Wednesday, November 30, 2011

Up days cushion down days


In my last post, I talked about not getting into a panic as the global markets drop in value day after day. And drag our portfolios with them, I might add. I wrote, the markets have "a long way to go before it is panic time. Corrections, even big corrections, are normal."

Today The New York Times ran an article headlined "Banks Act, Stocks Surge and Skeptics See a Pattern." All very true. The Dow was up 490.05 points. The TSX soared as well. But I agree with the concern voiced by The Times, this rally could evaporate.

I've bought all I'm buying on the dips. I'm keeping whatever cash I've got. I'm keeping, as they say, my powder dry. I would be surprised if we did not see more market volatility in the coming weeks and months.

To put today's rally in perspective let's look at the stocks I mentioned in my last post. These were all stocks that I had bought on recent dips. Four of the six were down when I last checked --- a couple by as much as 5%. That's a lot when you realize I just bought all these stocks at supposedly bargain basement prices.

Tonight, I discover:

  • BMO Equal Weight Utilities Index (ZUT) is up 6.4%.
  • Claymore S&P/TSX Canadian Preferred Share Units is down .4%. Not much, but still it is in the red.
  • REM is also in the red, down .8%
  • PWT-T up 5.4% 
  • AUSE is up 2.1%.
  • RY-T  is up 4.8%.

So, my recent purchases are, as a group, in the black. My income has grown thanks to the extra dividend income and I'm happy --- for the moment.

As I prepare for bed, the Asian markets are up:

  • Nikkei is up 2.12%.
  • Hang Seng is up 5.85%.
  • Shanghai is up 3.43%.

As I went to bed, I thought, "barring any unforeseen problems, tomorrow should be another good day for North American markets." Well, its morning and Europe is essentially flat at 8:30 a.m. EST and the premarket trading in the States is trending lower. I may lose a little of my profits from Wednesday but overall it will be a fine day. My cash reserves will continue to swell as the month end dividends show up in my account.

I'm not gloating over my profits, even though I am up many, many thousands for yesterday. I fear these profits may be ephemeral. I see my growing portfolio as simply being fattened in in preparation of the next famine. If it gets fat enough, it may well weather the coming bear market, and weather it very well.

Whatever, don't panic.

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