So, it has been 16 months since my last post. I've been busy.
Enough about me; back to the market. Several dummies out there have been stating the market is overvalued, undervalued, etc. The only thing the dummies have in common is that they make their statements, with no back up or even a reason why they think what the think.
As for me, the market is as irrational as ever. Mutual funds an folks buying when a stock is too high and selling when a stock is too low is driving the market into backwardness (not sure if that is a word). With the emergence of 401(k)'s and IRA's over the past forty years, the average Joe has a voice in the market, which drives it into madness. The average Joe also states that Wall Street is fixed and if you aren't in the game there, then you will lose in the end. Not entirely true, as these same statements by both the average Joe and the expert dummies, still follow up there statements without an explanation why their statement is true. If you were not a dummy making those statements and you know the market is fixed, then you would know how it is fixed and would be able to take advantage. If you are truly going to make a statement, then at least present your case with facts that back up the statement, rather than throwing out a naked statement on the internet. I turn a deaf ear to the statement, unless it has back up.
That being said, the market as a whole is overvalued as the overall earnings do not back up valuations. There are still good buys out there, however. As we all know, dividends make up approximately 70% of the gains enjoyed by the market over the long term. If you want to beat the market, just throw your money in ATT at a 5% dividend yield and increases the dividend every year. All the professionals were telling their clients how well they did in 2013. My company's investment managers were patting themselves on their back about a 21% gain in 2013. I let them know the overall market had a 37% gain, so the 21% is a bit of a let down. Dummies.
Anyway, stocks to keep tabs on are BAC, which might be increasing its paltry dividend of four cent per year. SIRI is close to issuing its first quarterly dividend. STEV is extremely volatile, but has big time upside. I own positions in all three stocks just mentioned, so I am a little biased. Those three companies should be given a look, at least. Good luck in 2014!
Saturday, May 3, 2014
Tuesday, January 1, 2013
Fiscal Cliff- What Does That Mean?
Yes, I know that the term "Fiscal Cliff" is both annoying and metaphorically incorrect. Yes, tax increases and spending decreases will go into effect, but the only immediate effect will be on your take home pay in your pay check. The tax increases will not be set in stone until the end of the year. If an agreement is made to stave off the tax increases and spending cuts, then you will not have to worry in the short term. The Fiscal Cliff is more like a snow ball that is rolling down the hill and getting bigger and faster as it gets closer to the bottom. That is how the current fiscal situation will effect us.
The major problem lies in the long term, whether or not the agreement between the GOP and Dems. is reached. Either way, this situation will create a tremendous opportunity to buy into the stock market. This opportunity is only for individual stock investors that are also long term investors and not traders.
If you've been following along, the future is not looking good. Long term investors have to be nimble and probably stick with blue chip, large cap stocks. Mutual funds are still ok for the set it and forget it investors, but you still have to check in to see if the top ten holdings of each fund you invest in are in line with the risk.
I, myself, being an investor in individual stocks, have been building my cash base. There are going to be a lot of buying opportunities in the next 6-12 months. As I always recommend, buy in slowly and get out slowly. That will always serve you well in the long run. Good luck in 2013.
The major problem lies in the long term, whether or not the agreement between the GOP and Dems. is reached. Either way, this situation will create a tremendous opportunity to buy into the stock market. This opportunity is only for individual stock investors that are also long term investors and not traders.
If you've been following along, the future is not looking good. Long term investors have to be nimble and probably stick with blue chip, large cap stocks. Mutual funds are still ok for the set it and forget it investors, but you still have to check in to see if the top ten holdings of each fund you invest in are in line with the risk.
I, myself, being an investor in individual stocks, have been building my cash base. There are going to be a lot of buying opportunities in the next 6-12 months. As I always recommend, buy in slowly and get out slowly. That will always serve you well in the long run. Good luck in 2013.
Saturday, November 10, 2012
Post Election Market Expectations
Sorry for the haitus, but I was sitting around thinking about the big pull back I was hoping for in October, but that did not happen. I was hoping for a 10% pull back, but we only saw about a 2.5% pull back. Now that O'Bama has his mulligan intact, what should we expect? Just for clarification purposes, the O'Bama comment was no indication that I support Mitt or the Republicans. I am non-partisan. Now, back to business.
So, the market will not be good to the long or short term investor of the broad market. All of your 401(k) accounts will take a pretty good shot, unless you are in a stable fund with a quarterly adjusted interest rate. I do not think we will see the affect on stable funds that we saw in 2008, when they lost money for the first time in history.
For my portfolio of both deferred compensation and my brokerage account, I've been rotating money to safer territory and building my cash up in order to take advantage of the larger pull back that await us in 2013. I firmly believe, as I did in 2008, that the earnings reports (even in the Christmas shopping season is a success) for 4th quarter 2012 will be poor, thus bringing the broader market down.
What adds to the problem, is that with O'Bama at the helm, interest rates will cotinue to stay low and deficeit spending will remain high. Money will continue to be printed, to the tune of about $1T per year, which will weaken the dollar and increase inflation. Investing gold and oil will help hedge against inflation. Since wages are stagnant, it is not wise to sit and do nothing while the cost of every day staples and energy start rises at an ever increasing rate.
There is some good news, though. With interest rates remaining low for the next two to four years, obtaining financing will remain cheap. The best thing to do with cheap credit is to consolidate expensive credit. Pay down your debts, but at the same time, increase your savings and continue to invest. For the 99% of us, that is the best way to take control of your finances. You have to hit all the metrics that make up your finances.
Here is a list of stocks that should be relatively safe places to keep your money while we go through the correction. They provide diversification as well as a hedge against inflation:
BTU
XOM
KO
JNJ
GOLD
DUK
So, the market will not be good to the long or short term investor of the broad market. All of your 401(k) accounts will take a pretty good shot, unless you are in a stable fund with a quarterly adjusted interest rate. I do not think we will see the affect on stable funds that we saw in 2008, when they lost money for the first time in history.
For my portfolio of both deferred compensation and my brokerage account, I've been rotating money to safer territory and building my cash up in order to take advantage of the larger pull back that await us in 2013. I firmly believe, as I did in 2008, that the earnings reports (even in the Christmas shopping season is a success) for 4th quarter 2012 will be poor, thus bringing the broader market down.
What adds to the problem, is that with O'Bama at the helm, interest rates will cotinue to stay low and deficeit spending will remain high. Money will continue to be printed, to the tune of about $1T per year, which will weaken the dollar and increase inflation. Investing gold and oil will help hedge against inflation. Since wages are stagnant, it is not wise to sit and do nothing while the cost of every day staples and energy start rises at an ever increasing rate.
There is some good news, though. With interest rates remaining low for the next two to four years, obtaining financing will remain cheap. The best thing to do with cheap credit is to consolidate expensive credit. Pay down your debts, but at the same time, increase your savings and continue to invest. For the 99% of us, that is the best way to take control of your finances. You have to hit all the metrics that make up your finances.
Here is a list of stocks that should be relatively safe places to keep your money while we go through the correction. They provide diversification as well as a hedge against inflation:
BTU
XOM
KO
JNJ
GOLD
DUK
Sunday, July 15, 2012
What to do in the Second Half of 2012?
So dummies, present company excluded of course, what do we do with the second half of 2012? Well, in the irrational market that we currently deal with today, it seems like guesswork. However, the guesswork is left to the day traders and as for intelligent investors as ourselves, you should look at the big issues in the world economy. The three biggest issues are the debt situation in Europe, coal and natural gas.
The debt issue in Europe will not correct itself for at least a decade. The European Union may have to bite the bullet and disband. You have a group of countries, that are broke, lending money to each other. Something will have to give, since you cannot get blood from a stone. Eventually, one of the countries will default, which will create a cascading effect that will trickle down to every other developed country, since we are all owning and are owed money from every other developed country.
So, what do we do with the available information we have? The hippies are campaigning for the end of coal and trying to stop hydro-fracking, despite the fact is has been proven that hydro-fracking has been developed with safe guards to protect our drinking water. So, coal and natural gas prices are in the gutter. Luckily, there are slew of developing countries that are craving cheap energy. The main importer of coal is China and FYI, coal is still the largest export of the United States. Natural gas has been undervalued for about a decade. Natural gas will pop in about five to ten years as coal's lifespan is about twenty years, before it is replaced by solar power and natural gas.
Coal has had some developments in the past week. Patriot declared bankruptcy and Peabody just recently finalized a purchase that makes them the largest utility in the United States, servicing over seven million people in six states. Peabody is the long play as the stock has been killed over the past year. I have the company valued in the $80-$90 range and it is currenlty trading at around $22 a share. Again, the irrational market will most likely not price the stock correctly, but as with every stock today, they are not priced correctly. This creates tremendous opportunities for saavy investor as every stock is priced incorrectly. In the long term the stock will eventually be in the range of proper pricing. The trick is being able to double up when the stock is beaten down and when to realize the stock is overvalued and to reduce or eliminate your position.
Tickers for the future:
BTU
BAC
DUK
CHKE
WM
JNJ
Good luck!
The debt issue in Europe will not correct itself for at least a decade. The European Union may have to bite the bullet and disband. You have a group of countries, that are broke, lending money to each other. Something will have to give, since you cannot get blood from a stone. Eventually, one of the countries will default, which will create a cascading effect that will trickle down to every other developed country, since we are all owning and are owed money from every other developed country.
So, what do we do with the available information we have? The hippies are campaigning for the end of coal and trying to stop hydro-fracking, despite the fact is has been proven that hydro-fracking has been developed with safe guards to protect our drinking water. So, coal and natural gas prices are in the gutter. Luckily, there are slew of developing countries that are craving cheap energy. The main importer of coal is China and FYI, coal is still the largest export of the United States. Natural gas has been undervalued for about a decade. Natural gas will pop in about five to ten years as coal's lifespan is about twenty years, before it is replaced by solar power and natural gas.
Coal has had some developments in the past week. Patriot declared bankruptcy and Peabody just recently finalized a purchase that makes them the largest utility in the United States, servicing over seven million people in six states. Peabody is the long play as the stock has been killed over the past year. I have the company valued in the $80-$90 range and it is currenlty trading at around $22 a share. Again, the irrational market will most likely not price the stock correctly, but as with every stock today, they are not priced correctly. This creates tremendous opportunities for saavy investor as every stock is priced incorrectly. In the long term the stock will eventually be in the range of proper pricing. The trick is being able to double up when the stock is beaten down and when to realize the stock is overvalued and to reduce or eliminate your position.
Tickers for the future:
BTU
BAC
DUK
CHKE
WM
JNJ
Good luck!
The Great Recession: Part II
Sorry for the prolonged hiatus. I had some business dealings that needed to be addressed. So, how has everyone enjoyed the market lately? Well, Europe changes its story, pretty much on a daily basis. You have to love the media, by reporting that Europe "Feels confident that it might have an answer to the debt issue." And, the market goes up. It is true about any good or bad news that is announced by the oh so smart media.
The problem with today's market is that it is too easily influenced by the media. The reason for that is today's market has everyone in it; educated, uneducated and ignorant. Fifty years ago, you had much fewer investors in the market and mutual funds did not exist or were extremely new. The only people invested in the market are the ones who had money and had a pretty good idea of the value of companies, because they were priced in the market much closer to the real value as opposed to the pseudo value they are assigned today. It is more confusing today, however, there is greater opportunity to be taken advantage of, if you can anticipate the market.
Ah, anticipating the market is basically impossible, because it is so random and is affected by investors who have no idea what they are doing. This causes all stock prices to be incorrectly priced at all times. The saavy investor will see this and take advantage. I must quantify this as the investor must be long on this investment. If you try to trade in this market, just like a casino, the longer you are in and the more trades you make, you'll eventually lose.
The problem with today's market is that it is too easily influenced by the media. The reason for that is today's market has everyone in it; educated, uneducated and ignorant. Fifty years ago, you had much fewer investors in the market and mutual funds did not exist or were extremely new. The only people invested in the market are the ones who had money and had a pretty good idea of the value of companies, because they were priced in the market much closer to the real value as opposed to the pseudo value they are assigned today. It is more confusing today, however, there is greater opportunity to be taken advantage of, if you can anticipate the market.
Ah, anticipating the market is basically impossible, because it is so random and is affected by investors who have no idea what they are doing. This causes all stock prices to be incorrectly priced at all times. The saavy investor will see this and take advantage. I must quantify this as the investor must be long on this investment. If you try to trade in this market, just like a casino, the longer you are in and the more trades you make, you'll eventually lose.
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