Just One Man's Opinion - 04 August 2005

by JMac

THE BALANCED PORTFOLIO

A balanced portfolio is one in which the investment styles are blended. It is not balanced by sectors, but rather by investment styles, e.g. growth, growth and income, value and speculative. It is for the investor who wants some return, some safety and is willing to take some risk. It requires an investor to be patient and nimble. That sounds counterintuitive, but it is not. The investor must be willing to constantly review his or her holdings to ensure they still have the extrinsics and fundamentals that caused them to be attractive in the first place. For instance, drillers are red hot right now and should be in any growth portfolio. However, if oil prices slumped, as they did in the early 80's, then they become speculative plays. Likewise, if the Fed suddenly turns and starts lowering interest rates then housing and bank stocks become growth and income.

If you do not have the time to do the homework each week there are dozens of mutual funds out there which qualify as "balanced funds". If you would like my favorites, contact me by leaving a comment in this thread. Remember: only no-load funds and no funds with an expense ratio higher than 1% .

Meanwhile, here are my suggestions for a balanced portfolio ( G = Growth, G & I =Growth & Income, V = Value, S = Speculative High-risk High-reward) :


AVON - V
MICROSOFT -V
NATIONAL CITY - V
QUALCOMM - G
GENERAL MILLS - G
MOTOROLA - G
IRON MOUNTAIN - G
SCHLUMBERGER - G
WEIGHTWATCHERS - G
STARBUCKS- G
HONEYWELL - G
BOEING - G
COMCAST - G (nice quarter guys!)
WALGREENS - G
HALLIBURTON -G
UNITEDHEALTH - G
ANHEUSER BUSCH - G
SYSCO - G
FEDEX - G
UPS - G
HONEYWELL - G
ALTRIA - G & I
BANK OF AMERICA - G & I
EXXON - G & I
J & J - G & I
PROCTER & GAMBLE - G & I
COKE - G & I
GE - G & I
DUKE ENERGY - I
HARRAHS - S
APPLE - S
IBM - S
CORNING - S
GENETECH - S
GM - S

Mix and match to your delight.

AVOID -autos, airlines, money center banks, defense, and retailers, except, perhaps, Nordstrom, Coach, Wal-Mart, J.C.Penney and Sears on pull-backs.

GOOD LUCK !

Just One Man's Opinion - 03 August 2005

by JMac

DEAL OF THE CENTURY ?

In April, Unocal shareholders agreed to accept Chevron/Texaco's all cash offer of $63 per share. Oil was at the mid - 50's at the time. Then, the Chinese oil company Cnooc offered $67 in cash AND stock. Chevron, et.al. successfuly convinced the politicians that the sale to the Chinese was "not in our national interests" and Cnooc withdrew its bid Monday. With oil now at $62, Chevron gets Unocal's proven reserves at less than $20 a barrel, Unocal shareholders get less than fair value and the Chevron lobbyists get bonuses.

A FOOL'S TRAP - Don't be suckered in by The Big 3 automakers' July sales reports. Anyone can increase their sales by giving away their product. If these guys do not get MAJOR concessions from the UAW next year they are in big trouble. Stick with companies that have market share AND pricing power, e.g. Procter, Weight-Watchers, Motorola and Qualcomm.

THE NOT SO "FRIENDLY SKIES" - Delta will seek bankruptcy protection on, or before September 15. Dead Men Walking - United, U.S. Air, Independance, Northwest/AmericaWest.

FACTOIDS - In the seventy-five year history of commercial aviation in the US, the airline industry, as a whole, has NEVER had a profitable year. Meanwhile, J & J has not missed a dividend in 348 consecutive quarters, that is 87 years!!!

UTILITIES - An unusually hot summer and continued deregulation will result in a blow-out third quarter for the electric utilities. Best of breed - Duke Energy (yielding 4%), FP&L, Public Service of New Mexico and, yes, Pacific Gas and Electric.

PREDICTIONS - Microsoft will report at the end of this quarter they have in excess of 50 billion dollars in cash on hand. Beware - bondholders, housing and bank stockholders. Alan Greenspan is determined to burst, what he sees, as "the housing bubble". At least two more rate hikes are coming.

COMING TOMORROW - THE BALANCED PORTFOLIO

Just One Man's Opinion - 01 August 2005

by JMac

FOR YOU DAY TRADERS -

On July 12 I speculated that Washington would nix the purchase of UNOCAL by the Chinese oil Co. CNNOC and that T.Boone Pickens or Exxon/Mobil or BP might put in a bid. In a copyrighted story on Monday, The Wall Street Journal reported that the Chinese are about to withdraw their $67 a share offer in the face of growing political opposition. Chevron offered $63, but I think with oil at this level UNOCAL is worth at least $70. There may be another suitor out there who is willing to pay that, or more.

ANOTHER DOG DAY AFTERNOON - ANOTHER ESSAY

"THE CHINA SYNDROME"

The 19th century was the British century, the 20th the American, and the 21st will be the Chinese. In a few decades China's Gross Domestic Product (GDP) will exceed ours. The US will still lead in per capita GDP, but will be second, or perhaps third behind China and India in total GDP.

Many "pundits" are concerned with the military, political and economic ramifications of this sea change. Defense analysts assert that we should consider China to be our next adversary and we must prepare for the inevitable confrontation similiar to that we faced with the former Soviet Union following World War II. This, along with other factors makes many financial planners less than sanguine about long-term investment in China.

While I agree that China is now a major force on the world stage, that does not necessarily mean that we will be forced into another war, either hot or cold.

The are differences between this scenario and that which we faced with the USSR, or Germany or Japan in the 1940's. First communism in China is of different brand than that overseen by Stalin (who, in reality was not much of a Marxist-Leninist himself, but actually just a paranoid meglomaniac). Neither is it facsist in nature as it was in Germany or Japan. It is moderatly pragmatic and is both devolving and evolving. The "class struggle", essential to Marxist-Leninsim, is devolving as a new middle class is emerging. Free enterprise is evolving with the growth of an investor class.

The most important differance is the intellectual realization of self-interest. It is not in either country's interests to go to war over Taiwan or textile imports. It IS in both of our interests that our economies grow and prosper.The Chinese want to dominate the Straits of Taiwan, but even more they want to dominate the world markets. They want to purloin our technolgy, but their people want the latest GE appliances, Coca-Cola and Pampers. Hitler, the militarists in Japan and Stalin wanted more than markets and refrigerators, they wanted political hegemony. It is always possible that some irrational American president or Chinese premier would be willing to risk Armageddon to subdue the other, but rational self-interest (greed) should hold them in check.

It is here that unfettered investment by both countries in each other's economies may save mankind from the unthinkable. In 2002 direct investment in China exceeded that in the US for the first time since such statistics were kept. Virtually every company in the Dow 30 and hundreds of others have direct or indirest investments in China. Bank of America just took a 9% stake in the huge China Construction Bank. Meanwhile China is buying our treasury notes and bonds and is bidding for US oil companies and real estate. Idealogues and xenophobes on both sides of the Pacific will be restrained by the pragmatic instincts of thier respective investor classes. This is why I do not worry when China seeks to become an "owner" of American properties. It is far better to be swamped by Chinese yuans than Chinese ICBMs. Do I worry that we may go to war over Taiwan? Yes. Am I concerned about China's recent build-up of their strategic forces? Absolutley. However, China believes it cannot be safe until it has a countervailing deterrant to our superior military might. Would the US feel any differently? If the USSR had exploded the atomic bomb before we did, would we not have lived in similair fear and race to get our own? Remember the national "panic" when, in 1957, the Soviets launched Sputnik?

My point is that economic cross-pollination is the best chance to avoid mutually assured destruction. A prosperous China and India is a better guarantee of peaceful co-existance than the 7th Fleet cruising in the South China Sea.

Richard Nixon was definitely not my favorite president, but he was prescient enough to open the door to China in 1972. He understood three decades ago that isolating one-third of the world's peoples was no only dangerous, but bad business. The present day leadership in China was equally far-sighted when they realized that no matter that Mao and Lenin might roll over in their graves, the only way China could be come a true world power was to embrace market capitalism. Apparently, Adam Smith translates well in Chinese.

Just One Man's Opinion - 30 July 2005

by JMac

AN UPDATE - JUST FOR FUN

As I indicated at the start of this column, the comments and recommendations are NOT intended for traders, but rather investors who have a 3-5 year time horizon. However, I thought it would be fun to see how we did in the month of July.

The market had a pretty good month in spite of the attacks in London and continued high oil prices.

Dow up 365 pts; Nasdaq up 127 pts; S & P up 43 pts.

The first item is the stock's price on July 1 and my comments at that time in lower case. The second is the closing quote on July 29 and my comments today in CAPS. N/C = NO CHANGE IN RECOMMENDATION.

Altria - 65.03 buy & hold - 66.96 N/C

Boeing - 64.68 buy & hold - 66.01 N/C

Coke - 49.21 buy on pull back - 43.76 BUY

Pepsi - 53.51 buy & hold - 54.53 N/C

Avon - 37.80 buy 32.71- CURRENCY EXCAHANGE RATES MADE FOR TOUGH QUARTER, BUT STILL A BUY

Proctor & Gamble - 52.90 buy & hold - 55.63 N/C

J & J - 64.95 buy & hold - 63.96 N/C

Wal-Mart - 48.28 buy - 49.35 N/C

Microsoft - 24.84 buy - 25.61 BUY ! ITS A BARGAIN HERE.

Intel - 26.02 buy - 27.14 N/C

Weyerhouser - 63.89 buy - 68.98 N/C

St. Joes - 81.40 buy - 81.39 N/C

SBC - 23.94 hold - 24.45 SELL, TERRESTIAL TELEPHONY IS AN ENDANGERED SPECIES

Target - 54.56 buy - 58.75 N/C

Sears - 149.87 buy -154.60 N/C

GM - 34.65 avoid - 36.82 N/C

Ford - 10.31 avoid - 10.74 N/C

Chrysler - 40.40 avoid - 48.42 IF U GOT PROFITS TAKE THEM, NOW !

Citigroup - 46.16 buy - 43.50 HOLD, WHO TAKES SANDY WEILL'S PLACE IN '06 ????????

FedEX - 82.24 buy - 84.09 N/C, WHO DO THINK IS SHIPPING ALL THAT STUFF FROM CHINA ?

EXXON - 58.31 buy - 58.75 N/C

Wendy's - 47.64 July 1st - "if you think they spin-off Horton's and sell real estate buy" - 51.70 WELL, FRIDAY THEY DID ! DID YOU BUY ?

Sysco Foods - 36.19 buy - 36.06 N/C, BUFFET IS BUYING

Lucent - 2.94 only for gamblers - 2.93 N/C

Dupont - 42.83 hold - 42.68 N/C

Dow Chemical - 46.87 hold - 47.95 N/C

Eastman Chemical - 54.99 hold - 55.39 N/C

Southwest - no quotes. WHEN, NOT IF, DELTA GOES DOWN, BUY

Home builders - no quotes - TAKE PROFITS HERE

Duke Energy - 29.99 buy - 29.54 N/C

Home Depot - 29.99 neutral - 29.54 N/C

Lowes - 57.60 nuetral - 66.22 N/C

Comcast A - 30.67 buy - 30.73 STRONG BUY, TELEPHONY OVER CABLE COMING ON.

Time-Warner - 16.59 neutral 17.02 BUY (SEE COMCAST)

Google - 294.15 neutral- 287.76 N/C

eBay - 33.01 - buy - 33.34 BUY

Apple - 36.81 buy - on pull back - 42.65 SELL, NOW !

Motorola - 18.27 buy - 21.18 STRONG BUY, THESE GUYS ARE KNOCKING NOKIA DEAD

Chevron - 56.97 buy - 58.01 HOLD, WAIT & SEE WHAT HAPPENS IN UNOCAL MATTER

GE - 34.66 buy - 34.50 N/C

Amazon - 33.09 neutral - 45.15 IF YOU GOT PROFITS TAKE THEM NOW!

Fortune Brands - 90.15 buy - (CORRECTION - TIGER PLAYS A NIKE BALL) 94.55 N/C

IGT - 28.24 buy - 27.36 N/C

Yellow/Roadway - 50.80 neutral until oil hits $55 - 52.81 - N/C

Defense stocks - hold - N/C, DEFENSE SPENDING SLOWS IN FY ' 07

Disney - 25.09 neutral - (CORRECTION - ITS IGER NOT EIGER) N/C

Verizon - 34.57 neutral - SEE SBC ABOVE

QWest - 3.71 sell & avoid - 3.82 N/C

Tyco - 29.11 avoid - 30.47 N/C

General Mills - 46.71 - buy - 47.40 N/C

Alcoa - 26.14 neutral - 28.05 - HOLD, NICE QUARTER

Anheuser-Busch - 45.88 buy - 44.35 N/C, BUFFET IS BUYING

Colgate-Palmolive 50.05 buy - 52.94 N/C

Corning - 19.25 - buy on pull back - 19.05 BUY

Iron Mountain - 31.02 buy - 34.29 BUY, I JUST LOVE THIS COMPANY !

WeightWatchers - 51.03 buy - 56.82 BUY MORE

Wal-Greens - 46.08 buy - 47.86 N/C

Bank stocks - neutral - AVOID - SELL JP MORGAN CHASE

Drillers - pick 'em - TRANSOCEAN, NABORS & SCHLUMBERGER

IBM - 74.67 buy on dips - 83.46 HOLD

Texas Instruments - 28.03 neutral - 31.76 BUY

Starbucks - 51.66 buy - 52.55 N/C

Burlington Resources - 56.81 buy - 64.11 HOLD