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Wednesday, June 30, 2010

All Heart - Inspiration from a Man with No Arms or Legs

If you are ever feeling down about your life, family, the stock market or whatever then watch this video.

Video Title: "LOOK AT YOURSELF AFTER WATCHING THIS"


No Arms, No Legs - No Worries!

Saturday, June 19, 2010

Equity, Bond & Money Market Fund Flows Report

The weekly mutual fund flows data shows money continues to pour out of low yielding money market funds.  Also, equity funds show a net loss of funds for the year
From briefing.com's weekly wrap:
IndexEnded WeekYTD %
DJIA10450.640.2
Nasdaq2309.801.8
S&P 5001117.510.2

Annual data shown in table 1 below. Raw data from AMG Weekly Fund Flows Data

Weekly 06/16/2010
  • Equity Fund Inflows $11.4 Bil
  • Taxable Bond Fund Inflows $3.7 Bil
  • xETFs - Equity Fund Outflows -$13 Mil; Taxable Bond Fund Inflows $2.3 Bil
Fund Flow Totals for 2010 through 6/16/10

Table 1 AMG Fund Flows for Full Year - $B
--------------- Equity Tax Bond MM Fund
Fund Flows for 2003 40.8 40.7 NC
Fund Flows for 2004 95.0 11.3 (64.3)
Fund Flows for 2005 71.9 9.3 89.0
Fund Flows for 2006 52.5 29.9 308.3
Fund Flows for 2007 111.3 68.8 569.5
Fund Flows for 2008 3.5 (3.3) 608.0
Fund Flows for 2009 6.0 172.0 (280.2)
Fund Flows for 2010 (1.6) 75.5 (431.4)+

  • NC = Data Not Compiled
  •  += Some data for Money Market Funds between March 2010 and June 19, 2010 is missing but the overall trend is clear.
ExETFs—For the week ended 6/16/2010 All Equity funds report net outflows totaling -$0.013 billion as Domestic Equity funds report net outflows of -$0.307 billion and Non-Domestic Equity funds report net intflows of $0.294 billion... ExETFs—Emerging Markets Equity funds report net inflows of $0.310 billion as some investors continue to become less risk averse as they take advantage of a bottoming euro/dollar relationship and expected exports to US consumers… Net inflows are reported for All Taxable Bond funds ($2.323 billion), bringing the rate of inflows of the $2.410-trillion sector to $1.651 billion/week... Increasing net inflows are reported to International & Global debt funds totaling $0.628 billion from $294 million a week earlier, and the largest inflow to the sector in seven weeks, indicating less risk aversion among investors to that sector... Net inflows are now reported to Corp-High Yield funds totaling $0.068 billion, the first inflows to the sector in seven weeks... Money Market funds report net outflows totaling -$37.866 billion... ExETFs—Municipal Bond funds report net inflows of $0.218 billion….

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 164% (a double plus another 64%!!) vs. the S&P500 UP a tiny 6.2% vs. NASDAQ UP a tiny 2.0% (All through 6/28/10)

Subscribe NOW and get the June 2010 Issue for FREE!!

In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% vs. the DJIA up 18.8%
As of  now, 6/28/10, the explore portfolio is up 1.8% YTD vs. DJIA Down 2.4% & S&P500 Down 2.3%



Tuesday, June 08, 2010

ARMH: Jim Cramer likes Arm as "The Next Intel"

Update 7/29/13: Calling ARMH "the next Intel" Jim Cramer Likes Arm Holdings
Yesterday on Jim Cramer's Mad Money TV Program Cramer called Arm Holdings (ARMH Charts) "the next Intel" (INTC Charts) because its microprocessors are more energy efficient than Intel's. Cramer said ARMH is in 95% of all smartphones and MP3 players. Jim said Arm gets 75¢ in royalties for every iPad sold which makes it a great play on Apple (AAPL Charts).
Click chart for full size image courtesy of stockcharts.com

What Cramer didn't say is they are "more energy efficient" because they are slower and don't do as much. The new Intel "core i7" powered desktop computer I am writing this on has hyper threading and four cores so it effectively has eight processors working at the same time on up to eight different tasks. Of course this will use much more power than an MP3 player that just plays one song or video at a time.
Mariam Metsinger reported:
Arm Holdings had an amazing analyst day last month when it reported its total addressable market is expected to double to 29 billion chips in 2014 from 15 billion in 2009. The company could get significant pin action from Microsoft (MSFT charts), as its next generation of Windows is likely to operate on ARM-based processors. ARMH is also diversified into other areas, and its technology is used in sensors, smart meters and hard drives.


While ARMH's multiple is 31, this is reasonable, considering its growth rate is 22%. Cramer would buy the stock when it pulls back 2 points from where it was Monday to $10.
A PE of 31 with a growth rate of 22% is a PEG of 1.4.   I would not call it "a good value" (good value is when growth rate exceeds PE for a PEG under 1.0) but this PEG is not "unreasonable"  as long as growth continues above 20%.  It is easy to grow a small market but once it is large, growth slows as others want a piece.

I would think once the market is large enough, Intel could enter with its own low power chip such as its low cost Atom processor now used in low cost netbooks. Also, as the market matures, Apple could design their own chips and have them made at a foundry so they could keep the profits themselves rather than give them to ARMH. In fact, I would not be surprised to see Apple eventually go to a foundry build their own chip around Intel's atom processor where I believe the license fee to Intel could be less. They may use this to pressure Arm to lower prices. One thing for sure, it can be dangerous investing in companies with few products and customers as a large customer could go elsewhere for lower prices or more performance.

Finally, as users demand more functionality and multitasking from their portable devices, this will favor Intel and AMD with their multiple processors on a single slice of silicon. As the market for these devices get large enough for Intel to notice, I expect to see Intel (and probably AMD) release versions of their microprocessors optimized for low power rather than blazing speed. ARMH may continue to do well for years, but it is not without its risks.

More information:
Disclosure:  I own Intel and Microsoft in my personal portfolio.  I purchased Intel and Microsoft in 1993 at $3.67 and $2.43 per share, respectively.  I also cover both in K"irk Lindstrom's Investment Letter" and currently hold positions in both for the "Explore Portfolio."


Monday, June 07, 2010

G20 Rejects Bank Tax & Removes Fiscal Stimulus

Canada was successful with its effort to block a uniform bank tax on all members of the G20. This is a tax favored by the United States, the United Kingdom, Germany and France as a way to create a fund to dip into for emergencies without returning to tax payers for the funds.

Finance ministers that met in Busan, South Korea, on Saturday said in a communique that each country will be free to choose its own way of dealing with the issue.

Canada argued that banks in countries that acted responsibly and did not need their taxpayers to bail them out should not be punished for the sins of the others who did. Those in favor of the tax, especially Tim Geithner of the US, want all countries taxed equally so banks in the responsible countries that didn't need taxpayers to bail them out won't get a competitive advantage.

From Canada sways G20 to rethink bank tax
Canada has been lobbying world leaders for months that countries that didn't need to bail out their financial institutions during the recent crisis shouldn't have to punish their banks for what others did.

"It was apparent that most G20 members do not support the concept of a universal levy," said Finance Minister Jim Flaherty at the conclusion of the meeting.

"What there is agreement about is the following principle -- to the extent that a financial institution contributes to a financial crisis, then the financial institution should bear the cost of that contribution and not taxpayers.

"At the end of the day, different countries will choose different ways of reaching the goals ... but there is no agreement to proceed with an ex-ante tax."

Excerpts from G-20 and US: Going Separate Ways Highlights Prisoner’s Dilemma
Unlike last year when the U.S. swapped all sorts of favors for a coordinated global fiscal stimulus, this year the U.S. represented by Treasury Secretary Tim Geithner is receiving the cold shoulder. Finance ministers from around the world are happy to ‘go their own way’ in pursuit of what they believe to be their national interests.

Finance ministers of the world’s leading economies have been so spooked by the sovereign debt crisis that they have decided they can no longer wait until economies are growing strongly before they remove fiscal stimulus.
and
In a letter to the rest of the G20, Tim Geithner, US Treasury secretary, argued: “Concerns about growth as Europe makes needed policy adjustments threaten to undercut the momentum of the recovery”.

In private, G20 officials said that the US had been the country most concerned about the new austerity drive and feared for the momentum for global growth. In the meetings it had been frank in the meeting in calling for China to revalue the renminbi and for Germany to boost domestic demand, officials said.

Mr Geithner, himself, was open about his fears in his letter to the G20. “Concerns about growth as Europe makes needed policy adjustments threaten to undercut the momentum of the recovery,” he wrote, adding that fiscal tightening won’t “succeed unless we are able to strengthen confidence in the global recovery.”
You have to stand up and TAKE NOTE when other countries, especially some in Europe, say the US is taxing and spending too much and they won't play along

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 158% (a double plus another 58%!!) vs. the S&P500 UP a tiny 4.5% vs. NASDAQ UP a tiny 1.2% (All through 6/5/10)

In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% vs. the DJIA up 18.8%
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Sunday, June 06, 2010

John Bogle on Long, Government & Corporate Bonds

Summary of John Bogles advice given during a video interview on bond allocation to Long, Government and Corporate Bonds.

In this video interview John (Jack) Bogle, the founder and former chairman of Vanguard, gives his current recommends for bond investors. Many will be surprised to learn Bogle is recommending against holding certain types of bonds and a different bond allocation than what is in Vanguard's Total Bond Index Fund, VBMFX.

For most of his career, Bogle has recommended against market timing in favor of placing your assets into index funds with an allocation based on your age. Generally, he recommended 100 percent less your age into Vanguard's Total Stock Market index fund, VTSMX, with the remainder of the funds in Vanguard's Total Bond Index Fund as he said in a CNBC interview.
Get your balance right. Have a certain amount in bond funds, bond index funds or Pimco funds for that matter because Paul (McCulley, PICMCO managing director) has done a fabulous job out there. Paul and Bill (Gross, PIMCO Founder and director). Take your equity position and make it 80% say US, 20% non US. Get your balance having something to do with your age. More bonds as you get older like I am and stay the course.
[John C. Bogle (7/14/08 with DJIA in a bear market at 11,100)]

This has changed which the video below and my summary of the interview highlight.

Some Key points from the interview:

#1 Bogle says avoid the long maturities:
I am nervous about the fixed income markets. Therefore I would not use the long maturities.
#2 Bogle recommends about 1/2 short term bonds and 1/2 in intermediate term to get some "reasonable income" and the ability to "ride the fluctuations that are sure to come."
And so, I'd say some combination of maybe one half short term bonds, or limited term, a little longer than short term, or in intermediate terms. In other words, half in short and limited, and half in intermediate term, which should give you some reasonable income, and should enable you to ride with these fluctuations that are sure to come, I think, in the bond market.
===================================================

===================================================
Full Text of Bogle Interview.

#3 On the total bond index fund, VBMFX, Bogle recommends a different weighting with more in corporate and less in government bonds than the index shows.
So you really ought to look into what kind of a bond fund you have. The index has sort of an intermediate term of maturity, and that's certainly more than satisfactory. But it's heavily weighted by government, and at these yield relationships, I'd think I'd have a little more in corporates, and maybe a little less in governments, than the index shows.

Some will say the above is market timing which Bogle has been a strong opponent against.
The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly fifty years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently. Yet market timing appears to be increasingly embraced by mutual fund investors and the professional managers of fund portfolios alike.
[John C. Bogle in Common Sense on Mutual Funds: , pg 20]

My answer is Bogle has recommended against market timing the stock market in general but he's always said it is ok to use some of your "mad money" or "explore portfolio" to gamble on the edges. Bogle on Managed Mutual Funds:
Actively managed mutual funds? Yes. But only if they are run by managers who own their own firms, who follow distinctive philosophies, and who invest for the long term, without benchmark hugging. (Don't be disappointed if the managed fund loses to the index fund in at least one year of every three!)"
[John C. Bogle in “The Little Book of Common Sense Investing”, Chapter 18]

Bogle on individual stocks for your “Funny Money” account:
Yes, Pick a few. Listen to the promoters. Listen to your broker or adviser. Listen to your neighbors. Heck, even listen to your brother-in-law.
[John C. Bogle in “The Little Book of Common Sense Investing”, pg 202]

Also, removing  long term  and some government bonds from your portfolio and replacing them with corporate bonds doesn't change your allocation between fixed and equities so you could argue he isn't market timing stock, just bonds!

I agree with Bogle's advice and neither of my newsletter portfolios currently have bonds with long maturities.  Kirk's Two Investment Letters

With my own money and the core portfolios in "Kirk Lindstrom's Investment Letter," I don't need the yield so I am in capital preservation mode on the fixed income side with my only bonds holdings in  iBonds, TIPS and TIPS index funds such as FINPX from Fidelity and VIPSX from Vanguard.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 158% (a double plus another 58%!!) vs. the S&P500 UP a tiny 4.5% vs. NASDAQ UP a tiny 1.2% (All through 6/5/10)

In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% vs. the DJIA up 18.8%
Subscribe NOW and get the June (or the current month) Issue for FREE!  
More Information:

What do people think about John Bogle's advice to not own certain bonds and have a different bond allocation than is currently in the total bond fund?   


 

Wednesday, June 02, 2010

Mango Salsa - Low Sodium - Low Calorie

What good is investing in financial assets for the future if you are not around to enjoy the fruits of your sacrifice?  Not only that, but you can save a fortune in health care costs with a healthy diet and exercise.   This recipe below for healthy, homemade mango salsa is much healthier than the mango salsa I ate in Hawaii because it skips the salt.

In our facebook group "Investing for the Long Term" we have a discussion forum called "Healthy Living - Invest in Your Health Too" where we are very fortunate to have noted nutrition expert  Dr. James J. (Jay) Kenney, PhD, RD, FACN answer our questions about health and nutrition.Dr. Jay, an evangelist for personal responsibility for your health, has helped me greatly over the years stay fit and healthy based on good science and sage advice.

Homemade Low Sodium Mango Salsa

Yield: 3 cups (12 servings)
Ingredients
  • 2 semi-ripe mangos chunked, unpeeled
  • 1 cup (16 g) cilantro
  • 1/2 medium red onion, peeled
  • 1 jalapeno, halved, seeded
  • 1 tablespoon lime or lemon juice
Steps:
  1. Place all ingredients into the Vitamix container in the order listed and secure lid.
  2. Select Variable 1.
  3. Turn machine on and quickly increase speed to Variable 4
  4.  Blend for 15 seconds or until desired consistency is reached. If necessary, use the tamper to push the ingredients into the blades while processing.
Health Classification: Diabetic Friendly, Low Fat, Low Sodium, Low Cholesterol, Heart Healthy, Gluten-Free, Vegetarian, Vegan, Raw
We like the "Vita-mix Super 5200" blender for its heavy duty motor, solid construction, 7-year warranty and second container for grinding whole grains and beans. Consider getting an extra container to keep in the fridge or have a fresh container while the other is in the dishwasher.

Nutrition Information:
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