I am having a spendtabulous day today. Woke up took care of all the dogs. (Captain, our daughter's dog is visiting this weekend. Cute but really suffers from puppy brain.) Had a healthy breakfast with the boys at the club, finished reading The Journal, Barron's and Investor's Chronicle, one of my bonus prizes of my trip to the UK. It is a UK based, but well written weekly about stocks and investments in Europe.

Then with no sign of jet lag, commenced getting some stuff out of the house to the Big Truck (We have an Ford F-250 for such occasions.) so we can move it too storage. We have chosen to do this as we are holding off on the rebuild of our son's room till after the daughter's wedding and multiple wedding receptions.

By 11:30 it was time to start the tapping of the keys. We were going to go to the movies sometime this afternoon to see Cowboys and Aliens which is getting pretty good peer reviews but movie critics claim it is "cheesy". Ok guys and gals look at the Title. It is not meant to be a message movie. We chose to enjoy dinner with Ryan and Kristin at Hanna's tonight instead of going to the movies. That actually worked out well as I was feeling a little lagged and Jack might be having a bit of a dehydration headache as I type this. 

Keep Calm And Seek Value

That was the cover of this weeks Investor's Chronicle, and after reading the Journal, Barron's and this fine publication, better advice is hard to find.  

As I mentioned yesterday, Barron's had a very bullish feel to it this week after carefully describing the carnage of last week. Several articles say it would be foolish to anticipate what the market is going to do in the next few weeks. Call me foolish.

It is conceivable that market could deteriorate further, no doubt. However, even if the market drops another 5% (500 points on the Dow) we are reaching some very deep discounts for value in the market. More importantly, look at the 10 Year Yield. It got down as low as 2.15% last week. The supposed safe haven of the world was down to 2.15% and has not pulled up much from there.

So what does that mean to you as one of those blindfolded casino monkeys? Well If I was running a business (oh yeah, I do?) and I had a few billion dollars on my balance sheet in cash (oh yeah, I don't), and the best safe return I can get on my money is 2.15%, I'd have to ask myself, can my company return better than 2.15% over the next 5-10 years. If I said yes, I would be buying back shares of my company. (The market goes up.) I might also try primping (not pimping but close) my shares by initiating a dividend or increasing my dividend. (The market goes up.)

I would do that because the other 8,000 companies on the open market are looking for something to do with the 2 trillion dollars in cash on the side lines. In order to make my stock look attractive, I do not have to generate a dividend much beyond 2% to be attractive.

I might also look to buy healthy but cheap (aka value) strategic partners or competitors which will increase the M&A (Mergers and Acquisitions) market. (The market goes up.)

If you go back to the original Salve Lucrum Blog circa October 2009, you will see where we stated, in order for our guess about a 12% increase in the market for 2010 and an overall improvement for the economy would requite two elements. Do you remember what they were?   (Listen! That is the theme to Jeopardy playing in the background while we wait for your answer or question for those true Jeopardy Aficionados.) What were, higher employment and a turnaround in the housing market? Correct for 22% and 400,000.

Last week we did see a 21.7% increase in mortgage applications, the largest in quite a while. Our golf buddy and friend Mike Ameel, Real Estate Broker Extraordinaire who has sold every home in Coto De Casa twice (My claim not his.) correctly guessed it had to be heavily influenced by refinancing. He was right. Refis were up 30% and new home contracts were down 1%, but that negative number is the best negative number we have seen in quite a while.

Also, on Thursday the jobless claims number came in below 400,000 for the first time in 5 months. That means fewer people were claiming unemployment, theoretically a good thing.

Next week is ANYBODY's guess. Cramer did a good piece on Friday's Mad Money laying out what to look for and after reading Barron's this week, we would say he nailed it. Keep an eye on Europe as a few of the Central Bank manager's (Italy, Germany, France) are trying to broker a global debt relief package that might include The US, China, and Brazil. If they come up with a decent proposal it COULD calm the markets. Also keep an eye on the Housing market index on Monday and actual housing starts on Tuesday. We think the multiple house sector of the market might beef up these numbers to where the market might be happy. Single family units will still be depressed. Industrial production numbers on Tuesday will be promising or at least not disappointing. Jobless claims will stay hair below the 400,000 mark. Existing home sales on Thursday will be bad. All of this will culminate in another down week with the market closing about 1-1.5% down. It will be a bumpy ride and we will see crazy interday swings.

I will close today with a peak at our main portfolio now down 4% in unrealized gains. Good luck this week and remember Keep Calm and Seek Value.

Color Code:

Yellow=Options

Orange=Bonds

The rest are equities.

Salve Lucrum