For a dull day on the markets, it was a good day for me, even though my MannKind play yesterday didn’t pan out. Then again, it didn’t tank either, in spite of missing earnings by a penny/share. I am going to hold it for a little while and see what happens.

As for the rest of my portfolio:
AGQ: 6.23 to $105.59 (6.27%)–bought at $103.00
AOD: -0.04 to $5.63 (-0.71%)–bought at $5.78
AT: 0.03 to $13.47 (0.22%)–bought at $12.62
DGP: 0.77 to $39.30 (2.00%)–bought at $38.8199
INTC: -0.42 to $20.05 (-2.05%)–bought at $18.52
JUBAX: NA to $10.43 (0.00%)–bought at $10.17
MNKD: -0.02 to $6.38 (-0.31%)–bought at $6.40
PALL: 1.76 to $64.47 (2.81%)–bought at $55.76
SIVR: 0.76 to $24.63 (3.18%)–bought at $22.00

OVERALL: +1.15%

Consider this your open thread for the weekend! Have a great Halloween folks!

I am going to repeat this warning from Bernie in the comments, as I am sure there are at least a few Fidelity investors out there:

I thought i would just mention this to others in case they are thinking of purchasing the new Sprott Silver fund thru Fidelity. This is just an ATTENTION for Fidelity customers. I purchased PSLV today and they charged a $50commission. Its a DIFFERENT $50 warning screen during the purchase. Therefore its almost impossible to see. They made the adjustment for me because i called and complained. But for others they are all paying a $50 fee plus the $7.95 purchase. I don’t know why since its on the NYSE. Fidelity will make out like a bandit today

That’s obscene. Thanks for the warning Bernie.

Commenter Bag had some questions, so I thought I’d throw him/her a whole post.

1) Ed, you earlier stated you do not suggest using 401k for more than matching funds. I cannot remember, but I think this was due to lack of options for funds. I think you suggested the following 1) 401k for matching funds 2) IRA (Roth or regular? I lean towards Roth) 3) any further savings – brokerage account.

It seems that you would roll into option 3 if you want to save 15% and make more than 50k a year. Are the advantages of flexibility greater than the tax advantages of a 401k? Would that matter if it is Roth or regular 401k?

Yes, the advantages of flexibility are far greater. Remember, most 401k options are pretty bland funds with high management fees. What returns you get are heavily eaten away over time, unless you buy your company’s stock.

I haven’t discussed this before, while having some of your 401k in your company’s stock may or may not be a good thing (only you can judge that), you need to also consider how much of your retirement funds overall you have in your company’s stock, and that means considering what you have outside the 401k. I wouldn’t advise having more than 10% in your company’s stock, and only then if you either work for a blue chip company, or work for a company for which you have complete faith (this requires a lot of soul-searching AND research). Remember the downside: When Enron busted, a lot of it’s employees lost everything they had in their 401k plans because they had it all in company stock.

Back to your question, you can still receive the same tax advantages of a 401k with a regular IRA (not a Roth). Everything you put into a regular IRA is fully tax deductible (up to the contribution limit). If you still want to put away more money for retirement after that, I would consider a Roth IRA (Note: I don’t know how the contribution limits would apply for a Roth donation made on top of a regular IRA donation in the same year.).

If you still wanted to save more beyond that, I would sooner go with a regular brokerage account than a 401k, simply for the flexibility. Even if you were following a strict conservative investment strategy, the options available to you in a regular brokerage account are better than most (if not all) 401k plans. If you are concerned about the tax hit, you could always use a tax-free strategy, by buying tax-deductible bonds or funds in a regular brokerage account. 

Remember, 401k’s are all about the matching funds. If your company matches 50%, then you get an immediate 50% return on your money up front. Not many investments will give you that.

And when you leave your company, make sure you roll over your 401k to an IRA as soon as possible! It will involve some paperwork, but it is well worth your time to do it.

2) What do people do when they go on vacation to protect themselves? For the more “buy and hold” type investments, I imagine that is something to let ride. I had some Lynas and came back to see it drop about 15-20% while I was away. Do people set stops before you leave? Or do you not really walk away from your account?

Vacation? What’s that?

Seriously, I am not much of a traveller. Most places I go, I am usually not away from a computer for more than a day.

However, if I were going to be away for longer than that, I think I would have to take a serious look at my portfolio. Stocks like Intel (INTC) would be left alone. Stocks like Lynas would probably be sold ahead of time, since there is too much risk involved. Simply put, remove as much risk from the portfolio as possible. I would remove my commodity plays like SIVR and PALL too, since commodities require constant babysitting, due to all the economic factors that can effect them. For borderline stocks, something like Atlantic Power (AT), I would put in stop loss orders. 

3) Is there a consensus on what are good brokerage companies? I use Ameritrade currently, but started this when I was just looking to play with a bit of my own investment. As I am looking to start putting more money into IRAs and otherwise, should I look somewhere else?

We actually haven’t come to a consensus on that question. I do see a point in the near future when I will probably move into 100% cash, and then I plan to do some serious brokerage shopping. I do plan to report what I find here, so I can see what everyone thinks. Stay tuned…

First, I would like to thank all of you who came by yesterday. We had the heaviest traffic day ever here with 1,930 hits!

Second, you folks carried it over into the night. I woke up this morning to more comments than I could respond to! But I am glad to see all of you using the site. As always, this is your place too, so feel free to discuss anything here. I will try to keep the intelligent commentary coming, although I may have to outsource it to India…

If you have ever heard of Samuel Beckett’s play Waiting for Godot, or seen it, then you may be aware that it is controversial, in that people either love it or hate it. Of course, any play about two guys sitting around waiting for a third guy is bound to be either a highly intellectual experience, or deadly dull.

That explains what we can expect from the markets from today through Tuesday. Even with the election on Tuesday, the markets won’t react to that unless the Democrats pull off an upset (about as likely as me being named the next CEO of Exxon). Even then, the markets might pay more attention to the Federal Reserve’s announcement on Wednesday.

Until then, expect the markets to do very little, unless something major happens elsewhere in the world.

We had some good discussions going on the blog today, and my portfolio did well (not a loser in the bunch!). All in all, a good day!

AGQ: 3.04 to $99.36 (3.16%)–bought at $103.00
AOD: 0.04 to $5.67 (0.71%)–bought at $5.78
AT: 0.02 to $13.44 (0.15%)–bought at $12.62
DGP: 1.03 to $38.53 (2.75%)–bought at $38.8199
INTC: 0.28 to $20.47 (1.39%)–bought at $18.52
JUBAX: NA to $10.38 (0.00%)–bought at $10.17
MNKD: 0.00 to $6.40 (0.00%)–bought at $6.40 today
PALL: 1.18 to $62.71 (1.92%)–bought at $55.76
SIVR: 0.36 to $23.87 (1.53%)–bought at $22.00

OVERALL: +1.22%

Why would I buy a biotech stock that is bleeding cash, like MannKind Corp. (MNKD)?

This is a small play, based on two simple facts:
1. The CEO bought 700,000 shares (worth over $5 million) back on October 20th, for $7.15 each. Insiders already own nearly 37% of the company’s stock. This one transaction is more than all the insider transactions on the stock for this year.
2. The company reports earnings tomorrow (October 29th).

This is strictly a gut play. I don’t have a large investment in it, but we’ll see if it pans out.

I picked up the shares at $6.40.

(Part 2 of a continuing series where I take a look at all the stocks in the Jubak Global Equity Fund, aka JUBAX)

I find it intriguing that Jubak has added Agrium (AGU) to JUBAX, yet it shows up on his old website under his “watch list”. If he did add it to JUBAX at the time he mentioned it on his Jubak Picks website (which was August 25th), it has done rather well for JUBAX since then, rising from around $70 to it’s current price of $87.

It is hard to criticize a pick that has done that well. But it is time to let this one go.

In the short term, this stock looks ready to drop. With an RSI of 64 and a short ratio of 1.7, and a dividend that only pays twice a year with a yield of 0.13% (and a payout of 3% that screams “RAISE THE BLOODY DIVIDEND!”), this has “pending short attack victim” all over it.

Even if you like the agricultural play factor of Agrium, which makes fertilizers and other agricultural products, it seems to already have the agricultural boost in it’s price:

P/E: 24.93
Forward P/E: 13.98
PEG: 4.99
EPS Next 5 years: 5%

To me, it looks like Agrium already has it’s growth potential factored into the price. While it is a good company with solid financials, I think it’s had most of it’s run, and I would call it a “strong sell” at this price.

1. Is the Democratic Party’s obstinance on taxing the rich going to end up hurting the poor and middle class? It is beginning to look like it, since tax withholdings for everyone will go up starting January 1st. It’s hard to blame the GOP on this one, since they have explicitly stated they want to extend the tax cuts for everyone, not to mention the Democrats control the Congress and White House.

2. Speaking of politics, I always suspected liberalism might be a genetic defect. Now to figure out how to treat it. Here’s a thought…
(Just kidding people. Don’t jump down my throat.)

3. In fairness to Democrats, the Republicans aren’t anywhere near perfect. PIMCO’s Bill Gross nails it:

Each party has shown it can add hundreds of billions of dollars to the national debt with little to show for it or move our military from one country to the next chasing phantoms instead of focusing on more serious problems back home. This isn’t a choice between chocolate and vanilla folks, it’s all rocky road: a few marshmallows to get you excited before the election, but with a lot of nuts to ruin the aftermath.

Each party’s campaign tactics remind me of airport terminals pre-9/11 when solicitors only yards apart would compete for the attention and dollars of travelers. “Save the Whales,” one would demand, while the other would pose as its evil twin – “Eat Whale Blubber,” the makeshift sign would read. It didn’t matter which slogan grabbed you, the end of the day’s results always produced a pot of money for them and the whales were neither saved nor eaten. American politics resemble an airline terminal with a huckster’s bowl waiting to be filled every two years.

Read the rest of Bill Gross’s commentary, which is actually more about the Federal Reserve’s quantitative easing next week than the election. Even though it was written with PIMCO’s customers in mind, I find it to be perfect with it’s analysis. Considering it was written by a guy whose company sells bonds for a living, it leaves me fairly worried about what the next round of quantitative easing will do to the bond market (and our country as a whole).

4. Speaking of the Fed, When the Federal Reserve is polling bond dealers about potential effects of another round of bond purchasing, I think quantitative easing is a foregone conclusion. But I will give the Fed credit for at least considering the impact on the bond market before throwing money at it. Now if we can just get them to quit throwing our money away…

5. More QE talk, from Bloomberg’s Mark Gilbert:

Albert Einstein defined insanity as doing the same thing repeatedly and expecting different outcomes. The crazy gang at the Federal Reserve should heed those words when debating how much more market manipulation to inflict on the world of fixed income.

The worrisome thing about so-called quantitative easing — a concept still novel enough to mean whatever the Humpty-Dumptys in central banking want it to — is that its consequences remain unquantifiable, and the perceived need for more central-bank purchases of securities should make investors uneasy.

Fed Chairman Ben Bernanke said in an Oct. 15 speech that it’s difficult to work out the “appropriate quantity and pace of purchases and to communicate this policy response to the public.” He also said that “nonconventional policies have costs and limitations that must be taken into account in judging whether and how aggressively they should be used.”

Imagine a surgeon telling her patient she wasn’t sure what size scalpel she’d be using or what the likely outcome of the procedure might be. Or an architect admitting to a planning committee that he wasn’t confident about his stress calculations or the durability of the newfangled materials he was using.

“Nobody understands QE,” says Fred Goodwin, a strategist at Nomura International in London. “We have no idea how inflationary it really is. A patient juiced up on QE wants to party and it does not matter what anyone says. Don’t worry about what central banks are worried about; worry about unintended consequences.”

To put it bluntly folks, YOU are the guinea pigs in Bernanke’s experiment! Picture Ben Bernanke with Gene Wilder’s hair, yelling, “It’s alive! ALIVE!”, and you get the picture of what is happening. Bernanke is trying to raise the dead economy like Frankenstein’s monster. But sometimes, the dead are best left where they are, and the world is better off relying on the next generation of new life to carry on the spark of human life.

6. Now for some good news…New jobless claims dropped to a 3 month low! Existing claims dropped 122,000! Stock futures are up, and the dollar is down. It could be a good day in the markets.

Commenter Moraski passed this along: There will be a new rare earths ETF that will start trading tomorrow: The Market Vectors Rare Earth/Strategic Metals ETF (REMX).

I cannot stress this enough: Do NOT buy this ETF!!!

There may come a time in the future, possibly the near future, when we might want to buy this. But the timing for this ETF is awful. The rare earth market is in a free fall at the moment. Stay away from it.