1. The Ubiquitous Bear David Rosenberg: I am just keeping a catalog of Rosenberg's bearish commentary. This is a link to his latest bearish calls. (video: CNBC.com & written summary: CNBC.com) As the market rallied 50% off its lows, Rosenberg has been consistent in his bearish views, as I would expect. He is now calling this rally the biggest bear rally of all time. I am sure that Alan Abelson would agree with him, since both of those sages missed the run up entirely and have been naysayers every step of the way. Whatever, this rally has done wonders for my portfolio.
2. Jobs Report-Much Better than Expected: Nonfarm payrolls declined in July by 247,000, much better than expected by the consensus forecast. Employment Situation Summary The unemployment rate fell to 9.4%, while the forecast was at 9.7%.
The revisions to prior months are moving in the right direction for the first time in months, with the revisions reducing the number of job losses. Both May and June were revised to show less losses. The work week was up too, which is a positive, even though the increase was just to 33.1 from 33. The economy is clearly turning, notwithstanding the protestations of Abelson and Rosenberg. I can almost see Alan calling David now trying to find something negative to put in his column tomorrow.
I would not be surprised if the increasingly positive economic data puts a stop to the dollar's recent decline.
3. Goldman Sachs on the Return of Commodity Price Rises: GS released a report yesterday predicting that the current rally in commodity prices is just the beginning. Before the recession hit hard, there was a supply shortage caused by years of under investment. The credit crunch has made that problem worse, which will show up again in higher prices once the world recovers from the current downturn and worldwide demand starts to accelerate. I suspect that this forecast will turn out to be true, but the timing of another spike in prices is probably impossible to predict with any precision. I read another story today that there are about 50 super tankers being used to store about 100 million barrels of oil , due to slack demand, anchored primarily off the Gulf Coast in the U.S. and in Europe.
I am not going to even try to predict commodity prices. Instead, I will sell my commodity positions into parabolic moves, which happened last year, and then gradually add positions back after prices crater, recognizing that commodities have a place in my portfolio, just not a permanent seat at the table, more of an invited guest that hopefully will not overstay their welcome. Admittedly, this is a somewhat simpleton approach, and ultimately it is based on a recognition that I have no confidence in my ability to predict short term moves in commodities. I do have a small measure of confidence in putting on and taking off longer term positions. Recently, I have added positions in RJI, RJZ, and RJA. Bought MSPRA RJZ & ADX/ COMMODITIES AS AN ASSET CLASS Bought RJI, Sold DKQ, Bought Google/Pared BWX Added RJA Last fall I added UNG and UCO. Dynamic asset allocation shifts: from long bonds to commodities Starting a Shift Very Slowly into Commodities
4. Brookfield Asset Management (BAM-owned): BAM was one of the non-consumer staple stocks bought in March during RB'S frolic and detour: Buy of EWC & BAM (at $13.73). BAM reported net income for the 2nd quarter of 24 cents compared to 17 cents in the year ago quarter. Operating cash flow declined to 46 cents a share. The average estimate, as shown at YF, was for earnings of 17 cents. Revenues were 2.978 billion. MAYBE HEADKNOCKER NEEDS TO GIVE RB MORE MONEY TO INVEST.
5. Pepco Holdings (POM-owned): POM is a non-core electric utility holding, but I am currently reinvesting the dividends to buy additional shares. Earnings fell to just 11 cents for the 2nd quarter. This was down from the 2nd quarter of 2008, when the firm earned 53 cents a share excluding some special items. Revenue fell to 2.07 billion, down from 2.52 billion in the year ago quarter. Both the revenue and earnings were well below the consensus forecast. POM is a weak hold.
6. Bought 100 of CEF JDD in ROTH (see Disclaimer): I have been moving my asset allocation in the retirement accounts to 70% bonds/30% stocks, as I have found over the past 9 months or so tremendous opportunities in buying individual bonds or bond like securities, such as equity preferred stocks. I bought 100 shares of the closed end fund JDD in the ROTH this morning at $8.4. This is a leveraged fund. While I do not buy stocks on margin, never have, I will venture into buying small positions in CEFs that leverage their assets with borrowed money, as long as I have some comfort in the market. Leverage will work decidedly against these leverage CEFs during a market meltdown, as shown clearly in what happened to them between September 2008 to early March 2009. Excluding interest expense, the expense ratio for JDD is currently .88%. JDD - Nuveen Diversified Dividend and Income Fund As of yesterday's close, the discount to NAV was 16.76%: JDD This is primarily an income fund, which is why I put it in the ROTH, where I am focusing now on a lot of income generation. The current yield based on my cost is over 10% annually, paid in quarterly installments. JDD Fund Quote The fund divides its investments into four categories: 25% in REITs; 25% in Emerging Market Debt; 25% in non-REIT common stock (mostly of the higher dividend variety); and 25% in floating rate senior loans. JDD This is a link to the last quarterly report: FORM N-Q
No comments:
Post a Comment