Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Posts Tagged ‘investment advice’

This Large-cap Chinese ETF
Ideal for Long-term Investors

By for Profit Confidential

Chinese stocksThe Shanghai Composite Index (SCI) has been rallying and is up 9.3% this year as of Thursday, which is ahead of the Dow Jones Industrial and just below the S&P 500.

However, playing the Chinese capital markets involves excessive political and economic risk. The country is also stalling, but continues to grow well above other global regions, including Europe and the eurozone. My investment advice is that you need to build a well-diversified portfolio that would enable you to play Chinese growth stocks, especially small-cap stocks.

China is the second largest economy in the world and is continuing to roll along at a nice pace in spite of the country’s gross domestic product (GDP) slowing to 8.1% in the first quarter, down from 8.9% in the fourth quarter. The International Monetary Fund (IMF) estimates that the U.S. will grow its GDP by around 2.5% this year, compared to around 8.5% for China.

While the risk is high in trading Chinese stocks, especially of the small-cap variety and for smaller trading accounts given the selling of Chinese reverse merger stocks over the past year, you could also play China via some good exchange-traded funds (ETFs). If you are looking for some Chinese Internet plays, find out which stocks are the most interesting in Surfing China’s Internet for Profits.

In the ETF area, I like the PowerShares Golden Dragon Halter USX China ETF (AMEX/PGJ), which has strong small-cap components.

If you are looking for more of a blue-chip focus, take a look at the iShares FTSE/Xinhua China 25 Index (NYSE/FXI), which holds the top major companies in China. Holding this … Read More

Spending Remains an Issue;
My Advice on Retail Investing

By for Profit Confidential

The fact that consumer spending has not tanked in spite of unemployment being at over nine percent and expected to stay around this level through 2012, and continued weakness in housing is encouraging.

European Situation Likely to
Worsen: My Investment Advice

By for Profit Confidential

We have a likely debt default in Greece, pegged at a whopping 98%. Ireland and Portugal continue to struggle with muted growth and massive debt. Spain may be needing help. Bond yields are rapidly increasing in Europe in line with the risk levels. You can get a whopping 70% yield in Greek bonds, but then the bonds are likely to default. In comparison, the current yield on a U.S. 10-year bond is less than two percent. Germany and France are suffering due to their focus on the poorer nations. Germany is said to have no issues letting Greece default and then dealing with the debt crisis mess after.

Retail Stocks: Showing Some Improvement

By for Profit Confidential

I must admit the fact that consumers continue to spend despite any strong or sustained job growth and continued weakness in housing is encouraging. With consumer spending accounting for two-thirds of GDP, retail sales will eventually be stronger when the jobs and housing areas improve, albeit it will likely take over a year.

Investment Advice: Managing
Risk’s Key Given the Volatility

By for Profit Confidential

The overall stock market bias continues to be bearish. The selling capitulation remains in effect. Just take a look at what happened on Wednesday:
– DOW down over 500 points
– S&P 500 down over 100 points
– NASDAQ down over 50 points
The fact that we have yet to see a firm bottom makes the situation dangerous.

Fire Sale of Stocks Could Get Bigger

By for Profit Confidential

This is not a market for the risk-adverse. Watching the key stock indices plummet over 10% in less than a week is scary and nerve-wracking. But the world is not ending. That I can say.

Austerity Measures: Why They
Will Happen in America Next

By for Profit Confidential

I’m in Modena today, home of the iconic “Ferrari” brand. My mind is wandering quickly…thinking about Europe and America. Invariably, I wander off to government austerity measures. I apologize in advance to my readers if I have been talking too much about this as of late. But that’s all I hear from people here. They are upset. Governments in Europe are cutting fast and deep.

My Best Stock Advice on the Retail Sector

By for Profit Confidential

Consumer spending drives the economy and gross domestic product (GDP) growth, accounting for about 70% of GDP in the U.S. The retail sector has been rebounding in spite of the lack of jobs and the declining home prices. The S&P Retail Index (RLX) is trading near its 52-week high, up 37% from the 52-week low. The RLX recently traded at its highest level since the index was created in 2007.

Stocks Aiming Higher, But
Don’t Forget That Risk

By for Profit Confidential

On July 19 and 21, the key stock indices surged towards their respective multi-year highs. The key stock indices have shown some resilience after battling back from being down nearly 10% this year to the point where the S&P 500 is less than two percent from its multi-year high. The key stock indices are aiming higher, but I sense that it will not be an easy route to a breakout given the difficult resistance as stocks move towards the upper levels.

Why Chinese Reverse Takeovers Significantly Lag the S&P 500

By for Profit Confidential

Since the financial crisis, the global equity markets have shown a solid turnaround before witnessing some sort of risk aversion during 2011, as the European problems continued to worsen. Asian equities have been the worst-performing markets year to date, whileU.S.markets ranked amongst the top performers.

The Portfolio Diversification Lesson: What You Can Learn From my Friend’s Mistakes

By for Profit Confidential

During the technology euphoria in late 1999 and early 2000, I recall that a friend of mine had taken out a massive loan against the value of his home and bet on several high-risk micro-cap stocks. I remember his position surging from $100,000 to nearly two million dollars in less than two months. He asked me my investment advice on what to do. I said take profits. He did not listen and sat on the two stocks all the way back to well below his initial investment!

An Investment Strategy for Higher-risk Periods

By for Profit Confidential

It's looking like stocks may waver as we continue into the traditionally slower summer trading months. Without leadership, markets may stall.The investment strategy George suggests to help you generate some premium income.The current market bias is positive, but there’s some concern about the chart. The S&P 500 breached its 50-day moving average (MA) on Monday before rallying, but has failed to mount any sustainable rebound, currently stuck around its 50-day MA. My concern is that failure to edge higher could drive the index back lower and continue the sideways channel in existence since February.

The absence of any strong catalyst could leave the broader market comatose for the summer months.

On the S&P 500, there is key support around 1,250. A break below would be bearish and see a move below 1,200. I expect the support to hold. On the upper end, there is strict resistance around 1,362. A strong break above could drive additional gains towards 1,400.

This means that stocks may waver as we continue into the traditionally slower summer trading months. Without leadership, markets may stall. Should this happen, my investment advice would be to write some covered call options to generate some premium income and reduce the average cost base of your positions. But be careful, as a market surge could take out your position at the call strike price. Make sure you are comfortable with the upper strike price of your covered call. Make sure it is just above the key resistance of the stock.

I have long favored the use of covered call options on long positions should the market trade flat. This may be the case now.

Why let your positions sit idle? As I said, you can write some covered calls to generate some premium income and help reduce your average cost base. … Read More

Your Investment Portfolio & Risk Management: Strategies You Need to Know

By for Profit Confidential

Stocks are in rally mode, with the key stock indices battling back to above their respective 50-day moving averages. There is some euphoria surfacing, but I believe it is somewhat overdone. My investment advice is that, before you get too ambitious and chase stocks higher, you need to take a step back and think about the situation and where you are at personally.

Stocks Looking Good After
Break at 50-day MA

By for Profit Confidential

We are at the mid-point of the year. The year started with a bang, but reversed course in May and early June, with stocks trending down on rising global risk.

At the mid-year, the key indices are up between four and seven percent in the first half, with hopes for a better second half, albeit the global market risk continues to be high.

Retail Stocks: Faring Well
Despite Jobs and Housing

By for Profit Confidential

So far, even without strong job growth and with continued weakness in housing, consumers continue to spend, which is helping to drive the economic renewal, albeit sluggishly. This is positive and clearly encouraging once the jobs and housing areas improve. The Fed realizes this.

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