Transcript from 01/18/05 eConference.
Dave Hunter: Hello, all, and welcome to tonight's eConference. Our guest
tonight is Gene Michaels. Gene heads up the Wall Street Secrets Plus Portfolio Management Team. To Gene and his team,
information is king. The more information they can dig up on a company, the
better. Gene's topic tonight is "5 Ways to Get an Edge on the Market Right
Now." Gene, any opening comments?
Gene Michaels: It's cold!
Dave Hunter: Yes it is!
Gene Michaels: Hey,
let me get right into the first of those 5 things. 1.
Be sure your asset allocation is correct for the times.
Right now would be a good time to have a little extra cash in your portfolio to
take advantage of some bargains out there like KKD. 2. Don't follow the pack.
By the time you jump on that stock that everyone else has heard about, it just
might be too late. Try to be one of the first ones in. The people who jumped on
TASR found out about this the hard way.
Louellen: What do you think about oil stocks like NEK?
Gene Michaels: ?
Louellen: I meant what do you think about oil drilling stock companies
Gene Michaels: As long as oil prices stay up they will be ok. But try not
to be the last one out as the stock starts to fall. That brings me to #3, and
that is: Set a defined exit point on your winning and losing investments. Get
out with a profit when the investment hits your goal. You may leave some cash
on the table but that's better than getting hurt. And you've
freed up your capital to get into something else. And on the downside, be ready
to jump out when something starts to drop.
They do come back some times, but not often.
tim: I notice your portfolios have started to move towards more
option-oriented strategies. For example, the hedged momentum portfolio; could
you talk a little about this one for me? Thanks.
Gene Michaels: We are always testing portfolios. We look for the strategies
that can get good consistent returns. We have been testing Option portfolios
for a while and the two we added were testing well. Options can give a nice
return and limit risk when you use them correctly.
Ryan Green: What do you think of Wynn Resorts?
Gene Michaels: This is the stock we love to hate lately. The volume is a
little low – under 1 million shares on some days, and
the revenues have not started to roll in yet. But the stock keeps heading up.
This is one we are watching closely. So far, we have made around a 19% return
on it, and that's just since Dec 10th.
Louellen: What do you think about uranium mining stocks; any
Gene Michaels: We don't follow those stocks. But we have heard that China
is about to build more nuke plants but I'm sure they have enough Uranium over
Ryan Green: So which is your best portfolio?
Gene Michaels: They all have their pluses and minus.
de: What is the symbol of the 19% stock?
Gene Michaels: WYNN. We did a debit spread on it to minimize our expense
and maximize our return.
de: Any analysts follow them?
Gene Michaels: Not the nuke companies. One of my analysts just chimed in
here that the APPX was the one with the 19% return. WYNN is on track for an 11%
de: No, WYNN.
Gene Michaels: Yes, we did Win.
Bob: So what do you think of the market as a whole; are we headed
down or up?
Gene Michaels: There's always someone who asks this question. A lot will hinge
on what happens with the Iraq
elections. If those people grow the guts to stand up for their own freedom and
vote, then our boys will be out of there and we can turn our resources back to
domestic issues. If not, expect the worst in the market.
de: Debit spread so both WYNN and APPX are optionable.
Gene Michaels: Yes they are.
de: Maybe hinge on if Americans are allowed to invest part of
their Social Security.
Gene Michaels: This is a scary subject. It would be good for our business
if this new Social Security plan is set up, but we have seen too many people go
off on their own and lose all their money. That scares
de: Thanks. Also on how high Greenspan raises rates?
Gene Michaels: That is a wild card. This trade deficit may be the real
problem. Our dollars have become worth 30% less in the last year. Soon we will
start to feel this.
de: Investing in DIA or SPY would return better than 2% Social
Gene Michaels: Agreed, but anyone under the age of 40 who thinks Social
Security will really be there needs to wake up and start saving like crazy.
de: With the dollar dropping, EWA looks good.
Gene Michaels: That's one we don't follow. Now on to number 4: Don't only
diversify between sectors but try to keep a % of your investments in overseas
companies. That is, companies that get a large part of
their revenues from foreign countries.
de: If the market goes higher it might be prudent to, but LEAP
puts on QQQ or SPY equal to portfolio or Rydex Ursa.
Gene Michaels: If they are priced right. Take a
look at spreads to cut your costs down. You win less on a big drop but your up-front
costs are much lower.
de: EWA is an EFT for Australia.
Gene Michaels: We saw that, but we don't know enough about the Australian
market. It may behave like the US
market. To diversify, you probably want something in Asia and Europe.
The question list is running low, Dave. We might be able to go home early
Dave Hunter: Yes, it looks that way Gene. Any other
Gene Michaels: We need to give the book away.
Dave Hunter: Okay.
Gene Michaels: We are mixing all your user names up in a hat. Okay, we have
Dave Hunter: But wait, Gene; there are more questions.
Gene Michaels: We will get to all the questions.
Dave Hunter: Ok then.
Gene Michaels: But we need to give the book away.
Dave Hunter: Go For It! Who is the lucky winner?!
Gene Michaels: Whoops, I lost the piece of paper. We will have to do the
drawing again in a few minutes.
Dave Hunter: Ah!
de: True; a spread will cut your cost, but if for tax reasons
you don't wish to sell your stocks, you could always deduct the loss on taxes
if your LEAP hedge did not pan out.
Gene Michaels: That's something you should check with your accountant about.
de: There are 2 China ETFs.
Gene Michaels: Might be worth dipping your toe in a bit
on these. Try to average in. Our fear is that China is so dependent on our $ that
they may go down with us in a currency crash.
trackman: Please talk about financials -- especially banks &
credit card companies.
Gene Michaels: Some earnings reports today came out good. It looks like
people are ready to take on more debt. Scary. Probably worth having some KRB represented in a good portfolio.
Nate: What's your feeling about shorting stocks; using stop loss
protection to negate any big losses?
Gene Michaels: You need to look close. Put options may be a better way to
go. Not all stocks can be shorted all the time. Puts have a limited loss if the
stock goes against you.
de: The Aussie dollar has done well against the US$; also, South
Africa and Canada as natural resource plays.
Gene Michaels: This sounds like one of your specialties. Thanks for the insight.
de: What about REITs? The R-squared is contrary to stocks usually!
Gene Michaels: With those interest rates on the rise and a threatening RE
bubble, these are risky. We are trying to pick the winners in our REIT
portfolio. But even our research did not give us the results we wanted. After
two great months we took a small hit.
de: Would consider AMGN or BRL over the Big Pharma stocks.
Gene Michaels: These are probably getting ready to rise. Been
down for a while. Now for that drawing.....
Dave Hunter: Drum roll please.....
Gene Michaels: But first, # 5. Hold the drum roll.
For number 5: try to get the best information you can on the stocks you hold
and on the ones that appear on your buy list. If you get your information at the
same place everyone else does, you will be following the pack. Not a good place
Dave Hunter: That's the truth.
Gene Michaels: When you are behind the big dogs, guess what you usually
step in? To be out in front, get a good, reliable news source. When we
developed our Market Intelligence Center,
that's what we wanted to do – create the ultimate information tool. Enough with
the commercial let's get to the drawing. De, please send and email to
Dave Hunter: Woo hoo! Go de!
Gene Michaels: Someone will contact you to send you the book.
Dave Hunter: De, don't forget to send the e-mail. Gene, any last questions?
Gene Michaels: Thanks, everyone, for attending. We will try another one of
these in about two weeks.
Dave Hunter: Yes, thank you all for joining us tonight.
Gene Michaels: If there are any subjects you would like to hear about, email
them to support@WallStreetSecretsPlus.com.