A portfolio of 8 stock picks from the edge

"Don't you see what's happening? Potter isn't selling. Potter's buying! And why? Because we're panicky and he's not." -George Bailey Around mid-week the overall performance of the 8 Stock Portfolio actually dipped into negative territory. At the time, every stock with a financial aspect was being sold into oblivion, dragging down every asset that wasn’t made of gold. The market was either going to capitulate horribly or something was going to happen to prevent it. On … read on »

"On top of the world or in the depths of despair." This week Wall Street's fourth largest investment bank fell 77%. The largest US Savings & Loan declined 36% after being down as much as 59%. The largest US insurance company fell 46%.  But despite these crushing losses for Lehman Brothers, Washington Mutual, and AIG, the indexes all posted gains for the week. At various times this year, the entire market has become seemingly fixated on a … read on »

"If I'm too scared to use my powers... then I don't deserve them." -Hiro Nakamura Friday stories began to circulate that the government would soon act to bail out Fannie Mae and Freddie Mac. Today a top House Democrat confirmed that Treasury Secretary Hank Paulson "intends to use the powers that Congress provided." Paulson had obtained his "bailout powers" from Congress back in July under the premise that having such powers would insure that they never needed … read on »

Last week it seemed like all anyone wanted to talk about was the impending zero share price for Fannie Mae and Freddie Mac. This week the negative chatter fell silent and FRE and FNM recovered. For anyone who thought this would send the stock market off to the races, think again. After some ups and downs the markets finished down on the week. The market will get a break on Monday and begin the month of … read on »

The stock market started off the week going down because of worries about Fannie Mae and Freddie Mac. But the market ended the week going up despite worries about Fannie Mae and Freddie Mac. There's been an almost overwhelming consensus that the common equity in these two companies is worthless and the stocks are going to zero. In my dictionary, "overwhelming consensus" spells "contrary indicator." But in this case, I don't think its worth placing "bets" … read on »

Another week of tumultuous action. I heard a video the other day that made an interesting point. Tom Brown from BankStocks.com called for a bottom in financial stocks and said that if you're investing in any sector except oil, you have to believe the same. For example, if you are investing in retail stocks, how could they have seen the bottom if there's more pain ahead for real estate/financials/banks? I've intentionally avoided financial stocks and have … read on »

"Doth suffer a sea change into something rich and strange." OK what happened this week? Sentiment seemed to swing from utterly dismal to resolutely euphoric. Some might call this kind of extreme volatility the sign of a bottom. But whatever the case, I seem to have picked a good week to start the portfolio. Despite bad news on a couple of fronts the portfolio racked up a sizable gain for the week. The first week's performance was … read on »