A couple of weeks ago I added Nike (NKE) to clients accounts. I bought the stock for several reasons. I generally expect a modest decline for 2007 with some sort of normal but uncomfortable correction along the way. If I am wrong and the market has another great year I think Nike has a good chance to do very well in an up a lot environment, so the stock is a sort of counter strategy to my prediction. I could have gone with something smaller like Under Armor (UA) but even if we have great year it is late cycle and I would think large would do better than small, we'll see.
I added the Agriculture ETF (DBA) to my personal account in a small way, not for clients, yesterday. I may add this for clients in a couple of months but I need to have a better feel for how it trades before I expose client money. If I do add it it would be no more than 2%. Part of the reason I bought it is that I have faith in Deutsche Bank that their products will track what they are supposed to and I think corn and wheat hold a lot promise and you probably know that Jim Rogers loves sugar. More than anything else this is a diversifier and the worst year of the back test was minus 25% in 1998. The S&P 500 was up 28% that year, again I think of this as a diversifier.
This chart comes from Michael Kahn's Barron's column yesterday. It was a great read if you subscribe.
His basic take is that copper (the commodity) has a little way to correct, gold (the commodity) could have a lot further to correct and in this chart of Southern Copper (PCU) he sees support at $42. PCU's old name was Southern Peru Copper, they dropped the Peru a short while back. As I read the column and thought about the action last week I wondered how, with the commodity and emerging market aspects of this one it didn't go to zero, I had a good chuckle.
If you don't know the stock it has a huge dividend and trades like nitroglycerine. If you think you want to look into it double check on the security of that yield.
A personal item; one of my four readers here in Prescott said hello to me at the gym yesterday, go figure.
Who's the whiz in marketing who thought it would be a good idea to have the re-debut of Fast Money on against the BCS Championship game?
2 comments:
I have some questions. I have been interested in PCU because of its yield. What do you mean by "there is support at $42?" Also, do you mean by the "security of the yield", if they can maintain the yield into the future?
"support" is a term that pertains to technical analysis. If you do not knwo the term I would suggest a visit to investopedia.com.
yes I mean maintaining the dividend in the future. cash flows of a copper company are not the same as a utility.
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