Haven't written in a week and a half because to be honest I'm trying to figure out the risk/reward of owning stocks right now and the general direction I expect the overall markets to move over the coming months. We kick off 3rd quarter earnings season this week and from what we've already seen (from FedEx and other international companies) the problems in Europe, which have continued to plague the global economy are having a significant impact on U.S. businesses. It's because of this reason, and the recent economic slowdown in China, that I still think the prudent approach to the markets at this point is to remain cautious until we get further clarity out of Europe which can't seem to get its act together.
But yes the U.S. housing market is rebounding and stocks have performed well over the past several months, but consumer and business confidence continues to remain weak and overall business spending and hiring is tepid at best. My recent and current approach has been and continues to be opportunistic and look for high dividend yielding attractive stocks while at the same time looking to take profits where possible. The technology sector has struggled of late and I expect we will continue to see more of the same as international and U.S. government spending lags. Specifically Apple, which is everyones favorite, has lost about 15% over the past several weeks and I am unsure if the sell off will continue but as I said if you have profits on the investment I would at least take some. One of my biggest investment positions continues to be Yahoo as the company has made several changes to its business model and a turnaround seems to be taking hold.
Some of the other investment ideas I've been looking to buy include the following (high dividend paying stocks):
Veolia Environmental (VE) 9% yield
KKR Financial (KFN) 8.5% yield
Verizon (VZ) 6% yield
Enerplus Energy (ERF) 6.5% yield
Pengrowth Energy (PGH) 7.7% yield
Altria - Phillip Morris (MO) 5% yield
Some of the mutual funds I'm looking to move into are the FPA Crescent Fund (FPACX) and the Permanent Portfolio Fund (PRPFX). As stocks move down (and become more attractive based on valuation) I'll be looking to buy U.S. small and mid cap mutual funds.
Btw, I'm keeping a close eye on developments out of North Korea, Israel, Syria, and of course Iran.
