Tuesday, July 1st, 2008 Recap

I've been away for a few days. I was unable to do my usual weekly roundup and I was not able to make a post yesterday. On Friday, my portfolio outperformed the DOW as it was down only .5% compared to a 1% drop for the DOW. On Monday, my portfolio again outperformed the DOW with a .35% gain versus a fractional gain in the DOW. This ran my record against the DOW to 6-0. On Monday, I began tracking my portfolio against the S&P 500 index. I started with a win for a 1-0 record. Today was a different story as my portfolio was down about .1% against gains in both the DOW and the S&P. This makes my record against these indexes 6-1 and 1-1 respectively. There wasn't a lot of news on the day, but the DOW went for a wild ride. By late morning, the DOW had dropped more than 100 points below yesterday's close twice with a trip into positive territory sandwiched in between. At the closing bell, the DOW was up 32 points.

News specific to my portfolio:
Since I haven't made an entry since last Thursday, I wanted to mention that I sold out of Apple (AAPL) and Raytheon (RTN) on Friday. I like both stocks and I will probably regret selling them, but I just felt it was time to get rid of both given the near-term outlook. First, with AAPL I fear that they will not be able to sell as many new iphones as originally predicted. Gas and food prices have continued to rise and I think we will see more food inflation in the coming months as companies start to pass on price increases to the consumer. There are many factors that have been driving the oil market higher and it's uncertain whether this will continue or not. Either way, gas prices are elevated and iot appears they will stay that way even if prices drop. To me, this all says less spending by consumers on things like the iphone. In RTN's case I'm afraid the upside will be limited until after the Presidential election. The current polls are showing Obama leading McCain and this is perceived to be bad for defense spending in general. I continue to believe that RTN can increase earnings by selling to foreign countries, but the U.S. defense budget is by far the largest in the world and this is what is driving the stock price at the moment. Today, Teva Pharmaceuticals (TEVA) was my biggest gainer tacking on 2.6%. However, we'll have to keep an eye on this one tomorrow as after the bell the company announced they had lost a patent dispute against Astrazenica (AZN). Both Bucyrus International (BUCY) and Chesapeake Energy (CHK) were big winners today advancing more than 2%. Tomorrow will be an interesting day for CHK. After the market closed, they announced a joint venture with Plains Exploration. The deal seems pretty sweet for CHK as they sold 20% of the land they have in the Haynesville Shale to Plains for $1.65 billion and also agreed that Plains would pay money to drill wells for CHK. Apparently, other investors agreed with me as the stock traded up to $70.75 in after hours trading. This represented a $3.39 move beyond the closing price. US Steel (X) was the biggest loser on the day dropping over 5%. Apparently, investors were in the mood to sell steel stocks as the whole group suffered. I want to buy more of this stock if it drops below $170 per share. The steel companies have pricing power right now and I think this will be shown in the next quarter's earnings reports. One concern about the steel sector has been increasing input costs. This is where X has a bit of an advantage as they own most if not all of their supply chain. I look for this stock to go above $200 soon and still higher as we move toward the end of the year.