Markets for sure knows how to confuse traders on a HOURLY basis......
Nice to see green close on Dow & S&P 500......
NASDAQ is another story.....Red was the colour.....
In my portfolio :
Sold SOL.....
Portfolio is RIMM & UYG.....
What is my strategy now......
Stay put with my current picks...until bear market is OVER.....which MAY be a long wait....unless something fundamentally CHANGE in my pick....
Why this approach.....
No need to do FA or TA in any stock as nothing is working......
Good ER is being sold off & perception of MISS is redefined for some & not others.....
This is the worst bear market ..I have ever seen.....nothing seems to work for more than two minute.....
BLOG does NOT give buy or sell.
Saleem
22 comments:
so, is solar done? i remember, you were so bullish on SOL and i am little bit surprised that you sold...i am not changing anything in my portfolio and just ride this out... i dont know how long....
Hi Troy,
My selling of SOL is a reflection of this bear market.....
Price action in solar stocks is NOT making sense...
Most solar stocks are hitting 52 week low????
I always look @ entire solar sector to support my pick....
Saleem
I think the earnings would turn the tide around, but who know, this market is crazy....
For what its worth.. From a newsletter that I follow; Its heavy buying accumulation on the heels of heavy selling distribution. But theres no doubt what our underlining bias is, we're giving the edge to the bulls.
Last weeks Follow Through Day (FTD)is just a small technical indicator telling us that institutions may be placing bets to the long side of the market.
All we need now is leadership and technical bases to form.
Victor
Hi Victor,
Thanks for the optimistic note.
We all are hoping for a positive tape.
Saleem
Lead Article IBD
‘Decent Time To Buy’
Some value investors are purchasing shares for first time in a year
As president of First Pacific Advisors, Robert Rodriguez manages over $2 billion in equity assets. On Oct. 9, Rodriguez says, he did something he hadn’t done in an entire year. He bought some stocks.
Rodriguez is a noted value investor who had been very bearish on the market. So bearish that his flagship FPA Capital mutual fund had been holding well over 40% of its assets in cash in recent years.
But Rodriguez, like other bearish value investors, is finding low prices to be irresistible. In an Oct. 20 interview, he reported opening six new positions and adding to several older ones over the prior 10 days.
“There are values in the marketplace,” he said.
Saying that he still had open orders on the new positions, Rodriguez declined to name the lucky shares. But he indicated most were energy and energy-related companies “in the $1.5- to $5-billion market cap range.” Rodriguez is not the only valueoriented money manager taking the plunge into stocks these days. Warren Buffett recently took stakes in Goldman Sachs and General Electric, and last week touted U.S. stocks as a sound investment at current levels.
Long-term market bear Jeremy Grantham — chairman and chief strategist at Grantham, Mayo, Van Otterloo — told IBD that for the first time in years, U.S. equities are now “fairly valued.” Like most other investors, managers of value mutual funds have gotten hammered this year. The average loss in value funds year to date exceeds 37%, Morningstar reports. Indeed, just one fund in a universe of 649 value funds has managed to lose less than 12%. That would be the Forester Value fund, down just 4% as of Oct. 22, after holding positive for most of 2008.
“I’ve stayed away from trouble all year and stayed in the safe stuff,” said portfolio manager Tom Forester. Forester owned few financials, but did well with food companies like Heinz and Kraft. Now, though, Forester sees value in some depressed financials and industrials. He has added to holdings in Travelers and Allstate, and opened a new position in General Electric, even though GE’s stock has plunged to decade lows.
“Yeah they’ve got some issues,” he allowed. “But the selling has been overdone.” GE has historically sold at a premium to the market. But now, at roughly 10 times forecast earnings, it’s selling at a discount, said Forester. And while GE’s financial services unit still faces some risk, “the risk has gotten overpriced,” he assayed.
“This is a pretty decent time to buy,” said Forester. Stocks now “are not trading on fundamentals. They’re trading on emotions.”
And the financial sector overall could rebound, he reasoned. Right now, he says, everyone fears the risk of another institution going belly up. “So they’re going out and shooting them all,” he said.
Forester believes a basket of financials would now make sense. For retail investors, a financial sector ETF like the XLF is “a decent idea.”
Overall, Forester says he sees upside to 10,800 in the Dow. “I wouldn’t be surprised to see the S&P 500 at 1,150-1,200 by the end of the year,” he added. The S&P index closed at 908.11 on Oct. 23. The Heartland Value Plus fund is the third-best performer among the value funds, down just 17%. Lead portfolio manager Brad Evans declined to name specific targets but said he is buying insurance brokers. “Insurance rates are going up and brokers should benefit because they get commissions,” he said. And unlike the insurers, the brokers don’t actually take on accident risk. Stocks in this group are at historical lows as measured by price-to-book and price-to-sales ratios, he said. Publicly traded insurance brokers include Marsh & McLennan and Aon Corp.
The cautious buy signal from Grantham may well represent the most startling about-face of a bearish value manager. He has long argued that U.S. equities have been in a bubble inflated by artificially low interest rates. Cheap money encouraged speculation and padded corporate profits, he argued. But now, with the bubble burst, Grantham considers U.S. stocks to be fairly valued. Some are even worth buying.
Buy The Brand
Grantham likes brand-name companies that have high and stable levels of profitability, along with pricing power. He specifically cites Coca-Cola, Procter & Gamble and Johnson & Johnson.
These stocks have held up fairly well this year, so they may not look like the bargains to be found among firms down 40%-50% or more. But, he notes, “for five consecutive years — from 2003 to 2007 — the highest-quality companies underperformed. They came into this crisis as cheap as they ever get on a relative basis.” Now, they’re somewhat less relatively cheap. But they’re still selling at what Grantham described as “a fairly decent discount.”
Grantham is a global asset allocator. Even as he deemed U.S. stocks overvalued in recent years, he was bullish on many foreign equities. This enabled his GMO Global Balanced Asset Allocation III fund to return over 9% annually over the last 10 years, far above most market indexes and benchmarks.
With emerging market stocks having sold off sharply this year, Grantham again favors equities in China, Russia, Brazil, Chile, Taiwan and other emerging nations. High quality U.S. blue chips and emerging market equities are now “the two cheapest asset categories,” he said.
It’s Still A Bear
But both Grantham and Rodriguez emphasize that there is still reason for caution. “I’ve been telling my associates when I ask them to run the numbers: I don’t want to know what the upside opportunity is. I want to know what the downside risk is,” said Rodriguez.
He fears that corporate profits and consumer spending are going to deflate. “Corporate profit margins will not be what they have been,” he stated. And consumers will also be forced to slow spending. “There’s been an excess of leverage in the U.S. financial system that has allowed overconsumption,” he said.
Grantham argues that corporate profit margins over time tend to return to historic norms. Should they now deflate to historic norms, fair value for U.S. equities is at a 975 level for the S&P 500. The index is now 7% below that level.
But when bubbles burst, markets tend to overcorrect to the downside. “Every great bubble, when it breaks, has overcorrected,” said Grantham. Typically, these corrections can take stocks 30% below fair value.
GE, despite the support of Buffett and Forester, hit an 11-year low intraday Thursday. Insurance brokers sold off after Willis Group reported weak third-quarter results and pulled its full-year guidance. Many energy stocks hit lows the prior day as crude oil dived below $70. Grantham expresses hope that we might escape the overcorrection this time. But investors putting new money into the market should be aware of the risk — and willing to wait it out. Over the long term, he says, the outlook for U.S. equities now is far better than the one he saw 10 years ago.
“You can be confident now that you’ll do decently over the next 10 years — which was not the case for the ruinous bullish predictions of 10 years ago,” he said.
The S&P 500 on October 23, 1998, stood at 1070. The average investor sitting in stocks over the last decade has lost 15% of that nest egg.
Hi, salim, all
Very sad taht you sold SOL.I still like SOL. ldk but momemtum is negative for all solor stock. I am buying selling for 30 ,40 cent. Bought GE, ORCL,JPM but got out end of the day.Lucky enough to make some money. Somebody talkig about GEOY . looks good for short. I took short position in GEOY.If it cross 24 i will cover
Nothing is lookig good.Keep eye on IBN.It is a big company and no way it can go to b.k. It should be double in few months.I may take position tomorrow.I like stock that can not go down more the 2 dollor like csco,orcl,ge.Very dangerous market for long. Thanxs
Saleem--Finally decided to set up a Google account to comment here, although I have visited many times. Have you considered using options with UYG? You can sell the Nov $9 calls for $1.25, giving you around a 20% return in less than a month if called away, with nice downside protection if not called. Or maybe own at least a little bit of SKF to hedge your UYG? UYG looks like a risky play given that it was down today, even with a big turnaround and keeps going lower and lower. I keep hoping things will turn as well, and own some XLF in my account. I wish SOL had worked out for us! Good luck tomorrow!
take a look at the futures, total massacre.
Hi all
whats wrong ??I just wake up and cant believe .Thanx
Hi Ds,
Good for your strategy....
Selling SOL was not easy...bear market forces you to be extra careful when sector is sliding to new lows..still follow tape closely.
Tough day today...
Saleem
Hi Punbr,
Welcome to the BLOG.
Nice to see you here.
Sure can use some of your ideas to benefit everyone.
Please keep posting what works for you.
Saleem
Hi Troy,
Yes it is BRUTAL out there today...
Is this the final capitulation...which some people were waiting for????
Who Knows these days????
Saleem
Hi All,
The market has become completely disjointed from reality. Nothing will work on the long side. Longs have been buying all the way down. Companies are still doing business and making money. The media is driving the fear factor scare. Political elections are putting fear into investors. There is nothing new under the sun. All this will pass in time. Buy low sell high.
Hi salim, all
Does ENER , LDK , need more money for expansion???.I think they do ??cover short i GEOY.
Thanxs in adavance.
Hi Ds,
Most solar companies need money for expansion including LDK/SOL..
They also need sales to generate cash to make payment...
Saleem
Hi Standards,
When nothing makes sense stay with your best ideas on the long side & still managing risk on the downside.
Yes buying low does work eventually.
Saleem
hello all
SALEEM Any lower in price and I will be broke
I am praying for a green close today
The news is saying we are close
J the Cramer says we are not at the bottom yet--oh yea!
Good luck all
M
Hi Madmax,
This is the-worst bear market EVER...
SO....
If one can survive this....then every other market will be piece of cake !!!
Saleem
LDK Solar has no fund-raising plans for 2 yrs-CEO
http://www.reuters.com/article/marketsNews/idINSHA8098420081024?rpc=44
Hi Troy,
LDK CEO has said many many times that they do not need financing..but keep coming back for more every 3 to 4 months...
LDK MB was full of rebuke @ last financing..some even saying that PENG has "no credibility"
I like LDK business model alongwith SOL..but reality is that they BOTH need money for 2009 expansion...which is a good thing to expand.
Saleem
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