Good morning,
I had a busy day with a couple of meetings with my clients. These are clients who have made more than 30% returns for their portfolio I manage for the last 4 months when they transfer their investments to me because their previous Investment Advisers have disappeared after losing more than 50% in a year with their portfolio. The common question they asked me during the meeting was how the markets will perform for the next 6 months and whether they should sell their equities portion of their portfolio to lock in profits. Is this the same question we all have today? My advice to all these clients of mine is to first remain focus on their objectives, time horizon, risk profile and the strategy for re-balancing for their portfolios. Since their objectives and risk profile has not change and I am expecting the volatility index to decline, my recommendation to them is to buy more equities (relatively reduce bonds) when the markets are trending up for the next 3 months (constant proportion strategy) and do a review of the market conditions if the constant mix strategy (buy equities as market falls) should be applied in February next year.
I was home early last night because I was anticipating a good rally when the stock markets open for trading because Asian markets have closed higher amid expectation that the retail sales will beat estimates and Lowe has reported that it is seeing stabilization in some of the hardest hit housing market. I was also expecting Bernanke to keep the interest rates intact for a little longer and the market will react to the speech. Indeed KUTE was right with its macro forecasts yesterday as broad based buying drove the US markets to close at their highest in for 2009. The DJIA closed 1.33% higher to close the session at 10,407.96; S&P 500 was up 1.45% to close at 1,109.30 and Nasdaq closed 2,197.85, up 1.38%.
I have mentioned in my earlier blog that I will only trade stocks that KUTE select for its potential gain for the week (ie. fundamentally sound and cycle trend indicating upside advancement for the week and candlestick formation confirmation of up trend or indecision) and actively buy and sell daily if technical signals opportunities. Last night, I bought NOV at $44.76 when the stock gapped up from last Friday’s close and took another position at $44.70. The stock closed 2.92% higher at $45.46. The day’s high was $45.79 and my positions were closed at $45.70. That was the only stocks I traded last night and didn’t buy into MGLN as I am still sticking to my 30-20-50 rules for liquidity since I am still holding on to PTEN which took up much space in my 50% portion. The stock closed 3.51% at $16.52. The reason I am holding on to this stock is to test the KUTE’s rule that even if the price did not move as forecasted, the stock is good to hold and the price will advance over the next 3 months since it is fundamentally good and its financials are strong. At least I don’t lose much for this position and I am still in the money.
As for the other selected stocks, ESV closed 3.29% higher at $47.45, CVX gained 1.75% to close at $78.61, MGLN was 2.87% higher at $36.19 and MIR up 0.41% at $14.83.
Have a great day!
Francies Cheng
BBus MAppliedFinance
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