Tag Archives: VFICX
Anxiety is building in the bond market — a sure sign that a good buying opportunity isn’t far off.
Traders were greeted this morning with the unpleasant news that import prices shot up 2.3% in September. If that pace kept up for a whole year, we would be looking at a 30% inflation rate in foreign goods. Shivers!
In this month’s visit, I’ll show you how Alan Greenspan is unwittingly setting the stage for a big rally in bond prices, starting soon. We’ve seen his hardheaded determination to tighten credit before—and we know the result. Some high-octane Treasury bonds, I predict, will roll up a total return of 15% or perhaps even 20% in the coming year.
In this month’s visit, I’ll show you how to plot your course through these tricky waters. Greenspan seems determined to steer us perilously close to the shoals of recession, but we know how to protect ourselves. We’ve got ample reserves of bank CDs and bonds, and the stocks we’re buying are well insulated from economic shocks. (Two, in particular, look like great values right now, with potential for 20%–30% gains in the next 12 months.)
It’s an open secret. After five years of wrestling witha a stingy stock market, a lot of investors feel torn. But I would hate to see you miss out on the superb opportunities for long-term growth that are waiting to be plucked in today’s market. I’m talking about a small, select group of blue chip stocks so cheap that you’ll want to hold them for years and years.
No, it’s nothing like the good old panics the bond market used to treat us to, back in the 1980s and 1990s. But bond prices have taken a pretty good drubbing over the past four weeks. Even with today’s rally, the price of a long Treasury is about 5% off its February peak. Since early 2000, when the stock market bubble popped, every “correction” of 5% (or more) in bonds has ultimately rewarded investors who had the moxie to buy.
Stocks are down again today, bumping along near their lows for the year. Will we get a bounce anytime soon?
Probably — if not today, at least within the next two or three sessions. From a technical standpoint, the market is oversold on both a short-term (2-3 weeks) and intermediate-term (2-3 months) basis. We’re due for a rally.
In this month’s visit, I’ll show you how to fatten your portfolio regardless of who wins. Hint: Both candidates will grapple with the same set of economic challenges in 2005, so you can make a tidy fortune if you understand what those are (and how they’re likely to be dealt with). We’re already preparing for the road ahead by pocketing profits of more than 90% on our small-cap stocks while shifting cash into bonds, high-yielding blue chip stocks and even a low-risk “hedge fund.”
Yes, we got a little flurry of a rally in the stock market yesterday after the Federal Reserve lifted its target rate for short-term interbank loans a quarter point to 1.25% — the first official rate hike in four years. Traders seemed relieved that Greenspan & Co., in announcing the move, promised to act in “measured” fashion if further increases should prove necessary (as they almost surely will).
More evidence is gathering of an approaching seasonal top in the stock market. Yesterday’s sharp intraday reversal to the downside hands us another piece of the puzzle.
There are essentially two ways of looking at the markets. These two paths are known as fundamental and technical analysis. I draw on both methods to come up with the recommendations I offer in Profitable Investing.