Oddities of the recent downturn August 28, 2007
Posted by Andy Robinson in : Market Research , add a commentWhile the correction we’ve experienced wasn’t entirely unexpected, there have been some oddities about this downturn that are worth pointing out. I’ve been mistaken about a few historical safe havens that have proven less than satisfactory in holding up their value. Read this Morninstar article for a more detailed analysis but the gist is that technology companies have held up better than value stocks, and the precious metals have fallen in tandem with stocks. Diversification is still necessary in constructing portfolios, but it didn’t insulate many people from this latest correction.
Highlighting Singapore August 24, 2007
Posted by Andy Robinson in : Market Research , add a commentJim Jubak wrote an article today entitled Singapore: Your key to Asia profits where he makes a case Singapore companies are poised to benefit from the robust growth in Asia right now with less of a downside risk. He argues that so much of the economic activity occurs with these companies investing all over Asia, so you’re more protected against regional slowdowns. I’m a little leery of emerging markets currently as global markets are a bit dicey, but if you are allocating a portion of your portfolio to emerging markets Singapore seems a solid way to play it. The ETF symbol is EWS and for full disclosure I do not own any shares of this.
Using silver as a long-term hedge August 23, 2007
Posted by Andy Robinson in : Market Research , 1 comment so farPrecious metals have long been used in portfolios to protect against the the erosive powers of inflation on your wealth. I believe that owning some precious metal like gold or silver is crucial right now as central banks around the world are poised to start easing their monetary policy in reaction to the recent turmoil in the debt and equities markets. I am picking the ETF for silver (SLV) as my latest portfolio pick because the price is right and the longer term demand/supply fundamentals are compelling. Read the recent article by Robert Kiyosaki to hear his explanation why supply is shrinking and demand will continue to strengthen. For full disclosure, I do not currently own any shares of SLV and its intraday price at the time I recommended it on 8/23/07 is $116.01 per share.
Fed must do more for markets, investors say August 22, 2007
Posted by Jenna Robinson in : Market Research , 1 comment so farSome analysts now say that the central bank’s move last Friday to restore confidence by encouraging banks to borrow directly from the Fed at a lower cost has had only limited impact so far and that the Fed will need to take more drastic action by cutting its benchmark interest rate soon if it fails to see more progress.
But not everyone agrees.
Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said in a speech to risk managers in North Carolina on Tuesday that turmoil in financial markets was not a reason in itself to reduce rates.
Buffett getting into financials August 21, 2007
Posted by Andy Robinson in : Market Research , add a commentThe fact that Warren Buffett has started seeing buying opportunities in financials has reaffirmed my belief that what we are seeing is a healthy market correction, not a market crisis, and that we are at least two-thirds through it. While it’s probably too soon to buy any shares of Countrywide, I would consider buying Bank of America (like Buffett is) on any dips as well as other quality blue-chip names. Bank of America has been one of my stock picks since March of this year, and I still find it a compelling value. For full disclosure, I do not own any shares of either Countrywide or Bank of America at this time.
Jim Cramer is a joke..did I even need to tell you? August 20, 2007
Posted by Andy Robinson in : Off Beat , 1 comment so farHis shtick is turning Wall Street into a circus by throwing chairs and ranting until his face turns red. I find some of the antics entertaining, but always thought that he was one of the worst sources of information possible for the average investor. His show is more fitting for a trader than an investor, and so it should not be surprising that Cramer’s picks haven’t beaten the market (in fact, even significantly underperformed) for the two years that he’s hosted the show Mad Money. I mean, I really love to say “bulls make money, bears make money, pigs get slaughtered” because it’s funny, but I have a sneaking suspicion that the “pigs” refer to those unfortunate enough to invest based on Cramer’s advice.
Sage words from the founder of Vanguard August 17, 2007
Posted by Andy Robinson in : Educational , 1 comment so farJohn Bogle is the pioneer of index funds and just gave Newsweek an interview that puts this market volatility into a solid long-term perspective. Excerpts of this interview are printed in this article entitled Hope Will Return. If you stay the course and stick to your appropriate allocation of stocks and bonds, times like these are just a blip on the radar. He made a terrific point concerning the BIG CRASH of 1987 where the stock market went down 25% in a single day. That’s scary stuff and makes our recent 10% correction look like a walk in the park. Well, anyone who had owned the stock market throughout the whole of 1987 (despite the crash) would have been up 3% that year. If you let emotion get the better of you, you end up buying at market tops and selling stocks at the bottom.
Time to Nibble Again August 16, 2007
Posted by Andy Robinson in : Market Research , 1 comment so farI called attention to the prospect of this correction in my July 18th and July 20th blog entries, and we’ve finally pulled back about where I expected. Since July 18th, the Dow has retreated just over 9% and the S&P has fallen just over 10% (intraday). Market risk continues to remain high but equity prices have pulled back to attractive enough levels to compensate for the additional risk. I am putting half of the cash that I kept on the sidelines the past couple months into large-cap growth stocks. The rest of my cash I’m probably going to use over the next month. This market probably will go a bit lower between now and September 30th, but as I am unable to time the market (because it’s impossible) I will do the best I can. I will profile a few specific companies that look like bargains over the next couple articles.
Angst returns to global markets August 15, 2007
Posted by Jenna Robinson in : Uncategorized , add a commentGlobal shares have fallen again as concerns about world credit conditions - driven by problems in the US mortgage sector - continue to worry investors.
On Tuesday, the Dow Jones lost 1.6% to 13,029 points and the Nasdaq fell 1.7%.
Around the world, London’s FTSE 100 fell 1.4% to 6,058 points by 1200BST while Japan’s Nikkei-225 index dropped 2.2% to finish at its lowest close in eight months. In Hong Kong the Hang Seng closed down 2.9%, while in Europe France’s Cac 40 index lhad ost 1.5% and Germany’s Dax index slipped 0.3% in morning trading.
A Falling Dollar, After All August 13, 2007
Posted by Jenna Robinson in : News , add a commentAfter looking at the evidence, economist Robert Murphy agrees with the alarmists:
The US economy is far more flexible now than it was during the dark days of the Carter years. Tax rates are much lower, the Fed isn’t as insane, and financial markets are far more sophisticated at handling risk. Even so, it is hard to avoid the conclusion that the dollar could be ready for another beating.