2010 - Distress in real estate continues. Will it create an investment opportunity in stocks or REIT's?

Peter Lynch, possibly the greatest fund trader of all-time with his Fidelity Magellan fund, states early in his book "One Up on Wall Street" that one needs to pass a "mirror test" first before you start to study the financial section to look at stocks. Peter said "before you buy a share of anything there are three personal issues that ought to be addressed." Well it is issue number one that I want to discuss, 1. Do you own a house? Well in 1989, when Peter wrote his book, it was a great idea and over the long term it has been a great idea. However, recently with the bank credit crunch, foreclosures due to too much leveraging of financing, and some over supply conditions, the value of real estate has gone down in the short term. Add to that pressures in the Commercial real estate market continuing in 2010 and you get some very distressed property values for those that have to sell. At the same time an opportunity is created for some of the real estate investment trust, (REIT'S), with new infusions of cash from high net worth liquid investors to make some once in a lifetime buys.
I should note at this point that banks should exhaust every option to help a homeowner stay in their house and not foreclose on them. It is devastating and could happen to anyone given a bad turn of financial circumstances, such as loosing your employment.
Anyway , some REIT's that you may want to look at to make some money are: CGM Trust: Realty Fund, (Symbol CGMRX)$20.86 NAV,which gives you a blend of real estate investments. If you like the Washington DC play on real estate you can go First Potomac Realty Trust , (Symbol FPO) $11.85 NAV or Liberty Property Trust (Symbol LRY) $31.25. If you are looking for a value play here with a good dividend my broker Vince likes Duke Realty Corp.,(Symbol DRE)as a longer term pick. If you are looking for something to invest in on the mortgage side you may like Annaly Capital Management Inc. , (Symbol NLY) $18.38. I think as tempting as it looks, it is a little early in 2010 to buy the home builders, unless we have a dramatic drop in interest rates. I keep my eye on Lennar (Symbol LEN) and Beazer Homes, (symbol BZH).

Happy Holiday portfolio shopping,

Freewilly

Baltic Dry Index and the bulk shipping business has been on the rise lately, but is there trouble ahead?

Up to a couple months ago, I did not really think much about the bulk shipping business. I had seen some folks jumping in and out of DryShips Inc. (Symbol DRYS 6.29), in the $5.50 - $7.50 trading range and it seemed to be tied mostly to the Chinese economy and how much stuff they are gobbling up.

Well, I can tell you two things about this business. When it is going well it has great margins and is extremely profitable. Second, it is extremely capital intensive to buy ships and finance them in all kinds of creative ways. So you are either doing real well or really bad, earnings wise with rapid swings.
Some companies that have performed pretty well in this space and seem to make money are Diana Shipping, (Symbol DSX), and Kirby Corp.,(Symbol KEX). Both of these have done pretty well over a one year period. Some names I would avoid are Eagle Bulk Shipping, (Symbol EGLE) and Overseas Shipping Group, (symbol OSG). OSG leads in sales revenue, but not so good on the bottom line of the balance sheet. Some prognasticators are calling for softness in the bulk business in mid-2010?

So go with whatever floats your boat, I personally like DSX.

Freewilly

Gold has taken off in price, will Silver try to catch up?

With the continuing fall of the US Dollar, Gold on the COMEX has jetted up to a friday close of $1116.80 per ounce. Yet Silver on the Comex sits at a Ho-hum $17.39 an ounce? There seems to be a disparity here and common sense seems to dictate that silver needs to rise from here. Well there is alot to look at here, including bullion and coins. I'm no millionaire and can't afford stocks like BHP Billiton or RIO Tinto the mega player miners in this space, but not pure silver plays. You can look at the Junior mining stocks on the Toronto Stock exchange but your equity risk increases dramatically with these names.
So here is my recommendation: I-Shares Silver Trust , (Symbol SLV), from the Barclay Global Fund Advisors. The price currently is $16.92. It is up YTD 59.86 % and 84.07% for 1 year. Let these guys figure out what to buy. You get a 100% Silver play and don't have to try to figure out a miner's balance sheet. If anybody has other suggestions on Silver, please I invite you to post them in comments.

Dreary, rainy weather continues in PA. and Jersey,

Freewilly

Getting near the end of the year - time for a longshot?

Well the 2009 stock trading year is rounding the bend towards a close and you are still looking for that one 3-point shot at the buzzer to win the game at the end of the year. You have dice in hand and should be playing with the houses money if you have been involved most of the year. So I thought I would roll out some speculative names for sporting purposes only. (Speculative means you can lose or make a lot of money quickly. Some luck and good timing is required. If you cannot afford to lose your money you should not speculate).
The first name I will throw out is BioCryst Pharmaceuticals Inc. (Symbol BCRX). BioCryst received an initial order for 10,000 courses of its intravenous flu drug peramivir, valued at $22.5 million, under a contract from the Department of Health and Human Services (HHS). Demand will remain strong for their product that is also marketed in Japan.
Next up, Clearwire Corp. (Symbol CLWR). Their 4G highspeed
wireless internet services using WIMAX to cover your home, business , and mobile internet needs. The 2G and 3G carriers are quickly running out of spectrum with continued high growth. WIMAX makes your world one big hot-spot. Side bets on this stock are Sprint , (Symbol S), who owns 51% of Clearwire's stock and Motorola (Symbol MOT), that is cranking out with factories humming WIMAX infrastructure equipment for their towers.
Third, we need to acknowledge the boom in Gold recently. So at least let's pick one with a pretty good return on equity. ELDORADO GOLD CORP , (Symbol EGO). All I know is that all that glitters is not gold. I also know that the dollar keeps getting a haircut because of our low interest rates, making it worth less and less. So people are looking for somewhere to preserve their equity.
For full disclosure, of these stocks I currently only own Clearwire. That does not make it any better or any worse than the other picks!.

So roll the dice, 2010 is coming soon.

Freewilly