Pre-market futures have been dodging and ducking all morning. First up with news that Citi may reverse split it’s stock then down with news from FedEx. The latter disappointed most with its earnings and forecast.
Yesterday’s extremely aggressive move by the Fed has the world atwitter. Throwing a trillion dollars around is not being taken lightly. Importantly, the Fed is suggesting that if THIS doesn’t work they still have more ammunition.
But I will take this latest move with good cheer and continue to add equities, carefully. And put moving stops on everything. Moving stops simply means that a floor is put under your position. Buy a stock at $20 and put a 7% stop under it and if the stock moves to $21 the stop moves up at the same percentage.
Commodities had a huge move yesterday as the Fed action threatens inflation. Supposedly, we were not going to see inflation for “a couple of years” that I heard repeatedly from the talking heads. Now, I would bet they are not so sure. Gold, for example, is up over $50 this morning. Soft crops like wheat and corn, are up big. The dollar is swooning over the Fed action.
To combat the possibility of inflation in my portfolio I have owned TIP for a long time and suffered. This ETF buys Treasury Inflation Protected bonds. A cheaper way to buy TIPs is by Fed auction directly through the Fed web site. I believe TIPs are better held in an IRA or 401k because of the tax situation.
Tomorrow is quardruple witching expiration day. These days are fraught with peril since there are so many portfolios closing out and/or hedging, all in one day. It is a tough time to trade.
S&P 800 remains a formidable barrier. Watch for any advance over that number.
General Electric conducts it’s huge investor conference today. Many expect a severe cut in estimates for the finance component of the company.
I don’t own any Vanguard ETFs at the moment but still feel they offer a good jumping off point for those not wanting to buy individual shares. Here is the site: Exchange-Traded Funds
Finally, while we clearly feel better about ourselves over the last couple of weeks we are not out of the woods. Our market is up 15% from the lows of in a very short time. Many, many stocks have advanced 50%-100%. It is still a mine field out there. Caution is necessary and warranted.
Sidebar
My friend, Peter, lives with his wife, Helga, on top of a mountain in Vermont. This gives him plenty of time to ruminate over things and he frequently will call me after the close with his latest conclusion on life and business. After watching the AIG hearings yesterday Peter pronounced them to be “dramatic” but also shares my concern of the new order. Rich people-bashing is in, making tons of money is out. Peter also told me that Ayn Rand’s Atlas Shrugged sold more copies last year than in the previous ten. Oh, oh.
