Use access key #2 to skip to page content.

The Correction Cometh

Recs

10

April 15, 2013 – Comments (16) | RELATED TICKERS: EXAS

I have been discussing at www.AmericanResourceBoom.com for about a month now the growing likelihood that we would see a correction. I am not going to repeat myself here, but I will suggest to take a very serious look at asset allocations from a Ben Graham "Intelligent Investor" standpoint. 

Given that we have entered the 5th year of a cyclical bull market, within the confines of a secular bear market, it is logical to think this bull is nearing an end. However, with all the government stimulus, it is also easy to think that the past few weeks volatility and today's drop is just a set up for one more leg up.

Regardless, being more than 75% in equities at this point is silly. I am about 50% equities, however, I also have some short currency positions for about 12% of portfolios with the balance in cash and global bonds. 

It wouldn't be a bad thing to be all the way to the conservative edge with a 25% equity allocation for fund investors. I am at 50% because I like my companies.

Look to add EXAS as a biospec if it goes under $10. FCX, CHK, VE, WLL and POT are favorites of mine if I can get a bid. 

Good luck. 

16 Comments – Post Your Own

#1) On April 15, 2013 at 1:04 PM, Option1307 (30.16) wrote:

Regardless, being more than 75% in equities at this point is silly.

Perfect I just make the cut as I'm at 70%!

I've been readjusting my portfolio since the start of the new year and have been a net seller thus far.Things have been too hot in my opinion lately and have suggeste we need the amrket to chill out a bit. 

I would welcome a general market correction with wide open arms at this point. My "wish list" grows by the day!

I'm currently an owner of EXAS and VE has been getting higher and higher on my potential buy list everyday. Just need a market correction to provide me a good entry point.

Report this comment
#2) On April 15, 2013 at 2:04 PM, kirkydu (92.32) wrote:

Good luck Option1307. I think we are 50% likely to actually get a cyclical bear market, not just a correction, beginning this year. We'll see. If not this year, then soon after.

Report this comment
#3) On April 15, 2013 at 2:59 PM, Valyooo (99.40) wrote:

@kirkydu,

What short currency positions do you have?  I was long AUDJPY, but it went up really fast so I closed, very tiny position, turned $800 into $1412 in a day, not a ton of money but not bad.

What do you think of going long IEP right now with that cash? Treasuries do well every summer.  Personally right now I am short SPY, going to long IEP very soon (waiting for new brokerage account to be set up) 

Why do you say 50% likely for cyclical bear?  I base a lot of my trading off of seasonality and time cycle analysis, but I can't get any really good books/articles on in depth stuff for cyclical/secular analysis....any recommendations?  I would like to know more about it, IMO the most fascinating part of investing 

 

Also what do you think of gold and silver right now?  I am thinking of buying gold if it hits $1200 

Report this comment
#4) On April 15, 2013 at 7:20 PM, awallejr (76.71) wrote:

Seems like "sell in May" is creeping into "beat the sell in May crowd and do it mid April."  We need a correction it is just a question of how long it will last since with computers what used to take months seems to happen in days.

Report this comment
#5) On April 16, 2013 at 2:13 AM, valuemoneygreen (81.05) wrote:

I must be really silly because I am 100% long. A correction came last year in May. I stayed long ALL year. My return last year was just over 68%. I have been 100% long since 2009 and will stay that way for at least another year unless the market is up over 25% this year. Or if WFC trades at 14 times this years earnings which is very doubtful. There are almost always deals out there and I would not be a seller of WFC if it is trading less than 14 times this years earnings. I will sit and collect my dividends if there is a correction and be perfectly happy! Even if WFC takes 2 years to hit $50.40 my 2 year return for this year and next will be over 44%. Which I can live with those returns. I don't want to miss ANY of the move up!

Given that we have entered the 5th year of a cyclical bull market, within the confines of a secular bear market

I think that is correct. The bull market usually lasts 7 years though and this is when the DOW starts out performing the S&P. Or MEGA caps start outperforming. This is starting to happen. The average secular bear phase lasts 14 years and we are about there.

Long WFC

Report this comment
#6) On April 16, 2013 at 2:14 AM, valuemoneygreen (81.05) wrote:

I must be really silly because I am 100% long. A correction came last year in May. I stayed long ALL year. My return last year was just over 68%. I have been 100% long since 2009 and will stay that way for at least another year unless the market is up over 25% this year. Or if WFC trades at 14 times this years earnings which is very doubtful. There are almost always deals out there and I would not be a seller of WFC if it is trading less than 14 times this years earnings. I will sit and collect my dividends if there is a correction and be perfectly happy! Even if WFC takes 2 years to hit $50.40 my 2 year return for this year and next will be over 44%. Which I can live with those returns. I don't want to miss ANY of the move up!

Given that we have entered the 5th year of a cyclical bull market, within the confines of a secular bear market

I think that is correct. The bull market usually lasts 7 years though and this is when the DOW starts out performing the S&P. Or MEGA caps start outperforming. This is starting to happen. The average secular bear phase lasts 14 years and we are about there.

Long WFC

Report this comment
#7) On April 16, 2013 at 2:16 AM, valuemoneygreen (81.05) wrote:

sorry about the double reply my internet connection was messed up

Report this comment
#8) On April 16, 2013 at 11:33 AM, Valyooo (99.40) wrote:

68%, nice....why 14x for wfc?

Report this comment
#9) On April 16, 2013 at 11:54 AM, dragonLZ (99.36) wrote:

kirkydu, I'd suggest you add a disclaimer to your posts suggesting to people you know what lies ahead.

Here is what you said in April of 2009 in your post Short Rally to Fizzle Soon:

While I had hoped that the economy was in the early stages of stablization, it appears that there is another leg down to come. In looking at my weekend edition of FT and grazing stratfor.com it is pretty evident that the equity markets don't stand a chance for a sustained rally and will chop along probably for a couple more years at least. I had hoped the worst was behind us. It's not.

Not sure how good of a call this was (to suggest you "know" we are in a "cyclical bull market, within the confines of a secular bear market".

Just a suggestion.

To me, your post sounded like you are reading this market like an open book just because you suggested we are due for a correction and yesterday it looked like you were correct.

I'm sorry if I'm being disrespectful (I know you know more about the markets than I will ever learn), but had to say something knowing your "market predictions" record. 

Report this comment
#10) On April 16, 2013 at 12:07 PM, dragonLZ (99.36) wrote:

Here is what you said in February of 2010:

"yeah, I started bailing as the market approached 10k, but that doesn't look so bad now. I am slightly net short as of about a week ago (see caps new positions), btw, for anybody who cares. Being net short is unusual for me, I generally only go market neutral as I have retail clients and have to worry about regulators (who tend to harass retail advisors who don't fall in line, rather than find the Bernie Madoff's and Wall Street hucksters).

IF I didn't have to worry about regulators, I would be 2:1 short to long, fyi."

Report this comment
#11) On April 16, 2013 at 12:12 PM, dragonLZ (99.36) wrote:

January 2011:

"Added some short ETFs to Caps portfolio. I have not added shorts in real life however as the trend hasn't turned that way quite yet. We could be setting up for a last gasp bull run, however, and if that happens the subsequent drop will be more severe. Any run up here is short term imho. We will see a 20-40% correction this year in my opinion as it appears that the gov'ment is running out of powder- unless of course it decides to explicitely back high inflation as a "rememdy." Dear Gov'ment, I (we?) prefer deflation even if that means lower asset prices for a few years."

Report this comment
#12) On April 16, 2013 at 1:53 PM, reddingrunner (95.69) wrote:

if you keep saying it, eventually you will be right.

as usual i have no idea what the market is going to do in the next month or year, i just stick with my strategy through thick and thin and count on "thick" winning in the end.

 

Report this comment
#13) On April 16, 2013 at 2:50 PM, valuemoney (< 20) wrote:

@Valyooo because historically it has traded at that number on the high end. Then I know I am getting FULL price if I sell.

Report this comment
#14) On April 17, 2013 at 8:26 PM, CCharing (91.75) wrote:

Exas news cometh

Report this comment
#15) On April 18, 2013 at 11:11 AM, L0RDZ (78.28) wrote:

LMAO>>>>>  I'm  so  pissed  I  tried   to  red  thumb  exas and  TMF  after several  hours  never  red  thumbed  it  for me  so I cancelled my  pick....

Looks  like  Dragon  sized  you up perfectly...

nice  pitch  for  exas...  I  just hope  no one bought any  in real life...

 

Report this comment
#16) On April 20, 2013 at 4:53 PM, jiltin (30.00) wrote:

I have been watching for an year now. Everytime minor correction comes, it takes 50 to 60 points of S&P. This is very short term cycle.

After year 2013 started a lot of Hedge funds jumping in market as they know, for sure, FED will increase the rates in near future. 

The current unofficial estimate of jobless is almost double (that is what wallstreet journal says) of actual reported (6 months EDD). Hedge funders know that FED will not pull until it comes 6.5% and trying to jack up all securities madly.

This will take another 12 months to 18 months. Until then, I do not see any correction. Hedge funds are taking advantage of FED weakness and they will loose the securities at high level. The best review  point or turning point must be around 2014 aug-dec period.

This is my own analysis and I am still new to stocks. 

Report this comment

Featured Broker Partners


Advertisement