Seeking Alpha by Adding Beta

The week was short but very interesting. It was only 3 working day week so everyone was looking for Thanksgiving weekend - people deserved a break from all gloomy economic news and looking forward to spend some money on Black Friday. Looking at last weekend collections of "New Moon" (teenage vampire movie) which were 3rd highest on record - it was looking all bright for shopping season. Initial readout from Black Friday sales seem to be promising and most likely this holiday season would end either flat or 1-2 % down from last year's shopping season which in general should be pretty good news (given high unemployment). Now let's look at "Dubai Factor". IMO, it was just matter of time when over-leverage caught with another house of cards built right in the middle of desert. I think Dubai is great city with tremendous potential. The idea of diversifying from oil revenues to more sustainable industries like tourism, trade and finance should be followed by many ...

After a swoon till March and then upswing, market indices are almost at same levels where they were year ago (and 10 years ago). And given last few weeks sea-saw (one week up, one week down), market is looking for decisive direction. Let's take a look at both sides of arguments: Optimists: Forecasts: DOW: Above 11000, S&P: 1200 We just came from brink of collapse and given so much fiscal and monetary stimulus, GDP growth would pick up and hence profits and stocks should go up Economies of developing countries (especially BRIC ) have decoupled from developed economies and should provide necessary growth to world economy Housing market in US seem to be stabilizing Banks seem to be putting their houses in order and may not need additional capital Risk taking is back with recent IPOs and pick up in M&A Pessimists: Forecasts: DOW: Below 8000, S&P: 850 Unemployment is rising and dangerously close to post-depression all time high (10.8 reached in 1982) Foreclosures are still ...

I am regular reader of Economist - normally my Saturday goes in reading Economist. It gives me good understanding about geo -political and economic issues around the world. This week, it has special coverage on " Brazil takes off ". Few weeks back it had similar special coverage on China. I am hoping that they will have one for Russia and India. Economies and stock markets of BRIC countries are on fire again even though economies of their biggest customers (US, Japan and Europe) are still in slow recovery. At one point last year, everyone thought that BRIC countries economies would bust but governments of these countries have done pretty good job in timely stimulus. Frankly, the way stimulus was handled by China and India was much better than US stimulus since it got economies going quickly. For example, India's plan of offering job to anyone who wants to work in rural India is an excellent idea in such situations. After all, that's what got US out of great depress...

One week up, one week down. That's the market summary and it would continue for next few months with DOW hovering around 10000 (with range from 9500 to 10500). So it is ideal time to do some balancing of portfolio to protect the yearly gains and move the money into safer alternatives. All year round, most of my recommendations were in high beta stocks. Many of them did extremely well (e. XL, HIG , LNC , HUN, IDG and many others). Some of them were duds (CIT-A, DRYS). Winners outpaced losers by 3:1 margin. So now it is time to lock and protect those gains. Here is high-level portfolio allocation recommendation - it may change based on individual age and risk tolerance and many other factors. If your age is between 30-40: Bonds, CDs , cash and bond mutual funds: 25% Stocks, Preferred stocks and equity mutual funds: 75% If your age is between 40-50: Bonds, CDs , cash and bond mutual funds: 35-40% Stocks, Preferred stocks and equity mutual funds: 60-65% If your age is between 50-60: ...

Last week was a pivotal week for markets and left investors wondering - was it a scary "trick" or opportunity "treat" ? As expected and predicted GDP grew by 3.5%. At surface investors celebrated the news on Thursday with nearly 200% point gain. But on Friday, they had second thoughts after parsing the numbers and realizing that actual GDP growth excluding "cash for clunkers sales" and " inventory buildup", was below 1%. Now that these are one time events over, investors are looking forward and wondering from where growth would come ? Hence the Friday sell-off. Despite last 2 week sell-off, markets are still up by more than 50%. So there is still some time to cash-out gains and wait for opportunity in another sell-off which may take markets below 9500. However I am still sticking with my prediction of DOW near or above 10000 by year end. Let's look at stock recommendation for the week: Company: Genworth Financial Symbol: GNW Buy price: $10...