The stock market continues to present some incredible opportunities! We are still in the middle of a very strong bull market. Last month, the “Sell in May and Go Away” theory proved to be completely wrong. I discovered just how clueless even the professional investors can be. A lot of very smart people got it wrong! What did these people do after they discovered they had it all wrong? They didn’t sit around waiting to say “Ah hah! I told you so!”. No, they made corrections to their portfolios, and they made them quickly. This is exactly how you have to invest when you’re focusing on the short-term, trying to time the market. It’s a game a lot of us with full-time jobs just don’t have the time to play.
While it’s probably not the best idea to go “all in” with the stock market right now, you shouldn’t be doing nothing at all. Buy in stages. Sell in stages. The fact of the matter is that nobody knows what will happen, but based on the pure technical charts of the Dow Jones Industrial Average and the S&P 500 index, we all know that we’re long overdue for a correction.
Unfortunately, I don’t have the time every day to analyze all of the individual companies I have in my watch list, but I do have the time to see which stocks have been trending up, which stocks have been trending down, and which ones aren’t moving at all. I also have the time to hear what other people have to say about the market while I’m driving to/from work every day.
Here is some of Jim Cramer’s most recent news:
From a short-term investment standpoint:
Last week: With the situation in Iraq right now, oil prices could get hit hard. Result: It’s better to sit on the sidelines than to put more money in the market. Even better to take profits if possible. However, as of 6/17, tensions may be easing due to a stronger coalition. 6/17 was the first day of positive news. The market continues to go up, which is similar to the market situation when Russia went into Crimea. The market caught wind of the actual situation over there before the media could get a handle on it and continued to climb as a result.
–The Fed’s news on inflation at 0.4% (the highest since 2/13) today should have a direct impact on the mortgage interest rates. When inflation goes up, interest rates go up, which means the bank stocks will go up. Higher rates mean more money for the banks as they can make more money. There are no bank earnings to be posted any time soon, which also allows more room for imagination (growth) within the financial banking sector.
Intel’s good news last Thursday (raised 2nd quarter and full-year sales outlook) caused a spike in Microsoft and HP stocks. They could continue to rally throughout the year.
More risky stocks right now: Tesla, Amazon
Less risky stocks: Google, Apple, Facebook
Cramer has a strong outlook for GWPH if you want to enter the marijuana industry as a speculative play. This company, GW Pharma, is a pharmaceutical company based out of the UK that has a solid foundation outside of its experimentation with marijuana as a drug for cancer patients. Their latest drug with THC, the active ingredient in marijuana, is being used to treat epilepsy. I’ve been watching the stock for about a month now, and compared to the other speculative marijuana stocks like FSPM and MDBX (there are a lot of penny stocks in this area), GWPH is rock solid and has continued to go up. Surprisingly, it was up 16.27% today on positive data related to its epilepsy drug.
My outlook:
Buy into the bank stocks: KEY, BAC, C, FHN, GS, HBAN, KEY, RF, STI, WFC, ZION (short and long term).
–These stocks rallied quite significantly today. They have been close on my radar for awhile now and they never go up more than 0.5%. Today, almost all of them surged 1% or more. They are all very low relative to their history and they have not come back to their “normal” levels like a lot of other stocks have. This could be an opportunity to make a lot of money as the housing market recovers. You would have to ask yourself whether you believe in a housing recovery or not.
Buy into AAPL, FB and HPQ (short & long term).
–Apple is going to release some new products, and Facebook, as well as Apple, is going to continue to kicking ass in China. Apple’s iWatch could be as popular, if not more popular than the iPad. Plus, rumors have been flying around about Apple entering the home automation market. This could be another game changer for the company.
Consider buying into TWTR and TSLA (long term). – Twitter recently let their COO go, which caused a slight boost in their stock – they’re working on their ads, and if the result is anything like Facebook, the stock will show more gains moving forward. Tesla’s CEO, Elon Musk, has been extremely wise in creating the right partnerships with the right companies (most recently Nissan and BMW for increasing their charging station base), knowing when and how much to get involved with politics, and most importantly he’s continued to prove everyone wrong. Everyone! Their Model X car will be released in 2015, and if it’s anything like the Model S, we have a lot to look forward to. The stock, on the other hand, is extremely overvalued. It’s not a good investment for the short term. Keep a close eye on it for a pullback if you’re interested in adding it to your portfolio. And if it doesn’t see a pullback after (a month, two months? – you have to define the time period) and you’re still interested in owning the stock, admit you were wrong, buy it and move on. Just don’t fall into the trap of thinking “the pullback’s not coming, so I’m not investing in it” mindset. If you believe in the company, its products and its future, you should do something about it.
Outside of these suggestions, it’s important, if not FAR MORE important to be investing regularly in the top 12 dividend aristocrats of the S&P 500 through a DRIP program in a Roth IRA and/or Individual broker account. Even small amounts are OK. Combine this with investments into the VFINX fund and you will be rich when you retire.
For me, personally, I have been experimenting with the information I’ve learned about the bank stocks, Tesla, Apple, Twitter, etc. to make profits in the short term so I can invest MORE in the S&P 500 dividend stocks for the long term..
Buying an investment property is another idea to take advantage of the lower rates and lower prices right now. I used to think this was impossible with the property prices in Chicago going for $200k+, but when I started looking further, there are locations where you can buy vacation properties (in CHICAGO) for $50k.
http://www.zillow.com/
Regardless of where you are, it helps diversify your investments, it will go up in value over the long term, you can rent it out, and you can (most importantly) enjoy it on the weekends.
In conclusion, be cautious with your investment choices right now, but don’t do nothing. And if you’re just getting started and haven’t set yourself up with a Roth IRA account yet using a solid foundation of reliable stocks, that would be the first step. Open the account. It takes 10 minutes. It’s harmless and very easy. The next step is funding the account by linking it to your checking account / savings account. The final step is investing the money – where do you want to put it? Most importantly, take things into your own hands. You can do it.
Message me with any questions – I read every comment.