Hey folks,
I hope you are doing well today and looking forward to the weekend. Today’s blog won’t be long as there really isn’t a whole lot of new news (is “new news” that proper English?) today. It’s the same thing…government intervention, stocks getting beat up across all sectors, hedge funds continuing to unwind their positions, etc. This only means that stocks are getting cheaper, which means we get to be happy buyers. The question is when?
I chatted with a friend of mine yesterday about life, the markets, and whether this was the time to buy. Warren Buffet says it’s time to buy. Who can argue with the Oracle from Omaha! Check out his article here. My take is that stocks are cheap right now, they may get cheaper, gold and silver should be higher given the flooding of US dollars into the market, there is obvious market manipulation of gold and silver prices per my blog two days ago, and what the US markets have been struggling with over the past 2 years is now entering the European and Asian markets, which is evident by inflation issues in India and China consumption of raw materials and basic materials slowing down. So, how am I approaching this market?
- buy small tranches (portions) of stocks in global leaders and keep buying if prices continue to go south (i.e. Coke, Wal-Mart, McDonald’s, Exxon, Johnson & Johnson, Microsoft). You could also sell puts on stocks you would like to own and/or sell covered calls on stocks you already own since the premiums are very attractive right now due to market volatility (check out the VIX index…around 70!).
- buy gold and silver bullion (if you can find any)
- buy gold and silver ETFs (GLD and SLV)
- buy GDX (gold miner ETF) and SSRI (silver standard resources) and other mining companies with proven reserves and that are actually mining. Considering gold has held its own throughout the year, the mining stocks have been slapped downward by well over 30%.
- buy some uranium stocks because I feel nuclear technology is the only way countries can truly become independent of Middle East oil. This is more speculative since trading volume in this sector is very low and the spot price for uranium has crashed from its recent highs. If McCain wins, this sector should explode since he wants to build nuclear reactors in the US. If Obama wins, it will continue to stay suppressed until uranium shortages occur due to overseas consumption.
- hold 15-20% in cash for now until a floor has been established in the markets
Basically, I think valuations are low, and I want to start buying but in small portions in case prices continue to go down. Once there is the obvious floor in the market, then I want to load up on the above mention global giants. Also, I like gold and silver as I feel the US dollar will devalue over the long term and feel the Euro will continue to break down and some of the mainland European countries may eventually back to their own currencies. My view on the Euro is that multiple countries, one currency, and all on different agendas shouldn’t work.
Here are some articles to take with you into the weekend:
- Warren Buffet says he doesn’t know when the floor in the market will be but he is a buyer right now at these historically low valuations. Here is the link.
- What will happen when the time comes to sort out Lehman’s CDS derivative mess? Read about it here.
- Will commodities be the next market to get slammed by counterparty failures? Here is the article.
Enjoy your weekend and speak soon. If you have any questions, post a comment or e-mail me at moolahtimeletter@gmail.com.
ciao,
Moolah
