Wednesday, August 24, 2011
We know the strategy...find those stocks of Fortune 500 companies (i.e., solid companies) that normally offer decent yields and, when they are unfairly punished along with the rest of the market, pick them up to take advantage of their "accidental" high yield. Let's call these AHYs.
We can only assume that the reason that these yields are referred to as accidental is because the strong belief is that the price reduction of these AHYs is truly temporary and that their yields will be maintained regardless of economic directions. This seems to me a bit like fortune telling, in that these pundits want you to believe that they can see the future. They can't, as confirmed by the banking industry's near collapse in 2008/2009, so beware of these recommendations.
More importantly and to the subject of this post, don't ignore your hidden fears. Assuming that the pundits are right and these AHYs will maintain their yield and the selloffs in these stocks are temporary, then picking up these AHYs will be a great move as part of your long-term investing strategy.
BUT...most of us have a very innate fear that we don't admit to until it's too late...we hate losing money and we really get scared when things, particularly our portfolios, start falling like there is no bottom. Our long-term investing strategy generally goes out the window in bear markets when selloffs can often seem precipitous. And we often sell what we have held for the least amount of time...i.e., we have a LIFO mentality (Last In, First Out). It takes us time to love the stocks that we acquire so the most recent purchases get sold first.
So those AHYs that seem like a great buy may eventually turn into a great investment...unfortunately, during a bear market, MOST of us will sell the AHY we just purchased in the next leg down and thus take another brutal hit in our already battered portfolio.
Remember two rules in bear markets...nothing is a "great" buy and things generally become far cheaper than one expects before the market bottoms.
Note that the market appears to be inviting us back into the water (with a 60 point rally in the S&P in the last 2 days)...but as I noted in my last post, this selloff is nowhere near from being complete. Be safe, be nimble and don't ignore your hidden fears.
Friday, August 19, 2011
Thursday, August 4, 2011
Friday, April 1, 2011
So…I thought today might be it…
- new quarter (i.e., past the requirement for hedge funds and mutuals to buy into the close of the record 1st quarter - referred to as "institutional window dressing" or the "art of looking smart")…
- great jobs number creating a pop at the open creating the final death knell for shorts and rallying cry for bulls
- all culminating in a realization that this may be the best we'll see in a while with crushing commodity prices...expectations for higher rates coming sooner than later...leading to…a collapse by the close…
But now I am not so sure…one of the 7 long positions I exited this morning was at 68 when I got out at 10am EST…it’s now at 73 – 3 HOURS after I sold it…another was at 19...now approaching 20...so I am picking them great, but getting too skittish to keep holding. Another few positions are making remarkably strong moves after signaling alerts in the morning, which I decided to ignore due to my bearish sentiment…three of the four positions that I was alerted to are up 3% at least since 10am EST.
I also noticed that the Dollar rally has completely imploded and that the Dollar is now pushing for a closing low (against the Euro at least) not seen since 2009 (needs to close above 1.4207 – it’s at 1.4219 after getting down to 1.406 in the morning)
Of course the tell-tale signs of a top are still ther...volume again running low – oil up another $1 - approaching $108, VIX getting crushed again - i.e., complacency rampant, the usual Cramer suspects and market high-flyers are rallying ... BUT not in unison...many are up, but some are flat and a few others are getting crushed.
Still - this continues to be one of the toughest market to gauge in a long time...
Friday, March 4, 2011
I drew this amazing trendline back a couple of days back and just extended it out today and it is AMAZING how the SPY has been hugging this exact trendline for the last 2 hours…a break below this (131.67) convincingly takes us to the next line (130.71) – hoping to see all of this today!