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Market Condition / Stock Purchases
May 14 at 8:21 ET (By andyf613)
Hey guys - sorry I haven’t been actively sharing my opinion with you regarding my stock purchases. A couple of interesting things going on in the market. Equities have been recovering from its severe downfall in the last 2 months (March and April) although for the month of May they seem to be taking a small downturn again which is still hard to determine at this point whether this is a short term or long term effect due to the current market conditions.
A couple interesting stocks I have recently purchased:
- JRJC: China Financial Online. This is actually a stock I have been following for the past year. The stock has had a severe downturn over the past 6-9 months. Due to its current discounted value in my opinion, I have decided to recently purchase it
- X: US Steel: Overall, as well all know the commodities market in 2007 has been a rising market. No matter what commodity you were long on you would have made money. US Steel has had great financial reporting over the past few years. That being said, I believe that stock is starting to reach its max value and will be probably selling soon.
I will share some more ideas with you on Google and Baidu in the next few days…
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guliamo
May 14 at 8:44 ET
Hi Andy,
Do you think it's safe to say that the panic of "The worst financial crisis since WW2" was a bit extreme?
I have been looking at US Steel (X) for a while and was puzzled by the fact that although Revenue has grown 38%, earnings have slid 13.9% (yoy)
Also, as there are so many basic material and energy plays, where do you think the smart money should sit, large, mid or small caps?
alternately, how do you feel about BHP as an all around raw material / energy play which also provides a good hedge against the US dollar?
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madmoola
May 14 at 12:12 ET
the comment was not extreme enough
the financial crisis is more comparable to the 30's
if you would like some historic facts
to support this i can post them
the gov has created the worst economic disaster since the depression and its not over yet just watch
there should be a growing number of takeovers in the commodity space as resources get increasing more costly and harder to find
this as well as global demand is why commodities prices
are on fire (like BTU for example)
the US dollar now as unbelievable as it sounds
could be due for a bounce
you need a hedge for inflation not necessarily the USD
although long term its headed towards worthless
JRJC sounds interesting though
i have held X for sometime
and i would class steel not as a commodity but as a material
although these days you could certainly make the argument
in the commodity space im more liking Vale (RIO) and CCJ
at this point uranium will likely have another big run
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andyf613
May 14 at 12:41 ET
Interesting opinion you have Madmoola. In order to be in a recession you need to have 2 negative GDP's as an indicator which does not seem to be yet a 100% clear from what is being reported.
Second, I would not comment that fast that the financiaL crisis is comparable to the 30's which I dont think is the case for the moment YET. People have learned from the WS Crash in 1929; for example when the Dow Jones or NYSE falls by a certain amount of points, markets will get down shut in order to avoid a crash.
As it goes for commodity prices - this is a good questions as diff ppl have diff views on what is exavtly driving the prices up. Some say inflation, others have diff views which im not to familiar with at this point.
Steel is definitely considered a commodity. And most materials (raw or others) are considered commodities i.e. raw copper.
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arawak
May 14 at 1:22 ET
Nice to see another doom and gloomer on the board.
Andy - they can shut the markets down all they want. They'll just gap down when they reopen if things are really bad.
I don't think we're looking at a market crash in the sudden catastrophic drop sense unless something spooks the international markets and causes a run on the dollar (not impossible). No, instead I see a halting but unavoidable grinding away of quality of life, the worth of the greenback, and general capacity for economic growth.
This decline will be caused by three forces that will act with varying strength over the next 20 years.
1. The debt load of the US government is now essentially past the point of no return in my opinion. No politician will make the sacrifices necessary until it is too late to do anything but take a machete to social security, etc, and/or inflate the dollar to pay off gov't debt with junk fiat $$ (in which case those on fixed incomes will get crushed especially bad). If we did an about-face right now and passed a balanced budget amendment we might be able to claw our way back but as it is now we must borrow something like $2 billion a day from the rest of the world just to keep status quo.
Politicians, from what I have seen, are only offering magic salves for the economy (tax cut this, stimulus package that) that will make it grow so fast the debt will just get washed away with all the new tax revenue. Too bad the GAO says the US would need to grow at double-digit percentages over the next 75 years for that to happen (and it ain't gonna).
2. Peak oil is real and other commodities are going to be scarcer and in greater demand. As fuel prices continue to climb we will see discretionary spending evaporate as people lose that 5-20% of their income to heating, electricity, gas, etc.
3. Wealth distribution in the US is increasingly uneven. More and more wealth, as a percentage, accumulates with the top 2-3% of the populace. This and other similar socio-economic factors will serve to antagonize the first two points.
Enjoy!