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May 9, 2007
Cara’s Daily Board, Wed., May 9, 2007, 9:28 AM
Before we get into the fray, let me start by reporting a Precious Metals Alert. I decided to hold off reporting earlier until I could see what was happening in the metals spot market this morning. The PM’s are getting the “c-section”, which is to say, this is the start of central bankers patting themselves on the back.
Fed Day (2:15pm ET) and international markets are enthusiastic, but, except for the PM’s, for the most part are quiet leading up to the news. Thursday morning will be further news from central banks in UK and Europe.
Yesterday in the US started with a sharp decline in stock prices, but soon after turned bullish and stayed that way through the session. The DJIA closed just -4 points short of completing a new all-time record of 25 gains in 28 sessions. The NASDAQ Composite gained less than a point, so call the market even on the day.
The DJ Transports gained +1 pct on strength in the railroads (CSX, GWR), truckers (JBHT) and logistics services (R).
The Dow Utilities dropped -0.5 pct from Monday’s record high close.
More deals yesterday and this morning. No company is safe, not even General Electric (GE). And the Wall St. Journal today is reporting that possibly three or more private equity groups could bid for wireless carrier Alltel Corp (NYSE:AT), which at 65.20 has a market cap of $22.7 billion. GE of course is the giant, having a market cap of $382.2 billion. The word is that GE split into pieces would be worth significantly more.
Yesterday, there was a report that giant steelmaker Arcelor Mittal (NYSE:MT) is planning a $40/share bid for AK Steel (AKS), which fired up the latter stock by +9.2 pct.
Then there is a story headlining today’s largest newspaper in Canada (the Toronto Star) that says Canada’s Prime Minister Stephen Harper figures the bid for Alcan (NYSE:AL), one of the country’s biggest companies, by Pittsburgh’s Alcoa (NYSE:AA +2 pct) must be good for Canada.
I think “Stevie”, as he is known in Texas (not even his wife calls him that), must have just gotten off the phone with his pal George Bush. So maybe Stevie can get Pittsburgh to cough up the massive shortfall of the employee pension fund, which just happens to be much bigger than the one at Stelco that an idiot judge ruled was sufficient cause to put that company under his court control until his now law firm could swing ownership to Friends & Family.
Politics sucks. And when judges get into the game, there isn’t any end to my scepticism.
Btw, that judge accepted Stelco’s “bankruptcy” by valuing the iron ore and land assets at book, which is a fraction of the free-market value they are today – with no change at all since they departed his court – and that my friends is why suitors are lined up to pay billions for the so-called “new” Stelco.
So most of these M&A deals are set-ups, and, well you know, the dead fish stinks from the head. The aroma of the marketplace today has simply become overwhelming.
Canadians can thank “Stevie” for the Business Trust fiasco, and for a few more gaffs. Unfortunately, when he sat in Parliament as a power-hungry leader of a third-rate party, nobody ever conceived the storyline would be that “Stevie” gained a frend in Texas who would show him how to turn Canada into his personal fiefdom.
As I say, politics sucks. And maybe the politicians of the country who read this blog will demand that any foreign suitor for Alcan first bring that pension liability up to level and then repay all the federal and provincial tax money that has gone into that dog of a company. Why should the workers and the Average Joe in Canada get stuck putting money into the pockets of others when trying to get to the end of the month with enough funds to keep wolves from the door is the reality for most Canadians.
By now most of you know the story of my associate Mr. Platinum. You may not know that he hurts from Stelco. So at the PDAC, he asked me what company in Canada would be next. I told him Alcan. And he replied, “Hmmm… you might be right.”
Three weeks ago, I was walking by his “home” in the financial district and saw him through the window having lunch. So I invited myself in. “Don’t sit down” he said, “my associate is just using the phone. He has to catch a plane in an hour and I have to sell him a uranium company.”
All smiles, so I added that after my next meeting I would return. “No, after this fellow leaves, I have another one waiting. He also wants to buy a mining company from me, so I’ll be busy.” I left him alone to finish lunch. I smiled that the market was so hot that people were lined up to buy, and here was one of Canada’s giants of the mining industry waiting for them to come to his table to buy. And he was selling.
At PDAC this year Mr. Platinum said to me something really strange. “Do you know how screwed up this country is?” He used stronger language. “I own an island in the far north (I also know he owns a giant helicopter and a former icebreaker or minesweeper ship to get there), and nobody can tell me who has jurisdiction. I called the feds and they say it’s a territorial matter. The Territory says it’s a federal matter. Hmmm, I’m thinking of selling it to a foreign nation. Do you see my point, Bill? We have no security in this country with government that is incompetent.”
I passed that story along shortly afterward to Prof. Samantha Arnold, who is an expert in the country’s northern border security. Samantha is the sister of the late Al Arnold.
I could go on here, but my point is that readers ought not be sceptical at my remarks about the state of the nation, either Canada or the US. We have passed the responsibility of leadership to power-hungry groups who work in the most clandestine fashion to enrich themselves at our expense. Nobody seems to care unless there is an immediate payback for their Friends & Family, leaving themselves out of the mix for now for reasons of public optics. Like Stelco, I call it engineered fraud.
As this market melt-up continues, the rich will get richer, and the rest of you will wonder why. I’m telling you why.
After beating earnings expectations yesterday, the heavy construction/engineering stocks (MDR, FLR, ENG) were strong. Capex is a story that you should be watching. And while you are, please check the term ‘crowding out’. As the demand for capital from the private sector increases at the same time that rocketing government budgets also have to be financed, the interest rates will lift. But, you say, the economy is slowing. Well, that’s Stagflation. Learn to live with it.
1970’s redux.
Today at 2:15pm ET, there will be the FOMC decision and guidance from the Fed. Other central banks will follow tomorrow, eg, Bank of England (7:00am ET), and the European Central Bank 45 minutes later.
All eyes around the world are on the Fed's FOMC report..
Remember, whomever is selling, like we saw yesterday at the open, “is also redeploying that capital in other market sectors, industries, and parts of the world”. I wrote that early yesterday, but it will apply until interest rates start to hike and cross a tipping point.
The NASDAQ was basically flat.
Mostly green arrows.
Some green arrows, but the action seems muted. Awaiting the central banks to give us a c-section.
The $USD was strong earlier. At about 7:00am ET, it was 82.004, then it dropped a bit, to 81.961 at 8:11am.
As I wrote yesterday, “These are futures traders moving the market in advance of expectations there will be a round of central bank dogs barking this week. (But) As we usually discover later, it turns into a case of puppy love. The Fed does nothing much and the traders are encouraged to stay the bullish course.”
U.S. Treasury Bond Jun. 2007 contract
The chart of the T-Bonds shows drop in prices as yields have lifted ahead of the Fed.
Early yesterday I wrote, “Yields (had been) dipping because of too many lousy economic datapoints hitting the market. Not enough to scare equity traders mind you, but enough to satisfy the bond traders. The fly in the ointment will be the language of the central bankers this week. Talk of speculation (and inflation, although that’s not the problem) will drive up yields and the prices will fall back again.” Now you see how my crystal ball works.
The e-Mini Jun-07 oil contracts are up to 62.275, which is stronger than the past couple days.
Problems in Nigeria, I suppose. I can’t believe the US “Strategic” Petroleum Reserves are being replenished.
Gold Jun-07 contracts on the NYMEX
This morning at 8.45am ET, spot gold is at 682.60, giving ground to yesterday’s 684.70, and the 685.03 when I first checked in this morning.
Careful not to get caught up in the spin city stuff from Washington.
Spot silver was at 13.39 at 8:45am ET. When I checked in earlier it was 13.43 and falling from 13.50 earlier.
Spot platinum was up to 1332 when I checked in earlier about 6:30am. At 8:45am it had dropped to 1323. It was 1327 at 6:30am ET yesterday, after hitting a high earlier in that session at 1332.
Spot palladium is down. As I say, traders in all the precious metals are awaiting word from the Fed, and then the spin, and finally the truth.
$CRB stayed flat at 308.90 from 308.92 at the close the prior day.
Crystallex was going nuts yesterday. I reported my unbiased views and added some comments from sources. I’m starting to feel like the Burt Lancaster character JJ Hunsecker (I think) in a famous movie that depicted the life of reporter Walter Winchell (except I never had a sister!).
A reader wrote to plead more information. He said he and his wife had put ALL THEIR CHIPS (and more) on Red KRY. I couldn’t believe it. He wrote: “I have everything I own and then some invested in KRY… my livelihood depends on it… That said could I ask you off the record how reliable your sources are from what you posted today. Your response will go to my wife's ears and no farther.”
So I wrote him this reply:
Unfortunately, I cannot write something to one person and not everybody.
I don’t understand how anybody could roll the dice on one stock that has significant financial losses and absolutely requires the decision of a govt like Venezuela to be successful. That’s not trading or investing.
In any event, I have several fairly good sources outside the company who believe this deal will happen soon. If I didn’t I would not have added to the speculation today. Besides, the stock traded 18.3 million shares (US and Canada) today on a sizable uptick. That is not distribution. I truly believe the stock will trade at prices over US$10 before this is over.
Best, and good luck to you.
/Bill
The mind boggles.
A well informed reader just sent me this note.
Canaccord going hard on their institutional desk on European Minerals (EPM.TO C$1.42 last), trading at nav, 100,000+ ozs prod'n starting next year, and ppries in Kazakhstan.
Man!!! If they like THAT one...
The comparable of course is Western Goldfields (TSX:WGI and WGDF.OB US$1.96 last).
KRY is up between +1.1 and +2.5 pct already. The rest of the PM's opened soft.
Cara 100 Stockwatch
Here are the Cara 100 gainers in the previous session.
Interactive chart of the top 12 Watch List gainers
Silver Wheaton (SLW) was no winner yesterday!
Here are the top Cara 100 losers for the last session.
SLW topped the Loser’s Board. From first to last in 24 hours.
Interactive chart of the top 12 Watch List losers (Interactive link)
Here are the 52-week highs and lows in the Cara 100, set in the prior session.
Only four of the Cara 100 companies hit 52-week intra-day stock highs yesterday, down from 14. Zero lows again.
Here are the interactive charts of up to a dozen stocks with (unsmoothed) RSI-7 above 70 and below 30, from “Chris”:
There are now 5 Cara 100 Company stocks that are below 30 on the Daily RSI-7 (up from 2) versus 17 above 70, (down from 29), using data from “Chris” – which he takes from BillCara2.com, which is not smoothed like David’s data, which he takes from Worden.
Here are the current Cara 100 RSI-7 values, sorted by highest and lowest, first by Daily values and then by Monthly, prepared by “David” using TC2007 (Worden) [based on Welles Wilder smoothing], which is slightly different than the RSI-7 formula used by “Chris”.
Here are the stocks in the Cara 100 trading at extreme values:
There are various sources for up/down grades by broker-dealers. One is at Briefing.com. Traders ought to check everyday for ratings changes. That website updates in the morning.
Wrap up:
Have a great day, but please don’t listen to that nonsense from central bankers about inflation when we all know by now they are referring to speculation, which they have induced to help Friends & Family. The party goes on after we get through the huffing and puffing of the c.bankers.
PM’s down for a short time; then up sharply. My crystal ball tells me everything I need to know.
Posted by Posted by Bill Cara on May 9, 2007 09:28:13 AM | Category: Cara's Bull Board
Discourse
Apologies for being a laggard, I am still on yesterdays thread. As a frequent reader of the comments (and only a rare commentator), I check the main Bill Cara page a few times a day when I am close to home. I follow comments trying to learn as much from them as I can. When I find a thread that really grabs my attention, I can visit the comment section again and again. On a day when I exit out after reading, for example, 43 comments, then return and find there are now 85 comments, it pays to be fleet of foot. What would help me would be to have the comments automatically tagged with consecutive numbers. That way when I get back to my favourite site, I can quickly scroll down to number 44 and carry on....... They don't have to be big "in your face" numbers, discreet would be good.
Posted by: nickm ![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
May 9, 2007 9:52 AM [link]
http://www.atimes.com/atimes/Global_Economy/IE09Dj01.html
I highly recommend your reading Henry C K Liu's article referenced above about the liquidity boom. I think that it puts some of the pieces together in an understandable mosaic.
Re: I don’t understand how anybody could roll the dice on one stock that has significant financial losses and absolutely requires the decision of a govt like Venezuela to be successful.
With all this melt up, bottom calling in the housing sector, and unfair edge the elite have, it all seems like gambling these days. When i catch clips of Jim C on tv, the noise triggers the same reaction to my brain as the clanking of coins at the slots.
But I am looking fwd to Bill's insight after his lunch with Western Goldfields Mgmt. Have a great day everyone!
Posted by: NYUgrad at
May 9, 2007 10:03 AM [link]
While it is really none of my business, I would strongly suggest that no one play red/black roulette with their future and should consider closing any such position immediately.
For more color on just how risky Venezuela can be, please read this article from another pro written on May 7, 2007, and please pay special attention to the summary. All the best.
Venezuela’s Inflation Problem
Author: Monty Guild
HUGO CHAVEZ HAS AN INFLATION PROBLEM, AND IS BECOMING INCREASINGLY AUTOCRATIC
Last year, Venezuela’s inflation rate was 17%. This has of course been expected and is what happens when you nationalize a lot of industries. Nationalizations, on a global basis, have historically caused corporate efficiency and productivity to decrease as unsophisticated and unmotivated, politically appointed bureaucrats replace seasoned professionals as the managers of the nationalized companies and industries.
Production slows, costs rise and the profit motive is replaced with the "do less, but still collect the pay" motive. For example, since the nationalization of the Venezuelan oil company a few years ago, oil production in Venezuela has fallen substantially. Many experienced Venezuelan petroleum engineers and geologist have left the inefficient, bureaucratic and corrupt Venezuelan national oil company and moved to jobs in Canada, the U.S., Europe and elsewhere in the oil producing regions of the world.
Hugo Chavez has wasted Venezuela's money in the form of handouts to foreign countries to buy political power and influence in Latin American politics. Now, he is slowly strangling the economic base of his country by nationalizing and threatening nationalizations of many industries including steel, cement and others.
WILL THE LATIN PATTERN REPEAT ITSELF IN VENEZUELA? WE THINK IT PROBABLY WILL
Outside of having natural resources, Venezuela is competitive in nothing. If Venezuela follows the pattern that has been exhibited by other formerly prosperous Latin American countries once they fell into the hands of a demagogue, the outcome will look something like this:
1. Inflation will continue to rise.
2. Chavez will blame the companies who are passing along cost increases, he will nationalize them taking over the assets for a fraction of their true value.
3. He will operate them inefficiently which will lead to further inflation and more shortages.
4. Eventually, the poor who elected Chavez will realize that he did not keep his promises. They will bring in another strong man, who will offer new, but similar programs.
5. The country will careen from one egomaniac dictator to another until all of their natural resources have been eaten up, and their business infrastructure damaged.
6. They will look back in a few decades and see the same type of destruction that has been visited on so many formerly strong Latin nations before them. It is a cycle of power and prosperity to poverty and second class status.
SUMMARY
With Venezuela's recent expropriation of all foreign oil companies’ fields, we look for oil production in Venezuela to continue to decline. Inflation will drive the standard of living down. The educated will continue to leave the country. Therefore, we would avoid all investments in Venezuela.
In a global environment of tight energy supplies and increasing energy demand, we expect oil prices to continue to rise due to Venezuela’s declining production. Also, high inflation anywhere means higher gold demand and higher gold prices, especially in that country.
Posted by: Telestar3d at
May 9, 2007 10:03 AM [link]
Not going to judge the reader with all his money in KRY, as it's his prerogative to roll the dice. Brings to mind an interview I came across many years ago about diversification: I think the point this investor made was that diversifying was a great way to maintain wealth, but in order to accumulate wealth, you need to concentrate your bets early on. I don't necessarily agree. Good luck.
Posted by: 2nd_ave at
May 9, 2007 10:03 AM [link]
MU(+.33) and SNDK (+.44) up doing well in the morning
Posted by: JogyP at
May 9, 2007 10:07 AM [link]
More about the impossible position in which analysts operate. A fundamental view of the business is quickly crushed by liquidity, buy back and dividend increase (the latter being the sole LT value creator for investors):
"Less than a week after we downgraded IBM on weak US spending and no near-term catalysts, IBM changed the rules by initiating its largest value creation moves in years, forcing us to re-think our change. As a result of IBM’s accelerated buyback program likely adding at least $0.08 in 2007 and over $0.20 in 2008 even before the coming tailwind on pension expense reduction, adding another $0.25+ to 2008 with smaller increments to earnings in future years, we are moving our rating back to Buy from Neutral. IBM is not particularly exciting but 13% and 16% earnings gains in 2007 and 2008, respectively, should keep a bid to the stock."
Excerpt Goldman Sachs Research.
Financial engineering to the rescue of tepid business conditions...
JML
Posted by: Jumble at
May 9, 2007 10:13 AM [link]
NickM--Every comment is posted with a time. Why don't you consider using the time stamp as your consecutive number?
"PM c-section"?
I'm slow, can someone explain Bill's characterization? (gutting?)
Posted by: jasper at
May 9, 2007 10:21 AM [link]
RE:Leisa@10:19am - you beat me to it - that would be my recommendation (time stamp) and is how i maintain my position on the comments.
Another idea is posting the time stamp next to the user name when replying (or just the time stamp).
Posted by: sergio at
May 9, 2007 10:22 AM [link]
NYUGrad, I'm in the exact same boat. I can't believe what is going on. (not to mention the blatant similarities between today and the late 1920's which I'm discovering in one of the books I'm reading: Gold Diggers of 1929 by George Fetherling).
Fortunately I just moved and have chosen not to get a TV for fear of 'just glancing at CNBC from time to time'. Recently I'm only reading Bill's daily reports, comments, and a few other sites, financialsense, etc. It all seems a crapshoot. Even at my new place of employment which is by no means financial-related (fitness), I have overheard people talking about the markets, with a few self-proclaimed fountains of knowledge wowing the audiences or leading the discussions. I tend to steer clear and bite my tongue (not that I'm by any means an expert). Granted, we all have our 'sources' of information, and everything I hear or try to explain to people I care about comes from somewhere. To each their own. My question is, when does the roof cave in?
Bill, your clairvoyance amazes me. I remember when you posted of this 'market melt-up' and I sort of had my doubts. This is because I was caught up in my new found amazement of the PM's, which I 'knew' were going to skyrocket. It's amazing the amount of noise that happens on both sides of the fence.
Looking forward to the book, the fund, and being a part of the Microcap team.
Best of health to all the rare level-headed individuals who recognize this blog for what it's really worth.
Posted by: Eric at
May 9, 2007 10:25 AM [link]
I read that IBM is supposed to lay off 100,000 workers... I'll believe that when I see it.
http://www.theregister.co.uk/2007/05/05/ibm_cringely_100k/
Project LEAN indeed!
What does the Crystal Ball say on the price of Oil? (USO) Chart looks to be at an interesting point.
Anyone looking at Moly (MLY.TO) today?
I agree with the position that you need to make strong bets to make big gains, and diversification is just your insurance. The concept of 70% stock/30% bonds doesn't really make sense right now.
However, I don't believe that you have to risk your own money to make that kind of money.... don't bet the farm on a piece of paper.
Sell out as much as you need to keep your gains & keep your house.
A guy gets home from work one night and hears a voice. The voice tells him, "QUIT YOUR JOB, SELL YOUR HOUSE, TAKE YOUR MONEY AND GO TO VEGAS."
The man is disturbed at what he hears and ignores the voice. The next day when he gets home from work, the samething happens. The voice tells him, " QUIT YOUR JOB, SELL YOUR HOUSE, TAKE YOUR MONEY AND GO TO VEGAS."
Again the man ignores the voice, though he is very troubled by the event. Every day, day after day, the man hears the same voice when he gets home fro work, " QUIT YOUR JOB, SELL YOUR HOUSE, TAKE YOUR MONEY AND GO TO VEGAS."
Each time the man hears the voice he becomes increasingly upset. Finally, after two weeks, he succumbs to the pressure.... believing the voice to be that of God. He does quit his job, sells his house, takes his money and heads to Vegas.
The moment the man gets off the plane in Vegas, the voice tells him, "GO TO WYNN'S CASINO." He hops in a cab and rushes ove to Wynn's. As soon as he sets foot in the casino, the voice tells him, "GO TO THE ROULETTE TABLE." The man does as he is told. When he gets to the roulette table, the voice tells him, "PUT ALL YOUR MONEY ON 17."
Nervously, the man cashes in his money or chips and then puts them all on 17. The dealer wishes the man good luck and spins the roulette wheel. Around and around the ball goes. The man anxiously watches the ball as it slowly loses speed until finally it settles into number . . . 21. The voice says...... "DAMN!"
I like Drew Carey's verson better...
Titanium producers RTI, ATI, and TIE making big moves in the last few minutes.
Long RTI
Posted by: JogyP at
May 9, 2007 10:32 AM [link]
Reference putting “ALL THEIR CHIPS” on KRY, the “reader” should understand it’s his & her decision and THEY ARE RESPONSIBLE for the gamble, not Bill Cara or anyone else.
If things work out, fine; count your blessings. And realize, this does not happen repeatedly in life.
If things don’t work out, look in a mirror. Don’t look to blame someone else.
The reader’s remarks reflect anxiety, but it’s probably unlikely they will heed others’ suggestions to close out the position. Perhaps, taking smaller profits on half the position may be more acceptable to them, unless their greed overwhelms all decision making.
On another front: RE:Leisa@10:19am - you beat me to it --Sergio
Ditto---I use time stamp also.
Posted by: Seamus at
May 9, 2007 10:42 AM [link]
True life story, either last summer or the one before: a kid from Great Britain flew to Vegas with the intention of placing his life's savings (about 150K) on RED. He was accompanied by his fiancee and his Mom (and supposedly had their blessings). Fortunately, he won the bet.
Posted by: 2nd_ave at
May 9, 2007 10:48 AM [link]
Uranium company USU flying today on high volume...
Posted by: 2nd_ave at
May 9, 2007 10:53 AM [link]
I think this dialog helps people like the couple with all their eggs in a KRY basket. Those with experience in this area (asset allocation) need to speak up and offer a helping hand. It's true that consolidation can lead to big returns just as it can lead to annihilation. But all one's eggs in KRY is crazy talk.
Maybe someone should point them to the Cara PM20 and maybe four or five other sectors.
I would be checking BillCara2.com to check out which sectors are hot as well and maybe spread the risk amongst five or more sectors. Since this melt-up makes most everything "basic" hot, five or six of those areas would diversify and still outperform....until the meltdown.
Personally I invest for my entire family, so I feel the pressure like a broker. I never put more than 20% of the portfolio in any one asset other than cash. I had a 20% PM position until a while back and pared it down a bit. 100% in KRY would make me cry alright. I would never sleep.
It would be interesting to see how different genders see this. I think men inherently take more chances and from what I've seen, women are far more methodical and fundamental in their approach.
Posted by: Craig at
May 9, 2007 10:58 AM [link]
I'm sorry, but putting your all your money and more on KRY is crazy. At least take partial profits in every rally.
For your own health I would not take so much risk. Some diseases have psychological causes. Anxiety can break you down physically. I was just discussing this with my wife this morning.
Although there are some people who physiologically can take extraordinary risk without feeling the pressure. They tend to do a lot of extreme sports.
Posted by: moab at
May 9, 2007 11:06 AM [link]
For that person all in and more, check out derivatives. you can use leverage to your advantage. So take some of your gains off the table from the recent run up. invest a much smaller portion in July or October call options.
Bill has options 101 right here
http://www.billcara.com/options/
I read that financial stress is the main cause of divorce. if you really have put more than you and your spouse can afford to lose take the gains now. put a much smaller portion of it on call options. If/when kry gets permit you still make a lot of money!
Posted by: NYUgrad at
May 9, 2007 11:13 AM [link]
MPEL, Grand Opening of Crown Macau on May 12, 2007.
A nice short video for your viewing pleasure.
Posted by: Telestar3d at
May 9, 2007 11:18 AM [link]
Since we are using roulette as an analogy, take your house/marriage/life savings off RED. Take a smaller stake and play inside. Same idea of leverage where hitting a number pays 35 to 1.
Posted by: NYUgrad at
May 9, 2007 11:20 AM [link]
Grandfathers who have been through the trenches are the best people to listen to when it comes to investing. My grandfather started me investing in gold when I was 10. I have never stopped and never looked back. Then I moved into real estate and have never looked back. I maintain a portfolio of stock with no more than 10% in any one stock.
My grandfather gave me this advice on investing.
Never borrow money to invest.
Only invest money you can afford to lose.
Have nerves of steel.
Have no fear of failure.
By the way my wife also sleeps well at night.
Posted by: Horatio at
May 9, 2007 11:22 AM [link]
Put me in with the majority as I also like this format just fine. If some want a chat board, there are plenty of those available already.
Bill (I believe), nice call on DNN. Another one that looks to have moved ahead is USU. Perhaps both are getting some love due to the BHP-RIO rumors....
Posted by: redclaydawg at
May 9, 2007 11:25 AM [link]
re: speculation
Our eyes can focus on one thing and everything else fades. An exaggerated and disorted process of "eyes on the prize." Like the athlete that can only see the goal line. One day one hears a mad man say google will go to the moon, i need you to buy goog. And, wha la, it triples. The next year one reads a wise man says KRY will be the stock of the year. Yeah, I want to be aboard that one, I missed the last, these guys are in the know. Out goes the window of all the supporting rules that even the Mad man holds dear. I believe that based on our needs we can distort the full message. There are so very many balls to juggle in the investing game some of us forget and drop a few without even knowing it.
ps. what does Bill's characterization "c-section" mean in his opening remarks?
Posted by: jasper at
May 9, 2007 11:31 AM [link]
USO dropped & daily RSI is below 20 after a positive oil inventories report.
However, the oil inventories only increased by 400,000 barrels... while the Nigerian bombings took up to 200,000 barrels a day out of the pipeline.
Is there a discrepancy here?
I wonder if BHP's executives and board will file a restraining order against I-bankers for unrelentless harassment. "You should buy Alcoa". "How about Rio Tinto?" "Why not sell yourself?"
My two cents (if they happen to peruse Bill's blog): combine AA/AL/RTP/BHP in a quick series of mergers and sell the package to private equity for $400bn+. That could soak up some of the excess liquidity in the market overnight.
JML
Posted by: Jumble at
May 9, 2007 11:46 AM [link]
ALOHA !!
The way POG is being ripped I suspect the FED will have not so happy news for US Dollar fans! Like clockwork 9 out of 10 times they always take gold down before an important "fraudulent" announcement!
YOUR TAX DOLLARS AT WORK !!!
GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...
Posted by: kaimu at
May 9, 2007 11:50 AM [link]
Thank you, Leisa!
Posted by: jiggstoo at
May 9, 2007 11:56 AM [link]
A DOW THEORIST SEES AN "UNPRECEDENTED WORLD BOOM"
After 50 years as editor of Dow Theory Letters, and one of the oldest investment newsletters worldwide, the bear of all bears, Richard Russell, has capitulated and is now playing for the other team. Bill, what is your take on this?
Posted by: onlineaces at
May 9, 2007 12:00 PM [link]
onlineaces -
Check yesterday's comments for Bill's take. I remember RR went bullish days before February 27th because of the confirmation of the bull by Dow Transports.
Posted by: moab at
May 9, 2007 12:13 PM [link]
Buybacks:
I have real difficulty in seeing the goosebumps that people get when stock buybacks are announced. A company is doing nothing more with its core business but is deploying excess cash to buy back stock. In Leisa-land, the numerator still matters. Don't people still care about absolute revenue/earnings growth without the machinations of the denominator? You still have the same pie, it's just getting cut differently.
ALOHA !!
I have often mentioned the low inventories of the base metals. For the first time I am posting a chart showing how low essential food supplies are based on current consumption. Granted that an economic crash can lower demand for metals but when it comes to food it is not the same. The choice between buying a new I-Pod or eating is a "no brainer" for most "normal" people!
This chart shows that food supplies in terms of grains is at 1960s lows and in particular wheat is at historic lows and looks as if it is at a pivotal stage to break lower.
Link: http://www.nowandfutures.com/download/ag_consumption_weekly_supply1960-2006(grains,wheat).png
.png){kind=link}
As Katrina pointed out in a way no politician or FED official could spin supply lines are tight at best. The industry standard of FIFO(First In First Out)leaves little excess invetories and to my knowledge there is no "Strategic Wheat Supply" in the USA or anywhere in the World. The population explosion demands people be fed by their governments, even dictators are not immune. Having a three day supply line for US goods does not instill a lot of confidence. Depending on FEMA would be foolish.
The other side of the coin is why producers are not keeping up. I believe in one simple word "INFLATION" ... Monetary inflation creates goods scarcity, because producers in an effort to keep profits will cut back inventories of all essential production materials. Rapidly rising costs of production and government attempts to cap prices for consumers do not bode well. It is the classic "Catch 22"! The one and only culprit is ... you guessed it ... THE GOVERNMENT! No matter how they try to spin the bad news THE GOVERNMENT is at fault every time. They control the money supply with their henchmen at the FED. Consider eliminating the culprit for once instead of rewarding them with four more years!
Here are a couple Freudian slips of mine using the word "GOVERNMENT" ...
- COVERNMENT
- GIVERNMENT
Both seem appropriate almost every day!
Posted by: kaimu at
May 9, 2007 12:27 PM [link]
I wonder when Mr 100% KRY got in.
I'm 20% in KRY, but I built up my position from 1% at$2.76 many many months ago. I've sold off a little on spikes to 3.25+, and added more on dips back to 2.80. My average price now is 3. I've enjoyed the ride and gotten quite familiar with the price action of the stock
My motto is that you have to strike HARD when the right opportunity presents itself.
Posted by: traderray at
May 9, 2007 12:32 PM [link]
"C-section" comment has me puzzled also...I guess he's referring to some kind of emergency intervention on the part of the CB?
Posted by: 2nd_ave at
May 9, 2007 12:37 PM [link]
Leisa,
With a corporate share buy-back, I think that shareholders believe the weak hands will sell, leaving the strong hands to stick with the company. Kinda like Natural Law of Propagation of the Strong by getting rid of the quitters and losers who no longer believe in the company.
It could also be a Rule of Dummied Down Investors that if the Board of directors believes the stock is at a good enough price for the Company to buy, then it is good enough for them. And their confidence is fortified, and they say to themselves, "I'm going to buy some too".
Maybe it's a matter where some traders believe that the sellers are going to have more ammunition to buy back later after the share price dips a little, which would put an effective floor to the share price.
And then there are the quantitative trend followers who would be pleased because they believe that fewer shares outstanding will result in higher growth rates per share for revenues, earnings, dividends.
I'm sure books are written on this subject.
My question is how does anybody think that the balance sheet is strengthened when a company has insufficient free cash flow to buy back those shares and to increase dividends too, meaning they have to borrow to finish the deal.
Posted by: Bill Cara at
May 9, 2007 12:38 PM [link]
Bill,
I share the exact sentiments on buy-backs.
Who can honestly say a corporation is creating value for their shareholders by purchasing their stock back at high levels and issuing debt to do so?
Brian
Posted by: brianr at
May 9, 2007 12:46 PM [link]
Reg: "C-Section"
Bills c-section comment puzzled me. Then I thought about the c-section my wife had in January. So here is my interpretation:
PMs are going to be knocked down by the CBs selling in the next few days. And it will take a few weeks to recover.
Posted by: JogyP at
May 9, 2007 12:46 PM [link]
Regarding USO signals:
Are signals based on USO reliable at all considering its problems with keeping up with the market?
(see the WSJ article discussing some ETF's inability to track their target assets.)
Posted by: ableape at
May 9, 2007 12:50 PM [link]
Reg: Stock buy backs
Amazon's Most Profitable Business: Buying Back Its Own Shares
http://internet.seekingalpha.com/article/34114
Leisa:
I will defenitely have goosebumps if I see MRVL announces a stock buyback causing the shares to jump 20%.
Posted by: JogyP at
May 9, 2007 12:55 PM [link]
I've read that the USO tracking is questionable.
Malcom Fobes III probably has some work to do to get his 10% commission... :)
(I sold 1/2 my position today... should have kept my 42.90 position from Feb instead of buying in yesterday...)
Dear Everyone,
Beautiful weather we're having down here in the NY area. I just want to say, It's one thing for a guy with 20 grand total to put all his cash into one stock, and quite another for a fellow who's sitting on 20 million to do the same. Please correct me if I'm wrong, and I'm sure many of you will think that I am, but it becomes, in my estimation, less and less prudent to perform the action being referenced here as the total dollar amount increases. Ditto the decreasing age and retirement timeframe of the individual. So while it might be "crazy" for rich person to put all his eggs in KRY, the idea of a college kid rolling the dice with his 5 or 10 grand strikes me as being not so crazy. It's more sane because
A) It's a smaller dollar amount and
B) He's got time to make it back if it doesn't work out.
It sounds like a paradox of sorts, but this is my take. Many of the great speculative fortunes got their start because people took on "insane" risk, usually without fully understanding it. Read Market Wizards again if you've forgotton this.
Also, I have never diversified, or de-worsefied, as we call it down here. It's one of the benefits of being a small, independent trader. We don't have to diversify, we can (try to) ride the swiftest and the surest horses (hopefully) without review or supervision.
Investing in stocks is risky. Spending all your money, while amounting to a sure loss, and is less so.
And with apologies to Clement Clark Moore..."the children were nestled all snug in their beds, while visions of mining permits danced in their heads..."
Your friend Chris
Posted by: shark_attack at
May 9, 2007 1:00 PM [link]
EVERYONE, but especially PM and PM miner holders, commodity holders:
Put up a two year or eighteen month chart of gold, the miners or the commodities.
What happened last May (May 06) after the Fed meeting and the fed "going neutral"?
SEE that ski slope? BEWARE and set tight stops.
If it does that again I would be a buyer, but I'm sitting here with my finger on the sell button first and the release is hours away.
I'm expecting volatility to get a bit of a spike this PM.
I have a position in GLD and UXG
Posted by: Craig at
May 9, 2007 1:04 PM [link]
Leisa -
Re: buybacks.
I share your detachment from the canned excitement that swells throughout FinTV & analysts with each announcement. For me, buybacks are another figment of Wall Street's/executive managers' elaborate PR machine: "See how confident we are in our future. Our best investment is in ourselves - not our business, but ourselves!" (Could there be some narcissistic instant gratification here?).
If buybacks were limited to cash on hand, I wouldn't mind, but leveraging for stock buybacks is more worrisome in my book. As a part owner, I don't want a candy today in exchange of a later turn at less of the pie tomorrow. My risk just went up if I hold my stock and the prospects for future investment in the core business less bright. Financial engineering for cosmetic purposes is the last refuge when execs bow to the power of the traders. No real wealth creation, just a transfer that will frustrate the already gapping divide between Wall & Main Street. As FinTV perorates all day long as to the professionals' puzzlement with the missing individual investor, don't look further; create real value added, invest in the company's future and they will flock back. Drag them back through smoke & mirrors and you'll get another bad ending and years of distrust.
JML
Posted by: Jumble at
May 9, 2007 1:04 PM [link]
Bill,
How long do you think the c-section recovery period will be?
It is funny that all my miners positions are under water, except KRY (which I only hold due to peer pressure :-) )
Posted by: SiO2 at
May 9, 2007 1:25 PM [link]
My process of rapid free association thinking is a key feature of my creativity. As fast as I can think, I type. A lot of times, especially when rushed, I upload without editing. So what was in my head at the time is what you see.
Now, as I write those words, in reference to my earlier use of “c-section”, I am further thinking that a month or two ago, apparently somebody on a KRY board said that I was dropped on my head at birth. So maybe my thinking does not translate so clearly at times.
Look, I am being creative, that’s all. I was thinking that the price of PM was going to be cut, and I was delaying publishing the blog. I was thinking Dr. Bernanke and helicopter blades. Who knows what I was thinking? Sometimes I get into such a zone I don’t even know what I am doing or have done.
The first time I was aware of that was in 4th year Finance course at WLU with Dr. Baz Healey. He was a tough, demanding prof, the Dean of the business school who later became President of the University of Waterloo I believe. He always rated his students by #1, #2, #3, etc, and after one particularly hard exam, he gave me a #1. So I returned to my paper to see what I could glean as to his thinking. When I read that paper from start to finish I started to shake. I had to sit in a chair because the handwriting was mine but the words seemed to come right out of a text book. I was stunned at the content I had given. That’s called being in the zone. It happens. I try not to think about it.
Yesterday at 7:30am, I wrote about June Gold: “Although last traded at 690.4, I don’t know if the 690 support level can hold. We’ll see this morning. If not, I still expect a floor of 682 will hold. This morning at 7:28am ET, Spot gold is up to 684.70. It came off during the night from a 2:00am ET high of 688.45. The 687 support did not hold. Traders in all the precious metals are awaiting word from the Fed.”
Today just after 1pm, the June Gold hit a spike bottom of 677.7, moving quickly back to 682.0 at the moment. I think the 682 support holds for the June Gold.
All I’m trying to do is get into a zone where I think the price motion is likely to take us. Sometimes I’m right. One thing I know is that when I stop to think about it, and listen to the noise from talking noggins who don’t know a price from a company, I often go wrong. I need to be totally focused to be fairly accurate. Writing helps me do that because while my eyes are watching something else, I can be typing fast and letting my open mind speak my thoughts.
That in a nutshell is an explanation to c-section. ;-)
Posted by: Bill Cara at
May 9, 2007 1:27 PM [link]
COOL EXPLANATION,BILL
know exactly where you are coming from
Posted by: mbernold at
May 9, 2007 1:33 PM [link]
Re: MU
Looking good here, having recently broken a multi-month downtrend, and potentially breaking out above the neckline of an inverted head and shoulders pattern going back the past two and a half months or so.
Long MU, looking to add on pull-back to the neckline around $12.
Posted by: doug11 at
May 9, 2007 1:37 PM [link]
Bill,
Just keep the tap open and type. It works, it's not broken, and it's awesome.
Having to think about what C-section means is half the fun. Hell, I'm going to have to read the options page many times to figure it out.
If you had used "circumsized" I bet all but Leisa would know for sure and she would have a good idea what was meant.
Posted by: Craig at
May 9, 2007 1:40 PM [link]
Ouch! My gold stock watchlist has taken a haircut across the board today. Unfortunately, I own full portions of most of the companies on the list. What to do? Bring out the dry powder....mmm?
Fred
Posted by: lovesaves at
May 9, 2007 1:40 PM [link]
Reg: LVS
Bill you wrote:
"Yes, the LVS PE is too high (after all, the ROE is 21.3) and the stock has run from ~40 to almost $110 during 2006 (with the peak reached in Jan-07), but I’m not looking to buy at today’s price of $86.13. I’ll be patient and let the stock come to me a little more. "
LVS now at 78.33 with RSI7 at 22
http://www.billcara2.com/tkchart/tkchart.asp?stkname=LVs&px=&wt=0
Is LVS coming to you at these levels?
Posted by: JogyP at
May 9, 2007 1:56 PM [link]
Telstar -
Chavez knows that, economically, he's bulletproof. He threw most of the trained people out of his oil company, replaced them with loyalists - no problem! He'll develop Orinoco heavy oil, but on his terms and timetable.
He was born poor in the interior, saw that over half the people were poor - despite decades of oil $$$. The slums that ring Caracas didn't improve in the 70's, 80's or 90's. He rightly saw the way to move politically - to mobilize and benefit people like himself.
His aid to the region is a smart investment in his effort to counter the US and spread his views.
I think Chavez DOES have a huge need to create jobs. That's why I think KRY and GRZ will be allowed to operate, and why I suspect foreign investors who create jobs can be well received, if they play by Chavez' rule.
He is NOT your average dictator. He handily wins all his elections. A well-informed VZ friend estimated Chavez has only 10 political prisoners. He hosts a Sunday afternoon TV show where he tells jokes and sings ...
I bet the CIA is doing everything it can to bring him down. But I think he'll be around for a long time, and his influence will grow. BTW, did you that a VZ oil minister initiated OPEC?
Posted by: Jock at
May 9, 2007 1:58 PM [link]
Good afternoon, Bill.
Someone is making a big bet on fear and a market decline by june. More than 106,000 june 20 calls are being traded today. The vix today is 13ish.
Nibbled on some slw, ready to buy more. PAL having a great day. I suspect cramer has a hand in this.
Posted by: mogwai8myball at
May 9, 2007 2:15 PM [link]
Mark Hulbert's commentary today on gold: "Where have all the gold bugs gone? Commentary: Contrarians see bullish good news in their departure"
http://tinyurl.com/yvt28l
Posted by: RDR at
May 9, 2007 2:58 PM [link]
Leisa,
I have been reading Henry liu's comments for sometime,I find his comments interesting and useful as of course I do Bills on this site.Henry has his own site with many more informative articles and analysis.Worth a look I think.
Posted by: john uk at
May 9, 2007 3:05 PM [link]
Jock, the article that I shared was by Monty Guild and is his views. The reason I presented it was so that it could be processed by the all or nothing bet player in the hopes of re-evaluating the position.
The choice of diversification (>20) or concentration (<10)is an important one, but I know of no one who will be successful at this game by betting all or nothing consistently, in fact I will state that their on the road to ruin. The life of perhaps the greatest trader is proof of that, Jesse Livermore. Many of you already know that he blew his brains out after losing it all for the last time (he was bi-polar).
Chavez is a very smart man and knows what he doing. So was Ferdinand Marcos who plundered his country. The American government has also become a disfigured entity.
With KRY, we are all waiting for two events:
1) It receives the permit and prospers
2) Chavez to Nationalize Mines and the stock goes to cents on the dollar
That’s the bet, pure and simple.
Posted by: Telestar3d at
May 9, 2007 3:09 PM [link]
Agree, Telstar. Actually, "All or nothing" might well read Nassim Taleb, Fooled by Randomness, who shows how highly improbable events ("black swan events") wipe out traders. Risk control is critical to survival, whatever the bet!
On KRY/GRZ. I think the bet is less binary, and depends upon the political skills of managements. As they execute projects, there could be blowback. There will be uncertainty as to whether the Mining Law applies to them. (Chavez changed the rules of the game on the oil multinationals.)
A minister growls at KRY/GRZ, and the stocks (post permit) can tank too.
It's agony to trade KRY/GRZ, but I don't dare "buy-and-hold" them either.
Posted by: Jock at
May 9, 2007 3:30 PM [link]
Re Hulbert's latest on gold: He's been on the mark every time with contrarian calls on gold timing, usually within a day or two of publication. Of course, no one's right every time-once in awhile, the crowd will be right.
Posted by: 2nd_ave at
May 9, 2007 3:44 PM [link]
I received a letter from ANON. Here is the letter and my reply.
-----------------------------------------
My name is ANON
I am a recent reader of your blog and there are many things that are said that I do not know about.
I know it is an imposition but I would be most appreciative if you could advise me where on your blog I can get the top 20 gold miners the readers refer to.
I would also like to know your Cara Trading Advisors and
your profit-generating precious metals advisory services.
I know this is very naive but could you give some brief explanation about using your RS-7 system?
Thank you for whatever you can do.
-----------------------------------------
Hello ANON,
http://www.billcara.com/archives/2007/01/goldminer_picks_for_2007_fri_j.html
http://www.billcara.com/archives/2007/01/follow_up_on_gold_call_fri_jan.html
Cara Trading Advisors (Bahamas) Ltd is a company I recently incorporated in Bahamas with the intention of using it as my operating company for services to render to clients after I become registered to trade in securities there, probably in about 12 weeks time. To do that I require a certificate of permanent residency there, which is in process.
As to the quality of service I will provide at that time, I expect it to be very professional. The remark in my blog that you refer to was tongue-in-cheek. As readers know, I have been retired for over six years, and any writing I have done to this point is free and non-commercial.
The Relative Strength Index system I use is a very simple application of Monthly-Weekly and –Daily price series calculations of the RSI-7 (ie, 7 period averages). When the M-W-D RSI-7 falls below 30, I generally regard the stock as in the Cara Accumulation Zone (AZ) and when it is above 70 across the board I consider the stock to be in the Distribution Zone (DZ).
The AZ and DZ are the points where I encourage traders to focus on probable trading decisions to come. Then when the Daily RSI-7 crosses back up above the 30 line in the AZ, I call that a Buy Alert, and similarly if in the DZ, the RSI-7 falls below 70, I call that a Sell Alert.
Each trader has a different set of circumstances (risk tolerance, capital and information resources, goals and objectives, etc) so additional information might required after any Alert to Buy or Sell.
For myself I also use intra-day data for calculating other technical indicators like MACD and Stochastics. Furthermore, before Buying/Selling, I look at the same data for (a) the Company’s peer group and sector, and the broad market, and (b) my sense of the market action at that time based on a number of inputs. My objective is first to protect wealth, and then to exploit opportunities for gain, through share price trading.
In all cases, the prices I look at are for shares of quality companies, which I define as a Cara 100 company. Mostly those are peer leaders based on business model, our perception of the quality of management, the Company’s financial strength, and its operating margins and performance. I avoid trading in the shares of companies that I think have “issues”.
Depending on my assessment of the bigger picture of the market environment (ie, trend and cycle datapoints and my evaluation of those), I may dismiss the Monthly data series from my analysis. Depending on whether or not I believe a Bull market, for example, is mature, I tend to decrease the RSI level to say 68 or even a little less. Early in a Bull market, I would increase the 70 level to probably 75, possibly higher. The opposite applies for the Accumulation Zone.
This discipline will be described in depth in my upcoming book, “Lessons of the Trader Wizard” (perhaps available early July) as well as on my website www.TraderWizard.com, which is being updated at the present time. Subsequently I anticipate publishing a book on the “Trader Wizard’s Cara-100 Series of Companies", and another on the “Timing Tools of the Trader Wizard”. If things are really slow in The Bahamas this Fall, I hope to have these next two books ready to publish in about eight months.
I hope this helps answer your questions.
Please feel free to contact me any time. If time is available, I’ll try to answer, but anything I write in general terms like this reply I will also publish in the blog.
Thanks again.
Best,
/Bill
------------------------------
I should have added that as this website/blog and my other two websites get a make-over, I hope to make the navigation easier so that any reader will have an easier time finding these answers. If any reader has ideas that could help, why not send them to me either by comment in the blog or direct to BCara@BillCara.com. Thanks.
Posted by: Bill Cara at
May 9, 2007 4:51 PM [link]
Agree on PAL, sure is exhibiting the 'Cramer Effect'. Funny that USU exhibited the 'Bolling Effect', which means that yet again I missed a takeoff because of its muted follow-through....grrrr.
Catching up on my reading and our friend Richard Suttmeier has added to his growing body of bad indicators for our economy as reflected in the real estate & bank financing numbers. (RightSide.com)
The case for us PM lovers is only improving. Someone tell me if GSS is OK to add to the portfolio, the chart looks less volatile than others trading in its price range.
Posted by: redclaydawg at
May 9, 2007 5:16 PM [link]
Bill
Great response to Anon. As always, great educational information.
Posted by: jfs at
May 9, 2007 5:35 PM [link]
Bill,
Is there some list you maintain of people interested in potentially becoming clients of Cara Trading Advisors? I'm wondering if you have a rough time-table for when you'll have more public information available regarding your company's services and the requirements to attain them.
Posted by: Fazeli at
May 9, 2007 5:54 PM [link]
Fazeli, and others
Offering financial services that I do not have in place, and fully tested, and approved by regulatory services is not something I wish to get into. In time I will give you all a very general description. I will probably have a registration category on the website for those who wish to chat with me about such things or visit me in Bahamas at the appropriate time.
It is important to me that everybody understand what I am doing with this blog, which is to give insights and opinions that hopefully will educate, inform and facilitate readers who then ought to make better personal decisions. I take that as my mission, like a ministry. It was only last spring, two years after I started this blog, that I talked to my wife about the possibility of retiring to Bahamas, and she commented to the effect that laying on a beach was not my style, so I had better have something challenging to do. We talked about my coming out of retirement. Then in June a year ago, I received letters from Wiley & Co, and Prentice Hall Financial Times asking if I would care to write a book for them to publish, and that set me on a dual track.
I like challenges.
I continue to laugh at myself for getting goofy at times on this site, but today after writing a response re c-section it came to mind that I tend to do this to flush thoughts from my head that are interfering with my natural creativity. For example for a few Saturday mornings that I was having trouble focusing on the start of the Week In Review (WIR) I would write about the Starship Enterprise and the Romulan forces of Bush and crew. Then I would get down to business and be serious for a few hours and later as my mind would begin to wander again, deep into the WIR, I would revert to goofiness.
Just so you'd know.
I love to have fun but I'm pretty serious when it comes to getting down to business. I respect the rules of the securities market much more than you might surmise based on my constant railing against HB&B and industry/government regulators.
When I was building Qtrade in Vancouver in 2000, I pitched the hiring of the number one manager of my competitor, who agreed to join after he put in notice. Later that week, the competitor in Vancouver and their linked national association based in Toronto issued a news release that my associates thought was directed against us. We were not even licensed to trade in securities at that point, and already the competitor was firing darts. So, to calm my young associates (most were in their 20’s), I asked a simple question: "Have you ever before seen a national financial institution issue a news release about financial services they had hoped to offer sometime in the future?"... but probably in not less than six months to a year, following the time I assumed we would be fully licensed and operating a high quality service.
I made my point. My hiring of their top man panicked their executive and that was their way to fight back, but in doing so they were undermining their own credibility.
By understanding that we had a terrific business model, were developing technology they couldn't hope to compete against, had the cash in the bank we needed to pull it off, and finally hiring the top 20 supervisors and managers of every HB&B competitor, my associates calmed down. Life is all a matter of confidence. We were establishing our own destiny while at that point we were still working out of a construction office while ours was being built. We had our heads to the grindstone seven days a week, and we sure weren't issuing news releases. I knew we couldn’t be stopped from destiny.
Five months after I moved to Vancouver to start the task of looking for an office and hiring staff, we became nationally licensed (the Investment Dealers Association executive told us our application was the finest they had ever seen -- totally without deficiencies of any kind) -- and our technology (which my current techie Steve and I designed) and our outstanding young people, were good enough to go out into the marketplace (with zero track record) and sign up, in just two months, over 60 financial institutions as their broker of choice for their bank and credit union accounts totalling about two or three million people. As CEO, I managed to do that for a cost under $1 million Cdn (about US$700,000 at the time).
Today Qtrade is rated by Report On Business as the number one electronic broker in Canada, ahead of all the big banks, and they are also a full-service broker and funds manager and distributor, with a pool of potential clients numbering over 5 million from their 180+ partner financial institutions. I am proud of the final result and, although I am asked from time to time, have no interest in selling my shares in the company.
http://www.qtrade.ca/index.jsp
My retirement led to the next "challenge" which was to learn how to blog. Three years later, with the changes that are being implemented behind the scene today, I am now ready to take off for another "challenge" in a tax-friendly country. If there weren't another mountain to climb, I'd be really disappointed.
But you know I’m smiling.
Posted by: Bill Cara at
May 9, 2007 7:08 PM [link]
Dear Bill and Company,
I didn't say that the possibility of a total wipeout is ever negated, merely that one's ability to tolerate that risk versus that reward differs dramatically depending on one's situation, as dumb as I know that sounds. But think about it. If you're about to graduate Harvard, and you're uncle Sid is getting you a job on Wall Street, and all you have is a thousand bucks, and if you put it all on little mining stock that shall remain nameless, I don't think that's the most heinously irresponsible idea, granted, it's an extreme example. Future lottery winners also benefit.
Chris
PS: What's with the shooting star today? Are we testing up to 5, or is it ..lookoutbeeeeellllloooooowwwwwwwwwww!!!!!!!!!!!!!!!!!!!!!
Posted by: shark_attack at
May 9, 2007 8:11 PM [link]
ALOHA !!
I love an excellent entreprenurial success story like QTrade ... Good on ya Bill!! Nice to see the HB&B guys lose ground ...
Anyway, I had no bigger satisfaction than starting my own business competing for multi-million dollar contracts against my former employers. Even though they won't admit it I did some serious damage to their bottom line and I believe BKed one of them! I am not mean spirited but all is fair in the contracting business. You have the low number and you win! I have to say that they did try to manipulate the outcome by trying to discredit our bids as not qualifying, but after a few years that all went by the wayside and the school districts we were working in actually called and sent faxes asking us to bid their projects and in some instances delayed projects so we could fit them into our bidding schedule. We consistantly out performed and our customers had a first class quality job done within or prior to their construction schedules. In twenty years of business we were never late and never got a "Notice Of Potential Liquidated Damages" letter. There are days when I miss the "wheeler-dealer" aspect of the biz trading and negotiating and pushing contracts! Those construction lawyers are a tricky lot ... In the end though I believe my life expectancy will be a lot longer out here in FlowerLand Hawaii! I still can't resist inspecting EMT work and electrical installations. My wife catches me looking at ceilings and walls at airports and hotels and asks ... "Another code violation or is it just crappy work?" I have to say the old addage about an electrician's house is true for me. I spend a lot of time getting this business going or travelling or goofing off and hardly any time doing home repairs and improvements. My take is ... the roof is good, the walls are good, the windows work, the doors work ... DONE! Well, we live in a warehouse not a "real" house! I have never been keen on where I live. I guess I always have known that where I live is just temporary ... like life ... I have absolutely no interest in the perfect McMansion and neither does my wife! Yet I am probably the only orchid farmer in the World with an original Picasso hanging in my garage right next to a ManRay and the light switch is broken! HA !!! There's more important crap in the World than "decor" ...
I also want to mention MOTHERS DAY !! We are SOLD OUT as usual and I thank all those here that purchased flowers. You know who you are! Much appreciated everyone and especially Bill! LOVE YOUR MOTHERS !!!
Best to all ...
Posted by: kaimu at
May 9, 2007 8:41 PM [link]
Ya lots of inflation in renegate nation of venezuela, definitely out of control, we need some IMF boys in there to straighten it out. They'll do a bang up job. Probably graduates of the Pat Robertson law school. I'm sorry we have the brilliant Woly at the world bank another criminal organization. Those institutions are frauds and the gig is up. They step up and bail out the private investors to no ones benefit and on our dime.
and a commie rag
http://www.venezuelanalysis.com/news.php?newsno=2293
http://www.indexmundi.com/venezuela/inflation_rate_(consumer_prices).html
Posted by: stocon at
May 9, 2007 9:25 PM [link]
Bill,
Thank you for sharing your short autobiography with us. My previous career was 16 years working in Employment and Community Services with the YMCA of Greater Toronto. Our mission at the time was "to provide opportunities for personal growth and service to others." Our vision was "deliver quality services at the heart of a healthy community". From reading your story, I'm left with the feeling that I've found my way to a very good place here at billcara.com and I hope to stay for a long time to come!
Thanks,
Fred
Posted by: lovesaves at
May 9, 2007 9:47 PM [link]
ALOHA !!
Does anyone here use a "toll road" to get to work? Perhaps in the near future you'll be paying Goldman Suchs ...
Looks like Goldman Suchs has finally decided to trade paper for "hard assets" by buying up USA roads. How many roads in your state will be sold to Goldman Suchs to pay off government worker pensions? According to this article GOldman has raised $6.5bil and is looking to eventually run up to $500bill!
Link: http://www.commondreams.org/archive/2007/05/09/1064/
These guys know their paper game can only last so long ... Who holds the most US Dollars aside from China and the US Treasury? Wall Street banks ... HB&B! What will those dollars buy after a US dollar crisis? Better buy some assets that aren't paper ...
Posted by: kaimu at
May 9, 2007 10:23 PM [link]
just joined the board today and would like to say hello (and use this as a test to see if it works ok..i'm a bit of a amateur at blogs).
i work in the finance world and like what bill is doing here so thought i'd join in. wish you all the best.
Posted by: coripaco at
May 9, 2007 10:28 PM [link]
Kaimu,
I too always mention to my friends that my dream would be to own toll booths with ez pass. what a scam that is.
And I am unhappy to report NYC is thinking about penalizing you $8 in addition to the toll to get into Manhattan, for congestion. Even residents! Dont forget you will most likely get 1 parking ticker every month if you do business on the island of Manhattan as well.
Thank you mr bloomberg.
Posted by: NYUgrad at
May 9, 2007 11:04 PM [link]
Kaimu,
If the residents of Manhattan wish to pay 650K for a 400 sf flat overlooking Rockefeller Center, they can afford the 8 bucks. Charge 'um. stk
Posted by: stktrader at
May 9, 2007 11:46 PM [link]
Kaimu,
I take it you sell flowers. What is the website? It is my anniversary on the 20th. I got to get busy. Is there still time for a delivery? My wife would love to get something from Hawaii.
Posted by: stktrader at
May 9, 2007 11:48 PM [link]
JogyP -
Wouldn't buying LVS now be trying to catch a falling knife? Bill advocates buying (among other criteria) when RSI 7's move back above 30 - i.e. when the falling knife has stabilized (based) and started to move up.
Posted by: Jock at
May 10, 2007 12:50 AM [link]
ALOHA !!
stktrader ... Is that all $650k USD? Thats $1,625USD per sq ft.! What's the maintenance fees, property tax and utilities come to every month and do you have to tip the doorman too?
Plenty of time for the 20th, mate! Go to www.kaimuflowers.com ... Still 5% off but you have to type "Bill Cara" in the "apecial instructions" section.
NYUgrad ... WOW ... $8 just to drive into Manhattan! What the heck is a "parking ticker"?Add in toll roads and parking and $50 could evaporate pretty fast! Last time I drove from Tiburon to San Fran across the Golden Gate it was $5. I wonder what it is now? I recall parking in San Fran for a biz lunch and the parking cost more than the lunch! Thats the other thing to own a parking structure in a major city. When I lived in the North Beach area of San Fran in the late 1980s it was $200 a month just to rent a space in someone's garage! It must be $500 a month now! Boy do I have some stories about SF cops and parking tickets! I think that city could survive just on parking tickets alone!!!
You know the millionaires in NYC they're the ones with a car! What does Trump pay to park his jet?
coripaco ... Welcome to a different "financial world".
Posted by: kaimu at
May 10, 2007 3:14 AM [link]
ALOHA !!
Did I type four "w"s?
I see Bill corrected it. The Hawaii Kaimu Flowers website is ...
Posted by: kaimu at
May 10, 2007 3:17 AM [link]
kaimu - speaking of inflation - i want to send my ukulele back to Hawaii for repair: USPS $35!! UPS $38!! We are talking about a 6 lb. box, and the insurance charge is only 3 of those dollars. What does is cost you to ship those orchids and who do you use?
Posted by: rob d at
May 10, 2007 7:54 AM [link]
ALOHA !!
rob d ... You're talking apples and oranges since we use FedEx and we get a "volume" discount since we are shipping every day not just one day. Of course there are other factors such as fuel surcharges and confirmations and business discounts and weight and box size and destinations (rural) that also dictate prices up or down. At times FedEx pricing can get complex especially when we ship International because of foreign government restrictions and their duty and sales tax rules.
Because of the different size bouquets(retail and wholesale)and gourmet treats shipping prices vary widely from a low of around $8USD to as much as $75USD(mostly wholesale boxes for weddings that can weigh up to 46 lbs).
Shipping costs make up almost one third of our bottom line ... Its a business expense like taxes you have no "real" control over.
Posted by: kaimu at
May 10, 2007 9:10 AM [link]
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another quarter, another warning at toll…..
slashing guidance from feb……....(write-downs)!
An Irish Taste for Real Estate in Manhattan
With a weak dollar, Mr. McCann said, the New York apartments are relative bargains compared with real estate in Ireland and Britain…..
Give the Consumer Credit/minyanville
http://immobilienblasen.blogspot.com/
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at
May 9, 2007 9:35 AM [link]