The market has been on quite a tear since the November 2011. The market has cycled from pessimism to optimism. While there is good reason for the markets to trade higher, like an improving economy and declining unemployment, I'll proceed with caution. Overall, the prices for most common stocks are no longer dirt cheap. Remember, the markets have more than doubled off the march 9th, 2009 bottom of 676 on the S&P500. Interest rates are at all-time low's and we (North American consumers and businesses) are still chugging (when we should be sipping) from the low-interest-rate punch bowl. Who would of thought we'd see 5 year fixed money at 2.99%? I'm firmly in the camp that says it's time to raise rates ( I can hear the collective - gasp!!!). So I'm raising cash - selling into the strength. In the meantime, I'll continue to look for value opportunities that may arise. On that note, I have started a position in a large oil company, that's currently way out of favour (read cheap), but still has good prospects going forward, and plenty of oil/gas in the ground.
On another note, this week 19 major U.S. banks were stress tested by the Federal Reserve. I fully expect most of the super-majors ( C, BAC, WFC, USB, JPM, GS) to pass. Some, may come closer to the line that I'd like, but remember, these are tests based on hypothetical severe economic conditions. All eyes will be on BAC, as it's my largest U.S. bank holding and >10% position in my portfolios. With these tests complete, that will likely pave the way for increased dividends and share buy-backs. The uncertainty (warranted and unwarranted) around many of these banks has started to lift and their stock prices will react accordingly over time. Several of these majors are still cheap. But if your adding new money to the banks, then wait for a pull back.
In case you missed it: I'm long BAC, C, WFC
No comments:
Post a Comment