4/29/2006 newsletter (April performance)
*** Market
Ben Bernake reaffirmed Wall Street that the pause of interest rate hike is near. SP500 responded favorably, mostly in the hard beaten bank stocks. You may have heard that Microsoft revealed soft outlook and got beaten down 10% to the lowest level in 2 years. Intel CEO also told Wall Street Intel will have "broad restructuring". He put, not one stone will not be touched; and it would be too narrow to think the restructuring is just eliminating jobs. Wall Street welcomed this move.
However, the last week of April is somewhat negative to my portfolio. Several stocks are sold off more than 10%, even 20% in a single day. Some are due to bad news (lower than expected). Some are just profit taking. Sometimes Wall Street tends to be very homogeneous. All the institutions received the same reports from a few analysts, and decided to sell at the same time. This often caused extreme short-term volatility and scared people off. Although to Graham folks, the moodiness of Mr Market is to be taken advantage of. In my opinion, if you can't, at least you need to be able to sit still and do not be disturbed by it. If you need to sell, do not even look back after the order is executed. Otherwise, you will not be able to gain any edge over Wall Street... That is, you are worse than Mr Market.
*** Portfolio
That being said, I am still sitting on those beaten stocks after a lousy week. My portfolio finished April at $13.49. Fractionally higher than a month ago. This is about +14% YTD, compared to SP500's +6% YTD. I am about +8% ahead (ie, I losed 2% edge this week).
If you ever pay attention, you will also notice that oil stocks have a subtle weakness these days. Many oil stocks are not able to surpass the highs established last September, even though the commodity, crude oil, made new high. This is called "divergence" in technical term. A sign of overheated market cooling down. I am expecting some selling among these stocks in the next few months (not yet for now).
--Steve
Ben Bernake reaffirmed Wall Street that the pause of interest rate hike is near. SP500 responded favorably, mostly in the hard beaten bank stocks. You may have heard that Microsoft revealed soft outlook and got beaten down 10% to the lowest level in 2 years. Intel CEO also told Wall Street Intel will have "broad restructuring". He put, not one stone will not be touched; and it would be too narrow to think the restructuring is just eliminating jobs. Wall Street welcomed this move.
However, the last week of April is somewhat negative to my portfolio. Several stocks are sold off more than 10%, even 20% in a single day. Some are due to bad news (lower than expected). Some are just profit taking. Sometimes Wall Street tends to be very homogeneous. All the institutions received the same reports from a few analysts, and decided to sell at the same time. This often caused extreme short-term volatility and scared people off. Although to Graham folks, the moodiness of Mr Market is to be taken advantage of. In my opinion, if you can't, at least you need to be able to sit still and do not be disturbed by it. If you need to sell, do not even look back after the order is executed. Otherwise, you will not be able to gain any edge over Wall Street... That is, you are worse than Mr Market.
*** Portfolio
That being said, I am still sitting on those beaten stocks after a lousy week. My portfolio finished April at $13.49. Fractionally higher than a month ago. This is about +14% YTD, compared to SP500's +6% YTD. I am about +8% ahead (ie, I losed 2% edge this week).
If you ever pay attention, you will also notice that oil stocks have a subtle weakness these days. Many oil stocks are not able to surpass the highs established last September, even though the commodity, crude oil, made new high. This is called "divergence" in technical term. A sign of overheated market cooling down. I am expecting some selling among these stocks in the next few months (not yet for now).
--Steve
posted by Steve at 9:09 PM
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