I first blogged positively about Apple in the spring of 2010 (also was positive about gold in that same post and in follow-up posts). I have ridden AAPL up from about $200 early in 2010 to over $630, though I confess I missed some of the ride largely due to A) market fears (which were correct) and B) SJ fears (which were medically correct but so far irrelevant to the stock price).
In any case, let me segue to Treasuries. I began "pounding the table" for them about a year ago. At that time I went to an approximate 30% weighting in my accounts for 10-30 year maturities, heavily weighted to both the ultra-long maturities and to zero coupon bonds. After yields collapsed, I lowered that to about 10% and held it there as "insurance". With the latest collapse in yields, I have now lowered that to about 2% just this week. These funds have been recycled into stocks. These are not ordinary stocks.
The main stock is AAPL as a long-term holding, though of course I may trade it at any time. I am bearish on the stock market over the weeks and months ahead, but I "think different" about what's safe and what's not. As I've alluded to indirectly more than once, I think that the mega-cap "blue chips" with trailing twelve month P/E's of 15-20 but no organic growth and generally little, none or negative tangible book value are much riskier than Mr. Market thinks. They are less volatile on a day-to-day basis, but riskier. I'll leave it at that for now as trading awaits.
The secondary stocks are Con Ed (ED), which I can foresee rising in price to yield 3% as time grinds on; and further additions to my already significant holdings in leveraged closed end muni bond funds.
Finally, I want to add that I think that numerous measures of fair value for the Dow that are used widely on the Street are itching to buy the Dow here.
"So my current posture remains to treat stock market rallies as sell opportunities and interest rate up-moves as trading buy opportunities."
ReplyDelete-- DoctorX May 26
And vice-versa?
Patterns-wise, the S&P should go back up to its 50 day SMA and even above it. If it doesn't and it breaks below the recent low I expect another leg down before going back up to the 50 day moving average.
ReplyDeleteI, like JB McMunn am unclear as to your timing on stocks, Dr.X. But that you are down to 2% in bonds and that money went into stocks, I conclude that you are bullish for the short term.
I only have a short term view and flip flop, taking small losses half the time I flip or flop.
JB and Rigorous
ReplyDeleteSorry to be unclear. Basically I'm in munis and cash, 2% in Treasurys down from 12% or so.
Very little in stocks. While I don't agree w Albert Edwards about SPY breaking 66.6, I have written extensively about my fundamental "like" (in the FB age) of Smithers' long-term graph.
http://www.smithers.co.uk/page.php?id=34
I "think" that unless the US is lucky (and I'm hoping), another domestic recession-- even a mild one that does little damage to the real flow of goods and services (I don't expect another bad recession)-- will likely finally pull the market to or below fair value at least per either q or CAPE.
Also please see my update today. Just didn't "like" the ISM comment-- though of course things could break either way (hoping!)
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