1. The volatility in the markets related to Fed meetings has been accelerating. Generally the first reaction up or down was the contra trend reaction. In other words, the market will be higher a few weeks from now rather than lower. Today’s rout marked the worst two-day period since November 2011. BTW that was a great buying opportunity. I don’t feel that way today. There is a bit of complacency still in the market that make me think this sell-off will not have a quick bounce back.
2. The market is not terribly oversold but will likely base in a tight range for a couple of weeks based on my read of the charts.
3. Insiders have been relentless sellers of this market. Don’t buy shareholder unfriendly stocks. What I mean by that is don’t invest in companies that are continually using their stock like their own private printing press. Stick with companies that have management willing to put their own skin in the game. Look for insider buying. That’s common sense and will keep you out of a lot of problems. Yes, you may miss some big winners but I’d rather take the chance .
4. Now is not the time to invest in speculative names. Take your chances with dividend paying blue chip stocks. Many of these names still have not succumbed enough in my mind. Some names that we are buying a little lower are P&G, AT&T, and MO.
5.Avoid low yielding REITS and MLPs. Historically buying a REIT yielding less than 5% or an MLP less than 6-7% was not a good idea. I would rather own a blue chip paying 2.8% with strong prospects of growing dividends than a REIT yielding 3%.
6. Something is going on in China with money markets that is spooking investors. I don’t know what it is but people have been comparing it to Lehman’s collapse. I have a hard enough time figuring out what’s happening here so I don’t invest in other countries. None the less we live in a global environment and it’s impacting us.
6. As the sage of Omaha says, you must keep your head when other’s are losing theirs.