Porfolio Review Since Blog Inception

Short Kimberly Clark (KMB) @ $60.93 - Loss 0.8%
Long Imperial Sugar (IPSU) @ $15.20 - Gain 7.6%
Long School Specialty (SCHS) @ $21.48 - Gain 0%

Total - Gain 2.3%

I have invested $5,000 in each trade and have defined exit points for each stock in my postings below. I have a firm belief that profitability is easier achieved when you have defined profit and loss points at the time you purchase any sort of investment vehicle.

Analysis of Consumer Price Index 3.18.2010

A headline look at the Consumer Price Index shows a flat reading from January to February, however in looking beyond the headline I found an interesting trend in the education category. It shows educational books and supplies are increasing at a rate of 7% year over year and about 0.5% month over month for the last three months. This trend sent me on a search to find the most pure educational supply company that trades publicly. My search results found a company called School Specialty (SCHS). The company has a low P/E and should be a direct beneficiary of increasing educational supply prices. Trade: Long School Specialty (SCHS) @ $21.48 (Stop Loss: $19 & Take Profit: $25)

I also noticed the medical care and medical supplies categories increasing at almost an annual pace of 5% in the last three months, but with the uncertainty of health care reform I am going to stay away from any stocks related to medical supplies and services until the future becomes a bit more clear. Trade: None

Analysis of Producer Price Index 3.17.2010

The most interesting part of the producer price index in my opinion is in the Crude Materials category. The crude materials category includes many raw materials that companies use to make finished goods (eg. wastepaper, iron ore, cotton) The crude materials category has several groupings that are up year over year in excess of 50%, which tells me that corporate profits for companies that rely heavily on raw materials to generate finished goods could be squeezed for profits. An example would be wastepaper; wastepaper is up 98.4% over the course of one year, and with the earthquake in Chile and China's economy picking up I would venture to guess wastepaper prices go up even more. Trade: Short Kimberly Clark (KMB) @ $60.93 (Stop Loss:$64 & Take Profit: $56)
The next interesting grouping was the cane sugar, which is up 35.6% year over year. With companies finally figuring the adverse health benefits of high fructose corn syrup I think the demand for sugar will continue to pick up, thus driving the prices higher. Most likely the cost difference between sugar and high fructose corn syrup will be passed on to the consumer so my trade will come via a long position in a company that profits from high sugar prices. Trade: Long Imperial Sugar (IPSU) @ $15.20 (Stop Loss: $14 & Take Profit: $20)

Why I am starting this Blog

This is my first blog, and in this blog and future blogs I plan to help others better understand the economic indicators that are released by our government on a daily basis. I believe the media focuses to much on the headline number and rarely takes an in depth look at the economic reports. Looking at only the headline numbers can be misleading and unprofitable. It is my intention to read and understand the full economic reports in order to make profitable stock trades and engage others in meaningful conversation.

UNME