Round Rock Wealthbuilders January 2009 Meetup

The Chinese word for "crisis" is comprised of two symbols - Danger + Opportunity. In every crisis both exist and the true investor tries to find the opportunity in every crisis and profit from it. Round Rock Wealthbuilder's is dedicated to networking to identify and find the opportunities in every stock market or real estate crisis situation, and helping each other grow. The market volitility continued in November with triple digit DJIA swings. Hedge fund were blamed for the selloff as they sold everything to raise cash to cover investor redemption requests. Biotech (-11% YTD)and Medical Equipment (-15% YTD) have been the best sectors, but even they are down. The entire economy continues to feel the impacts of tighter credit and now the banks are cutting credit lines to consumers ($2 Trillion per Yahoo). Many economists say we're still in the early innings of a continued real estate and financial sector meltdown, with about 50% more to come. Small businesses are closing or laying off as they are unable to find ST money to borrow to meet day-to-day operational needs (see Republic Door & Window) and now consumer spending, a main pillar of the US economy, is the worst since 1942. Cash has been the best strategy for 2008 and the market dynamics remains a "sell the rally market." If large corporations are reducing spending, trimming payrolls and hoarding cash the mild recession could move to depression. Raw materials are still needed by China for their infrastructure development, even though demand is slowing. Prices of gold mining companies, even after gold dropped $150/oz., don't properly value reserves in the ground, and many gold and silver mining company shares are currently priced at less than book value. The price of gold/silver have either stayed flat or gone up, as valued in Rupees, Rands, Roubles, Euros, etc. and only dropped in the U.S. Gold and silver bullion are hard to find, and gold is seilling for a 12% premium to Comex prices and silver bullion for immediate delivery is selling for +50% premium. However, gold is small market and will continue to be subjected to bouts of extreme volatility. On the high dividend shipping sector: 90% of global trade goes by ship, and global trade is still higher than in 2000. Most of the ships are extremely oversold and offer excellent long term investments. NEWS: Many of the large oil companies are using tankers to accumulate oil at depressed prices and store it offshore (in friendly waters) but this is tying up ship tankers and they are getting their contracted day rates (CNBC 12/11/08). Stay with ships that have low debt loads and LT contracts of +3 years. At the December meetup there were 6 first time attendees and 33 returning members. The agenda included discussions on the financial liquidity and credit issues and main street impacts. More than 1 million jobs have been lost this year, the consumer has quit spending, the strong dollar has shut down the export pillar of the economy, Xmas sales forecasts are depressing, and Fed liquidity moves have yet to filter down to Main Street. Now pension fund losses are impacting state and local govt. budgets as they cut services to re-fund pensions. The good news is that IBD technical indicators from section B charts page, Investment Advisors Bull/Bear contrarian signals and the VIX are at extremes USUALLY seen at market bottoms, and LIBOR has dropped, suggesting credit is thawing. For the second half of the meeting we looked at the local real estate market with some of our local gurus and hot and cold areas of the greater Austin R/E market. Foreclosures are up 70% from the same time period in 2007 and tight credit continues to impact new buyers ability to secure a loan. Some creative strategies for finding loans were shared that are working. It's still a buyers pick-and-choose market and buyers with with good credit continue to face tightened scrutiny. Central Texas continues to be an attractive destination for retirees in general for it's low tax rate (Texas is #7 for lowest tax rate in the US), affordable housing, quality health care facilities, growth rate, temperate climate, and diversity of culture and other activities (Round Rock is ranked #7 as a best place to live in the August MONEY magazine). All IBD meetup participants are invited to a monthly Wealthbuilder's of Round Rock meeting, free of charge, now in it's 5th year. The evening's program is sponsored/chaired by two long time Round Rock IBD subscribers and sucessful investors who offer their combined outlook, including technical and fundamental analysis, on investing and trading opportunities for the coming month. Wealthbuilder members also include active real estate investors who share with the group their outlook on the greater Austin area real estate market.