Welcome to July! Just like how Will Smith’s character in “Hancock” reacts extremely to a magic-word (we’ll just call it a magic-word in this post); so does the market today. In the case of the market though, I can speak the word out loud— it’s OIL! Today, we saw classic market paranoia, financials-pandering and oil-mongering. Just like Hancock, the market’s powerful yet weak, popular yet loathed! Let’s hope that it doesn’t end up like Hancock some day, requiring unrequited love to survive.
So let’s see how far off I was, in my market read last night
- ARD is up 4.5% since I picked it as a value add to my portfolio (I got in at 52.30, so I’m up only 3% in the past 2 days)
- SOLF saw a little dip –1.3%, far lesser than it’s peers. The company’s good but the entire Chinese and Solar sectors have been hurt due to oil. However, there’s also some concern about the high-interest short-term loans that SOLF has taken for this round of expansion.
- Turns out I was spot-on regarding the agri-stocks. POT. MOS and AGU were all down 2.5%.
- I was wrong in expecting the US market to react positively to RTP and RIO similar to the Japanese market. Read this post to understand why Wall Street reacted differently than expected.
Interestingly, the market rallied back on the news that GM made less losses than expected! That’s the strange world of market sentiment for you. Huh?
Gold, Silver and precious metals (read tangibles) were all up today.
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This’s an embodiment of market sentiments. People want to protect their money and it’s historically been the case. 3 reasons why people invest in gold:
The stock market’s hurt and down, the $ is weaker than ever before and no one believes that US only has a 4.2% inflation. When gas costs over $4/gallon; the American sentiment which assumes low-priced gas to be a birthright (and I believe that as well), reacts and as we’re seeing how this reaction has a wide-ranging impact.
Additionally, increase in oil prices causes everything from commodities to finished goods to have reduced margins. This compounds the inflation as now the manufacturers have to charge more to ensure their business stays viable. See chart below to see the Gold versus Stock return chart from 1800’’s till date
A good investor, IMO, is one who can scientifically factor any (all) risk into the investment strategy and can weather downturns. Did you know, Benjamin Graham—the father of Value Investing, had a return of 17% during the great recession. His principles of investing hold strong, even today. Case in point- Warren Buffet, who calls himself 85% Graham (Buffet studied under Graham, in case you didn’t know). I’ll cover Graham, Buffet and their principles in a later post for sure.
The tenacity to weather and come out positive in a downturn is the sign of a true investor—and that’s what I’d like to be one day. And I’d like to do it through Trend Investing!
Ben Graham’s ideas do form the core of my strategy—however, I look at a much shorter time horizon that what his strategy dictates.
I’ll have to skip on the market read tonight, as I have my regular day job to tend to. Sorry!
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