Fasten your seat belts, everyone, because it appears that we'll be seeing lots of volatility in the months to come. Explosions in the toxic subprime mortgage nearly guarantee some turbulence.
Much of the concern on Wall Street has centered on the health of the U.S. consumer as household spending takes a hit from the double whammy of a weak housing market and rising gasoline prices.
However, the biggest blow may come from corporate America. Business investment was a key factor behind the stronger-than-expected second-quarter gross domestic product figure released last week. Although consumer spending advanced at a slim 1.3% annual rate in the second quarter, business investment rose at an 8.1% annualized pace. If companies pull back just as consumer spending is tapering off, it would hamstring the U.S. economy.
Tighter credit is already stinging some smaller retail trade companies that supply goods to stores, says Richard Hastings, senior retail analyst with Bernard Sands, which advises retail vendors on credit risks. "We are seeing the beginning of some significant credit tightening, especially in the default market for trade credit risk," Hastings said.
If terms stay tight through the critical holiday shopping season and into next year, suppliers will have little choice but to cut back on shipments, he said.
So in your trading, it's doubly important to look for companies that will withstand any storms that might blow their way, whether they're on the consumer or the corporate side.
I believe I've found such a pick, and it's a company many of you probably have not even heard of:
Since 1987, Toronto-based Manulife has bolstered its market-leading role in financial protection and wealth management. Manulife's portfolio of financial products includes life insurance, pensions, mutual funds, annuities, group benefits and long-term care, and its 20,000 employees serve millions of customers in 19 countries and territories around the world.
Manulife is among the most-profitable life insurance companies in North America and was the first Canadian life insurer to top $1.5 billion in earnings. Manulife's financial performance has attracted a strong and diversified shareholder base, earning credit ratings that are among the highest in the industry.
MFC's financials are solid: A forward
P/E that comes in at 13.03, return on equity near 16%, revenue totaling $31.43 billion, cash on hand at an impressive $9.75 billion, total debt to equity at a minuscule $0.268 thousand, and, to finish it off, free cash flow of $3.43 billion.
Here is the play: I am going to buy 10 DITM calls going all the way out until January (MFCAF), using the $30 strike; the stock closed Wednesday at $36.87. I will pay $7.60, or better, to control 1,000 shares of Manulife common stock.
The Game of Life
As NFL players endure two-a-days, with full pads and contact, baseball enters the dog days of August, with one-third of the regular season left to play. The Mets maintain a modest lead over the Phillies and Braves in the NL East. The Cubs are leading in the NL Central, with the Cardinals, amazingly, in the hunt. The NL West has to be considered a four-team race, with the Dodgers, Diamondbacks, Padres and Rockies all within three games of one another.
Although it is difficult to count the Yankees out, it appears as though the AL East is Boston's to lose. The Tigers and Indians continue to battle for the top spot in the AL Central, with the Twins still in contention. The Angels and Mariners are the best in the AL West.
On the milestone front, Tom Glavine was unable to claim his 300th career victory on Tuesday night, despite an outstanding outing. His next opportunity will be against the Cubs on Sunday night. Apparently, A-Rod has some engine problems, which wrestled in him stalling out on the on-ramp to Highway 500. Out in Los Angeles, Barry Bonds remains one homer shy of Hank Aaron's career mark of 755, as Commissioner Bud Selig diligently follows Barry's quest -- in person.
The MLB trade deadline arrived at 4 p.m. on Tuesday, with a few significant names changing zip codes. Overall, there was not a great deal of activity; however, two trades occurred that may have a significant impact on the pennant races. The blockbuster was John Schuerholz, Braves GM, acquiring Mark Teixeira, from the Texas Rangers, for give prospects. Teixeira fills a gaping hole at first base for the Braves by furnishing a big left-handed bat in the middle of the lineup, as well as with his outstanding fielding credentials, which have already resulted in two Gold Gloves.
The 27-year-old star has averaged 35 homers and 112 RBI in his first four seasons. Nonetheless, the price was steep. The Braves dealt three of their prized prospects -- Jarrod Saltalamacchia, a 22-year-old switch-hitting catcher with star potential; 18-year-old shortstop Elvis Andreas; and 21-year-old left-hander Beau Jones -- and two other young arms to the Rangers.
To further solidify his chances to grab the wide-open NL East, Schuerholz acquired Octavio Dotel, who appears to be almost all the way back from elbow surgery two years ago, from the Royals, for Kyle Davies, who has been a relative disappointment thus far. The Braves have clearly sent the message that they want to win now!
The other big name to move was Eric Gagne, from the Rangers to the Red Sox, for a left-handed pitcher, and two minor-league outfielders. Evidently, Gagne, who has to OK the trade, is content to relinquish his closer's role to become the setup man for Jonathan Papelbon in Boston.
Clearly, if the Red Sox can get to the eighth inning with a lead, they will be extremely difficult to beat. In contradistinction to the Braves, the Rangers have unloaded the present, and they are building for the future.
Another blockbuster deal transpired, but in a different sport. Kevin Garnett, a former MVP and 10-time All Star, was traded from the Timberwolves to the Celtics, for seven players, in the biggest trade for one player in NBA history. Along with Paul Pierce and the recently acquired Ray Allen, Garnett gives the Celtics three star players, thereby catapulting them to a formidable threat to get to the NBA finals.
The Players Club recognizes that trades are a part of the game. Moreover, we realize that some players involved in trades move to a better situation, while others move to less-desirable destinations. By guaranteeing recurring cash flow, through our strategic partner, The Players Club endeavors to ensure that when our members trade their playing shoes for
, they will emerge victorious in the sands of time.
Always Remember: Life is a journey; enjoy the ride!
At the time of publication, Dykstra was long MFC.
Nicknamed 'Nails' for his tough style of play, Lenny is a former Major League Baseball player for the 1986 World Champions, New York Mets and the 1993 National League Champions, Philadelphia Phillies. A three time All-Star as a ballplayer, Lenny now serves as president for several privately held businesses in Southern California. He is the founder of The Players Club; it has been his desire to give back to the sport that gave him early successes in life by teaching athletes how to invest and protect their incomes. He currently manages his own portfolio and writes an investment strategy column for TheStreet.com, and is featured regularly on CNBC and other cable news shows. Lenny was selected as OverTime Magazine's 2006-2007 "Entrepreneur of the Year."