Hey Hey I'm A Monkey

As we mentioned, Devin and her friends are having a weekend in Palm Springs, CA. I am having a weekend of watching The Open, and now women's soccer. I have not killed any of the animals and Devin should be home in just few short hours. I did straighten our 2 car garage this morning, the first time since the great flood (Not the biblical one, but our little catastrophe.) At first I did it to impress my lovely wife, but about half way through, I was looking forward to having the garage be somewhat functional.

Last night, Jack, Kristin, and I hosted Ted M. and his kids. They are great and he ain't too bad either. It was a good night and wrapped up about 9:00, so I got some reading done and finished this issue of Barron's. (More later)

Not sure what we are doing tonight, but hope to have this blog put to bed early as it is a big week coming up.

It was nice knowing Devin was out having a good time away from the "war zone". She had a big surprise as the girls took her to one of the casino's in PS and they saw "The Monkeys". Ya see, Devin is a huge Davey Jones fan and I got a text from her saying, "OMG, we are right up front." She had a really good time. That was Friday night. Last night while entertaining our guests, we got word that the girls were gambling. We lived in Las Vegas for 13 years and I'll be Devin did not spend 50 dollar or 13 hours gambling in the entire 13 years we lived in Vegas. So imagine my surprise when I heard she had lost $300.00. Now I can't comment because I lost about $430.00 on a Citigroup call option this week, so I just took it in stride.

It has been a nice weekend but I did miss my girl. No, I am not saying that so I get brownie points, because she does not read my blog. She has gotten clever though as she opens them and then deletes them so my contact reports show that she opened them. I am telling you she is cute and smart.

Gimme an E, Gimme a T, Gimme and F, what's that spell?

Let's for a moment say you have your financial house in order (decent medical and disability insurance) and have done some initial reading about the market and think you want to play, but do not want to risk money on a specific stock or two. A great way to get started is with a mutual fund or ETF (Exchange traded Fund). You probably know my feelings about mutual funds. Mom always said, "If you can't say something nice . . . " so let's talk about ETFs.

An exchange traded fund is a package of assets or a reflection of an industry sector, or an index and is traded on an exchange just like a stock. The positive things are that the price of an ETF trades minute by minute like a stock where as MFs (Mutual Funds) are valued at the end of each day based up a calculation of their Vet Asset Value). That liquidity and volatility provide investors with the flexibility to move with the market as needed. ETFs, because they are usually reflecting an index or a group of stocks or a commodity does not require the intense active management that most mutual funds require so their fees are 50-85% cheaper than MFs.

But the real advantage to ETF is the diversification value of an ETF. Let's say you wanted to get in the game, but are not yet comfortable with doing the homework on individual stocks, but want a balanced portfolio of Banks Stocks, Oil Stocks, Industrials, Tech stocks, and some penny stock speculative stocks. You could open a portfolio with 1000 dollars, and use Morningstar.com to find an ETF that meets each of those descriptions and place 200.00 in each. If you add $100.00 a month, you would just put $20.00 into each ETF.

One of the few downsides to ETFs is they do not typically allow dividend re-investment like a stock or some mutual funds. So you account could accumulate some cash which you would have to reinvest yourself.

This is an easy painless way to get in the market. If you have any questions how to do what I suggested, just ask your broker. If you don't have one, contact Charles Schwab and share with them this blog description. They can answer any questions you would have. Let me know if I got it all right.

Our message about ETFs was triggered by the supplement in this week's Barron's Magazine. The do a great job of explaining the ETF as an investment tool. They rate the top 15 Value based ETFs. It is one of the best supplements I have seen in a while. We encourage to pick one up if you think ETF would help you get started or round out your portfolio.

Speaking of Barron's and the week ahead.

Our guesses were way off for a third week. Unfortunately the guesses were positive in nature so instead of the market being up for the week it settled down about 1.4%. We expected the Empire State report to pleasantly surprise, but it poorly disappointed. The DOW was down about 177 points on the week and The S&P was down more than 2% to 1,316.

Alan Abelson provides a coherent recap of the week with his column. We can't say we saw anything news worthy in the column, but for a wrap up, it was well done. He did point out the fact that, now we do not have the Treasure buying 40-60 billion a month in US bonds, creating the demand for the bonds might have to mean an increase in interest. There was another option bantered about in his column and that would be to demand a portion of private 401 Ks have T Bills in order to protect the tax benefits of the 401 K program. That would be a game changer.

Jonathan Laing does a piece about the possible end of the house crisis. He cites recent Cash Schiller reports and gets to the guts of the numbers. Personally we think he might be getting a head of himself, but what do we know. As I write this it is interesting to note that real estate is booming. (In China)

I'd like to tell you more about the this week's Barron's, but daughter and wife are standing over my shoulder to do some photo collage for some wedding thing? I will have to let you buy a copy your self and enjoy. (The ETF supplement will make it worth while.)

Ok the week ahead only has 5 key data points. In the essence of saving time, here we go:

Housing starts will disappoint below the 575K expected. (look for a repeat of the 560) Bank of Canada will not change the interest rates.

Existing home sales will disappoint below the 4.90 Million units expected. Look for a 4.75 Million.

Jobless Claims are expected to rise, we think not. Look for a slight drop to 395/ (Breaching that magic number of 400K. That should make Mr. Market smile.

The miserable Philadelphia Fed Survey is expected to improve hugely. From a minus 7.7 to a positive 5.0. We think it will be better. Look for 6.2.

Then we wrap up the week with leading economic indicators which is expected to drop from .8% to .3%. We think it will sit at the .8% again for another month.

Here is our guess at the Friday close. Look for about a point and half on the Dow. Our number is 12,662. The S&P will come closer to a two percent rise to 1,340.

In earnings this week, here are few to keep an eye on. Look for Zion's bank to beat the -.02 cent estimate. Possibly they will come in at 0 or .01 cents. Tuesday, we have BAC Bank of America. They are expected to loose 90 cents a share. With the bump in financials of late look for minus .75 which will be a nice beat of the estimate. JNJ Johnson and Johnson will beat the 1,23 a share. Not by much say a nickel to 1.30. Look for STT State Street Bank to beat the .96 cents a share to 1.00. AXP, American Express will beat the estimate of 98 cents a share, but not by much. That takes us through Tuesday and I have some more homework to do on the balance of the week.

So how do we make money based upon that. Look at calls 30 days out that you think will beat. An augest JNJ 67.50 call looks interesting at 1,25 a contract. You might also look at the August 44.00 Call for $1.64 a contract. And you could play the August 21 call for 1.57 a piece. That is what I am shopping for tomorrow morning. OPTIONS ARE VERY RISKY AND NOT FOR EVERYONE. PLEASE DO YOUR OWN HOMEWORK AS WE HAD A GREAT MEAL AT HANNA'S AND I AM WORKING ON ONE GLENMORANGIE AND ONE GLASS OF THE 2008 TURNBULL CAB.

Salve Lucrum