DRH

Dow 30 Overbought / Oversold Edition

Would be nice if the author could explain the data posted a little better.

Dendreon: Short Squeeze Time

It's not that they won't give the details, they can't because the 28th is their presentation at the AUA (not a conf. call) and the actual data is embargoed till then.

4 Stocks for an Anticipated Industrial Recovery

It's a nice basket of stocks. Already have CAT and looking into MMM. I like the idea of buying in stages as the price drops and yield goes up. Hopefully we'll get some opportunity here.

Dividend Yields Continue to Shrink, Don't Yet Indicate a Bottom

Hmm, I'm not sure I'd put much faith in the average dividend yield of the S&P. What if we just keep getting more dividend cuts as stock prices fall? How would we ever get to 6% yield then? I think we're in uncharted territory, and I don't know if the historical basis can apply to this.

We're in a Dividend Investor's Paradise

In this market 3% yield is actually considered low. Interesting how times change...

Now when I run my screens I set a minimum requirement of 5% yield and still get a lot to chose from. Granted, not all dividends are created equal, but it is possible to find 6, 7, even 8% yielders. I know it's a terrible thing to say, but I was disappointed we went up so much today. I'm greedy and I wanted more decline so I could keep buying!

Barron's Calls a Bottom

I really have no idea why people insist on going out on a limb trying to call bottoms.

I've heard lots of great arguments for why stocks can't get much lower. The points made in this article are, for the most part, reasonable. However, when people are behaving irrationally there's just no limit to what might happen.

The Andrew Jackson Portfolio - Nine Stocks for $20

I agree, definately a pure spec play...

In this market, there are bargains everywhere for somebody looking to make a few speculative investments. IMHO, it doesn't make a lot of sense to focus on companies with known problems, poor forecasts, and a real possibility of bankruptcy. I'm sure there are better opportunities out there with less "baggage".

The Andrew Jackson Portfolio - Nine Stocks for $20

I still like GE, but I think the rest of those stocks are damaged goods and I would not be a buyer...even at these low prices. It may seem like a bargain, but when we look at real earnings it's very questionable. I agree that they won't all go under, but what if some do and the rest just languish at their present levels? It's hard to justify buying based on the fundamentals. It really becomes a spec play.

Ten Stocks to Hold Long-Term - Barron's

No comment on the stock picks, but if it were me I would want a little more diversification if I was actually picking 10 stocks to buy and hold for 5+ years. Seems like a little to much tech in that list to suit me. How about picking a utility, or an energy stock, or an industrial? Maybe throw in a drug stock, or something in the materials sector? What about a telecom?

Jeff Immelt Buys 50,000 GE Shares: Whoop-Dee-Doo

I'd rather have Immelt than some of the other clowns working for the banks. What really is the point of this article?

It's nice to hear the CEO is buying their own stock. Your complaint is that he didn't buy enough shares? How much should he have bought?

Obama Effect Creates Opportunities in Defense Stocks

Wholeheartedly agree that the defense stocks are a good value.

However, the fear that Obama may cut defense is real, not imagined. I think you look at which companies have very long term, high dollar value contracts. In these cases, the gov't may not be able to easily back out of it (without getting hit with high costs), and the contracts don't end until Obama's term is practically over.

'Wars and Rumors of Wars' - Time to Look at Defense Stocks

As an employee of on of the defense companies you mention, I'd like to add a few comments and possibly correct a few misconceptions:

1) Trying to anticipate war is no reason to be buying defense stocks. They will go up if the US suddenly gets involved in a conflict, but this is only because of the speculators. Enough people have the same misinformed point of view that it actually creates demand in the stocks. See #2 below.

2) The most profitable time for defense stocks is NOT when we go to war, it is when we are in sort of a cold-war mindset and do not have significant numbers of troops engaged anywhere. If we suddenly decide to send troops somewhere, then this takes up resources. When you need money to fund day-to-day troop operations, your not going to spend money developing the next generation aircraft carrier, fighter jet, or submarine. I remember right after 9/11 a lot of the programs we had got shut down because money had to be used to fund troops on the ground.

3) During times of war, the only companies that benefit are the ones that make the supplies troops need on a day-to-day basis, or ones that have some emerging technology that the military thinks could be a 'game-changer'. The larger companies don't see any added benefit.

4) Defense contracts can often span 5 years of more. So in many cases the work that will be performed while Obama is in office has already been negotiated by the Bush administration. It may be several years before the new administration gets a chance to increase/decrease funding levels. In these cases, going to war is the worst thing for the industry. No significant new contracts are awarded, and the funding we already have is put in jeapardy.

An ETF Package That Outperforms the S&P 500: Update

Sorry Gary, my mistake, got the symbols confused.

If you wouldn't mind continuing the discussion...I have analyzed your HMF, and had a few other comments. You have chosen sector based ETFs representing all the major sectors. Between all your ETFs you basically have every stock in the S&P and then some. However, the return seems to outpace the S&P (at least for the years you were able to track). I believe the key difference is that you are equal weighting each sector. If we look at the S&P it is usually not close to being equal weighted between sectors. At present, SPY has about 15% financial services and less than 4% utilities. Your HMF has 11% everywhere (I'm assuming you would rebalance once every year or two). I would suggest that your HMF is doing better because the sectors where the S&P is weighted over 11% have recently been performing worse than sectors where the S&P is weighted less than 11%. In a nutshell, the equal sector weighting provided a little less exposure to underperforming sectors and more exposure to the better performing sectors.

Don't get me wrong, I think this is still a better approach than just simply putting everthing into SPY or RSP. It certainly results in a more diversified portfolio.

Any thoughts?


On Jan 05 10:53 AM Gary Hickman wrote:

> Thanks for your comments. Actually, there is only one financial ETF
> in the portfolio- IYG. XLV is health care.

An ETF Package That Outperforms the S&P 500: Update

Thankyou for the portfolio idea. It seems reasonable except that the holdings include the financial services ishares AND the financial services SPDR. Why two ETFs in the financial services space, while everything else seems very balanced? Is this an intentional attempt to overweight one sector. It would seem to me that there will end up being a disproportionate amount of money going into companies like JP Morgan, Bank of America, and Wells Fargo. Would it be wise to swap out either xlv or iyg for something else? Regards, Dave