Percentage of Stocks Above Their 50-Day Moving Averages [View article]
Small and mid-cap stocks historically tend to do somewhat better going into market (and business cycle) bottoms, and much better coming off bottoms. Large caps tend to outperform later in the cycle as we near tops.
The CD has no risk to principal and also has no possibility of principal appreciation. If you have no need for capital growth and no fear of inflation, go for the CD. By the way, it is very hard to find a 5% CD right now.
I don't know where the market is going in the short term. I have significant long positions in eight stocks (and lesser positions in a few others). The major longs are AAPL, BIDU, GRMN, GS, HOLX, LDK, POT and RIG. I plan on holding for several months minimum and possibly several years. I have protected myself with occasional short positions in the same stocks, triggered by stop orders. In the past six months the net gain on the long side has been only 5%, but I am up 14% on the shorts. I buy to cover short positions using stop orders as well. This strategy produces a lot of short term trades, daily checking and resetting of stop orders, and lengthy tax reporting, but has always been profitable. The big gains will made when there is a "crash" - my definition is a move to Dow 10,000 or below in a few months time - or when there is a sustained rally. In the meantime I make many short term trades while protecting positions being held for eventual long term capital gains.
All this is a lot of work but I can hold agressive positions and sleep well at night. Who cares where the market is going? I don't.
FedEx, Royal Bank of Scotland, Tell the Real Economic Story [View article]
Facts that will change my strategy back to mostly long term investing include any one of the following: 1. Dow below 10,000. 2. Dow above 14,800. 3. S&P 500 moving averages (50 day and 200 day both positive, ie moving upward). What kind of facts would you look at notsosmart? I certainly understand your reaction if you are referring to the opinions of others, including me.
Are Dividend Growth Investors Idiots? [View article]
I agree with xi Hu - diversify investment strategies. Also, modify each strategy based on current market conditions. If you use stops on long positions, tighten them when the applicable moving averages (eg, S&P 500) are dropping. If the market is whip-sawing, follow a strategy that buys lower end of the trading range and sells higher end. If the market moving averages are heading lower, incorporate some short selling.
Don't time the market, but definitely react to what is happening and remain alert to changes of market direction.
FedEx, Royal Bank of Scotland, Tell the Real Economic Story [View article]
Good summary of "let's keep it real here". The probability of a trading range market (Dow 11,000 to 14,000) is very high (at least 50%) for the next 6 months or so. I feel there is at least a 25% chance of the RBS projection and less than a 25% chance of a new high in 2008. I have been following a long/short trading strategy for the past six months and will not return to longer term investing until my outlook is changed by facts.
Lending Stock to Yourself: Nifty Idea, But Is It Just Active Long-Only Management? [View article]
This sounds like another synthetic investment vehicle/process that simply compounds complexity without providing any added benefit, except to the creator's of the process, who collect higher fees than they could justify with the simpler actively managed long only strategy.
Oil Hits $140: What Could Trigger a Reverse? [View article]
In reading through all the posts, I come to one conclusion: more drilling will not solve the energy problem. It takes 5-10 years or more to start production from new drilling (AMWR, coastline) and then there is energy for only a few more years before the estimated oil is burned up. Major production from shale and tar sands requires massive amounts of energy. If we can produce this massive amount of energy then using it directly rather than going through another intermediate process before use makes a lot of sense. The same can be said for any other energy intensive production process for combustible fuels (example, coal gasification or liquidification).
In 5-10 years we can move significantly toward using solar, wind, geothermal and tidal energy. We have to go there eventually. I say, the sooner the better.
Ultimately, these "natural" energy sources should be much cheaper per kilowatt than burning combustible fuels. Then hydrogen becomes economically attractive for mobile electricity generation in transportation.
Both of the current presidential candidates seem to be aware of these factors. Maybe we will finally get an energy policy that makes economic and environmental sense.
Good data summary. I find it useful. Individual investment sentiment for this year looks more like 90-91 than like 2000-02. It remains to be seen if the follow through supports that observation. If one is a student of markets and economic cycles, your article is helpful. If one is looking for specific investment advice that is actionable (maybe this is Murph), this article would be frustrating.
By the way, I am a contributor to the AAII sentiment survey. The week of June 9 was my first bullish input in 11 months; since July 2007 my input had been bearish. I found it curious that my personal switch to bullish coincided with the overall survey falling to more than 50% bearish. I guess there must be two sides in every trade!
I started in the 1980's to joke about the the political label "Tax and Spend" being only the spoken side of the equation; "Cut Taxes and Spend" was the other side. No other labels matched the reality of the times. I am pleased to see the recognition of this reality, although it is belated.
We have taken on debt (national debt) to pay for "living expenses". Economic logic dictates that debt is justified only as investment, when the future return justifies (and retires) the debt. For example, if we increased debt to develop lower cost renewable energy, the debt could be retired with the future savings on energy expense and increased productivity. Only investment with payback should be undertaken.
If a universal health care system saves cost in the total economic system, those savings can be applied against the cost of implementing and running the system. Any remaining debit balance would be paid with taxation and/or user premiums. Any other solution is unsound and digging a deeper pit for our future.
Can sound economic policies be supported by a populace that lives by systematically borrowing from home equity and nearly maxed out credit cards to maintain living style?
Which Solar Stocks Will Continue To Shine? [View article]
I think Jack omitted ESLR probably because they have been losing money. I am starting to follow ESLR, though, because they should have positive earnings next year, have a high potential technology and could have accelerating growth.
Whatever is to come, anyone who is a trader needs to preserve capital in the current market. Whether you do it with options as hedges, using a combination of long and short positions or placing very tight stops, you must protect capital. Now is not the time to depend on luck (or hubris). Yes, you may have whiplash losses and small slippages, but now is the time to quard against large losses.
If you are a long term investor, maintaining a larger than customary cash position is very wise. It is not a bad time to realize some long term capital gains to increase cash. After all, you may not have the current tax environment in the future either. Finally, I agree with the comments others have made about diversifying globally.
Waldman's article and all the discussion is very interesting. My own take is that the primary problem with wealth distribution arguments is that they often quite polarized. Most take one of two positions: (1) soak the rich and help the poor; or (2) laissez-faire, let the wealthiest prosper unimpeded. The most productive approach would reward upward mobility without penalizing the most successful unduly. The largest problem I see in the past 8-16 years is that there has been an increase in the percentage of people with high incomes ($300,000 and up) without a decrease in the percentage with low incomes ($50,000 and less). In other words, the middle class is shrinking. In my opinion, the health of the economy would be improved if we had a steadily rising population in the middle class, produced from a drop in the low income population without an adverse effect on the high income population. Of course, many of the very Rich, such as Soros, Buffett and Gates have taken a positionin favor of increasing taxes on the wealthy, but many of the less affluent wealthy are not well served, nor is society well served, by drastically reducing their after-tax income to benefit the low income population.
The discussion of taxation should center on the equitable distribution of support for the common needs of society with the realization of rewards for risk taking and productive work. Tax policy should concentrate on ensuring the size of the population of the middle class can increase, not decrease as it has in recent years.
Eight Stocks Going Ex-Dividend This Week [View article]
Adan - - -
PEG is the ratio of Price/Earnings ratio divided by the earnings growth rate (usually the 3-5 year forward estimate). It may not have importance for a 5-10 day strategy such as dividend capture. I would speculate that there might be a smaller risk of a loss for very low PEG vs very high PEG, but sometimes very high PEG stocks are in a bubble and might keep going higher in the short term. This would be worth a careful study; the downside is that the results would be subject to the rearview mirror criticism.
Thanks for your observations. I appreciate you sharing your research. So not only do I have to worry about the further collapse of the dollar due to the Fed accepting possible junk as collateral, but now I have to worry about the leveraged effects on stocks when the Fed raises rates and/or stops accepting junk.
No wonder I have become more of a trader than an investor!
Percentage of Stocks Above Their 50-Day Moving Averages [View article]
Appreciate the fine research numbers - thanks.
The Dark Side of Dividends [View article]
The CD has no risk to principal and also has no possibility of principal appreciation. If you have no need for capital growth and no fear of inflation, go for the CD. By the way, it is very hard to find a 5% CD right now.
The (Non) Crash of 2008 [View article]
All this is a lot of work but I can hold agressive positions and sleep well at night. Who cares where the market is going? I don't.
FedEx, Royal Bank of Scotland, Tell the Real Economic Story [View article]
1. Dow below 10,000.
2. Dow above 14,800.
3. S&P 500 moving averages (50 day and 200 day both positive, ie moving upward).
What kind of facts would you look at notsosmart? I certainly understand your reaction if you are referring to the opinions of others, including me.
Are Dividend Growth Investors Idiots? [View article]
Don't time the market, but definitely react to what is happening and remain alert to changes of market direction.
FedEx, Royal Bank of Scotland, Tell the Real Economic Story [View article]
Lending Stock to Yourself: Nifty Idea, But Is It Just Active Long-Only Management? [View article]
Oil Hits $140: What Could Trigger a Reverse? [View article]
In 5-10 years we can move significantly toward using solar, wind, geothermal and tidal energy. We have to go there eventually. I say, the sooner the better.
Ultimately, these "natural" energy sources should be much cheaper per kilowatt than burning combustible fuels. Then hydrogen becomes economically attractive for mobile electricity generation in transportation.
Both of the current presidential candidates seem to be aware of these factors. Maybe we will finally get an energy policy that makes economic and environmental sense.
AAII Bearish Reading Above 50% [View article]
Good data summary. I find it useful. Individual investment sentiment for this year looks more like 90-91 than like 2000-02. It remains to be seen if the follow through supports that observation. If one is a student of markets and economic cycles, your article is helpful. If one is looking for specific investment advice that is actionable (maybe this is Murph), this article would be frustrating.
By the way, I am a contributor to the AAII sentiment survey. The week of June 9 was my first bullish input in 11 months; since July 2007 my input had been bearish. I found it curious that my personal switch to bullish coincided with the overall survey falling to more than 50% bearish. I guess there must be two sides in every trade!
"Rubinomics" Is Back, Part Two [View article]
We have taken on debt (national debt) to pay for "living expenses". Economic logic dictates that debt is justified only as investment, when the future return justifies (and retires) the debt. For example, if we increased debt to develop lower cost renewable energy, the debt could be retired with the future savings on energy expense and increased productivity. Only investment with payback should be undertaken.
If a universal health care system saves cost in the total economic system, those savings can be applied against the cost of implementing and running the system. Any remaining debit balance would be paid with taxation and/or user premiums. Any other solution is unsound and digging a deeper pit for our future.
Can sound economic policies be supported by a populace that lives by systematically borrowing from home equity and nearly maxed out credit cards to maintain living style?
Which Solar Stocks Will Continue To Shine? [View article]
Preparing for the Fall [View article]
If you are a long term investor, maintaining a larger than customary cash position is very wise. It is not a bad time to realize some long term capital gains to increase cash. After all, you may not have the current tax environment in the future either. Finally, I agree with the comments others have made about diversifying globally.
Supply-Side Fairy Tales [View article]
The discussion of taxation should center on the equitable distribution of support for the common needs of society with the realization of rewards for risk taking and productive work. Tax policy should concentrate on ensuring the size of the population of the middle class can increase, not decrease as it has in recent years.
Eight Stocks Going Ex-Dividend This Week [View article]
PEG is the ratio of Price/Earnings ratio divided by the earnings growth rate (usually the 3-5 year forward estimate). It may not have importance for a 5-10 day strategy such as dividend capture. I would speculate that there might be a smaller risk of a loss for very low PEG vs very high PEG, but sometimes very high PEG stocks are in a bubble and might keep going higher in the short term. This would be worth a careful study; the downside is that the results would be subject to the rearview mirror criticism.
Contemplating Key Indicators [View article]
Thanks for your observations. I appreciate you sharing your research. So not only do I have to worry about the further collapse of the dollar due to the Fed accepting possible junk as collateral, but now I have to worry about the leveraged effects on stocks when the Fed raises rates and/or stops accepting junk.
No wonder I have become more of a trader than an investor!