The stock market doesn’t look good here and investment risk in all markets remains very high. There’s an undeniable, real fragility to capital markets around the world and most of the uneasiness is due to debt woes in Europe and the real possibility that the euro currency might come apart. The largest capital market in the world is currencies and, when there are major shocks in this market, all individuals feel the effect.
As I wrote previously, now is the time to hurry up and wait. There aren’t any screaming buys in the stock market just yet, but now is a great time to be waiting and watching. It’s very difficult to be an investor when sentiment turns bad, but the best money is always made buying low and selling high. No doubt, it takes courage to be a speculator.
I recently read a report on what famed investor George Soros bought and sold on the stock market in the first quarter and his moves are quite interesting. Soros is a proven wealth creator for his investors and is a seasoned trader of all kinds of global securities.
Most notably, Soros lightened up on his gold exposure in the first quarter. He sold about 10% of his SPDR Gold Trust (NYSE/GLD) units. I bet you he wished he waited another couple of months to sell, because the spot price of gold just hit a record high. What Soros bought was oil and quite a bit of it. His fund added to positions in Petroleo Brasileiro (NYSE/PBR) and Suncor Energy (NYSE/SU), and he increased his fund’s stake in Exxon Mobil (NYSE/XOM) by about 80%. That’s a big bet on oil.
Again, I can imagine he wished he waited just a couple of months before making these trades. Clearly, Soros wanted to take some profits from gold and put them into oil. His timing was a little off, but, as we all know, speculating isn’t easy. Importantly, what Soros’ trades illustrate is that he is trying employ the best investment strategy around: buying low and selling high. It is simple, but difficult to execute.
I think the stock market is going to be in for a very tough road ahead for the rest of this year. Domestic equities are now hampered by sovereign debt woes. This issue isn’t going away anytime soon. But, with these gyrations come the best opportunities. A major new entry point in stocks is going to present itself, but we’re not at that point yet. Global investor confidence is now an issue and that means that it’s going to be rocky roads again.