-=Trader Wizard Ezine - October 17, 2004=-



	Trader Wizard Perspective Daily global capital markets advice "Blog" posted before the NYSE morning bell and throughout the trading day.

	Who is Trader Wizard?

	Trader Wizard's Mission My goal with this Ezine, other than enjoying the challenge of a weekly ‘buy or sell’ recommendation, is to continue the independent investor information, education and facilitation process started with Trader Wizard.

	Articles by Trader Wizard

	Fuel For Thought Time to Buy Newmont Is SEC Watching GOOG? To Rise Like the Phoenix China’s First Pure ETF (FXI) TW’s Virtual Book on Gold Teekay Shipping (Bahamas) Gold Break-Out More China Trading Possibilities Foreign Brokerage Possibilities

	Security Traders - Writers Guild

	Security Traders - Recommended reading: The Stock Market Jungle Please visit our sponsor.


BUY or SELL Recommendation on GM
	General Motors (NYSE: GM) Oct 15 close: $38.95 RECOMMENDATION: ACCUMULATE Strategy: Write GM=XU December 2004 Puts Strike@37.50 Price to be calculated at the market close October 15 (GM=XU Dec-04 close @ $1.30) OneChicago Single Stock Futures (GM1C): GM1C Z4 (Dec 04) $38.45 Among general reading, here is material I used to make this decision: EasyStock Interactive charts: Monthly, Weekly, Daily, Hourly, 30-Minute and the Reuters data at Yahoo Finance.

The case for accumulating (the stock):
	1. Even though GM has fallen to 6th largest market cap among auto manufacturers, it is still the biggest manufacturer. With a sluggish economy and high gas pump prices, buyers are holding back and the Company has had inventory problems. This picture will change. 2. PE (ttm) is 7.24, and PE (fwd) is 5.91, which is well below industry competitors, which are all in the 10 to 11+ range. According to my 2004 earnings estimate of $6.70, the stock is trading at a PE of just 5.81. The Company itself is guiding $6 to $6.50, but I am presuming an excellent Christmas sales season. I may be out with my 4Q04 earnings estimate, but Value Line seems to agree. Analysts seem to be missing the picture that GM has the greatest earnings capacity in the industry. 3. Price to Sales and Price to Book is by far the best amongst its major competitors. 4. Technical indicators (RSI, STO and MACD) are interesting, but not remarkable. STO and RSI are looking better than MACD, and are suitable for an Accumulation recommendation. 5. The Short % of Float (8.82% at Sep-08 vs 5.3% for Ford) is probably close to 10%, which is a hugely bearish sentiment. 6. Consensus Wall Street analyst opinion is 2.7 out of 5, which is a weak hold, and supports my contrarian opinion of a 2.0 rating. 7. The Dividend yield of 5.13% is by far the best in the industry and the $2.00 annual dividend is well protected.

The case against accumulating (the stock):
	1. On Thursday, GM reported $0.78 earnings for the quarter, which was well under consensus estimates of $0.96. 2. Management just announced a 20% employee cut-back over two years in Europe.

Trader Wizard's expectation for this trade:
	1. The G=XU puts may be exercised, so I may earn the $1.30 premium. I would just as soon accumulate the stock if put to me in December at $37.50, which with my $1.30 premium income would result in a cost base of $36.20. If so, my cost would be 7.1% less than today’s price, which in 62 days or less would be a reasonably good discount (7.1%) to the current price. Should I see a downward price spike in the stock to $35 or less, I will switch my recommendation to an outright BUY, and will recommend aggressive purchase of calls at that time.

Trader Wizard Profit & Loss:
	The ‘Trader Wizard buy or sell’ Ezine will soon present a calculation of P&L for individual trades and for all trades (both open and closed) for the prior 12 months.

DISCLAIMER: As TRADER WIZARD earns no revenues, nor profits, from any content, which is provided solely for the purposes of investor education, information & facilitation, we shall not be held responsible for the actions of individuals, parties, or corporations taken in response to the ideas, thoughts, concepts, or information presented in this web site. Anyone who believes otherwise ought to contact Bill Cara and immediately cease reading the TRADER WIZARD content.

Re-sending this ezine to any number of colleagues is encouraged; provided you also cc: Referrals@TraderWizard.com. In return, we will provide recipients with a FREE subscription and ensure that all e-mail lists are kept strictly private. To subscribe click here.
TRADER WIZARD Ezine ©2004