I took a couple of days off from blogging last week. I was tied up with client accounts- adding to equities, and taking advantage of some better yields in tax free bonds. This being said, I think we are beginning to see a fairly clear pattern in the equity markets. If anyone within the Bush Administration makes a comment, the markets sell off. When the incoming Obama team makes an announcement, the market rallies. I think you'll see this pattern continue as confidence is restored.
Keep in mind I don't blame President Bush (like others). I think his entire cabinet should have been fired along with the Vice President. I realize this is tough to do, but numerous failed policy decisions have haunted this administration.
On Friday, the equity markets went nuts (rallied) when Federal Reserve Bank of New York chief Tim Geithner was rumored to be the next Treasury Secretary. Apparently investors believe this is the right choice. At this point investors could care less who is appointed as long as the values of their stock portfolios gain in value.
The roughly 500 point rally on Friday was helped by a deeply oversold market, and this investors woke up to news that Citigroup was not going to fail.
In the weeks and months ahead, I think we'll see a gradual mending of the stock market and the economy. With the S&P 500 down over 45% for 2008, a giant stimulus program by the Obama administration will go a long way toward restoring confidence in the markets.
What I have found impressive over the past few weeks is the massive buying by corporate insiders. Normally I will see 1-2 pages of insider buys to go along with 1-2 of sells. Now I am seeing 7-9 pages of buys, and 1 page of insider sells. Obviously insiders are seeing tremendous opportunities.
Here are our Top 10 ETF's for the week of November 24th:
While the DJIA, S&P 500, and NASDAQ are at these extremely low levels, I want to take advantage of the declines in these indexes in preparation for a market rebound in 2009 and beyond.
NEW SELLS:
FXF: Currency Shares Swiss Franc Trust
NEW BUYS:
VTI: Vanguard Total Stock Market ETF
Top Holdings:
AAPL, T, CVX, COP, XOM, GE, IBM, JNJ, MSFT, PG
Dividend Yield 3.36%
Despite the weakness in all sectors across the board, bonds, banks, biotech, and energy still rank among the top 25 in the ETF universe.
1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) VTI: Vanguard Total Stock Market ETF
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) KBE: KBW Bank ETF- Not Rated
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust
Here are our Top 10 Fidelity Sector Funds for November 2008
NEW BUYS:
FBIOX: Biotechnology
NEW SELLS:
FSMEX: Medical Equipment
1) FSCHX: Chemicals
2) FBIOX: Biotechnology
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSRBX: Banking
10) FSVLX: Home Finance
For the Week:
The unemployment numbers will continue to be a major focus in the months ahead. Many layoffs in a weak economy occur in the weeks leading into Thanksgiving and Christmas. Hence the slogan, ""Merry Christmas -- You're Fired."
Jobless claims rose this week to 542,000 above the estimate of 505,000.
The housing market remains weak as building permits are at a standstill. Believe it or not this is good news since additional inventory is not being added to the market. Eventually, existing inventories will be worked off as bargain hunters enter the market. Adding more supply would not help work off the glut of existing real estate.
The "Green Team" within the Obama administration will not be able to function properly if energy prices remain at current levels. So, and I may be in the minority (usually am), but I belive oil prices will rebound to the $60-$70 level in the coming months.
I am also looking for a rebound in commodity prices as the world economies improve. China will continue to gobble up rocks, dirt, and anything else that can be turned into cement, iron, steel, coal, etc...
The U.S. dollar has rallied over the past 3 months, and since oil and commodities are priced mainly in dollars, as the dollar declines, prices for oil and commodities will rise.
The media has scared the heck out of investors by using the "depression" word. They had to do this to scare you into selling your stocks while they were accumulating. See, the Wall Street Gang knows that investors are better informed, and have better access to information than ever before. The only way to get the average investor to sell is to present them with the possibility that a depression is real. While the media was reporting on a possible depression, we couldn't even get our economists to admit we were in a recession. What the heck!
The other ridiculous comment I heard- from a financial TV reader- was consumers making $70,000 a year would spend less for Christmas because their mutual funds and 401K plans had declined in value. WHAT??????????
What the heck does a lower MF of 401K value have to do with disposable income. Personally, my MF's, stocks, or 401K money is for retirement, and I do not touch that money-ever. If anything, I will be adding to these portfolios by year end, or quarterly. As long as I have a safe, and secure employment, why should a decline in my retirement portfolio stop me from spending at Christmas. It won't.
Here's my opinion. I believe we are witnessing the best buying opportunity we will ever see in our investing lifetimes-just my opinion.
-Gold
-The U.S. Dollar
Our current asset allocation is as follows;
95% Equities: (Normally 95%) Aggressive
80% Equities: (Normally 80%) Moderately Aggressive
60% Equities: (Normally 60%) Moderate
40% Equities: (Normally 40%) Moderately Conservative
20% Equities: (Normally 20%) Conservative
