Is Barack going to catch Hillary?

Is Obama really within 3 points of Clinton in California, as the Rasmussen Poll shows? If so, it would be stunning. Almost all the other public polls have shown her with double-digit leads, but he's obviously coming up fast with his endorsements. In general, a point-and-a-half a day is about all any candidate can gain over a sustained period of a week or more, but with the primary four days away that gives Barack a chance to take it.
I'd be a little cautions, though. The Rasmussen poll was the only one that had Romney beating McCain in South Carolina the week before the election, and then he lost a five-point lead in that poll in one night of polling. That really shouldn't happen and it doesn't inspire confidence in the poll methodology.

The stealth rally

Wow, since the Martin Luther King Day meltdown overseas that didn't quite happen here, we've had quite a rally. The S&P has regained more than half its loss and is now down only 4.06 percent on the year.
The Five for 2008 portfolio is now up 6.31 percent YTD, led by Capstead Mortgage, up 21 percent. With 125 basis points of rate cuts at its back, analysts are plugging numbers into their spreadsheets and coming up with estimaes of $2 in dividends for 2008. So it has some room to run to $20.
KSK is also recovering nicely, and only PEP is losing, apparently because of high commodities costs. PEP reports next week and we should find out how much of a dog it is.

Hunkering down

With European markets down big, investors are bracing for yet another awful opening tomorrow. Thus far this year, the S&P is down 9.75 percent -- think about it, losing 10 percent of your money in just 13 trading days.
The "Five for 2008" portfolio is up 1.55 percent this year, mostly thanks to Capstead Mortgage (CMO), up 13.6 percent. This is a stock that does better in recessionary times because its earnings and dividends move inversely with interest rates. Credit risk is low, unless you think FNMA insurance on mortgages isn't worth anything (seems like Congress would never allow a default) But if things get bad enough in the credit markets, wouldn't surprise me to see CMO take a hit too, in which case it might be time to buy more.
The worst of the five stocks has been Pepsico (PEP), down 5.85 percent. Funny, this was our "safety stock." As the only common stock in the portfolio, it suffers from positive beta. The other three haven't moved much this year. In this market environment, that almost counts as a victory.

Ford bonds recommended

In this week's Barrons, highly respected PIMCO fund manager Bill Gross recommends senior bonds of both Ford and General Motors. With a yield of over 12 percent, they're poised to take advantages of structural changes in the auto industry and the weak dollar making imports more expensive, he says.
This recommendation should be good for KSK, which is senior Ford debt packaged to trade like a stock. As it's my largest position, I might consider selling a little into a Barron's rally, but it does look underpriced.

First days tell the tale?

If the first five trading days of the year tell the tale -- an old market saw with a grain of validity -- 2008 will be awful. The S&P is down 5.3 percent already.
Our "Five for 2008 portfolio," which was built for a near-recessionary environment, is holding up well, up 1.0 percent YTD. Unfortunately, there's a lot in my personal portfolio that isn't doing so well, starting with the big T, which cracked today after AT&T's CEO cited consumer weakness -- not so much sales as disconnections due to non-payment. That's a bad sign right there.
I've made a few small sales so far this year, haven't bought anything yet.

Sell into it

Ended 2007 with a gain of 9.9 percent, the worst since '03. I was up about 15 percent at midyear but didn't see the financial meltdown. Best stock was Apple, followed by Southern Copper (PCU). Worst was Citibank.
2008 has started extremely poorly as the market seems to think a recession is in the offing. Not sure that's true, but the cyclicals, the materials and the techs, which did so well last year, have turned sharply lower. I think any rally will have to start with the financials, so I've been selling in an orderly fashion in the early days.

Five for 2008 -- opening prices

We did our hypothetical buys at the close today of the stocks mentioned last week and will track these separately in a Yahoo account.
PWE -- 750 shares at 26.
CMO -- 1500 shares at 13.19.
JSM -- 1100 shares at 17.51.
KSK -- 1400 shares at 14.70.
PEP -- 273.7 shares at 75.90. (The fractional total is so the total starting portfolio value comes to just under $100,000.)

Disclosure: I am long all of these stocks.