I was travelling - in the East Coast, in frigid winter - hence couldn't pen down my thoughts after Thursday market close.
This week has been as bad as it could be! On top of the ISM data and oil price shock early this week, job data which came in on Friday confirmed every one's worst fears. 5% joblessness rates and a mere 18,000 addition in December (as against an average 110,000+ in normal times!) REALLY confirms economic slow down. On top of this, we had bad news from every end - National City cutting 800 more jobs, another prominent CEO quitting (State Street Global Advisors), Retail layoffs, projected lay offs in MER and C.
Enough is enough (was that Mike Huckabee's or John Edwards's - both speak the same hardline tone anyway!). C'mon, it cannot be that bad. It's hard to think that en economy cruising at 4.9% annual growth rate in 1 quarter falls to deep recession the next. It's the market over-racting, typical of a period when people realize growth wont be as rosy as it was for the past 10 or 12 quarters. Biggest losers...the usual suspects - Retail, Home construction, automobiles & worst of all, Financial Services.
C, WB, JPM, MER, GS (!) all pummelled. I would say it's time to ENTER some of these stocks provided you're patient to wait. This sector is set for serious rebound once the market gets its bearings right.
As a hedge, keep equal bets on a mix of the following: Quasi-sovereign income/bond funds, Large-cap pharma, Staple consumer (KO, MO, JNJ).
Always remember - rain or shine, you place your bets right and smart!
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2 comments:
Witrh clear signs of joblessness increasing and manufacturing declining, I am surprised that you are still bullich on this economy.
Coming to my own selfish point, I have a lot of WBs at 41. Should I exit or hold? Do you think its wise to average out and lower my purchase price?
I do agree indicators look bullish - but the economy has more strength that it seems now. Hold on and you will see some stability in 1-2 months...it will be a long slow down period though.
WB - I know you are worried with it at 35-36 now. I would recommend strongly that you HOLD - ready for a 12-month holding period. If you are not brave enough to leave it unhedged, hedge it with some investment in medium-long term highgrade corporate/sovereign bonds & staple consumer stocks.
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