Report card

Time for the year-end report card on financial recommendations. It was a good year over all.

First, the market picks. I said repeatedly to buy stocks and gold, and avoid bonds, and that advice paid off. Specifically, on 6/30/05, I said stocks were going higher. They have done so -- about 23% since then. On 3/10/06, I said to avoid bonds. Ten-year rates were at 4.76% then, and are now 4.71%, so bonds would have maintained their value while paying the same interest as a money market fund. There were several reiterations of the stocks/gold/anti-bond theme over the year.

Now for specific stock recommendations:
Rec date Ticker Rec price 12/31/2006 Return
12/22/2005 GLD 50.14 63.21 26%
1/10/2006 WMT 45.86 46.18 1%
3/25/2006 NOOF 7.75 9.61 24%
5/6/2006 SLV 139.95 128.64 -8%
5/20/2006 AMZN 33.94 39.46 16%
6/20/2006 SLV 102.86 128.64 25%

I cashed out of NOOF in early April. If you did too, that would really be a 10% gain in a couple weeks rather than a 24% gain over the year.

My one option recommendation was a loser. I bet that Amazon would stay in the 32 - 39 range in November, and it rocketed to 42.50 (I have repaired that trade by buying back the Nov 37.50 and selling a Jan 40. If Amazon is well above 40 in January, I'll let the stock get called away. If not, I'll have an 0.80 profit on the option trades overall).

I'm sticking with Amazon, Wal-Mart, silver, and gold. Wal-Mart may have a tough year if we have a recession from the housing bubble hangover. If it does, I'll buy more. It's a three-, five-, or ten-year stock for me. Amazon is much more speculative, but I'd like to hold on to it for the long term too. And silver and gold -- well, I'll be trimming my position at much higher prices in a few years. The Fed is going to create inflation to bail out the housing bubble, and that will be good for all things commodity. I'm still bullish on the stock market for the same reason. The Fed won't allow the idiot American consumer/speculator to face the consequences yet.

As for other predictions, I was the first I'm aware to definitively state that Rick Santorum would lose re-election. I also correctly predicted the allegedly neck-and-neck Bilbray-Busby California Congressional race. I did not predict the Democratic landslide, though, and even thought that George "Macaca" Allen would keep his Senate seat.

If I'm missing any bad calls, please let me know. You know how the mind tends to recall favorable things more than unfavorable... and the archives can be a treasure trove of embarrassment.

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Quotations from Chairman Varones

 Inflation is progressive utopians encountering resource constraints for the first time.