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Are we heading for a double top ?

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March 10, 2010 – Comments (12) | RELATED TICKERS: C , HBAN , AIG

   After seeing all of the giddy people on CNBC this morning about how great everything Is right now I am convinced we are going to hit a double top. Some of the stocks that are on fire are the worst of the worst...   AIG, Fanny Mae, Freddie Mac, Citygroup.....  These are just a few examples,but the point Is that when the junk stocks start acting Irrationally,we are probably at or near a short term top at the least. I began selling some of my real life positions to raise cash....  be very careful here fools...   TS

12 Comments – Post Your Own

#1) On March 10, 2010 at 11:27 AM, topsecret09 (40.72) wrote:

 Topsecret10 real portfolio alert......  Sold  (SYA)  (BLX)  (ALIF)  (LGND)  (DPTR)  total cash position $18,657.00  {Portfolio Is now 24% cash....   TS

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#2) On March 10, 2010 at 12:08 PM, kdakota630 (29.74) wrote:

Agreed.  Personally, I'm continuing to be patient, calling for the second "top" in roughly July.

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#3) On March 10, 2010 at 12:24 PM, topsecret09 (40.72) wrote:

 Topsecret10 real portfolio....    BOUGHT (SA) Seabridge Gold   Added to position. 100 shares @ $21.85 (  Portfolio Is now 20% cash}  TS

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#4) On March 10, 2010 at 12:36 PM, daveandrae (< 20) wrote:

Cash, except for emergencies, is an irrational holding in the portfolio of the LONG TERM investor.  When you subtract taxation and inflation from the current interest rate that cash  offers ( which is already at zero percent) the return is quite negative. 

The only reason why someone would hold a large percentage of cash in their portfolio is because they fear all other asset classes, stocks, bonds, real estate, gold..etc..etc..will be even MORE negative. Thus, cash is not so much of an asset class, as much as it is a place to hide.  

The problem, of course, is timing.  The s&p 500 has been gyrating around the 1133 level for damn near 12 years. To make a bet that the market is going to go down from here, and significantly is quite a wager. For there has never been a 15 year holding period in which equities have produced a negative rate of return. 

Thomas Edmonds.  

 

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#5) On March 10, 2010 at 12:47 PM, chk999 (99.98) wrote:

Cash, except for emergencies, is an irrational holding in the portfolio of the LONG TERM investor.  When you subtract taxation and inflation from the current interest rate that cash  offers ( which is already at zero percent) the return is quite negative. 

No, cash is a wonderful thing to have especially when others don't have any. It is irrational to buy stuff just to buy or because everyone else is. Refusing to buy when assets are too expensive is the mark of a good investor. 

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#6) On March 10, 2010 at 1:10 PM, topsecret09 (40.72) wrote:

#4) On March 10, 2010 at 12:36 PM, daveandrae (< 20) wrote:Cash, except for emergencies, is an irrational holding in the portfolio of the LONG TERM investor.   If you truly believe this,you have no business Investing In the stock market In particular...  How many times have I heard that "you cannot time the market"...  In fact,there are many people that are very good at It....  Go back through my blogs and you will see that I called the last two short term drops almost on the money...  Oh,and by the way...  When the market topped at 14,000 In 2008 I sold EVERYTHING,and raised CASH...  I got back Into the stock market In May,2009 with fully Invested positions. I have traded In and out of positions since with my cash ranging between ZERO and 40%. I have been In the markets since 1982 when the Dow was at  800,and Intel was 2 bucks a share before any splits...   TS

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#7) On March 10, 2010 at 1:15 PM, topsecret09 (40.72) wrote:

  If you would have bought and held over the past decade,you would have made NOTHING...  You have to actively manage a LONG TERM portfolio so that you can take advantage of possible lucrative situations that arise from time to time. Entire sectors fall In and out of favor,and If you can recognize these situations you can re-position a portfolio for bigger gains. You have to have CASH to Initiate new trades....  TS

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#8) On March 10, 2010 at 1:23 PM, outoffocus (23.70) wrote:

 You have to have CASH to Initiate new trades....  TS

 Agreed, I missed out on alot of gains last year because I didnt have enough cash (invested too much too soon).  My retirement portfolio is about 60% cash atm (cashed out at the first "top") because from what I see theres too much gambling going on for me to find any good long term "bargains". Will it stay that way? I certainly hope not, but for now I think the market has gotten a bit ahead of itself.

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#9) On March 10, 2010 at 1:38 PM, topsecret09 (40.72) wrote:

Focus...     There Is too little upside and a LOT of downside risk right now In my opinion. Even If the dow makes It to 11,000,I see GREAT resistance at this level. There are way too many junk stocks that are zooming right now. Abercrombie & Fitch hitting new highs recently should be enough to scare anyone out of the market....    TS

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#10) On March 10, 2010 at 1:49 PM, topsecret09 (40.72) wrote:

Timing Is Everything

By: Steve Reitmeister
March 10, 2009


Buying timely stocks is the key to profitability. I know the momentum crowd agrees with me. Everything they do is about locking in short term gains to maximize portfolio returns over time. But I can hear some mumbling from the value investors out there.

They believe the key to success is buying stocks that are undervalued. And they will profit when other investors awake from their slumber to discover the error of their ways. Granted value investing can offer some big gains. But too often it takes a long time to realize those gains, which ends up sapping the final returns in the portfolio.

Guess what? I am a value investor too. But a reformed value investor that has learned that I can combine value investing with timeliness to maximize returns. To help reform the rest of you, let me prove to you why timeliness is so important.

Meet Two Investors: Moe and Larry

No investing lesson is complete without the inclusion of the 3 Stooges. So let's imagine that Moe and Larry are both looking to buy stocks. They go into the market at the same time but purchase different companies. Moe ends up with a 20% gain while Larry sees a 10% rise.

Who did better?

The gains on the surface would have one believe that Moe clearly beat Larry. Yet there is one vital piece of information missing . . . how long did they own their stocks? Let's add that in now.

Moe made a 20% gain in 1 year=20% annualized return.

Larry made a 10% gain in 3 months=44% annualized return thanks to the power of compounded returns.

In this new light, Larry clearly kicked Moe's investing behind because Larry got his return in a much shorter period of time. Larry wasn't waiting around for the stock to make its move. And thus for the first time ever Larry Fine has been called a winner.

1) Break Old Habits: Too many value investors fall into the trap of buying stocks right after a big earnings miss. They believe the steep fall in price is an overreaction and the stock will bounce back soon. However, studies clearly show that these stocks are consistent underperformers often lagging the market for several months. So the first step towards doing things right, is to stop doing them wrong.

2) Best Value Metrics: Different value investors focus on different value metrics. Our research has shown that these are the best metrics to find winning value stocks.

Price/Earnings (P/E) <=20: The lower the PE the better. But if too low, then you miss out on some nice growth stocks.Price/Book Value <=2: Benjamin Graham, the father of value investing, believed strongly in the effectiveness of low Price to Book ratio. Recent studies prove that is still the case.Current Price/52 week High >=.6: This is saying you want the price under the 52 week high, but not too far under. If too far under then you could be falling into the trap noted in point #1.

3) Earnings Estimates: Hey, if you've been to Zacks.com at least a few times, then you must know by now that earnings estimate revisions are the most powerful force impacting stock prices. Len Zacks proved this over 30 years ago with his seminal research. And there is no better way to tap into this timely indicator then with Zacks #1 Ranked stocks with a 27% annualized return. These are the stocks most likely to beat the market over the next one to three months.

Following each one of these three pieces will help you start producing better returns in your portfolio. Combine them altogether and you will be amazed at what you can accomplish.

6 Timely Value Stocks Right Now

Currently there are 6 timely value stocks in the portfolio of the Zacks Value Trader service. This is the same service that has beaten the S&P 500 in all 3 years since launching in 2007. In fact, in 2009 it jumped +47.5%. That's nearly double the S&P 500 thanks to many short term value plays like the +17% gain on Wonder Auto (WATG) in only 2 weeks. And +27% on Lubrizol (LZ) in only 2 months.

I invite you to see these 6 stocks and learn the secrets behind the Value Trader’s success. Be sure to check it out by Saturday March 13 before the special offer ends. This is the ideal time to get aboard.

About Zacks Value Trader

Best,
Steve Reitmeister

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#11) On March 10, 2010 at 4:19 PM, topsecret09 (40.72) wrote:

Rising fuel prices could kill this rally...   

NEW YORK (AP) -- Oil settled above $82 on Wednesday after driving past $83 briefly following a government report that showed U.S. crude oil supplies didn't grow as much as analysts expected last week.

Benchmark crude for April delivery rose 60 cents to settle at $82.09 on the New York Mercantile Exchange.

The Energy Information Administration said crude inventories grew last week by 1.4 million barrels to 343 million barrels. Analysts expected a build of 2.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. The lower build raised hopes that demand might be picking up, although there's still a lot of oil on hand.

"There was nothing inherent in the report to justify buying up to $83 per barrel," said oil analyst and trader Stephen Schork. He cautioned against focusing on one week of data which "doesn't mask the fact that we have seen enormous builds and smaller draws in the weeks prior to this."

Meanwhile OPEC said world oil demand should grow by 900,000 barrels per day this year, an upward revision from last month's forecast. OPEC said its forecast depends on a sustained global economic rebound, particularly in the U.S.

While oil prices have risen about 17 percent since early last month, crude demand in the U.S., the world's largest consumer of oil, has remained sluggish.

"We really have to look overseas for growth," said Andrew Lipow, president of Lipow Oil Associates. "Oil demand is increasing in the usual suspects like China and India, but it's also increasing throughout the Arabian Gulf and in Africa."

This means higher gasoline prices for U.S. consumers, he added. Retail gasoline prices climbed again on Wednesday. The nationwide average rose 0.9 cents to $2.768 per gallon, according to AAA, Wright Express and Oil Price Information Service.

Prices have risen 11.6 cents in the last month and are now 82.7 cents higher than levels of a year ago.

The dollar edged down slightly against the euro in afternoon trading. A weaker dollar makes crude cheaper for investors holding foreign currencies.

In other Nymex trading in April contracts, heating oil rose 2.64 cents to settle at $2.1162 a gallon. Gasoline gained 2.48 cents to settle at $2.2851 a gallon. Natural gas rose 4.3 cents to settle at $4.559 per 1,000 cubic feet. Earlier, natural gas hit a 52-week low of $4.450.

In London, Brent crude rose 57 cents to settle at $80.48 on the ICE futures exchange.

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#12) On May 20, 2010 at 4:31 PM, topsecret09 (40.72) wrote:

 That darn ol Topsecret...     TS

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