Sunday, October 31, 2010
The Stock Market is in Dangerous Territory
Yep, that is my opinion. The markets have rallied nearly 14% since my last post.
Tuesday, July 6, 2010
U.S. Dollar Index Topped Out
The U.S. Dollar appears overbought, will the stock market rally and the bond market sell off?
http://futures.tradingcharts.com/chart/US/M
http://www.fxstreet.com/rates-charts/usdollar-index/
* as of 7/5/10, the U.S. Dollar index is at 84.552; the index topped out at 88.834 on 6/4/10
http://futures.tradingcharts.com/chart/US/M
http://www.fxstreet.com/rates-charts/usdollar-index/
* as of 7/5/10, the U.S. Dollar index is at 84.552; the index topped out at 88.834 on 6/4/10
Monday, July 5, 2010
May and June, not so good
Well, the months of May and June haven't been so good. I have neither bought nor sold any securities during that time frame. I made some disaster investments in a couple of companies that are teetering on the edge of bankruptcy at the height of the stock market pull-back. The rest of my investments have lost double digits, but I still like the prices of where they are at.
Maybe in hindsight the major stock indexes of the world have had such as huge run-up from March 2009 that a pull-back was inevitable. The stocks markets were on fire earlier this year and maybe I should have has a clue. Maybe I should have bought some portfolio insurance. The rest of this summer should be interesting.
Maybe in hindsight the major stock indexes of the world have had such as huge run-up from March 2009 that a pull-back was inevitable. The stocks markets were on fire earlier this year and maybe I should have has a clue. Maybe I should have bought some portfolio insurance. The rest of this summer should be interesting.
Saturday, June 12, 2010
Stock Market Summary Weekending 6/11/10
Overall good week for me. The markets rebounded after a month's long sell off. Just from the readings on the web, I think that the stock markets have bottomed and will give us a nice rally through the summer; Dow Jones will approach 12,000. Again this is a near-term prediction.
I pretty much sat tight this past month and did no buying nor selling of any stocks. Every stock in my portfolio was down. I am a long-term trader and try to buy stocks that are going to multiple several fold over the long-term. I did sell some natural gas and oil stocks earlier this year after a nice year-long run-up on some of them. With those sales, I bought some media stocks, REITs and a trucking company, all have done well with the exception of the trucking company which has gotten destroyed in the down-draft of the May sell off after I purchased some shares in April.
IMHO, 2010 and the coming years for the stock market will not be nearly as fruitful as the past year. I am finding less bargains as the markets rise and shorting the markets is not my specialty, but I may one day buy puts on the S&P to hedge my portfolio when the markets return to mania levels.
2009 was a slam dunk, more on that later.
I pretty much sat tight this past month and did no buying nor selling of any stocks. Every stock in my portfolio was down. I am a long-term trader and try to buy stocks that are going to multiple several fold over the long-term. I did sell some natural gas and oil stocks earlier this year after a nice year-long run-up on some of them. With those sales, I bought some media stocks, REITs and a trucking company, all have done well with the exception of the trucking company which has gotten destroyed in the down-draft of the May sell off after I purchased some shares in April.
IMHO, 2010 and the coming years for the stock market will not be nearly as fruitful as the past year. I am finding less bargains as the markets rise and shorting the markets is not my specialty, but I may one day buy puts on the S&P to hedge my portfolio when the markets return to mania levels.
2009 was a slam dunk, more on that later.
Friday, June 11, 2010
Marc Faber Calls a Near-term Bottom on the S&P 500
Mr. Faber argues that sentiment on stocks is very negative and that the stock markets are oversold near-term. He indicates support on the S&P 500 of 1,045 based on the February 5, 2010 low. Also, June and July are historically better months for the stock markets, so there is a possibility of a summer trading rally before the stock markets cool again.
Long-term Mr. Faber is bearish on stocks.
Long-term Mr. Faber is bearish on stocks.
Some High-Yielding Dividend Stocks
Company Symbol Yield % Price
Invesco Mortgage Capital Inc IVR 15.83% 20.29
Resource Capital Corp. RSO 15.9% 6.81
Prospect Capital Corporation PSEC 15.91% 10.87
Annaly Capital Management, Inc. NLY 16.75% 15.96
Anworth Mortgage Asset Corporation ANH 17.2% 6.61
Cornerstone Progressive Return Fund CFP 17.94% 7.22
Capstead Mortgage Corporation CMO 19.42% 10.81
Hatteras Financial Corp. HTS 19.84% 26.44
American Capital Agency Corp. AGNC 21.6% 27.54
K-Sea Transportation Partners LP KSP 24.32% 7.44
source: dividendstocksonline com (5/14/10)
Invesco Mortgage Capital Inc IVR 15.83% 20.29
Resource Capital Corp. RSO 15.9% 6.81
Prospect Capital Corporation PSEC 15.91% 10.87
Annaly Capital Management, Inc. NLY 16.75% 15.96
Anworth Mortgage Asset Corporation ANH 17.2% 6.61
Cornerstone Progressive Return Fund CFP 17.94% 7.22
Capstead Mortgage Corporation CMO 19.42% 10.81
Hatteras Financial Corp. HTS 19.84% 26.44
American Capital Agency Corp. AGNC 21.6% 27.54
K-Sea Transportation Partners LP KSP 24.32% 7.44
source: dividendstocksonline com (5/14/10)
Thursday, June 10, 2010
Investment Advice from the Sage of Omaha, Warren Buffett
'Be fearful when others are greedy. Be greedy when others are fearful.' - Warren Buffett.
VIDEO: Peter Lynch Former Fidelity Magellan Manager
Peter Lynch is the former head for the Fidelity Magellan mutual fund. $10,000 invested in his fund in 1977 would have grown to well over $270,000 by 1990.
Wednesday, June 9, 2010
Link to Price Earnings Ratios (P/E) and Dividend Yields of Major Stock Indexes
Below is a link to the price-earnings ratios (P/E) and dividend yields of major stock market indices and averages. This tool is a very useful guideline if you are looking at past historical data in determining if the stock market is relatively undervalued or overvalued. I will have more on this in coming posts.
http://online.wsj.com/mdc/public/page/2_3021-peyield.html?mod=mdc_h_usshl
http://online.wsj.com/mdc/public/page/2_3021-peyield.html?mod=mdc_h_usshl
Bullish on Stocks, Bearish on Bonds??
Long-term bonds Government bonds average 2.1% (5-year t-bond) to 4.2% (30-year t-bond), the Dow Jones earnings yield is near 7% (6.58% with the Dow at 10,132), not including dividends. This puts the Price/Earnings ratio of the Dow at 15.2.
investorsfriend.com
investorsfriend.com
Tuesday, June 8, 2010
Stock Market Predictions for the Remaining 6 Months of 2010
-All major U.S. indices will be higher than today (Dow is at 9,940) but no more than 20% higher.
- Homebuilders, regional banks, mortgage insurers will be the big winners.
* Please read legal disclaimer for this blog.
- Homebuilders, regional banks, mortgage insurers will be the big winners.
* Please read legal disclaimer for this blog.
Warren Buffett's Thoughts During a Bear Market
"Under the 1974 headline, "Look At All Those Beautiful, Scantily Clad Girls Out There!," this profile in Forbes magazine captures Warren Buffett's personality and chronicles the singular path he cut through the investment world. Though the piece is 34 years old, it sheds light on the man behind Berkshire Hathaway as the company's shareholders meet this weekend in Omaha, Neb.
Robert Lenzner and Evelyn Rusli will be reporting from Omaha all weekend. You can find the latest on the shareholders' meeting here.
How do you contemplate the current stock market, we asked Warren Buffett, the sage of Omaha, Neb.
"Like an oversexed guy in a harem," he shot back. "This is the time to start investing."
The Dow was below 600 when he said that. Before we could get Buffett's words in print, it was up almost 15% in one of the fastest rallies ever.
We called him back and asked if he found the market as sexy at 660 as he did at 580. "I don't know what the averages are going to do next," he replied, "but there are still plenty of bargains around." He remarked that the situation reminded him of the early '50s.
Warren Buffett doesn't talk much, but when he does it's well worth listening to. His sense of timing has been remarkable. Five years ago, late in 1969, when he was 39, he called it quits on the market. He liquidated his money management pool, Buffett Partnership, Ltd., and gave his clients their money back. Before that, in good years and bad, he had been beating the averages, making the partnership grow at a compounded annual rate of 30% before fees between 1957 and 1969. (That works out to a $10,000 investment growing to $300,000 and change.)
He quit essentially because he found the game no longer worth playing. Multiples on good stocks were sky-high, the go-go boys were "performing" and the list was so picked over that the kind of solid bargains that Buffett likes were not to be had. He told his clients that they might do better in tax-exempt bonds than in playing the market. "When I got started," he says, "the bargains were flowing like the Johnstown flood; by 1969 it was like a leaky toilet in Altoona." Pretty cagey, this Buffett. When all the sharp MBAs were crowding into the investment business, Buffett was quietly walking away.
Buffett settled back to manage the business interests he had acquired, including Diversified Retailing, a chain of women's apparel stores; Blue Chip Stamps, a western states trading stamp operation; and Berkshire Hathaway, a diversified banking and insurance company that owned, among other things, a weekly newspaper, The Omaha Sun. The businesses did well. Under Buffett's management, the Sun won a Pulitzer prize for its exposé of how Boys Town, despite pleas of poverty, had been turned into a "moneymaking machine."
Swing, You Bum!
Buffett is like the legendary guy who sold his stocks in 1928 and went fishing until 1933. That guy probably didn't exist. The stock market is habit-forming: You can always persuade yourself that there are bargains around. Even in 1929. Or in 1970. But Buffett did kick the habit. He did "go fishing" from 1969 to 1974. If he had stuck around, he concedes, he would have had mediocre results.
"I call investing the greatest business in the world," he says, "because you never have to swing." You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! And nobody calls a strike on you. There's no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it."
But pity the pros at the investment institutions. They're the victims of impossible "performance" measurements. Says Buffett, continuing his baseball imagery, "It's like Babe Ruth at bat with 50,000 fans and the club owner yelling, 'Swing, you bum!' and some guy is trying to pitch him an intentional walk. They know if they don't take a swing at the next pitch, the guy will say, 'Turn in your uniform.'" Buffett claims he set up his partnership to avoid these pressures.
Stay dispassionate and be patient is Buffett's message. "You're dealing with a lot of silly people in the marketplace; it's like a great big casino and everyone else is boozing. If you can stick with Pepsi, you should be OK." First the crowd is boozy on optimism and buying every new issue in sight. The next moment it is boozy on pessimism, buying gold bars and predicting another Great Depression.
Fine, we said, if you're so bullish, what are you buying? His answer: "I don't want to tout my own stocks."
Any general suggestions, we asked?
Just common sense ones. Buy stocks that sell at ridiculously low prices. Low by what standards? By the conventional ones of net worth, book value, the value of the business as a going concern. Above all, stick with what you know; don't get too fancy. "Draw a circle around the businesses you understand and then eliminate those that fail to qualify on the basis of value, good management and limited exposure to hard times." No high technology. No multicompanies. "I don't understand them," says Buffett. "Buy into a company because you want to own it, not because you want the stock to go up."
"A water company is pretty simple," he says, adding that Blue Chip Stamps has a 5% interest in the San Jose Water Works. "So is a newspaper. Or a major retailer." He'll even buy a Street favorite if he isn't paying a big premium for things that haven't happened yet. He mentions Polaroid. "At some price, you don't pay anything for the future, and you even discount the present. Then, if Dr. Land has some surprises up his sleeve, you get them for nothing."
Have faith in your own judgment or your adviser's, Buffett advises. Don't be swayed by every opinion you hear and every suggestion you read. Buffett recalls a favorite saying of Professor Benjamin Graham, the father of modern security analysis and Buffett's teacher at Columbia Business School: "You are neither right nor wrong because people agree with you." Another way of saying that wisdom, truth, lies elsewhere than in the moment's moods.
All Alone?
What good, though, is a bargain if the market never recognizes it as a bargain? What if the stock market never comes back? Buffett replies: "When I worked for Graham-Newman, I asked Ben Graham, who then was my boss, about that. He just shrugged and replied that the market always eventually does. He was right--in the short run, it's a voting machine; in the long run, it's a weighing machine. Today on Wall Street they say, 'Yes, it's cheap, but it's not going to go up.' That's silly. People have been successful investors because they've stuck with successful companies. Sooner or later the market mirrors the business." Such classic advice is likely to remain sound in the future when they write musical comedies about the go-go boys.
We reminded Buffett of the old play on the Kipling lines: "If you can keep your head when all about you are losing theirs … maybe they know something you don't."
Buffett responded that, yes, he was well aware that the world is in a mess. "What the DeBeers did with diamonds, the Arabs are doing with oil; the trouble is we need oil more than diamonds." And there is the population explosion, resource scarcity, nuclear proliferation. But, he went on, you can't invest in the anticipation of calamity; gold coins and art collections can't protect you against Doomsday. If the world really is burning up, "you might as well be like Nero and say, 'It's only burning on the south side.'"
"Look, I can't construct a disaster-proof portfolio. But if you're only worried about corporate profits, panic or depression, these things don't bother me at these prices."
Buffett's final word: "Now is the time to invest and get rich.""
from Forbes
Robert Lenzner and Evelyn Rusli will be reporting from Omaha all weekend. You can find the latest on the shareholders' meeting here.
How do you contemplate the current stock market, we asked Warren Buffett, the sage of Omaha, Neb.
"Like an oversexed guy in a harem," he shot back. "This is the time to start investing."
The Dow was below 600 when he said that. Before we could get Buffett's words in print, it was up almost 15% in one of the fastest rallies ever.
We called him back and asked if he found the market as sexy at 660 as he did at 580. "I don't know what the averages are going to do next," he replied, "but there are still plenty of bargains around." He remarked that the situation reminded him of the early '50s.
Warren Buffett doesn't talk much, but when he does it's well worth listening to. His sense of timing has been remarkable. Five years ago, late in 1969, when he was 39, he called it quits on the market. He liquidated his money management pool, Buffett Partnership, Ltd., and gave his clients their money back. Before that, in good years and bad, he had been beating the averages, making the partnership grow at a compounded annual rate of 30% before fees between 1957 and 1969. (That works out to a $10,000 investment growing to $300,000 and change.)
He quit essentially because he found the game no longer worth playing. Multiples on good stocks were sky-high, the go-go boys were "performing" and the list was so picked over that the kind of solid bargains that Buffett likes were not to be had. He told his clients that they might do better in tax-exempt bonds than in playing the market. "When I got started," he says, "the bargains were flowing like the Johnstown flood; by 1969 it was like a leaky toilet in Altoona." Pretty cagey, this Buffett. When all the sharp MBAs were crowding into the investment business, Buffett was quietly walking away.
Buffett settled back to manage the business interests he had acquired, including Diversified Retailing, a chain of women's apparel stores; Blue Chip Stamps, a western states trading stamp operation; and Berkshire Hathaway, a diversified banking and insurance company that owned, among other things, a weekly newspaper, The Omaha Sun. The businesses did well. Under Buffett's management, the Sun won a Pulitzer prize for its exposé of how Boys Town, despite pleas of poverty, had been turned into a "moneymaking machine."
Swing, You Bum!
Buffett is like the legendary guy who sold his stocks in 1928 and went fishing until 1933. That guy probably didn't exist. The stock market is habit-forming: You can always persuade yourself that there are bargains around. Even in 1929. Or in 1970. But Buffett did kick the habit. He did "go fishing" from 1969 to 1974. If he had stuck around, he concedes, he would have had mediocre results.
"I call investing the greatest business in the world," he says, "because you never have to swing." You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! And nobody calls a strike on you. There's no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it."
But pity the pros at the investment institutions. They're the victims of impossible "performance" measurements. Says Buffett, continuing his baseball imagery, "It's like Babe Ruth at bat with 50,000 fans and the club owner yelling, 'Swing, you bum!' and some guy is trying to pitch him an intentional walk. They know if they don't take a swing at the next pitch, the guy will say, 'Turn in your uniform.'" Buffett claims he set up his partnership to avoid these pressures.
Stay dispassionate and be patient is Buffett's message. "You're dealing with a lot of silly people in the marketplace; it's like a great big casino and everyone else is boozing. If you can stick with Pepsi, you should be OK." First the crowd is boozy on optimism and buying every new issue in sight. The next moment it is boozy on pessimism, buying gold bars and predicting another Great Depression.
Fine, we said, if you're so bullish, what are you buying? His answer: "I don't want to tout my own stocks."
Any general suggestions, we asked?
Just common sense ones. Buy stocks that sell at ridiculously low prices. Low by what standards? By the conventional ones of net worth, book value, the value of the business as a going concern. Above all, stick with what you know; don't get too fancy. "Draw a circle around the businesses you understand and then eliminate those that fail to qualify on the basis of value, good management and limited exposure to hard times." No high technology. No multicompanies. "I don't understand them," says Buffett. "Buy into a company because you want to own it, not because you want the stock to go up."
"A water company is pretty simple," he says, adding that Blue Chip Stamps has a 5% interest in the San Jose Water Works. "So is a newspaper. Or a major retailer." He'll even buy a Street favorite if he isn't paying a big premium for things that haven't happened yet. He mentions Polaroid. "At some price, you don't pay anything for the future, and you even discount the present. Then, if Dr. Land has some surprises up his sleeve, you get them for nothing."
Have faith in your own judgment or your adviser's, Buffett advises. Don't be swayed by every opinion you hear and every suggestion you read. Buffett recalls a favorite saying of Professor Benjamin Graham, the father of modern security analysis and Buffett's teacher at Columbia Business School: "You are neither right nor wrong because people agree with you." Another way of saying that wisdom, truth, lies elsewhere than in the moment's moods.
All Alone?
What good, though, is a bargain if the market never recognizes it as a bargain? What if the stock market never comes back? Buffett replies: "When I worked for Graham-Newman, I asked Ben Graham, who then was my boss, about that. He just shrugged and replied that the market always eventually does. He was right--in the short run, it's a voting machine; in the long run, it's a weighing machine. Today on Wall Street they say, 'Yes, it's cheap, but it's not going to go up.' That's silly. People have been successful investors because they've stuck with successful companies. Sooner or later the market mirrors the business." Such classic advice is likely to remain sound in the future when they write musical comedies about the go-go boys.
We reminded Buffett of the old play on the Kipling lines: "If you can keep your head when all about you are losing theirs … maybe they know something you don't."
Buffett responded that, yes, he was well aware that the world is in a mess. "What the DeBeers did with diamonds, the Arabs are doing with oil; the trouble is we need oil more than diamonds." And there is the population explosion, resource scarcity, nuclear proliferation. But, he went on, you can't invest in the anticipation of calamity; gold coins and art collections can't protect you against Doomsday. If the world really is burning up, "you might as well be like Nero and say, 'It's only burning on the south side.'"
"Look, I can't construct a disaster-proof portfolio. But if you're only worried about corporate profits, panic or depression, these things don't bother me at these prices."
Buffett's final word: "Now is the time to invest and get rich.""
from Forbes
Bearish on Bonds, Bullish on Stocks?
Long-term bonds Government bonds average 2.1% (5-year t-bond) to 4.2% (30-year t-bond), the Dow Jones earnings yield is near 7% (6.58% with the Dow at 10,132), not including dividends. This puts the Price/Earnings (P/E) ratio of the Dow at 15.2.
investorsfriend.com (6/2/10)
investorsfriend.com (6/2/10)
Warren Buffett's Partnership Letters
After all of these years, someone out in cyberworld has kept and posted several of Warren Buffett's partnership letters from 1959 to 1969. Some of these letters go into the business deals that the partnership made investments in, others describe how Mr. Buffett values a company for investment purposes such as balance sheet analysis; really fascinating stuff if you are trying to get into the mindset of Mr. Buffett from his pre-Berkshire Hathaway days.
The link to Warren Buffett's partnership letters:
http://www.ticonline.com/buffett.partner.letters.html
The link to Warren Buffett's partnership letters:
http://www.ticonline.com/buffett.partner.letters.html
Monday, June 7, 2010
VIDEO: Walter Schloss; Warren Buffett's Mentor
Excellent video of Walter Schloss answering some questions from students at The Ben Graham Centre for Value Investing regarding some of his criteria for selecting stocks. Mr. Schloss helped to mentor Warren Buffett when the both of them worked for Mr. Graham, the father of Security Analysis.
http://www.bengrahaminvesting.ca/Resources/Video_Presentations/Guest_Speakers/Schloss.htm
http://www.bengrahaminvesting.ca/Resources/Video_Presentations/Guest_Speakers/Schloss.htm
Happy Monday! Far East Markets Are Getting Crushed
The Far East markets are getting crushed today, down as much as 3%. No doubt the markets are still spooked from the collapse of the Euro. By the way, the Euro in my opinion is doomed (see the theEconomicAnalyst.blogspot.com blog for more on that). Anyhow, this should make for an interesting week. I will probably be doing some light trimming of the portfolio, probably selling one of my four REITs that I hold.
I am not really reacting to the mania of the markets just yet. I just like to buy stocks low and ideally hold forever, only selling when I see a screaming bargain in another stock or when a stock is overbought. I would prefer that the Dow return to the 6,000 level so I can make a killing by taking long positions in some absolute bargains. Why? Because I do not short, nor employ leverage, I just do what I am comfortable with doing and like Wayne Gretzky says 'skate to where the puck is going to be, not where it has been.' In my case I am having the stock prices come to me rather than chasing them around like I would with a hot gal!
If I see another 10% pull back, I may do some stock reallocation. Just nothing really interests me at the moment as I am fully invested.
I am not really reacting to the mania of the markets just yet. I just like to buy stocks low and ideally hold forever, only selling when I see a screaming bargain in another stock or when a stock is overbought. I would prefer that the Dow return to the 6,000 level so I can make a killing by taking long positions in some absolute bargains. Why? Because I do not short, nor employ leverage, I just do what I am comfortable with doing and like Wayne Gretzky says 'skate to where the puck is going to be, not where it has been.' In my case I am having the stock prices come to me rather than chasing them around like I would with a hot gal!
If I see another 10% pull back, I may do some stock reallocation. Just nothing really interests me at the moment as I am fully invested.
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