The Sky Is Falling
You might believe that if you saw the way the end of December went. ASFI has been beaten down badly because it was a few days late filing its annual report and the market as a whole is down 5.5% over the last 3 days.
I'm not going to bother to predict what is likely to occur over the next few days but here are some of my general thoughts:
1) ASFI went down on a meaningless downgrade. It then went onto the naked short list which speaks volumes of why this low-turnover, low-volume stock dropped so far and so fast for no apparent reason. I doubled up, this is a great business.
2) My problem with the market is not that its gone down. My problem is the stocks that should have gone down haven't gone down enough to bring the markets to an attractive overall valuation.
3) Ultimately I would keep putting smart money into well priced, high yield, high quality securities. If you want an example look into ABR (I'll talk about this in a following article).
Currently I myself have been rebalancing my portfolio to make sure its not heavily weighted towards financial services thanks to my recent aquisitions. I only typically keep roughly ten issues at a time, excluding option speculations, but I wanted to shift some weight into a close ended municipal bond fund.
I sold out of SPN after its 20% day earlier this week for a net of just over 35%. I like the company for the long haul but when you get a 20% profit in a single day on mildly good news its time to take some profits and walk away.
Subscribe to:
Post Comments (Atom)
2 comments:
We see eye-to-eye on this sensationalism about a recession. It's an election year, emotions are high, but there was 4.9% growth last year. Totally onboard with rebalancing away from financials to avoid sub-prime fallout, it's going to be a hard year there. If that's a smart move, then why is the tech-heavy NASDAQ getting pummelled? To me it should be out-performing as people get away from financials...
P/E's in the Nasdaq are very high because are pricing in unrealistic growth scenarios (like 40% a year for 10 years, etc). When the general economy slows down it becomes obviously exactly how overly optimistic those growth rates are and so they plummet.
Post a Comment