Early Edition 11am Friday December 15th:
1. MARKETS
2. UP STARS/DOWN STARS
3. ASTRONUT
4. QUOTES
5. ON THE WEB
6. LETTERS
WHITHER JANUARY?
With the exception of interest rate disappointments, much of the
market bad news is already known.
So many TMT have pre-released earnings disappointments, there is
a fundamental case to be made for a mild January rally. More good
news is that Oil is likely to hold under $30 throughout most, if not all
of 2001.
Still, there is likely to be another opportunity to bargain hunt later in 2001, perhaps as low as Nasdaq 2200, but almost certainly 2525. Let us not forget January is national bankruptcy month. The conventional wisdom is that lowering interest rates is good for financial stocks. Be that as it may, as bad loans rise, we expect this to negatively impact this sector short term. In any case, it adds unnecessary risk. Begin distributing financial stocks no later than three days after the first Fed rate decrease. Brokerage stocks, for obvious reasons, should be sold sooner.
There can be no greater sin this December then paying substantial
tax if your investments lost money. Even if you have made money, this could
be an excellent time to wash your portfolio, i.e. sell stocks that have
appreciated considerably over many years together with recent TMT losers.
Speak to your financial advisor and accountant immediately for individual
tax and portfolio advice.
Key Dates: December 18, 19
DJIA: BUY
NASDAQ: BUY
US Bonds: Trading Sell Monday
NG: Sell
IXT: Begin to Under weight
2. While foreign automakers like Volkswagen (VLKAY), have been reaping the benefits of the cheap Euro, the tide is turning. The US dollar twin peaked in 2000 and will continue declining next year. In addition to our two favored US auto value plays of Goodyear (GT) and General Motors (GM), we are now upgrading Ford from Sell to long term Accumulate under 23. It is cash rich and by 2002, most of its tire problems should be behind it.
As analyst after analyst issues downgrades, the Astrologers Fund, which previously was bearish on most TMT stocks, now is issuing upgrade after upgrade. Most of the problem with computer companies’ sales is that there are in between product cycles. We reiterate both a Trading and intermediate-term buy on Compaq (CPQ) under 21: Short-term price target of $23; 3-6 month price target of $27.50.
3. What’s good for the goose is not good for gander it seems. Last week, Congress voted to give Fed Chief Alan an 11% pay increase. He deserved it. Wonder what the Fed would have to pay if it were a baseball team? See Highest Baseball Salaries. We believe this should be the benchmark reward for all doing a good job. Workers receiving a 3.5% increase or less are falling behind Real inflation. Therefore we are downgrading Fannie Mae (FNM) from a strong buy to a market perform.
According to Wal-Mart Canada, the Number 1 selling toy for the holiday season is their Rage Scooter. This year, Scooters emerged as one of the country's most popular modes of fun and transportation. Scooters in Canada, Bicycles in Holland, and Walking in New York City: does this all suggest a possible downgrade on the auto sector? No. As Jupiter in Gemini goes direct on January 26, we maintain our intermediate term accumulate on weakness sector rating.
4. “If consumer spending slows down in the states, it will have a
devastating effect on Asia. 2001 could be a crunch year.”
Ian Perkin, chief economist, Hong Kong Chamber of Commerce
HW: Not “if”, “when”.
"Value and low risk is the new stock market theme. This new market
leadership can probably be expected to last for a while. Market themes
tend to run in multi-year cycles."
Richard Leader, managing director, Burnham Asset Management
HW: I thought was in the “old” economy. These days most cycles are
speeded up. Anything that does not give instant gratification is
passé.
"The Fed has only one way to go now, toward an easing stance. The
only question is how fast will they do it in the face of what appears to
be a rapidly developing slowdown."
Allen Sinai, economist, Decision Economics
HW: Like the market, it can go either way, and there are compelling
arguments for the Fed to continue to play cat and mouse with the public.
5. SATURN-JUPITER
2000, The Presidential "Death Cycle"
Every twenty years, the planets Jupiter and Saturn combine together
in the sky, signaling a general political and governmental shift. Almost
all of these conjunctions are in earth signs, the ones most involved in
practical matters such as these. It just so happens that they are landing
on even numbers, and every so often one lands in an election year. This
is one of those years. Although things do change around the world, this
seems to have an adverse affect on United States presidents - they tend
to die.
You can purchase 2001 Calendars from our bookstore in person or WELCOME TO AFUND SHOPPING NETWORK online. Don’t miss another Lunar eclipse like January 9, 2001 again!
6. READER: Hi Henry! I was intrigued by your forecast of a strong
showing for the Canadian dollar in 2001-2002. It's about time, isn't it?
HW: Astrologically, fundamentally and Technically speaking, I believe
so!
READER: Boy! I'm not sure that going after tanked value stocks
proves to be such a great strategy, as it seems very difficult to determine
when they will quit tanking. It seems that they just keep sinking even
after 60% drops. Initially, I reinvested in Oct. at the prices below
as an INVESTOR, but am wondering, in light of this unexpected BAD BAD month,
if I should seriously consider becoming intermediate term investor/trader
instead and get out at the end of Dec. and back in at the end of FEB.
According to, Rebecca Nolan, the NASDAQ just slowly sinks from Jan. 1 to
the end of Feb. when it seems to go VERY low again and am concerned about
these tankers even going lower in light of what has been happening this
month.
HW: Rebecca’s view is certainly possible. There are three
ways to find a market bottom: 1) Make a trend changing forecast.
2) Wait until the market recovers using trend following techniques.
3) Not to try.
Assuming the market will go back to 3200+ intermediate term has
been our working assumption. However, I believe more trading will, and
should be done, in both conservative and aggressive portfolios in 2001
in order to have acceptable returns.
READER: If mobile subscribers reach 1 billion by 1H 2002 and handset
replacement increases to 70-80% in subsequent years after 2000's 40~50%,
as NOKIA said in its analyst meeting, we can buy all Japanese electronics
components makers related to mobile handsets WITH OUR EYES CLOSED NOW.
HW: I prefer to buy with my eyes open, and early next year, not
now.
READER: What significance are the KEY DATES listed in your newsletters.
Are they major up days or major down days?
HW: They can be either up or down days. If you are a gold
subscriber, we offer our opinions as to which in our daily market commentary.
If you are a silver subscriber with an investing horizon, these trading
market fluctuations are not very important.
READER: Please renew my subscription into a 3 month gold trial -
payment by credit card (as I did last time). P.S. In order to be charged
with the old price for gold subscription, do I have to decide this year,
(just a few days left) or before end of the trial period?.
HW: You have to give us the order to charge your card by December
30. Of course, you have all year to pay off the card, and considering it
is saving close to 50%, I hope your credit card is charging you less interest.
READER: Some of these Internet companies (not dot coms) are down
90% or more and seem to have a place in the future. If it safe to invest
in some of these infrastructure or ASP companies now? Would you wait till
March 2001 to invest for the long run?
HW: If I like the price, i.e. it is a new, new economy stock that
is priced under or close to value, I would be willing to buy and hold long
term. Otherwise, you may have to wait until May/October 2001.
READER: Times Roman is much easier on the eyes than Olde Typewriter.
HW: I have been using Ariel. As an experiment, we are putting
Times Roman here in our Letter section. Next month, I will email subscribers
to vote their preference, and ask the Florida Supreme Court to supervise
the count.
READER: Your thoughts on JDSU?
HW: Like all TMT and Internet stocks, JDSU is likely to have a bounce
from here [52-60], but should be sold very early in January if not before.
READER: Thanks for the service--the best investment advice service
in the market place.
HW: My Leo Sun is happy to hear that!
Beginning 1/1/2001: Gold will be $1500 one year, $2500 two years
and $500 quarterly.
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