There is nothing like an 1,100 point in the Dow to get you wishing that you were fully invested. I thought the market would rally, but I have been surprised that we did not go lower and also at the size of the rally. So what do do now? Has the market reached bottom and we are in the beginning on a new bull market? Or is this simply a rally within a bear market? Honestly, I am not sure. The economic conditions are still poor, and I don’t think that earnings projections have fully taken into account the recession that we are in. So based on that, stocks should head lower as earnings estimations are cut.
Friday’s sell-off did not happen like I thought it would, but I have not changed my strategy.
I think the market still will go lower and I have orders in for some stocks about 5% and 10% below their current levels.
This is the hardest part of investing as you wonder if stocks will fall to your levels or whether they have already bottomed and that you are about to miss a huge rally.
When all this hedge fund selling is done, and I dn’t think it is yet, I think we will ahve a big rally becuase their is a lot of cash on the sidelines waiting to be invested in stocks.
I turn on CNBC and it looks like the market is going to be down 8-10% this morning. I am looking at this as a buying opportunity and am placing orders for stocks about 10% and 15% below the market close’s yesterday.
I have about $4,300 left in cash waiting to be invested, but I am waiting for the market to go a little lower before I commit some more cash. I don’t think that the market has bottomed yet, and I believe that I will get a chance to buy some good stocks and lower prices over the next several weeks.
Not that it is easy sitting on the sidelines watching some stocks soar on positive news or a market rebound. I am up about 30% on Berkshire and 20% on Google, which have both seen big jumps from when I bought them. I realize that I have the gains I have because I was able to buy these stocks when the market was in a free-fall and these two stocks were on sale.
I am amazed at how bullish everyone has become. Barrons over the weekend had a page on 25 stocks you should buy now. And that was after the worst week for the Dow in recent memory. What concerns me is earnings. Companies are starting to report Q3 earnings and I expect a lot of them to say that business is tough. Especially is you are in the B2C market.
The auto market is in a free fall, and the airline, hotel, housing and retail sectors are not in much better shape. I am hoping that some negative earnings reports in the next couple of weeks will push the market back down into the mid to low 8,000’s so I can pick up some more stocks.
In addition to buying Berkshire Hathaway on Friday I also bought some shares of Google (GOOG) and the NASDAQ 100 (QQQQ).
Google stock has come down over 55% from a high of $747 a share earlier this year amid concerns that a slowing economy.recession will mean that companies will spend less advertising dollars online and as a result, Google’s runaway growth rate will slow. These are valid concerns. The economy is slowing and Google will be impacted.
When I bought the Vanguard S&P 500 Index Fund I wrote that I invested only about 25% of my cash into this fund because what I did not want to do was invest all my money at once and then have the stock market fall sharply. Boy am I glad of that decision.
The stock market last week was going through quite the sell-off and I had been looking at buying Berkshire Hathaway if the market continued to sell off. Earlier this summer I had written an article about Berkshire where two analysts had given conflicting opinions about the direction of Berkshire. I had finished that post by asking the question “Is Berkshire heading to $100,000 a share or $200,000.” At that time, Berkshire (BRKA) was trading at about $122,000 a share, down from a high of $147,000 in April.
Today I bought 28.043 shares of the Vanguard 500 Index Fund (VFINX) at a price of $106.98 a share. Fidelity charged me a fee of $75 for the trade, because the fund is not part of their fund network, for a total cost of $3075.00.
Why this fund? Well the fund definition is as follows:
What to write about has been something that I have been struggling with for weeks. Making stock or mutual fund recommendations that I don’t follow myself is a little bit self-centered. General financial commentary is nice, but I think it needs to have some context to make it worth while. That context from now on will be my own personal experiences and thoughts. Yes I will mix in opinion and commentary from Wall Street, bit I will give my opinion on what the “experts” are saying.
Western Refining, Inc., through its subsidiaries, operates as an independent crude oil refiner and marketer of refined products. In today’s rising crude market, you would think that all refining stocks would be performing well. Western Refining is the exception.
The problem is debt. WNR debt problems have caused the stock to fall almost 80% from its July 2007 highs and it has not reached bottom yet. At $13+ a share, Western Refining still trades at a significant premium to its peers on 2008 and 2009 EV/EBITA and Wall Street expects that a debt covenant will be broken in the coming weeks.
