The Motley Fool's CAPS investing service is one of the newest additions to the investing community at Fool.com, and it's another great way for investors to work together to beat the market. One of the features in CAPS allows users to set up a blog to talk about their picks, investing strategy, market view, or what they just had for lunch (if they so desire). I've scoured through some of the most recent blog posts in the CAPS universe to bring you some of the great content to be found there.
Absent a financial disaster, the Fed will not ease in 2007
The first stop this week takes us to the blog of pickthis, a CAPS All-Star who's ranked in the top 4% of all players. While many cheered the policy statement from the Federal Open Market Committee last week and believed it to be another step on the way to the Fed lowering rates, pickthis took a different view.
"While the Fed may lower rates, I don't think anyone is thinking about what it would take for them to do so. That, folks, is something just short of a financial catastrophe.
"In my opinion, the Fed will not lower rates should inflation stay above their 'comfort zone.' Even if the economy were to continue to slow, the Fed will stay neutral. Which event tends to remedy itself: a slowing economy (recession) or high inflation? Recessions tend to work themselves out and are part of the economic cycle, while high inflation is a different animal. This Fed is more concerned about inflation than a recession (in my opinion) and will not lower rates, despite what the economy is doing, if inflation remains high.
"Again, it's much less painful to live through a recession than a period of sustained inflation. So unless we get some sort of gigantic fallout from subprime or another financial disaster, the Fed will probably stand still until inflation is contained. Also, with the rest of the world raising rates, lower rates would likely tank the US dollar further. Another bad scenario.
"This brings me to the market. The worst case scenario may be stagflation, which appears a real possibility. The Street is not pricing this in which leaves a large amount of downside risk today."
You can read more from pickthis here.
It's not boring if it makes you money
Next I headed over to the blog of adprintz, another CAPS All-Star. As he mentions in his post, he has seen good returns from oil drillers such as Noble
"My strategy is to invest in sectors I consider undervalued as a whole. In the past I tried to pick the cheapest stock in every sector, but that never produced the results I was expecting. I usually found that if the rest of the sector was fairly valued, the cheaper stocks were cheap for a reason. Usually the market knew bad news was coming, or management was just incompetent. However, when entire sectors are undervalued, it usually just means that they are currently out of favor. As long as it isn't a fundamentally flawed group (sorry subprime, you don't fit the bill), the money will come back in and make the patient investor quite a nice profit.
"The stocks I have been loading up on recently have been shipping. Specifically, railroad shipping. With the price of oil continuing to stay high and likely to go higher into the future, railroads will see ever-increasing demand. They were already 10 times more efficient than trucks. Now the cost benefits are just going to be too much to ignore. Couple that with the relatively low PEG ratios of Trinity Industries
I, for one, am never one to argue with a boring portfolio that yields results. If I need excitement, I'll go get a speeding ticket -- my stock portfolio is for making money, not providing jollies. Of course, there are few better investors, or more boring investors, than big Warren. And who's going to argue with him?
You can check out more of adprintz's fresh stylings here.
I'm waiting by the phone, patiently
Speaking of Warren Buffett, and closing out our weekly tour of the CAPS blogosphere with a little levity, I found this entry from TheWho44 (our third CAPS All-Star of the day):
"Appar[e]ntly Berkshire Hathaway
"Warren Buffet[t] is looking for someone young, knowledgeable, patient, with a 'genetic aversion to risk' to replace him as Chief Investment Officer at Berkshire. This probably eliminates the entirety of the American population. Better look in Canada. Or maybe Finland."
While I got a chuckle out of TheWho44's post, I have to also note that, sadly, I have not heard back yet on the resume I sent to Berkshire. I've got my fingers crossed, though, and I've been wearing the same socks for three weeks for some extra luck.
You can read more from TheWho44 here.
Well, now it's your turn -- get off the sidelines, join CAPS, and start up your own CAPS blog to share your knowledge and insights with the rest of the CAPS universe.
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Fool contributor Matt Koppenheffer shares some thoughts of his own on his CAPS blog. He does not own shares of any of the companies mentioned. Berkshire Hathaway is a Motley Fool Inside Value choice. The Fool's disclosure policy does not have its own CAPS blog, but if it did, it would be more prophetic than Nostradamus and more poetic than Yeats.