Thursday May 17, 2012 7:15 AM CST
Rich Karlgaard is the Forbes Publisher. He has an interesting take on the Facebook IPO on page A 15 of today's WSJ. I have not seen anyone else making this comparison but Mr. Zuckerberg may be the reincarnation of P T Barnum. Barnum was famous for giving the public what it wanted and never underestimating the questionable taste of that want.
And so Mark has catered to what Dale Carnegie said was important to people, themselves. While E Bay created a national auction marketplace, Mark created a national personal scrapbook. It is as though, aal the 1960s, you could invite the entire nation to your own personal slide show.
Rich asks it we would prefer owning Twitter, Facebook, or fracking technology, yep I'll take the latter. I'll pass on his idea bout robot driven cars. But the article on page 3 pictured on page A1 is turly amazing. Here wheelchair bound stroke victims are able to use their own thoughts to move robotic arms. Now that would be a valuable IPO.
But, recall two of our recommendations on December 26, 2011.
We liked RIG at 40, essentially its book value, It zoomed to 57 by mid March.
We liked GM at 20, essentially book value, with enough tax credits to essentially be its own municipal bond fund, no taxes for years. It zoomed to 26, not as spectcular but not bad.
We have noted that CEF is back to its Dec 26 levels. Now we learn that Mr. Buffet owns 10 million shares of GM. It as the only auto stock up yesterday Shall we join the oracle of Omaha??
GM
So far a nice series of lower highs. And Barrack's favorite auto company. The election will be won in Ohio, Michigan, Wisconsin. Do not discount favors for companies employing voters in those states the next few months.
RIG Transocean
Here is a May 14 look at RIG and its balance sheet. THere is a clear reverse head and shoulders pattern here.
Seadrill SDRL looks much much better. But the money is made buying things that are out of favor as we have done with SJT and HGT. Note that as everything else, stocks, oil, gold, plunged lately, our pick, nat gas has soared from 1.90 to 2.45.
The year end provided us with a handy line of demarcation when we could expect the tax selling to abate. We lack that sort of line in the sand now. But I suspect accumulating some GM and RIG here could pay off the same way or better. As always owning shares of any individual company is fraught with danger. we noted JPM and JCP in our last post.
Want to speculate on the oil price? Here is a way to do that and earn 6.8%.
PBT Permian Basin Royalty Trust
We promised to keep an eye on the Energy Trusts and this is becoming a compelling opportunity. Like RIG we have the inverse head and shoulders pattern. And we are close to recent lows where PBT rebounded in good fashion. As always never buy any security much less one company without your own thorough investigation.
Final Thoughts
Stock market crashes do not occur when millions of small investors are fearfully crowded into 'safe' T Bonds yielding 2%. They occur amid the giddy expectation that the stock market will continue up. Which social mood prevails now? Fear prevails as millions have taken shelter in TLT and such. Such behavior cannot be rewarded by the market.
These bond holders must be forced back into the stock market just as they were wen 2012 began. Granted the rally only lasted a matter of weeks. But it pushed stocks to new highs.
This pattern of up and downa, in and out, will likely continue for the next three years as it did in the 1930s and 1972-74.
Comments