Anglo American (NASDAQ: AAUK) owns a range of assets covering gold, platinum, diamonds, coals ferrous and base metals.

AAUK was up 34 cents to $33.09 in pre-open trading. AAUK has a market cap of $86 billion. Gold is recently trading at $905.90 according to Bloomberg.

AAUK overall option implied volatility of 47 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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After five months of tracking my 2008 picks, it is rewarding to finally have a breakthrough -- topping the three major stock indices and Berkshire Hathaway (NYSE: BRK.B) too. It has been painful to have to report each month that I was being bested. However, since I have not seen anything contradicting my original rationale for my eight picks I stood my ground.

This past month saw great improvement. For the first time since I posted the original story Chasing Value: Final list -- 8 stocks for 2008, five of the eight stocks are up:

Moving into positive territory by pennies was Loews Corporation (NYSE: LTR). Among its holdings is a 51% stake in Diamond Offshore Drilling, Inc. (NYSE: DO) that has been doing well as the world remains desperate for more oil and natural gas.

Bunge Limited (NYSE: BG) was the other stock to cross the line into the black, while Valero Energy Corp. (NYSE: VLO), although improving, remains my worst performer. It is still down almost 28% after five months.

The gap between the Dow Jones Industrial Average, Standard & Poor's 500 Index and the technology heavy NASDAQ Composite Index narrowed substantially so that the three are tracking each other very closely. Stocks like Apple, Inc (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) continue to gain significantly and their outlooks have not been shaken amid overall pessimistic economic forecasts.

Most of my picks improved. Last month's three winners stayed on track with continued higher energy and commodity prices along with the war. Raytheon Co. (NYSE: RTN), the high tech defense contractor, Reliance Steel & Aluminum (NYSE: RS) and Anglo American plc (ADR) (NASDAQ: AAUK) do not show any signs of wavering. All three continue to be mentioned in M&A conversations with RTN on the buying side, AAUK on the selling side and RS on both.

In January, I added Newcastle Investment Corp. (NYSE: NCT) and Huaneng Power (NYSE: HNP) to my holdings. In April, as HNP hit new lows, I acquired more stock, happy to collect the 5.6% dividend yield. I did not add anything in May.

Through May, the average return for the eight picks amounted to a loss of -3.36%; a major improvement from last month's -8.96% or March's -15.96% depressing lows. This outperformed the average return of the indices: -5.47%. This year's stalking horse, Berkshire Hathaway (NYSE: BRK.B), while gaining a little during May and still besting all the indices, is down -4% for the first five months. I can't remember the last time I was ahead of 'my pal Warren' -- oooh, maybe I'm learning something!

I am Including dividends for my picks, that averaged an overall 3.91% yield through the first quarter. However, this is being adjusted because of NCT's reduced dividend to 2.99% going forward. Therefore, I will be adding 0.978% for the first three months and 0.249% (2.99% / 12) for each additional month. Through May, the loss was -3.36 + 0.978 + 0.498 = -1.88%. Using 1.8% for the average dividend of the indices times 5/12 adds 0.75%, and reduces the loss to -4.72%.

After five months I have overtaken all of the indices and BRK.B, to my surprise, even without the help of the dividends . BRK.B does not pay a dividend.

I continue to hope that 2008 does not end up being about who loses the least. The following are my eight picks with the starting share price as of December 28, 2007:

• Anglo American plc (ADR) (NASDAQ: AAUK) from $30.79 is Up to $34.28 for a gain of 11.33%.
• Bunge Limited (NYSE: BG) from $119.03 is Up to $119.37 for a gain of 0.29%.
• Huaneng Power International (ADR) (NYSE: HNP) from $41.75 is down to $33.74 for a loss of -19.19%.
• Loews Corporation (NYSE: LTR) from $49.35 is Up to $49.57 for a gain of 0.45%.
• Newcastle Investment Corp. (NYSE: NCT) from $13.08 is down to $9.92 for a loss of -24.16%.
• Raytheon Company (NYSE: RTN) from$61.51 is UP to $63.86 for a gain of +3.82%.
• Reliance Steel & Aluminum (NYSE: RS) from $54.32 is Up to $67.97 for a gain of +25.13%.
• Valero Energy Corporation (NYSE: VLO) from $70.55 is down to $50.84 for a loss of -27.94%.

The Indices:

• Dow Jones Industrial Average: 13,365.87 dropped to 12,638.32 for a loss -5.44%
• NASDAQ Composite Index: 2,674.46 dropped to 2,674.46 for a loss -5.68%
• Standard & Poor's 500 Index: 1,478.49 dropped to 1,400.38 for a loss -5.28%

This year's "stalking horse" Berkshire Hathaway (NYSE: BRK.B) (I am tracking the 'B' shares, not the more expensive 'A' shares) saw its B shares down from $4,685 to $4,498 for a loss of -4.0%.

After our Federal Reserve Chairman Ben Bernanke announced a cut in the discount rate of a quarter point to 2% last month, he changed his stance and intimated it would probably be the last cut. Now we are hearing noise there actually could be a raise in the rate depending on inflation fears. The market seems to believe that story in the long term, but not the short term one.

I still think investors should be looking at the defense sector Chasing Value: General Dynamics & Raytheon: The defense does not rest.

May Recap:

• 2008 picks: -1.88%
• BRK.B: -4.0%
• Major Indices: -4.72%

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I currently own shares of AAUK, BRK.B, HNP, NCT, and VLO.

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This month saw great improvement after last month's disaster. Having to conclude my findings on a specific month end day, or any day, depending on the news, sometimes distorts results. For example news on March 31 sent the market down and on April first my picks shot up an unusual amount; hopefully the trend will continue.

My riskiest stock pick Newcastle Investment Corp (NYSE: NCT) was down the most in March but recovered about 35% of the loss in April leaving Valero Energy Corp. (NYSE: VLO) the dubious honor of being my worst performer, down over 30% in the first four months of the year.

April showed improvement as many companies reported positive earnings reports or beat expectations.

The Dow Jones Industrial Average gained some ground in April as did the Standard & Poor's 500 Index, and the technology heavy NASDAQ Composite Index was up with stocks like Apple, Inc (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) improving significantly on very strong reports. Google is up over 25%.

Most of my picks improved. Higher food prices no doubt helped Bunge Limited (NYSE: BG) which recaptured losses moving up 23% from its recent bottom. My two winners Raytheon Co. (NYSE: RTN), the high tech defense contractor, and Reliance Steel & Aluminum (NYSE: RS) were joined by a third, Anglo American plc (ADR) (NASDAQ: AAUK) which had a 10% swing entering positive territory.

Even though it has been a tough year for most of my stock picks I have not changed perspective and my original rationale for my eight picks remains, with the exception of Valero based on its outlook. I do not change my mind based on price but on facts, and that is why though others are down it is only VLO that I am re-examining. See Chasing Value: Final list -- 8 stocks for 2008 for the original story.

In January, I added Newcastle Investment Corp. (NYSE: NCT) and Huaneng Power (NYSE:HNP) to our holdings. I made no additions in February or March among these stocks. In April as HNP hit new lows we acquired more stock. This is a long term position and we are prepared to ride the 5.6% yield as long as it is there for the taking.

Through April the average return for my eight picks was a loss of -8.96%; a welcome improvement from last months sad -15.96% showing. This under-performed the average return of the indices: -6.71%. This years stalking horse, Berkshire Hathaway (NYSE: BRK.B), sagged a little more during the month, still besting both my average and overall indices average. However, the DJIA is slightly ahead of 'my pal Warren' so far this year -- oooh!

Including dividends for my picks, they averaged 3.91% yield though the first quarter. However that must be adjusted because of NCT's reduced dividend, so I have adjusted to 2.99% going forward. Therefore I will be an adding .978% for the first 3 months and .249% (2.99% / 12) for each additional month. Through April the loss was -8.96 + .978 + . 249 = -7.73%. Using 1.8% for the average dividend of the indices divided by 3 adds 0.6%, and reduces the loss to -5.57%. I'm still the loser so far while the gap did close some. BRK.B does not pay a dividend.

I continue to hope that 2008 does not end up being about who loses the least. The following are my eight picks with the starting share price as of December 28, 2007:

• Anglo American plc (ADR) (NASDAQ: AAUK) from $30.79 is Up to $32.75 for a gain of 6.37%.
• Bunge Limited (NYSE: BG) from $119.03 is down to $114.09 for a loss of -4.15%.
• Huaneng Power International (ADR) (NYSE: HNP) from $41.75 is down to $33.65 for a loss of -19.4%.
• Loews Corporation (NYSE: LTR) from $49.35 is down to $42.11 for a loss of -14.67%.
• Newcastle Investment Corp. (NYSE: NCT) from $13.08 is down to $9.89 for a loss of -24.39%.
• Raytheon Company (NYSE: RTN) from$61.51 is UP to $63.97 for a gain of +3.4%.
• Reliance Steel & Aluminum (NYSE: RS) from $54.32 is Up to $60.78 for a gain of +11.89%.
• Valero Energy Corporation (NYSE: VLO) from $70.55 is down to $48.85 for a loss of -30.76%.

The Indices:

• Dow Jones Industrial Average: 13,365.87 dropped to 12,820.13 for a loss -4.08%
• NASDAQ Composite Index: 2,674.46 dropped to 2,412.80 for a loss -9.78%
• Standard & Poor's 500 Index: 1,478.49 dropped to 1,385.59 for a loss -6.28%

This year's "stalking horse" Berkshire Hathaway (NYSE: BRK.B) (I am tracking the 'B' shares, not the more expensive 'A' shares) saw its B shares down from $4,685 to $4,457 for a loss of -4.87%. This is the second month Berkshire has had a loss which increased by a small fraction while most everything else improved.

This year, so far, it looks like the big cap DJIA was the place to be.

Yesterday our Federal Reserve Chairman Ben Bernanke announced another cut in the discount rate of a quarter point to 2% and changed posture to signal it would probably be the last cut.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I currently own shares of AAUK, BRK.B, HNP, NCT, and VLO.

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After three months it is time to face the facts: two of the three indices beat my picks handily. I have not made a good showing so far and unlike most investment idea sources, I feel obliged to air my dirty laundry for all to see.

My riskiest stock pick Newcastle Investment Corp (NYSE:NCT) is down almost 37% this year, and the energy stocks did almost as poorly even though fuel prices are near all-time highs. The downers were not offset by this months' repeat winners.

March was a seesaw battle, but in the end there was not much to show for it. However, unlike the last day of January (down 370 points in the Dow) and February's last trading day (down 315 points), March had a final day of plus 46.49, which is not very meaningful.

The Dow Jones Industrial Average gave some ground in March as did the Standard & Poor's 500 Index while the technology heavy NASDAQ Composite Index was marginally up with stocks like Apple Inc (NASDAQ:AAPL) improving notably.

Most of my picks sagged a little more, while two remain in positive territory. Raytheon Co. (NYSE: RTN), the high tech defense contractor is up and Reliance Steel & Aluminum (NYSE: RS) is way up.

My original rational for my eight picks remains intact as far as I'm concerned, and although they are down I still like all of them for the year. See Chasing Value: Final list -- 8 stocks for 2008 for the original story. In January, I added Newcastle Investment Corp. (NYSE: NCT) and Huaneng Power (NYSE:HNP) to my holdings. I made no additions in February or March among these stocks. The only purchase we made in March was noted in Chasing Value: Tiffany is looking more polished and that has performed very well.

This month the average return for my eight picks was a loss of -15.96%, almost doubling the -8.06% through February. This under-performed the average return of the indices: -11.19%. This years stalking horse, Berkshire Hathaway (NYSE: BRK.B), sagged a little during the month, still besting both my average and overall indices average. So once more, I must take my hat off to 'my pal Warren'.

Now, including dividends for my picks, which average 3.91% yield divided by four for the three months, allows for an additional .978%, reducing the loss to -14.98%. Using 1.8% for the average dividend of the indices divided by 4 adds 0.45%, reduces the loss to -10.74%. Nothing can make my picks look good this month. BRK.B does not pay a dividend.

Newcastle Investments reduced its dividend by two-thirds in March (going forward) to increase liquidity and possibly buy back shares. In the coming months I will account for this and reduce the accrued dividends proportionally.

I hope 2008 does not end up being about who loses the least, instead of who makes the most. The following are my eight picks with the starting share price as of December 28, 2007:

• Anglo American plc (ADR) (NASDAQ: AAUK) from $30.79 is Down to $29.77 for a loss of -3.31%.
• Bunge Limited (NYSE: BG) from $119.03 it's down to $86.88 for a loss of -27%.
• Huaneng Power International, Inc. (ADR) (NYSE: HNP) from $41.75 is down to $30.54 for a loss of -26.85%.
• Loews Corp. (NYSE: LTR) from $49.35 is down to $40.22 for a loss of -18.50%.
• Newcastle Investment Corp. (NYSE: NCT) from $13.08 is down to $8.26 for a loss of -36.85%.
• Raytheon Co. (NYSE: RTN) from$61.51 is UP to $64.61 for a gain of +5.04%.
• Reliance Steel & Aluminum (NYSE: RS) from $54.32 is Up to $59.86 for a gain of +10.2%.
• Valero Energy Corp. (NYSE: VLO) from $70.55 is down to $49.11 for a loss of -30.39%.

The Indices:

• Dow Jones Industrial Average: 13,365.87 dropped to 12,262.89 for a loss -8.25%
• NASDAQ Composite Index: 2,674.46 dropped to 2,279.10 for a loss -14.78%
• Standard & Poor's 500 Index: 1,478.49 dropped to 1,322.70 for a loss -10.54%

This year's "stalking horse" Berkshire Hathaway (NYSE: BRK.B). I am tracking the 'B' shares, not the more expensive 'A' shares. The B shares are down from $4,685 to $4,472.90 for a loss of -4.53%. This is the first month Berkshire has had much of a loss, but it still bested most everything else....so 'my pal Warren' outperformed all of the indices and my average as well. As was the case last month, individually RTN (defense sector), AAUK and RS (metals) made a better showing.

The Federal Reserve Chairman Bernanke, speaking before Congress used the recession word quite freely, and again shared his willingness to lower interest rates again.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I currently own shares of AAUK, BRK.B, HNP, NCT, and VLO. (and TIF)

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MOST NOTEWORTHY:

• Thomas Weisel upgraded Apple (NASDAQ: AAPL) to Overweight from Market Weight, citing a re-set in FY08 expectations and expected growth from Mac market share gains, accelerating iPhone revenue growth and increased iPhone ASPs.
  
• WestLB upgraded shares of AstraZeneca (NYSE: AZN) to Add from Hold as they believe the company's growth in core franchises are being overlooked.
  
• Citigroup upgraded KLA-Tencor (NASDAQ: KLAC) to Buy from Hold , as they believe several near-term catalysts are likely to develop against an increasingly favorable cyclical backdrop. They think KLAC's near-term business is better than most think and maintain a $56 target on the stock.

• Goldman upgraded Anglo American (NASDAQ: AAUK) to Buy from Neutral and added shares to the Conviction Buy List.
  
• UBS (NYSE: UBS) was upgraded to Buy from Neutral at Merrill and added to the Europe 1 List.
  
• Jefferies raised comScore (NASDAQ: SCOR) to Buy from Hold.

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MAJOR PAPERS:

• In a deal that values Global Ship Lease at about $500M, the Wall Street Journal reported that Marathon Acquisition Corp. (AMEX: MAQ) is expected to acquire a majority stake, or 66%, in the firm that acquires and charters vessels to container shipping companies.
• Activist investors are moving in on Circuit City Stores Inc (NYSE: CC), which is expected to result in a change of management as the company's turnaround efforts have failed and many investors have jumped ship, according to the Wall Street Journal's "Heard on the Street".

• JPMorgan Chase & Co (NYSE: JPM) was in talks last night about raising its bid for The Bear Stearns Companies Inc (NYSE: BSC) by 500% in order to appease angry Bear shareholders who have vowed to fight the deal, the New York Times reported.

• The mining industry is consolidating, Business Week noted, and investment pro Richard Steinberg, sees Anglo American Plc (NASDAQ: AAUK) as a possible takeover target due to its sizable deposits of platinum and ferrous and nonferrous metals.
• Perfect World Co Ltd (NASDAQ: PWRD), a big player in China for online gaming, has seen its share price shoot up to $37 in October, up from $16 back in July, Business Week reported, and then slide back down to $21.90, attracting investors again.
• Business Week reported that investors are flocking to overseas investments and opportunities as they have become spooked by Bear Stearns' collapse, and the prospect of a protracted U.S. financial crisis or recession. John Maloney, president of M&R Capital Management says it makes sense to put money in non-U.S. investments, particularly in Liberty Global Inc (NASDAQ: LBTYA), a major cable company.

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The currency of our realm, the US Dollar, has been losing value for many years, but lately the results of this sad state of affairs have become increasingly more evident. Concerns are mounting on a global basis not just in the United States. The euro, once pegged at a buck, is now trading at $1.55, while gold has passed $1,000 and oil has continued its charge, breaking through the $110 per barrel mark.

While a good deal of this problem is home grown, the pain is being felt all around the world. We have read many stories about how the American economy is a smaller part of the global economy and becoming somewhat detached. This is nonsense. What has happened is that the global economy has become infinitely more integrated and like any integrated structure (the architect speaking), what occurs in one place is felt everywhere.

The Federal Reserve Board, led by Chairman Ben Bernanke, has been watching the economy in an extremely measured fashion, bordering on casual. To those who see beyond Bernanke's calm demeanor, one should imagine a stock trader of old, holding the ticker tape up to his eyes and monitoring every change, every blip in the market as the ticker tape machine clicks away, spewing out the latest market activity.

Last Friday the market tanked capping off a bad week and prompting me to post Dow below 12,000 -- do I hear 11,000? Yes I do!. Then, Monday, it tanked again. The Fed had seen enough and juiced up the market on Tuesday by providing a burst of liquidity in the form of $200 billion in credit swaps so that financial institutions would have more capital to lend. This was like taking a hit on a super caffeinated energy drink -- Wall Street got all excited for a day and the market jumped: Dow up +416: The Fed is not dead.

The Fed's action was fun for a day, but by Wednesday, traders were already whining 'what have you done for me lately' and when the sugar and caffeine had burned off, the market fizzled out quickly like some cheap fire works.

We all view the world from our own vantage point and have a hard time seeing the perspective of others, but they feel the pain also, becasue when the dollar goes down in value, it hurts our buying power. And what about the Chinese who are holding over a trillion dollars in US Treasury notes?

Then there are the European farmers and manufacturers crying foul because the relative cost of their goods on the open market has escalated. What about the pain of many of our dollar pegged neighbors, like Costa Rica, whose citizens were already far behind us on the economic curve, and now they also have to deal in dollars that have lost so much value. Oil , too, has gone up in price not just because OPEC won't increase production, but because they are "petro dollars" and correlate to our currency.

Every time our federal government prints more money (or issues digital currency) to cover the federal deficit, trade deficit, Iraq war, which is only off-budget in the imaginations of our government officials (elected and not), lowers interest rates (making Treasury notes less desirable) issues credit swaps or sneezes, the US, AND the Global economy STILL catches a cold! Right now, some are concerned it might be more than a cold -- the world economy might have caught pneumonia.

All of these popular companies must continue to operate under these sickly economic conditions. There is no day off, no place to hide, no running from the competition for Apple Inc. (NASDAQ: AAPL), Amazon.com (NASDAQ: AMZN), Anglo Amer ADR (NASDAQ: AAUK), Bunge Ltd. (NYSE: BG), Diageo plc (NYSE: DEO), eBay (NASDAQ: EBAY), General Electric (NYSE: GE), Google Inc. (NASDAQ: GOOG), Goldman Sachs (NYSE: GS), Microsoft Inc. (NASDAQ: MSFT), Raytheon Company (NYSE: RTN), Reliance Steel and Aluminum (NYSE: RS), Tiffany and Co (NYSE: TIF) and Under Armour'A' (NYSE: UA).

The only way to reduce inflation is to have a balance between the amount of currency in circulation and the goods and services available to purchase with said currency. Every action by the Fed to create liquidity in the economy, generates a phantom value, and if not met with an increase in productivity, is devaluing the dollar and enslaving us to a future of working more for less benefit. That is why I so strongly believe we should fund roads & bridges NOT mad money stimulus. For more discussion you can also read Serious Money: Stimulate productivity not consumption, which I believe is an imperative. That is the gravity of the situation.

In Part Two, I will expand further on these topics and delve into how there actually were and are weapons of mass destruction right under our noses -- economic weapons of mass destruction.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I currently own shares in AAUK, EBAY and TIF.

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Earlier in the week I posted about finding the market bottom using that age-old handheld calculator, a white paper napkin. So, unfortunately it looks like I may be right again. Not exactly something I was hoping for, but if it has to be, it has to be. I wonder if my old napkin can outperform Wall Street super computers?

Is this an auction to the bottom? Are investors bidding things down instead of up? Looks like it from all the negative sentiment. Consumer sentiment is down, and short sellers are all excited, increasing their negative positions to new highs every day.

And here is the all-telling sign of capitulation: the ever-lying overly optimistic government is starting to admit how bad things are and throwing hundreds of billions of dollars at the problem. When does the turnaround come?

That's easy: when President Bush reverses his position from last week and states that yes, we may be in recession; followed by the least experienced investors stomachs churning while they bail out totally.

So let's look on the good side. This means all you true value investors should have your watch lists in hand as "my pal Warren" and I do (and Dan and Greg and Mr. Noital) because the bargains are going to come fast and furious as we approach the Dow at 11,000. Let's also not forget about stimulating production, as I've already written about in Serious Money.

Oh, by the way, this morning's short-lived uptick was just a few bottom fishers getting excited...but there is more to come.

A few things from my watch list:

• Anadarko Petroleum (NYSE: APC)
• Anglo Amer ADR (NASDAQ: AAUK)
• Bunge Ltd. (NYSE: BG)
• Diageo plc (NYSE: DEO)
• General Electric (NYSE: GE)
• Intuitive Surgical Inc (NASDAQ: ISRG)
• Raytheon Company (NYSE: RTN)
• Reliance Steel and Aluminum (NYSE: RS)
• Tiffany and Co (NYSE: TIF)
• Under Armour'A' (NYSE: UA)
• Valero Energy (NYSE: VLO)
• Wells Fargo (NYSE: WFC)

Many of these are already bargains, but they will go lower. There are many more quality companies out there, and the lower the market drops, the easier it is to find them. Surprising as it may seem, when the market gets oversold, almost everything is a bargain. That being the case, load up on companies that pay dividends with quality products, good cash flow, low debt and of course...quality management.

Final Update: the DJIA closed at 11,893.69 -146.70 (-1.22%)

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I currently own shares in APC, AAUK, ISRG, MRK, and VLO.

...and for a special treat: Ode to TECH-bubbles: YouTube at its best!

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What's a value investor to do, my oh my...

Well folks, I have been following Anglo American plc (ADR) (NYSE: AAUK) for quite some time now. We own it in one portfolio, but recently I missed what now looks like a great opportunity to load up on it for the long haul.

In January the stock was trading under $25 for a few days but I was on vacation -- I'm forced to take one every so often by my family, I'm sure some of you know how that is. This was the week the DJIA dropped over 500 points one day when Bernanke dropped the Fed rate by a full point.

When I returned I set a stock alert for $26 per share thinking this would be doable. Unfortunately the lowest price it was available at in February was $27.20, intraday, on the 5th. It has only gone up since and closed yesterday at $33.28. It is trading up $1.35 mid-day to $34.63. All I can do is keep watching for another opportunity and be patient.

Anybody out there get in at the right time? AAUK is one of my picks for 2008 Chasing Value: Anglo American diamonds and gold are your best friend. Mr. noital has been cherry picking my picks for a while now -- anybody else out smart the 'professor'?

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of AAUK.

Update: AAUK closed at $34.635 (UP 1.355)

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Two months into the year and investors' true 'metal' was tested, and mine more than most. February showed signs of improvement over January, but the last week ended hopes of any rally. The last day of January saw a 370 point drop in the Dow and February's last trading day closed with similar results, down 315 points.

The soft stock market did display many points worth noting. The Dow Jones Industrial Average was about break even for the month, indicating investors were showing some signs of support for large cap stocks, prompted in part by news of increased profits at Wal-Mart (NYSE: WMT) and share buy-backs at IBM Corp (NYSE: IBM).

I cannot say the same for the other major indices, NASDAQ Composite Index and Standard & Poor's 500 Index, which dropped significantly last month.

Some of my picks also sagged a little more, although not as much, while two turned into positive territory. In January, only Raytheon Co. (NYSE: RTN), the high tech, defense contractor, was up. In February, the weak dollar and inflation concerns boosted Anglo American plc (ADR) and Reliance Steel & Aluminum (NYSE: RS) -- two commodity plays.

I still like all of my picks for the year and if things follow the pattern that is emerging, all should be fine for my eight picks. See Chasing Value: Final list -- 8 stocks for 2008 for the original story. In January, I added Newcastle Investment Corp. (NYSE: NCT) and Huaneng Power to my holdings. I made no additions in February.

As noted among the indices, the DJIA lost the least while the NASDAQ's losses increased. The average return for my eight picks was a loss of -8.06% (in January it was -7.82%). This outperformed the average return of the indices: -10.1% (last month-7.58%). But the stalking horse, Berkshire Hathaway (NYSE: BRK.B), improved during the month besting both my average and overall indices average. So once more, I must take my hat off to 'my pal Warren'.

Now, including dividends for my picks, which average 3.91% yield divided by six for the two months, allows for an additional .652%, reducing the loss to -7.41% (-7.49%). Using 1.8% for the average dividend of the indices divided by 6 adds 0.3%, reduces the loss to -9.8% (-7.43%). You can see the importance of dividends here. When they are included, I actually have reduced my loss from last month and increased the marginal benefit over the indices. All things being equal, I will have an inherent advantage all year. BRK.B does not pay a dividend.

I hope 2008 does not end up being about who loses the least, instead of who makes the most. The following are my eight picks with the starting share price as of December 28, 2007:

• Anglo American plc (ADR) (NASDAQ: AAUK) from $30.79 is Up to $31.72 for a gain of +3.02%.
• Bunge Limited (NYSE: BG) from $119.03 it's down to $110.84 for a loss of -6.88%.
• Huaneng Power International, Inc. (ADR) (NYSE: HNP) from $41.75 is down to $32.50 for a loss of -22.16%.
• Loews Corp. (NYSE: LTR) from $49.35 is down to $41.84 for a loss of -15.22%.
• Newcastle Investment Corp. (NYSE: NCT) from $13.08 is down to $10.77 for a loss of -17.81%.
• Raytheon Co. (NYSE: RTN) from$61.51 is UP to $64.84 for a gain of +5.41%.
• Reliance Steel & Aluminum (NYSE: RS) from $54.32 is Up to $55.46 for a gain of +2.10%.
• Valero Energy Corp. (NYSE: VLO) from $70.55 is down to $57.77 for a loss of -18.11%.

The Indices:

• Dow Jones Industrial Average: 13,365.87 dropped to 12,666.39 for a loss -5.23%
• NASDAQ Composite Index: 2,674.46 dropped to 2,271.48 for a loss -15.06%
• Standard & Poor's 500 Index: 1,478.49 dropped to 1,330.63 for a loss -10.00%

This year's "stalking horse" Berkshire Hathaway (NYSE: BRK.B) was one of the few stocks that were up on Friday 2/29/08 as investors ran for cover while the DJIA sank 2.5%. I am tracking the 'B' shares, not the more expensive 'A' shares. The B shares are down from $4,685 to $4,674.50 for a loss of $0.002%, basically nothing. This is actually an improvement from January. I guess it is no shocker that 'my pal Warren' outperformed all of the indices and my average as well. Only RTN (defense sector), AAUK and RS (metals) made a better showing.

The Federal Reserve Chairman Bernanke, speaking before Congress, discussed his willingness to lower interest rates again. The "smart money" is looking for action the month of March. He spoke before Friday's drop increased the odds of a rate cut.

The annual presidential pastime of embellishing the federal budget and deficits came out indicating a $400 billion deficit is likely -- so maybe $800 billion is more likely given all that's not included and the source of the predictions.

Most comments I have received during the past month support my notion that interest rates are a band aide remedy to an economic policy that has shown no signs of long or short term fiscal restraint. But I cannot say the American consumer has shown much restraint either.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I currently own shares of AAUK, BRK.B, HNP, NCT, and VLO.

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It was only yesterday that I wrote about Freeport McMoRan Copper & Gold (NYSE: FCX), noting the favorable metrics and that I put it on my watch list. And this morning I find that Gold & platinum prices soared to new highs, with gold futures setting a new record of $952.40 an ounce.

It seems investors the world over are rediscovering the precious metal after years of neglect. How could you expect anything else with social unrest, war and recession fears on the front pages of every newspaper, with China and India growing rapidly, placing high demand on all commodities, and with a head-in-the-sand administration just now lifting itself up to take a gander at the last few months of its dubious leadership.

Despite recession fears, there is also the serious possibility of dramatic inflation in the next few years based on deficit spending, the ever expanding federal government and lack of concern for the value (buying power) of the currency. It's pitiful. Gold has been an historic hedge against inflation, so why should now be any different?This has ignited one of my 2008 picks Chasing Value: Anglo American (AAUK) is down...but!, which has moved up sharply in the last week.

I do not know where the ceiling is on gold prices, but it does not seem historically high, and I still think AAUK and FCX belong on everyone's watch list.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of AAUK.

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January was a wild ride and February holds the promise of more of the same after yesterday's 370 point drop in the Dow. All the major indices were down in January and so were seven of my eight picks. Only Raytheon Co. (NYSE: RTN), the high tech defense contractor, was up. My two high flyers from last year, Huaneng Power International, Inc. (ADR) (NYSE: HNP) and Valero Energy Corp. (NYSE: VLO), were the biggest losers.

I have not changed my opinion of these stocks from that of the original story Chasing Value: Final list -- 8 stocks for 2008 and I am following them closely for buying opportunities. We have already added more Newcastle Investment Corp. (NYSE: NCT) and Huaneng Power to our holdings.

Among the indices, the DJIA lost the least and the NASDAQ lost the most. The average return for my eight picks was -7.82%. This underperformed the average of the indices that was -7.58% -- but my new stalking horse Berkshire Hathaway (NYSE: BRK.B) bested both, so Buffett is still the man.

Now including dividends for my picks which average 3.91% divided by 12 for the one month allows for an additional .326%, reducing the loss to -7.494%. Using 1.8% for the average dividend of the indices divided by 12 adds 0.15%, reducing the loss to -7.43%. The dividends tighted things up. BRK.B does not pay a dividend.

The following are my eight picks with the starting share price as of December 28, 2007:

• Anglo American plc (ADR) (NASDAQ: AAUK) from $30.79 is down to $27.67 for a loss of -10.13%.
• Bunge Limited (NYSE: BG) from $119.03 it's down to $117.03 for a loss of -1.63%.
• Huaneng Power International, Inc. (ADR) (NYSE: HNP) from $41.75 is down to $32.97 for a loss of -21%.
• Loews Corp. (NYSE: LTR) from $49.35 is down to $46.57 for a loss of -5.63%.
• Newcastle Investment Corp. (NYSE: NCT) from $13.08 is down to $12.50 for a loss of -4.43%.
• Raytheon Co. (NYSE: RTN) from$61.51 is UP to $65.14 for a gain of +5.9%.
• Reliance Steel & Aluminum (NYSE: RS) from $54.32 is down to $49.21 for a loss of -9.41%.
• Valero Energy Corp. (NYSE: VLO) from $70.55 is down to $49.21 for a loss of 16.28%.

• Dow Jones Industrial Average: 13,365.87 dropped to 12650.36 for a loss -5.35%
• NASDAQ Composite Index: 2,674.46 dropped to 2389.86 for a loss -10.64%
• Standard & Poor's 500 Index: 1,478.49 dropped to 1378.55 for a loss -6.7%

As I said earlier, this year's "stalking horse" will be Berkshire Hathaway (NYSE: BRK.B). Note that I will be tracking the 'B' shares, not the more expensive 'A' shares. The B shares are down from $4,685 to $4,550 for a loss of $2.88%. I guess it is no shocker that 'my pal Warren' out-performed all of the indices and my average as well. Only RTN (defense sector) and BG (food) made a better showing.

The Federal Reserve Board lowered interest rates twice during the month. I would hate to see how the market would be performing without the cuts. It seems to me that the interest rates are a band-aid remedy to an economic policy that has shown no signs of long or short term fiscal restraint. A healthy economy would not need proping up with gimmicks. I will elaborate on these issues in upcomming stories.

To find potential opportunities and verify my track record, read Chasing Value and Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. DISCLOSURE: I currently own shares of AAUK, BRK.B, HNP, NCT,and VLO

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Among the many investment pontificators you will find in the media, I pride myself on laying everything out on the table, good calls, bad calls and even my unfortunate periodic stupidity. All of my 2008 picks are down to a varying degree, making me look none too smart in the opening weeks of the year.

Among the stocks I like, Anglo Amercican PLC (NASDAQ: AAUK) has gone down from the $30 level where I recommended it to around $25 a share today. Its 52-week low is $23.38, and its high was $38.75. It pays a dividend currently yielding about 2%.

Early this morning, this was reported: Anglo American Enters Into Exclusive Discussions To Acquire Control Of The MMX Minas-Rio And MMX Amapa Iron Ore Projects. AAUK is a partial owner now and seeks full control of these Brazilian copper mines. Under the leadership of Cynthia Carroll, who became chief executive of Anglo American, it has been refocusing its business structure, planning sales of its building material division Tarmac for $6 billion, while it has also been reducing its stake in gold miner AngloGold Ashanti.

There has been a push to get big in copper, and all of the news out of South America supports this theme. Meanwhile MarketWatch reported China now world's largest gold producer; foreign miners at door. China is now producing more gold than South Africa, which has been the top producer since 1905.

I cannot get in the heads of AAUK management, but perhaps they believe that the growth of the gold mining business in China will impact gold prices, and they want to sell while the precious commodity is at record highs. Anglo has not abandoned expensive commodities altogether, maintaining major interests in diamonds and platinum.

When Anglo American touched its high last year, there were talks it could be a target of industry consolidation. This is another subject that is hard to get a handle on but if the share price remains low, it seems reasonable to assume that this noise will become louder again.

DISCLOSURE: We currently own shares of AAUK.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research n architecture & planning firm.

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The price-to-cash flow ratio has been repeatedly promoted in various publications as one of the more important metrics to consider when evaluating a stock to buy. Apparently over long periods of time it is more telling than the often quoted price-to-earnings ratio. I have read that cash flow is a key metric that "my pal Warren" looks at for Berkshire Hathaway (NYSE: BRK.B) investments.

Here are the figures for the Chasing Value: Final list -- 8 stocks for 2008 in order from highest to lowest P/CF. The 12/28/08 starting stock price, yesterday's closing price and the current P/CF for the most recent fiscal year (MRFY) are listed. Only two stocks are up, while six are down.

Although Warren Buffett is a value investor and many of us would like to follow in his footsteps, he is quick to point out that value is not always the lowest P/E or historic price. Value is what you are getting for what you are paying. You want to get the most and pay the least, and you hope that some of the metrics you consider give you a picture of that. However, looking at P/CF in the case of my eight picks, at least in the short term is not very useful because the two best performers have the highest P/CF. This would seem to contradict the theory.

Notice that NCT has a negative P/CF. This is because it is a REIT with good cash flow that has been savaged by being in bad company and having some derivative loans on its books. By the way, Berkshire Hathaway's P/CF is 14.37 is on the high side too. It closed yesterday at $4,327.50.

To find potential opportunities and verify my track record, read Chasing Value and Serious Money.

DISCLOSURE: I currently own shares of AAUK, BRK.B, HNP, NCT,and VLO

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

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