As I've said, the markets are trading in a tight range amid all of the 4th quarters earnings announcements that have been released over the past week and a half. I still believe that now is an appropriate time to take some short term profits and sit on one's hands until stocks come down in price and offer better "value". An interesting fact, so far in the trading volume (the amount of stocks traded) in 2012 is at its lowest level since 1999. This has me wondering what market participants are working! I will say this, I believe we will see a massive portfolio reallocation from money managers out of bonds and into stocks, and when this does eventually happen, the market will explode to the upside.
Most recently, I sold my positions in Clorox (the consumer staples company), not because it's not a great company or investment, but rather b/c I felt that I should take the $5/share gain I had on the stock and look to put that money to work else where. As I wait on for better "value", I've been researching and putting together my "shopping list", which is a compilation of different investment ideas I'm looking at. For example, in looking at Mutual Funds, I will allocate more money into U.S. MidCap and SmallCap funds after we get a slight selloff in the markets that I'm looking for. I eventually want to move some money into a Latin American Mutual Fund, but I need to wait to see what the global growth picture looks like over the next month (b/c Latin American markets are mostly dependent on natural resources and agriculture). Depending on how the economic data looks like out of China and Japan over the next month, I would also consider putting some money in an Asian focused Mutual Fund.
With respect to individual stocks, I still believe the financial sector is a great place to be invested, and will probably provide the biggest upside gains as we move thru the year. As I've said, I own (and like) Citigroup, Suntrust, Etrade and Chimera Investment Corp. I'm waiting to buy KKR Financial back once the price comes back down (I previously owned it and sold it for a profit), as well as Sallie Mae (which I also used to own and sold for a profit). I'm watching Alcoa, the aluminum company, as it's come down in price from $18 to $10 (and they should see a pick up in demand if global growth picks up). I like the automobile company Ford, as they have seen a mighty increase in market share over the past 6 months. The stock is cheap trading around $12 and I'm looking to buy some if it drops down to around $10-$11. I like both Verizon and AT&T for their growth prospects and the fact they both have dividend yields of over 5%, BUT Verizon just came out with lackluster earnings because they have given new and old customers such cheap deals on smartphones (iPhones, Blackberry's, etc) that it has actually hurt their profit margins. This will not always be the case because they expect their customer retention rates to increase but for now it could hurt the stock.
Whoooh! I know I've written a lot and mentioned several individual Mutual Fund and stocks investment ideas, but I'm gonna stop there and get some lunch! I'll write some more later about some of the other ideas I'm looking at.
