This post is for you! I would offer you a Bud, but it won’t fit through my internet connection.

Welcome to the weekend! In honor of this glorious weekend, I give to all of you a place to discuss any topic you like, investing or otherwise. Just be civil to each other is all I ask. The rest is up to you…

P.S. No, I don’t post on weekends. But I will be back with more bloggy goodness on Monday. Don’t you just hate the phrase “bloggy goodness”?

Today’s Winners:
1. CSKI: +0.33 to $11.11 (+3.1%)
2. GLD: +1.20 to $115.49 (+1.1%)

Ties:
1. NIV: +0 to $2.24 (+0%)

Losers:
1. WDC: -0.58 to $26.39 (-2.1%)
2. AMX: -0.72 to $49.61 (-1.4%)
3. PSEC: -0.09 to $9.71 (-0.9%)
4. LYSDY: +0.05 to $6.89 (-0.7%)

OVERALL: -0.3%

I added UPRO (Proshares Ultrapro S&P 500) today. We will see if Technical Trader is right about this one. No pressure TT…

I love it when the commenters here give me a tip, especially when it reinforces a suspicion I already had.

Today, commenter Technical Trader (the investor formerly known as dan, not to be confused with Prince) offered this short term trading tip:

I would buy if S&P holds up above 1100 at close today. stop at 1080 target at 1140-1150. you could play with sso, upro or any stock you like
Say PC, Teva, or even MRVL. MRVL looks a bit scary. But compare to 3 months ago. its much much safer. I’m bullish on it and will play a swing trade in the next few days.

I will possibly make a move with UPRO (triple long S&P 500 ETF) by the end of the day, but you folks can take this information any way you like.

Thanks for the tip TT, and enjoy your camping trip!

When I saw the GDP come in at 0.1% below expectations, I thought, “The markets will open low, then bounce back. Perfect time to hop into a long index ETF.”

But then I looked at all the long index ETFs. All the charts were either on the bad side of a head and shoulders, or in a simple down channel. And all of them were carrying values that were near their upper resistance. In other words, they would have to nearly crash in order to make them worth buying.

Needless to say, they opened down, but no crashes. But I will kick myself if they finish up next week.

In looking at the two options I posted yesterday on dealing with WDC, I thought of a third option: Sell part of my WDC holdings.

So I have put in a limit sell order at $28.49 on half of my WDC stock. That will allow me to at least see a small profit on the last purchase of WDC I made.

Fortunately, the sky only fell a little bit.

Today’s Winners:

1. CSKI: +0.32 to $10.78 (+3.1%)
2. LYSDY: +0.16 to $6.94 (+2.4%)
3. PSEC: +0.10 to $9.80 (+1.0%)
4. GLD: +0.50 to $114.28 (+0.4%)

Losers:

1. WDC: -0.83 to $26.97 (-3.0%)
2. NIV: -0.06 to $2.24 (-2.6%)
3. AMX: -0.46 to $50.33 (-0.9%)

OVERALL: -0.1%

It’s a good thing I had CSKI today. There is nothing like a little Chinese medicine to heal your portfolio on a bad day.

The markets are falling, after my portfolio is already losing money. What should I do?

First, this is why it is good to have a stash of cash on the side. It is time to look towards lowering the cost basis on my outstanding positions.

Second, I am cancelling the buy order on CBEH. There is nothing wrong with what I already own, but there is some damage control to do. This is not the time to expand my portfolio.

Third, ignore the stocks which are still in the black. At this time, only two are still above where I bought them: AMX and NIV. I am also ignoring PSEC, since I just bought it yesterday and it isn’t down much.

Fourth, ignore the stocks which are up today: GLD, CSKI, and LYSDY.

This leaves just one problem child: WDC. At this writing, it is down 7.3% from my cost basis (about $29). Unfortunately, it is trading below bottom resistance. The problem with WDC is it is a falling blade right now. When a stock falls right through good news, it is a freefall. It could stop today. It could stop tomorrow. Or next week.

This leaves me two choices: One, sell now and try to catch the bottom for a cheaper price; or two, ride it out and try to lower my cost basis later. I am going with option 2 for now.

Believe it or not, option 2 is the riskiest in the short term, since I am holding on to the falling stock. At least with option 1, I would take my losses now and not risk any more. However, if WDC turns around in an hour, I would also end up missing out on the profits by choosing option 1.

Am I being stubbornly bullish on WDC? Or is there some macroeconomic reality which I’m ignoring, which says WDC is doomed?

Feel free to chime in with your opinion on my moves, or just tell me how you folks are handling your portfolios on ugly days like today. Misery loves company.

Once in awhile, a company’s financials will scream “buy”, but when you dig further, you can find the ugly underbelly of the stock. Peerless Systems (PRLS) is a perfect example of such a company.

The financials are like money in the bank (numbers from Finviz.com):

P/E:  5.16
Price/book: 0.86
Price/cash: 0.82
Price/free cash flow:  5.74
Debt/equity: 0
ROI: 17.8%
Net profit margin: 186.5%

Add in the fact the company is sitting on over $55 million in cash, and I just want to drool.

But then I read the company’s description (also from Finviz):

Peerless Systems Corporation develops, licenses, and sells imaging and networking technologies and components to the digital document markets in the United States and Japan. It licenses software-based imaging and networking technology for controllers in embedded, attached, and stand-alone digital document products, such as printers, copiers, and multifunction products of original equipment manufacturers (OEMs). The company’s products include PeerlessPrint Family of software development kits (SDKs), an implementation of HP PCL page description languages; Peerless XPS, an embedded rendering solution for applications that use Microsoft’s XPS Page Description Language; and PeerlessTrapping, an imaging technology to improve print quality of color images. The company also provides PeerlessNet Web Services SDK, which provides device control and Microsoft Windows Vista support; Peerless Software Print Server, a software based print server with networking protocols that enable network print and scan connectivity; and PeerlessNet Security, which provides network security functions for digital imaging devices. In addition, it offers engineering and maintenance services to OEMs in support of its licensed software.

Unless you have been hiding in your closet for the last 10 years, then you know most of that technology is obsolete, or working on becoming obsolete quickly.

When you read their last quarterly financial statement, you see just how dire things have become for Peerless. It is always a bad sign when a company is looking to be acquired by another company. And they actually say that in the statement.

To be fair, they do say they are looking to acquire or be acquired. When a company is sitting on $55 million, a lot of options open up.

But let’s face the simple fact that Peerless has no future until something happens with all that cash. Until then it is just a slowly dying company.

In doing any investments, you first have to look at the overall economy.

Let us start with the Federal Reserve’s Beige Book from yesterday (from CNBC.com):

A new survey released by the Federal Reserve Wednesday found the U.S. economy growing this summer, even as risks mount. Of the 12 regions tracked by the Fed, the survey said that growth held steady in Cleveland and Kansas City, but slowed in Atlanta and Chicago. Economic activity elsewhere was described as modest.

High unemployment, cautious consumers and businesses, an ailing housing market and an edgy Wall Street have kept the recovery from gaining strength.

Manufacturing expanded in most regions. However, half of them—New York, Cleveland, Kansas City, Chicago, Atlanta and Richmond—reported that activity had “slowed” or “leveled off.” Steel production declined in both Chicago and Cleveland.

Retailers reported sales gains, although merchants in some places said shoppers focused on buying “necessities.” Sales of big-ticket goods were slower. In fact, reports across most regions found that auto sales had declined.

The housing market turned more sluggish after homebuyer tax credits expired in April. Commercial real estate businesses continued to “struggle” across all 12 regions, the survey said.

This basically tells us that the economy has come to a halt. Advancing slowly in some areas, regressing in other areas. And this is why I am keeping my exposure to U.S. stocks to a minimum.

Watch the early GDP numbers on Friday (they will be released at 8:30 AM Eastern time). The current projections are for annualized GDP growth of 2.5%. Needless to say, the markets will take anything less than that as the end of the world. In my opinion, anything above 1% is a good thing, showing that we at least have some growth, anemic though it may be.

What we are seeing in the broadest terms is the U.S. economy shifting. Some people are saying “jobs are going overseas”. I think they were already there. In the larger perspective, China has been growing for many years, and will continue to do so. At some point, China’s growth was going to have an impact on the world markets. Their growing industrial capacity was going to overtake the world’s demand, creating a deflationary situation. The financial collapse was, in a small part, contributed to by this effect. The competition from China left many small American businesses too weak to effectively compete against cheaper Chinese goods. Some of these small businesses closed, some moved their operations overseas.

Too often I hear, “But China is not competing fairly!” Granted, they don’t over-regulate their businesses, and they don’t tax them to death. Mind you, I am not saying all regulation is bad, or all taxes are bad. What I am saying is we need to be a lot more discriminating in how we regulate and tax businesses, especially small businesses. We CAN level the playing field. We just choose not to do it. It is far easier to point fingers at China than it is to solve our problems.

With that reality in mind, China will continue to grow, as the U.S. economy muddles along. This is why I have more of my portfolio in Chinese stocks.

Today’s Winners:

1. GLD: +0.27 to $113.78 (+0.2%)

Losers:

1. LYSDY: -0.37 to $6.78 (-5.2%)
2. WDC: -0.94 to $27.80 (-3.3%)
3. CSKI: -0.21 to $10.46 (-2.0%)
4. NIV: -0.03 to $2.30 (-1.3%)
5. AMX: -0.26 to $50.79 (-0.5%)

OVERALL: -1.7%

Fortunately, I added PSEC today for $9.75. Unfortunately, PSEC proceeded to drop a nickel by the close. Fortunately, I had that monster zero-point-two percent jump by GLD. Did I mention GLD went up? I’m trying to be positive here…