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Monday, December 20, 2004
Market Recap
The market started this shortened holiday week of trading mixed with the Dow gaining only +11 points, the NASDAQ suffering a -7 point loss, and the S&P up a fraction. There is not much in the way of news that changes anything from yesterday's commentary. The markets are hanging around with not much of anything new to bring in the buyers. Until there is some news that the bulls like, we may be trading sideways for a few weeks to build a new base on the charts of the big indices.
OTC BB Bulletin
Today was a great day for the OTC BB bulletin stocks. The markets may be trading flat lately but some of our OTC BB stocks have been performing very well. ZKID, mentioned in yesterday's bulletin at .06 closed today at .12 - a 100% gain in one day. It opened today at .07 so even if you bought the open, you could have made 80% today. It pays to look at this new bulletin we have created to better track our OTC BB plays (formerly listed at the bottom of this commentary). It is moves like these that can turn your portfolio into a cash machine while the overall market is flat lining. There are always stocks moving up in any market and OTC BB stocks will always trade on their own regardless of what the major indices are doing. They have a mind of their own and we hope to list some of these big movers for you on our new OTC BB bulletin, so please look at this each night as I will try to update it nightly.
M & A Heating Up
It is the last shopping week before Christmas, and it seems that consumers are not the only ones out there looking for bargains this holiday season. As we close out the year, some of the biggest buying is coming from big cooperate leaders. They are shopping for bargains and many are finding them. A few weeks ago, we had a commentary on mergers and acquisitions and stated we would be seeing many in the upcoming year.
Since that commentary a few weeks ago, we have seen many mergers and buyouts announced. It is like we had a crystal ball, we could not have timed that commentary any better. Here are some buy outs that have been announced just since we had our commentary on the subject:
- Kmart and Sears announced they will merge.
- Sprint and Nextel announced a $36 billion merger.
- A mega merger in the utilities sector is in the works.
- Excelon wants to purchase the New Jersey Public Utilities Service for around $12 billion.
- Symantec announced it is buying Veritas for around $13.5 billion.
- Oracle finally received approval to buy PeopleSoft.
We knew there would be some big mergers happening but I did not expect this many big mergers to begin happening so fast. All this buying tells me that stocks are cheap. If companies feel they can buy others out at the current stock price or for a slight premium to the current price, then we can take that to mean that the stocks are valued at the right price. Companies do not buy out other companies unless they feel the stock is cheap and the company is valued correctly.
The exception to all of these deals is the Oracle / People Soft deal. Larry Ellison has been on a personal rampage to acquire PeopleSoft for over a year now. A hefty premium is what it took, paying well above the street price for a stock in order to acquire the company. Did Wall Street not have this company priced properly? You betcha! Is Ellison overpaying because he cannot take 'no' for an answer? I think he is, but Larry Ellison is a shrewd business man and even though it looks like he over paid, he may just surprise us all and come out with the last laugh. Oracle share holders will know in time if he was right or wrong.
This is only the beginning of many mergers and acquisitions to come in the year 2005. I believe we will hear of many more merger announcements in the weeks and months to come. Who knows, maybe one of the bulletin stocks may be something Larry Ellison wants to buy!! If it is something he really wants, he pays quite a premium, lol.
Holiday Season Bulletins
There will be no bulletin on Thursday December 23rd because the market is closed on Friday in observance of the Christmas holiday. There will be no bulletin next Thursday December 30, because the market is only open for only a half day trading on New Year's Eve.
Holiday greetings from TWPD
From all of us at TWPD, we hope you all have a wonderful holiday season with your family and friends. We would like to wish all our members a very Merry Christmas and Happy New Year. May 2005 be a great year for you and your loved ones.
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As always, thank you for your support past, present, and future! Have a great night everyone; we'll see you all tomorrow evening.
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