Monday, August 15, 2011

It's Time to Buy and Sell

Now that the turmoil in politics and economic appears over, the stock market has been has been recovering well.  So the question is whether to buy or sell.  The answer is both:-)
Overall, I don't think the economic landscape has changed much. The U.S. is still spending too much and depending too much on debt.  The European sovereign debt crisis still looms.   The housing market is still poor.  The economic outlook is still negative and not getting better.The main disconnect is that global multinational companies continue to do well.  The earnings for the S&P 500 companies will be at a record despite the high level of unemployment.  It's still not clear to me the economy will get better or the S&P can match projected earnings
For now,  I believe the stock market will probably still be down at the end of the year because nothing has changed.  However, in the short term, it appears the market is heading up.  In fact, I've briefly thought about reinvesting 10% of my cash back into stocks.  But I am going to resist and limit my buying.
At this point, I plan to buy a few dividend paying stocks since we are mostly cash. I've already purchased 30 shares of Boeing and 50 shares of Century Link.  Other stocks I am considering include Johnson & Johnson, United Technologies, Abbott Labs, Pfizer and Intel.  On the other hand, I plan to take advantage of rising stock prices and lock in profits by selling into the rally.   I will sell some more stock options I own in the company from which I retired.
Hopefully, I will win by buying a little now and then benefit from the short term rally by selling the purchased shares or my stock options.  If I'm wrong, I won't have risked  very much.
Disclosure:  At time of publication, we own shares of Boeing and Century Link.

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This is not financial or investing advice. Please consult a professional advisor.

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