January 10, 2005  

 

1.    Everyone seems to be discussing Sirius Satellite (SIRI 6.65).  So many have been asking me about this one.  I don't follow it at all.  I certainly wouldn't short it, as I guess it could surprise and be a leader in an infant industry.  Apparently the market cap is close to $10b.  They are spending a great deal of money on Stern, NFL, NHL and MLB.  Insiders are supposedly well taken care of.  Kind of reminds me of the optics in the late 1990's.

2.    I placed a few more quotes on our Favorite Words page.  See the entries from January 10, 2005.

3.    I recently read Martin Zweig's book, "Winning on Wall Street".  I wanted to try and get clarity of what his investment techniques would be in a rising interest rate environment.  We certainly have a rising short term rate environment.  Yet, the 10 year treasuries are not that far off of their recent lows.  As I write this, the 10 year is at 4.26%.  In October the 10 year treasury broke 4.00%, and went as high as 4.40% recently.  Zweig writes that he is generally not too concerned with rates that are under 8%.  Yet, we have had 5 rate hikes and more expected, so it is certainly difficult to interpret his written views from the book, which my copy is 1994, to today's environment.  I continue to monitor his words and actions, by reading all that is available from Zweig Total Return Funds. 

You can read our notes to "Winning On Wall Street", by clicking here.

This is a confusing time for investing.  I am seeing so many indicators contradicting themselves.  During these confusing periods, I like to revisit my roots of investment analysis.  These roots include Zweig (above), Peter Lynch and Benjamin Graham.  The confusion arises from high debt levels, weak dollar, rising interest rates in a low rate environment, rising real estate prices, etc.       

4.    Fred Hickey in the January edition of The High Tech Strategist had the following interesting comments.

        a.    " A good contact told me that Amazon's sales for the holiday period were not that great".

        b.    He seems to be concerned with an inventory buildup.  He sites such companies as Solectron, Jabil Circuits, Merix, Xilinx and Altera.

        c.    He feels the U.S. consumer demand is slipping, and feels it has been slipping since the tax refund checks were mailed in the middle of last year.  Feels that electronic sales over Christmas were worse than expected, leaving indigestion, which shows up via, excess inventories, falling prices and declining factory utilization rates.

        d.    Feels the housing market "has begun to wobble."  He sites the alleged supply of unsold new homes in inventory grew to a 25 year high.

        e.    Mentions that Bush's promise to halve the deficit, will lead to reduced government technology spending, which in turn will hurt the industry, since the US government is the industry's largest customer.