The Market’s Lone Wolf
August 30, 2009
Last night I was watching "The Lone Wolf Spy Hunt", a Colombia release from 1939. The Lone Wolf is a former safecracker, but the police refuse to believe he is really out of the crime racket. In regards to our economy, much of the public won’t believe something either: that the recession has ended. I think recent comments from the Fed and current economic data indicates it has. The market displayed some nice upside action in the last few months, along with some healthy pauses. Consumer spending looks good with a .2 percent July increase. And on the corporate front, technology company Intel (INTC) said the 3rd quarter would improve on higher demand. The climate is clearly improving, and I think it’s time to put your money back into equities.
Whether you’re investing for yourself or the children in a custodial account, stocks are considered the best performers versus other asset classes in the long term. Yes, there’s risk. But children have the time and can afford the risk of stocks. So do you if you haven’t hit retirement age. Remember you can also diversify to lower your risk. That means having money in companies in different sectors. For example, a food, retailer, drug, tech and energy stock. I’ve been buying the blue chips, as usual. Here are some of my recent picks:
- -Pharmaceutical company Bristol Meyers (BMY) sells at a lower multiple than the competitiors like Merck (MRK) and Pfizer (PFE). Morgan Stanley stupidly lowered their rating on BMY. I think it's going higher, selling cheap, and pays a great dividend (yields 5.4%). I’d buy it.
- -Verizon (VZ), also a great dividend payer (5.9% yield). They had a nice 2nd quarter and I expect further profitability in the near term.
- -McDonald's (MCD) is a buy here. It’s a rock solid company that will continue to grow with the times, and last longer than you and me.
- -Finally with housing arguably at a bottom, I recommend Home Depot (HD). Also buy Target (TGT) with nice 2nd quarter earnings a few weeks back beating estimates.
So look at the Dow’s history, and consider it’s nearly certain growth for you and your children. If you’re willing to take on a little risk and you’ve been holding some cash, now is the time to invest. We’ve just been through a tough market, but don’t let that discourage you from promising investment opportunities.
