The market closed this week down 101.64 points (roughly 1%). The big picture is not looking good. My watch list rose from 6 to 12 companies this week. That is more than double. For a second consecutive week, I do not have any company that is within 10% of the yearly low. Although the market appear to be "topping out", I bought a stock that I sold earlier in the year, Altria Group (MO) at a yield of 7.5%. I placed Altria as my wild card company on the watch list because the company isn't trading near its low but after increasing the dividend by 6% plus a strong fundamental, I had to buy some for my family. If Altria falls to 52 weeks low, it would yield an amazing 9.5% and the company is known to have a ridiculous payout ratio of 90%+. Enough about that, here are the companies on my watch list as of September 4, 2009.
Market Commentary
I am getting bearish on the market. When good companies sold off, that tells me the big money is selling. I am in mostly cash (90%) except for a small trading position I placed on a gold miner, Yamana Gold (AUY). That turned out to be a great trade as gold approach 1,000 mark. I don't know when the market will turn or where it will be so all I can do is manage the risk associate with my capital. Let me give you an example.
I purchased Altria for a family member who is very conservative. If you too are conservative and would rather place your money in a CD account (currently average 1.755 %), why not buy some Altria which will pay you (at current yield of 7.35%) 1.84% per quarter. You will receive the same amount of income in just 3 months compare to 1 year. The risk will be greater but if you can hold for one year plus, I think you will do well. The risk of price decline is just as good as price rise.
Print this post
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.