Sunday, September 23, 2012

What should we expect going forward in the market?

Who knows? I've been asking myself this question - is this the beginning of a beautiful thing, or a head fake? This market is very tricky. The world economic situation is uncertain, to say the least, but the S&P is high. Jobs are hard to come by and housing is still in the dump, yet the market has blown it off. Like I said, this new market of the last 10 years has little to do with fundamentals.

We've made good money on our coal and ore positions. To be fair, we have picked some dogs too. Our solar stocks are really in the dump. The slowdown in Europe and to a lesser extent, China, has really impacted solar, as Europe drove a lot of the demand. I've temporarily unloaded my SOL and put the money in ANR earlier this month. I'll buy SOL back sometime in Oct after my 30 day wash sale period, as I still believe it's a good buy down here.

As far as ARNA, what a job hedge funds and other speculators are doing on the stock. It's clear now they were wrong going with VVUS. VVUS got approved, but it's been a disaster since then. If ARNA had said they didn't believe they would get approval in Europe, the stock would have been cut in half, yet VVUS loses a couple of points. ARNA is a great long term buy and I'm still holding plenty. I would stay away from the options, as there is way too much manipulation happening there.

So, I'm holding on to my positions and riding out the volatility. Looking for some new names. Here's something to think about. The bears and shorts are beating the war drums. China has promised $150 bils and we got QE3. Eventually that money will start to find its way through the system and stocks highly correlated to the economy will attract more than their fair share of attention.

4 comments:

Anonymous September 23, 2012 at 9:08 PM  

Hi Paper,

Great reading your usual Sunday night post. Hadn't seen you post in a while and was waiting to hear your thoughts on this market. I know you said that you were looking for some new names. What do you think about DRYS? That as well as EGLE have been on my radar for a while now. My initial thoughts on the shipping sector were that even if we were to see a turnaround I'd rather be in coal right now. It seems like a turnaround for the shipping sector in general especially for these more speculative names might come after the coal turnaround. Not trying to time the market but I'd just rather allocate more available cash to some of our coal names. I was wondering what your thoughts would be on DRYS and EGLE if you get a chance to look at them? Also I was wonderng if you think JRCC has the potential to reach as high as $12 by 2014 in the event of a huge sector rebound? I'll look forward to your reply.

Best,

E

PaperGains September 23, 2012 at 9:27 PM  

E,

Yeah, I've been preoccupied with some other things lately and the time got away from me.

As far as EGLE and DRYS, those are names I'm familiar with and while they should do well during a thriving economy, they are one up on the value chain. Natural resources will do well, the products that are made from these resources and the ships that carry them while then do well. I'd rather be down at ground zero, as there are too many other factors to think about as you move up the chain.

I believe JRCC should do well along with the other coal names, as long as the slump ends soon. I'm waiting on 10+ in that one.

Thanks for your comment.

PG

Daniel October 5, 2012 at 4:43 AM  

Dear papergains,
What kind of effect do you think the elections will have on coal stocks? In other words, do you think a Romney victory would help them?

PaperGains October 7, 2012 at 12:37 AM  

Daniel,

I'm not paying too much attention to what effect the election will have on the stock market. If Romney wins, any rally in coal will be short lived, as the realities of the economy will set in shortly afterwards.

Coal is down not because of anything Obama did, but because China stopped buying up everything in site and because nat gas dropped to historic lows.

This will get turned around soon and speculators will begin to push coal and ore higher. I can wait.

Thanks for your comment.

PG

The Vix

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Where we rant and rave about the market and of course give our opinions on stocks we love or hate. We're not advisors and urge you to conduct your own due diligence.

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