Credit market finally affects equity market July 27, 2007
Posted by Andy Robinson in : Market Research , add a commentOur favorite contrarian Bill Fleckenstein posted an interesting article last night A 300-point drop? It’s only just the start which points the finger at the credit market for triggering the start of the thumping in the stock market that we’re starting to see. What we’re seeing (which is something that I’ve said would happen in previous articles) is a flight out of lower quality debt. Junk bonds and other forms of debt have dropped substantial in price of late, which is causing an intense tightening throughout the entire credit market. The fear on Wall Street is that this will put a freeze on deal-making such as leveraged buy-outs, mergers, and acquisitions. Recently bulls have been using such deals as an excuse to keep the rally rolling. I expect the next couple months to be pretty rocky and take the market at least another 5% lower.
Protection against a falling dollar July 26, 2007
Posted by Andy Robinson in : Educational , add a commentThis Yahoo Finance article called Hedge your Retirement Savings with Currencies reveals several interesting ways to make money in this weak dollar environment. Some of the options include holding certificates of deposit (CD’s) denominated in a foreign currency. I think this is a terrific option because you make interest on the CD and likely some gains from a further dollar decline. There are also some new foreign currency exchange-traded funds and a mutual fund for those interested in other options.
Housing problems still hound stock market July 25, 2007
Posted by Andy Robinson in : Market Research , add a commentWhat looked to be a solid recovery from yesterday’s furious sell-off got a poke in the eye from the most recent report released this morning from the National Association of Realtors. The sales of existing home dropped to the most sluggish pace we’ve seen in 4.5 years. Click on the above link to view more of the data.
A positive take on small-caps July 24, 2007
Posted by Andy Robinson in : Market Research , add a commentAlthough I’ve been beating the drum that the best way to play equities right now is large-caps, this Motley Fool article Are the Shorts Right? gives us an interesting comparison of the relative price of small-caps versus large-caps. If a correction were imminent, they reason that the relative price-to-earnings between the two equity classes would differ from historic norms. Apparently the premium for small-caps is not abnormal, so their view is that one shouldn’t rearrange one’s portfolio allocation simply because all the “smart money” is shorting the small-cap index.
Five mistakes of bad investors July 23, 2007
Posted by Andy Robinson in : Educational , add a commentWhile I disagree with this writer’s assessment that the stock market is inefficient in aggregate, I agree whole-heartedly that certain individuals make bad, bad decisions with their investments. This Morningstar article highlights some of the most dangerous “irrational” impulses that can derail one’s retirement and erase wealth if unchecked.
Wall Street Refocused on Market Risks July 20, 2007
Posted by Andy Robinson in : Market Research , 1 comment so farIt’s still too early to tell whether I’ve made the right call in my Wednesday article when I called a market top and signaled that a solid pullback was likely. Yesterday the Dow did close above 14000 for the first time ever. However, today the markets are sharply lower and there are a number of concerns that will likely take the market lower still.
Market Turning Point July 18, 2007
Posted by Andy Robinson in : Market Research , 3commentsThis latest run in equities is starting to look a little thin on top. Although I’m not really into technical analysis, I have noticed that last Thursday on our big “up” day trading volume wasn’t particularly robust. Big moves in either direction are given more credence on extremely high volume. I’m signaling this as a possible turning point because yesterday we had three failed attempts to close the Dow over 14000 and in the end it closed just under at 13971.55. Traders will swing the momentum, at least in the near-term, towards bearishness. Although whether this downturn is sustained depends on data that comes out over the next couple weeks.
Home Price Correction July 12, 2007
Posted by Andy Robinson in : Market Research , add a commentThis is an interesting blog post, Home Price Corrections Story, that gives more information about what home prices are being hit the hardest. It seems that demand is holding up fairly well on both the high and low-end. The super rich are completely unaffected by the overblown sub-prime scare and first-time home buyers are still buying because mortgage rates are still historically good. The homes that are suffering are the “trade-ups.” It’s harder to sell your existing home so people are staying put in greater numbers.
Update on Ultra Petroleum July 3, 2007
Posted by Andy Robinson in : Company Profile , add a commentSince I recommended Ultra Petroleum (UPL) on March 22, the stock has been on a pretty wild ride. I picked it at $52 and it topped over $63 (a nice 21% upswing) before settling back to it’s recent levels of $56. Today Jim Jubak from MSN Money came out with the article Natural Gas? Play the Rocky Mountains that explains the recent stock price weakness and why this stock (among other players) has terrific long-term prospects due to new pipeline capacity opening up in 2008-2009.
The effects of higher rates on various asset classes July 2, 2007
Posted by Andy Robinson in : Market Research , add a commentJeremy Siegel, professor of finance at the University of Pennsylvania, wrote a great article called Profit From Higher Long-Term Rates. In it, he explains why he thinks that this environment is likely to be detrimental to the price of bonds and real-estate, but he sees stocks as the best place to put your money.