Saturday, February 28, 2009

Sunday Investment Club

At last week's meeting (Scroll down if you want) we once again suggested it was time to join The Buffet (as in Warren, the Oracle of Omaha) and begin to make long-term investments in the stock market. Specifically, we mentioned making regular purchases of SPY, a New York Stock Exchange traded fund representing Standard & Poor's 500 biggest publicly owned American corporations.

(Call it dollar cost averaging. When Warren said he was starting to buy, SPY was about 88. Now it's 74. If you'd purchased the same dollar amount of SPY every month, your average cost now would be about 82-84.)

Corkface, one of The Crimes of Austin Carr's Senior Correspondents, and recent invitee to the Rome Financial Conference, has a strongly different opinion. He says wait to invest, ignor Warren Buffet. We should all at least listen. Corkface accurately predicted the current housing/financial/economic disaster well over a year ago. In case you missed it in last week's Comments, Corkface said,

"It's obvious that betting against the US has never worked out before. We won't bet against it here longer term. (But) Timing on the bottom of the financials is very difficult at this point because the banks still haven't disclosed the full truth about their balance sheets. We see evidence of that every day."

"My concern is earnings," Corkface went on. "Where will they earn money in the next 12 months. They won't lend money for fear of the unknown and that's where the juice came from in the past. FRE and FNM need another 20billion to operate for the next 3 months and they truly are insolvent along with C and BAC (thanks to the bad deals for Countrywide and MER). We are de-leveraging not reloading."

"Buffet is being ignored at this time. People are waiting for the next PONZE scheme to be exposed to the public. The PONZE stories will be big for the next 6 months."

"DOW 6000 is the place for capitulation and then we re-think our bearish views. It's a traders market. Take profits and re-enter on things that are working."

"MBRK looks under pressure here and will trade to 2.25, 2.30 buy mid march. Currently at 1.70."

"HBC is reporting 1st week of March, it sees 27. Shorted at 45."

"Last one, TSYS. check it out. Text messaging play with strong growth story. Just came off a great run to 9.95. If it gets back to 8.50 I buy it again."

Okay, Corkface. If you had 10,000 Austin Carr (fictional) dollars to invest, how would you play it? Anybody else want to play? I'm taking my $10,000 and BUYING BankAmerica Monday if it takes another drop...probably the May 5 calls. Or maybe 3,000 shares of OMEX, my favorite treasure stock. Either way, Call me irresponsible...

Ladies and gentlemen, start your portfolios in Comments. You can use Friday's closing prices before midnight Sunday, or wait until Monday. Just don't cheat.

4 comments:

corkface said...

Austin,
I'm in!
Friday prices:
buy 20 hbc april 30 puts @ $2.30
4600.00
buy 2000 shares mbrk @$1.67
$3340.00
buy 250 shares tsys @$8.25
$2062.50
Total- $10,002.50
Austin, I will owe the you $2.50 when were done.
Let the fun begin!!!!!!!!!!!
corkface

Austin Carr said...

Okay, I'm buying 2,000 shares of OMEX at Friday's $3.36 close, plus 30 BAC May 5 calls for $1.01 each for $9,750. Gives me $252.50 cash to make us even.

I'll also keep track of Grandma's account, in which I will buy $1000 worth of SPY this month, and $1,000 more each of the next nine months.

Austin Carr said...
This comment has been removed by the author.
Marshall-Stacks said...

Susan Ruttan
in LA Law was a redhead, and then of course there's
Isla Fisher
(Confessions Of A Shopaholic - she's a genuine redhead).