Global financial markets rebounded as news out of China, Europe and the US restored confidence in the world's economic recovery. In the US, the Dow Jones Industrial Average rose 249.76 points (2.27%) and ended a three-day drop. The rally was sparked by the encouraging economic reports from the payroll number showing private employers adding more jobs in November; manufacturing also showed a 16 month growth, and the Fed's "beige book" indicated that the US recovery is strengthening.
With these encouraging economic numbers, we continue to add more toward equities to our portfolios especially if we get a meaningful stock market pullback. We still feel that the stock market will outperform moving towards the end of the year and continue into the 1st quarter of 2011.
Wednesday, December 1, 2010
Wednesday, November 17, 2010
Opportunity to buy on the market’s pull back
at
3:36 PM
The Dow Jones Industrial Average fell 90.52 points on Friday and again on Monday by 178.47 points to 11023.50, totaling a 3.7% drop for the previous few trading days. The sell off was attributed to the news from China that the government plans to curb the runaway economic growth with a possible institution of interest rate hikes. Added to the downside pressure in the market was the European sovereign debt issue with Ireland and its ability to fund their debt without a restructure of their debt.
The worries about China and European debt issue are concerns for the market but they are not new developments. We feel that the market’s pull back will give us an opportunity to invest into the market at a lower price.
Verdant Capital believes that the equity market is the best place to be, moving toward next year, especially with the Fed’s recent announcement of using quantitative buying of treasuries to keep the interest rate low. As stated from our last commentary, we will allocate more towards equities and be more aggressive in our portfolios. We will buy if any meaningful pull back in the equity market occurs. We continue to like investing in stocks in China/emerging markets, oil, and technology.
The worries about China and European debt issue are concerns for the market but they are not new developments. We feel that the market’s pull back will give us an opportunity to invest into the market at a lower price.
Verdant Capital believes that the equity market is the best place to be, moving toward next year, especially with the Fed’s recent announcement of using quantitative buying of treasuries to keep the interest rate low. As stated from our last commentary, we will allocate more towards equities and be more aggressive in our portfolios. We will buy if any meaningful pull back in the equity market occurs. We continue to like investing in stocks in China/emerging markets, oil, and technology.
Thursday, November 4, 2010
Don’t fight the Fed’s and invest more towards stocks
at
2:38 PM
The Federal Reserve announced that they would purchase an additional $600 billion of long-term Treasury securities by June 2011 in a second round of quantitative easing, which pushed stock market higher. The market rallied to its highest level since September 2008, and investors cheered on the Fed's latest effort to stimulate the struggling economy. The Dow surged nearly 220 points (1.98%), while gold prices set another record high and crude oil rose to a six-month high. Interest rates for the two and five year notes went down to record lows as did the demand for the US Treasury Rose.
With the Feds keeping the interest low for an extended period of time, the stock market will continue to work itself higher in the coming months. Our mantra is “Don’t fight the Fed’s” meaning we will be aggressive in buying stocks if any meaningful pull back does occur. Currently, we like stocks much more than bonds and we continue to be overweighed in China, Oil, and the emerging markets.
With the Feds keeping the interest low for an extended period of time, the stock market will continue to work itself higher in the coming months. Our mantra is “Don’t fight the Fed’s” meaning we will be aggressive in buying stocks if any meaningful pull back does occur. Currently, we like stocks much more than bonds and we continue to be overweighed in China, Oil, and the emerging markets.
Friday, September 24, 2010
Trading range and positive returns for 2010
at
4:30 PM
The Dow Jones Index leapt 197.84 points, or 1.9%, to 10860.26 and rose 2.4% this week, extending its upward rise to four weeks. For the month, the benchmark is up 8.4%; it’s the best September since 1939 and, as a result, we’ve seen investors race into stocks and commodities. The increased appetite for risky assets is a sign that investors feel that there won’t be a double dip recession.
The market has had an impressive run, but we believe it would take more positive economic numbers in the coming months for the market to move higher. The market is still currently trading on a “technical basis” confirmed by the current low volume environment that is exhibited in this rally. We are currently selling overweighed positions of Gold and QQQQ and then buying them back when the market retreats back to the lower trading range. We are also still accumulating China, oil and emerging markets.
The market has had an impressive run, but we believe it would take more positive economic numbers in the coming months for the market to move higher. The market is still currently trading on a “technical basis” confirmed by the current low volume environment that is exhibited in this rally. We are currently selling overweighed positions of Gold and QQQQ and then buying them back when the market retreats back to the lower trading range. We are also still accumulating China, oil and emerging markets.
Thursday, August 12, 2010
Market Trending …. It will take time for full recovery 08-12-10
at
2:16 PM
The Dow Jones dropped 265.42 points, or 2.5%, at 10378.83 with all the 30 Dow components declining. The stock market, commodities and riskier currencies fell over worry about the weak US recovery and slowing growth in China. With all three major US indexes turning negative for the year, we continue to believe that the recovery is occurring, but it will take a lot longer time than anticipated.
The market is currently concentrating on the economic numbers that have mostly been negative while corporate earnings have mostly exceeded projections. Most of the inflows for investing now have been in T-notes and bonds which have driven the 10-year Treasury note to a 4 month low of 2.69%. With yields hovering at such a low level we continue to like the stock market for risk adjusted returns. Concentrate on high dividend and yield stocks. This will pay you while you wait for the market to continue to return. For more aggressive investors, we continue to add to emerging markets and commodities.
The market is currently concentrating on the economic numbers that have mostly been negative while corporate earnings have mostly exceeded projections. Most of the inflows for investing now have been in T-notes and bonds which have driven the 10-year Treasury note to a 4 month low of 2.69%. With yields hovering at such a low level we continue to like the stock market for risk adjusted returns. Concentrate on high dividend and yield stocks. This will pay you while you wait for the market to continue to return. For more aggressive investors, we continue to add to emerging markets and commodities.
Monday, August 2, 2010
Stock Market Recovery…. Where do we go from here?
at
1:22 PM
The stock market started August with a bang on the news of encouraging manufacturing and construction-spending data and better-than-expected bank earnings in Europe. The Dow Jones Industrial Average closed up over 200 points, or about 2.00%, with most sectors in the S&P 500 with positive gains.
The positive momentum from July is carrying over into August but VCM is still very cautious about the fragility of this economic recovery. The unemployment numbers and consumer confidence have to improve drastically before we can declare that the economy and the market are fully back. Though we believe that we won’t get a double dip in recession, we feel that it will take time to recover.
The markets are currently trading on a technical basis and the recent move up in the stock market was partly due to institutional buying from an upward break of a key resistance level in many of the major indexes. We feel that the market will be in a trading range probably till the end of this summer and currently we are in the upper level of this trading range. As the market continues to move in this range, we will be vigilant in studying the earnings and economic indicators in the future.
The positive momentum from July is carrying over into August but VCM is still very cautious about the fragility of this economic recovery. The unemployment numbers and consumer confidence have to improve drastically before we can declare that the economy and the market are fully back. Though we believe that we won’t get a double dip in recession, we feel that it will take time to recover.
The markets are currently trading on a technical basis and the recent move up in the stock market was partly due to institutional buying from an upward break of a key resistance level in many of the major indexes. We feel that the market will be in a trading range probably till the end of this summer and currently we are in the upper level of this trading range. As the market continues to move in this range, we will be vigilant in studying the earnings and economic indicators in the future.
Friday, July 16, 2010
Stock Market Up’s and Downs
at
10:45 AM
The markets got more bad news on the economy today from the University of Michigan’s consumer confidence index which dropped to its lowest level since late August. Combined with poor earning from Dow companies, Bank of America and General Electric, the Dow Jones sank 261 points or 2.5 % back to 10,097.
Until Friday, the stock market had weathered the bad news, thanks to some solid earnings reports. Many observers had hoped that the market already had put in its lows for the year, but Friday's sell off erased all of the gains the market had made during the week and left its course again in doubt. The Dow ended the week down 1%.
We have always thought that the recovery will have its ups and downs and this week we are getting those downs. However, we still do not feel that a double dip recession is in the cards. The market will probably be in a trading range until we see more signs of recovery. With interest rates at all time lows, we continue to look toward dividend stocks to add to our portfolios. We believe that the economy is slowly recovering but it always takes longer than we think.
Until Friday, the stock market had weathered the bad news, thanks to some solid earnings reports. Many observers had hoped that the market already had put in its lows for the year, but Friday's sell off erased all of the gains the market had made during the week and left its course again in doubt. The Dow ended the week down 1%.
We have always thought that the recovery will have its ups and downs and this week we are getting those downs. However, we still do not feel that a double dip recession is in the cards. The market will probably be in a trading range until we see more signs of recovery. With interest rates at all time lows, we continue to look toward dividend stocks to add to our portfolios. We believe that the economy is slowly recovering but it always takes longer than we think.
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