Interesting insights the market is in for a ride this summer and probably into the first part of the fall. The economic factors are just not there to indicate a definitive turnaround and I agree the Fed is not using policy it’s using a flawed crystal ball and hoping for the best. I agree it’s time to move to higher ground and wait out the storm.
Re: Re : MoneyShow Pundits Like Cheap Drugs, Junk Silver & Yield
Scott Raynovich
5/12/2011 12:46:24 PM
yalanand,
Yes the end of QE is something to be worried about, it has supported the market. The market had trouble last year in March coming off the QE1 life support. But I think if the Fed sees the market falling apart they will add another program. I expect choppy trading during the summer with more clarity in the fall. I have positioned for such by raising cash and rotating into some cheap drug names (see my other comment)
I think it's interesting that blue-chip drug stocks like ABT and JNJ used to trade at market premiums but now they are the cheapest stocks in the market. Some of this is due to patent expirations, but consensus among these experts is that it's overdone. I agree. I also think there has been a bit of a rotation of stocks into safer holdings after the rally and holding a blue chip with big cash flows, 3% dividend and low P/E makes sense to me.
Re: Drugs and Inflation
TelecomFreq
5/12/2011 8:57:51 AM
good point about drugs, with all the boomers leaving the work force to enjoy the rest of their days playing shuffle board. With such a large part of the population getting older, it only stands to reason that they will be increasing the amnount of medications they are on. That being the case the big pharma companies are going to be a very safe bet for the forseable future, unless of course Americas relationship with perscription drugs changes.
Good analysis
tokyogai
5/12/2011 7:06:58 AM
Scott, this gives a good overview. It would seem that one of the take away messages is that you need to do your own research. It is good to listen to the pundits and experts, but in the long run you are responsible for your own portfolio. I tend to stick with value and companies that are doing well and that I think will continue to do well. I also dial in what I know of trends and the products the company has so I can make educated guesses about continued good results. I tend not to be one of the herd- they tend to go over the cliff together.
Re : MoneyShow Pundits Like Cheap Drugs, Junk Silver & Yield
yalanand
5/12/2011 4:52:11 AM
Scott,
Quantitative easing is going to end next month when quantitative neutrality begins. How do you think the market will react to this ?
Thanks for sharing, Scott. During the past two years, the return from blue chip is far lower than the mid or small cap. With the approaching inflation threat, I bet the Large Cap will be in favor soon.
Large Drug companies are good hedges against inflation, especially considering the baby boomers are entering retirement now.
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