Many stocks near 52-week lows are great bargains now. Downside is finally reaching a short-term bottom now that tax-loss selling for 2007 is wrapping up. Caution is still warranted as not all stocks near 52-week lows are considered worthy of purchasing.
Continued caution is still warranted for home builders, mortgage insurers, and airlines and transportation companies dependent on cheap financing and low energy prices.
Retailers can be selected cautiously given how beaten down they are.
International firms and cyclicals with high international exposure are still favored areas for purchasing beaten down names right now.
Friday, December 21, 2007
Foreign ownership of US Assets continuing to increase
Foreign investment vehicles from Asia are continuing to gobble up US assets. A Singapore investment fund has recently announced a large stake in Merrill Lynch. This follows large investments by China, Dubai, and Australia in our country within the last year.
National barriers continue to blur. Soon people will be asking why U.S. taxpayers are paying for a large military to defend foreign owned assets when much of the U.S. will be owned by foreign interests soon at the rate at which foreign capital is being recycled back into the country.
National barriers continue to blur. Soon people will be asking why U.S. taxpayers are paying for a large military to defend foreign owned assets when much of the U.S. will be owned by foreign interests soon at the rate at which foreign capital is being recycled back into the country.
Time for Year End Rally
Many stocks have been decimated this year and with Christmas around the corner, we should see a short-term move higher through the first week of January. Whether the trend continues past the first week of January is the big question.
Outside of housing and the financial markets, the US economy continues to show strength.
Demand for employees with strong skills are still greatly in demand.
Outside of housing and the financial markets, the US economy continues to show strength.
Demand for employees with strong skills are still greatly in demand.
Tuesday, December 18, 2007
Financial stocks remain near record lows
There is continued concern that the credit defaults for subprime borrowers will spread to higher quality borrowers who are getting squeezed by the increased costs for debt obligations plus basic needs such as food and gasoline.
This concern is weighing on higher quality financial firms along with the lower quality names.
As a result of this concern, stocks such as Bank of America (BAC) now yield over 6%.
If one already owns financials, I would not be selling these stocks at these low levels, but holding on for the long-term.
End of year tax loss selling is only exacerbating the reduction in share prices for these higher quality names.
The stock market will not be able to recover without a recovery in the financial stocks.
As a result, any recovery in the overall stock market is unlikely until mid-year 2008.
For those with patience and the ability to withstand volatility, the large financial, industrial, and retail companies provide good entry points at this price level.
This concern is weighing on higher quality financial firms along with the lower quality names.
As a result of this concern, stocks such as Bank of America (BAC) now yield over 6%.
If one already owns financials, I would not be selling these stocks at these low levels, but holding on for the long-term.
End of year tax loss selling is only exacerbating the reduction in share prices for these higher quality names.
The stock market will not be able to recover without a recovery in the financial stocks.
As a result, any recovery in the overall stock market is unlikely until mid-year 2008.
For those with patience and the ability to withstand volatility, the large financial, industrial, and retail companies provide good entry points at this price level.
Agricultural commodities strong
Agricultural commodity prices have remained high with strong global demand and poor weather in Australia and South America.
These prices are expected to hit the grocery store shelf sometime over the next year.
Making money in the stock market from this trend has not been easy. Agricultural equipment and fertilizer stocks are at very high prices and P/E ratios making them unattractive from a value perspective.
The Agriculture ETF (DBA) remains the best play in this space.
These prices are expected to hit the grocery store shelf sometime over the next year.
Making money in the stock market from this trend has not been easy. Agricultural equipment and fertilizer stocks are at very high prices and P/E ratios making them unattractive from a value perspective.
The Agriculture ETF (DBA) remains the best play in this space.
Thursday, December 13, 2007
Slowdown extending into economy
In September, the slowdown looked isolated to housing and consumer finance.
Since then, weakness has spread into commercial finance, autos, consumer retail, transports- truck and rail, domestic manufacturing, drug companies, and discretionary purchasing such as elective surgeries, designer goods, and travel.
Weakness looks like it will spread. Already 2008 earnings expectations are being reduced across the board for many companies. This bodes poorly for the stock market.
Long-term investments should weather the storm fine.
Short-term investments can expect continued weakness and volatility.
Since then, weakness has spread into commercial finance, autos, consumer retail, transports- truck and rail, domestic manufacturing, drug companies, and discretionary purchasing such as elective surgeries, designer goods, and travel.
Weakness looks like it will spread. Already 2008 earnings expectations are being reduced across the board for many companies. This bodes poorly for the stock market.
Long-term investments should weather the storm fine.
Short-term investments can expect continued weakness and volatility.
Continued headwinds
The writedowns of financial assets continue creating strong headwinds in the US economy.
Credit has tightened dramatically and interest rates for loans relative to US treasuries are high.
Yesterday a global consortium of government financial ministries got together to add $40 Billion to the global financial system to increase liquidity.
Unfortunately I do not see an end to tight lending standards until asset prices stop declining and foreclosures peak.
This will probably not occur until late 2008 or 2009.
Credit has tightened dramatically and interest rates for loans relative to US treasuries are high.
Yesterday a global consortium of government financial ministries got together to add $40 Billion to the global financial system to increase liquidity.
Unfortunately I do not see an end to tight lending standards until asset prices stop declining and foreclosures peak.
This will probably not occur until late 2008 or 2009.
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