Wednesday, December 15, 2010

More Moves and Reasoning

Yesterday I described the budding "screaming buy" market for municipal bonds. That doesn't mean any municipal bond. You have to use the best weapon you have - your mind. The human brain is man's greatest weapon and resource. It always stuns me that so many don't use it for investing. Many people spend more time analyzing the best buy for a new washing machine, but when buying a stock costing 10x as much, they ... just listen to a bloviator on TV or a big mouth at the "country club".

One should read the news and follow some of the financial commentary - they bring interesting outlooks and have some hard-to-find data on places like China. I listen, but don't obey like a trained dog. I listen and let the ideas bubble around my head and think. For example, traveling in Alabama I saw an interview by Jim Chanos, the famous short seller. About Chanos - he's, of course, a perma-bear of sorts. But he often has real facts to base stock specific thinking. Often he's early, and yes, he can be wrong. But listening to his data and facts helps.

I listened to what he had to say about the huge real estate building booms in China. Hmmm ... does "real estate boom" ring a bell? Those always blow up eventually; the one in China has gone on ... for years. Combine this with what we know about Red Chinese corruption and ... the little birdie is chirping. Watch out stocks requiring more and more growth in those areas. They've had a multi-year run. Don't be a pig.

Mrs. B's Sky Fund (a portion of The Krypto Fund manged for educational purposes by Mrs. B with my help) had bought CLF, an iron ore company, and MT, a steel company, in the summer when the beefer* boobs trashed them in a Viking raid on Euro fears. CLF now shows a 50% profit and MT shows a 25% profit. But their charts seem to indicate struggling patterns and those stocks are very, very dependent on Chinese demand for building buildings. Uh oh ... time to take some profits. Those were sold yesterday.

[*beefer = Big, Evil Fund - a financial Viking - scum of the investing world, bane for individual investors & traders, looters and piranhas in the markets].

Now consider AAPL - Apple. That stock has been a huge winner for Sky Fund, and is now a rather large position. It's up way over 100% from the dip buy of Mrs. B a while ago. My normal rule is to sell 1/2 of a stock when it's doubled. Then we have the remaining 1/2 for free. APPL has had lots of good news and I really like the company; its products are revolutionary. But ... what's next? Why take a big risk? The beefers love to raid that stock, particularly after earnings. January will be prime raiding season. And without more new products and good news, the beefers will surely bail out. Time to sell that 1/2 and get the remaining ride for free. That was done yesterday.

This money goes to cash to fund municipal bond purchases. I expect to be a steady buyer. Every morning Mrs. B and I will be looking over lists from her broker to try to buy good bonds. What's a good bond in my opinion? That's for a later blog post.

Word of the Day

"Preternatural" - adjective [$10]
Preternatural means outside the ordinary course of nature; supernatural.
Sentence: No preternatural skill or knowledge is required to be an above average investor. Just follow simple rules such as for Krypto Fund, pay attention and think. You'll be kicking beefer butts in no time.

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