Betting on a Higher S&P 500 for December Written By: David Neubert 2007-12-05 16:06:07 I bought some S&P 500 futures betting on a higher U.S. stock market for December. We have lower interest rates, a cheap dollar and U.S. companies at the cheapest forward price earnings ration in years. What's not to like? Do I have a stop on my position? You bet! I don't want to take a pullback of more than 1% on this market.
My hedge? I bought some puts on the Emerging Markets Index ETF (EEM - $159.44). My thought process is that only a global meltdown could hurt my position. The U.S. is poised to outpeform in December.
Disclosure: While I am long 160 strike puts on EEM, I am also short some 100 strike puts.
Extra Disclaimer: Futures and options are highly leveraged instruments. Do no use them unless you can afford to lose your entire initial investment and then some extra on top of that. Do not play with matches around gasoline either.
Green Century Balanced Fund (GCBLX) Offers an Environmentally-Friendly Investing Opportunity Written By: Miranda Marquit 2008-08-15 10:31:51 With green investing becoming more popular, many people are looking for ways to diversify into green holdings -- and even diversify within their green holdings. One way to do this is with green funds and indexes. And a green fund that is doing fairly well, considering the stock market performance over the past year, is the Green Century Balanced Fund (GCBLX). GCBLX chooses from stocks and bonds from environmentally companies, according to the fund's objective.
Level 3 Assets at Big Brokers - Not as Scary as People Say Written By: David Neubert 2007-12-14 12:08:58 Felix Salmon at Portfolio.com dug up the ratios for level 3 assets at each major Wall Street broker. This ratio is seen by some to be "scary." I don't find it as scary as some. The assets in Level 3 are mark-to-model. Some of these could include complex derivatives for which there is no market that exactly hedges assets, hence the high risk in panic liquidation but not so much in cash flow. Their markets are worried about some of those with the highest ratios of Level 3 assets to capital. Personally, I trust the risk managers at firms like Goldman Sachs (GS - $212.89), Morgan Stanley (MS - $50.88) and Lehman Brother (LEH - $63.03) to be able to correctly value these situations. I do believe the market will continue to focus on this ratio, which will encourage firms to try to move more assets out of this category.
Playing Year End Tax Selling: Buying Starbucks Written By: David Neubert 2007-12-14 12:56:23 Starbucks came up on my year-end tax selling screen, so I decided to take a look at its valuation. Everyone loves to hate Starbucks (SBUX - $21.20). The stock as been on a one-way ticket to hell, falling nearly 50% from its highs created by what I term the "Starbucks Bubble." In my experience, when stocks go down like this (deflating a bubble) the stopping point tends to be a 50% drop. But that is not why I chose to buy the stock here. I bought Starbucks today because it represents value at only 19 times next year's earnings. The stock also gains from the deflated dollar, as its earnings overseas are increasing.
In general, I think that Ford motor company is in trouble because they lack innovation. They rejected building and researching hybrids and will further continue to reject building cars with alternate energy sources unless led and forced by the more innovative German, Japanese and, maybe now, Chinese manufacturers. By owning the preferred stock, which I think of as a really risky subordinated high yield bond, I profit and Ford survives, but I do not need them to lead.
I would prefer to bet on the long term survival of Ford (either as a subsidiary of another company or because of a government bailout) than the long term success of Ford. This is not to say that the knock down to $6.70 a share might not represent an opportunity for a short term trade on the bounce back after the year end tax sellers are done.
Starbucks came up on my year-end tax selling screen, so I decided to take a look at its valuation. Everyone loves to hate Starbucks (SBUX - $21.20). The stock as been on a one-way ticket to hell, falling nearly 50% from its highs created by what I term the "Starbucks Bubble." In my experience, when stocks go down like this (deflating a bubble) the stopping point tends to be a 50% drop. But that is not why I chose to buy the stock here. I bought Starbucks today because it represents value at only 19 times next year's earnings. The stock also gains from the deflated dollar, as its earnings overseas are increasing. 
