Market Outlook - Aug 10th

As for Friday’s action, the jobs numbers was fair – to – good but the number of long-term (people who be out of work for 6+ months) layoffs (of course not disclosed in the media) grew, which is not good. Reports also indicate that consumers are trimming out of their debt, which is needed.


As for my personal accounts, I will swallow the pill of making “slower” money and buy names of quality. Today, I bought 3 solid names of quality: VALE, FCX, and RTP. FCX is a hedge fund hot stock, so it has higher fluctuations, so let it be known. However, they are one of the world’s largest copper and gold miners and if gold soars, as well as other commodities (inflation is coming in time) this stock can print $125+. As for VALE and RTP, these are the best Iron ore/metals firms in the business. China is spending tons on infrastructure and only 15% has gone through so far. These guys provide the volume of metals to China, as well as other emerging markets, Europe, etc. BHP is good too but these are cheaper on valuation in my view. These stocks might go lower, especially if we sell-off but the story will NOT change.

As for financials and REITS, the rally is getting very long in the tooth. Hedge funds are looking to short BAC in size due to the massive run up. The best option is to put 40% of the dollar amount in BAC into SKF as a hedge if you are in for the long haul, in case the stock sees pressure. I will be honest, the short hedges have cost me thousands; however, now that I am out of most, we will probably tank. SLM and BAC are my only financials as of now.
So in summary, I will try to find quick dollar trades but it’s not always that easy. We found 2 good trades in BPOP and HBAN, yielding 16% and 11% in matter of 1 and 3 days but momentum may not always be there.

Instead for the rest of 2009, I will search for value (what’s left) and buy it aggressively but not at all once., just in 20%, 33%, or 50% increments, to lower cost averages in good and make higher returns. For example, if I see DVN at $60 and want to buy 80 shares, I might buy 25, wait for $57 buy 25, then see if I get $55 then buy 30, to have a cost average of like $57ish instead of buying 80 all at $60. Cost average is one of the keys to winning this game that many people don’t do.