For those who don’t subscribe to Barron’s (you should), this week included an update from the roundtable they did at the beginnning of the year. It started like this:
“DOW 14,000, OR BUST.
Suddenly either alternative seems possible for stocks, as the outlook for interest rates turns murky. The Dow industrials and the Standard & Poor’s 500 could race to new highs as corporate profits keep climbing — or fall amid signs that the greatest party ever is ending for bonds.”
It was a somewhat painful read in that I could agree with both sides of the argument which left me wondering what I really thought at the end. Not only was the group divided on what the market as a whole was going to do for the rest of the year, two panelists even had vast differences on an individual stock, RIMM. Fred Hickey says to short RIMM since it has no future and Art Samburg says now is the time to buy RIMM and could see it topping 200.
From what I surmised, the final consensus is that we are still due for another longer correction this year at a minimum, but most said 2008 should be good. That theory makes me wonder if that’s why we continue to have such shallow corrections. If most of the big money people think next year will be good, why would they sell much now.
For the small money people, like me, it may just be a better opportunity to sell naked puts while volatility increases due to fear and bigger swings in stocks’ prices, but only well OTM. I made a small mistake with FWLT yesterday. I forgot my common sense when I placed my order. I even wrote that I thought it would dip to around 105, but yet I placed my order in between the current bid/ask. Had I been thinking correctly I would have taken a better guess on how high the puts would go if/when the stock dropped to my predicted price. I did that a few weeks ago and had three orders hit on the same day during that minor correction attempt. I’m up on all three of those now. It’s always about sticking to the basics for me and not getting greedy, especially in an aged bull market.
Funny how folks debate the Dow.
I am still above water, barely, with Encysive. Now they want to formally dispute with the FDA. That smacks of desperation. Anyway, I’ll watch and wait.
Whether the “market” is up or down, one needs to make correct picks.
I talked with a guy, Scott, of Income Spread Trader.com. I liked their advertised returns, and method of monthly cash flow. They could save me some research, and the spreads are similar to covered call plays, in that they have defined risk/reward. He also is a CPA and said he could do my taxes. Well, I sent an email asking how it works if I wanted to move funds to their autotrade broker–either thinkorswim, or optionsxpress. I don’t want to have to cash out, since some of my stock is down. If I could just move the stuff as is, that might work. They only charge $50 monthly, and you have to give a credit card, that’s the drawback. I don’t know what I will do. ok, talk to you later…