2Q has not been kind to me, with my portfolio taking a hit, along with the stock market correction. Notice that I am saying market correction, meaning that although I am increasingly nervous about the markets, I am still bullish. But the time for the bear to arrive is drawing near.
For 2Q, I am down 5% viv-a-vis 1Q. For the year overall, I am still up 40%. My positions are mostly concentrated on gold mining and oil and gas companies. Gold, it normally performs better in the 2H. As for oil, July and Aug could be good months to unload.
Thursday, June 30, 2011
Wednesday, June 22, 2011
Why should we be bullish?
Lombardi is long-term bear on the stock market, but now, he is bullish. Here's why:
1. The S&P is trading at 14.5 times last year’s earnings. Since 1991, the S&P has traded at an average of 20.5 times earnings.
2. Interest rates in the U.S. are not rising for the near future, as the unemployment rate remains high.
3. Stock prices have fallen 6.2% since May 2, 2011—and investors are in panic mode. Stock prices usually rise after panic.
4. Investors pulled $5.46 billion out of stock mutual funds last week, according to the Investment Company Institute in Washington—the biggest withdrawal of money from stock mutual funds since the week ended December 8, 2010.
5. The percentage of bullish stock advisors in the marketplace has fallen to a low not seen since September 2010.
1. The S&P is trading at 14.5 times last year’s earnings. Since 1991, the S&P has traded at an average of 20.5 times earnings.
2. Interest rates in the U.S. are not rising for the near future, as the unemployment rate remains high.
3. Stock prices have fallen 6.2% since May 2, 2011—and investors are in panic mode. Stock prices usually rise after panic.
4. Investors pulled $5.46 billion out of stock mutual funds last week, according to the Investment Company Institute in Washington—the biggest withdrawal of money from stock mutual funds since the week ended December 8, 2010.
5. The percentage of bullish stock advisors in the marketplace has fallen to a low not seen since September 2010.
Some reasons to be optimistic in 2H 2011
1H 2011, we remember to be rangebound. Even my portfolio is currently flat since the good gains registered in 1Q. What about the coming 2H? AmFraser says we can look forward to the 2H due to the following reasons:
1. Global monetary policy remains easy
2. Recovery in Japan likely in 2H
3. More positive on China as inflation expected to peak in 2H
4. More optimistic GDP full year forecats raised to 5-7% from 4-6% earlier
5. Expected growth in corporate earnings of about 10% here with valuation
reasonable at 13.6x
1. Global monetary policy remains easy
2. Recovery in Japan likely in 2H
3. More positive on China as inflation expected to peak in 2H
4. More optimistic GDP full year forecats raised to 5-7% from 4-6% earlier
5. Expected growth in corporate earnings of about 10% here with valuation
reasonable at 13.6x
Tuesday, June 21, 2011
No selling climax yet?
Today, CIMB wrote this article, warning investors that the selling is not done.
"The S&P500 Index touched 1,258pts last Thursday, just 9pts from the Mar low of 1,249pts, before bouncing back by the end of the week. A break below the Mar low would be a bearish sign. We are looking for some signs of a selling climax over the next 1-2 weeks before the index can bottom out in the near term. Last week, the MSCI Asia ex-Japan did penetrate its support trendline at 555pts, which has become the resistance. Its 200-day SMA at 559pts also caved in. The key support level remains the Mar low at 525pts, which, if broken, would be very negative for the index. Indonesia's JCI broke below its major support trendline at the 3,740-3,750 levels at the end of last week. The weekly MACD also confirmed its bearish "dead cross" last week."
Shortly after, The MSCI Asia Pacific Index jumped 1.2 percent as of 3:03 p.m. in
Tokyo. Futures on the Standard & Poor's 500 Index added 0.1 percent, while those on the Euro Stoxx 50 Index increased 0.5 percent.
Moral of the story? Do not wait for the perfect buying opportunity because we will never know when it will come.
"The S&P500 Index touched 1,258pts last Thursday, just 9pts from the Mar low of 1,249pts, before bouncing back by the end of the week. A break below the Mar low would be a bearish sign. We are looking for some signs of a selling climax over the next 1-2 weeks before the index can bottom out in the near term. Last week, the MSCI Asia ex-Japan did penetrate its support trendline at 555pts, which has become the resistance. Its 200-day SMA at 559pts also caved in. The key support level remains the Mar low at 525pts, which, if broken, would be very negative for the index. Indonesia's JCI broke below its major support trendline at the 3,740-3,750 levels at the end of last week. The weekly MACD also confirmed its bearish "dead cross" last week."
Shortly after, The MSCI Asia Pacific Index jumped 1.2 percent as of 3:03 p.m. in
Tokyo. Futures on the Standard & Poor's 500 Index added 0.1 percent, while those on the Euro Stoxx 50 Index increased 0.5 percent.
Moral of the story? Do not wait for the perfect buying opportunity because we will never know when it will come.
Monday, June 20, 2011
Positioning for the upside
Markets have made new lows...
Till date,
DAX: - 8%
Dow Jones: - 8%
Hang Seng: -11%
Shanghai: -15%
STI: -6.5%
Yes, the markets may continue to fall but before we sell, wait ...
CIMB has advised clients to "Position for the bounce, even if long-term negative". Amongst reasons cited are "current weak sentiment merely represents a weak patch, not a turn in equity markets" and "As QE2 ends, the US will move back towards recession; within a quarter, we might have QE3 again, under whatever name it might be called. Again, this is not the consensus view for now, which is why we think markets could be due for an unexpected rally before end-3Q11, when expectations would probably change."
Till date,
DAX: - 8%
Dow Jones: - 8%
Hang Seng: -11%
Shanghai: -15%
STI: -6.5%
Yes, the markets may continue to fall but before we sell, wait ...
CIMB has advised clients to "Position for the bounce, even if long-term negative". Amongst reasons cited are "current weak sentiment merely represents a weak patch, not a turn in equity markets" and "As QE2 ends, the US will move back towards recession; within a quarter, we might have QE3 again, under whatever name it might be called. Again, this is not the consensus view for now, which is why we think markets could be due for an unexpected rally before end-3Q11, when expectations would probably change."
Friday, June 17, 2011
Is this the clearest buy signal?
Mic Lombardi made this interesting observation...
Investors pulled $5.46 billion out of stock mutual funds last week—the biggest withdrawal of money from stock mutual funds since the week ended December 8, 2010.
This is according to Investment Company Institute in Washington.
But, where did stock prices go after December 8, 2010? From the period December 8, 2010 to May 2, 2011, stocks rose 12%. Investors took money out of the market…and the market rallied.
"Given investors fleeing stocks and given stock advisors being at their most bearish position since September 10, 2010, I believe we have just undergone a correction in a primary bear market rally and that this oversold market will surprise on the upside."
I am definitely on the long side of stocks.
Investors pulled $5.46 billion out of stock mutual funds last week—the biggest withdrawal of money from stock mutual funds since the week ended December 8, 2010.
This is according to Investment Company Institute in Washington.
But, where did stock prices go after December 8, 2010? From the period December 8, 2010 to May 2, 2011, stocks rose 12%. Investors took money out of the market…and the market rallied.
"Given investors fleeing stocks and given stock advisors being at their most bearish position since September 10, 2010, I believe we have just undergone a correction in a primary bear market rally and that this oversold market will surprise on the upside."
I am definitely on the long side of stocks.
Thursday, June 16, 2011
Is this the Great Stock Sale?
Dow Jones - Down 7.6%
S & P - Down 8%
Dax - Down 8%
FTSE - Down 6%
Hang Seng - Down 9.4%
SSE - Down 13%
STI - Down 5.2%
The Straits Times article today noted that some blue chip stocks are at bargain basement prices. Will the stock market sell down more? Most probably, but should we follow the rest and cut loss?
Stock market bear Michael Lombardi has acknowledged that "After a sharp decline of 926 points by the Dow Jones Industrial Average from May 2, 2011, to June 13, 2011, and given the sharp rise in stock advisor bearishness, I believe that the odds strongly favor a stock market rally here from severely oversold market conditions."
And finally, the fengshui index indicates that June is the month for getting value for a song.
Therefore, the gut instinct must be to BUY, not SELL.
S & P - Down 8%
Dax - Down 8%
FTSE - Down 6%
Hang Seng - Down 9.4%
SSE - Down 13%
STI - Down 5.2%
The Straits Times article today noted that some blue chip stocks are at bargain basement prices. Will the stock market sell down more? Most probably, but should we follow the rest and cut loss?
Stock market bear Michael Lombardi has acknowledged that "After a sharp decline of 926 points by the Dow Jones Industrial Average from May 2, 2011, to June 13, 2011, and given the sharp rise in stock advisor bearishness, I believe that the odds strongly favor a stock market rally here from severely oversold market conditions."
And finally, the fengshui index indicates that June is the month for getting value for a song.
Therefore, the gut instinct must be to BUY, not SELL.
Monday, June 6, 2011
Could this be the next scenario for the stock market?
In his latest article "Economy: Next Down Leg to Be Longer, More Painful Than 2008",
Michael Lombardi wrote about the upcoming financial armageddon. This is because interest rates cannot go any lower than they are, and the government can’t be more broke than it is. During this next economic downturn, which is well underway, the government and Fed will have very limited ammunition to fight the weakening economy…and that’s why I believe the next down leg for the economy will be longer and more painful to consumers than the last one."
However, he noted that stocks of the gold mining companies, the juniors and the major producers, have been consolidating and forming a base from which they will make their next price assault upwards and this time, gold stocks will lead the yellow metal higher.
Well, at this juncture, I am still bullish on equities, but not just any equities. I am bullish only on gold miners and oil and gas companies. If it is indeed true that as Lombardi mentioned, between 2002 and 2010, when we had a year where the price of gold remained relatively unchanged in the first two months of the year, January and February, like we experienced in 2011, gold bullion and gold stock prices were higher in November and December of that year 100% of the time, then I would be looking forward to a “golden” Christmas this year.
Michael Lombardi wrote about the upcoming financial armageddon. This is because interest rates cannot go any lower than they are, and the government can’t be more broke than it is. During this next economic downturn, which is well underway, the government and Fed will have very limited ammunition to fight the weakening economy…and that’s why I believe the next down leg for the economy will be longer and more painful to consumers than the last one."
However, he noted that stocks of the gold mining companies, the juniors and the major producers, have been consolidating and forming a base from which they will make their next price assault upwards and this time, gold stocks will lead the yellow metal higher.
Well, at this juncture, I am still bullish on equities, but not just any equities. I am bullish only on gold miners and oil and gas companies. If it is indeed true that as Lombardi mentioned, between 2002 and 2010, when we had a year where the price of gold remained relatively unchanged in the first two months of the year, January and February, like we experienced in 2011, gold bullion and gold stock prices were higher in November and December of that year 100% of the time, then I would be looking forward to a “golden” Christmas this year.
Sunday, June 5, 2011
Time to get on board?
The CLSA fengshui describes that the period from Jun to early July will not be good for stocks this way, "Not as good for the market, but chance of getting value for a song."
Indeed, global markets have fallen since beginning June. But Henderson's Bill McQuaker (deputy head of equities)has called on investors not to panic, saying a double dip is unlikely. Saying investors should worry less, but invest more, he says the recovery is following typical pattern of economic recovery so far.
Vice-chairman of Blackstone Advisory Partner's Byron Wiens is of the same view. He thinks the S&P can get to 1,500 by the end of the year, and investors should be looking for buying opportunities right now. He expects the index to fall 10%.
Contrary to these two opinions, are the views of financial newsletter writer Michael Lombardi's view that the reward to buy stocks is no longer worth the risk. However, he feels that the "bear market rally" in stocks may not be over.
As for me, I tend to still believe we are in the mid to late cycle of a bull market. As such, the current lull is yet another opportunity to accumulate stocks. I am definitely a buyer in these times, and will be continuing to buy as the month prgresses.
Indeed, global markets have fallen since beginning June. But Henderson's Bill McQuaker (deputy head of equities)has called on investors not to panic, saying a double dip is unlikely. Saying investors should worry less, but invest more, he says the recovery is following typical pattern of economic recovery so far.
Vice-chairman of Blackstone Advisory Partner's Byron Wiens is of the same view. He thinks the S&P can get to 1,500 by the end of the year, and investors should be looking for buying opportunities right now. He expects the index to fall 10%.
Contrary to these two opinions, are the views of financial newsletter writer Michael Lombardi's view that the reward to buy stocks is no longer worth the risk. However, he feels that the "bear market rally" in stocks may not be over.
As for me, I tend to still believe we are in the mid to late cycle of a bull market. As such, the current lull is yet another opportunity to accumulate stocks. I am definitely a buyer in these times, and will be continuing to buy as the month prgresses.
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