Monday, February 23, 2009

The Kirk Report

The Kirk Report

A Timely Reminder

Posted: 23 Feb 2009 03:27 PM CST

<p>On such ugly day, it is always nice to be able to share a happy chart to serve as a timely reminder of why we're still in this game. Shares of <b>Nova Chemicals (<span id="ticker">NCX</span>)</b> soared <span class="green"><b>+285%</b></span> today on news of being acquired by the country of Abu Dhabi.

<p><div style="margin-bottom:5px; margin-top:8px;" align="center"><img src="http://www.kirkreport.com/pictures/ncx_2_23_09.gif" border="0" alt="NCX" width="448" height="327"></div>

<p>If you recall, <span id="ticker">NCX</span> was one of the <a href="http://www.kirkreport.com/login.html"><b>36 stocks</b></a> we're currently tracking due to their wide discounts from book value.

<p>Apparently those with cash to spend in Abu Dhabi are running value stock screens these days. If the market is going to bottom, we need to see a lot more of the same as vultures go to work.

Read & Weep

Posted: 23 Feb 2009 03:03 PM CST

Bailout Backlash

Posted: 23 Feb 2009 10:19 AM CST

It was only a matter of time before someone decided to create a nifty bailout calculator:

This calculator was developed by Right.org which also offers a petition for Americans to sign who are unhappy with these expenditures. Indeed, citizens across the USA are beginning to protest.

* Traders aren't too happy either as efforts to block the new trader tax heat up. What interesting times we live in!

Q&A With Mebane Faber

Posted: 23 Feb 2009 08:13 AM CST

file mebane_faber.gif
For February's Q&A, I've asked portfolio manager Mebane Faber to be our guest. His firm, Cambria Investment Management, focuses on quantitative investment strategies.

Mebane is a frequent speaker and writer on investment strategies and has been featured in Barron's, The New York Times, Real Money, Seeking Alpha, and The New Yorker. I learned about him some time ago through his excellent blog, World Beta. Recently, Mebane also co-founded a new website - AlphaClone - which is focused on building portfolio clones based on the holdings of the world's top fund manager's. Finally, Mebane also has a new book coming out next month called "The Ivy Portfolio."

Mebane is well-known in the investment world. His research paper, "A Quantitative Approach to Tactical Asset Allocation," has attracted a tremendous amount of positive attention as it outlines a very simple timing method that has improved returns versus a buy-and-hold strategy by reducing portfolio risk and trading frequency all while being invested in the market approximately 70% of the time. In this Q&A, we'll talk quite a bit about this approach and other perspectives I think will help you tremendously with your long-term investing and market-timing.....[READ]

End-Of-February Relief Trade

Posted: 23 Feb 2009 08:09 AM CST

Good morning. Premarket futures are showing a positive bias. Strength in overseas markets and news that the U.S. government plans to increase its stake but not fully take over Citigroup and other banks eased some of the nationalization fears we saw last week.

In other news, investors are looking at the latest Chicago Fed Index, Treasury advisers have started lining up the biggest bankruptcy loan ever in case General Motors and Chrysler need it, and another survey of business economists remains bleak. We also have a fresh press release from the government regarding the new Capital Assistance Program.

Premarket gainers: C, FITB, MS, BAC, WFC, JPM, GE, OCNF, NCX, BCS, DRYS, RBS, HST, BQI, ACAS, ALD, ICO, GNW, LVS, GEOY, EGLE, PALM, UAUA, SNAK, ZION, GERN, FSLR, ENER, & SOHU.

Premarket losers: GOLD, UBS, CS, MT, WYN, NYT, AEF, HCS, HS, & BRKL

Today we have the 10:30 Dallas Fed Manufacturing Survey and Fedpeak from both Lockhart (12:40PM) and Fisher (6:PM). Beyond the latest from the government and financials, the two big market movers this week will be durable orders and the GDP. Traders will also be watching for any hints of stability in the housing sector as new home and existing home sales reports are provided.

While the Monday after expiration is often a negative day for the market, we're oversold enough here for a short-term relief trade. After that, things get much more difficult to figure out especially given the lack of clarity and confidence in the market, financials, and the government's plans. In the S&P 500, for example, we could rally up into the mid 800s and still not change the negative technicals so, while we have room for a profitable relief trade, we have a long way before the damage we've seen is repaired.

Let's make it a great week!

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