No Place Like Home

I read once that the sense of smell is the one of the five senses most powerfully associated with memory, a connection to which I can personally attest. To this day the scent of freshly-cut grass takes me back to when I was just a little tyke and the Fridays I would spend outside while my mother worked through various projects in our yard with her gardener. His name was Ernest, and my mother would put much effort into preparing for this one day of the week when he was there to do everything from mowing the lawn (with a manual push mower) to planting new shrubbery and flowers she had collected during the week. Today, Ernest's job has been replaced  by the lawn services of the "mow, blow, and go" variety, where any suggestion of a project list for the day would require major rescheduling and price negotiations. Their business model depends on a quick in and out. My mother's job, it seems, was somewhere along the way replaced by lives too busy to devote an entire day to the yard.

I must have caught a good whiff of grass recently (Zoysia, that is), or more likely I have in mind that my grandson will soon be puttering around in the garden with me, because my thoughts have turned to the efforts we put into caring for our homes and environs. As for a memory not prompted by olfactory experience, I recall the trend known as "cocooning," posited by futurist and author Faith Popcorn in the early 1990s. Popcorn's thesis postulated that people would put more resources--time, energy, and money--into making their homes more liveable and comfortable ("nesting" is another term for this), and thus would spend more time away from the public sphere. She also predicted that people would shop at home online well before we all started browsing for Christmas gifts in our pajamas. My wife and I frequently talk about how much we enjoy working together on those little projects in the yard and in the house that make our place more enjoyable for us and more inviting for friends and family. Cocooning does not mean being a hermit or a misanthrope, but I can tell you that the more we work to improve our home, the more we want to stay around and enjoy the fruits of our labors--sometimes just the two of us, often with good friends and family. And let's face it, we could all come up with a litany of reasons not to go out: crime, traffic, crowds, armed citizens with short tempers, unmannerly and nonchalant service people, etc.

It would be folly to make investment decisions based solely on the musings of futurists, whose wrong predictions cost them only credibility and not real dollars. Even with cocooning put away in our box of fanciful notions, though, we still face the very real issue of the housing market and its ensemble of players who have had the wind sucked right out of their sails for at least five years now. Disbelief might be the best word to describe the reaction of investment commentators to the notable surge this year in the home-builder stocks, and such disbelief is good news for the sector's future returns. As investors, we all need to stay in touch with our "inner contrarian," because the future of any sector or stock depends on there being some skeptics on the sidelines. Once everyone has become a true believer, there is no one left to buy. If you are waiting for someone to sound the "all clear" on the housing sector, then you will miss the best returns. So, I am happy to put out the welcome mat for the skeptics. The market is always telling us something, though, so we need to consider the year-to-date performance of some of the home-builder stocks: MDC Holdings (MDC, $34), up 90%; Lennar (LEN, $32), up 65%; Meritage Homes, (MTH, $37), up 60%; Toll Brothers (TOL, $32), up 58%; DR Horton (DHI, $18), up 46%. If we are seeing a genuine recovery in housing, then I would expect that this sector has more room to run. In late July Goldman added MDC to the firm's Conviction Buy list and raised the price target from $34 to $50.

We'll also note that Home Depot (HD, $56) has been strong this year, up some 34% since January. That brings us to the place where the housing recovery meets whatever validity there might be to the cocooning trend. This also gives us the chance to remind ourselves of one of the basic tenets of investing, which is that great companies do not always make for great stocks. I suspect that divergence might apply to Williams Sonoma (WSM, $38) and Scotts Miracle-Gro (SMG, $43), two companies whose products I love for cocooning, but whose stocks I can't really get excited about--but my enthusiasm may be stirring. My wife still gives me a hard time about the $200 toaster and $200 coffee maker (it grinds the beans!) I bought from Williams Sonoma years ago. The toaster recently quit working (and nobody gets toasters repaired anymore), and my wife found a replacement that works even better--for about $39.99 at Target (TGT, $64). The grind feature on the coffee maker quit working, and it always bugged my wife that the thing was too tall to slide beneath the overhead cabinets above the counter top. So, she bought us a shorter one for about $50 at Costco (COST, $95)--it doesn't grind beans, which is fine because we don't buy whole beans often, and it slides perfectly into place, just where my wife wants it. So, I just wonder who is going to be buying all of those expensive kitchen toys from WSM when the alternatives are abundant and less expensive. But...there's more to the WSM story, namely the company's Pottery Barn and West Elm businesses, both of which offer home furnishings and accessories at reasonable prices. Also, WSM just reported results for the second quarter, with both earnings per share and revenues coming in above expectations. That's encouraging, and the stock is hitting a new 52-week high in Tuesday's after-hours trading.

It would be almost impossible to walk into any garden center and not see some of the products made by Scotts. The company has done a good job of building the Miracle-Gro brand, and it really doesn't face the "$200 toaster" problem. The stock, though, has suffered this year. Consumers just haven't been spending a lot on such products lately, and it is perfectly understandable that it's pretty easy to skip fertilizing the lawn if you're worried about your job and the economy. Both WSM and SMG stand to benefit from a robust and sustained recovery in the housing sector, but we just haven't seen indications of that in their stock prices the way we have with the home builders. And I can't think of any reason why SMG would be a "value trap" candidate--it's not a Best Buy or a Radio Shack, two companies whose downfalls make perfect sense even without looking at their financial statements. Macro trends don't always translate into success at the micro level, but I suspect that all of those retiring baby boomers might be loading up on Miracle-Gro as they plan on spending their golden years puttering around the garden.

A continued recovery in the housing sector would be just what this economy needs--at least that cylinder would be firing as the others seem on the verge of sputtering. As investors, we need to be aware of emerging trends and tuned into the companies that might benefit. In other words, wake up and smell the coffee, even if the coffee maker didn't grind the beans. Better yet, just kick back and sniff the grass (Zoysia, of course).

Life is short. Get busy.

Jim


Disclosure/Disclaimer: My family members and/or I own shares of MDC, MTH, DHI, HD, and COST. Individual stocks are mentioned here for the sole purpose of illustrating investment concepts, and nothing stated here should be construed as the advice to buy or sell any security.

Elvis Has Left The Building

It won't be long now before college football is in the (soon) slightly cooler air, but first we have to work through those rituals that mark the waning days of summer: families returning home from their last vacations, kids going back to school, and the thousands of Elvis fans who will make their way to still-sweltering Memphis and Graceland to pay homage to The King. As part of our own tribute to The King this week, we'll offer up a bit of Elvis-inspired investment analysis, made to fit the occasion with some only slightly tongue-in-cheek observations. Let's get started.

Don't Be Cruel

With apologies to T.S. Eliot, it is August, not April, that serves as the cruelest month for fans of The King, as it was during that time in the summer of 1977 that Elvis shuffled off this mortal coil and went to that great Jungle Room in the sky. I like to think of Elvis up there right now, sharing a fried peanut butter and banana sandwich with Buddy Holly and Michael Jackson--maybe getting ready to party with Janis Joplin and Jimi Hendrix.

When it comes to being cruel in this temporal world, the market has plenty of cruelty to dish out to investors, and nowhere is that on display more than when companies report financial results that disappoint the market. The concerns over the European crisis, slowing growth in China, and how all of that will hurt the U.S. economy--a global slowdown, in other words--have investment analysts especially focused on the forward guidance offered by companies when they report their quarterly earnings. The quarter posted by Priceline (PCLN, $563) recently, where earnings per share clocked in at $7.85 versus the $7.37 estimate, was immediately overshadowed by the below-consensus guidance that the company issued for the remainder of the year--guidance that explicitly cited Europe as a major factor. Adding to this gathering storm are worries about the tax increases and automatic government spending cuts slated for the first of next year. The government needs to get control of its spending, but taking such a massive chunk out of aggregate demand right now could paralyze an already limping economy. Put all of this together, and the recent strength we have seen in the market is even more astounding (a little Suspicious Minds music would be in order here). The market seems ready to move up at even the slightest hint of better economic news, or at the mere notion that some of these problems might be resolved. My own sense is that we will not see Congress deal with the so-called "fiscal cliff" until after the election, if then.

The historically low interest rates we are seeing visit another form of cruelty on savers. Make no mistake about it, these low rates are good for the economy overall--they pave the way for increased business investment (what the economy needs most), make mortgages more affordable, and make it possible for consumers to refinance their debt burdens. Those savers who need interest income in retirement are about the only ones who get left out of the party. How can low interest rates persist in the face of our government's staggering borrowing needs? Or, to put it another way, why are investors willing to accept such meager yields on bonds? Part of the answer is that many of the investors buying bonds are not investors at all--they're central bankers. While the oxymoronic combination of low rates and huge deficits seems to violate the basic laws of economics, the condition may very well continue as long as the Fed is buying bonds to keep rates low and liquidity flowing into the economy. Mr. Bernanke is not buying those Treasury bonds for retirement income.

Viva Las Vegas 

If Elvis were performing this song in 2012, he might have to call it "Viva Macau," that being the region in China where Vegas now resides, not in terms of literal geography but in terms of concept. Just like the hopes of many gamblers, the promises of Macau have been dashed, at least for now, with the slowing growth in China, or at least the perception thereof. That has meant broken dreams for shares of  Las Vegas Sands (LVS, $39), where growth seems to be slowing. Also, as we cautioned before when we looked at LVS, the combination of a highly regulated industry and a foreign government can add up to some high-stakes shenanigans, either real or perceived. LVS has been in the headlines lately with more such unpleasant allegations. The stock is down, and a recovery will require some patience. However, I still believe in the allure of gaming for people all over the world, and I especially like a business where the house always wins.

Heartbreak Hotel

In a world where economic growth is slowing and recession is threatening, the hotel industry is typically not one of the places where you would want to invest. More broadly speaking, what is most puzzling about this market is that some of the industrial stocks have been relatively strong--at least their price behavior is not forecasting an economic apocalypse. Emerson Electric (EMR, $51) and General Electric (GE, $21) are within striking distance of 52-week highs; oil service stocks such as Schlumberger (SLB, $75) and National Oilwell Varco (NOV, $77) have rallied well off of their lows. The market is always telling us something, and that may not always be the same as what the news media are telling us. The market is giving us a mystery, wrapped in a conundrum and cloaked in an enigma. In the hotel sector, Starwood Hotels and Resorts Worldwide (HOT, $54) now trades about 10% off of its 52-week high; it has actually been stuck in a range about 10% either side of its current level all of this year. I like the company because it manages, rather than owns, a number of the hotels that bear its flagship brands (St. Regis, W, Westin, Sheraton). The market seems to be taking some former high-flying stocks to the woodshed (Priceline), while sparing the rod on those stocks that have not had such massive gains. Taking all of this into account, I have to think that the market is either ignoring a looming disaster, or that there is no disaster looming.

Return to Sender

Part of successful investing, at least as I see it, involves understanding the big picture (the macro picture) of emerging and prevailing trends and finding individual companies (the micro picture) where those trends are manifest in robust financial results and stock prices. This has been the case with the discount retailers, where the stock movements both signaled and confirmed both the beginning of a trend and its persistence. It makes sense to consider whether other companies might benefit from what are now some well-established aspects of our "Tale of Two Cities" economy. Today we'll nominate Rent-a-Center (RCII, $35) as a stock that should fit like a glove, but has yet to prove conclusively that we have a matching pair. What we can say is that the rent-to-own concept makes sense for a lot of people in this wobbly economic recovery. The company's latest earnings came in above expectations, but revenues were below forecast. That is shaping up as something of a pattern for stocks in this economy, because companies have done a remarkable job of cutting costs and strengthening their profit margins--so we'll see those companies that beat their earnings estimates but miss on their top line revenue. This one bears watching, but true growth investments can't rely on expense reductions alone without solid top line growth.


Burning Love

It may not be the type of burning that Elvis felt for Priscilla, but you have got to love it when companies report stellar financial results and surprise the market in a positive way. One of the more prominent surprises of this earnings season came from Mellanox Technologies (MLNX, $112), the Israel-based designer and supplier of connectivity solutions that optimize data center performance. The shares rose about 40% after the report in July, and since then have added yet another 20%. Probably what investors cheered most was the company's guidance for projected revenues at some 50% above analysts' expectations. Investment firms have been increasing their earnings estimates and price targets on the stock, with one share price target as high as $150 per share. The big concern right now is that the slowdown in economic growth around the world will hurt corporate earnings. Analysts are especially focused on the guidance comments that companies make when they report earnings and are listening for any indications that estimates of future earnings are too high. If those estimates have to come down, then stock prices will likely decline also. That is exactly what we saw with Priceline. So, when a company like MLNX, which is benefiting  from the "big data" trend,  says that their business is booming, there is this huge relief that at least some sectors and companies are not being affected by the slowdown. Investors bid up the prices of these stocks, and the fact is that there are fewer and fewer of such stocks today--and they are getting harder and harder to find. Of course, investing can be a lot of fun when earnings overall are growing strongly and the market is surging, but I think that is the equivalent of going big game hunting at the zoo. What is more challenging--and ultimately more rewarding--is finding those companies that are doing well in spite of the economic headwinds.

Are You Lonesome Tonight? 

I suspect that I am not the only person who once looked at the idea of online dating as a mild form of pornography, the revealing of oneself to strangers (which is what porn really is) without taking one's clothes off. However, matchmaking Internet style has now gone mainstream and converted quite a few of the skeptics. It is no longer seen as the domain of the desperate, but rather as a convenient shopping ground for people too busy to check out potential mates the old-fashioned way. That brings us to Match.com, one of a number of Websites owned by IAC/Interactive (IACI, $52). IACI also owns Ask.com and a total of more than 50 Internet businesses in more than 30 countries. Another company whose business is built on a collection of media brands is Scripps Networks Interactive (SNI, $60), which owns Home and Garden Television (HGTV), the Food Network, and the Travel Channel, all of which offer Websites to supplement their television content. I like companies that have built strong brand franchises, and I especially like to find the ones with Internet exposure that have not been over-hyped. IACI and SNI offer plenty of content to keep you occupied on those otherwise lonesome nights.

To all of the Elvis fans who will be "touching down in the land of the Delta Blues" this week, I wish for you a safe and enjoyable stay in our city. Goodnight, Elvis. May you continue to rest in peace.

Life is short. Get busy.


Jim




Disclosure/Disclaimer: My family members and/or I own shares of PCLN, LVS, SLB, NOV, IACI, SNI, and MLNX. Individual stocks are mentioned here for the sole purpose of illustrating investment concepts, and nothing stated here should be construed as the advice to buy or sell any security. Stock prices are as of Friday afternoon, August 10th, 2012.

Road Trip

What do you get when you mix lackluster economic growth, high unemployment, financial anxiety, and falling gas prices? Well, that combination of circumstances just might take you straight to the front porch of the Cracker Barrel Old Country Store (CBRL, $64). While the Internet, smart phones, and satellite navigation systems have made the concept of "the middle of nowhere" virtually obsolete, it's still nice to find a familiar and reliable way station when traveling in less-than-familiar territory, a function served in my youth by the once-ubiquitous Stuckey's. Cracker Barrel joined the pantheon of recognizable road signs years ago, and what they offer is not fast food. The menu for seated dining is also something of a cardiologist's nightmare (or secret dream): everything, from country ham and biscuits to chicken and dumplings and fried chicken livers, that qualifies as country cookin'. But you know what to expect, and that's the whole point. When I am on the road away from home, I'm not likely to choose food from someplace I've never heard of--no "Big Bob's Bad Barbecue" unless I've read about the place in Garden and Gun magazine, for instance. I don't want Hepatitis A to be the most memorable souvenir of my road trip.

My wife and I have just returned home from our annual pilgrimage to the North Florida Gulf Coast---Destin--and one of our hallowed traditions is a visit to the Factory Outlet Mall, just a short drive from our condominium. This mall is so ginormous that one might easily mistake it for the ultimate suburban mega-church complex (the home church of the Chick-Fil-A guy, perhaps?). But no, this complex offers a religious experience of a different sort, namely salvation by bargain--Jesus Saves, and so do you! I bought a wallet at Coach (COH, $56) and a shirt at Brooks Brothers, but our chief mission was to pick up some treats for our grandson. Plenty of such deals were on display at Osh Kosh and Carter's (CRI, $52), but what really impressed me was the crowd at Ralph Lauren (RL, $152). There were so many people standing in line to check out (I counted upwards of 25) that we almost put back our selections and left. However, they had about 10 check-out stations fully staffed (unlike the U.S. Post Office, where a long waiting line is the signal for employees to take a break), and our queue moved quickly. Our grandson will be all prepped-out and ready to wow the babes at Parents Day Out. 

Our other trip (by air, not road) this summer was to New York to visit our daughter who moved there a year ago after graduating from George Washington University, in D.C.  A particular highlight was seeing the play Harvey, featuring Jim Parsons from the television show Big Bang Theory. It was great, and I was able to fulfill my mission of seeing a play that was not a musical. My regular readers here will recognize that a trip to New York allows me the chance to apply my "Memphis Theory" test, which means that any trend that has not yet showed up in my hometown probably has more room to run. Every place we went or passed by in Brooklyn and Manhattan that had a "juice bar" also had a long waiting line, notable among them being Jamba Juice (JMBA, $2.50). I bought my JMBA shares a few months ago, and it was nice to see some confirmation of a robust business. Start spreading the news.......

 When it comes to dining recommendations and reservations in major cities, I stand by my long-held conviction that there is no substitute for a really good, flesh and blood hotel concierge. I have to think that a concierge's request for a reservation at a popular restaurant is less likely to be turned down than if I called directly, because no restaurant wants to disappointment such a lucrative source of referrals. What I like to do is first consult the Zagat service(Zagat.com, or the books, now part of Google) for ideas so that the concierge at least has some idea of the dining experience I'm seeking. I have recently started using tripadvisor.com (TRIP, $37), which adds a new twist to restaurant and hotel searches by tapping into your Facebook account. Unlike Zagat, where the reviews are quasi-anonymous, the comments on tripadvisor are from both friends and strangers. So, if I know that a certain friend of mine has impeccable taste in restaurants (meaning that he likes what I like, really), his opinion is going to carry more weight with me than will the comments from sources I do not know. TRIP stock took a hit recently when their quarterly revenue fell below expectations, and it doesn't take a rocket scientist to understand that a global economic slowdown is going to hurt the results of travel-related companies. I think TRIP is still a really compelling long-term growth story. By the way, if you are headed to New York, my wife and I loved our stay at the Gramercy Park Hotel, and the concierge there was extremely helpful.

I find air travel to be stressful enough as it is, so I am not likely to compound my stress by booking a flight on Spirit Airlines (SAVE, $20.50), where "no fills" apparently means no legroom, no free soft drinks, and no free carry-on. The concept here is about saving money, where the idea that "you get what you pay for" is transformed into "you don't get what you don't pay for." I also learned a long time ago that it is not a good idea to limit my investment choices to those products and services that fit my own personal tastes and preferences. SAVE may not be the type of travel experience you are seeking, but its "Dollar Tree with wings" discounting is bringing in plenty of business. Their routes are primarily in the Southeast, with many destinations in the Caribbean. 

No vacation would be complete without stocking up on some tasty adult beverages, perhaps some of the products made by Beam (BEAM, $61). That's Jim Beam, of course, as in the bourbon. The company that is now Beam was once part of Fortune Brands, a collection of brands that also included Titleist golf balls and home security systems. The company didn't see much in the way of synergies from its brand portfolio, so they split up the enterprise, leaving BEAM focused on the spirits business. Brands include Courvoisier, Maker's Mark, Canadian Club, Knob Creek, Skinny Girl margarita and sangria, Gilbey's Gin, and Laphroaig single malt scotch. Alcoholic beverage companies tend to hold up better than many stocks in an uncertain economic environment, so BEAM is worth keeping on our Radar Screen. And the distinction between personal tastes and investment choices applies here as well: the Grey Goose goes down the hatch, but the Jim Beam goes in the portfolio.

Our final vacation stop this summer was New Orleans, where you don't need to pack any alcohol because the stuff is everywhere. And we are home just in time for Elvis Week in Memphis, so next time here we'll be paying tribute to The King with a little bit of Elvis-themed investment analysis. Stay tuned.

Life is short. Get busy.

Jim

Disclosure/Disclaimer: My family members and/or I own shares of CBRL, COH, RL, JMBA, TRIP, SAVE, and BEAM. Individual stocks are mentioned here for the sole purpose of illustrating investment concepts, and nothing stated here should be construed as the advice to buy or sell any security.

 

Greener Acres?

Recently, an analyst who was being interviewed on CNBC about the drought and its devastating effect on the nation's corn crop remarked that a chicken is just "corn with feathers on it." When it comes to summing up the consequences of parched corn fields for the food chain, that pretty much nails it. Even if you never eat an ear of corn, you've probably feasted on the four-legged creatures--cows, chickens, pigs--for whom corn is a dietary staple. The extent to which the higher corn prices due to the curtailed supply will show up at the grocery store ($10 for a box of Corn Flakes??) will depend on whether food companies can pass on their higher costs. The more they can, the higher prices we'll see on the shelves; if they can't, their margins will be squeezed. With the corn situation in the headlines, today we'll revisit some of our investment thoughts about agriculture.

As corn prices rise, the incentive for farmers is, of course, to plant more of it. Back in January, we looked at fertilizer company CF Industries (CF, $204), but our investment thesis had nothing to do with any possible drought conditions--it is hard enough to forecast stock prices, let alone the weather. That thesis still rests on two factors, the first being the growing global demand for more dietary protein. As economies develop, their populations shift their diets to include more protein, and that means more corn to feed to all the needed livestock--our cows, chickens, and pigs. Here we'll just underscore the caveat that secular trends don't necessarily translate into profitable investment opportunities, at least not in the short run. It's like assuming that the onslaught of the retiring baby boomers will make it a good idea to invest in nursing homes and Winnebagos--there are many other intervening factors to consider. The closer at hand catalyst for CF has been the declining price of natural gas, a key component in the production of nitrogen fertilizer (and if you'll recall, nitrogen is essential for corn, whereas soybeans make their own nitrogen). CF, now up 40% year-to-date, has been sitting pretty with these tailwinds, one long term and one short term. The drought has put the fertilizer stocks back in the spotlight, at least for a time, giving another boost to the shares.

Short term (we hope) conditions such as the drought can act like a train conductor stepping onto Wall Street and screaming, "All Aboard!" If it's not raining, we'll just invest in irrigation equipment companies--such a no-brainer that jumping on that train might suggest you have no brains at all. Lindsay (LNN, $71), a prominent maker of irrigation equipment, has risen some 23% since the end of June, the lion's share of its advance since the beginning of the year. I can't say whether or not LNN would make a compelling investment (I don't follow the company), but I strongly suspect that investors have now bid up the stock to reflect a best-of-all-worlds increase in sales of its equipment. It will be too late to save this year's corn crop, but when the nation's breadbasket finally gets a good soaking, the investor enthusiasm for LNN will probably wane. We saw similar sentiment at work with Lions Gate Entertainment (LGF, $13), which rallied strongly in advance of the release of The Hunger Games, reaching a high of $16.19 in March. The box office for the movie was robust, but it really couldn't have been any more robust than what was expected--and factored into the stock price. LGF now trades at $12.82, awaiting another celluloid catalyst.

What is an investor to do? First of all, recognize that the pursuit of quick and easy profits does not make for an investment strategy. Is the current condition, whether a drought or a movie hit, indicative of a longer-term, sustainable trend? We are more likely to find those enduring trends in the areas of healthier eating, benefitting  the likes of Whole Foods Market (WFM, $95) and Hain Celestial (HAIN, $56); discount shopping at TJ Maxx (TJX, $45) and Ross Stores (ROST, $67); and big data analytics with firms such as Teradata (TDC, $69). Those trends are well-known also, but they are less likely to be seen in hindsight as one-off events.

Getting back to the farm, I want to add Raven Industries (RAVN, $33) to our Radar Screen, one reason being that it doesn't seem to be on many other radar screens. The little-known (on Wall Street) company makes products for what is known as precision agriculture, which basically means the use of computer technology to improve crop yields. Unlike Oliver Douglas (Eddie Albert, pictured above in Green Acres), farmers today have access to technologies that bring precision to planting and the application of fertilizers and other chemicals. This includes the use of GPS-guidance and a RAVN product known as Slingshot, which allows all of this to be controlled through a wireless cell phone network. The company also is doing good business with its reinforced plastic sheeting, which is used as pit liner in the oil and gas industry. Also, RAVN is the only supplier of high-altitude research balloons. The next time you think you have seen a UFO, it might be one of those devices.


The Market and the Economy

 As seasoned investors know, the stock market can be as fickle as J.R. Ewing in a discount brothel. Which economic indicator will the market dance (ahem) with today? For about the past year, the market has not taken well to disappointing economic news, whether that news is of slowing growth domestically or weakness in Europe and China. Over the past few weeks that focus seems to have shifted somewhat, with the market hoping for--and expecting--some additional monetary easing from our Federal Reserve and other central banks around the globe. That could lead us to a sentiment similar to what was common in the strong economy of the 1990s--when really good economic news was actually bad news for the market, because it raised the specter of higher interest rates from the Fed. This time, though, signs of continuing weakness in the economy--and especially in the labor market--will be perceived as putting more pressure on the Fed to undertake another round of Quantitative Easing. That may be one reason why the market is up strongly this morning (Friday), with its new dance partner being the uptick in the unemployment rate. Watch out, because when the market doesn't get what it wants--and expects--it can get ugly. Just like J.R. Ewing.

Life is short, Get busy.

Jim

Disclosure/Disclaimer: My family members and/or I own shares of CF, WFM, HAIN, TJX, ROST, TDC, and RAVN. Individual stocks are mentioned here for the sole purpose of illustrating investment concepts, and nothing stated here should be construed as the advice to buy or sell any security. Stock prices are as of Friday morning, August 3rd, 2012.