Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.
ValuEngine is a fundamentally-based quant research firm in Newtown, PA. ValuEngine
covers over 7,000 stocks every day.
A variety of newsletters and portfolios containing Suttmeier's detailed research, stock picks,
and commentary can be found at http://www.valuengine.com/nl/mainnl
December 22, 2010 – Real Estate Housing Asset Bank (REHAB)
In addition to my proposal for a rigorous stress test for community banks seeking bailout money, I also
propose a new program to assist banks in clearing their balance sheets of non-performing assets.
Greed among community and regional banks on Main Street resulted in a vast quantity of distressed
C&D and CRE loans on the books of community banks. These categories total about $1.43 trillion and
they include incomplete new homes, strip malls, office buildings, condos, etc.
My proposed solution is called the Real Estate Housing Asset Bank or REHAB. REHAB focuses
on hard assets – homes, land, and buildings. In my opinion, US taxpayers would rather own real
estate as investments rather than shares of bank stocks and mortgage securities laced with toxic
REHAB would take title to “other real estate owned” (OREO) and buy the properties collateralized by
C&D and CRE Loans. REHAB would also buy foreclosed home and rehabilitate communities laced
with vacant homes and unfinished homes, malls and office buildings.
Once an unhealthy bank sheds its bad assets and OREO, it becomes a fresh Good Bank that should
be able to entice capital from the private sector instead of tax payer money. REHAB is not just a Bad
Bank; it also creates jobs on Main Street USA and completes projects that will eventually be used once
the economy recovers.
Hard assets are the collateral backing bad loans and toxic mortgage securities. Many real estate
projects have been nearly completed and thus the shovels are still warm. Through REHAB the
completion and maintenance of US owned real estate will create real jobs that were recently lost and
This is a real and lasting economic stimulus!
Tracking the US Capital Markets – US stocks are overvalued fundamentally and overbought
technically on both daily and weekly charts. The major equity averages straddle weekly pivots and
risky levels at 11,496 Dow, 1250.3 SPX, 2670 NASDAQ, 5136 Dow Transports and 787.37 Russell
2000. Fifteen of sixteen sectors are overvalued according to ValuEngine with only 38% of all stocks
undervalued. At 35% the stock market tends to find a top.
The Yield on the 10-Year Note (3.332) – This week’s pivot at 3.358 has been a magnet. My
semiannual value level at 3.479 was violated at last week’s high yield of 3.568.
Comex Gold ($1389.4) – The 50-day simple moving average is $1370.7 with this week’s risky level at
Nymex Crude Oil ($90.17) – Has been influenced by my weekly pivot at $89.61. My semiannual value
level is $83.94 with my annual risky level at $97.29.
The Euro (1.3137) – My weekly pivot is 1.3079 with quarterly pivot at 1.3318.
The Dow Industrial Average (11,533) – I will not have new monthly, quarterly, semiannual and annual
value levels, pivots and risky levels until January 3, 2011, but this week’s pivot is 11,496 and today’s
risky level is 11,587.
An example of how “Buy and Trade” beats “Buy and Hold” looking at Adobe Systems (ADBE)
• If you purchased Adobe at $32.20 on February 8th you would be holding a position at a loss.
Courtesy of Thomson / Reuters
Here are the “Buy and Trade” Strategies from my ValuTrader Model Portfolio
1. Buy at $32.30 on Feb 8, sold at $35.96 April 22 for a gain of 11.3%
2. Buy at $31.00 on May 21, sold at $33.46 on June 18 for a gain of 7.9%
3. Buy at $30.15 on June 24, sold at $29.05 on Sep 2 for a loss of 3.6%
4. Buy at $28.48 on Aug 11, sold at $29.05 on Sep 2 for a gain of 2.0%
5. Buy at $25.90 on Sep 22, sold at $27.89 on Oct 8 for a gain of 7.7%
6. Buy at $27.80 on Dec 14, sold at $30.98 on Dec 21 for a gain of 11.4%
That’s today’s Four in Four. Have a great day.
Chief Market Strategist
ValuEngine.com, (800) 381-5576
Send your comments and questions to Rsuttmeier@Gmail.com. For more information on our products and services visit
As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. I have daily, weekly, monthly, and
quarterly newsletters available that track a variety of equity and other data parameters as well as my most up-to-date analysis of world markets. My
newest products include a weekly ETF newsletter as well as the ValuTrader Model Portfolio newsletter. You can go HERE to review sample issues and
find out more about my research.
“I Hold No Positions in the Stocks I Cover.”