Saturday, December 31, 2005

Happy New Year

Looking back at 2005, the market held up well considering what it had to endure. There was the nonstop rate hikes by the Fed, natural disasters and soaring energy prices. Here are the returns on the following benchmarks for 2005: DOW -0.62%, NASDAQ +1.37% and S&P 500 +3.0%. These aren't good returns, but it could have been much much worse. This year the active managers outperformed the index funds. It's about time! Well I have a small to do list for 2006. The first item on the list is to fund my Roth IRA. Like last year I'm going to purchase the Fidelity Contra Fund. I've had this fund since 1995 and it's always been a strong and consistent performer. Like I said before, I'm pretty conservative with my retirement portfolio and minimize individual stock holdings. The second item on my to do list is to aggressively raise cash for the remainder of the condo down payment. That means more sale of the company stock. And the last item is to really have some fun and start enjoying some of the hard earned cash! :) I think that's it for now...

Have a Happy, Healthy and Prosperous New Year!

Tuesday, December 27, 2005

Inverted Yield Curve?

If you look at the yield curve, the two year note yields are higher than the three and five year notes. This a small inversion, but I would treat it as a flat yield curve. A few more rate hikes and we'll see a clear inversion of the yield curve and this will be bad news for the economy. The bond market is telling us that growth will be stagnant in 2006 and if the yield curve inverts, we'll be looking at an economic slow down. A lot of people are dismissing the importance of the yield curve and I think that's a mistake. I put a lot of weight on the yield curve. It's had an excellent record in forecasting recessions and I don't see why it's different this time.

Saturday, December 24, 2005

Anyone Home?

The market is on a vacation until the new year. There's very little trading activity going on right now. Take a look at the volume, it's pathetic. So for now, I'm just going to start planning for next year. One area I would like to gain some exposure is the Japanese market. There are several Japanese ETFs and ADRs. Right now, I'm eyeing a Japanese exchange traded fund (EWJ) and Canon (CAJ). I really like the chart of both EWJ and CAJ, but I would wait for a pull back before putting any cash to work. I also wouldn't discount SONY (SNE) although they have stumbled a bit.

Friday, December 16, 2005

Pfizer Wins

Investors in Pfizer (PFE) have been eagerly waiting for the court ruling on the Lipitor patents. Late today, the court ruled that the Lipitor patents were valid until 2010 and 2011. This is a huge huge win for Pfizer since Lipitor makes up a huge chunk of Pfizer’s sales. Pfizer generated close to $11 billion in Lipitor sales last year. This uncertainty was holding down the stock price, but now there's the all clears signal. The stock jumped 12% in after hours trading on this news and will go much higher. Now I'm glad I didn't sell Pfizer.

Wednesday, December 14, 2005

Amgen + Abgenix = Good Deal

This is a smart acquisition by Amgen (AMGN). Today Amgen made a bid to purchase its partner Abgenix (ABGX) for $2.2 billion in cash. This acquisition will be dilutive to Amgen’s earnings for the next two years. With the acquisition, Amgen gains all the rights to panitumumab, a drug used to treat colon cancer. Investor's liked the deal and sent Amgen shares up 3.2% to $79.25 in after hours trading. Amgen is projecting peak sales of ~$2 billion / yr for this drug, but a few analysts think Amgen's estimates are too low. I've seen estimates for peak sales of this drug around ~ $3 billion / yr. These are just staggering numbers for a drug that hasn't even received FDA approval. Amgen obviously has plenty of confidence in this drug! Amgen's going higher...

Monday, December 12, 2005

Pfizer Showing The Money

With Pfizer (PFE) touching 8 year lows today, the company announced a huge dividend increase. They are increasing the dividend 26% to $0.24 per share from $0.19. This will increase the yield to ~ 4.5%, which isn't bad. This is definitely a good move by Pfizer to enhance shareholder value. With an aggressive stock buyback and a high dividend, I really can't see the stock falling any further. I'm going to stick my neck out and say that Pfizer has hit a bottom. The stock had a strong reversal from the lows after the dividend announcement. Management did the right thing by showing the money to the shareholders!

Saturday, December 10, 2005

Credit Card Blog

Here's a cute little blog. This person is trying to pay off their credit card balance and uses art to show their progress. Check it out: click here

Friday, December 09, 2005

A Dyslexic Mistake

Talk about a big typo mistake. A Japanese brokerage firm accidentally entered an order to sell 610,000 shares of a new offering at 1 Yen. The firm was supposed to enter an order to sell 1 share at 610,000 Yen. This typo mistake cost the firm $225 million. Ouch! You have to feel bad for the broker / trader, who entered the order. Here's a link to the entire story: click here

Thursday, December 08, 2005

Cold Season

Yeah, I'm coming down with a little case of the cold. So what do I do? I head down to my local drug store and pick up a pack of Cold-EEZE. I'm pretty skeptical of this stuff, but I've used it before and it does appear to reduce the cold symptoms much faster. Anyways, I'm checking out the package and notice that it's a public company. Quigley Corp (QGLY) manufactures the product. Just for the fun of it, I checked out the chart of QGLY. In fact the chart looks pretty good; the stock just had a nice break out. Unfortunately, this company is just too speculative. They've had accounting issues in the past and the recent spike was due to some new product announcements. They developed a mask that supposedly filters out and kills viruses. Seriously, who's going to walk around in public with a mask? I like the product Cold-EEZE, but not the stock.

On a different note, yesterday Amgen (AMGN) announced a nice stock buyback. They are buying back $5 billion of stock and that's on top of the $2 billion remaining in the current stock buyback. This accounts for ~ 10% of the outstanding float. Stock buybacks are generally bullish for the stock. Management has confidence in the future outlook of the company and feels the stock is a good value. The stock buyback will also increase the earnings per share. Amgen’s going higher…

Tuesday, December 06, 2005

More Amgen...

My cash position was getting uncomfortably high so I decided to put some of it back to work. I nibbled at some more Amgen (AMGN) today. There's pretty good support for the stock around the $80 area so we'll see. I still have Pfizer to deal with... Everyone, who has Pfizer, is probably selling for tax loss purposes. Pfizer will probably pop a bit in January when all of the tax loss selling is finished.

Monday, December 05, 2005

Boston Scientific and Guidant??

There were rumors last week that Abbott Labs (ABT) was interested in acquiring Boston Scientific (BSX). Well, today the truth comes out; BSX is going after Guidant (GDT). This was a total surprise to me! I couldn't believe it after reading the headline news. Now the big question is: Who wants GDT more? BSX or JNJ? I think both JNJ and BSX need Guidant. JNJ has a more solid currency, but is it willing to raise the bid? After what GDT has gone through with JNJ, I can see GDT being more receptive to the BSX offer. I can also see the great synergies between BSX and GDT. This would be my preference in this potential marriage. The shareholders will ultimately decide. This drama is far from over...

Today, I made a very small transaction. I sold my position in Cytyc Corp (CYTC). I didn't make any money in it. It's a nice little niche company, but a big chunk of the business is selling HPV detection systems. Merck will soon gain FDA approval of a HPV vaccine and that's going to be a problem for Cytyc. Glaxo Wellcome (GSK) is also close to marketing its HPV vaccine. I just think there are safer plays out there right now. It's all about managing the risk and reward.

Saturday, December 03, 2005

Another Portfolio Update

Well another month has gone by and the years almost over. How time flies, huh? Here's my current non retirement portfolio with the % holding and % return for each holding. The only thing I really need to do is to sell Pfizer before year end to realize the loss. This one really bugged me. I had a nice gain in Pfizer and has now developed into a loss. This should never have happened! I'll learn from this mistake.

Ticker % of Portfolio% Return
Amgen (AMGN) 2.88% +4.48%
Biogen Idec (BIIB) 3.09% -22.48%
Boston Scientific (BSX) 3.89% -4.61%
Cytyc (CYTC) 0.99% -1.17%
Genzyme (GENZ) 63.97% +287.72%
Invitrogen (IVGN) 3.64% +312.68%
Microsoft (MSFT) 1.13% -29.09%
NASDAQ 100 (QQQQ) 1.50% +51.71%
Qiagen (QGEN) 10.19% +208.88%
Pfizer (PFE) 4.10% -25.30%
Sepracor (SEPR) 0.99% -9.02%
Cash 3.59%

I usually don't trade much in order to minimize taxes and transaction costs. Here are all of the trades I executed this year with the % return. The only one I regretted selling was Apple; that was a bad trade. I sold Apple way too soon :( I'm not going to complain. It's been a very good year and I'll be writing a big check to Uncle Sam this tax year.

Ticker % Return
Apple (AAPL) +10.39%
Fisher Scientific (FSH) +20.96%
Genzyme (GENZ) +243.75%
Johnson & Johnson (JNJ) +8.69%
Las Vegas Sands (LVS) +20.79%

Thursday, December 01, 2005

Negative Savings?

The US Government just released the personal income and initial jobless claims data this morning. What’s interesting is that with “incomes rising faster than spending, the personal savings rate improved to negative 0.7% from negative 0.8%. The record low was in August at negative 2.2%. The savings rate has been negative for six of the past seven months.” This is not good… it basically says that people are living off credit. It’s just a ticking time bomb…