End of a rough month

As predicted, after being up 150 the Dow gave back some of that gain. It was up 60, but not a bad 4 days. It recovered almost half the decline from it's October record. This has been a rough month after it started near it's highs. The recent rally is betting the FED will cut interest rates in a couple of weeks and continue rate cuts hoping that will solve all problems. Maybe, maybe not. Housing continues very weak. Housing oversupply won't correct quickly.

As badly as banks performed, technology did a little worse in November. Tech is still playing defense, investors are losing interest after it's rapid runup. The best performing group was non discretionary (i.e. P&G (PG) and Altria (MO) which makes Philip Morris). Away from sexy techs into boring necessities which should weather a slowdown better. The VIX is around 23, down a bit. Over 20 suggests high volatility. Be ready for more bumps in the road.

Up, Up & Away

Looks like it's up, up & away for the markets. Dow is up 600 since the low a couple of days ago. Today it's up "only" 55, pulling back from a plus 100 gain. They're betting on another interest rate cut in Dec. Advance/decline ratio is 3-1, not bad. In the PM, traders may sell to lock in gains before the weekend making for a very good week. I think the next move should be down, but it looks like it wants to test 14K.

Some groups have not participated, selling near recent lows. MLPs (master limited partnerships) have been in a 290-310 range for a few months. Today they're up 2 to 297. REITs (real estate) have been hit hard, many offering high yields of 6-10% or more. Junk bond funds investing in speculative quality bonds have been hit hard in the current credit situation. Traditionally their yields are 4 points (400 basis points) above the treasury rate. Now it's easy to find 11% yields, a good 7 points above the 1o year Treasury rate. The last 2 groups especially will be under tax loss selling pressure in the coming weeks. But those yields are getting very nice for those willing to accept the extra risk.

Bernanke hints rate cut

Asian markets are up except for Shanghai which is down about 1%.

Federal Reserve Chairman Bernanke tonight hinted another interest rate cut may be needed to bolster the economy. That may add a couple hundred points to the Dow tomorrow. However Dell (DELL) reported earnings after the market close that disappointed investors, causing the stock to sell off 10%. I think tomorrow will be another up day after the hint about a rate cut. Dow futures are already up 75 in overnight (for us) trading. High volatility will continue.

digesting gains

The market digested gains today with little change. Decliners were a little ahead of advancers on NYSE, but nothing dramatic. The head of the FED speaks tonight, maybe his speech will influence tomorrow's markets.

One interesting news item was an oil spill from a pipeline run by Enbridge, one of the master limited partnerships. The MLP index measuring the group fell back 2 to 295, it's flirting with the recent low. That news affected many in the group not to mention helping push oil prices up after the recent pullback.

mixed day

Wall Street started out down, but recovered & is barely heading up. Oil rose partly because of a fire in a US pipeline. Sears (SHLD) declined 15 after reporting lower 3rd quarter profits. Dow is up 13 while advancers about equal decliners. NAZ is flat.

rally continues tonight

Here's what the AP said about today's move:

Wednesday's jump was also the biggest one-day percentage gain for the Dow since April 2, 2003. The broader Standard & Poor's 500 index climbed 40.79, or 2.86 percent, to 1,469.02, logging its best two-day point gain since April 19, 2001. The Nasdaq composite index shot up 82.11, or 3.18 percent, to 2,662.91, giving the technology-dominated index its largest two-day point gain since March 4, 2002.

Asian markets are following through, up 1-3% tonight. The dollar strengthened, the yen rose to "only" 110 while the Euro slipped slightly to 1.48+. Dollar's strength probably follows the strong market. Oil fell to around 90, jut a couple weeks ago it was pushing 100. Of course, this remains a high price for our economy to digest.

The market is now overbought, short term buyers who made money will sell to lock in profits. In addition, short sellers may have bought stock back to cover their short sales. Such purchases will not last. This is how volatility works. Stand by for more big swings in the rest of this week.

Dow soars

Dow soars on encouragement that the FED will continue lowering interest rates. The 2 day rally of almost 600 points recovers over 40% of the recent decline from its high above 14K. That's some kind of rally. Asian markets were weak last night, but the European ones had strong gains. Can you spell "volatility?" The long treasury declined a little to a rate of 4.03%, not really a major flight away from safety. Housing reported it's still weak. Banking problems continue. We'll see what tomorrow brings in a market that is clearly "overbought."

Another big up day

Sorry for the delay, computer problems. Maybe they're resolved. Meanwhile the stock market is up 2%, that's big like the Asian markets move in a day. Advance/decline is about 6X, wow. They are betting on a rate cut which is assumed will solve all problems. I don't think so. Home sales fell for the eighth straight month, Wells Fargo projects an 1.4B loss, etc. This has been highly volatile this week. Let's see how it plays out.

Buyers win today

Dow ended up 215 recovering most of Mon's loss while advance/decliners were 2-1, not impressive for a major rally. Dow remains under 13K, an important psychological level. NAZ also did well, up 40. Looks like Citi news dominated thinking today. But tomorrow is a new day with more news. The VIX fell, but at 26 it remains high which means high volativity. Tomorrow will be the test if today's rally has legs.

Oversold rally

US stock markets rebounded strongly after the Abu Dhabi Investment Authority said it will invest $7.5 billion in Citigroup (C). Wall Street liked that vote of confidence but I'm not so sure. While the gut reaction was a vote of confidence for the nation's largest bank, my view is Citi needed a lot of money after major mistakes were made. They suffered severe losses amid the ongoing crisis in the mortgage market, banks have announced they would have to write off $80B in bad loans - a track record not to be proud of. The Dow Jones industrials rose 162 points, advance/decline ratio is 2-1 and NAZ is up 30. That's how volatility works.

Dow	12,906.09	+162.65	+1.28%

This may be just an oversold rally, let's see how it plays out.

Asian markets down again

The Dow was down 237 bringing it's decline from the high last month to just over 10%, definition of a correction. Traders worry about continuing problems in the credit markets not to mention weakness in the housing market. The 10 year Treasury bond closed at 3.85%, the lowest level since June 2005. The yen is under 108 while the Euro is near $1.49, the dollar weakens further.

Asian markets followed the lead in NY, down 2-3%. Shanghai at 4900 is down about 20% from over 6000 just a few weeks ago. It looks like uncertainty continues to rule the markets.

Down again

Dow drops 237 & NAZ down 56, easily qualifies as another rough day. I think S&P is at a 2 year low. Some the money from selling is going into the 10 year Treasury bond dropping it's yield to a very low 3.83%. That's called, flight to safety. Financials got hit amidst worries about the FED saving (if needed) Countrywide (CFC) in a bailout. Countrywide hit a new low below 9. Uncertainty is big, the VIX (volatility index ) is at 29 indicating a lot of wide swings ahead. In all this time of uncertainty, it's time to keep your powder dry. That means do research to find the diamonds in the rough. High yields will reward the patient.

Not again?

One more tough day in the markets. Asian markets were up but European markets pulled back. In NY, stocks are sliding as investors weigh concerns about credit & banking against retail reports. Wall Street gave up modest early gains as concerns about a weakening credit market unraveled some enthusiasm over reports of strong electronics sales over the holiday weekend. Dow is down 38 & NAZ is down 12. On the big board, decliners beat advancers 3-2.

Here are 4 AP stories hitting the market today:

(1) A consortium led by Virgin Group, wants to take over Northern Rock, the battered mortgage lender, & wants to re-brand Northern Rock as part of Virgin Money business. The consortium would repay 11 billion pounds ($22.7 billion) of the 25 billion pounds ($50 billion) the Bank of England has loaned Northern Rock on completion of the transaction. The remainder of the money would be paid "in due course," Northern Rock said.

(2) HSBC Holdings (HBC), Europe's largest bank, will bail out two troubled funds it manages by transferring $45 billion of their assets onto its balance sheet. Additionally it will also inject $35 billion into the two funds,

(3) Citigroup (C), bracing for big credit-related losses in the fourth quarter, is looking to lower costs which could mean another round of job cuts at the nation's largest bank.

(4) E-Trade Shares (ETFC) fall after news potential buyers are debating mortgage portfolio's cost.

The retail news after Black Friday was considered "good" but the negative news from the financials is too much for the markets. Uncertainty continues to be the word everybody is talking about, not good. This is shaping up as another tough day as traders can not get uncertainty off their minds..

Asia markets

Asia markets are up strongly (2-3%) on Mon (Sun evening here). Australia elected a new PM over the weekend, they started strong out of the gate. Shanghai, Korea, Hong Kong, Taiwan, Japan are all up reacting to favorable buzz from Black Friday retail sales in the US. Even the Dow futures are up 54. We'll see if this continues or another shoe drops in the sub prime market.

Bargain hunting Friday

Bargain hunting today in a shortened trading day. Not a lot happening so many are taking a long holiday weekend. The Dow is up 126 while NAZ is up 22. Advancers outnumber decliners by 4-1. Fundamental problems remain. The dollar sets new lows against foreign currencies. Monday we'll get a look at early holiday shopping. Mortgage problems will continue. Have a good weekend.

Weak dollar

Wed night, Asian markets were mixed following a difficult day in NY. But Shanghai dropped 2% to under 5000. Out of the opening gate tonight, it's down another 1% to 4940. They are concerned about a slowdown in the US market, their biggest market. Just a few weeks ago, it topped 6000. Other markets tonight are mixed, probably waiting to see US markets tomorrow.

I keep thinking about the weak dollar. The dollar keeps hitting new lows, tough to figure out. The Yen is "up to" 108+, last month it was around 115. Then they said 113 was very high. The Euro is over $1.48. Today, the head of Airbus said they're being hurt very badly by the cheap dollar (planes by Boeing cost less while theirs cost more). That's good for US business but gets complicated in a worldwide economy. Each multinational company will have it's own reaction to the weak dollar as many have divisions in other countries. In the coming months, we will learn more about how US companies are impacted by the weak dollar.

S&P 500 Dividend Aristocrats

On Thanx Day, time to take a breather from the rough market. Recently I wrote about the S&P 500 Dividend Aristocrats. S&P pulled companies from the S&P 500 which have a minimum of 25 years of higher dividends, many have records going back 30-50 years. I found a blog by Eddy listing the members & discussing their records, click on Dividend Aristocrats to learn more. These are the kind of stocks to keep in mind when planning to invest.

Enjoy today's holiday!

Grrrr, another rough day!

Another tough day as investors did want to hold stocks of the short weekend (Thursday). That means sell off big in the last hour. The Dow dropped 150 just in the last hour to the lows for the day at 12.8 (uh-oh, solidly below 13K). S&P 500 is now down YTD! NAZ was down 35. Maybe Chicken Little was right! We'll be OK, but looks like there will be rough sledding again. Have a good Thansgiving.

Down on same problems

The markets are down for the same reasons: retail sales sluggish at best, housing is weak, mortgages are a mess, oil is over 99, the treasury bond is below 4% (the flight to quality), etc., etc., etc. I forgot, it looks like the US economy is slowing which affects the whole world! Dow is down over 100 (although up from its low) placing it solidly below 13K, NYSE decliners are triple advancers, NAZ is down 32, this goes on and on. Hang in there by making plans for buying at more attractive prices.

Asian markets down again

After a very rough day, the Dow is up just above 13K. On the overnight, Asian markets are down around 2-3%. They are worried about credit problems slowing growth in Asia. Their exporters are down sharply on the weak dollar. In addition, Dow futures are down 49 (very early signal for tomorrow).

Tomorrow, last day before the holiday, should be a quiet day. But, all bets are off. VIX (volatility index) is 26, a very high level. Wednesday & Friday may be very volatile. One day, the problem is oil, now at 98 again. The next it's mortgage worries. The next day has reduced forecasts for retail sales. I think the weak dollar is hurting. It's getting difficult to keep track of all the problems.

Another rocky day

Another rocky day in the markets. Dow squeaked out a close above 13K, obviously that may not hold very long. At the extremes, Dow was up 100 & down 100. Advances & declines were about equal. NAZ was up 3. It's very difficult to explain this behavior, making the future more uncertain. VIX, the measure of volatility, is about 26, a very high level. Expect more big swings.

Countrywide (CFC) was the focus at the end. After the ugly news about the government mortgage agencies (FRE & FNM) earlier, they denied they have bancruptcy problems. I'm looking for another volatile day tomorrow.

Dow down 17 & NAZ down 7, not good. Decliners outnumber advancers, not very good. This is shaping up as another down day.

Shaping up, another tough day

I'm looking at today's graph below. The market started with a big gain, almost 150, out of the gate but slipped back to up only 22. Gainers are a little ahead of losers. Similar at NAZ, now only up 7. Problems persist. Freddie Mac (FRE) lost $2B and is looking at a dividend cut, down 12. Fannie Mae (FNM) is down 8. These semi government agencies have serious problems. Countrywide (CFC) & Washington Mutual (WM), caught up in the negative news, are at new yearly lows. Target had lower earnings & issued a gloomy forecast for this quarter. Despite a major stock back, down $.90 or 2%.

overnight

Asian stocks are down 2-3%, following the US selloff. They did not take it very well. We should keep in mind that the US is their biggest market. The Japanese yen is a little below 110 (i.e. a rise in value) which is part of the weak dollar story. I think the weak dollar hurts our stock market even if only in a small way. Can't wait to see what tomorrow brings in the stock market.

Gloomy day

Another gloomy day as the Dow closes below the important 13K level. NAZ was also down big, Google (GOOG) is down over 100 points from its high a few weeks ago. The usual suspects are at play, weak housing and plenty of banking worries, banks sold off big once again. In addition, Countrywide (CFC) is at a new low in the 10's. Earlier this year it was over 45. They are the biggest mortgage holder, if they fall that's going to be a big uh-oh! Hewlett-Packard (HPQ) reported good earnings after the close, maybe that will help tomorrow. I'm sure how much good that will do. Hang in there.

Dow Drops Below 13,000

Today AP put it very well, "Stocks slid further Monday as Wall Street absorbed a gloomy outlook for the banking sector and anticipated bleak news from the National Association of Homebuilders. The Standard & Poor's 500 index and the Dow Jones industrial average each lost more than 1 percent." Dow is down 175 (below the important 13K level) & NAZ is down 1 1/2%. Goldman downgraded Citigroup (C) because they will have to write off 15B in loans. There are worries that the bad housing market will drag more industries down. Lowes (LOW), #2 to Home Depot (HD) ,forecasted lower 4th quarter earnings in anticipation of further deterioration in housing.

I worry about the weaker dollar. The Euro is $1.46 while the Japanese yen is up to 110 (now they're forecasting 100). This is a very complex issue especially for multi nationals since they are affected in many ways. But I'm afraid on balance the weaker dollar hurts the US economy & the stock market.

I remain positive for some banks, housing related issues REITs, MLPs & the Dividend Aristocrats in the S&P 500 index. This remains homework time preparing for better buying opportunities. Remember, Chicken Little didn't prove right.

MLPs

I first learned about MLPs (master limited partnerships) only 6 months ago. They are a slightly different type of investment, offering units not shares & paying distributions rather than dividends. Their track record is tracked on the Alerian MLP index (^AMZ at Yahoo Finance):

The last 12 months started off with a major move from 260 (a plateau) to around 335. Then, the index went thru a bumpy flat period followed by a large sell off to around 300 in early August. Since then it's been in the 290-310 zone. In the last couple of weeks, it slipped back, looks like it will test the low again around 290. I like these companies. Demand for building more pipelines in the US seems unlimited in the coming years. Analysts figure growth as yield plus their growth rate. In other words, if the unit yields 6% plus the distribution is expected to grow at a 5% rate, they project investment growth of 11%. The distributions are tax efficient, unfortunately being a limited partner also means a limited amount of tax hassle.

In Asia, it's already Mon, their stock markets are mixed. We have a short trading week because of the holiday, but expect high volatility. The Dow looks like it may test the lows of its 13-14K trading range.

A little bit of buying at the end of the day, Dow up 31 & NAZ up14. Banks are off again, just can't muster a rally. Countrywide (CFC) is at its lows for the last few years. After the pullback from gains at midday, I have a feeling that buying is from shorts zeroing out their positions. They should have had a great weak. Just noticed, Starbucks (SBUX) is at a 52 week low, another uh-oh.

Slight rebound

There is a slight rebound, D0w up 65 & NAZ up 8. The banks are off their lows to near breakeven. Countrywide (CFC) continues near the lows from last month. If they don't survive, there will be more bloodshed for financials (banks). Let's see if the shorts cover (buy) going into the close.

Mixed day

A down day again although Dow & NAZ are up slightly, decliners are about double advancers. The news front is not good. FedEx (FDX) lowered earnings expectations for the fiscal second quarter & full year, down 5. Starbucks (SBUX) cut its earnings forecast for fourth quarter after it reported traffic at stores open at least 13 months dropped 1 percent, down 2. I don't drink coffee but this is not a good indicator for the overall economy. Major banks are down about 1 each, more worries about even bigger problems with mortgages & the loan portfolios. Fortune said that Fannie Mae's (FNM) problems (losses) could be bigger than reported. This week, the market has sold off big in the closing hour, i.e. investors don't want to hold overnight. Because this has been a down week, short sellers might buy in the last hour to take gains by reversing out their positions. Keep in mind good stocks should be available at lower prices. Hang in there.

Another down day for Asian markets, China, Japan, Korea, etc. down 2-3%. This selling is a continuation of selling in the US near the end of trading. Asian markets have continued worries about financial problems. i.e. banks, etc., and the difficult housing market in the US.

Dow futures are down 30, a very early signal tomorrow may be a another tough day here. Use the time of declining markets for homework, to select good value stocks for investment.

Down again

Another bummer day in the market, Dow down 120 & NAZ down 26. Uh oh. Traders must have read my points from midday: JC Penney, high oil prices & financial problems are shook the market late in the day. Recently it has become common for the market to sell off near the end of the day. The Dow is back at 13.1K, near the bottom its trading range for the last few months. The VIX is around 26 indicating continued high volatility. Tomorrow can be anotehr wild day!

Down again

Another bumpy day, although the bumps just slipped into negative territory & advance/decline line is about 3-1 for the negatives. News is on the negative side. General Electric Asset Management bond fund suffered losses in mortgage-backed securities, what's new? Barclays Group took a $2.7 charge. JC Penney reported a down quarter & cut it's fourth quarter outlook. Dow is down about 47 & NAZ another 1/2%.

This is good time to mention MLPs (master limited partnerships), a recent favorite of mine. This group has emerged in the last 10 years or so to medium size. The businesses sell units (not shares) and pay distributions. Their distributions provide a good yield (around 6-7%) & are tax free. However, they also represent tax hassle. Income, 10-20% of the distribution, is reported on a K-1 form in March (i.e. late) plus income is divided among the states where it does business. Computer tax packages can handle the numbers, but it does add complications to taxes. As partnerships, they are generally not allowed in IRSs & other retirement accounts. For the venturesome, seeking income & growth, these may be interesting.

I started learning about these about 1/2 a year ago, & like them. Their index is the Alerian MLP index which is 299, up from 100 at the end of 1996. That's a nice run. The comparable index including distributions is about 650, even nicer. There is a lot to learn about these investments, a good place to start is search for:

master limited partnerships primer

A few brokerage firms have excellent 50+ page reports. There is a lot to learn about this area, I will continue discussing it in the future. This read is an alternative to more & more writedowns.

The Asian markets are mixed, only minor changes with a slight edge towards down. Keep in mind they are very plugged into the US market as we are probably their leading customer. They have sub prime loan investments plus worry about how sub prime problems will affect their business selling to US customers. The futures for US markets are little changed, as usual.

Stocks slipped to slightly down (Dow down 22 near the close), not a lot decided in the market. Bear Stearns will write off $1.2 B hoping that will be the end of major problems in the fourth quarter. Britain's HSBC Holdings is writing down another $3.4 billion from exposure to the sub-prime. Here is the closing chart showing a drop of over 100 points in the last 30 mins, for the day there was only a 76 point drop. Uh-oh!

Let's see what tomorrow brings.

Tues overnight markets

This was a strong up day in the stock market. The news from Walmart helped, the stock was up 6%. Same store sales were up 1.5% & they expect a good holiday season, forecasting same store sales will increase 2% in this quarter as sales exceed $100B. While their news is good, sub prime & other problem loans for banks remain, $90 barrel oil and the weak dollar in the foreign markets are going to affect the economy. Tech stocks which had been hammered in the last week rebounded strongly.

After the big rise in today's US markets, Asian markets are following through with gains of 2-3%. Everybody feels good, or at least now. US futures in Asia are showing little change even though Asian markets are strong.

Up 320

Well the stock market had a great day. Dow was up 320 while NAZ was up 3 ½% (after getting clobbered in the last few days). OK, enjoy the gains, Walmart & Goldman Sachs were 2 big ones helping to push the market up. Now where do we go from here as Dow remains range bound between 13-14K?

Enjoy the day

Wow!! That's some kind of gain. We're near the close & this is some kind of day. The VIX (volatility index) declined 5 to about 25, but it's still high explaining today's large swing. But the advance/decline ratio is only about 5. Considering today's gain, I would like to see this number higher. Enjoy!!

Up, Up & Away

The stock market is having a nice rally today, up 176 already putting it solidly above 13K. Interesting, this is the third day in a row the Dow has been around 13.1K, a trading zone for the short term. Walmart reported very good earnings & forecasts, always a big plus. Goldman said they didn't expect to take a big hit with write downs. BankAmerica is writing down $3B in debt to cover loan problems, so they're up 1 1/2. Even Countrywide reported mortgage business down substantially, they're still up fractionally. The buyers are back in the driver's seat, NAS is up almost 2%. Volatility continues, expect more big swings.

Mon, semi-holiday

Mon was another volatile day. Dow was up most of the day but in the last hour sold off, down 55 putting it below 13K. Credit worries continue. Countrywide's existence is being called into question again. NAS was down almost 2% as technology has taken big hits in the last few days. High flying Google pulled back over 100 from it's record levels. Apple, RIMM & other recent NAS high flyers have had similar pullbacks in the last week.

Two of my favorite stocks are Caterpillar & 3M (a member of S&P's dividend Aristocrats group), multinational Dow stocks which should do well going forward. They have low P/E ratios and decent dividend yields, good stocks to keep in mind if they decline.

Asian markets are mixed but down a little tonight. Tomorrow may be another tough day here.

Another Rough Week?

In the last 3 days of last week, Dow dropped about 600. Grrr! Expect more this week. Analysts are expecting banks to announce another $20 billion in loan writedowns for this quarter. If anything, final numbers could be even larger. I worry about Countrywide Financial (CFC), the largest mortgage lender. They squeaked by the August crisis with $12B in emergency financing plus selling $2B in preferred stock sold to BankAmerica. Now the stock is very near its recent lows. They are so big, their problems will adversely affect other financials. On the overnight market, a major Hong Kong bank just reported an addiitional $1B write-down on its loans related to sub-prime.

NAS stocks were slammed hard late in the week. Meanwhile gold is 835 while oil pushes 100, a price that will bleed thru to economies around the world. Already (Sun evening), Japan, Hong Kong & Korean markets are lower 2-3%`each. The US stocks markets will be open on the semi-holiday of Mon. Get ready for another rough week, keeping in mind that lower prices bring more attractive buying opportunities.

Dow closed down 233 & NAS down 68, even worse percentage wise as sellers roared back at the closing bell. Maybe we'll see a movie tomorrow for relief.

We're near the close of a rough week. Dow is still down about 150 at 13,100 & declines are about advances. Banks, had a terrible week, rallied at the end thanx to bargain hunters. Bank of Amer said market dislocations will impact this quarter (i.e. sounds like what I predicted earlier today). They don't have major sub prime problems, instead collateralized debt obligations (CDOs), uh-oh. This problem will affect all major banks.

The VIX index (volatility) is up to 28, very high indicating that 1-2% daily moves in the Dow are more likely. While not good or bad, this could keep the nervous types from jumping back in. Look for a bumpy ride again next week.

Another Down Day

Early this morning Dow was down 122 in pre-trading. Uh-oh again! It followed thru in regular trading, now down about 200 & flirting with 13K. For the last few months it has been stuck between 13 & 14K , this time it will test to see if it can break thru on the down side.





This morning Merck announced that they will set aside almost $5 billion for Vioxx law suites. That's considered "good" because it allows them to get on with the business & forget the past. OK! Bigger news was that Wachovia took another $1B hit on it's loans in October (note that's just October). The market is getting tired of more ugly stories from the banks. But they will continue for awhile. Chances are most will take a "big bath" in this quarter to "clean" the books making it easier to start the new year fresh. I don't mean to be knocking banks because I like them & their yields. However more tough stories will be coming in coming weeks.

REIT's are down with the rest of the market. There is fear of adverse effects from a slowing economy, but I like the fact they have hard assets (properties) and better ones have excellent track records of paying increasing dividends. Many have high yields, going higher.

The financial news can be depressing in these times and probably will continue for at least a few months. This is the time to study and prepare for buying opportunities, for very smart investing.

It's near midnight & Dow futures are up 46. The Asian markets are mixed tonight after Shanghai took a 5% hit yesterday, it is off about 15% from it's recent high. I'm paying more attention to behavior of Asian markets, especially Shanghai, Hong Kong, Korea & Japan. Get a good night's sleep.

Another down day but could have been worse, as it was shaping up as the worst 2 day stretch in about 5 years. At the lows, Dow reached almost 13.1 near bottom of its trading range over the last few months (about 14K top & 13K bottom). It bounced back to close at 13266, down only 39. Tech was hit harder, down 2% or only half it's maximum loss during the day. Google, RIMM, Apple, Cisco all got slammed hard. Those investors learned about gravity, what goes up also comes down. The VIX (measures volatility) is at 26, above 20 is considered a big number suggesting more wild swings. After the close Dow futures were below the close, i.e. the last shot was negative. Let's see what tomorrow brings.

Financials including banks had a fairly mild day. But Washington Mutual yields about 11% and Countrywide is coming under a dark cloud again. Big bank stocks hung in there as sellers finally gave up after 1 EST. It's hard to remember the last time a bank reported good news!

The stock market started out on an up note, but is pulling back to slightly negative & advance/declines running about even. The banks are rebounding but that may be because sellers are running out of stock to sell while nibblers are buying. Federal Reserve Chairman Ben Bernanke is providing the big news today, looks like his testimony will not give much encouragement to buyers. The major good news is Ford had a smaller than expected loss, swell.

This is 10:45 PM EDT and Asian stocks follow through on declines at NYSE. China, Hong Kong, Japan, Korea, etc markets are each down 2-3%. Investors are worried by declines for their business, much of the business is selling to the US markets. In sympathy with these declines, Dow futures are down another 62,an early signal for another rough day on Thursday.

One Tough Day!!

This was one tough day. The down opening continued through the day with Dow down 360. GM and Washington Mutual got hammered and those are mighty big companies affecting a lot of others. Somewhat overlooked is that Countrywide, largest mortgage company, is sinking back to prior lows of a couple of weeks ago when they promised not to lose $1 billion again. It's problems will spread to others. The VIX or volatility index was up past 25, a very high & worrisome level. This is not time to panic. Right now, I kind of like this as I'm looking for more bargains & think they are coming. Hang in there, time to do homework to earn profits from future buying.

Tough day

After waking up & turning on TV, I found Dow was down 144 in pretrading, ugh!! At midway, it's still there. There are plenty of problems to worry the market. Today's biggest is that China may diversify it's stock holdings (i.e. in the US). Diversify means SELL, spelling an ugly day for the market. Other worries continue. The weak dollar is getting more attention, especially after the top model in the world says she wants to get paid in Euros not dollars. That thought speaks louder than 100 economists combined! Oil looks like it's heading for 100 very soon & the US has not felt this price pressure yet in a major way. Credit worries continue. Washington Mutual has been weak falling another 9% today as they are talking about credit losses in the last quarter. With a yield over 10%, sellers are bailing out letting buyers worry about the next dividend. This tough market can be expected to last for awhile, but it's also creating buying opportunities.

I like companies with excellent track records. Despite recent stories, some banks have done well and offer nice dividend yields. REIT's, master limited partnerships (MLPs), and selected stocks offer nice yields which will become even more attractive if the market slips further.

I've liked REIT's (real estate investment trusts) for a long time. Most have moved up nicely since early in the decade. In the past, yields have been 10-12% for higher yielding stocks. Today some offer yields around 7-8% as prices have pulled back this year. Most REITS own properties, typically apartments, malls, shopping centers, offices, etc. many specialize in one area of the country. Large ones are going international, buying properties in Europe, Japan, Mexico, etc. While this is a relatively new business compared with big companies going back over a century, some are able to point to records of 10-20 years. REITS are getting hit by worries in credit markets, but should be examined as ong term investments with nice yields. Good ones will survive rewarding the smart investor.

Flattish day today. Up vs down stocks on NYSE about even at lunch time while Dow is up about 35. Oil is up to 97. Financials continue under pressure. Citi is down 1.11, worries continue. But BankAmerica & Chase are up about 1 each. Let's see how the rest of the day plays out.

Ugh!!

The market closed lower after trying for a rally late in the last hour. Dow was donw 51 after being down 100+ early in the day. Pretty much the same story all day, financials were hammered with worries about more problems with sub-prime mortgages and other loans. These worries will probably continue plus the China market has problems.

China stocks took a big hit. Petro China after becoming the first trillion dollar company was down 12% on NYSE. I sense they are trying to tell us something which may not be good. Tonight will be a good time to watch Asian markets on cable networks to learn more about their problems, probably related to worries about their business with the US.

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Today the stock market started out. Premarket Dow was down 100, but losses have been cut back at midday. Credit worries starting with Citi spread to other major financials & the rest of the market. The advance/decline ratio is over 3-1, not good. This week is shaping up as a tough week for the stock market.

Cable financial news

Recently my cable provider added additional channels at an extra cost. Some are helpful in evaluating the stock markets. Before I was limited to CNBC & Fox Business News, starting last month, but FBN has to learn how to report financial news. Now Bloomberg & Asia.CNBC have been added, I like them. When the US markets close, Asian markets are getting ready to open. During our nighttime period, they are trading and these stations give updates. Now it is easy to see if Asia markets are following thru or not from US trading. Those who stay up late (or rise early) can catch opening trading for the European markets.

The big news in Asian markets is China, the Shanghai market is near record levels. It's helpful to keep in mind that their investors are not sophisticated, their rapid rise will have it's day of reckoning. Today China stocks on NYSE are down big led by Petro China ADRs, off 10%. Petro China is in the news for becoming the first trillion dollar company. US investors should folow overseas markets to learn how they influence ours.

Asian markets react to their local business there and their exports to countries led by the US. Sub prime problems in the US affect them because their financials have invested in them forcing write-downs like in the US. Keeping an eye on these markets is important for an investor here to be a very smart investor.

Sunday, November 4, 2007

I'm starting this blog to focus on very smart investing. In 1953, Louis Engel, a partner in Merrill Lynch, wrote a popular book, How to Buy Stocks. He said, “This book is based on a very simple premise: that the stock market is going up...Why? Because it always has.” The book talks about investing for the “long pull.” In the last 50 years values for long term investing have not changed. These principals are used by Warren Buffet and he has done quite well.

When investing for the long term, the best indication for the long term future is the record of the long term past and referred to as track record. Many companies have track records demonstrating excellent long term growth, some for over 100 years. The easiest measures to follow are sales, EPS and dividends. Now with internet resources available to all, it is easy to get this information.

One excellent guide which is not well known was recently put out by Standard & Poor's. They are probably best know for the S&P 500, an index most people follow which includes 500 of the biggest and best know corporations in the US. A couple of years ago, they came out with a subset which attracted my interest, S&P 500 Dividend Aristocrats. In this elite group are members of the S&P 500 with a track record of “25 consecutive years of increased cash payments based on ex-dividend dates from January1.” Membership is very limited, only 56 qualify (such companies as Exxon, Citgroup and IBM are not included)! Many have paid higher dividends for 30 – 40 or 50+ years, a solid record of long term growth. With these track records for dividends, there is strong indication their growth will continue. But companies are not all equal.

Included are some of the biggest banks, drugs, insurance companies, foods, beverages & retailers, all with different prospects and outlooks. But starting with this list, it should not be difficult to narrow it to a few in which an investor sees continuing high growth rates for the future. S&P 500 Dividend Aristocrats is the type of list I like for getting very smart investing ideas.

Today's Market

As you can tell,I am basically a fundamental person looking at long term trends and values. But I also follow technicals or charts. The Dow had a great run recently, but maxed out in July at 14K. Since then it's had a very bumpy ride with a substantial increase in volatility. The performance of high volatility can be expected to continue as banks are adversely affected by mortgage and bad loan problems, housing in the US market is in a major recession and oil approaches $100 a barrel with implications for higher inflation rates in the future. In addition overseas markets, especially the fast growing Asian ones, run the risk of being adversely affected by a slowdown in the US market. While this does not look like a good time for investing, it is the time to study beaten up industries and stocks to identify which ones will ride out the storm. Bargains are coming, this is the time to prepare for opportunities to buy for very smart investing.