Is it me or does this friday come with a bit of sadness as today marks the last day of summer? I say bittersweet because I love the summer and the sun and the beach and family vacations, but I also appreciate the quiet beauty of fall with the changing of the leaves, the cooler temperatures, and of course college football!
This morning in stock market and investment news, KB Homes, one of the largest homebuilders in the country, released earnings this morning and blew away analysts expectations and actually turned a decent profit when most thought the company would continue to struggle and lose money. Quite the contrary as the company said they are seeing a healthy pick up in demand for housing, which bodes well for the overall housing market (which has been the achilies heal of the most recent recession). An investment firm this morning downgraded the discount brokers Charlest Schwab and Etrade (I own Etrade) because they said the volatile stock market behavior is keeping the average investor out of the market...while I somewhat agree with this opinion, the discount brokerage companies still offer incredible value as they are undervalued and I expect there will be a good amount of consolidation in the industry (which is why I own Etrade because they are the most attractive company to be acquired by a rival or a large bank). Apple came out and said that their new Iphone 5 is flying off the shelves and they expect to have sold over 10 million by the weekend. While this is pretty awesome news, I think Apple's stock is somewhat overvalued and I would be taking profits if I owned any shares...remember stocks don't go up forever, doesn't matter if it's Apple or Walmart.
Generally speaking, I'm still concerned with the disconnect between the way in which stocks have acted over the past 3 months and the way in which the global economies are struggling. Fundamentals have been tossed aside and the animal instincts of following the crowd and chasing returns has taken over; this is a very tricky time to be invested because no one wants to be the last one at the party when the cocktails run out. Just remember, a profit on an investment is still a profit, and just because you might sell out of your investment early as it continues to go up is not a bad thing. I continue to look to take profits where I have them and move the proceeds to the side of the market as I wait for stocks to come down in price and have more attractive valuation. In the meantime, as I discussed with a client/friend the other day, I'll be looking to move that cash into high yielding dividend paying stocks such as Duke Power, Scana, Chimera Investment Corp, KKR Financial, Altria (Phillip Morris - tobacco), Verizon, etc.
So, all that being said, today is bittersweet for me as I say goodbye to the lazy hazy crazy days of summer and usher in the leave changing days of fall (although I dread the day when I have to start raking leaves!).
