British Gas - Earnings Breakout

British Gas had a high volume breakout of more 10% on good earnings report. This could be a good buy if there is follow through...

Mothercare - Earnings breakout

This share has rallied 40% in 3 months on earnings breakout. This is the kind of breakouts we should be looking for. Look at the smooth curve. It seems after a pause it starting its second leg up.

Autonomy and Wynnstay

Search software specialist Autonomy made a strong finish to 2008, despite facing currency headwinds. Fourth quarter revenues rose to $145.4m from $111.1m in the fourth quarter of 2007, making full-year revenues $503.2m, versus $343.4m the year before. Profit before tax in the fourth quarter more than doubled to a record $70.5m from $32.9m, while full-year pre-tax profit jumped to $185.7m from $91.5m.

Welsh agricultural products supplier Wynnstay posted a 61% surge in pre-tax profit for the year ended 31 October 2008 after 'very strong trading' across its agricultural and retail activities. Pre-tax profit rose to £5.22m from £3.25m in the period on revenues that increased by 49% to £234.6m. Agricultural business revenue increased 52% and operating profit up 112%, while specialist retail arm rose 42% with operating profit rising 45%.

A new year Rally

Today miners lifted FTSE but looking at the volume, the rise is not very convincing. Usually such low volume rallies are followed by a pullback or correction.

Only Logica, Antofagsta had slightly convincing volume.

Happy New Year

I heard the saying yesterday on one of the radio channels "Optimist is one who welcomes the new year, pessimist is one who waves good bye to old year".

There is sense of optimisn in the air. Everyone seems to believe that the worst is over and buried with 2008. I guess this is the kind of optimism that is required to kick start the things. Even though there are still some negative signals but I think over next few coming months we will see market improving.

wish you all a Happy and Prosperous new year.

THE O'HIGGINS STRATEGY

O'Higgins, a US fund manager, outlined his strategy in his book Beating the Dow.

The system is simple. Get a list of the 30 stocks in the index. Take the 10 highest-yielding stocks. Looking at these 10, invest equal amounts in the five stocks with the lowest share prices . Leave alone for a year. On the first anniversary of your selection, review the list again. Reinvest the portfolio plus the accumulated dividend income in the new selections. On the second anniversary do the same thing. And so on.

According to O'Higgins, shares selected according to his system had produced an average annual performance five percentage points better than the Dow Jones over the period from 1961 to 1995, when dividend income was included in the calculation. It doesn't work every year, but over time its results are impressive.

2009 List (prices as of close of 31 Dec 2008)

Standard Charted: 875p

HSBC Holding: (662p)

BP: (526p)

Barclays: (153.4p)

BT Group: (135.2p)

RBS was at number 3 in above list but has been excluded as they will not be paying any dividends this year.

Another list from FTSE 30, which is not based on the market capitilisation but average share price is

BT: (135.2p)

GKN: (97p)

ITV: (29.75p)

Ladbrokes: (185p)

Logica: (69p)

2008 list (price at start and end of year)

ITV: 85.4 - 39.75 = down 53%
BT: 272.75 - 135.2 = down 50.4%
GKN: 282 - 97 = down 65%
Logica: 117.75 - 69 = down 41%
Royal Sun & Alliance: 140.21 - 138.1 = down .7%

Grim outlook

In UK the outlook is very grim. There are more and more companies going into administration. It was Woolworth earlier this month, yesterday Whittard and today Zavvi.

Most of the stores on the high street have started the Christmas sales very early this year. The consumers are just not willing to spend.

If this continues very soon we will have ghost town centers. There won't be many business left on the high street.

The house prices continue the downward spiral.

The banks are just not lending money to anyone though they are ready to give you credit card with 0% offer for 12 months.

Current theme is spend sensibly, stick to your current job and stop listening to Robert Preston. That guy makes thing sound really awful.
Listen to Johny Walker instead...