Did I not just say the same thing a week ago specifically point 3 of my previous blog entry?
http://www.cnbc.com/id/26289118
I'm still sticking with my energy/gold/healthcare/tech plays for now. USAA has an interesting mutual fund ( USAAX ) with companies like Mastercard, XTO, IBM, Monsanto, Google, Oracle, Apple, RIG and Gilead. It's down 20% from its highs last October and with most of those stocks taking a beating over the last 3 - 6 months, I think it might be a good, diverse bet to wade through the upcoming volatile months ahead.
Tuesday, August 19, 2008
Monday, August 11, 2008
I love a good sale!
Holy cow! What a fast, swift ride down in energy and commodities over the last month! Of course, I bought a few stocks at the peak myself and have quickly lost......well.....a LOT in the last 4 weeks after seeing nice gains in others in the sector. I can't beat myself up too much as I did take profits along the way ( investing 101 ) and bought us a trip or 2 to Disneyland and a backyard patio. But still, that kind of decline that fast is hard to stomach.
Have you seen gold plunge 150 points in the last 2 weeks? Crazy!
Here's my theories:
1. Financials were shorted and beaten down so much and energy was the place to be. When we saw oil hit that 150 mark, it seemed to be the turning point where people ( investment hedge funds ) started profit taking and scrambling to cover their options by pulling money out of energy and putting it into financials. I can justify this reason as causing the initial 15 - 20% drop. The additional 15% drop that followed was pure emotion. Those who couldn't take the heat or see past six months from now, bailed.
2. Oil will be back. I've read many articles about China recently regarding their oil usage. Today, I read they had a 7% drop in demand this last month. To someone who might not know better, they might freak out and think that if China was slowing their demand, prices MUST be high. But what they might not realize is that for the last 6 weeks or more, the Chinese government mandated a cut back in driving as well as closed factories to try and "clear the air" before the Olympics. Plus, the price per gallon that they pay is subsidized by the government. They haven't seen the huge run ups in prices like we have seen here. At least not yet. I'm betting that a few weeks after the Olympics are over we'll start to see the "demand" pick up in that region again.
3. Then there's gold. Come on! Do people really think that we are out of this mortgage mess yet let alone curbing inflation any time soon? I don't. I'm still paying twice for my loaf of bread and 50% more for my juice. Do I really think I'll see the old prices ever again? I wish. Northwest Airlines just announced another $70 "fuel surcharge fee" they will begin charging soon. We all know where the "old" fuel surcharge fees from the early 2000's went. No where. We're just barely dealing with people who got 3 year ARMs. Next year will be those who got stuck in the 5 year ARMs and won't be able to refinance because their home is worth 30% less than what they paid. Not to mention that 40% of the homes on the market in my town are in foreclosure. Two homes on my street were abandoned over eight months ago and are just now being auctioned off. Retail companies are posting losses even after the "stimulus checks" yet we see their stocks jump on the news. How does any of this make sense? It doesn't. And I think the rally in the dollar is just an over reaction to Europe talking about a recession and choosing to not raise interest rates. Another reason I think gold will go back up is that the 800 level seems to be the point where mining companies won't be able to make a profit ( because of higher energy and inflation ) and will slow down mining which will bring up demand and prices.
Here's my game plan. I'm buying beaten down stocks. I know. It's HARD to buy low when you don't know how much lower they "could" go. It's scary. But it's SMART! I bought MCD at $50/share in January after they reported their 4th quarter '07 numbers which were good but not good enough and the stock took a 10% beating. Look at where it is now......$66! More recently, look at XTO Energy. I bought a few shares at its peak a month ago. It dropped 20% pretty quickly each day thinking it couldn't possibly go lower. Then it did. So when it finally hit 25% down and was ridiculously oversold, I bought some more. It's still hovering around that low but I have all the faith in the world that it will be back up soon.
The key is spotting a great deal and understanding the difference between a stock going down because it's a bad company or because it reported a less than stellar quarter.
I'm still buying into my USAGX fund as well. Gold isn't going away any time soon. I'm thinking at near its 1 year lows, it's a pretty good deal.
This is an interesting read:
http://www.financialsense.com/fsu/editorials/dancy/2008/0516b.html
Have you seen gold plunge 150 points in the last 2 weeks? Crazy!
Here's my theories:
1. Financials were shorted and beaten down so much and energy was the place to be. When we saw oil hit that 150 mark, it seemed to be the turning point where people ( investment hedge funds ) started profit taking and scrambling to cover their options by pulling money out of energy and putting it into financials. I can justify this reason as causing the initial 15 - 20% drop. The additional 15% drop that followed was pure emotion. Those who couldn't take the heat or see past six months from now, bailed.
2. Oil will be back. I've read many articles about China recently regarding their oil usage. Today, I read they had a 7% drop in demand this last month. To someone who might not know better, they might freak out and think that if China was slowing their demand, prices MUST be high. But what they might not realize is that for the last 6 weeks or more, the Chinese government mandated a cut back in driving as well as closed factories to try and "clear the air" before the Olympics. Plus, the price per gallon that they pay is subsidized by the government. They haven't seen the huge run ups in prices like we have seen here. At least not yet. I'm betting that a few weeks after the Olympics are over we'll start to see the "demand" pick up in that region again.
3. Then there's gold. Come on! Do people really think that we are out of this mortgage mess yet let alone curbing inflation any time soon? I don't. I'm still paying twice for my loaf of bread and 50% more for my juice. Do I really think I'll see the old prices ever again? I wish. Northwest Airlines just announced another $70 "fuel surcharge fee" they will begin charging soon. We all know where the "old" fuel surcharge fees from the early 2000's went. No where. We're just barely dealing with people who got 3 year ARMs. Next year will be those who got stuck in the 5 year ARMs and won't be able to refinance because their home is worth 30% less than what they paid. Not to mention that 40% of the homes on the market in my town are in foreclosure. Two homes on my street were abandoned over eight months ago and are just now being auctioned off. Retail companies are posting losses even after the "stimulus checks" yet we see their stocks jump on the news. How does any of this make sense? It doesn't. And I think the rally in the dollar is just an over reaction to Europe talking about a recession and choosing to not raise interest rates. Another reason I think gold will go back up is that the 800 level seems to be the point where mining companies won't be able to make a profit ( because of higher energy and inflation ) and will slow down mining which will bring up demand and prices.
Here's my game plan. I'm buying beaten down stocks. I know. It's HARD to buy low when you don't know how much lower they "could" go. It's scary. But it's SMART! I bought MCD at $50/share in January after they reported their 4th quarter '07 numbers which were good but not good enough and the stock took a 10% beating. Look at where it is now......$66! More recently, look at XTO Energy. I bought a few shares at its peak a month ago. It dropped 20% pretty quickly each day thinking it couldn't possibly go lower. Then it did. So when it finally hit 25% down and was ridiculously oversold, I bought some more. It's still hovering around that low but I have all the faith in the world that it will be back up soon.
The key is spotting a great deal and understanding the difference between a stock going down because it's a bad company or because it reported a less than stellar quarter.
I'm still buying into my USAGX fund as well. Gold isn't going away any time soon. I'm thinking at near its 1 year lows, it's a pretty good deal.
This is an interesting read:
http://www.financialsense.com/fsu/editorials/dancy/2008/0516b.html
Subscribe to:
Posts (Atom)
