30 October 2011 A Week Without Me

BAGAKOAA; 30 October 2011 A Week Without Me

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October/2011

We waited till the trip was over before we chose to write this. That decision was made just in case we did not make it. No sense spending hours upon hours of writing only to have your iPad lost in a fiery crash. Mmmmm, so I am writing this in an airplane instead?

Yes I am flying home to my wonderful family. The week went by faster than Ben and I would have thought. Monday Ben picked me up at 5:36 am and we were off. Now I have known Ben since 1972. That made the trip just this side of enjoyable. He was not feeling well on day one, suffering from a nasty sinus infection.

While he was not his usual chipper self, because we have known each other so long, the long bouts of awkward silence were not awkward. We stopped at a few gas stations when I picked up a turkey and cheese sandwich which we enjoyed reading the ingredients.

turkey sand

Sodium ferrocyanide, sodium aluminium phosphate, sulfur dioxide, thiodipropionic acid, vegetable carbon, phytic acid, poly vinyl pyrrolidone, magnesium diglutamate hexamine, and that was only half the list I could almost remember. It was two slices of white bread, two slices of turkey and once slice of white american cheese?

Besides that, there were no side trips or landmark hunting. 739 miles the first day and we arrived in Albuquerque, New Mexico.

fairfiled nm

We checked into the Fairmont Inn and had a quick dinner at Chili's. We were both tired and Ben was still not well. He took care of dinner and the hotel rooms. Thank you Ben.

Tuesday we were on the road by 6:30 am. I had the pleasure of driving east during sunrise. That was bad enough, but I had an eye infection that was gunking up pretty good. Looking into the sun and an eye infection made for an interesting first couple of hours. (There was one stretch where we had a 55 foot shiny sided tractor trailer next to us and it created the sensation of having two suns with their rays burning into my cornea. The good news was, that Ben was feeling a bit better. Again, there was little sight seeing. Just an eleven hour long haul to Fort Smith, Arkansas. We got in about seven o'clock and were hungry. I did have another turkey and something sandwich along the way. We decided to have dinner at Hooters.

Now I cannot remember ever eating at a Hooters, but I found it a bit over rated. It was close to the Fairmont, so we could not complain. We did end up buying dinner for a table of military personnel. Thanks for protecting us guys it was the least we could do for you. The girls were pretty, but I had been locked in a Ford Expedition with Ben all day so everything is relative.

Back in the sack, and we were up and on the road by 7:30. We each took turns over sleeping at the hotels. Wednesday was Ben's turn. I rattled his cage and he was down stairs just as I finished reading my WSJ, IBD, and FT on my kindle. Wednesday was a long day. We went thirteen hours but ended up in Clemson SC. It was dark so my first view of the Ben's new homeland would have to wait. We enjoyed a late dinner at Taco Bell. Not may options in Clemson at 9:00PM or even 6.00PM for that matter. We stumbled into the Marriott Courtyard about 10.00PM. That ended a long day. But Ben was feeling almost normal.

Thursday we slept in till 7.00AM. We had breakfast at the obligatory local landmark Waffle House. Then it was out to the country side to drop off Ben's truck load of wine and stuff. The home he is renting is beautiful, deep deep deep deep being the key word here, in the woods surrounding by white pine, elm, and poplar trees. There are lakes everywhere. The fall turn was just commencing so it was very pretty. They lack large quantities of Aspens (they call them birch), so the fall colors are nice but not explosive as you might see at the tree lines of higher elevation country or in the rockies.

We toured the area and he showed me some of the lake property he has been looking at. Nice stuff. For 800 thousand or so you can get a nice lakeside custom home with a dock for you boats on a couple of acres. Nice stuff.

Then it was off to his new office. They have about a hundred thousand square foot building that will work great for them. The cost of living and the give backs by the county and state and utilities makes this a really sweet move for his company. It is funny to hear how hard a state like SC is working to bring company in and watch how hard California's is working to chase people out.

We finished the day by visiting his daughter Lauren at her place of work. It is a lakeside Pub called the Tiki Hut.

It was good to see Lauren and it's nice to see her adjusting to southern living. I hope Ben does as well.

We then went to the areas best Italian place called Paesanos.

paesano's

It was very nice. It has that home town feel to it but the veal parmesan, bread, and sauces were very good. The wine list was a little weak, (I am still on the wagon if you were wondering.) but I am confident Ben will work with Frank the owner to get that tightened up. We made it back to the Courtyard by 8.30 and I was tired even though we did not do much but drive around all day.

Today (Friday) it was my turn to oversleep and we had to make a run for Atlanta airport. I made it with lost of time to spare thanks to Ben's driving. The trip was a huge success as we made it safely in three days. I always wanted to make a run across the states and it was a pleasure to do it with my buddy Ben. We had a few laughs, we sang a lot of songs, enjoyed some fast food, and saw this great country of ours.

I will miss knowing Ben will not be at the golf course waiting for me on Wednesday nights or I, waiting for him at Hanna's once a week. Yeah I will still see him, as he has his daughter Jessica here and he is on my Board of Directors, but it won't be the same knowing I can hook up with him to grab some sushi or have a glass of wine and figure out life together. But life moves on.

We have already talked about me bringing the family out to catch a Clemson football or basket ball game and been will be out next month. We had spent a good 20 years living in different states when we lived in las Vegas and Michigan, but it was nice huaving him just down the street. We will be talking and face booking often. And after all he is a reader of the blog.

There was a funny moment on the trip I have to share. We were driving through Alabama and Ben was on his cell phone with his daughter. There was a state trooper ahead so he said to his daughter, "Hold on I have to put the phone down the police are up ahead." Now I looked at him and smiled. He picked up the phone and started talking again. Then he did it again a few minutes later and both his daughter and I were laughing. I was driving at the moment and he was putting the phone down. Guess you had to be there. I will have some pictures in a few days when Ben gets unpacked and is wired at the house. Keep an eye out for the graphics.

Now we started expanding our list of readers because of our unfortunate flood back in December 2010. Many of you appreciated us keeping you up to speed about the craziness of dealing with contractors and rebuilding our home. Most of you know our home is just about complete. Well now we are starting another project.

Last December on the way to Utah, Devin and I were considering expanding Jacks bedroom so we could use his playroom for an exercise room. (aka a place to store stuff and hang laundry). We made the wise decision to wait until 2012 because we had two years of contractors building our house just the way we wanted it and spending a small kingdoms fortune doing so. We thought a year of enjoying the house was good idea before we started another project.

The Good Lord and some mud and cacti had other ideas. We figured we are so used to having contractors around the house that we should go ahead with Jacks room. They start tomorrow. That means we spent the majority of the weekend preparing the garages to be destroyed and find place to put things that were in those garages. It was a long back breaking weekend. Yesterday (Saturday) I made the mistake of lifting a tub that I had just put about 25 bottles of beer and 35 cans of soda into. I felt a tear go down my backside and reminder I was born with an inguinal hernia. (A small pouch opening in the wall above the scrotum where lower intestines try and squeeze out.) What a fund weekend. Devin, Jack and I did accomplish a lot and its good to be home.

What A Week

I left town one hour before the market opened and returned on hour after the market closed last week. From what happened, you should all take up a collection and get my butt on the road every week. We basically had a 4% week. Some stocks did much better than that and a few did not. If you had participated in our pimping of GLW corning, you have a great week. I hope you all added some profit to your portfolios. (Yes Russ ASGN, On Assignment is still flying high. Nice call. Jack and Kristin are up over 80%.)

In reading this weeks Barron's, the sentiment has definitely changed. If you remember about three weeks ago we told you nearly every article was filled with doom and gloom. We also said that is when the players come in and swoop down to feed off the carrion by the side of the road to fear and greed. It looks like it happened. Money flows were fairly strong all week long and the volume has presented a strong market uptrend. There were enough strong up days to discount the few distribution days we have had in the last 10 trading sessions.

The entire last quarter (ending September) was down 14.3%. October (and we have one day left) is up 13.7%. Now the sentiment in Barron's this week is optimistic, but cautiously optimistic. We would agree. This is a very fast comeback and should be watched carefully. The bounce is the result of inconsistent and unreliable news out of Europe layered upon some decent earnings reports and some economic data points that are better than our dismal estimates. That is not to say everything is moving right along with the economy.

In the category of good news, money is flowing out of the bond market into the equity market. That means people are willing to take a little more risk and help prop up these equity prices even though they appear to be a little over bought. (Kopi Tan points out 19 out of 20 stocks in the S&P 500 are above their 50 day moving average. A claim which sound a bit too much for me to believe and we will be checking.)

Our word this week will be caution. Watch your stops.

Bollinger Bands Revisited

This week with the time in the evening and not blogging, I had my Kindle and my iPad. I had enough room for one book so I chose one that was chart intensive (since charts do not present well on the Kindle-The Fire Should Correct that-we will know in a couple of weeks.). I chose Bollinger On Bollinger Bands.

Now don't freak out because the book is heavy with statistics, but we will summarize real quick for you and show you how it can be one more tool to check price patterns. Bollinger bands are nothing but a standard deviation line drawn around a simple moving average. The typical Bollinger uses 20N where N=your data points. In our case we are talking about 20 days of closing prices. You could use 20 minutes if you are day trading, but we use 20 days as laid out in a 6 month daily chart. The standard deviation is + or - 2. That means we are using 2 standard deviations from the average. One deviation is up and one is down. We draw the average of the 20 days and we draw the up deviation and the low deviation creating the upper and lower bands. Here is one for GLD just so you can see what it looks like.

gld 10 29 2011

If you look at the chart, you can see two blue lines. Those are the upper and lower Bollinger Bands. (Sorry I just noticed I drew a 50 moving average and should have drew a 20 day moving average.) If we had used a 20 day SMA (Simple Moving Average) you would see the upper and lower bands create a channel around the moving average. Note the price move up to the left and tag the upper band about 4 times. Then we had a steep sell off as shown by the red bars indicating a down day with heavy volume. The ne had 4 or 5 days of above selling on the downside and the price headed towards the lower Bollinger Band. You will also note the momentum indicator on the bottom was showing more selling that buying. (Negative numbers means more sellers than buyers) Then in the last 6 trading sessions we see positive momentum and a move up from the bottom Bollinger Band with positive volume. These are all buy signals according to Bollinger.

The good news is most websites allow you to put an overlay of Bollinger bands on your customizable charts. It would be nice to say buy when you price is at the bottom of your Bollinger Band and sell at the top. It is not quite that easy, but with a little practice and understanding a few of the indicators in the book, like relative strength and momentum, you can go back and look at how you market timing looked compared to what the Bands might have done to refine your timing.

SGI The Simple Gold Indicator

It is funny we used GLD in our charting example because we just read an interesting article from our friends at Stansberry and Associates. You know who they are they are the ones who are the doomsdayers and have the video clips about the end of the world as we know it.

Anyhow they have an interesting gold buying indicator with a proven track record. It is quick and simple and in doing some back testings seems to support their claim. Here is how it works.

One day month you look at the spot price of gold. Get the previous 9 months spot pricing and calculate the average. If the price is above the 9 month average you buy gold. If it is below the 9 month average you sell and go to cash position. Their claim is if you started with 10,000 dollars in 1868 and followed this plan, you would have 1.28 million dollars.

Now keep in mind what the means. If you had put 10,000 dollars into an account and kept it their until the price was below the 9 month average would have to sell everything and move the cash to a cash account earning some interest. When the price moved above you would take all that cash and reinvest in GOLD. The last go around in 2009 would mean you put about 800,000 dollars back in gold. Not sure I could be that brave.

We will run the numbers and build a spreadsheet to test this, but at face value looking at GLD, the average is 149.47 and the going price for GLD is $169.25. The SGI says buy or hold gold. Again we have some homework on this one but it is interesting.

I know I owe a couple of you some homework answers and believe it or not I had some of it done before I left for the road trip. We will get this stuff out there in the next day or so. Hope you all have a great Halloween.

Remember to live in the Now. That is what life is all about.

Salve Lucrum

BAGAKOAA;

I am not a professional investment advisor. Anybody reading my blog and investing accordingly must be out of their minds. I have made more money than I have lost. There are many more qualified people than I to actually tell you how to invest your money.

BAGAKOAA=Boys And Girls And Kids Of All Ages

Salve Lucrum=Latin for Hurrah for Profit.

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