Wise Observer

Hayling Island

Hayling Island is a tiny island that is tied to the Mainland by a Bridge on the Solent coast.

This splendid Island is called home by a mere 16,900 individuals who savour the miles of coast lines lining against the Solent. The traditional sea side sense is a consummate backdrop for Sailing, Swimming, kite surfing and wind surfing.

Boasting 2 churches St Peters built in 1140 and St Marys which dates back to the 13th Century. A trip to the Life Boat Station and Museum situated along Sandy Point explains the fearlessness and history, whilst the scenes across to the entrance of Chichester harbour may be savoured and perhaps captured..

Or if you fancy a round or 2 why not tee up at the Hayling Golf Club, founded in 1865, the 18 holes will test any golfer, set in a splendid location looking out across the Solent towards the Isle Of White, complete with Club House and of course the 19th Hole.

Or perhaps the fascinating treasures on exhibit at the Royal Marines Museum wont fail to impress, with their displays of Landing Craft, Uniforms, Silver and Manuscripts dating back centuries. Or be transmitted back in time with a call in to Southsea Castle built on the say so of Henry the 8th, now home to a fascinating Museum and to the fabulous Over Lord Tapestry which commemorates D Day

The things which contribute to price levels and action in the financial markets are numerous and diverse, and their influences can vary through time, and across different markets. This article identifies the different types of Economic Data influences and the role they play.

There are two ways economic information can influence prices. The first is in the macro sense. Macroeconomic inputs include:

• Interest Rates
• Economic Growth (GDP)
• Government Budget Surpluses/Deficits
• Trade Balances
• Commodity Prices
• Relative Currency Exchanges Rates
• Inflation
• Corporate Earnings (both for individual companies and the broad collection)

These elements will generally all have long-term inputs in to the pricing of any given market. They do not tend to move in sharp, dramatic fashion, so their influences also tend to be seen over longer periods of time.

That said, the release of economic data related to the above can be seen to have serious impact in the short-term activity in the markets. This comes primarily in the form of data releases. Some of the most important are:

• Employment Data
• Trade Data
• GDP growth figures
• Consumer & Producer Inflation rates
• Retail and Wholesale Sales
• Confidence & Sentiment Readings (U. Michigan survey, etc.)
• Income & Spending
• Production
• Interest Rate policy decisions
• Earnings releases

The markets can react in very, very dramatic fashion to these releases when they are out of line with expectations. The foreign exchange market, namely the EUR/USD exchange rate, provides a striking example.

On one Friday morning at 8:30 Eastern the monthly Non-Farm Payrolls report hit the wires. This report (released on the first Friday of each month) probably provides the most short-term volatility across all market sectors of any regular economic release. When the data comes in well off of market expectations, fireworks can ensue, as was the case in the example. Over the course of about 2-3 minutes EUR/USD fell more than 20 pips, turned around and rose about 60 pips, then fell back down to near where it had been before the data was announced (a pip being 1/10,000 of a Dollar). It then proceeded to run nearly 100 pips higher in fairly steady fashion over the course of the next hour.

Here is another example, this time of T-Bond futures.

When those payroll figures were released at 8:30 the market dropped more than two full points. One point on the T-Bond futures contract is worth $1000, so each contract fell more than $2000 in about two minutes. Consider that the margin on a contract at the time was probably around $2500. That means a trader could have lost more than 80% on the trade in the blink of an eye.

It is also important to understand that in the futures pits such data events often result in fast market conditions. This means that the action is so hectic that there may literally be trading going on at several different prices in different parts of the pit. This is a risk of having open positions at the time of a major news release. The market may snap back fairly quickly, as in the chart above, but in the meantime the trader’s positions may have been liquidated on a stop order at a substantial loss.

Fortunately, all major economic releases are well documented. They are done on a pre-announced calendar which is readily available on any number of web sites, and of course in the business news media. In the vast majority of cases, one can also find out ahead of time from any number of sources what the expectations are for the release.

Foreknowledge of pending data events may not prevent losses which may result from unexpected figures. It will, however, allow the trader to recognize and understand when risks are increased. Make sure, especially if you are a short-term trader, to know what data is coming out. It can make a difference in your performance.

John Forman is author of The Essentials of Trading (Wiley - April 2006), and a near 20 year veteran of trading and analyzing the markets. Visit Anduril Analytics to learn more about his trading, market analysis, and research activities and to find out how you can get a copy of Anduril’s free report on what every trader and investor needs to succeed.

Why is a value investor writing about an unprofitable internet company? Because value investing is about finding dollars that trade for fifty cents; with a market cap of less than 75% of sales, Overstock.com (OSTK) looks like it may be exactly that.

But isn’t it too risky?

The greatest risk in any investment is the risk of overpaying. So, the real question is: what is Overstock worth? I think it’s worth at least $1.5 billion. With Overstock’s market cap currently sitting around $500 million, my valuation certainly looks far fetched. But, there’s only one way to know for sure. Let’s take apart my argument piece by piece, and see if any of my assumptions are unreasonable.

First Assumption: Over the next five years, Overstock will neither generate truly free cash flow nor consume cash. In other words, its free cash flow margin will average 0%. Cash generation in some years will exactly offset cash consumption in other years. Obviously, this assumption is unreasonable, because there is almost no chance the cash flows will exactly offset.

That’s not a problem if it turns out Overstock does generate some free cash flow over the next five years. In that case, my assumption simply errs on the side of caution. If, however, it turns out Overstock actually consumes cash over the next five years, there is a problem - possibly a very big problem. So, which scenario is more likely?

Overstock’s revenues are growing quickly. Gross margins look solid at 13.3% in 2004 and 14.9% over the last twelve months. Overstock’s unprofitability is the result of its selling, general, and administrative expenses (SG&A) which have been growing exponentially. Will these expenses continue to grow? Yes, but not as fast as revenues. Over the last twelve months, Overstock’s spending on cap ex has been 5.6% of sales. That number is an aberration. In the long run, spending on cap ex should not exceed 3% of sales. Considering the business Overstock is in and the expected sales growth, the company will, more likely than not, generate some free cash flow over the next five years. Therefore, the assumption that Overstock will be cash flow neutral over the next five years is not overly optimistic.

Second Assumption: Over the next five years, Overstock’s sales will grow by 15% annually. Is this an unreasonable assumption? Again, I don’t think it is. Very few industries are expected to grow as fast as eCommerce. Overstock’s revenue growth in 2003 and 2004 was over 100%. In the past year, that growth has slowed. However, it is still closer to 50% than it is to 15%. Overstock isn’t in a cyclical business. So, there is no reason to believe current sales are abnormally high.

Also, all that spending on advertising is increasing consumers’ awareness of Overstock. A review of Overstock’s traffic data shows it has not only been gaining more visitors; it has also been climbing the ranks of the most popular web sites. While it is a long, long way from the Amazons, Yahoos, and eBays of the world (and will never reach those heights) Overstock is becoming a well known internet destination. This fact was most clearly evident in the weeks leading up to Christmas. Shoppers who visited Overstock during the holiday season obviously know it exists, and may very well return at some other point in the year. Analysts are predicting very high growth rates for Overstock; however, they are also recommending you sell the stock. I don’t put any weight in their estimates. But, for the other reasons given, I believe the assumption that Overstock will grow sales at 15% a year for the next five years is not unreasonable.

Third Assumption: Six to ten years from today, Overstock will have a free cash flow margin of 3%. Ten years from today, Overstock’s free cash flow margin will rise to 4% and remain at that level. Now, of all the assumptions I’ve made, this one is the most questionable. Sure, Amazon has that kind of free cash flow margin, but Overstock isn’t Amazon, and it never will be Amazon. Overstock’s gross margins are less than Amazon’s. In fact, Overstock’s gross margins are less than Wal - Mart’s. However, Overstock’s fixed costs will eat up a much smaller portion of its sales than is the case over at Wal - Mart.

If you compare Overstock to other online retailers, you will see that if Overstock does experience strong sales growth, a 3% free cash flow margin six years from now is not unreasonable. I assumed Overstock’s sustainable free cash flow margin will be 4%. There’s a case to be made that 4% is too high. I won’t make that case, because I don’t believe in it. Remember, that 4% number comes ten years out. That gives Overstock plenty of time to grow sales and thus reduce SG&A as a percentage of sales.

Fourth Assumption: Six to ten years from today, Overstock will be growing sales by 12% a year; eleven to fifteen years from today, Overstock will be growing sales by 8% a year; thereafter, Overstock will grow sales by 4% a year. Let’s see what this really means. According to these assumptions, Overstock’s sales will be as follows:

Today: $707 million

2011: $1.59 billion

2016: $2.71 billion

2021: $3.83 billion

2026: $4.66 billion

2031: $5.67 billion

2036: $6.90 billion

Seven billion dollars is not an unreasonable target - if you have thirty years to achieve it. To put that figure in perspective, Amazon.com currently has sales of about $8 billion. So, even after thirty years, these assumptions don’t lead to Overstock reaching the same size as today’s Amazon. Don’t forget these numbers assume some inflation. For instance, if inflation averages 3% a year over the next thirty years, Overstock’s projected $6.90 billion in sales only translates to $2.84 billion in today’s dollars. So, these assumptions only lead to a fourfold increase in Overstock’s real sales over a period of thirty years. I think that’s pretty reasonable.

If you take these four assumptions together, you get a value of $1.5 billion for Overstock. Today, Mr. Market is offering it for $500 million - that’s why I’m writing about an unprofitable internet company.

Geoff Gannon writes a daily value investing blog and produces a twice weekly (half hour) value investing podcast at http://www.gannononinvesting.com.

Financial security is something we all strive for, well most of us anyway. Some people are perfectly content living paycheck to paycheck and claiming their house is their savings. Part of me wishes I could be that relaxed to have such a laid back view of things.

For those of us that do want to have some level of financial security we try to save and invest our money at any opportunity. Some people do this on their own, while the majority of people have some sort of financial professional offering them advice. I personally have an account set up with a financial advisor. Most financial advisors will tell you to “diversify” your money and investments. But, do they really mean it? Yes, they mean it as long as it makes them money.

I feel in order to truly be diversified in your investments you need to have your stocks, bonds, and savings. But, the real gold mine is in precious metals. Very few people invest in precious metals, in comparison to the amount of people in the stock market. The most well-known precious metals are gold and silver, in addition to platinum and palladium (a by-product of platinum).

Precious metals retain their value very well. A major difference between precious metals and stocks or bonds is that gold and silver have actual value, meaning I could take it and give it to someone as a form of currency in some countries. The United States used to back its currency with gold and silver but they sold it all off in the past three decades or so. Now the dollar is backed by Congress.

Precious metals have many uses other than the obvious use in jewelry. Silver is used in X-ray film, gold is used in some electronics as a conductor of electricity, and there are many more for each of the metals. Because of how widely these metals are used and the importance of some of the applications in which they are used, the value will eventually continue to go higher and higher. For example, I have read some projections on the value of silver in the next ten years or so. Some experts predict silver will hit anywhere from $100 to $400 and ounce. The cheapest I have bought some of my silver for was $7.37 an ounce. Whether it hits those highs remains to be seen. But, because of the uses for these metals and the fact the supplies are limited it is a safe assumption that the value will raise as the supply on Earth lessens.

Investing in the stock market is different because you need to evaluate the company, its competition, the future potential, and many more factors. You have to concern yourself with the management of the company and the direction they are taking the company. With precious metals you do not have the same concerns. Gold is gold and silver is silver regardless of what else happens in the world. Its prices can fluctuate but it will not go out of business or be involved in billion dollar lawsuits that threaten the stability of the company. For these reasons I feel precious metals really are the true gold mine.

Scott Bianchi operates http://www.best-internet-bargains.com If you would like to be included in his mailing list when he publishes a new article send an email to articles@bestinternetbargains.com

Faulty diamonds.

Many errors that effect the appearance and value of a diamond can occur in cutting. Remember that some diamond’s cutting faults will make a stone more vulnerable to breakage. We recommend avoiding such stones unless they can be protected by the setting.

There are several cutting faults to watch for in round diamonds. First, look carefully for a sloping table or a table that is not almost perfectly perpendicular to the point of culet.

Second, the diamond culet can frequently be the source of a problem. It can be chipped or broken, open or large (almost all modern cut diamonds have culet that come nearly to a point), or it can be missing altogether.
Third, repairs to chipped areas can result in misaligned facets, which destroy the stone’s symmetry.

Sometimes. too, as a result of repair, an extra facet will be formed, often in the crown facets, but also on ot just below the girdle. These extra facets may slightly affect the diamond’s brilliance.

Girdle Faults

The girdle is often the source of faults in a diamond. Bearded or fringed girdles are common. A fringed girdle exhibits small radial cracks penetrating into stone; these can result from a careless or inexperienced cutter. A bearded girdle is similar but not as pronounced a fault and can be easily repaired by re-polishing, with minor loss in diamond weight.
The relative thickness of girdle is very important because it can affect the durability as well as the beauty of the stone. Any girdle can be nicked or chipped in the course of wear, or by careless handling, but if the girdle is too thin it will chip easily. Some chips can be easily removed by re-polishing, with minimal diamond weight loss. If there are numerous chips, the entire girdle can be re-polished. Chips or nicks in the girdle are often hidden under the prongs or concealed by the setting.
If the girdle is too thick, the stone may look smaller because a disproportionate amount of its weight will be in the girdle itself; such stones, for their weight, will be smaller in diameter than other stones of comparable weight.

The gradations of girdle thickness:

Extremely thin
Thin
Medium
Slightly thick
Extremely Thick

The girdle can also be wavy, rough, or entirely, out of round.
A natural may not be a fault. It’s actually a piece of the natural surface of the diamond crystal. In cutting, a cutter may decide to leave part of the “natural” rough surface in order to get as large a diamond as possible from the rough stone. If this natural is no thicker than the thickness of the girdle and does not distort the circumference of the stone, most dealers consider it a minor defect at worst; it it extends into the crown or pavilion of the stone, it is a more serious fault.
Sometimes, if the natural is somewhat large but slightly below the girdle, it will be polished off. This produces an extra facet.

Other Popular shapes

Unlike round diamonds, “fancy” shapes, all shapes other than round, have no set formulas, so evaluating the make of a fancy is more subjective. Table and depth percentage can vary widely among individual stones of the same shape, each producing a beautiful stone. Personal taste also varies with regard to what constitutes the “ideal” for shapes other than round. Nonetheless, there are certain visual indicators of good or poor proportioning, such as the “bow tie” effect, which even the amateur can learn to spot. There are recommended ratios for overall shape and symmetry, but a preferred shape is largely a personal matter. Ranges for what is “acceptable” or “unacceptable” have been developed. As you gain experience looking at specific shapes, you will be able to spot faults, and begin to determine what is within an “acceptable” range. Moderate deviation will not significantly affect the beauty or value of a stone; however, extreme deviations can seriously reduce a stone’s beauty and value.

Cutting faults in popular fancy shapes

One of the most obvious indicators of poor proportioning in fancy shapes is the bow tie, or butterfly effect, a darkened area across the center or widest part of the stone, depending upon the cut. The bow tie is most commonly seen in the pear shape or marquise shape but may exist in any fancy shape diamonds. Virtually all fancy shapes cut today will exhibit some minimal bow tie effect. Nonetheless, the presence or absence of a bow tie is an indicator of proper proportioning. In poorly proportional stones there is a pronounced bow tie; the more pronounced, the poorer the proportioning. The less pronounced the bow tie, the better the proportioning. The degree to which the bow tie is evident is the first indicator of a good or poor make. A diamond with a pronounced bow tie should sell for much less than one without.

As with the brilliant cut diamond, fancy shapes can also be cut too broad or too narrow; and the pavilion can be too deep or too shallow.
Personal taste will always play a role in fancy shapes, some prefer a narrow pear shape, for example, while others might prefer a fatter pear. Whatever the shape you are considering, you must ask yourself whether or not you find the stone exciting. Does it have a pleasing personality? Does it exhibit good brilliance and fire? Is the entire stone brilliant, or are there “dead” spots? Are there any cutting faults that might make it more susceptible to chipping? Then you must make the choice.

New shapes create excitement

Today we can choose from many diamond shapes and diamond cuts, ranging from the classics diamond shapes:

Round,
Oval,
Pear,
Marquise,
Emerald-cut, and
Heart.

To new diamond shapes that appear as cutters continue to experiment with novel looks. Here are some of the most exciting:

Radiant

A rectangular or square brilliant cut, this shape is perfect for the person who likes the shape of an emerald-cut but want more sparkle. The starburst radiant is a variation of the standard radiant, and exhibits a slightly different personality.

Princess

A square brilliant cut which is ideal for bezel and channel settings, or ant setting in which you want the stone to be flush with the mounting. The quadrillion was the first trademarked “princess” and is cut to unique specifications which some believe creates the most beautiful of square brilliant cuts, and which demands a slightly higher price than others of this general types.

144 Facet

This patented cut produces a diamond with 144 facets rather than a diamond with 58 facets, giving it unsurpassed brilliance and fire. An important feature of the 144 Facet is the girdle, which is more resistant to chipping than girdles produced by many other cuts. The 144 Facet is an expensive cut, comparable in cost to an “ideal” make diamond.

Dream a Royal cuts

These cuts are a good choice for anyone who wants a large look on a limited budget. They are “thin” cuts, but unlike “spread” or “swindle” diamonds, which are usually lifeless, extra faceting and precision cutting help to produce unusual brilliance for their depth. A dream cut marquise (or, similarly, the “Duchess”) will look much larger than a traditional marquise of the same weight. These cuts are available in shapes resembling the marquise, pear, and oval.

Trilliant

Popular shape for use as a center stone, or for side stones, this triangular brilliant cut is also a thin cut, giving a large look for it weight. Extra facets and precision cutting produce high brilliance. When flanking either side of another diamond, trilliants produce a much larger diamond look, overall.

In addition to the new cuts discussed above, one of the newest cutting innovations is the brilliant cut baguette, such as the Princette(TM) and Bagillion(TM). They occur in a “straight” and “tapered” shape. These have gained popularity because they have greater brilliance than traditional baguettes. They can be used to flank diamonds or other stone in traditional settings, or used in very contemporary jewelry design with straight, clean lines.

Early cuts enjoy renewed popularity

Interest in antique and period jewelry is growing rapidly and, as it does, the diamonds that adorn them are arousing renewed attention and gaining new respect. The way a diamond is cut is often one of the clues to the age of a piece. Older diamonds can be replaced or re-cut to modern proportions, but replacing or re-cutting stones mounted in antique or period pieces could adversely affect the value of the jewelry. To preserve the integrity of the piece, antique and period jewelry connoisseurs want “original” stones, or, if stones have been replaced, at least stones cut in the manner typical of the period. The market is becoming increasingly strong for diamonds with older cuts, and pieces are also strengthening.

As these early cut diamonds receive more and more attention, a growing number of people are beginning to appreciate them for their distinctive beauty and personality, and for the romance that accompanies them. The romantic element, combined with a cost that is more attractive than new diamonds, is also making them an increasingly popular choice for engagement rings.

Some of the most popular early diamond cuts are: the table cut, the rose cut, the “old-mine” cut, the “old European” cut (Prior to 1919, when America began to emerge as an important diamond cutting center, most diamonds were cut in Europe. Most “Old European” diamonds were cut prior to the first quarter of the 29th century).

Table cut

The table cut illustrate man’s earliest cutting effort. By placing the point of a diamond crystal against a turning wheel that held another diamond, the point could be worn down, creating a squarish, flat surface that resembled a table top. Today we still call the flat facet on the very top of the stone the table facet.

Rose cut

The rose cut is a sixteen century cut, usually with a flat base and facets radiating from the center in multiples of six, creating the appearance of an opening rose-bud. The rose cut appears in round, pear, and oval shapes.

Old-mine cut

The old-mine cut was a precursor to the modern round. This cut had a squarish or “cushion” shape (a rounded square or rectangular) and more facets than today’s modern 58 facet diamond. Proportions followed the diamond crystal, so the crown is higher and pavilion deeper than modern stones. The table is very small, and the culet is very large and easily seen from the top (resembling a “hole” in the diamond). These lack the brilliance of modern stones, but often exhibit tremendous fire. Old-mine cut diamonds are also seen in pear and oval shape.

Old European cut

Appearing in the mid 1800s, the old European cut is similar to the old-mine cut diamonds, but is round rather than squarish, with 58 facets. The crown is higher than modern cuts, but not as high as in the old-mine cut; it has a deep pavilion, but not as deep as old-mines. The culet is still “open’ but smaller than old-mines.

Old cuts can be very beautiful. The intense “fire” exhibited by some old-mine and old-European cut can have tremendous allure. By today’s standards, however, they lack brilliance, and a very large culet may detract from the stone’s beauty.

Are diamonds with old cuts valuable?

Old-mine cut and old-European cut diamonds are normally evaluated by comparison to modern-cut stones. Value is usually determined by estimating the color, clarity, and the weight the stone would retain if it were re-cut to modern proportions.

It is not suggested to re-cut old diamonds if they are in their original mountings. The overall integrity of the piece, and value, would be adversely affected by doing so.

If the setting has no special merit, the decision must be an individual one, based on whether or not the stone appeals to you. As we have said, some older cuts are very lovely, while others may look heavy, dull, or lifeless. An unattractive older cut may have equal, or greater, value because of the improved make. In addition, re-cutting can sometimes improve the clarity grade of an older stone.

A word about re-cutting diamonds.

There are many fine diamond cutters in the United States, New York City is one of the most important diamond cutting centers in the world for top quality diamonds, and many diamonds can be greatly improved by re-cutting. The cost is surprisingly low when one considers the benefit to the stone, and effect of re-cutting on the diamond’s beauty and value (sometimes the clarity grade is also improved).

If you have an old-cut diamond which you don’t care for, or a damaged diamond, your jeweler can consult with a diamond cutter, or refer you to one, to determine whether or not your stone can be improved by re-cutting and, if so, what risks and costs might be involved.

A Knowledgeable jeweler can help you decide whether or not a diamond should be re-cut, make arrangement for you, and help assure you that you have received the same stone back. For your own comfort and security, as well as the cutter’s, we always recommend that prior to having a stone re-cut you obtain a diamond grading report or thorough appraisal so that you have a point of reference when the stone is returned.

To what extent does cutting and proportioning affect value in modern diamonds?

Excellently cut and proportioned stones cost significantly more per carat than those that are not cut well.

Remember: The value of two diamonds with the same weight, color, and clarity can differ dramatically because of differences in cutting.

The article above can be used on your web site or newsletter.

When it is published, May I request that you include my name and resource box (the bio., contact and copyright information that follows the article. I would also appreciate if you could send me an e-mail of notification along with a complimentary copy of publication.

Bijan Aziz is the owner and Web Master for The Jewelry Hut.

http://www.thejewelryhut.com

The best source for fine Diamond, gemstone, and Pearl Jewelry on the Web

Forget fundamental research, put aside those technical charts and, by all means, turn off those cable business programs. If you really want to know what’s going to happen in the stock market, all you need to follow are a number of urban legends.

Starting at the beginning of the year, the theory goes that if January is a good month for stocks, then so goes the rest of the year. If January is a lousy month, then you can’t say that you haven’t been warned. It’s certainly fortuitous that the January indicator takes place early in the year rather than later when you’ve already lost a bundle and have little hope for recovery. Going back over the last fifty years, the theory has been right about 90% of the time.

Chip Dickson, a Lehman Brothers portfolio strategist, has studied this phenomenon since 1970. According to his research, the S&P 500 rose 86% after turning in positive January results and fell 57% after falling in January.

If you need greater confirmation, look no further then the Super Bowl. Here, you’re in the money if the NFC wins. If the AFC wins, then the bears are coming. The degree of accuracy has been 80%. In the interest of full disclosure, this theory actually started by pitting the old AFL teams against the NFL teams. Unfortunately, fewer and fewer AFL teams are still playing and the expansion teams are completely muddying these waters. It’s probably safe to assume that this theory may have to be retired in the near future.

Hopefully, not all Super Bowl theories will fade as easily. Among my favorites is the disruption of water supply to major cities caused by all the toilets being flushed at halftime.

Moving on in the year (i.e., during the summer doldrums), we can follow horse racing to see if there’ll be a triple crown winner. Good for the horse, bad for the market. Unfortunately, this hasn’t been tested since 1978 when Steve Cauthen was aboard Affirmed and the S&P 500 gained 6.9%. Although that year didn’t help the theory, the two times prior to that (i.e., in 1977 when Jean Cruguet rode Seattle Slew to victory and in 1973 when Secretariat won with Ron Turcotte) the S&P 500 did drop -7.43% and -26.34% respectively.

For golf fans, you might want to check out the “Tiger Effect.” This one’s new to me but, supposedly, if Tiger Woods simply plays in a tournament (it doesn’t matter if he wins or loses), the market will rise on the following Monday.

Are you a Baseball fan? Then your month is October. If the Mets win the World Series, that’s not a good sign. Of course, if you’re hit by lightning, that’s also not a good sign. For the record, in 1969 the New York Mets beat the Baltimore Orioles 4 games to 1 and the S&P 500 fell -8.24%.

Thanksgiving is supposedly a good time to make money if you buy on the Tuesday or Wednesday prior to turkey day and sell on the Monday of leftovers.

Finally, the year 2005 kept the record intact for the market not turning in one single losing “5th year” in any decade in 120 years - not 2005, not 1995, not 1985, not ever!

Now, let’s just hope the record stands in 2015 and we’re all around to see it.

Glenn (”Chip”) Dahlke, a senior contributor to the Living Trust Network, has 28 years in the investment business. He is a Registered Representative of Linsco/Private Ledger and a principal with Dahlke Financial Group. He is licensed to transact securities with persons who are residents of the following states: CA. CT, FL, GA, IL. MA, MD. ME, MI. NC, NH, NJ, NY.OR, PA, RI, VA, VT, WY.

If you have any questions or comments, Chip would love to hear from you. You may contact him at dahlkefinancial@sbcglobal.net. You may also contact him at the Living Trust Network. It’s web site is http://www.livingtrustnetwork.com.

Copyright 2006. Living Trust Network, LLC. All Rights Reserved.

The probabilities of scooping up the Euro Lottery jackpot is a remote one : seventy six million but the probability of acquiring a money prize is a fairly decent one in twenty four. If the jack-pot is not won on a given lottery draw, it is carried forward to the next lotto draw that will result in an ever increasing jackpot value. New regulations brought in on the 09/02/07 restrict the number of successive rollovers to eleven, with the jack-pot rolling down to smaller value levels on the 11th draw when the prize is not won.

The Euro millions lotto or the Euro lotto, as it’s usually acknowledged, gathers the ticket receipts of the 9 partaking European countries awarding a sizeable Euro Lottery jack-pot. With the amount of nations joining the Euro on the increase, that will without question will lead to new states partaking in the EuroMillions lotto. A growth in the amount of individuals partaking in the Euromillions Lottery will lead to a lasting growth of the already immense European Lottery jackpots.

The new rules likewise initiated Euro Lotto Super Draw which happen twice yearly and offer jackpots in the region of 100 million pounds. The difference with Super-Draws is that the jackpot must be won during the week of the lotto draw; this means, when there is no lottery ticket matching, all the numbers drawn and the top prize will be allotted to the lottery ticket bearer(s) on the next winning prize tier.

Each and every participant must pick out five primary numbers from 1 to 50 and two Lucky Star numbers from 1 to 9. During the euro millions draw five primary and 2 lucky-star numbers are then selected at random from 2 lotto draw machines containing numbered balls.

This is perhaps a startling thought to many people. But while I do find it provocative, it is perhaps not very far-fetched and has its merits. Of course, if one believes that Provenge is a guaranteed blockbuster than the thought is simply absurd. But if one takes what I consider a more realistic view that the path to Provenge’s success is extremely difficult then, perhaps, getting rid of Provenge is not such a bad idea.

Dendreon is burning close to 100 million dollars per year, with most of the money going to Provenge clinical trials, building manufacturing facilities for Provenge, preparing the sales force for Provenge, etc. Provenge, Provenge, Provenge - everything else seems to be on the back burner. While the company still has cash at the moment, it is running out of it fast. In fact, the money will have to be raised sometime in 2006, before or soon after the launch of Provenge.

Dendreon will likely to be starving for cash till 2008 before the money from the Provenge sales may start trickling down. And what if the trickle is very meager? Two-three years from now new cheaper drugs could well outcompete Provenge and reduce it to a fancy expensive drug with limited patient base. There are several competitors that could bring their drugs relatively soon after Provenge hits the market. Prostvac-VF from Therion, GVAX from Cell Genesys (CEGE), and DN-101 from Novacea come to mind. While these drugs are likely to be approved after Provenge, they will most likely be much cheaper to produce because they are not custom-manufactured for each patient. With so many drugs targeting the prostate cancer, the ability of a company to deliver drugs that are competitive price-wise could be the most critical for winning a substantial share of the market.

I would go as far as to suggest that the scenario according to which Provenge is not even able to pay for the cost of its own development is quite likely. At the same time, the cash that Dendreon has now could be used to more speedily pursue highly promising Trp8 inhibitors that are currently in the pre-clinical development. ~130M in cash is large enough to push Trp8 program well into phase II clinical trials. It may be unfortunate that the money will be spent on Provenge, a possible money sink with no meaningful return to the shareholders. DNDN should continue to produce good setup for the short-term trader but it may not be such a great play for the long-term investor.

Welcome to my Trading Signals for Biotech Blog: http://www.trading-signal.blogspot.com

The article is here: http://trading-signal.blogspot.com/2005/11/is-dendreon-worth-more-without.html

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