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October Blues ?

As usual, market is having October blues. Last week was one of those weeks when investors were reminded that 6 month rally can stop and markets can in fact go down. Some of the macro readings like unemployment report, manufacturing activity in Sept are coming below expectations. This could be cause for concern as it can dent consumer confidence which is so critical for all important holiday shopping season. Q3 results would start coming in from next week. CIT is on brink of bankruptcy (I hope you folks did not follow my speculative recommendation of CIT-A - that was a bad call). So next couple of weeks, be careful and stay on sidelines. Once major companies like Alcoa, Intel etc announce results and give some guidance, at that time, one can take a look at which way markets are heading.

Till that time, I would recommend staying in cash and sell "covered calls" for stocks which you hold to generate some extra return.

Over next couple of weeks, I will be watching couple of insurance plays - Genworth (GNW at around $10-$11) and PMI (at around $3.50 to $4). Both these companies sell at nearly 40% discount to their book values and could offer good 50% returns over next 12 months.

Today's Ekal 5K/10K walk was pretty good - it gave me some motivation to do more such walk(s) and maybe even consider half-marathon next year.

Have a great week !

/Shyam

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