My Investing Notebook
:: Useful notes on investing. ::
My Investing Notebook
:: Useful notes on investing. ::
There is a very good article on investing in the latest Kiplinger’s (Feb 2010) “Make A Buck Off A Sagging Dollar.” Their view is that the dollar is on the decline, and you better diversify. They have a few suggestions how you can do that.
I also think the long term the dollar does not look so good. Especially when comparing it to emerging markets.
Read on…
You can invest in emerging-markets bonds through Pimco Emerging Local Bond (PLBDX). “Pimco invests in 15 markets, including Poland, South Africa, Mexico, and Thailand.” It’s on the expensive side, though, with an annual cost of 1.35%. I try to stay under 1%, but this might be worth the price.
For a lower cost alternative, check Wisdom Dreyfus Emerging Fund (CEW). “This exchange-traded fund, launched last summer, uses futures contracts to provide exposure to money-market rates of 11 emerging markets currencies, including the Polish zloty, Chinese yuan and Chilean peso.” Annual fee is 0.55%.
Barron’s: Are there any sectors of the market that you do find attractive?
Duffy: We are long consumer staples, discount retailers and pharmaceuticals. One way to participate is through the Gabelli Healthcare & Wellness Trust [ticker: GRX]. It holds roughly half health care and half global consumer brands in high-quality names like Danone [DA], Nestlé [NSRGY] and CVS Caremark [CVS]. It trades at a 20% discount to net asset value, though it has a fairly high expense ratio of 2.16%. If you look at Big Pharma, during the tech-stock and growth bubble of 2000, these companies traded as growth stocks, with an enterprise value to annual research and development spending of about 50 times. Today they’re trading at 10 to 15 times. We like fallen growth stocks that are cheap, like Wal-Mart Stores [WMT]. The stock has gone nowhere in the last decade, but gross profits have grown 2.7 times.
…
We like the VXX, an exchange-traded note that’s based on S&P 500 short-term volatility as measured by the VIX index. It’s down 67% this year, and fits into the whole idea that complacency is very high.
Reference
Barron’s Interview
Invest 10% in all of these 10 ETFs and you got yourself something close to what an Ivy League portfolio looks like. For more information, check theivy.portfolio.com
iPath S&P GSCI Total Return Index (GSP)
iShares Barclays TIPS Bond (TIP)
PowerShares DB Commodity Index Tracking (DBC)
SPDR Dow Jones International Real Estate (RWX)
Vanguard Emerging Markets Stock (VWO)
Vanguard FTSE All-World Ex-US (VEU)
Vanguard REIT Index (VNQ)
Vanguard Small Cap (VB)
Vanguard Total Bond Market (BND)
Vanguard Total Stock Market (VTI)
Reference
Kiplinger’s Magazine – 11/2009 Issue
Sell in May, buy in November?
It’s a technique that’s proven to yield good results. I wrote about it in 2007, see Sell in May, Buy Back in November.
Last year, the biggest losses were in that period. This year, I think it might be similar. Over the past couple of weeks, the stock market rebounded a great deal. I feel that stocks might be overvalued. Too fast too soon — that’s my general feeling.
I’ve sold several of my stocks recently. It’s not only because of this rule. I want to simplify my investing. I want to own companies that I know (TJX, PHG,NOK,F,CSCO,VZ are some that I’m sticking with). I want to own less stocks and more ETFs.
I’m going to test the impact of this rule, though. I have a larger share of my stocks in Consumer Staples (Kraft, General Mills, Procter&Gamble). Plus, I recently found a mutual fund that has a large short position, so in my retirement account, I investing a bit in it. It’ll benefit when the stocks go down.
I had a feeling that stocks were overvalued when the Dow reached 14K. But selling short is tough. I did several transactions, one of them was Wells Fargo. I did benefit, but with a wild stock market moves, I just bailed out. Investing in a Fund that has many short positions is better, I think. One that I found that is open and only requires $1K upfront is Comstock Capital Value R (CPCRX). It returned 57% in 2008! Had I known about these funds, I would have invested in them. Now I do, and this will help me in the long run. I learn something new every day. 
But this fund is expensive! 
It charges around 2% per year, I’ll have to find something else eventually. (Let me know if you know about something less expensive, that’s open and requires small position to invest.)
All in all, I think the stock market is due for a correction to the downside. The economy, though it seems it might be leveling off, is still in a bad position. Unemployment is high, foreclosures are mounting , house prices are sliding… Too much negative for the ecomomy to quickly rebound. I’m preparing for it a bit different this year, Sell in May, But in November.
Being well diversified is the key to long-term investing. If you were not, you probably learned from the recent correction. I began moving towards big, dividend paying, safe companies for some time. As a result, my portfolio is in good shape after the correction. The fact is, though, the economy is slowing and might even go through a recession. It doesn’t mean that there are no good picks. Actually, the best time to buy is during market downturns.
Here are some of the stocks and ETF that I’m currently looking at. I think technology is a good place to be in the near future. There is decent growth and the stocks do not look overpriced. I am going to have to pick on technology oriented ETF and invest in it.
Software and Technology ETFsSoftware ETF ( (SWH))iShares S&P GSTI Software Index Fund ( (IGV))PowerShares Dynamic Software ETF ( (PSJ))Technology Select ETF ( (XLK))
Town Sports Intl ( (CLUB))Strong membership growth; profits should follow.
Here are the stocks that are “on my radar” now. I am doing a little re-shuffling in my portfolio. My objective is to have 10-15 quality stocks and invest in them regularly. (In addition to the ETFs I hold.)
Walgreens (WAG) » Pharmacy: ($44.1, S&P Rating: 4 stars, Great Value Line rating): Good company to own. Great appreciation potential. Recommended in Value Line as well as S&P Outlook.
WellPoint (WLP) » Health: ($127, S&P Rating: 5 stars): Recommended in Value Line as well as S&P Outlook.
Darden Restaurants (DRI) » Restaurant: ($31.4; S&P Rating: 4 stars): Owner of Red Lobster and Olive Garden is looking exceptionally well. Ready to deliver. Recommened by Value Line, S&P Outlook, and Barrons.
Amgen (AMGN) » Biotech: ($59.3; S&P Rating: 4 stars): I’ve always liked Amgen. I invested in it couple times before and always came ahead. The stock looks good, has good potential. It is recommened by Value Line and S&P.
Here are the stocks that are “on my radar” now. I haven’t been buying lately (only investing in stocks that I currently own — dollar costing, to be exact), but these look good…
Now, after February is gone — one of the worse months, historically — it might be a good time to load up on some stocks. This year, my strategy is to pick big, international companies as the dollar is weak and the economy might cool a little bit. I’m also investing in the following ETFs: SPY, VDE, VGT, VHT, VUG, EFA, EEM.
Citrix (CTXS) » Web Software: ($23.5, S&P Rating: 5 stars): Very good company to own for superior returns. I’m looking to get in. Recommended in Value Line as well as S&P Outlook.
Cisco (CSCO) » Network Gear: ($18, S&P Rating: 5 stars): Very good company beaten down. They will recover. One of the strongest players in the industry. Good long-term investment.
Coca Cola (KO): ($43.6; S&P Rating: 4 stars): International company with strong overseas growth. Beaten down.
General Electric (GE) » Electronics: ($36; S&P Rating: 4 stars): Strong inernational company. Good company to hold. Good price.
Hain (HAIN) » Foods: ($18.9; S&P Rating: 3 stars): This company looks interesting as we move more and more into organic, more healthy foods.
WebEX (WEBX) » Web Communications: ($23.4; S&P Rating: 5 stars): Leader in web communication. Looks cheap. Very good growth potential.
CheckPoint (CHKP) » Security Software: ($22; S&P Rating: 5 stars): Looks cheap. Very good growth potential.
Here are the stocks that are “on my radar” now. I haven’t been buying lately (only investing in stocks that I currently own — dollar costing, to be exact), but these look good and might be up for grabs soon.
Note, however, that September has been, historically, the worst month of all.
Advanced Data Processing (ADP) » Business Services: (S&P Rating: 5 stars): This is a good stock, good long-term play.
Applied Materials (AMAT) » Semiconductor: (S&P Rating: 4 stars): Chip stocks are down but because they’re cyclical they’ll bounce back. Applied Materials should do well. Good time to get in.
Cadence Design Systems (CDN) » Software: (S&P Rating: 4 stars): Good stock; cheap.
Car Max (KMX) » Car: Stock that was recommended in BusinessWeek (see article); I think it has a lot of potential. I like their business plan.
Sony (SNE) » Electronics: (S&P Rating: 5 stars): Recommended all over the place: good international player; safe bet; good long-term player. I’m looking to getting into it.
Phillips (PHG) » Electronics: (S&P Rating: 4 stars): Has always had good producs; seems cheap now.
Sybase (SY) » Database: (S&P Rating: 4 stars): Cheap; it will recover.
Sysco [Foods] (SYY) » Food: (S&P Rating: 5 stars): Just look at the stock chart for this market leader. Very cheap. Should do fine.
OK, you might have noticed that I stopped updating my stock lists. The main reason for that is that it was becoming painful to update the XML file with the picks (that’s how I stored them). I have not given up on stocks — I don’t think that will ever happen. I’m going to make my picks in this Stas on Investing blog, under the My Buy List category.
Investing in stocks is exciting. Although, I have to tell you that I bought some mutual funds and some ETFs, just to diversify a little more. OK, I’ll tell you which ETF I bought in the list below, as I think it is a good time to buy ETFs. What is an ETF? Exchange Traded Fund, that’s the name. It is basically a mutual fund traded like a stock. Get a little more info on ETFs here. I’ll explain how and where I’m putting my money in a seperate, later entry.
Nokia (NOK) » Communications Equipment: ($13, S&P Rating: 4 stars): I think that it might be a good time to get into buying this wireless equipment leader. This stock got hummered because they missed the analysts’ expectations. However, this is a very good long term play.
Standard & Poor’s Depositary Receipts (SPY) » S&P Index: ($110): I want to diversify my exposure to stocks a little bit. A good way, I think, is to buy an index fund. This ETF is basically the whole S&P index: it’s like owning every stock in the S&P Index. They have a 0.1% fee, which is low when compared to a reasonable 1% mutual fund fee. Index funds beat all of the mutual funds in the long run — that’s a fact.
Humana Inc (HUM) » Insurance: ($15.8; S&P Rating: 5 stars): Managed care company that’s oversold. S&P raised its rating on it from 3 to 5 stars (the highest) and they recommend buying it. It went down a lot.
