Market looks due for a bounce today - futures up pre-open - anybody going long?
Answers
368 points
ads answered 9 months ago …
With the current market, volatility is the norm. The increases will tend to be large just as the decreases will tend to be large. If you are looking for a bottom, I don't think we have seen it yet, but yes there will likely be a handful more bounces now and then over the next few months before things truly turn around. While it is kind of late to say much about what it looks like the markets will do today, since they have already done it, thought I'd at least comment on my outlook and position.
As far as going long, most of what I hold, I'm planing to hold for a while, as they are either solid companies that are seeing growth and profits even through this downturn, or they are well funded early stage companies that have great products and/or services that will be on the leading edge of the upturn that will occur once the economy does start to improve. This is the exact reason that it is wise to do your homework and not buy on a whim or second hand information as whlie the market is going higher today, it could very well come back down before the end of the week. Either way what I'm invested in I'm holding for a while regardless of where the market goes in the next few months (in fact if I can spare the funds I will likely invest more into these firms, as well as a couple of others that I simply have not had the cash to spare yet).
2222 points
readytoretire answered 9 months ago …
I agree with ads. I view this as a short term bounce due to China. I don't think it will last as I don't see the economy improving for quite some time. This is definitely more of a trading market versus a investing market as we will see major swings both up and down for some time.
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3963 points
MNSL answered 9 months ago …
Some companies in next rotating sectors, neglected sectors will benefit from lower raw material cost, lower interest rate in the next 18 months. In addition companies with local demand also will have above average growth in the next 05 years.
In addition some of these companies have less debt in their balance sheet. There will be always demand for their products despite having some characteristics of recession, inflation, hyperinflation and depression globally now.
It is time become long in some companies in next rotating sectors, neglected sectors, simple businesses and consumer staples sectors now.
For example: in many countries demand has collapsed for items such as electronics, tech products, cars, tyres, leathers, cosmetics, houses, gold and diamond jewellery, ceramics, building materials, furniture, forest items, clothes, leather products , plastic and packaging items and advertisement etc. Some companies in these sectors already have closed down their operations and some will become bankrupt sooner than later.
Export oriented global companies in above sectors will hit hard. Tourism and travel sector also will hit hard in the next 03 years. People will travel less in the next 03 years.
However there are strong demands for some products such as eggs in some countries. As a result of this, despite fall of animal feed and grains still egg prices are high in some countries. These companies will make profit in any situation in the next 18 months. Some of strong companies in these sectors will have continuous growth for the next 05 to 10 years and weak competitors will lose their market share and some will become insolvent due to higher debt rate.
I do not think it is wise to become long in hot sectors now. Current recession is completely different from the past recessions and it has combinations of some characteristics of recession, stagflation, depression, hyperinflation and inflation.
It will affect very badly and worst than great depression for some sectors. Therefore sector hunting is very important in the current global market scenario. In fact some companies with local demand for their products will have advantage over others once costs of production, distribution cost and raw material cost come down sharply in the next 18 months. They will have sharp rise in their profits.
However even under lower cost production environment some export oriented companies will not have opportunity to sell their products in the global market until economy improve. Some global export oriented companies will become bankrupt due to weak demand in the next 03 years.
It is wise to avoid hot sectors now. Only few sectors will have great opportunities in the next 03 to five years.
3963 points
MNSL answered 9 months ago …
I think we should go long for companies such as Sanderson Chicken Farms, General Mills, Bread firms etc in every market weakness. However it is better to do some research as well. Even though Sanderson farms make loss now analysts expects strong profits from next finical years onwards
Pl see following link as well:
http://seekingalpha.com/article/122272-sanderson-farms-good-risk-reward-fr om-the-long-side
The current share price does not reflect fair value for Sanderson Farms (SAFM). I believe the company has 40%+ upside from current levels and the unlike much of corporate America, current catalysts are to the upside, as input costs (namely feed costs) will decline dramatically in 2009 YOY. I recommend initiating a ¾ position at current levels, going to full position at $25/share.
368 points
ads answered 9 months ago …
Yes, a temporary bounce this most likely is. But there are some good investments available. While I've not taken a look at the chicken company that MNSL suggests, it is in one of those sectors that could turn around more quickly than most as it is one that will tend to be affected less by the current economic downturn and if the market is valuing them lower than what they truly are (due to short term losses that will not last) then they may very well be a good buy right now. After all, over the long haul, value investing is the one technique that over the long haul truly works well (7 of the 10 most successful invsetors of all time were value investors). I'm certainly enjoying seeing yesterdays bounce though, as my portfolio was up 15.6% on the day (although I'm still down from its cost).
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