Thursday, January 8, 2009

The Kirk Report

The Kirk Report

Top Stock Pickers

Posted: 08 Jan 2009 11:33 AM CST

Earlier this week we reviewed the performance of members' top picks for the fourth quarter. The best performer was Emergent BioSolutions (EBS) with a +99.47% return which was recommended by two members - Abramov Andrei & Bob Witte.

As I've done in the past, I asked each member to answer a few questions for us and they've been kind to share them. Enjoy!

Robert D. Witte

NAME:  Robert D. Witte (Des Plaines, Illinois)

PROFESSION:  I earned a B.S. in Civil Engineering from the Illinois Institute of Technology. I retired about five years ago from Harza Engineering Company in Chicago, after a forty year career as a structural designer and Project Manager of hydroelectric projects.

MARKET EXPERIENCE:  I bought my first stock in 1965 on a hot tip and lost about 98% of my investment! It was a speculation on the development of oil shale in Utah. After that adventure, I realized that I had some serious shortcomings in my stock market investing skills. I confined most of my trading to mutual funds in my 401k account. My trading decisions were based on emotion and I never made much money.

After I retired, I concentrated on learning how to trade. I have learned more about trading in the past five years than in the previous forty years. The internet has made a tremendous difference. I remember when my "system" consisted of going to the public library and looking at outdated stock charts. It was like trying to read tea leaves and just as effective.

I found an excellent instructor named Russ Rzeszutko at Oakton Community College in Des Plaines and took his courses on technical analysis, interest rates, foreign exchange markets and supply side economics. These courses provided a base for my investment knowledge. Jack Chan at simplyprofits.org has been very helpful in sharing his strategies on technical analysis and money management. Finally, I have learned a great deal from the Kirk Report, and regularly review the stock screens.

MARKET STRATEGY:  I use technical analysis and sector analysis for selecting stocks for potential trades. I use a combination of trendlines, RSI, MACD, stochastics, and a series of 3 short term arithmetic moving averages to select entrance and exit points. The moving averages are an effective way to catch a trend early. I also monitor the number of stocks trading above their 50 day moving average as a general timing indicator- an idea courtesy of the Kirk Report. In my experience, the best places to find potential trades in a down market are in the new 52-week highs list and the top 100 stocks list. I found EBS in these lists on September 26. EBS had the best chart that I could find, was in a relatively strong sector, and had significant profits with a low P/E. EBS appeared to have potential as a low risk/ high reward opportunity.

MOST IMPORTANT THINGS I HAVE LEARNED:  Investing is a risky business, and profits do not come easily. Exercise patience and develop your investment skills before risking a significant part of your savings. Never stop learning.

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Abramov Andrei

NAME:  Abramov Andrei (Baltimore, Maryland)

PROFESSION:  I'm 42 years old and a fresh investor (2 years). I came to USA from Ukraine 11 years ago with my American dream, working all types of cleaning, kitchen, construction jobs. I have bachelor degree from Madison University in business. (Distance learning). I'm working for small stuff agency and another is renovation and home improvements.

MARKET EXPERIENCE:  I started to be interesting in stock 2 years because of Jim Cramer's TV show "Mad Money." I ordered a lot of translated books from Russia because there were a lot economic and financial slangs that I did not understand the sense even in my native language. I subscribed for WSJ and Barrons. I was keeping reading and studying some books from your recommended list.

I found info about you and your site one year ago in the book "The Dick Davis Dividend." No doubt that I became your member. I learned more from your mailbags, comments, and interviews than I had learned from big and expensive books. For me it's a big honor to be member of your circle. You are my mentor and distance guru. Thanks Charles for what you are doing.

MARKET STRATEGY:  I'm just making my first steps in trade. In addition to your website, my favorite screener is Finviz. I also use MSN Money. I also read some Russian language sites. I'm also a subscriber of Harry Domash's Dividend Detective and find it helpful.

My favorite companies are who pay monthly dividends, have no debts, and hold lots of cash. I also like international dividend payers. I also found out your pre-market winner and loser names have a lot of potential for one-two day's trade as a strategy. I have tried a lot of your pre-market winners and they work.

I recently took back full control of my investments after my 401K at Fidelity lost about 55% last year. I'm doing a lot of paper trading and portfolio creation right now and I've been successful of late (my portfolio is up 19% for the last month and a half).

MOST IMPORTANT THINGS I HAVE LEARNED:  When I came to this country I had several dreams - have a house, my own company, and a couple of investment properties. Now, I want to learn to become a trader. I really enjoy the conquest and new challenges that trading provides. I've learned many things, but translated from Russia, here's a motto I try to live by I'd like to share with you and other members:

"If we might have a second chance to live the days one more. And rectify mistakes we've made to even up the score. If we might have a second chance to use the knowledge gained, perhaps we might become at last as fine as GOD ordained. But though we cannot retrace our steps, however stands the score…..tomorrow brings another chance - for us to try one more!"

Thank you Robert & Abramov. I look forward to having you as lifetime members!

Are Earnings Estimates Still Too High?

Posted: 08 Jan 2009 08:30 AM CST

Good morning. Negative sentiment continues after Wal-Mart surprisingly lowered its fourth quarter outlook. Meanwhile, weekly jobless claims fell a better than expected 24,000 to 467,000 and the Monster's Employment Index dropped 12 points to 131.

Premarket gainers: SWIM, SHLD, ANDS, CRXL, EMC, TRW, UNM, ISYS, ODP, CPN, LWSN, RBN, WTM, ARO, BLUD, URBN, GME, ANDS, RBN, GOLD, ONNN, RBS, HOTT, & SYT.

Premarket losers: ISRG, PMTC, SAY, WMT, AMTD, JCG, IFX, ICO, CHS, MTW, SONC, EGLE, JAVA, ACAS, SOLF, MICC, DRYS, YHOO, CELG, COST, FSLR, SRG, RTP, WDFC, ANF, M, NAT, & CAH.

Following Wal-Mart, the concern is that earnings estimates are still too high going into another earnings season and we'll need to see some reports that counteract that fear. The news is expected to be bad, but there has been hope that estimates have been taken down enough that it won't matter, which is why how investors react to Wal-mart and others who lower guidance is important to watch.

For today, the main focus will remain on positioning ahead of tomorrow's jobs report and whether we can hold up under more pressure. In addition, Obama is scheduled to speak about the economy at 11:AM.

Go make a great day!

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