Junk faxes

This morning at 5:48, a fax touting a company called Superlattice Power, Inc. came across my office fax machine. The fax came from The Energy Bull which is in the business of "providing bullish picks in the energy and alt-fuel sectors." According to the fax, Superlattice Power Inc.(SLAT) "is an emerging leader in the development and marketing of the next generation of lithium-powered batteries worldwide."
SLAT is much better than the usual junk penny stocks that cram fax machines. It's got actual SEC filings and a market cap north of $200M. There's still no earnings though(it lost a penny per share last quarter). Plus, there's barely any cash in the bank(just under 19K).

Who is The Energy Bull? My Google search turns up nothing. I can only assume that they are a penny stock promotion service. They're not even a good one, as their fax contains spelling errors and language that is evasive and overly enthusiastic.

Let's look at the fine print on the fax for some clues:

The Energy Bull is an independent marketing firm...This report is based on The Energy Bull's independent analysis, and may, or may not be the opinion of The Energy Bull...The Energy Bull has been compensated twenty thousand dollars by a third party for the dissemination of this report.

However, the company published this disclaimer on its website:

Unauthorized Fax Disclaimer
It has come to our attention that unsolicited faxes concerning Superlattice are being sent out by Alternative Energy Advisor, The Energy Bull, and other companies. Management strongly recommends that you disregard these communications from Alternative Energy Advisor, The Energy Bull or any other purported companies; Superlattice has not authorized and does not condone them. Management is attempting to locate Alternative Energy Advisor and The Energy Bull to request them to cease and desist from sending any communications of any type whatsoever concerning Superlattice.

I'm willing to bet the the disclaimer is part of the scam.

Google "stock promotion" and you'll get thousands of companies that make a nice chunk of change touting stocks about which they know nothing. I'm surprised that The Energy Bull was honest enough to fess up to being paid by a third party.

I'm not saying that there aren't viable, investment worthy companies trading on the OTCBB or Pink Sheets. They just don't use promotional services to pump up their share prices. That's what their products and earnings are for.

Bailout coming

Ignore the government right now. Paulson is speaking in both Wall Street and Washington gibberish. Bush said the mortgage giants are “very important institutions.” That's all I need to know. Despite its claims, this President is ot a conservative. He loves government interventions. Plus, he wants his party to win the next election. Bush is already being compared with Herbert Hoover and if he doesn't do something to try and save the housing market and the economy, they'll be linked as twins.

The Dow is under 11,000. Remember Dow 14,000? That's about where it was a year ago when I began this blog. The housing market is tumbling and might need another 25% shave in order to adjust to reasonable levels. Oil has hit yet another record high. The dollar is getting its ass handed to it. Unemployment is up.

Can we finally use the recession word?

The GE earnings release told me everything that I need to know about this economy. One of the best-run companies in the world which is a master of managing earnings, reached into it's hat and didn't pull out a rabbit. Earnings were flat.

Read this statement from CEO, Jeff Immelt:

"Led by double-digit segment profit growth in our industrial businesses and a strong relative performance in our financial services businesses, we delivered a solid quarter in a volatile environment," GE Chairman and CEO Jeff Immelt said.


"Many markets and industries remain healthy, while the U.S. economy is challenged," Immelt said. "Opportunities in emerging markets, infrastructure, commodities and global healthcare are creating demand for our businesses, while we fight through the difficulties of a burdened U.S. consumer, a tough housing market, inflation and volatile capital markets. Even with all this uncertainty, we still see growth opportunities ahead."

That's a nice summary of what's been working in the market and what hasn't. Simply put, if you live in an emerging market, then it's Everybody Wang Chung Tonight. If you live in the good ol' US of A, the song playing on your stereo is Drive by The Cars.

I think that Fannie and Freddie will rally on Monday. Some people with short this rally. I am not that brave. I am going to buy this bottom and wait for the cavalry.

Requiem

Noted value investor, Sir John Templeton is dead. Pneumonia struck him down at the ripe age of 95. Sir John is famous for having founded Templeton Growth back in the 1950s and making early bets on the rebound in Japan. Sir John was buying international equities long before Long before Mark Mobius or Jim Rogers trading securities. Sir John was not just about money however. Through his foundation, he gave away $60 million a year for research into religion and science.

For insight into his investment methodology, take a look at Investing the Templeton Way: The Market-Beating Strategies of Value Investing's Legendary Bargain Hunter by Lauren C. Templeton, his niece. It's a remarkable story of the value of thrift, patience, and truly being a contrarian.

Is the sky falling...still?

Home prices are falling. Oil is trading north of $138/bbl. Banks are hard up for cash. Has the financial world been on a repeating loop for the last year? Weren't we supposed to be past ugly things like writedowns, dilutive offerings, shareholder lawsuits and arrests? Maybe we've fired up the DeLorean and no one told me. Let's see, the Celtics were playing the Lakers, that would indicate that it was the 80s. Donald Trump is ubiquitous and annoying. However, George Michael is out of the closet and I don't hear "Walk Like an Egyptian" everywhere I go. Alright, I've got my bearings now. It's still 2008.

So now I need to gauge how things are going in America. Luckily, Darden Restaurants, Kroger, Remy Cointreau, and Sonic are reporting today. That should give me a good sense of whether or not Americans feel rich or poor. After all, when you don't have money to eat out, but you just want a sip of Cognac to get you through the night?

My guess is that things are bad, but not quite this bad. Certainly, not Mad Max bad or Waterworld bad.

Unfortunately, this is how it's going to be for at least the next two years. It took a while for the excesses to build up and it will take a good while for them to be siphoned off. There is no miracle weight-loss cure for the American economy. Instead, we're going to get a steady regimen of rice cakes and exercise.

It's good to be king

It's good to be king and have your own way.- Tom Petty

Not only is Dick Fuld a billionaire who runs the 4th largest investment bank in the U.S., but he can also throw underlings under the bus when he screws the pooch. It's good work if you can get it. Don't tell me that Erin Callan wasn't doing her master's bidding while she was deliberately misleading investors about Lehman. Don't worry though, this is Wall Street. They're not being shown the door for leading the bank to a 3 billion dollar quarterly loss. They're just being reassigned, sort of like the Seinfeld episode where Elaine keeps promotes the crazed Vietnam veteran in the mailroom at J. Peterman because he's doing such a bad job. Where is the chorus calling for Fuld's head? Isn't the board supposedly looking out for shareholders?

Hollywood got it right about Wall Street 20 years ago.

Gordon Gekko: [at the Teldar Paper stockholder's meeting] Well, I appreciate the opportunity you're giving me Mr. Cromwell as the single largest shareholder in Teldar Paper, to speak. Well, ladies and gentlemen we're not here to indulge in fantasy but in political and economic reality. America, America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. Now, in the days of the free market when our country was a top industrial power, there was accountability to the stockholder. The Carnegies, the Mellons, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company! All together, these men sitting up here own less than three percent of the company. And where does Mr. Cromwell put his million-dollar salary? Not in Teldar stock; he owns less than one percent. You own the company. That's right, you, the stockholder. And you are all being royally screwed over by these, these bureaucrats, with their luncheons, their hunting and fishing trips, their corporate jets and golden parachutes.

Cromwell: This is an outrage! You're out of line Gekko!

Gordon Gekko: Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can't figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I'll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated.

Dick Fuld owns about 2 million shares; LEH has a float of over 500 million shares. In total insiders control about 3.6% of the shares outstanding. Do you honestly think these guys are working for the shareholder?

Maybe ol' Gordon was right.

Plunging

The market is taking a beating today. Why? The jobs report and oil. Let's ask ourselves, are these new phenomena? Hasn't news like this been reported for the last twelve to eighteen months? Just about everybody is taking a beating, but especially financials. Isn''t this also an old story? You mean there are still lots of bad loans out there and people who won't be able to pay their credit card bills, and this matters?

It seems that we priced so much optimism into the market that reality is getting it killed. It's like admitting that your kid is ugly after all. It's embarrassing and it hurts.

What is working right now? Energy. Should you rush there? Maybe. Now would be a good time to review your asset allocation. What's your exposure to energy already, not just in individual stocks, but via ETFs and mutual funds. Include your retirement accounts in this calculation. Do you need to rebalance?

As always, you should always look for bargains. The news often is as bad as the market would have you believe. Review the 52-week lows list. Try to identify beaten down industries. Set some price targets for favorite stocks.

As Gordon Gekko said to Bud Fox, "go to work."

Buffett's buys

These lists appear every quarter on investing websites, no doubt culled a lowly staffer burning the midnight oil, scouring the EDGAR database. Despite how much you might appreciate their efforts, ignore the info. It's not that helpful to know what Berkshire Hathaway bought after the fact. You'd want to know beforehand. What would be even more exciting would be knowing what is Mr Buffett's personal brokerage account, outside of Berkshire shares. I know that 99% of his networth is in Berkshire shares, but I imagine that he invests somewhat differently for just himself than for his shareholders. After all, he's dealing with a smaller sum, so he can buy all sorts of interesting, smaller stocks that he can't for Berkshire.

In others news, I was in the elevator at work and this index, the Tomo 300 flashed on the screen. It's an index that attempts to capture the value of intellectual property. Has anyone ever heard it referred to previously? I know that it's very new(it debuted in mid-December '06), but I can't think of ever hearing about it on Bloomberg or CNBC. There apparently are a few Claymore ETFs that license it and trade on the AMEX. The holdings are really all over the place: energy, telco, materials, consumer staples.