Tuesday, February 12, 2008

February 12, 2008

Market Watch:

All the major indices are trading up today, but the Dow is the definite leader. The Oracle of Omaha has decided to infuse more capital into the hands of bond insurers. MBIA Financial (MBI) and AMBAC Financial (AMK) are both trading down 10% on the day. Buffet's offer was only to insure municipal bonds, which do not cover the risky debt these corporations hold.

Still, the rest of the market is pushing on strong with financials like Capital One Financial (COF), Citigroup (C), and Washington Mutual (WM) leading the way. Other sectors showing strength today include agriculture, construction machinery, energy, and mining.

Question and Answer:

Tannim asked: Why is Monsanto up? France just banned one of their major GMO crops there. Astroturf-san Inc. should be hurting right now.

At DollarBuilder, we believe that the current forces driving the market are more holistic. The entire agricultural sector is drastically outperforming the market right now. As a result, almost all members of the sector are benefitting. In addition, because of high corn and Round-Up sales, today Monsanto boosted its earning projections for the second time in as many months.

In Play:

Hopefully you've been able to make some money during this recent mini-rally. If you're looking to continue to do so, I hope you had the opportunity to take some profits on UltraShort Dow30 ProShares (DXD) in the past few days. DollarBuilder believes that a 10% discount of this stock's current valuation would be a bargain under current market conditions.

We also believe that gold will soon be a strong play as a part of your portfolio. However, we consider the current valuation to be a bit high. Now would be a good time to start learning about trading gold, though!

Dollar Bill did not own any shares or short positions in any of the stocks he's mentioned at the time of publication.

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