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Time to Re-energize Portfolio !

Earnings season is almost over and majority of companies beat earnings - what is relief especially since markets has built up so much expectations. Last week finally DOW broke its 4 week losing streak but still very much hovering around 10000 range. I was predicting it to touch 11000 based on momentum and earnings surprises. If not from Greek and overall Europe problem, it might have come very close to 11000 - instead Europe problems brought it down below 10000. One way it was a good break since non-stop ascent was not sustainable. Now that it has taken some breather and assuming Europe resolves its issues about PIIGS deficit by standing firmly behind Greek debt, markets would resume its upward journey. I am predicting DOW to cross 10500 by Mar 31. Only major risk is Greek problem - if Europe is not able to give clear direction about Greek, there is risk that DOW may fall near 9500.

Last Sunday's Superbowl match was great - while my prediction did not come true, I was happy with Saints first-ever win. They played excellent football and deserved to win. It's great boost for City of New Orleans also.

As individual investor, this is good time to take some positions especially in energy sector. I particularly like Oil MLP sector. Many companies in MLP sector stopped their distributions for conserving cash which was right call. Now that they are in the process of completing their non-core asset disposals and refinancing their debt, they would resume the distributions in 2010. Here are some picks (which I have recommended in my earlier posts also)
  • XTEX ($9) and/or XTXI ($7) - this company is very close to refinancing its debt after which it will resume its distributions. So I am expecting about 50% return in 12-18 months
  • AHD ($5.5) and/or APL ($11) - very similar to XTEX/XTXI. AHD in particular has come down and provide a good entry point for similar 50% return in 12-19 months
  • ERX ($33) - If you want to aggressively play energy sector, this 3x ETF provides a good way to play it. However this is extremely volatile and one should invest only if he has stomach to live with volatility. Given that world economy is recovering, energy demand is going to go up and would benefit all energy companies and hence ERX could return over 50% from now till 18 months
Have a great Valentine's and President's weekend and Happy Chinese New Year !

/Shyam

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