Monday, August 31, 2009

Good to be back

I'm back. My family matters are taken care of, I can return to blogging.

The main theme right now is continuing buying panic. Some big funds buy everything, good or bad. They don't care, the only bad thing for them is to show too much cash on balance on September 30. I don't know when this panic is going to end and which way. So far, I did couple of trades around positions, which I mentioned earlier. I'm still in a bullish mode, if there is a pullback. But I'm not going to buy into buying panic, this is a sure way to lose money. There will be opportunities to buy cheaper. My sectors of interest are still tech, banks, debt and REITs.

Another emerging theme is China. This might be huge. Somehow most pundits think that US debt is the next bubble and miss the obvious. China's export is down more than 20% year to year and they claim growth?! In export depending economy?!! The problem is pin action. If China bubble pops, commodities are going down. All of them, with exception of natural gas, which is lying on the floor already. And this is a double edged sword. Lower commodity prices should help economies of the world to recover. With exception of economies depending on said commodities. Because many of commodity depending countries are not politically stable, implications can be frightening.

And third theme: Japan. There is functioning democracy there, at last. I hope it will help to revive petrified society, which should be good for economy. My huge congratulations to the people of the country! In other words, first time in my investment career, I'm considering buying Japanese stocks or ETFs.

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Thursday, August 27, 2009

Buying more PGF

Bought more PowerShares FInancial Preferred ETF (PGF) today. This is financial preferred ETF, paying about 10% yield. ITF was oversold lately, good time to buy.

I was quite busy with family matters lately, no time to blog. I'll be back!

Full disclosure: at the time of publication author had a long position in PGF. Positions can change any time.

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Wednesday, August 26, 2009

Selling some SNF

Yesterday sold some of Spain Fund (SNF) holdings. Took profits on the shares I bought in June (mentioned here). Another reason: fund stopped its policy of quarterly dividends equal 2.5% of NAV.

Full disclosure: at the time of publication author had a long position in SNF. Positions can change any time.

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Wednesday, August 12, 2009

Buying back IFN

Yesterday I bought back IFN shares I sold on July 23 (mentioned here). I was going to buy back from the secondary offering, but price was too good yesterday, close to NAV.

Full disclosure: at the time of publication author had a long position in IFN. Positions can change any time.

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Tuesday, August 11, 2009

Cramer vs Kass, Part Deux

In my previous article on that matter (this one), I sided with Kass, thinking that we are in sideways/slightly downwards correction. I was wrong, at least for three weeks. We had such a wonderful rally!

Doug wrote a piece today which almost matches my thoughts. Almost.

Now we are talking long term. Which in our brave new world means about 18 months. I'm thinking about positioning and every decision now can bring big gains or losses.

So, who to follow? Cramer, who is all "buy, buy, buy", but lately prudently recommended to sell something into the rally? Or Kass, who doesn't see any long term upside?

Funny enough, I can't take either side now. I think that Dougie is closer to the truth in his analysis of economy and the way recovery is going to progress. We are going to have slow recovery, harmed from time to time by bad decisions, such as tax hikes (already going on and more coming), big stupid government programs, like medical welfare for everyone, biofuels and God only know what else.

But I don't agree with the conclusion. I think that we are going to have a huge bull market next several years. And there is only one reason for my optimism: history of the previous Great Depression. That one started in 1929 and ended in 1939 (or, as some would argue, in 1943). You'd think that stock market was down the drain all those years. Wrong! Dow Jones fell 89% from 1929 peak to 1932 low. But after that, Dow rallied. Rallied huge. Anybody who invested in stocks any year between 1932 and 1943 won huge.

Was 1932 bottom related to any improvement in economy? Just kidding. New Deal and other stuff were still ahead. Economy didn't even think to recover and unemployment was at around 25%. The reason for the rally was simple: stocks were dirt cheap and paid huge dividends.

Fast forward to now. Stocks were sold way too much. Many of them are dirt cheap and pay huge dividends. Lots of REITs, bond ETFs and CEFs pay more than 10%. Not all of them are going to be destroyed. Banks are cheap. Bank preferreds are cheap. Again, most of the banks will survive. Tech is still dirt cheap.

I am bullish long term. We are going to have volatility, which should be used to trade. But I an going to use current pullback to increase my long position. Economy might suffer in the nearest future, but it doesn't mean that stocks can't rally.

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Monday, August 10, 2009

Cash For Clunkers: The Best Stimulus So Far

I'm outraged at the outrage. Government is spending pitiful 3 billion dollars, which is not even a blimp on the total stimulus money and return is huge. Auto sales are way up, program is widely popular. People are spending money, banks increase lending, gas hogs are replaces with more efficient vehicles.

Let's compare to other stimulus packages.

Consumer stimulus package of 2008: 146 billion. Result: consumers paid off some debt (i.e. no stimulus).

AIG bailout: 150 billion and counting. Some of it probably will come back, but dozens of billions are lost.

Farm welfare packages: hundreds of billions every year. Hard to say exact numbers, they are changing all the time. Results: overproduction of some goods (milk, for example), inefficient production (sugar), waste of resources.

Energy packages (ethanol and organic diesel): hundreds of billion every year, complete waste of money, higher prices of agricultural products, environmental harm caused by more land used for intensive farming.

This list can be continued. Of all other stimulus packages, only bailout of banks made sense, and this money will be returned, most probably with big interest. And Cash for Clunkers is much more efficient than any of them. It does what stimulus should do: increase customer spending, when financing only part of this spending. I think 3 billion is not enough, maybe even 10 would not be enough. Make it 20, help people to spend, help auto industry, help local dealers, help economy.

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Thursday, August 6, 2009

Sold BBT

Sold my BB&T Corp (BBT) today. I bought it as a speculation on the secondary, which didn't work out. Even wanted to take a loss, but then current buying panic started. It's now time to take profit and reduce the number of positions in my portfolio.

Full disclosure: at the time of publication author did not have any positions in BBT. Positions can change any time.

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