Buying Oil Now Is Not Profiteering

Today I bought some oil via USO. Oil still has ample upside in the short run because of geopolitical risk in the middle east. The speculation of conflict between Iran and Israel this summer has everyone giddy for Oil. Of course the prospects of this situation scare the hell out of me. Russia and China will back Iran and World War 3 will go down. People will get nuked and it may be the end of the world as we know it.

Buying USO right now is not profiteering. I call it making the best of a shitty situation. If I was orchestrating the war and simultaniously buying oil it would be a different story. I am just playing the hand being dealt.

www.greedypicks.com

Bought some shares this morning…

Fluctuating prices is my addiction, when the stock market closes I itch like a crackhead yearning for a fix. Left with just thinking about the market, I’ll share some thoughts.

Earnings this week should provide more insight on how high-income consumers are spending money. On Tuesday we have Saks and Macy’s (Bloomindales), and on Wednesday Toll Brothers reports.

‪Marc Faber recently reiterated some valid points on he is bullish on real estate. Essentially, existing supply and the rate of new construction will not satisfy future demand from immigration and population growth.

I am considering getting long oil, even if only as a hedge for my personal gasoline consumption. One area of LA already has nearly $5.00/g gas.

Of course $5 gas is not sustainable in the long run, demand destruction occurs above $4, people will adapt and consume less i.e. car-pooling, utilizing public transportation, staycations, green technology, etc.

In the short run anything can happen with current geopolitical risks in the Middle East. $5 gas could be a fantasy in a couple months.

Greece will be the recipient of another bailout package. Germany is the boss and Merkel will not tolerate a Euro-Zone calamity in an election year. She is popular amongst Germans, why risk screwing up an easy re-election?

Greece still has cancer and will eventually default, but this scenario will have to wait until Merkel’s next term.

Railroads look oversold and attractive. UNP is my favorite prospect. NSC also looks good if it can get above the 200 SMA (~$70).

www.GreedyPicks.com

Early this morning I closed out my short position in SDS for a small loss. I decided that better than expected employment numbers and Germany’s insistance that a Greek bailout package gets approved by 2/20 warrented a change of opinion and direction.
Therefore, I repurchased my AAPL position at relatively attractive prices this morning.

DUK earnings were better than expected. $.24 vs $.21 est. Outlook was inline.

FCX had some nice moves today.

Today I reluctently/thankfully sold out of AAPL above $515 and began accumulating a short position with SDS, Right now it is small but I will press my short bet as the market falls. Playing the downside right now is not such a bad idea. I also closed out and booked profits on TIF.

The market has done shit since last Friday, but my portfolio does not reflect mediocrity due to its excess weight in the holy of holies, Apple Computer.

Apple has never heard of Greece, it does not subscribe to Moody’s or S&P, it does not care if slaves assemble their products and it certainly does not care where the market is heading.

Apple is like the Honey Badger, it straight up don’t give a fuck.

Judging by todays final minutes of trading the Bulls are not ready to roll over.

The diagram above was recently depicted in a letter written by David Einhorn of Greenlight Capital.

On the eve of Greece’s parliamentary vote to approve a new bailout deal, this simplistic and beautiful diagram is extremely relevant. Everyone expects the bailout package will inevitably be approved but no rational minded individual would deem the crisis resolved. These bailout packages are not designed for Greece to fix their fiscal problems, they prolong and aggravate them. To make creditors whole Greece would have to grow their way out of debt, and judging by the health of their private sector, this is a hopeless scenario.

Eventually there will be an orderly default, and a Eurozone minus Greece will be a lot stronger.

I am very paranoid the market will correct itself soon. The cover of Barron’s this weekend, “DOW 15,000” certainly supports that theory. As a general rule of thumb, never trust anything on a Barron’s cover.

Going into this week, my portfolio is ~60% long.

I bought 30% more AAPL shares.

Allocating more capital to a winner is usually a good idea.

Chasing stocks is usually a bad idea, but since Apple defies the laws of the universe they’re an exception to the rule.

www.GreedyPicks.com

All of Obama’s critics like to pretend he is driving our economy off a cliff. This simply is not true. Nearly a quarter million jobs were created last month. Monthly job growth has been accelerating at pace that should be alarming all republicans. The best part is all the job creation has taken place in the private sector, while public sector jobs are ritually destroyed every month.

There is a renaissance occurring in American Manufacturing as our declining dollar creates more attractive exports for other countries to purchase.

The best thing about Obama’s presidency so far has not been healthcare reform or shooting Osama Bin Laden in the face, it has been stock market performance. S&P 500 returns are the single most important factor in judging a president. Obama has excelled. Since his inauguration on January 20^th 2009 the SPY (S&P 500 ETF) has returned 67%. During George W. Bush’s 8-year reign of ignorance the SPY fell 40%.

Fun fact: When G.W. Bush took office on January 20^th, 2001 the SPY was trading at $134.02. On Friday it closed at $134.54.

www.greedypicks.com

The market continues to surprise me by ignoring overbought signals and peddling itself higher, rewarding distinguished risk-junkies and frustrating the hell out most retail investors, who are stuck on the sidelines. If overheated equities want to continue ignoring the laws of gravity they will need retail participation.

One possible catalyst for getting the average-Joe excited to own stocks: Facebook’s IPO. Despite being incredibly overvalued and having extreme downside risk, Facebook will undoubtedly attract record amounts of retail interest. Degenerates from all over will fight over shares when they start trading. Their irrational exuberance may persist for an extended period of time, perhaps weeks. Inevitably, FBOOK will be an epic failure for buyers and huge opportunity for sellers. With hardly $4B in revenue, I think they would need to grow sales 4 or 5X in order to justify their rumored $100B valuation.

Current Longs: AAPL, BMY, DUK, FCX, TIF, ALXN, DLTR, GOOG, LO, VFC