Sunday, May 1, 2011

"Here we go again. The calendar has flipped over from April to May. Do we "Sell in May and go away"? Or, stay on the Magical Mystery tour with this Bull market?"

Dow Jones Industrial Average 12,810.54 (UP) Week ending 04-29-2011

The Dow Jones Industrial Average in Oct 2008 was at a top of 13,930.01. It then precipitously dropped in 5 months to 6626.94 on March 2nd, 2009. If you had capitulated, thinking it was the end of the world, and turned all your long term stock and capital into cash at this point, you made a grave investment mistake. Because since then to now April 29th, 2011, the Dow Jones has recovered most of that to now being at 12,810.54. If you were new money coming in at this bottom you are up 93.31% in two years. If you are looking at the chart of the DJIA for the last decade it looks like a big"W".  I will let you technicians figure out what that means on a Macro level. My inclination is that we have come this far and will eventually test the old highs which is some 1100 Dow points to the upside from here.

We should deter to The Wisdom of old Mr. Partridge in Reminiscences of a Stock Operator, who says it was never his thinking that made big money for him but his sitting tight in a bull market that had been successful. "Have the courage to stick to your convictions until you think the bull market is over". "The big money was made not in the individual fluctuations but in the big market movements".

So do you sell in May and go away? I think you should do both. In your front end/taxable accounts I think you raise some cash and take some equities off the table as your companies announce earnings. I would especially dump companies with weak balance sheets.  Go to 30-35% cash. In your long term accounts, like 401K's and IRA's where you may have money going in all the time, you should stay the course and keep buying equities. 

So what should you buy for growth once QE2 Quantatative Easing is all sorted out in June?

WILLIAMS PARTNERS (Symbol WPZ, $55.80) specialty chemical and gatherer, transporter, processor and treater of natural gas and fractionating and storing natural gas liquids.

Nasdaq OMX Group Inc. (Symbol NDAQ, $27.12) -  a global exchange group that delivers trading, exchange technology, securities listing, and public company services across six continents.

Human Genome Sciences Inc. (Symbol HGSI, $29.47) - a commercially focused biopharmaceutical company advancing toward the market with three products in late-stage clinical development.

SWISHER HYGIENE (Symbol SWSH, 8.77) - H. Wayne  Huizenga run  Hygiene and Sanitation Solutions Company. A green play and very agressive on the acqusition front. Huizenga has a great track record with other businesses.

What an eclectic mix of stocks to boost your porfolio long term growth, huh?

Out to the garden now to battle the weeds.


No comments:

Post a Comment