Friday, February 2, 2007

End of Week Update/Recap

Interesting week in the market. My portfolio has a whole posted fairly solid results; in the neighborhood of 1.5 percent, which is in line with the S&P 500 return for the week.

Oil prices continued to creep back up. One of my holdings, Chevron Corp, reported earnings this morning. They missed by about 9%, but the stock traded almost flat following a 3% gain yesterday. This happened because the street was happy with the year that the big oil companies had in terms of profits. The all-time profits were due to increasing demand, and record oil prices. In contrast, Chevron was hurt in the past quarter by the lagging price of Natural Gas.

Chevron is one of my favorite companies for a couple of reasons. To begin, they are one of the most diversified oil companies with resources all over the world. They are well invested in both upstream and downstream activities. They made a great discovery in the gulf of mexico this year that could provide massive amounts of new oil. One reason that is often overlooked, but why I like them is that they don't take a bad rap from the public like ExxonMobil does. Exxon gets blasted in the media because of the amounts of their profits. Chevron often avoids this negative press.

One negative on Chevron would be that they are based in California, which is the most progressive state in the union. They are the most likely to become subject to new taxes against oil companies to promote alternative energies.

Overall, I like Chevron. Nice dividend. Growing faster that most oil companies. Demand for oil is not going away. If we return to peak oil prices, Chevron should add an additional 10 percent.

Another observation: Portfolio holding Garmin LTD, upped nicely today on heavy trading. This could be due to a few things, but I look to the correlation of this Sunday's game. Garmin is running their first ever Super Bowl ad, and has been getting a lot of positive press for it. They teamed up with Fallon of Minneapolis who is well known for creating winning ad campaigns.

I still think we are due for a 5 to 7 percent correction in the markets, but either way, I'm holding strong that this is a strong market for the next year or so.

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