Defense stocks may not be a disaster after all
Steve Cook on Disciplined Investing

Syndication

Have You Seen This?

News

  • Make money by accessing all our Portfolios, the supporting research and Price Disciplines using our paid subscription blog, Strategic Stock Invetments. Our work is focused on making money for our Portfolios not as some academic exercise in Internet investing. Check our performance (audited)--our Dividend Growth Portfolio has beaten the S&P by 500 basis points per year for the last seven years but with a beta of only .62. (Mandatory Disclaimer: past performance is not a guarantee of future results.) We give you everything you need to duplicate our results, in particular, a strict price discipline for both Buying and Selling.

Have You Seen This?


Economics

   This Week’s Data

   Other

    One of the big stories of the day was Defense Secretary Gates presentation of his defense budget.  Many had feared the Obama Administration would impose severe cuts on defense; one of the results was a thoroughly dismal performance of the defense stocks for the past months.  Our Portfolios had lightened up on these issues (along with most others) as the Market declined last year, but have not yet build them back up precisely because I was worried about how defense spending would fair under Obama.

    Bottom line: this budget is not a bad one for the defense contractors.  When, as and if, our Portfolios reduce cash, the defense stocks will be at the top of our Buy List.
    http://www.slate.com/id/2215491/

Politics

  Domestic

  International War Against Radical Islam

The Market
    
    Technical

    Yesterday’s pin action I thought was pretty impressive.  Investors tried to take the Averages (DJIA 7975, S&P 835) below the prior resistance level (DJIA 7949, S&P 834); they succeeded intra day but couldn’t close below them.  Volume wasn’t impressive; but I still yesterday was a positive.  That keeps us in a trading range with a defined lower boundary (DJIA 6432, S&P 666) and an uncertain upper boundary.

    TraderFeed’s take on yesterday’s action:
    http://traderfeed.blogspot.com/2009/04/when-breakouts-turn-false-catching.html

    On another matter--gold; yesterday its price fell below a short term support level.  It would seem now that many investors who bought gold because they thought that the world was coming to an end have decided that it is not; and so now they are selling.  As you know I have believed for some time that a prudent investor should own gold; but not because the world was coming to an end.  It is because the world central banks are printing money as fast as they can get the ink and paper to do so.  Hence,  I think that our Portfolios need to have a position in gold as a hedge against inflation. 

That said, short term I hate arguing with the tape.  So I am going to follow my usual practice of making a stock (Market, ETF, etc) prove that it has broken a support level.  If we don’t see a rebound back above gold’s support level, then our Portfolios will  reduce their holdings by half (leaving a 1.5-2% position).  Stay tuned.
http://www.smartmoney.com/Investing/Stocks/The-Consensus-on-Gold-Is-No-Consensus-at-All/





Posted 04-07-2009 8:24 AM by Steve Cook
Filed under: