Burning Orc

Well, the good news is that over the past two days I have staunched the bleeding and have made some micro progress towards even-steven. It is hard to believe that just 2 weeks ago that my MFI portfolio was about even with the benchmark and cash... how fast it can go! Down to the benchmark about 20K now assuming 10K invested per stock. Yuck.

ORCT reported earnings yesterday (Crummy ORCT Release) and they were okay, but guidance was miserable. Here is what they said:

"As a result of lower demand for our products in Japan this year, we are reducing our guidance for 2006. For the year ending December 31, 2006, we expect revenues to be in the range of $62.0 million to $68.0 million, net income to be in the range of $2.9 million to $6.0 million and net income per diluted share to be in the range of $0.17 to $0.35."

Not very promising as I shall explain. So far this year revenues are about $40m. So they're saying $22m to $28m for the final 6 months. So far ORCT has made 36 cents per share in the 1st 6 months. So they expect to lose 1 cent to 19 cents the remainder of the year. Double yuck! In response, the stock dropped yet another 12%.

Not to be down on MFI, but I am almost certain I could have found 5 stocks (of my 29) that could have dropped less than 33% in under 6 months:

Stock	Cost	Current	Gain
DLX	$26.36	$13.68	-46.6%
HW	$37.42	$21.32	-43.0%
ORCT	$11.83	$7.47	-36.9%
PTSC	$1.31	$0.85	-35.1%
OVTI	$27.79	$18.19	-34.5%

Good thing I have an entire portfolio to cushion these losses. It should be noted that sans (some fancy French) these 5 chiens (more fancy French) I would still be in the red, but ahead of the benchmark.

Of my 15 non MFI stocks, I only have two down more than 10% (PFACP -17% and STP -14%).

Let us see what the smart talking heads are saying. Jubak wrote an artile saying basically that China is going to implode(China Economy out of Control). Geesh, I wish he could could be more cheery. At least he sadi it might take until 2009.

"In a train wreck, there comes the moment when it's no longer possible to avert disaster. Pull the brakes as hard as you can, the momentum of the train is so great that disaster is unavoidable.

I fear that China's economy passed that point of no return in the second quarter of 2006.

Today, I'm going to tell you why I think China's economy is headed for a train wreck. Not tomorrow, but in the reasonably near future. I'd say 2009."

Hmmm, that would not be good for the world economy.

Cramer said nice things about CSX. His opinion is that railroads are entering a golden era. Certainly made me feel better about my RAIL holding.

"In the old days, railroads [like CSX] only carried stuff that stopped shipping when the economy slowed down," he said, but the world has changed since then.

Now 25% of the shipping volume is coal - a product that America will need to keep using no matter what because "it's the cheapest fuel around." The other products hauled by CSX are grain (12% of the total), road aggregate (12% and benefiting from high spending by government) and waste (10-12%), he noted.

"CSX is now more than 60% non-cyclical," he said. "I think CSX is now a secular growth story."

Oh well, on to another day tomorrow... I don't think we're out of the woods yet.