Stock Picks for August 6, 2007

Sure are glad we sold LEH stock pick for a loss.  It went down another almost 8% yesterday.  We recommend staying away from financial stocks right now.  Banks, brokers, insurance, you name it.  The fall out may be bad in certain types of bonds also.  This is far from over.  We are just seeing a few hedge funds going under, there will be more.  The firings will also continue like at BSC.  We know some of the financial names look attractive, but I have no idea what is lurking in their portfolios.  Stay Away. We are recommending an average down on SAIA now.  It is much undervalued and we will pick up more if it goes down further.  Railroad and trucking companies are heavily owned by hedge funds and they are selling heavy right now, which is part of what is driving down the markets. It is amazing to see how vulnerable the markets are to a small increase in bid/ask ratio.  This is buyers and sellers.  Supply and Demand.  Selling increases on any fear, and the markets tank.  Not enough buyers of course.  When the sellers are satisfied, it will return moving up. For the next few weeks our portfolio performance is likely to look bad, but everything is declining.  But remember, in all of history the markets always come back. There are stocks that are moving up in this market, but they do not fit our strategy.  Our strategy is predominantly holding stocks for the long term in good companies, getting out if they become overvalued, and then buying back in.  Our screener helps us determine the entry/exit points.  However, during correction times we go into predominantly hold mode with lots of buying.  With room for 15 to 20 positions available in our portfolio we will quickly move to holding many more positions over the next 8 to 12 weeks. We see short term opportunities in stocks that are losing money, growing fast towards profit though, and are heavily speculative.  We will have to save this for another service in the future.  We have to stay true to our value vision. We may make additions to this newsletter tomorrow, so stay tuned, we are working overtime this weekend analyzing opportunities. 8/5/2007:  We have found so many undervalued stock picks this weekend, but we need the markets to settle down first.  More tomorrow.