Wednesday, August 24, 2011

Short one

Just some observations on markets.

The US financial stocks are almost as depressed as financial crisis 2008/2009. That does [NOT] really making sense to me. Bank of America hit US $ 3.95 in Feb 2009 but today is selling for 6.30/share. If you go back to good bank and bad bank strategy, I am sure you can extract much better value than this. All I can say, this is crazy!

Stock market is typically pricing a recession about 6 - 9 months ahead. The stock market is also will price in a recovery 3 - 6 months ahead too. If we believe the former, we will be in recession by Q1 or Q2 of 2012. So are we there yet? Does it mean that we should stay out of market for another 9 - 12 months?

If oil price were to continue to slide, is this the only hope that have now?

Going back to the same story of liquidity, I think there is a lot of liquidity on the side line.

If bond, treasuries and etc are junks, don't you think equity dividend yield of 5 - 10% is nice?

Buying individual stocks could be tough if you are not a stock picker/trader under this environment. I think buying an index fund could be a good option.

Final Analysis

My personal speculation, hear that? Speculation. My speculation is we still can catch this last train before the big storm come in. In other words, sell in May and go away should end anytime now and buying into Q4 '11 and reduce exposure by early March and see what happen is what I had in mind now.

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