Okay here is the deal at least in my view, NOTHING HAS CHANGED. I am still pretty bearish on the overall market. I believe that it will at best move sideways for awhile. So this calls for a tactic that most people are scared of and that's staying on the sidelines. Yep, just sit back and wait for this collapse of the market to play out. I am still screening stocks but at this point there is so much scrutiny involved that I might as well be sitting on the sidelines myself. I have already told you a few months ago to prepare for battle by repositioning your retirement accounts (401K and IRAs) and brokerage portfolios for the long winter. Some of you may have listened and others just simply ignored my instructions. I have two 401k plans and in my older plan I sold my gains and moved into a defensive position: a money market account. My IRA account offered a better hedged and I moved my gains into Treasury Inflation Protected Securities or TIPS. They offer the current Federal Treasury rates, which are not big returns, but add the rate of inflation to your returns. And its no secret at this point that INFLATION has been picking up for a long time now. Just ask yourself, how much has the price of goods you buy gone up and I bet across the board...you say enough to feel it when you shop. At this point its about wealth preservation until things get better.
Those accounts had gains in them so I moved to safer ground as the markets decline plays out. However, the other scenario is my current 401K plan is dropping like Britney Spears career, but I have adjusted my holdings. And this is why I am not panicking...b/c I am still young. If you didn't have gains or are in the red...keep buying in as prices go lower because you are able to buy more shares than you were before. Lastly, in your stock portfolio you better have some dividend stocks to ride out this drought b/c they will create a floor if your stock begins to decline. The only stocks I am adding to my portfolio at this time are ones that are hitting my superman price! Remember that concept from earlier posts! I always create attractive levels that are difficult to reach and when they get near those targets I look to add positions.
I am following another set of stocks this month:
Electro Scientific Industries (ESIO) - This is a technology play that reached, "Superman" status...as Soldier Boy would say. I was patiently waiting for 13.80s after evaluating charts and buying patterns and the market has pushed this stock down to these levels. I bought small amounts at this point and will watch it closely.
Convergys (CVG) - Bucked the trends recently and is moving up nicely. Again to be honest its so difficult to not chase this stock. I liked it at the levels of mid 14s but it is moving. I will wait and again throw out the really great price of 12.90s as a Superman price.
CSX Corp (CSX) - If you couldn't tell I love the railroads and CSX has been on my eye as private equity firms continue to pressure managment to improving returns. Although shrewd, I love to hear that type of action because they often lead to the catalyst that we are looking for to move a stock. Not to mention, I already own BNI and I still love this industry for moving all those commodities that the world needs. And they have pricing power when gas is high and BENEFIT as gas prices come down to help improve margins. Jump aboard the CSX express. I love the lows today of 55 and am watching this closely. I don't have a superman price but stay tuned.
Disclosure: I opened a position ESIO
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