Calling All Buyers

This is a heck of a way to start a new year. Last week was the third straight down week for 2005 — out of three weeks total. All three of my Dow portfolios are in the red, with Dow 1 leading at -9%.

What to do now? This is a case where procrastination paid off. If you’ve been sitting on this year’s investment money, now might be a good time to get it in the market. This downward slide can’t last forever, as we’ve discovered so many times in the past. Particularly if you’re investing in large, quality companies, a dropping market in the middle of strong earnings results is a pretty good buy signal. From’s Jan. 21st market wrap:

…even though roughly 80% of the more than 100 S&P; 500 components reporting earnings so far have either met or exceeded analysts’ forecasts, the lack of follow through from buyers has remained a reality…

My Dow 1 portfolio is now 9% below where it started the year. Double The Dow is down 7%. Good moments for dollar-cost averaging, I’d say.

Here’s some more good news, no matter how you eyeball it. I wrote two weeks ago that buying UTStarcom anywhere below $16 would probably prove profitable in the near future. It quickly got back above $16, thereby rewarding the bravery of whomever followed my advice. Now, even after the market’s new year slide, UTStarcom is still at $16.21. That’s high enough from the buy threshold I specified that I can feel good about suggesting it, but low enough compared to a month ago that you can feel good about buying it (or buying more of it).

I’m hanging tight to all of my current recommendations. The market is probably ending the short-term slide, especially when you consider that it’s behaving as if companies reported bad earnings. They didn’t. Once the crowd awakens to that, we may see higher prices before summer.

Here’s what Donald Luskin had to say on SmartMoney after the market close last Friday:

The best rallies come after declines — when the pain of losing money and the fear of losing more drives the weak players out, and stocks have nowhere to go but up. . . . Sentiment is already deteriorating to the point where, when it turns, stocks could make a move back to the highs reached at the end of 2004 — and I think they’ll go even higher.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.
  • The Kelly Letter
    A Complete Investment Management System
    The Kelly Letter  every Sunday morning by email.
    Like no other. Many subscribers say this is the best read of their week, astonishing in its ability to distill seven days of noise into one succinct overview of the very few items that might matter. Start your Sundays right!
    A one-page Quick Start Guide
    with page number references to full information in The 3% Signal. You'll receive access to this right away so you can begin transforming your portfolio into a performance machine immediately.
    The 3Sig Calculator.
    A thing of beauty! You'll use it to generate your own personal signals every quarter including exact share amounts to buy and sell based on your account balances. It emails you the results to make later quarters easy by keeping last quarter's numbers at your fingertips. Some subscribers say this tool alone justifies their subscription price.
    The subscriber-only section of this website
    where likeminded investors are commenting on notes and discussing in forums. Jason joins these interactions every day. They're a treasure trove of investing tips and wisdom.
    The archive of Kelly Letter notes.
    It’s a research center, searchable and smartly tagged to make gathering time-stamped material on covered subjects easy.
    The subscriber podcast.
    Jason reads every letter word-for-word. This feature was requested by subscribers who prefer audio learning. They listen on their Monday morning commute, during a workout, or while reading along at their computer.

    Save 17%

    Pay as you go
    Or sign up to receive free email and learn more about the system.
Bestselling Financial Author