Ok we will start once again with our rather lengthy but we feel informative portfolio update to the Salve Lucrum Family.      

Boys And Girls;

Ok we were mixed today in the market (meaning one of the three was out of line with the other two). Oracle had a nice report and the AAPL affect had the NASDAQ as the outlier today. So the overall market action was down about .25%. Not much to worry about. Regarding the Green Flag on the blog page, it will remain flying high a while as we lost one distribution day on the NYSE and the NASDAQ after yesterdays numbers so the count is NYSE 5, S&P 500 4, and Nasdaq 2. Today's action should not change those numbers so we are in a confirmed up trend.

Gold, made a teeny tiny comeback today but global forces do not look good for a number above 1,650. Oil was up because of a surprising weakness in inventory levels, but a really negative outlook from Baker Hughes cause most of the sector to drop and it was the wet blanket on the overall market.

The much awaited Housing report came out today and at first glance the shadow inventory and foreclosure inventory totaled ten million units which sounded scary. Later in the day it was noted that much of that inventory was in the 150,000 or less category and concentrated in a few geographical areas. The good news came when looking at homes in the median price range. There, the inventory levels are healthy. That might make the opening tomorrow promising.

We continue to crunch numbers using the Buffet Valuation Worksheet. I will have reports by this weekend. We have run 78 companies and have about 22 more to go. As a result of this excersize, I put some of you who had the cash in a new position for LMT Lockheed Martin Corporation, a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of advanced technology systems and products in the areas of defense, space, intelligence, homeland security, information technology, and cyber security in the United States and internationally.

Again, this worksheet uses a 5 year history of Earnings Per Share, Dividend Per Share, and Book Value Per Share. It also uses high lows of 5 years of pricing history. It takes that raw data and via this amazing spreadsheet projects share value from a historical stand point and then does the same analysis using a sustainable earnings growth rate. I take the average of the two to estimate a 10 year growth rate. (I really have NO LIFE what so ever.) Anyway, a few more to go, so if you want to fire up the worksheet for you throw me a name.

Ok here are the outliers in today's market action.

MSFT

In line with the market.

XOM

A little off, but in line with the energy group. BTW this stock maintains it's a 15% annual growth rating on the Buffet Valuation Sheet.

CELG

Up a little, but this stock was one of the highest rated from the worksheet. The number falls between a 10% decline and a 78% gain which averages out to 34.28%. Since the bulk of the range is on the upside it helps confirm our decision to consider this a core holding.

UNFI

A nice day, up a half a point, beating the market trend. The Buffet worksheet show a 7.8% growth figure, which is nothing to get excited about, but a real steady Eddie. I like their margin compared to peers and feel they make a good core holding.

MGRC

In line with the market no news.

AAPL

Basically a sideways day. No really big news, but 34 news articles that are not relevant.

ACET

Down a bit. No relevant news.

GWW

A nice day outperforming the market. No relevant news.

Brian

Is This Bed Just Right?

I am sure all of you know the story of Goldilocks, that insatiable young girl who felonied her way into the Three Bears House and was picky about their food and belongings before she nestled in a bed "just right" for her.

When I listen to the talking heads on Bloomberg and read the commentary in Barron's and the Journal, and even Mr. Cramer, I have noticed that recently, it feels as though half of the investment world thinks we will have an extended bull market and half think we are on the brink of fiscal Armageddon.

Now I want you to go to your portfolio and tell me which stock is "just right". Come on play a long with me a minute. Ok I'll give you one. MSFT Microsoft. You probably remember them. They used to be a big software company somewhere in the Pacific Northwest. They closed today at $31.91 a share. Is that just right? Ok show of hands. Everyone who thinks that $31.91 is the perfect price for MSFT raise your hands. Come on. No one?

Ok, now if you think $31.91 is too high, raise your hands. It looks like about 23 of you think it is too high and 27 of you think it is too low.

Let's try AAPL. Who thinks $602.50 is the perfect price for Apple? Come on, millions of people today determined that $602.50 was right price for Apple today. Who thinks that $602.50 is too high. Whoa, only 6 of you raised your hands. The other 44 of you think we have more of an upside from this price.

I know I can't really see your hands, but I am using the analyst sentiment for each stock to reflect what the "experts" think.

My point in going through this exercise, is to illustrate that while no one stock can ever be JUST RIGHT, the market can reach a point where the talking heads are evenly distributed positive and negative and I feel we are at that point. That implies that market is fairly valued based upon all that is known in the world.

You could argue that if you look at page B2 in the IBD you would see a NYSE short ratio at 15.77 which is a bit higher than the 5 year mean indicating a bullish sentiment. You could also cite the 15 % gap between the Investment Advisor's Bull/Bear survey. However if you listen long and hard I get the feeling we are in a good place.

This Bed Is Just Right. Now the question begs, whether it be tomorrow or next month or later this year, will we see a Bear standing over us or a Bull standing over us. I am leaning towards a short term bear as the market is way up since January and fund managers have to print a report saying how good they are doing. That will require some selling over the next couple weeks. Long term, I am thinking that housing will append the 2% growth we have assumed well into the back part of the year and into next. Median home inventories are looking stable and prices in that range may have bottomed. Rents are going up and we might see some new building numbers that could give an unexpected kick to this market.

But what do I know. I am just a blind folded monkey in the Stock Market Casino.      

Salve Lucrum