Saturday, October 1, 2011

V market.

The only certainty in the market is V.

V for volatility.

I follow Mark Hulbert column regularly.

In his latest write up he discovered a very unusual phenomena.

Since 1958, dividend yield of DJI has never gone below 10-treasury yield. Since 2008-2009 financial crisis, this is the second time dividend yield is higher than 10-yr treasury yield.

This phenomena was a norm from 1929 crash to 1957. The market volatility was a lot higher prior to 1958 because there was persistent memories of Great Depression, two world wars, etc…… Investors are/were demanding for a lot higher dividend yield during high volatility period.

If you want to read this article, click here

After read this article, it prompted me to consider the following strategies:

1. Make friend with volatility. Buy on support and sell on resistant.

2. Never fully invested. I am contemplating to raise cash for my Turtle portfolio(long term portfolio). Cash will not earn me money but when opportunities arise, it can be very useful.

3. Buy high dividend yield stocks. These companies preferably make things that people use everyday.

4. Invest in hard assets but invest sparingly in property counters.

5. When commodities stocks are depressed, dont be gun shy, pull out some money and BUY!

1 comment:

LCF said...

V normally refers to Virgin , haha. Good term, should patent this :)