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Where Is This Market Heading?

13 August 2008 2 Comments

We have been moving up and down recently between the 11,000 mark and the 12,000 mark. The fall in commodities, namely energy, has really fueled the recent rally. But the last two days have been ugly for the market with much of the rally fizzling. Where is this going? When will we enter a new bull market?

My stance with the current economic environment has been and will continue to be the following:

  • Bullish on natural gas. I believe we will get back to a rise in commodities with natural gas rising in the future. I also believe that future policy in the United States will result in favorable conditions for natural gas. I’m a huge fan of Chesapeake Energy (CHK).
  • I am bearish on financials and housing. We will have a long way to go. Once some of the ugly inventory in my neighborhood and in surrounding communities begins to go away, maybe we’ll approach a housing bottom.
  • I am bearish on the consumer and thus the overall market. The consumer has begun a slow down that I think will translate into continued weakness for our economy. Remember, the consumer drives a large part of the GDP. We will probably have one of the weakest holiday seasons ever this year. The one consumer product company that I like? Apple.  My position in the Ultra-Short ETF (SDS) gives me the exposure I desire for a down market.
  • Bullish on solid, long term company that have proven they can perform in any environment. My favorite company in this category is Philip Morris Int’l (PM). I like the international growth and shareholder value that this stock represents.
  • I also like water companies for very long term potential. I’m not banking on these positions because it’s hard to say when the future returns will come. I like Veolia Environment (VE).
  • I am bullish on China. As the recent Olympics have demonstrated, this place is moving forward with incredible momentum. The Chinese market is down huge from its highs, might be a good time to buy? I think the broad Chinese market will vastly outperform the Dow over the next 10-20 years.

Where do you stand on the market? I have made it clear where I stand and my money and my positions reflect these stances. While I may be wrong in some of my views on the economy, I have researched and listened to voices I respect to come up with my opinions. This is my method for determining where I put my money. You can view my actual portfolio at Covestor and verify my positions.

The important thing is to have a method to your investing. Why are you investing in the companies that you are investing in? Take a stance and make the appropriate action to put your money in the right places based on your beliefs and positions. Don’t invest blindly!

2 Comments »

  • Sean said:

    Water is a great sector right now, and definitely seems to be undervalued. I like Gormann-Rupp (GRC), they’ve been on fire lately. I’ve been following CHK too, unfortunately they took quite a fall off their high but I’m betting they’ll make a comeback sooner or later.

  • kevin duffey said:

    Sean thanks for the recommendation on Gormann-Rupp, I am going to check them out.