An Apple High

We will start out with our note to The Salve Lucrum Family Members

Boys And Girls

We had some good economic news today (initial jobless claims and regional manufacturing news) while inflation did not pop our balloon.  This helped the continued rally.  I even heard sound arguments for a 17,500 Dow by the end of 2013.  That was from Jeffery Siegel who is an author I appreciate (Stocks For The Long Term).  He is suggesting a correction of 5-8% then a drive to 17,500.  I call it fortune telling.

Anyway a good day for sure.  Let's look at the CORE holding for any anomalies.

AAPL

That was fun day.  We actually broke $600.00  ($600.01) before profits started getting skimmed.  Can't blame them for this as if it were not for my calls I would be taking some profits.  You might ask why aren't you taking profit in my account.  Due to the high share price, most of you have very few if any shares.  I did think about taking profits, but too many analysts are moving target prices well into the high 600s and several at the $720 range.  I cannot find a strong argument.  We did scoot stops up to protect the gains, and we should see an adjustment tomorrow and Monday after the release of the new iPad.  (Don't ask me it just almost always happens after the release of a new product.)

MSFT

In Line with the market and no significant news.

XOM

A little off the market, but tracking Brent crude.

CELG

This one underperformed despite Stifel Nicalous initiating coverage with a buy rating and a target price of 87 dollars.

UNFI

Off the market and down 1.45%.  It took a little digging, but a competitor CORE had a blow out quarter and there might be some that it was because of market share growth by CORE at the expense of UNFI.  In looking at the 10Q from CORE it was overall top line growth and margin expansion which made the numbers.  I think bodes well for the specialty natural organic food sector and is not necessarily a negative for UNFI.

GWW

In line no news to mention.

MGRC

In line no news.

ACET

We added to this position in the Primary account and moved our stop to $8.25.

That's a wrap of the portfolio today.  I will have some goodies in the blog tonight.  Hope you enjoy.

Bonds Ben's Bonds

We are not talking about our reader Ben, I am talking about the 10 year Treasury notes (Ben Bernanke who is the fed Chair, but kinda married to the Treasury and Tim's Bonds just didn't have the same ring to it.). We will do a lingo piece later, but you can use note and bond interchangeably in this conversation. (What conversation dude? You are alone at a typewriter. Whew, you scare me sometimes.) The 10 year Treasury is trading at 2.27 at the moment. Now that does not sound like a lot, but in the last few days, we have seen the 10 year (considered the "safe" money) move from below 2 % to where is now. That is a 15.7% increase from the beginning of the year @1.91%. That is a big move. If you go back to October, 2011 the yield hit a 60 year low at 1.67 %.

What is important is understanding what is possibly driving the yields. Ok here is how this works as I understand it. Every week, the treasury borrows money from God and the World. They do this by having a series of loans they offer with expiration dates and fixed returns and a set price.

For example, this week they have 3, 6, 9 month, one year, two year, 3 year, 5 year, 10 year, 20 year, and 30 year. Each settlement day say 10 years out for the 10 year has a face value and a fixed interest rate. Most of these are based upon a $25,000 face value loan (Note or Bond if you insist). The 10 year is currently offered at 2% interest. Now if the government offers this up though hundreds of dealers, the demand for these notes (Bonds or Loans if you insist) drives the auction price of acquiring those 2% notes. If I am feeling really good about the future economy and think I can do better in corporate bonds or buying mutual funds or even those stinky stocks, then the notes get traded below face value at what is called a discount. So I might be able to buy a $25,000 2% note to be paid back in 2022 from the US government at $24,983.00. Now I still get 2 % every year for 10 years and assuming the country does not go bankrupt, I will get the full face amount of 25,000 dollars. If you do the math, my actual return or "yield to maturity" is 2.27%

Now if you have been reading the blog for any length of time you know our goal is to achieve the 10 year X 2 in any given year. So our return has now gone from 4% to 4.52%. (We still guarantee our SL family members their principal + 5% annually).  

Oh, Oh, Oh Bama Care

I received this from a reader this morning. It has been around a while, but thought it is worth a pass on you. The comment is attributed to Donald Trump. I can not confirm or deny the words were spoken by him.

"Let me get this straight . . . We're going to be "gifted" with a health care plan we are forced to purchase and fined if we don't, which purportedly covers at least ten million more people, without adding a single new doctor, but provides for 16,000 new IRS agents, written by a committee whose chairman says he doesn't understand it, passed by a Congress that didn't read it but exempted themselves from it, and signed by a President who smokes, with funding administered by a treasury chief who didn't pay his taxes, for which we'll be taxed for four years before any benefits take effect, by a government which has
already bankrupted Social Security and Medicare, all to be overseen by a surgeon general who is obese ,and financed by a country that's broke!!!!! 

'What the hell could possibly go wrong?"

I don't know if you have had any run ins with the new Obama Care, but we just did and it was anything but fun. Here in a nutshell is what happened. Devin was diagnosed with a torn meniscus (knee muscle) about a year ago. Rather than heading right off to surgery which would have been slightly invasive and expensive for the insurance company (We have a-well used to be-great plan with Anthem. It is not an HMO, but a PPO which means we pay more but have-well we used to have- more choices.), Devin chose to work with a physical therapist, out of her own pocket for almost a year. Unfortunately, she has gotten to the point of diminishing returns, meaning she has mobility, but not enough to enjoy her active lifestyle. This was confirmed and we went to schedule the surgery. Now, because of Obama Care, Anthem is required to have all procedure reviewed by a government regulated medical advisor. While Devin is going in for one procedure, the doctor must get two other procedures approved in case one he is "in her knee" needs to do the other two procedures. The medical advisor originally approved the main procedure, but did not approve the "in case" supplemental procedures and implied that if the procedures were they could be scheduled at a later date. Now here is what Obama care has done. Devin goes in for an expensive surgery on her knee. Think anesthetics, doctors, nurses, and stuff. Because this government regulated medical advisor says so, if Devin's doctor discovers scaring or another issue, he must close. Wait for Devin to recover. Get the approval. Schedule another intrusive procedure. Think anesthetics, doctors, nurses, and stuff. Then hope that he does not need to do the third procedure. Yeah this is really efficient and cheap too.

Lingo Is as Lingo Does

I know that this portion of the blog is not for everyone. Economics and investing is boring if you don't have an interest. My e-mail blog software allows me to watch your eyes as you read the blog. I know when you have stopped reading. I know where you hit "close" and look at your next e-mail. I know that 83% of you have already stopped reading this e-mail blog post. Scary huh? I just made that stuff up, but I know most have not ventured down this far into the blog.

I think a lot of the disinterest in the financial world is because of the crazy lingo. That is why Jim Cramer has 300 million people watching Mad Money every day. (Actually the last published figure was 186,000 viewers and that was 2009 figures.) He does his best to simplify the lingo. The vernacular created for this industry is designed to make the people in the industry seem somehow more important and special because they know terms like Credit Default Swap or Free Cash Flow or my favorite, EBITDA.

Do not be afraid of the lingo. I have the Investopedia website in my sidebar of this e-mail just incase I or one of the articles I have stolen uses vernacular with which you are not comfortable. Please use it. It is free, but you do have to sign in and it is painless.

Please send me a note if you hear or see a word or term you want me to shed some light on. I use Investopedia almost every day. 

Salve Lucrum