Your Best Investment For the Future: You

What are the best investments for the coming year, 2009? Are they stocks,bonds and real estate, or are they  commodities such as oil and gold? After all the stock markets have taken a big hit this year down some 35-40%.  Oil has also rolled over  or should I say fallen off a cliff trading down as much as 110 points from its high of 147 a share earlier this year. So there must be plenty of good bargains in all this mess, right? Well sure there are plenty of good bargains out their, but probably the best one that you can make first, is in yourself. That's right yourself. Starting your own business is one of the best investments one can make. Unlike investing in stocks, bonds, real estate and other securities where you are a passive investor you have direct control in your own business. Your the President, the Boss man , the Sole Decision maker. Most of us rather have someone else do the work for us, which is always nice, but this comes with a price. By investing in yourself you are allocating the cost in your business much like a large company makes. So before you go laying out thousands of dollars in anyone of the investments mentioned, think about investing in yourself first.

Year-End Tax Selling???

Will we see year-end tax selling this year? That's a question that will be answered in just under two weeks, as December comes to a close and 2008 is almost history. What is year-end tax selling anyway? Investors holding beaten down or depressed stocks will usually sell them at year end to take the tax loss. This can be a good strategy if the investor has capital gains in other securities or investments. This year the market has been very unkind to  investors. Stocks that are hovering near their lows are usually the ones that are pushed down further during this period. However studies have been shown that stocks trading near their lows in December often outperform the market going into the first several weeks of the new year. Many professional traders often play this tax selling game. The Long term investor only needs to sell  if he finds a better deal elsewhere or if he has profits to match against the losses. 

STOCKMANMARC

Sears, AutoNation, & Savy Billionaires: Gates & Lampert

While many analyst and investors seem to be beating up on companies such as Sears Holdings(SHLD) and AutoNation(AN) investors Eddie Lampert and Bill Gates continue to buy shares. Why? The economy has not been this bad in at least one or maybe two generations. Sears is a retailer who seems to be out played by competitors WalMart(WMT), Target(TGT) and Best Buy(BBY). Then their is AutoNation that is caught up in the Big Three Auto Debacle of Ford(FD), General Motors(GM) and Chrysler. Why are these Billionaires pouring money into these companies? Do they see something that the majority does not see?

"Just recently UBS initiated coverage of the stock with a ‘’sell” rating Thursday, Sears needs to come up with a solution for its operating problems. Many of them involve the basics of retailing: growing comps, executing on merchandising, improving marketing. Without a strategic operating initiative, Sears won’t be able to distinguish itself from the competition in the crowded and stagnant retailing sector, and thus won’t be in a position to reverse a steep sales decline. Also short sellers have also taken an extremely bearish stance on the retailer, as more than 19 million SHLD shares have been sold short. This accumulation of bearish bets accounts for 17.6% of the company's total float, and is 8.5 times the stock's average daily trading volume. Should the equity continue its downtrend, these bears could add to their winning short positions, pushing SHLD even lower."

So what is it that is going on with these two companies? Basically Wall Street is saying these companies suck. In the case of Sears their saying that Sears has a flawed business model and that it is NO SPECIAL retailer. In the case of AutoNation, Wall Street is saying with all the negative press on the auto manufacturers we don't want this one either. Does any of this hold true? Maybe, at least in the short term it does. But for the shrewd business men that I think Gates and Lampert are the answer is a NO!

Is their something more going on here? Well in my humble opinion I think their is. In the case of Sears, yes it is a retailer that does not shine as bright as WalMart or Target, however as I have stated in earlier posts that it sits on alot of untapped Real Estate as well as BRANDED names- Kenmore, Craftsman, Diehard and LandsEnd. Most investors already recognize this and it is talked up in the media over and over. However, I think their is a bigger picture going on with these companies than meets the eye. WallStreet has ALWAYS been short term oriented, their job is to play salesman and to constantly make that commission dollar. While Lampert and Gates are making a bigger play which may take several years to pan out. Can the passive investor make money here? I think he/she can if they have patience and due their own research.

This is an interesting case to study because I think it is more than just a rich guy buying a stock and making 20 or 30%.

related links:

http://stockmanmarc.blogspot.com/2008/10/sears-not-just-your-average-retailer.html

http://stockmanmarc.blogspot.com/2008/11/sears-holdings-esl-investments-mr-eddie.html

http://finance.yahoo.com/news/Gates-Lampert-keep-buying-apf-13871819.html

The author suggest further research before investing.

Author is long SHLD

Update! Buffett Again AddsTo Burlington Northern Santa Fe Railway

Once again Buffett is adding to his position in Burlington Northern Santa Fe (BNI), bringing his total stake in the company to nearly 20%. Buffett first announce this position back in the spring of 2007, if you remember he was saying he wanted to do a huge deal, could this be it? Since the market has taken a dive this year he has been on somewhat of a buying binge, with other purchases of Goldman Sachs(GS), General Electric(GE) in which he got preferred shares in both these companies. He has also announce plans to buy all of Constellation Energy(CEG) for $26.50 a share. Below is a direct link to Berkshire Hathaway's most recent buys of Burlington which were on 12/8 & 12/9.

http://www.sec.gov/Archives/edgar/data/109694/000118143108066742/xslF345X03/rrd226027.xml

Ben Graham Nuggets Part 2

The Market Crash of 2008 has created many opportunities for the investor especially the most prudent of investors- the Value Investor. While many stocks look like bargains not all are. Many are value traps however many might be diamonds in the rough. One of Ben Grahams strategies while managing money during his 30 years of running "Graham-Newman Partnership" was to buy a basket of beaten down stocks . While there are many stocks currently that fit in the mold or come close to Grahams strategy here is the latest list:

All issues mentioned have a current ratio better than 1.5, a book value under 1.5, a p/e ratio under 15, positive eps growth over last 5 years, very low or no debt, and pay a dividend of at least 2 percent or better.

7 Ben Graham Nuggets

Williams Pipeline LP(WMZ)- Williams Pipeline Partners L.P. owns and operates natural gas transportation and storage assets in the United States.

Lufkin Industries(LUFK)- Lufkin Industries, Inc. and its subsidiaries engage in the manufacture and sale of oil field pumping units, power transmission products, and highway trailers.

Bebe Stores(BEBE)- bebe stores, inc. engages in the design, development, and production of womens apparel and accessories. Management holds a large stake in this one.

Heidrick &Struggles(HSII)- Heidrick & Struggles International, Inc. provides executive search and leadership consulting services in the Americas, Europe, and the Asia Pacific.

Titanium Metals(TIE)- Titanium Metals Corporation produces titanium melted and mill products.

Williams-Sonoma(WSM)- Williams-Sonoma, Inc. operates as a specialty retailer of home products.

Intersil Corporation(ISIL)- Intersil Corporation is a global technology leader specializing in the design and manufacture of high performance analog semiconductors.

More Ben Graham Nuggets here:

http://stockmanmarc.blogspot.com/2008/10/few-more-ben-graham-nuggets.html

*These are not recommendations but ideas for further study before investing.

Warren Buffett Is Adding to His Train Set

At 78 years old Warren Buffet is still playing with CHOO CHOO TRAINS, but their no longer the Lionel Trains from childhood day's. Looks like the Oracle of Omaha is amassing a large position in his favorite railroad company Burlington Northern Santa Fe(BNI). Buffett has been acquiring a position in this company since early 2007 and buying it on dips in the $70-80 range. He has also used the tactic of selling puts on the stock which pays him  similar to getting a dividend. If the stock hits his strike price the stock is put to him . If the stock never hits his strike price he pockets the option premium. Earlier in the year the stock almost hit $115 per share but has fallen back with the over all market. Here is a link to Berkshire Hathaway's(BRKA,BRKB) current filing.

http://www.sec.gov/Archives/edgar/data/109694/000118143108065808/xslF345X03/rrd225536.xml

also be sure and check the link to Gurufocus:

http://www.gurufocus.com/news.php?id=39652

Mr. 1 Up On Wall Street: Peter Lynch

Many are already familiar with Peter Lynch, but for those that are not Mr. Lynch managed Fidelity's Magellan Fund(FMAGX) from 1977 to 1990. At the time the Magellan Fund was one, if not the biggest fund with assets under management. The Fund was always ranked as one of the top performing funds through out his tenure. In fact Mr. Lynch beat the S & P 500 Index 11 out of 13 years while accumulating a annual average return of 29%. He is also known for a couple books "One Up On Wall Street" and "Beating The Street" which should be on any Value Investors bookshelves. While the Magellan Fund was always considered a growth fund, Lynch's style is certainly one that resembles many other widely known value investors. Lynch, like many other Super Investors seemed to invest in simple easy to understand businesses, ones that seem boring or mundane.

A Lynch Quote: " I'd rather invest in panty hose than in communications satellites, or in motel chains than in fiber optics. The simpler it is, the better I like it".

Who else have we heard say the simpler the better? If you answered Warren Buffet, you are correct.

Lynch was a big proponent in looking all around your own surroundings to find stocks to buy. Almost on every corner in America you see a MacDonald's(MCD) or a Starbucks(SBUX). Every strip mall is anchored by a Target(TGT), WalMart(WMT) or a Best Buy(BBY). What kid or adult does not own a pair of tennis shoes(sneakers) these days, with a high percentage being Nike(NKE). Probably most have drank a Coke(KO) or Pepsi(PEP) and the list goes on. Lynch also observed what his wife and children purchased, these were his in house analysts you might say. He also, oftened looked for companies that had similar and favorable attributes, companies that:

1. sound dull

2. do dull things

3. do something disagreeable

4. do spin off deals

5. are not well followed on Wall Street or have no big institutional investors

6. have negative rumors are all over it

7. are in a depressing business or industry

8. are in a no growth industry

9. the business that has a nitch

10. people keep buying it

11. it uses technology

12. when management and owners are buying the stock.

13. when a company is buying back shares.

Lynch retired at the top of his game but still plays an active roll within the Fidelity Family of mutual funds.