WFG Top Stock Picks in "Good Company"

The primary time of year for my/our robust stock and portfolio analysis is November and December.  This time period allows for a full review and appraisal of all current holdings and consideration of potential changes as we enter a new calendar year.  We, of course, evaluate all portfolios and holdings throughout the year, but desire to give each year's top picks time to run, unless new information comes to light that provides a cause for a making a sale or adding a new position that we believe meets our  ConVal^® security selection criteria.

The table below reflects what Morningstar calls the top picks at any given time of their "Ultimate Stock-Pickers."

 

It is very interesting to see that of the 70 stocks WFG currently owns via our ConVal^® process, all of the stocks on the list above are owned by WFG, except Wells Fargo.  These stocks were either already owned in 2010 or purchased in January of 2011.  Of greater note is that WFG identified many of these stocks as top picks earlier than the M-Star "Ultimate Pickers" did.

Investing Lessons

1. Bigger is not always better

2. WFG's ConVal^® process is a winner

It Was Time to Hedge Our Gold Position

With Gold continuing its parabolic ascent, we made the decision this week to hedge 50% of our exposure to Gold ETFs owned in our no load mutual fund.  We still believe the secular bull trend for the yellow metal remains intact but Gold is long overdue for a shorter term price correction downward.  Silver experienced such a correction several months back.

Investing Lesson
It's never a bad idea to take some chips off the table and protect your profits when any particular investment has run very far, very fast.  Knowing when to do this and how to do this is what separates a "good" professional money manager (hard to find)  from the self-directed investor, who more often than not will do the exact opposite; buy high and sell low!

You Know The U.S. Government Is Screwed Up When ............

Who's ready for iAmerica?

As reported by the BBC and backed up by the company's financials records, the software company Apple has more cash on hand than the United States federal government.

Apple's quarterly financial report shows that the company responsible for the iPad, iPod and the iPhone now has $76.4 billion in reserve cash while the U.S. Treasury Department is sitting on just $73.7 billion.

In my opinion, the feds could probably learn a thing or two from Apple's success. Congress remains embroiled in a debate over spending and whether the federal government, which currently owes trillions in debt, should be allowed to borrow even more. International credit rating agencies have threatened to downgrade the national debt for the first time in the nation's history if Washington doesn't come up with a solution to lift the $14.3 trillion debt ceiling while implementing a concrete plan to get the nation's "financial house" in order.

Meanwhile, Apple's financial report shows that the company's profits, even through the last recession, are booming!

Investing Lesson

When all is said in done, when it comes to politicians, more is said than done.

My Opinion

It still pays to be very conservative at this point in time. The numbers on the U.S. economy came in Friday and were unfavorable. There is still at least a 50% chance that before this market cycle is over, the economy may slip back into another recession, with the market taking a final 30-50% swan dive downward.  If and when that happens, it will then be time to load up the truck and invest aggressively.  Patience, is a virtue, but difficult for many to maintain.  I remain resolutely patient. 

PS: Any agreement on a balanced budget amendment will not be worth the paper it is written on, but will be hyped as a great victory, with no details and the teeth of someone with their dentures sitting in Polident.

The Power of Perspective

Carl Richards has become famous for his ability to create cartoon drawings, that are simple in nature, yet communicate powerful financial concepts.  I have shared his work with a number of WFG clients.

Carl has now moved into video blogging.

Watch the short video on:
The Power of Perspective

Investing Lesson
Many things in life are often harder than they look, including investing!

Iowa Indy Corn 250 and the Ethanol Boondoggle

A departure from the usual financial oriented blog, I spent last weekend in Iowa at the Indy Racing League (IRL), Iowa Corn 250 with my 18-year-old son, Sean.  That said, view the video then read the financial implications of our trip to the corn state!

Being from Indy, having been to over 20 Indy 500 races, but never having ventured beyond, this was a real treat.  I TiVo every IRL race each week.  I have come to eat and breathe IRL like I do Butler basketball.  Hey, I am a kid from Indy!

Life Lesson

Spend more time with your kids!

Investing Lesson
For the past four IRL seasons, the league had an arrangement with the ethanol industry, of which all cars, all season, ran on ethanol.  For the 2011 season, this is no longer the case as the cars are now running on that nasty fuel...gasoline!

Rumor has it that Congress is close to reversing the 50 cents per gallon subsidy for ethanol. If it does so, the fuel is not cost competitive. The most reliable studies on ethanol have revealed the following:

1. Without the 50 cents per gallon subsidy, the fuel is not cost competitive with gasoline.
2. Regardless of subsidy, the boondoggle of artificially promoting a "greener" fuel has had widespread, negative implications.
3. The cost of corn has skyrocketed over the past five years, causing Americans of all incomes to suffer an "ethanol grocery tax."
4. The amount of energy that it takes to produce a gallon of ethanol exceeds the "carbon footprint" of producing a gallon of gasoline.
5. Game, set, match.

We have the world's greatest natural gas reserves and have not figured out that natural gas is the wave of the future.  Why, you might ask?  Lobbying of course!  Hopefully, Congress, on the latest and third try, will pass an energy bill that places natural gas incentives as the number one way for America to more quickly move towards energy independence. Don't hold your breath!

There you have it!

Money Anxiety Index: Latest Sign of Double-Dip

Great article from CNBC about the increasing potential for a double dip recession.  Click on the blog title above to access.

Investing Lesson
The time to prepare for a storm is before it hits.

Stock Market Declines For 7 Weeks In A Row, The Longest Losing Streak In 10 Years

Investing Lesson

The chances of a "double dip recession," which I predicted last summer, but was obviously early about, is again fair game.  I believe it is better to be early and correct, than late and wrong when it comes to assisting our clients in navigating these turbulent financial times.