"ALWAYS A BULL MARKET SOMEWHERE."

I stole The Above Title From Jim Cramer. Although I am not a huge fan of Cramer, I occasionally watch him in hopes of gaining some fresh insights into the markets. I must admit, I have a difficult time finding the bull market in this environment. I always thought "bail out" was two words; however, it is used so often these past few months that it is, more often than not, written as one word. Banks, insurance companies, car companies, and investment bankers are looking for a helping hand from the government. The latest plea has come from real estate developers who will almost always produce more developed real estate than the markets need if they are given the money to do so. Home builders, are also crying the blues and trying to get the government to provide mortgage money to allow buyers to buy more real estate than they can afford. I am confused. I thought easy money was what caused the problem in the first place. The funny part of all this is that the government has no money. Their main source of funds has been the taxpayers, who are also tapped out, and the Asians who are always willing to loan money so that we will keep buying their stuff. The problem is that the consumers are trying to become more discriminating in their spending habits and the Asian economies are feeling the pinch all around.



Here is An Idea. This advertisement appeared in The Economist: "Our lives are full of things. Disposable distractions, stuff you buy but do not cherish, own yet never love. Thrown away in weeks rather than passed down for generations." I read that with considerable interest because I am amazed at the amount of stuff we own that is virtually worthless. The second paragraph was also interesting: "Perhaps things will be different now. Wiser choices made with greater care. After all, if the fewer things you own always excite you, would you miss the things that never could." What a thought provoking series of statements until you look at the bottom of the ad that says "A diamond is forever." I guess I'm not excited much by diamonds either. In my real estate activity, I am often called upon to be among the first to enter a house where the occupants died only a short time before. I am always amazed at the mountain of stuff that has no value to those who remain. I don't intend to throw all my stuff away, but I am determined to devote less time, energy, and money to acquiring stuff that those who survive me will consider worthy only of giving to the homeless or depositing into a landfill.



Enough Philosophy. I'm sure that most of you read this to get some idea of where opportunities may lie in this marketplace. On November 7th, I wrote of my purchase of Pro Logis (PLD), an industrial real estate firm owning industrial properties worldwide. My purchase price was $9.85 a share and I sold an option which allows the purchaser of the option to buy the stock from me, on or before December 19, at $10 per share. Since I received $1.75 per share for the option, my net out-of-pocket price for the stock was $8.1 ($9.75 purchase price less $1.75 received for the option.) Since I didn't want to convey the impression that I was only going to tell you about my winners, I promised to let you know what happened with this investment, win or lose. What happened almost right away was that the stock dropped to $2.50 a share. Not a great result for an investment professional risking his own funds. Fortunately, things turned around and the stock price rose to $9.00 at the time the option expired. I could have sold at that point for a profit of 11% in a month but, still holding a belief that PLD has a bright future somewhere down the line. I sold another call option to allow the option purchaser to buy the stock in January at a purchase price of $10.00 I received $1.20 for that option. At this point I am out $6.90 for the stock (9.75 less my original 1.75 option premium less my recent $1.30 premium). If the stock reaches $10 in January, I make a profit of 32% in two months. If not, I can sell the stock or write another call and receive another premium. This illustrates the potential of writing covered calls. There are some pitfalls but but this is a lower risk option strategy that offers an additional strategy for increasing gains from your portfolio.

Holidays are Coming. Christmas and New Year are rapidly approaching. These holidays have had religious significance in my family for hundreds of years. Here's wishing those of you who feel likewise a very Merry Christmas. For those of you who feel differently, I intend no disrespect. As always, your friendship has meant much more to me than all the "stuff" have managed to accumulate over the past 70 years.