Stock Evaluation from May 20

I'll keep evaluating the picks throughout the year, but heres the progress after a month and ten days.

Dow jones industrial average over this period:  -2.8%

Bullish:
BGY  -5.4%
SIVR  -3.3%
AAPL  -0.2%
KMP  -2.9%
ABB  -5.2%
CH  -0.9%
CCJ  -8.1%
MON  -1.0%
LYSCF  -22.0%
RIO  4.6%

Average: -4.44%

 Bearish:
MS  -6.6%
LNKD  -18.0%
JPM  -9.5%
PFE  -1.2%
GS  -4.3%
ALK  -1.9%
NOK  -36.5%
RIMM  -53.9%
ARO  -4.6%
SHLD -2.3%


Average:  -13.88%


Net Gain (shorts + buys):  -(-13.88)+(-4.44) = 9.44%

Lots of movement in the last month or so.  Somewhat dissapointing that I didn't beat the dow with my bull picks but oh well, these are long term picks theres plenty of time.

Banks and Bernankes

An article on marketwatch today highlights the reasons I've been positioning for U.S. banks to take a tumble.  It spot on nails the two reasons I've been short banks since the beginning of the year:  1. A growing public opinion of disapproval towards stimulus and Bernankes seeming unwillingness to support QE3 (The two seem related, theres a lot of public and political pressure against a QE3).  2. National debt cieling disagreement.  Uncertaintly and turmoil in this matter may bring the banks to their knees.

The article also cites the greek debt crisis, which completely escaped my mind until it took a bigger spotlight in the news a month or so ago.  If I could find the numbers on how much greek debt our banks own, and who owns what portion, that would be perfect. 

Heres the article:

http://www.marketwatch.com/story/three-financial-funnel-clouds-ahead-2011-06-28

We have a specific timeline, and a reasonable idea of what the decisions will be when each deadline comes.  It sounds easy, but I'll have to follow up on this post in August to evaluate theses assumptions.

Spotlight on Lynas Corporation

Lynas Corporation, a budding rare earth metals company, is full of investment opportunity. 

Anual Report for 2010:
http://www.lynascorp.com/content/upload/files/2010_Lynas_Corp_Annual_Report_FINAL.pdf

Investor Presentation, updated May 2011
http://www.lynascorp.com/content/upload/files/Presentations/Investor_Presentation_May_2011.pdf


In my opinion, the stock is currently undervalued and represents the current value of the company without considering earning potential.  The good news is that Lynas corp is beginning mining operations and it shouldn't be long before that earning potential is realized.  Even without growth rare earth demand, Lynus looks to take some significant market share from Chinese rare earth suppliers.

ticker: LYSCF

Internet Tech Stocks Will Be Among the First to Fall

It's not that I have anything against the Pandoras and Linkedins of the world, but its a fantasy thats not made to last.  Recent internet IPO's have created a lot of exitement in the markets ... deja vu?  The growing weight of an unpayable debt burdon and flimsy earning potential of these stocks should be enough to bring them down in the long run.

Bernanke forcasts growth in 2nd half of year, other updates

Ben Bernanke spoke today, explaining that growth for the year thus far has been slower than expected, noting high oil prices and the tsunami in japan as reasoning for the mediocre performance.  He then goes on to say that the outlook for the second half of the year is good, and forecasts strong growth.

http://www.youtube.com/watch?v=-3WRAG8GqEo

Rarely does the chairman get down to specifics, but we will remember this growth forecast and hold him reasonably accountable for his words.  

Something else to take away from his speech is the repetition of terms like "monitor", and "watch closely" that Bernanke uses superfluously to make it seem as if the fed has control over the economy.  I'm at a loss to explain why the FED thinks it has a mandate to control the economy.  Does stimulating our way out of a bubble deflate the bubble? Or does it just prolong the suspense?  I suppose we will find out soon enough.