What to Believe?

Markets were certainly spooked this week as bond rates spiked up. A little taste of reality as people all of a sudden realized that inflation is a problem as food and energy prices continue to spike up. If money actually does get tight, all the M&A and private equity will dry up. We'll see if today starts a new leg up, or was a bit of a dead cat bounce on what could be a long summer.

Jubak had a good article today about how food prices are going up as resources are geared towards ethanol. His opinion is that the energy used to grow the corn makes ethanol a so-so prospect, but the govt wants to act like it is doing something (Continue this article). Great.

Even worse, he said he is giving up on HW.

"Recent comments by Federal Reserve Chairman Ben Bernanke are the final straw for me on shares of Headwaters. As of June 8, I'm selling the shares out of Jubak's Picks with a 51% loss since I added them to the portfolio on Feb. 2, 2006. I had planned to hold the shares while the company rode through the slump in the construction sector and until its clean coal and heavy oil technologies had a chance to bear fruit. But I think that Bernanke was right when, on June 5, he said that the housing slump will drag on longer than the Fed had expected at the end of 2006. Late last year, he noted, home sales looked like they had stabilized, but the evidence in 2007 now points to a further decline. That puts earnings from Headwater's core construction materials and business at risk."

I am tempted to sell my shares. It'd be a nice tax write-off. Yikes, 51% pretty much matches my loss as I have held since February 2006.

I don't have my weekly graphs, but I ended up 1% over the benchmark, although it was a negative week all around. Even though today was a great day for the market, my portfolio was just okay. For some reason, none of my stocks went up over 2% today, despite the 150pt move for the Dow.

I did build a template and everything for the contest. Reminder, people do need to send me an email to marsh_gerda@yahoo.com to be entered, not just post a comment on this blog. See prior blog post for details. So far 5 of the 50 spots are filled.