The Barnard Observer

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Home  Vault  Misc Contact                                                            c2003-09 Thomas Barnard

Reading the Periodicals

The Narrative

            Since I wrote last time, little has changed.  Buffett has seconded Soros' remarks.  In Germany, to scout out private companies that would like to sell to him, Buffett said that the recession will be long and painful.

The CEO's

            Fortune (June 9, 2008) has a nice piece on CEOs.  Here are some highlights:

            Alan Mullaly of Ford got a $7 million bonus for meeting a profit target of a loss of $4.9 billion.

            Vikram Pandit of Citigroup got $241 million for taking the CEO job at Citigroup, including $165 for his stake in a hedge fund (a quarter of which Citigroup has already written down).  He also gets options worth $48 million, but his salary is only $250,000.

            My friend, writer Stephen Vizinczey, makes the point that becoming a CEO is the same as achieving nobility.  Thus, Stan O'Neal was allowed to resign, as opposed to being fired, this allowed him to collect $136 million in deferred compensation and stock options.  This, in spite of the fact that Merrill has written down $30 billion incurred during his reign.

The Gurus

            There was a complaint about the last newsletter since I did not particularly recommend any stocks.  So, I will recommend a few.

           Good interview recently with Ken Heebner in Fortune (June 9, 2008).  He favors the commodity plays, and steel is among his favorites.  He likes Nucor (NU), ArcelorMittal (MT), and U.S. Steel (X).  I bought a few shares of Posco (PKX).  Buffett likes North Korea, and he likes Posco.  So, you get both steel and North Korea.  Both Heebner's thinking and Buffett's.  Also, my brother, Michael, is also in the steel business and reports routine increases of rather staggering amounts.

Energy

            I am not particularly crazy about the oil sector since it is spiking more and more, and such spiking suggests the reverse.  I like Schlumberger (SLB) because it makes out whether or not a country nationalizes its oil.  They get their fees.  Fees for drilling, fees for testing.  With oil spiking, I expect more nationalizing of oil, but Schlumberger will make out with everybody.  Even friendly Canada has raised its royalty rates.  Expect trouble everywhere in oil.  And duck out if you hear any talk of glut.  Already, I understand that in the U.S. demand is down.  That refineries have lowered production to meet lower demand.

            I also like Suntech (STP).  It's in solar energy.  It's got wonderful profits.  They make the solar cells in China and ship them to Germany, which has a multi-year subsidy of solar energy underway.  This is probably a long term investment in the way Intel was 20 or 30 years ago.  We will inevitably turn to solar more and more over the years.  In one of my past newsletters I looked at solar.  Suntech was the only one with profits.

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Investment Advice

            Well, one of my investment gurus, Richard Russell is quite bullish in his newsletter, but his investment advice is cash and gold, so how bullish can it be?  It's a very uncomfortable time to invest.  Hard to get one's bearings.  But if you were comfortable, then probably stocks would be higher, and less interesting as investment vehicles.  So, I am not necessarily recommending any of the above stocks, but they should do better than others.

And Now a  Message from Our Sponsor

Mi Cosa

            This newsletter is free.  I have suggested stocks that I think have better than average chances.  These I make known for free.  By and large, these are big companies with huge market caps.  It's hard to make a lot of money with stocks that creep up and down with the averages.  Naturally, I am saving the stocks with the greatest possible chances for those willing to invest with me.

            I have changed my tactics.  I have decided that I will invest in a number of smaller companies.  My favorite, which I dubbed the P10B, still has great chances, but it is taking a long time, so I have weighted it down with other equally impressive stocks.  All of them possible ten baggers.  Consequently, if any of these stocks takes off, I could recover the initial investment of the sum of all stocks and then some.

            The risks are naturally very high.  Not for the faint of heart.  Call Tom Barnard at 708-386-9300, or email me at tbbarnard@yahoo.com.

June 1, 2008