Seeking Alpha by Adding Beta

Markets are looking for direction and its good thing. After multiple weeks of ascent, markets finally took a pause and little slide as happened last week is good for health of rally. With Q3 results starting in 2 weeks, markets would trade in range between 9300 to 9800. So this is good time to identify some picks with great risk/reward ratios. With that in mind, let's look at preferred securities once more. Check out my previous blog on this topic which I wrote when DOW was at 7000. Here are some preferred which could offer great upside and quarterly returns in terms of dividend. SFI -D ($7.70), SFI -E ($7.5) and SFI -G ($7). All these are preferred of istar financial ( SFI ). Most probably istar would survive this downturn in which case these preferred should trade near their face value ($25). Even in these times, board has not cancelled dividends on these preferred. The yield on these preferred are about 25% IDG ($17), IGK ($18). These are preferred of dutch financial giant ...

Last couple of weeks both Gold and S&P crossed crucial 1000 mark with Gold at 1020 and S&P over 1060. Normally these two indicators go in opposite directions. People worried about inflation and economic turmoil rush to gold while people more optimistic about future rush invest in S&P. So it is kind of odd that both these are moving in same direction. So which would touch 1200 first and offers better opportunity over next 12 months. In my opinion, investing in gold is like not investing at all. You should buy gold only to make things you (or your other half) want to wear - rings, necklaces and so on. Gold as investment may be good hedge against inflation over short-run but over long-run it does not pay off. It does not pay any dividends and upside potential is very limited. S&P has lot of volatility but since it covers America's biggest 500 companies, offers lot of potential and 1-2% yield over long-run. So If you are looking for which one would touch 1200 first, I w...

Markets are at 11 month high and Lehman demise anniversary (Sept 15) approaching next week - after 6 month streak and 50% gains, markets seem to be running out of air and taking a pause waiting to figure out what lies ahead in 3rd quarter results. So how does one re-energize the portfolio for next few months ? Here are some thoughts. From recent reports, there are signs that major economies of the world are coming out of recession and many countries (except US and UK) have even shown surprise growth even in Q2. US and UK are most likely show a growth in Q3 picking up the pace in Q4. Consumer confidence is going up and reaching 70. Unemployment though very high seems to be stabilizing and not falling off the cliff. With holiday season approaching (Diwali in India, Christmas in western world), people are going to feel more positive than normal. So in summary there are quite a few positive events in front of us. One sector which has direct co-relation with GDP growth is energy sector. Gro...

Tomorrow when America would be celebrating late labor day weekend, there is another anniversary financial world would be watching - Government takeover of Freddie and Fannie which started the events which we can call as "Panic of 2008" Let's review some of the highlights: Vanishing acts by many financials stalwarts like Lehman, Merril , Wachovia and so on Major government stakes in many other stalwarts like Citibank, Bank of America, RBS , Wells Fargo and so on Generational low on S&P of 666 and an opportunity for generational long-term investment - I don't think we will see such a low again for another 5-10 years One of the best 6 month return on S&P since 1938 Return of financials with generational returns on big banks like C (from 1 to 5), BAC (from 3 to 18), GS (from 50 to 170), AXP (from 9 to 30) and so on What lies ahead ? Mar 2009 could be like 1982 which started a secular bull market. It is possible that we could see another bull market started in M...