Don’t miss this deal if you want to buy something online. Here is the link to the deal. You will need to spend at least $30 excluding shipping charge, and obviously have a paypal account. I plan to purchase some stock newsletter.

Enjoy.

Just for today for a change of topics. Let’s all forget about money/finance/politcs and remember our Valentine today.

Full copyright reserved
Written by “Frugal” at My 1st Million At 33.com in the period of 10/28/95 – 11/20/95

P.S. I guess now you can tell your romantic lover that you are reading something “useful” now. By the way, it doesn’t rhyme but this is the best that I can do.

In Counter currents in the market, I postulated upon a bear capitulation based on the resilience of major indices and the Dow Transports making a new high (a Dow Theory confirmation signal). No such capitulation came. Instead, the market wondered aimlessly with compressed volatility for several sessions. Then came the sub-prime debacle at HSBC and New Century (brief summary). The stress in the sub-prime market was well known, even I mentioned it in Counter currents in the market, yet the market still seemed surprised by how bad the news was. So is the market really efficient? Something to ponder. Anyhow, even though I was shorting home builders and mortgage lenders on and off, I wasn’t positioned for this implosion. I suppose I had a little too much trust in the market.

It’s doubly interesting to note that the market was once again on the ropes today and was able to pull through on the back of an acquisition rumor of Dow member Alcoa by either BHP Billiton or Rio Tinto for $40B or a 33% premium based on Tuesday’s closing price. I can just see the bears pulling their hairs out as everything they’ve been saying about the housing sector are being vindicated and the market still merrily chugs along. For this reason, I’m still expecting a capitulation top. After that, we can start talking about a market correction of some depth.

I haven’t owned any base metal miners since last May. As can be expected, the whole sector got a lift from the AA rumor today. I took the opportunity to purchase some Teck Cominco (TCK) in part based on its nice looking technical setup. It closed at $74.23 during regular hours and clocked in at $75.80 in after hours trading. This is well above the 50 dma at $73.06 and the upper boundary of the triangle. Moreover, momentum indicators are all pointing up.

The AA buyout rumor is a continuation of a torrent of M&A activities in the base metal mining sector. Not too long ago, TCK tried inviting itself to the courtship dance between Inco, Falconbridge with Xstrata also butting in. Inco completed the merger with Falconbridge only to be gobbled up later by CRVD. TCK has a market cap of $16B as of Tuesday. Compared with BHP Billiton (BHP, $133.6B), Rio Tinto (RTP, $71B), CRVD (RIO, $84.5B), Freeport McMoRan (FCX, $11.1B to complete purchase of Phelps Dodge, $25.3B), and Xstrata (~$45B), its figure is decidedly slim in an industry where size is a prerequisite for survival. Will it finally don the pretty white dress? I keep my fingers crossed.

As I have described how a financial bubble progresses and deflates in my previous posts at My 1stMillionAt33.com: Comparing Bubbles in Real Estate and Stocks, and Best Example of the Real Estate Bubble, this “small cap” and “big cap” phenomenon is repeating itself over and over again. CNN Money news again confirms my observationa and theory.

Another way to visualize the progression and deflation of bubble, think of all individual units as either small cap, mid cap or big cap, with the big cap at the center, while the small cap at the furthest out, all in a circle. The hot money is like a force, lifting and concentrating its force at the center, the big cap goes up first. When the force is sufficiently large, the upward momentum starts to propagate out and lifts mid and small caps. In the last stage of a bubble, the small cap may have the biggest percentage rise-up, but the rise and fall may come very quickly and is not guaranteed. Once all the monetary forces dissipates throughout too big of an area, the upward synchronization cannot continue and breaks down. Since majority of the force is still in the center, the big cap will fall last. But the small cap and mid cap will suffer first. It is not guaranteed that the big cap will suffer a complete breakdown at the end of the bubble deflation. But such breakdown in the big cap will suffice to create the final panic and despair needed to mark the end of a financial breakdown.

You can take my words or trash them. But I still think that although real estate may not be falling down hard in the absolute non-inflation-adjusted price, it will not go up for the next five years with a very high probability. Anyone who is not in hurry can wait and put their money into the next forming bubble. So far, it appears that the markets like to make stock market the candidate. Don’t let your money sit idle or going down in real estate.

Posted by “Frugal” at My 1st Million At 33.com.

My blogging partner ML just had a new baby daughter (click to read more details) arrived in his family.

I want to take this chance to congratulate to him and his family.

A new life is precious in all ways. I wish that God will bestow all good fortune and wisdom upon his new daughter Alexandra.

Frugal

I guess the news is coming much sooner than I think it would. Baked good prices may rise more!! My last article on agricultural product inflation was for 2008 news headline. But food inflation is already slowly creeping into our everyday life. I advocated buying ADM stock in my previous post, and it went up by more than 10% the next day. Did you get a chance to ride the bull before it took off?

If you have some storage space, it probably won’t hurt to stock up some unperishable food assuming that your return will be higher than the interest rate in the bank. Or at least for emergency purpose. I hope the wage inflation will go up enough for everyone out there, . At least, the minimum wage has increased from $5.15 to $7.25 per hour over next two years, a 20% salary boost per year. Just wish I could get half of that percentage increase. But ALL these American workers fully deserve/need every cent of increase.

Posted by “Frugal” at My 1st Million At 33.com.

Baby Alexandra (Alexis) arrived at 3:09 AM, Thursday, February 8th. Two weeks prior, there was a fear that she might have been breeched. I was temporarily mortified by the prospect of her having my wife’s sense of direction but fortunately ultrasound later showed that worry to be unfounded.

Alexis came almost two weeks early. She also took after her mother and weighed in at a petit 6 ponds even, but it still took 3 hours of grueling pushing to bring her into this world. Both Mom and Baby are doing very well.

So begins a new chapter in our lives where each decision takes on greater significance. As far as our finances are concerned, we’ll continue to live and invest as wisely as we can and share our experiences here.

That explains my lack of blogging in recent days. My apologies also to comments that went unanswered. Things should start to improve next week.

Best.

This appears to be the beginning of the vicious cycles. Lax lending standards have resulted in loan buybacks and losses. Now they are forced to tighten up the lending standards, which will decrease the loan volume, which decreases profits, etc. This year of 2007 just started, and still a trillion dollar of refinance to go….

Here are some of the symbols that I watch.

Symbols Percentage Dn/Up on 2/8/07 at 8:30am
CFC -2.70%
CTX -2.51%
HBC -2.42%
KBH -2.76%
LEN -2.48%
LEND -8.17%
MTG -3.71%
NEW -36.21%
NFI -11.12%
PHM -2.37%
XHB -2.52%

Housing market is the big elephant in the room that every stock bull wants to pretend not seeing, and won’t talk about.

And what did Fed governor said? “[Interest] rates may have to go up”. Yeah, right! Notice that gold and oil investors are gradually tuning out on the Fed babbles.

My job has become quite busy. I am unable to write more. I decide to cut back on Thursday, so that there will be posting on Mon, Tue, one of the days from Wed/Thu, and Friday.

I’m not sure if I want to make this permanent yet. But it will be like this until further notice. Writing at 2:51am is no fun. Barely keeping myself not falling asleep. Yeah, another 4 to 5 hours and I really have to wake up.

Have a good day.

Frugal

The following carnivals featured 1stM@33 submissions. Please check them out for more stimulating readings. I decided to move Carnival announcement to Wednesday so that it is less confusing.

1. Carnival of Investing at Money $mart Life
2. Carnival of Personal Finance at Simple Dollar
3. Carnival of Frugality at Frugal for Life

Enjoy!