I really should have been afraid of is applying long-term investment ideas to short-term trading vehicles such as CPST.

Sold FWLT, Bought More PCU

After Southern Copper (PCU)'s awful Monday put it down 43% from its high after I last bought it in January, I had my sell order lined up to dump it all this morning.

Then I took a step back, and asked myself this question:

"Self, why would I sell Southern Copper, a stock that pays me an 8.7% yield for the privilege of owning it, while holding on to the stock of similarly bearish Foster Wheeler (FWLT), which pays me absolutely nothing?"

To which I had no good answer. So I sold all my FWLT, and used the proceeds to buy more PCU.

When I said I'm liking dividend stocks earlier this year, I meant it. Which means when I finally get around to naming August's Stock Of The Month, it will be guaranteed to have a big, fat, stable dividend.

And Capstone Turbine (CPST), you nauseatingly-volatile, non-dividend-paying friend of mine, consider yourself warned.

Portfolio Go Boom - And Not The Good Kind

Thursday: Exited Fording Canadian Coal (FDG) at $88.50, after it was taken out by Teck Cominco. Realize 205% gain, 60% annualized. Feeling pretty good.

Monday morning: Buy Hansen Medical (HNSN) at $13.18, Nintendo (NTDOY.PK) at $59.32, and add to Diana Shipping (DSX) at $29.66.

Monday afternoon: Hansen's at $11.94, down 9.4%. Diana's at $27.94, down 5.0%. 7 of the other 16 stocks I own are down at least 5%. Portfolio overall is down over 4%. Worst one-day performance I can remember. Feeling kinda not-so-good.

Sold ACAS (On The Wrong Day), Bought More TSO

I fell asleep at the wheel by owning a financial stock, American Capital Strategies (ACAS), simply for its large dividend (currently yielding over 20%!). I've heard and read pundits say over and over to stay away from stocks with large dividend yields, since they are most likely troubled companies looking to attract investors by other methods other than, say, ongoing business execution. Meanwhile I've had fairly good luck with large-dividend stocks, both in being able to fund and raise their dividend, and in capital gains for the stock.

However, it hit me today that all of my successful dividend stock choices have underlying assets of the "heavy stuff" variety. Oil. Natural gas. Aluminum. Copper. Coal. Nitrogen. Automobiles. Shipping tankers. American Capital Strategies' underlying assets are pieces of paper. These days, you can't trust pieces of paper to be worth anything. So the dividend yield becomes irrelevant.

So I sold at $17 per share at market open, at a 48% loss from where I bought in January. Unfortunately, the stock closed today north of $20. Oops. I'm just going to hope that was a dead-cat bounce.

I took my loser's money and threw it at another loser. I bought more Tesoro (TSO) since it has real assets and a real business in refining crude. I still believe it to be one of the most oversold stocks in the market - now oil just has to continue its correction.

Sold WFR, NVDA; Bought More ACE

I sold two stocks today, for a pretty lousy reason: I was sick and tired of seeing their ticker symbols in my portfolio. They also do not pay dividends, have been declining in value for months, and had become insignificant holdings percentage-wise. But mostly....just sick and tired.

WFR has fallen 26% from where I bought in November, and 43% from its high in December. It has been plagued by not only a market rotation out of solar stocks, but also by underperformance as compared to its peers.

NVDA has fallen 60% from where I bought in October, including a disastrous 31% decline on July 3rd after significantly lowering revenue guidance for its upcoming quarter. It warned despite the overall PC market being, by all indications, healthy.

These stocks are both solidly in "value-trap" territory- meaning they should have been sold several percentage points ago.

With the proceeds from these long-overdue sales, I added some more Ace Limited (ACE). Reinsurance is nice and boring, which is just what is needed right now. Plus, some knucklehead at Citi downgraded the stock because they are planning to reincorporate in Switzerland (from Bermuda), and therefore are subject to being dropped from American-based indices. Somebody should tell him that a) the stock will be picked up by international indices, and more importantly, b) being added or dropped from an index is a one-time event, which has no bearing on long-term stock performance. Thanks for saving me a couple of bucks per share, Mr. Analyst.

Stock Of The Month: VWSYF

My portfolio has gone from suck to blow.

Given my energy holdings in oil and natural gas production (Apache, Dominion Resources Black Warrior Trust), oil service (Tidewater), oil transport (Frontline), oil refining (Tesoro), coal (Fording), solar (MEMC Electronic Materials), and microturbines (Capstone Turbine), there was one major sector missing: wind.

Enter Vestas Wind Systems (VWSYF.PK), a Danish manufacturer of wind turbines, blades, and towers - they are a one-stop shop for wind-powered solutions. Vestas is also a pure-play stock, not a small division tied to a diversified company like GE, Trinity, or Windwood Governor. Wind power should be a significant contributor in the new clean-energy electricity capacity coming online around the world, especially in the U.S. and China. Best of all, wind is an abundant resource - the addressable market is anywhere and everywhere a wind turbine can be installed.

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Fording Canadian Coal (FDG) 13.54%
Dominion Resources Black Warrior Trust (DOM) 11.69%
Southern Copper (PCU) 9.79%
Goldman Sachs (GS) 5.96%
Capstone Turbine (CPST) 5.62%
Google (GOOG) 5.59%
Apple (AAPL) 5.02%
Tidewater (TDW) 4.73%
Frontline (FRO) 4.49%
Apache (APA) 4.46%
Foster Wheeler (FWLT) 4.29%
Terra Nitrogen (TNH) 4.15%
Companhia Siderurgica Nacional (SID) 3.13%
Vestas Wind Systems (VWSYF.PK) 3.07%
American Capital Strategies (ACAS) 2.71%
NVIDIA (NVDA) 2.55%
MEMC Electronic Materials (WFR) 2.49%
Diana Shipping (DSX) 2.39%
Ace Limited (ACE) 2.02%
Tesoro (TSO) 1.97%

Stock Of The Month: DSX

Going to the commodities well one more time...

Diana Shipping (DSX) is a dry bulk (or metals and grains) shipper, a sector that has been getting a lot of attention as day rates for leasing ships are at an all-time high. Both DSX and main competitor DryShips have had incredible runs since mid-January. DryShips is a lot cheaper, with a forward P/E of 6.5 as compared to Diana's 13. DryShips also has superior historical price appreciation (though both stocks are nearly identical for the past 6 months). So why buy DSX over DRYS? Diana's dividend yield is nearly 10%, while DryShips' is under 1%. In other words, DryShips' stock is levered to shipping day rates; Diana's stock is levered to its dividend. I'll happily choose the latter (you know by now I'm a sucker for big dividends).

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Fording Canadian Coal (FDG) 11.91%
Dominion Resources Black Warrior Trust (DOM) 11.43%
Southern Copper (PCU) 10.10%
Google (GOOG) 6.05%
Goldman Sachs (GS) 5.89%
Capstone Turbine (CPST) 5.53%
Apple (AAPL) 5.38%
Tidewater (TDW) 4.91%
Terra Nitrogen (TNH) 4.74%
Foster Wheeler (FWLT) 4.49%
Apache (APA) 4.29%
Frontline (FRO) 3.93%
American Capital Strategies (ACAS) 3.65%
Companhia Siderurgica Nacional (SID) 3.57%
NVIDIA (NVDA) 3.39%
Tesoro (TSO) 2.83%
Diana Shipping (DSX) 2.81%
MEMC Electronic Materials (WFR) 2.80%
Ace Limited (ACE) 2.19%

The 20 Greatest Singles Of All Time, Or How I Spent My First $20 On iTunes

OK, so these aren't actually the 20 greatest singles of all time; they are more like "the 20 greatest singles that don't appear on albums I already own, or on albums that I plan to buy in the foreseeable future." But that's kind of wordy. The list almost reads like a sample of one-hit wonders, with some very obvious exceptions.

Some important caveats: potential songs had to be available through iTunes (believe it or not, four songs were forced off this list for that lone reason - it's 2008, people! Any song that was in rotation on MTV or radio should be on iTunes by now); the list is inevitably biased by my song-oriented listening patterns back in the 1980's and 90's, as opposed to the album-oriented listening of the past 10+ years; and rank is determined by the order in which songs were purchased (I bought roughly one per day) - kind of like a fantasy song draft.

And without further ado, here's the list.

1. It Takes Two - Rob Base & DJ E-Z Rock (1988)
2. Buffalo Stance - Cherry, Neneh (1989)
3. California Love (Single Remix) - 2Pac / Dr. Dre (1996)
4. Your Love - Outfield (1985)
5. Burning Down The House - Talking Heads (1983)
6. 867-5309 / Jenny - Tommy Tutone (1982)
7. So Alive - Love And Rockets (1989)
8. The Humpty Dance - Digital Underground (1990)
9. Natural Born Killaz - Dr. Dre / Ice Cube (1994)
10. Let's Go All The Way - Sly Fox (1986)
11. Talking In Your Sleep - Romantics (1983)
12. Wild Thing - Tone Loc (1989)
13. Don't You Want Me - Human League (1981)
14. Obsession - Animotion (1985)
15. Just Like Heaven - Cure (1987)
16. 6 Underground (Nellee Hooper Remix) - Sneaker Pimps (1996)
17. Push It - Salt-N-Pepa (1987)
18. Let The Music Play - Shannon (1983)
19. O.P.P. - Naughty By Nature (1991)
20. Supersonic - J.J. Fad (1988)

Stock Of The Month: TSO

Now that the market appears to have more stability than it has in quite a while, money has been "rotating" out of commodities and energy, two sectors that have been among the few bulls of the last six months.

Don't believe for a second that those sectors are bursting bubbles. As long as we continue to live in a world of growing populations and economies, and scarce (i.e. less than infinite) amounts of raw materials and resources, commodities and energy are a fairly straightforward long-term investment thesis.

Tesoro (TSO) is an oil-refiner whose stock has fallen from an all-time high of $64 in October 2007 to its current price of $25. It is suffering from a tightening in refining margins, otherwise known as the "crack spread" (a term which I just can't use with a straight face), due to the current high price of oil. However, Tesoro's stock is poised to rebound should any of the following events occur:

• Oil prices go down, or even sideways (not terribly likely, but possible)
• Gasoline prices go up (very likely)
• An integrated oil company who wants more refining capacity, or oil explorer/driller who wants to become an integrated, buys out TSO (long-term likely)

Tesoro has a market-cap of just $3.5 billion, so it could easily be bought by any number of cash-rich energy companies. It is also trading at a low forward P/E of 6 and PEG of 0.64, representing tremendous value. Meanwhile, it yields a dividend of 1.5% while investors like myself wait for the turnaround.

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Dominion Resources Black Warrior Trust (DOM) 11.84%
Southern Copper (PCU) 11.55%
Fording Canadian Coal (FDG) 10.22%
Goldman Sachs (GS) 7.47%
Google (GOOG) 6.67%
Apple (AAPL) 5.71%
Tidewater (TDW) 5.22%
Terra Nitrogen (TNH) 5.06%
Apache (APA) 4.43%
Capstone Turbine (CPST) 4.37%
Frontline (FRO) 4.18%
American Capital Strategies (ACAS) 4.04%
Foster Wheeler (FWLT) 4.00%
Companhia Siderurgica Nacional (SID) 3.48%
NVIDIA (NVDA) 3.36%
MEMC Electronic Materials (WFR) 3.00%
Tesoro (TSO) 2.85%
Ace Limited (ACE) 2.47%

Selling Low, Buying High In CPST

As I've said before, I enjoy tracking the stocks I've sold, and take great pleasure in watching them fall. So, you can only imagine my daily pain in watching Capstone Turbine (CPST) go from $1.20 on January 22nd to a high of $2.87 this Monday. Yes, I've missed out on a 139% gain in less than three months time. It has progressed from mild irritation, to general disappointment and regret, to "I can't watch this stupid stock go up day, after day, AFTER DAY!! I give up, Capstone! YOU WIN!!!!!"

With that personal capitulation, I bought some CPST this Tuesday at $2.65. It's now at $2.80, but its momentum could break down at any time. This is all very similar to the way I've traded Terra Nitrogen (TNH) - I'll no doubt be DCA'ing my CPST position in the near future.

To fund this, I closed out two of my smallest holdings, Alliance Resource Partners (ARLP) and Nokia (NOK). It was a numbers game, but I have to question selling a coal stock whose lagging perfomance could mean catch-up returns are coming soon, and a world-class designer and manufacturer in the global secular-growth industry of telecom. Both stocks had nice dividends to boot. And, the early returns for ARLP and NOK since I've sold are up 8% and 4% respectively.

But hey, if they go on to double, I can always buy them back again.

Stock Of The Month: SID

Everybody that's been following the market knows that steel stocks are en fuego. As is the economy of Brazil, and more broadly, Latin America. And, as I've mentioned before, I'm a sucker for dividend stocks.

With all that in mind, I present to you Companhia Siderurgica Nacional (SID). Of all the steel stocks I've researched, SID had the best combination of high margins; high returns on assets and equity; positive cash flows; and high dividend yield. Yet somehow, it has largely not participated in the recent steel-stock bull run. I believe that it will gain the recognition it deserves soon - and if not, it is a prime takeover candidate in an industry ripe for consolidation.

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Southern Copper (PCU) 12.80%
Dominion Resources Black Warrior Trust (DOM) 12.56%
Fording Canadian Coal (FDG) 10.63%
Goldman Sachs (GS) 7.33%
Google (GOOG) 6.02%
Apple (AAPL) 5.41%
Tidewater (TDW) 5.11%
Apache (APA) 4.87%
American Capital Strategies (ACAS) 4.79%
Terra Nitrogen (TNH) 4.69%
Foster Wheeler (FWLT) 4.32%
MEMC Electronic Materials (WFR) 3.70%
Frontline (FRO) 3.70%
Companhia Siderurgica Nacional (SID) 3.49%
NVIDIA (NVDA) 3.15%
Alliance Resource Partners (ARLP) 2.61%
Ace Limited (ACE) 2.55%
Nokia (NOK) 2.25%

The Collateral Damage Of Bear Stearns

First off, while I am by no means celebrating the fact that a former $21 billion company is now worth about $500 million (give or take), it is satisfying to see that when unnecessary, reckless, greedy risks are undertaken (in this case, deriving nearly all cash flows from mortgage-backed securities), and those risks are realized, there are consequences. Let there be no doubt that the market system is healthy and working in that regard.

I myself took on some unnecessary, reckless, greedy risk by investing in MF Global (MF) at $30, and again at the bad-news discount of $20. Seems I was half right: the arbitrage opportunity was that the stock traded above its fair value of $0, and should be sold (or shorted if you're into that).

So yesterday, I put in a trigger to sell all my shares at a limit of $16. That trade was unfortunately never executed today, and next thing I know, the stock is at $4. So using my best charting skills (desperate times call for desperate measures), I waited it out until finally selling at $8.25 - realizing a 69% loss over three lousy months, and earning a sure-fire induction into the next version of my worst stock buys ever list. I took the proceeds and bought some more Goldman Sachs (GS), the only financial stock I'd ever want to own at this point, at $145.

Lessons learned:

The one-third rule. No, really. Aside from high-dividend stocks, breaking this rule is asking to lose money.

Always use market orders, except for thinly-traded stocks. By scrimping on pennies per share, I lost dollars per share today. Not a good risk/reward proposition.

Diversification is a good thing. MF was just one of 18 stocks I owned going into today. If MF was somehow just one of 10 or 5 stocks I owned, like this guy recommends, I'd be feeling a lot worse.

Fed Appreciation Day

Saturday: Declared here that "I'll be waiting for capitulation (high-volume, high-volatility, large-percentage indices decline) to put the newly-freed cash to work."

Monday: Observed the CBOE Volatility Index (VIX) rocket up to just shy of 30, and thought to myself, "this seems pretty darn close to capitulation." Added to my existing positions in Terra Nitrogen (TNH) and Foster Wheeler (FWLT) in the late afternoon.

Tuesday: Fed Appreciation Day. Stocks...go...up.

It's worth noting that the stock I exited out of on Thursday, Annaly Capital Management (NLY), popped 17% on Tuesday and is up 7% from where I sold it. Also worth noting that four other stocks I've owned in the past, but don't own now - Countrywide (CFC), Americredit (ACF), First Marblehead (FMD), and lululemon athletica (LULU) - were up double-digit percentages as well.
But all in all, I'll take things as they are. It will be interesting to see where the market goes from here. Like everyone else, I'm hoping Monday was the bottom.

Exit oNLY

Got out of Annaly Capital Management (NLY) this Thursday, a day it was down 18% on fears it would be subject to margin calls it couldn't meet, sparked by The Carlyle Group and Thornburg Mortgage. Annaly is an extremely well-run company, the best mortgage REIT out there - but in the end, it's still just a mortgage REIT, and it was punished just like the rest. I shouldn't have been hanging on to NLY for this long, when it was a reasonable conclusion that it would be the next domino to fall in the subprime/credit/mortgage bubble/market deleveraging debacle. I'll take my 4% + dividends gain and run away.

I'll be waiting for capitulation (high-volume, high-volatility, large-percentage indices decline) to put the newly-freed cash to work.

Stocks Of The Month: AAPL, MF

Several of my portfolio holdings have taken double-digit-percentage beatings of late. Foster Wheeler had a bad earnings miss. NVIDIA disappointed on forecasted operating expenses. Goldman Sachs is down nearly 40% from its high on Halloween. Once-mighty Google is currently trading at its 52-week low. Everything is on sale!

I've decided to reinforce my current positions in Apple and MF Global, which were previous picks from September and December 2007, respectively.

Apple, along with Google, finds itself in the unusual position of being a value stock, with a forward P/E of just 20, and $18 billion of cash and no debt on the balance sheet. I believe there is still plenty of iPhone and Mac growth ahead.

MF Global has been punished for a "rogue wheat trader" who cost the company $141.5 million. Consequently, the stock has lost $1.2 billion in market value, as investors are concerned about the perceived lack of risk management. Seems excessive for a likely one-time event that doesn't affect the fundamental story of the company, and a quasi-arbitrage opportunity as the stock should return to its previous levels.

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Southern Copper (PCU) 12.63%
Dominion Resources Black Warrior Trust (DOM) 12.25%
Fording Canadian Coal (FDG) 9.66%
Google (GOOG) 5.99%
Annaly Capital Management (NLY) 5.98%
American Capital Strategies (ACAS) 5.30%
Tidewater (TDW) 5.27%
MF Global (MF) 4.90%
Apache (APA) 4.64%
Apple (AAPL) 4.62%
Goldman Sachs (GS) 4.41%
MEMC Electronic Materials (WFR) 4.22%
Frontline (FRO) 3.78%
NVIDIA (NVDA) 3.67%
Alliance Resource Partners (ARLP) 2.76%
Terra Nitrogen (TNH) 2.72%
Ace Limited (ACE) 2.56%
Nokia (NOK) 2.44%
Foster Wheeler (FWLT) 2.18%

Bought More NVDA

I've had my eye on NVIDIA (NVDA) long before November of last year, when I named it my stock of the month. Its stock price has fallen 34% since then, and nearly 50% from its highs in July 2007.

Enough is enough.

I bought some more NVDA at around $22.50 on Friday, after it was punished 16% a day earlier for an earnings report that exceeded expectations, but drew concerns for an 8% to 10% increase in operating expenses in the upcoming quarter. A market-leading company such as NVIDIA will reward its long-term investors, by allocating resources such that revenues and profits will increase over the long-term. Really, is the prudent action for a high-growth tech company to be slashing costs? No way.

NVIDIA is focused on growth, by entering new areas such as smartphones - although they aren't a supplier to the iPhone, they will benefit from the greatly increased graphical expectations of those devices, due to the iPhone. Meanwhile, NVDA will continue to dominate PC and gaming platforms as the premier supplier of GPUs.

Stock Of The Month: ACAS

Bought some American Capital Strategies (ACAS) at $33 last week. ACAS is yet another high dividend stock, which has fallen 43% over the past year and was just too cheap for me to pass up. I'm not entirely comfortable about investing in a company dealing whose main product is debt, but it seems like a worthwhile risk.

Then, in a triggered sale, sold Intuitive Surgical (ISRG) at $237. Although it was for a 158% gain (64% annualized), I regretted this trade almost immediately because it's a great company with leading technology in a growing market - then I really regretted the trade when the stock zoomed up 29% in the two days thereafter. Is this a Terra Nitrogen(TNH)-like case of seller's remorse, where I'll feel compelled to "sell low and buy high"? Could be. Hopefully the stock will come back in first.

Finally, I feel Mr. Market has given us a gift recently by beating down Google (GOOG), due to "disappointing" earnings and a potential Microsoft/Yahoo! merger. You know how much of a threat MicroHoo is to Google in search? My bet is no more, and likely significantly less, than the sum of the two as they are now. So, I took my ISRG proceeds and bought some more GOOG at $520.

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Southern Copper (PCU) 12.08%
Dominion Resources Black Warrior Trust (DOM) 11.50%
Fording Canadian Coal (FDG) 9.10%
Google (GOOG) 7.25%
Annaly Capital Management (NLY) 6.32%
Goldman Sachs (GS) 5.84%
American Capital Strategies (ACAS) 5.53%
Tidewater (TDW) 5.35%
MF Global (MF) 5.21%
MEMC Electronic Materials (WFR) 4.23%
Apache (APA) 4.15%
Frontline (FRO) 3.67%
Terra Nitrogen (TNH) 2.93%
NVIDIA (NVDA) 2.92%
Ace Limited (ACE) 2.92%
Alliance Resource Partners (ARLP) 2.87%
Apple (AAPL) 2.82%
Nokia (NOK) 2.77%
Foster Wheeler (FWLT) 2.52%

Are We Capitulating Yet?

It's been an especially crazy last couple of days, the latest in a crazy start to the year for the stock market. I mean, it's been so crazy, that the Fed actually felt sufficiently motivated to - get this - move rates.

Insanity. The whole thing kinda reminds me of this scene. (I'll leave it as an exercise to the reader to draw the parallels.)



So, here's what I've done recently.

Sold Baidu.com (BIDU) at $282, for a 193% gain, 288% annualized
Bought more Dominion Resources Black Warrior Trust (DOM) at $17 (DCA'd to $20)
Sold Capstone Turbine (CPST) at $1.20, for a 25% gain, 28% annualized
Bought more Southern Copper (PCU) at $76 (DCA'd to $45)

Although the sells were of the triggered variety, there's a trend there: selling "speculative" stocks with no dividends, for "conservative" stocks with huge dividends.

(Hint: I'm liking dividend stocks in '08.)

Stocks Of The Month: TNH, FWLT

"Terra Nitrogen (TNH)
Bought: Sep @ $112.50
Sold: Nov @ $88.25 (-22%)
Year-closing price: $149.53 (33%)
I've made a huge mistake."

In order to avoid the even, uh, huger mistake of not buying an awesome stock in an en fuego sector with incredible fundamentals and a nice dividend, solely because I previously bought high and sold low on said stock, I picked up some TNH last week at $150.

I guess there's some saying about babies and bathwater, and how you're supposed to avoid throwing out one along with the other. I'd use it right now, if it weren't the most overquoted quote in the history of quoting.

I'll just say that it's probably not a good idea to sell great stocks in a bad market...because it's not a good idea to sell great stocks, ever.

Also, as suggested in part two of the 2007 recap, Geron (GERN) indeed dropped enough to trigger a sale, which allowed for the purchase of Foster Wheeler (FWLT) at $165. I needed an infrastructure stock in my portfolio, and I like FWLT's exposure to the global economy and to power generation. I am slightly afraid of its amazing run from a $9 stock in just a little over two years, but it is still just an $11.5 billion dollar company and should have room to grow further.

2007 Stock Recap: The Ongoing Concerns

So the market was down a bunch today. Alright, 2008! What an underperforming unpredictable and ulcer-inducing exciting market this promises to be!

Continuing from yesterday...

Let's look at all the stocks I've held going into this year, from worst to best - based solely on 2007's performance, while mostly ignoring any intra-year volatility:

Geron (GERN)
Bought: Oct @ $8.00
Year-closing price: $5.68 (-29%)
Dangerously close to triggering a sell. Hoping for election results, or revenues from one of those 879532748132746237014 patents, to kick in.

Dominion Resources Black Warrior Trust (DOM)
Bought: Nov @ $23.75
Year-closing price: $18.15 (-24%)
Strictly a dividend play. Should hopefully be DCA'ing soon.

Goldman Sachs (GS)
Bought: Dec @ $222.09
Year-closing price: $215.05 (-3%)
No subprime exposure to be found here.

NVIDIA (NDVA)
Bought: Oct @ $35.00
Year-closing price: $34.02 (-3%)
A little (OK, a lot) late, but I'm committed to this one long-term.

ACE Limited (ACE)
Year-opening price: $60.57
Year-closing price: $61.78 (2%)
Sometimes boring is well enough.

MF Global (MF)
Bought: Dec @ $29.99
Year-closing price: $31.47 (5%)
A bet on volatile and voluminous markets in 2008 and beyond.

Alliance Resource Partners (ARLP)
Year-opening price: $34.52
Year-closing price: $36.27 (5%)
My other coal play, which hasn't quite panned out.

Tidewater (TDW)
Bought: Nov @ $51.30
Year-closing price: $54.86 (7%)
Certainly in the right sector; should be getting some more attention this year.

Annaly Capital Management (NLY)
Bought: Apr, Jun @ $15.36
Year-closing price: $18.18 (18%)
A Fed rate cut bet that sorta worked.

MEMC Electronic Materials (WFR)
Bought: Nov @ $74.74
Year-closing price: $88.49 (18%)
Best fundamentals of any solar play I could find.

Apple (AAPL)
Bought: Sep @ $146.82
Year-closing price: $198.08 (35%)
iPhone sales are nice; Mac sales are nicer.

Google (GOOG)
Year-opening price: $460.48
Year-closing price: $691.48 (50%)
The world's best tech innovator. Looking forward to Android.

Frontline (FRO)
Year-opening price: $31.85
Year-closing price: $48.00 (51%)
Own for the dividend, but will take the capital gains too.

Apache (APA)
Year-opening price: $66.51
Year-closing price: $107.54 (62%)
Finally earned some recognition as one of North America's finest oil and natural gas companies.

Capstone Turbine (CPST)
Bought: Feb @ $0.96 (DCA'd)
Year-closing price: $1.63 (70%)
Thank you, Mayor Bloomberg!

Fording Canadian Coal Trust (FDG)
Year-opening price: $20.75
Year-closing price: $38.60 (86%)
Two magic words: "strategic alternatives".

Nokia (NOK)
Year-opening price: $20.32
Year-closing price: $38.39 (89%)
After several sleepy years, is finally being valued as the world-class juggernaut that it is.

Southern Copper (PCU)
Year-opening price: $53.89
Year-closing price: $105.13 (95%)
Great commodity, great dividend yield; great stock.

Intuitive Surgical (ISRG)
Year-opening price: $95.90
Year-closing price: $323.00 (237%)
It's better to be lucky than good. Here's an investing thesis: surgical robots are cool.

Baidu (BIDU)
Bought: Apr @ $96.50
Year-closing price: $389.80 (304%)
Again, better lucky than good. Happened to buy at near-year lows, and right before it took off. Still has a market cap 1/16th that of GOOG.

2007 Stock Recap: The Departed

Happy New Year everyone! And what better way is there to celebrate than to analyze all the stocks I've owned throughout the year?

(None. There is no better way.)

Let's begin with a look at all the stocks I've sold, from best to worst - based solely on 2007's performance, while mostly ignoring any intra-year volatility:

Aluminum Corp. of China (ACH)
Bought: May @ $33.59
Sold: Nov @ $60.03 (79%)
Year-closing price: $50.64 (51%)
I heart China, I heart commodities. Easily my best exiting trade of the year.

PetroChina (PTR)
Year-opening price: $140.78
Sold: Dec @ $175.93 (25%)
Year-closing price: $175.47 (25%)
More Sino-commodity goodness.

St. Jude Medical (STJ)
Year-opening price: $36.56
Sold: Jul @ $42.97 (18%)
Year-closing price: $40.64 (11%)
Missed the highs ($48 in August), but still pretty good here.

Qwest (Q)
Year-opening price: $8.37
Sold: Jul @ $8.66 (4%)
Year-closing price: $7.01 (-16%)
The turnaround never happened. Or I was late.

General Motors (GM)
Year-opening price: $30.72
Sold: May @ $31.51 (3%)
Year-closing price: $24.89 (-19%)
Yes, profits can be made by investing in an American auto maker. Although I missed the top by a wide margin ($43 in October).

Under Armour (UA)
Bought: Mar @ $46.52
Sold: Nov @ $48.00 (3%)
Year-closing price: $43.67 (-6%)
UA, as it turns out, is not the next Nike. Yet.

Fuel-Tech (FTEK)
Year-opening price: $24.64
Sold: Sep @ $22.92 (-7%)
Year-closing price: $22.65 (-8%)
A very volatile stock; missed the before and after highs by quite a bit ($38 in June, $34 in October).

Genentech (DNA)
Bought: Jan @ $81.60
Sold: May @ $77.58 (-5%)
Year-closing price: $67.07 (-18%)
Was I early? Analysts seem to think DNA is cheap. I think it's still too big ($71B market cap).

K-Swiss (KSWS)
Year-opening price: $30.74
Sold: Feb @ $28.81 (-6%)
Year-closing price: $18.10 (-41%)
Should have sold earlier (or never bought in the first place).

Sears Holdings (SHLD)
Year-opening price: $167.93
Sold: Jul @ $152.58 (-9%)
Year-closing price: $102.05 (-39%)
A horrible retailer, with housing exposure to boot. Yuck. Did well to get out where I did.

Johnson & Johnson (JNJ)
Year-opening price: $66.02
Sold: Mar @ $62.30 (-6%)
Year-closing price: $66.70 (1%)
Pretty much the dead-money I figured it for.

AmeriCredit (ACF)
Year-opening price: $25.17
Sold: Mar @ $20.89 (-17%)
Year-closing price: $12.79 (-49%)
Subprime auto financing? No thanks! A semi-smart call here.

Infosys (INFY)
Year-opening price: $54.56
Sold: Sep @ $46.92 (-14%)
Year-closing price: $45.36 (-17%)
Should have gotten out earlier, and hasn't done much since I sold it either.

lululemon athletica (LULU)
Bought: Oct @ $46.00
Sold: Nov @ $40.00 (-13%)
Year-closing price: $47.37 (3%)
Was scared out after a bubble-ish rise and fall from $60 in one months time. May be revisited.

First Marblehead (FMD)
Year-opening price: $54.65
Sold: Apr @ $35.30 (-35%)
Year-closing price: $15.30 (-72%)
Dodged a bullet here - thanks, one-third rule! Goldman Sachs sees value here, seems to be in a good business long-term (student loans)...but I'm scared of it.

Rite Aid (RAD)
Year-opening price: $5.44
Sold: Oct @ $4.04 (-26%)
Year-closing price: $2.79 (-49%)
Hit its high of $6.73 in June. Held on too long, but glad to get out when I did.

NYSE Euronext (NYX)
Bought: Feb, Mar @ $92.33 (DCA'd)
Sold: Sep @ $71.59 (-22%)
Year-closing price: $87.77 (-5%)
An absolutely lousy call, selling right before exchanges were bid up in anticipation of global consolidation.

RMK Advantage Income Fund (RMA)
Bought: Sep, Oct @ $7.95 (DCA'd)
Sold: Nov @ $5.13 (-35%)
Year-closing price: $4.51 (-43%)
A losing bet on a recovery from subprime.

Constellation Brands (STZ)
Year-opening price: $29.02
Sold: Mar @ $19.16 (-34%)
Year-closing price: $23.64 (-19%)
Should have sold on Jan. 1 - and ended up selling near the year's lows. Oops.

Terra Nitrogen (TNH)
Bought: Sep @ $112.50
Sold: Nov @ $88.25 (-22%)
Year-closing price: $149.53 (33%)
I've made a huge mistake.

Delphi (DPHIQ.PK)
Year-opening price: $3.82
Sold: Oct @ $0.395 (-90%)
Year-closing price: $0.15 (-96%)
No further comment.