Tuesday, January 1, 2008

SINLetter: Top Financial Bloggers Face-Off

I have been invited to participate in a stock picking contest for Q1, 2008. I normally do not do these because to be honest I have no idea what stocks are going to do in only three months but I do like the work Asif does at the SINletter so I will give it a shot.

Here are the rules of the contest:
1. Stock contest starts on January 2nd, 2008 and ends on March 31st, 2008.
2. Only stocks that trade above $1 at the time of selection and that are listed either on the NYSE, Nasdaq or the American Stock Exchange will be accepted (sorry no pink sheet or bulletin board stocks this time around).
3. You can pick ETFs and closed-end funds.
4. Regular dividend payments will not be taken into account both on the long side or the short side.
5. The stock contest price would be the highest price of the day for long stocks and lowest price of the day for short stocks if you pick the stock during a trading session. If you pick a stock after hours or over a weekend, the next trading session will be used to determine the highest price of the day for long stocks and lowest price of the day for short stocks.
6. It is not possible to use margin or leverage.
7. The value of S&P 500 you enter will be utilized as a tie breaker in case two or more contestants have the same returns at the end of the contest.
8. Because of shipping costs, this contest is currently only open to residents of the United States. If all you care about is bragging rights and not the prizes then please feel to participate irrespective of your location.
9. One entry per email address.
10. Each winner will be contacted a maximum of three times and in case we don't receive a response within 5 days, we will contact the next highest ranked contestant.
11. We reserve the right to disquality any entry at any time at our sole discretion.
12. We reserve the right to change these terms and conditions at any time.
13. This contest is for entertainment purposes only and we assume no liabilities for inaccurate information entered by us or contest participants, typographical errors, programming errors or equipment malfunctions.
14. We reserve the right to stop accepting new entries at any point.

That being said, here are my picks and a brief reasoning:

1- Altria (MO)
PMI ought to be spun off in Q1 and the massive share buybacks for both entities will be announced. If the economy does happen to look as though it will slide into recession, investors will flock to MO as a defensive play.

2- Citigroup (C)
What else could Citi say that will drop the stock price even further? Other than they are closing shop, I do not know. Hedgies and funds all sold out of Citi for the end of the year window dressing. That being said, it is dirt cheap and they recognize this and ought to begin buying in Q1.

3- Starbucks (SBUX)- Short
Starbucks faces a slowing economy, rising input prices, relentless competition and a management team that seems to recognize none of the above. Add them up and spot the stock a price 26 times forward earnings and shareholders are not in for a "Happy New Year."

You can track the contest results here:

Disclosure: Long Citi and Altria. No position in Starbucks

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