Skip to main content

"Fall" is coming: Be Careful !

Last week was another up week for markets with all indexes reaching 10 month high. The positive mood was reinforced by better than expected unemployment report with unemployment dipping to 9.4%. Looks like investors are becoming ready for GDP growth and willing to pay next year's prices now. In last 4 weeks, markets have gone up significantly. While this momentum could continue, it is better to take some profits and keep cash in hand because famous "Fall" months of Sept/Oct are nearby and if history is any guide, these months do bring some excellent opportunities if you have dome dry-powder ready. Here are few steps you can take:
  • If you are up by more than 50% or so, take some profits and keep those profits in cash
  • If you do not want to sell your long-term holdings (for tax reasons), sell "out of money" covered call against these stocks. So even if stocks went down, you would keep the premium. If stocks went up, you would get additional 10-20% upside.
  • Keep a list of quality stocks you want to buy and target prices and there would be an opportunity in next 3 months where you would be able to pick up these stocks at prices mentioned.
  • Here is my list (taken from my previous recommendations): DDR: $6, CBL: $5.5, FIG: $4.5, BAC: $14, GE: $12, PLD: $9, CENX: $8, PCX: $7, HIG: $16, LNC: $18, RF: $4.40, XTEX: $3.40, PDS: $5, KEY: $6 and so on
  • My this week's recommendation would be to stay in CASH or buy some dividend paying preferred shares
Have a good weekend !

/Shyam

Comments

Post a Comment

Popular posts from this blog

2025 = Is it going to be 1997 or 2000?

Happy Holidays... After 5 months of hibernation with no real reason than writing block, I decided to use quiet morning of Christmas day to start writing again. Lot has happened in last 5 months - in particular release of Animal Spirits with Fed starting interest rate reduction cycle and historic victory of President Trump for 2nd term. As the year turns into 2025 and stock markets at all time high, one would wonder, what's next?  To answer this, one needs to look back at 1920s and 1990s to give us some context on where markets may be headed. 1920s saw invention of televisions, radio, wider adoption of cars, vacuums, penicillin and many other which we consider household items now. These inventions created roaring 20s with markets going up by 500% eventually leading to crash of 1929. However during mid-20s, markets keep going up due to excitement of these inventions and end of World War-1 and Spanish Flu Pandemic. 1990s also saw many inventions - the key being launch of Netscape in 1...
Post a Comment
Read more

Elections and Rotations!

2024 will be known as an important year in terms of elections (97 nations covering half the population) across the major countries in the world. We are only halfway thru the year and already some key nations have gone thru elections and voters have indicated their preference for change (in a way). Let's take a look at few. India - Modi's BJP started with lots of enthusiasm with slogans of "Modi ki Guarantee" and "400 paar" (more than 400) seats (out of 543). Indian voters (which I considered one of the most smartest) gave reality check to Modi and BJP by reducing BJP count to 240 (from 303 in previous parliament) forcing it to form coalition government. I have lot more detailed hypothesis on these results (but not here). Almost everyone (including me) got their predictions wrong and lost some friendly bets. Indians want balance between "Strong, Prosperous, Proud" India with "Inclusive, Employment and Harmony". Modi and BJP are quick learn...
Post a Comment
Read more

And the Oscar goes to...

It's Oscar Sunday and time for predictions for few categories - before I digress into talking about drama in DC or markets.  First of all, I want to recognize the damage LA fires have done to the beloved areas of Los Angeles and impacted families across all spectrums. My heart goes out to them and wish them recovery and rebuilding of their lives... This year's Oscar nominees and post nomination period had been interesting to say the least. Due to this, the field is wide open in almost all categories and that's what makes prediction game so interesting. Just to set expectations, I would consider a win if I get even 50% predictions correct given the dynamics of nominees this year. So here are my predictions - "And the Oscar goes to..." Best Picture - Anora (surprise could be "The Brutalist") Best Director - Sean Baker for "Anora" (Surprise could be Brady Corbet for "The Brutalist") Best Actor - Adrien Brody for "The Brutalist"...
Post a Comment
Read more